posam
As
filed with the Securities and Exchange Commission on March 11, 2011
Registration No. 333-158387
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 2 ON
FORM S-3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Oncor Electric Delivery Company LLC
(Exact name of registrant issuer as specified in its charter)
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Delaware
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4911
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75-2967830 |
(State or other jurisdiction
of incorporation)
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(Primary Standard Industrial Classification Code Number)
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(I.R.S. Employer
Identification Number) |
1601 Bryan Street
Dallas, Texas 75201
(214) 486-2000
(Address, including zip code, and telephone number, including area code, of registrants principal executive offices)
E. Allen Nye, Jr.
1601 Bryan Street
22nd Floor
Dallas, Texas 75201
(214) 486-2000
(214) 486-2067 (facsimile)
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of communications to:
W. Crews Lott
Baker & McKenzie LLP
2300 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
(214) 978-3000
(214) 978-3099 (facsimile)
Approximate date of commencement of proposed sale to the public: From time to time after the
effective date of this registration statement.
If the only securities being registered on this form are being offered pursuant to dividend or
interest reinvestment plans, please check the following box. o
If any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment plans, check the following box. þ
If this form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities
Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. o
If this Form is a registration statement filed pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following box. o
If this Form is a post-effective amendment filed pursuant to General Instruction I.D. filed to
register additional securities or additional classes of securities pursuant to Rule 413(b) under
the Securities Act, check the following box. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a small reporting company. See the definition of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer þ
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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The Registrant hereby amends this Registration Statement on such date or dates as may be
necessary to delay its effective date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission acting pursuant to
said Section 8(a), may determine.
EXPLANATORY NOTE
This Post-Effective Amendment No. 2 on Form S-3 to Form S-1 Registration Statement (File
No. 333-158387) (the Registration Statement) of Oncor Electric Delivery Company LLC (the Company)
is being filed pursuant to the undertakings in Item 17 of the Registration Statement to update and
supplement the information contained in the Registration Statement, as originally declared
effective by the Securities and Exchange Commission on April 22, 2009, to include the information
contained in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2010
that was filed with the Securities and Exchange Commission on February 18, 2011.
This Post-Effective Amendment No. 2 on Form S-3 converts the Registration Statement on Form
S-1 into a Registration Statement on Form S-3. The registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for listing on Form S-3. The information
included in this filing updates and supplements the Registration Statement and the prospectus
contained therein. No additional securities are being registered under this Post-Effective
Amendment No. 2. All applicable registration fees were paid at the time of the original filing of
the Registration Statement.
The information in this prospectus is not complete and may be changed. We may not sell these securities until
the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is
not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED MARCH 11, 2011
PROSPECTUS
ONCOR ELECTRIC DELIVERY COMPANY LLC
$375,595,000 6.375% Senior Secured Notes due 2012
$523,722,000 5.950% Senior Secured Notes due 2013
$500,000,000 6.375% Senior Secured Notes due 2015
$550,000,000 6.800% Senior Secured Notes due 2018
$800,000,000 7.000% Debentures due 2022
$500,000,000 7.000% Senior Secured Notes due 2032
$350,000,000 7.250% Senior Secured Notes due 2033
$300,000,000 7.500% Senior Secured Notes due 2038
These securities accrue interest and mature as follows:
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Senior Secured Notes due 2012 (the 2012 notes) accrue interest at a rate of
6.375% per annum, payable on May 1 and November 1 of each year, and mature on May 2,
2012; |
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Senior Secured Notes due 2013 (the 2013 notes) accrue interest at a rate of
5.950% per annum, payable on March 1 and September 1 of each year, and mature on
September 1, 2013; |
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Senior Secured Notes due 2015 (the 2015 notes) accrue interest at a rate of
6.375% per annum, payable on January 15 and July 15 of each year, and mature on January
15, 2015; |
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Senior Secured Notes due 2018 (the 2018 notes) accrue interest at a rate of
6.800% per annum, payable on March 1 and September 1 of each year, and mature on
September 1, 2018; |
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Debentures due 2022 (the debentures) accrue interest at a rate of 7.000% per
annum, payable on March 1 and September 1 of each year, and mature on September 1, 2022; |
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Senior Secured Notes due 2032 (the 2032 notes) accrue interest at a rate of
7.000% per annum, payable on May 1 and November 1 of each year, and mature on May 1,
2032; |
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Senior Secured Notes due 2033 (the 2033 notes) accrue interest at a rate of
7.250% per annum, payable on January 15 and July 15 of each year, and mature on January
15, 2033; and |
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Senior Secured Notes due 2038 (the 2038 notes) accrue interest at a rate of
7.500% per annum, payable on March 1 and September 1 of each year, and mature on
September 1, 2038. |
The 2012 notes and the 2032 notes were issued in exchange for $375,595,000 6.375% Senior
Secured Notes due 2012 and the $500,000,000 7.000% Senior Secured Notes due 2032 originally issued
on May 6, 2002. The debentures were issued in exchange for the $800,000,000 7.000% Debentures due
2022, originally issued on August 30, 2002. The 2015 notes and the 2033 notes were issued in
exchange for the $500,000,000 6.375% Senior Secured Notes due 2015, originally issued on December
20, 2002. $349,690,000 principal amount of the 2033 notes were issued in exchange for an equal
principal amount of 7.250% Senior Secured Notes due 2033, originally issued on December 20, 2002
and $310,000 principal amount of the 2033 notes were not exchanged. $523,722,000 principal amount
of the 2013 notes were issued in exchange for an equal principal amount of 5.950% Senior Secured
Notes due 2013, originally issued on September 8, 2008. $549,885,000 principal amount of the 2018
notes were issued in exchange for an equal principal amount of 6.800% Senior Secured Notes due
2018, originally issued on September 8, 2008, and $115,000 principal amount of the 2018 notes were
not exchanged. $299,375,000 principal amount of the 2038 notes were issued in exchange for the
7.500% Senior Secured Notes due 2038, originally issued on September 8, 2008, and $625,000
principal amount of the 2038 notes were not exchanged.
We collectively refer to the 2012 notes, the 2013 notes, the 2015 notes, the 2018 notes, the
debentures, the 2032 notes, the 2033 notes and the 2038 notes in this prospectus as the
securities, unless the context otherwise requires.
We may redeem any of the securities at any time prior to their maturity at the respective
make-whole redemption prices discussed in this prospectus under Description of the Securities
May 2002 Indenture Optional Redemption and Description of the Securities August 2002
Indenture Optional Redemption, plus accrued and unpaid interest to the redemption date.
The securities have the benefit of a lien on certain of our transmission and distribution
assets, mortgaged under a Deed of Trust (as amended, the Deed of Trust), dated as of May 15, 2008,
from us to The Bank of New York Mellon (formerly The Bank of New York), as collateral agent. The
securities are our senior secured obligations and rank pari passu with our other senior
indebtedness that is secured by the lien of the Deed of Trust. The securities are senior in right
of payment to all subordinated indebtedness. The securities are not listed on any securities
exchange.
For a more detailed description of the securities, see Description of the Securities
beginning on page 12.
See Risk Factors beginning on page 7 for a discussion of certain risks that you should
consider before investing in the securities.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of the securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal offense.
This prospectus has been prepared for and may be used by Goldman, Sachs & Co. (the Market
Maker) and affiliates of the Market Maker in connection with offers and sales of the securities
related to market-making transactions in the securities in the secondary market effected from time
to time. The Market Maker and the affiliates of the Market Maker may act as principal or agent in
such transactions, including as agent for the counterparty when acting as principal or as agent for
both counterparties, and may receive compensation in the form of discounts and commissions,
including from both counterparties, when it acts as agent for both. Sales of securities pursuant to
this prospectus will be made at prevailing market prices at the time of sale, at prices related
thereto or at negotiated prices. We will not receive any proceeds from such sales.
The date of this prospectus is , 2011.
You should rely only on the information included or incorporated by reference in this
prospectus. We have not, and the Market Maker and its affiliates have not, authorized anyone to
provide you with additional or different information. The prospectus may be used only for the
purposes for which it has been published, and no person has been authorized to give any information
not contained herein. If you receive any other information, you should not rely on it. You should
assume that the information contained in or incorporated by reference in this prospectus is
accurate only as of their respective dates. Our business profile, financial condition, results of
operations or prospects may have changed since such dates. You should not rely on or assume the
accuracy of any representation or warranty in any agreement that we have filed as an exhibit to the
registration statement of which this prospectus is a part or that we may otherwise publicly file in
the future because such representation or warranty may be subject to exceptions and qualifications
contained in separate disclosure schedules, may represent the parties risk allocation in the
particular transaction, may be qualified by materiality standards that differ from what may be
viewed as material for securities law purposes or may no longer continue to be true as of any given
date. No offer of these securities is being made in any jurisdiction where such offer is
prohibited.
TABLE OF CONTENTS
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EX-23.B |
Notice of Corporate Separateness
Pursuant to commitments made to the Public Utility Commission of Texas, we and our majority
equity investor, Energy Future Holdings Corp., have implemented certain structural and operational
ring-fencing measures that are intended to further separate us from Energy Future Holdings Corp.
and certain of its other subsidiaries. See Prospectus Summary and our Annual Report on Form 10-K
for the fiscal year ended December 31, 2010 for more information regarding these ring-fencing measures.
By your receipt of this prospectus, you acknowledge the notice of corporate separateness
given hereby.
PROSPECTUS SUMMARY
This summary highlights selected information appearing elsewhere in this prospectus. This
summary is not complete and does not contain all of the information that you should consider before
investing in the securities. You should carefully read the entire prospectus and the information
that is incorporated into this prospectus by reference to our Annual Report on Form 10-K for the
fiscal year ended December 31, 2010 (2010 Form 10-K), including information in the sections
entitled Risk Factors and the financial statements and the related notes. See the sections
entitled Available Information and Incorporation by Reference. Unless the context otherwise
requires or as otherwise indicated, references in this prospectus to Oncor, we, our and us
refer to Oncor Electric Delivery Company LLC and its consolidated subsidiary. References to EFH
Corp. refer to Energy Future Holdings Corp., and/or its subsidiaries, depending on context.
References to the Market Maker refer to Goldman, Sachs & Co.
Our Business
We are a regulated electricity transmission and distribution company that provides the
essential service of delivering electricity safely, reliably and economically to end-use consumers
through its distribution systems, as well as providing transmission grid connections to merchant
generation plants and interconnections to other transmission grids in Texas. We are neither a
seller of electricity nor a purchaser of electricity for resale. We provide transmission services
to other electricity distribution companies, cooperatives and municipalities. We provide
distribution services to retail electric providers (REPs) that sell power to retail customers in
the north-central, eastern and western parts of Texas. This territory has an estimated population
in excess of seven million, about one-third of the population of Texas, and comprises 91 counties
and over 400 incorporated municipalities, including Dallas/Fort Worth and surrounding suburbs, as
well as Waco, Wichita Falls, Odessa, Midland, Tyler and Killeen.
We operate the largest transmission and distribution system in Texas, delivering electricity
to approximately three million homes and businesses and operating more than 118,000 miles of
transmission and distribution lines. Most of our power lines have been constructed over lands of
others pursuant to easements or along public highways, streets and rights-of-way as permitted by
law. At December 31, 2010, we had approximately 3,800 full-time employees, including approximately
640 in a collective bargaining unit.
Our transmission customers consist of municipalities, electric cooperatives and other
distribution companies. Our distribution customers consist of more than 75 REPs in our
certificated service area, including our affiliate, Texas Competitive Electric Holdings Company LLC
(formerly TXU Energy Company LLC), an indirect subsidiary of EFH Corp. (TCEH). Distribution
revenues from TCEH represented 36% of our total revenues for 2010, and revenues from subsidiaries
of Reliant Energy, Inc., each of which is a non-affiliated REP, represented 12% of our total
revenues for 2010. No other customer represented more than 10% of our total operating revenues.
The consumers of the electricity delivered by us are free to choose their electricity supplier from
REPs who compete for their business.
We are a direct subsidiary of Oncor Electric Delivery Holdings Company LLC (Oncor Holdings),
which is an indirect, wholly-owned subsidiary of EFH Corp. (formerly TXU Corp.). As of March 7,
2011, Oncor Holdings owned 80.03% of our outstanding equity interests, Texas Transmission
Investment LLC (Texas Transmission) owned 19.75% of our equity interests, and certain members of
our management and board of directors indirectly beneficially owned 0.22% of our equity interests
through Oncor Management Investment LLC.
On October 10, 2007, we were converted from a Texas corporation to a Delaware limited
liability company in connection with the merger of Texas Energy Future Merger Sub Corp (Merger Sub)
with and into EFH Corp. (the Merger). As a result of the Merger, investment funds associated with
or designated by Kohlberg Kravis Roberts & Co. (KKR), TPG Capital, L.P. (TPG) and Goldman, Sachs &
Co. (Goldman Sachs and, together with KKR and TPG, the Sponsor Group), and certain other
co-investors (collectively with the Sponsor Group, the Investors), own EFH Corp. through Texas
Energy Future Holdings Limited Partnership (Texas Holdings), with the Sponsor Group controlling
Texas Holdings general partner, Texas Energy Future Capital Holdings LLC (the General Partner).
Various ring-fencing measures have been taken to enhance our credit quality. These measures
serve to mitigate our and Oncor Holdings credit exposure to Texas Holdings and its direct and
subsidiaries (Texas Holdings Group) and to reduce the risk that the assets and liabilities of Oncor
or Oncor Holdings would be substantively consolidated with the assets and liabilities of the Texas
Holdings Group in the event of a bankruptcy of one or more of those entities. Such measures
include, among other things: our sale of a 19.75% equity interest to Texas Transmission in November
2008 (discussed below); maintenance of separate books and records for Oncor Holdings and its direct
and indirect subsidiaries (Oncor Ring-Fenced Entities); our board of directors being comprised of a
majority of independent directors, and prohibitions on the Oncor Ring-Fenced Entities providing
credit support to, or receiving credit support from, any member of the Texas Holdings Group. The
assets and liabilities of the Oncor Ring-Fenced Entities are separate and distinct from those of
the Texas Holdings
1
Group, and none of the assets of the Oncor Ring-Fenced Entities are available to satisfy the debt or
other obligations of any member of the Texas Holdings Group. We do not bear any liability for debt
or contractual obligations of the Texas Holdings Group, and vice versa. Accordingly, our
operations are conducted, and its cash flows managed, independently from the Texas Holdings Group.
We are a limited liability company organized under the laws of the State of Delaware, formed
in 2007 as the successor entity to Oncor Electric Delivery Company, formerly known as TXU Electric
Delivery Company, a corporation formed under the laws of the State of Texas in 2001. Our principal
executive offices are located at 1601 Bryan Street, Dallas, TX 75201. The telephone number of our
principal executive offices is (214) 486-2000. Our Internet address is http://www.oncor.com.
Information on our website or available by hyperlink from our website does not constitute part of
this prospectus.
2
The Securities
The summary below describes the principal terms of the securities. Certain of the terms and
conditions described below are subject to important limitations and exceptions. The Description
of the Securities section of this prospectus contains more detailed descriptions of the terms and
conditions of the securities.
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Securities Offered
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$3,899,317,000 aggregate principal amount of securities consisting of: |
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$375,595,000 principal amount of 2012 notes; |
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$523,722,000 principal amount of 2013 notes; |
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$500,000,000 principal amount of 2015 notes; |
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$550,000,000 principal amount of 2018 notes; |
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$800,000,000 principal amount of debentures; |
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$500,000,000 principal amount of 2032 notes; |
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$350,000,000 principal amount of 2033 notes; and |
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$300,000,000 principal amount of 2038 notes. |
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Maturity Dates
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The securities will mature on the following dates: |
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May 1, 2012, for the 2012 notes; |
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September 1, 2013, for the 2013 notes; |
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January 15, 2015, for the 2015 notes; |
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September 1, 2018, for the 2018 notes; |
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September 1, 2022, for the debentures; |
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May 1, 2032, for the 2032 notes; |
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January 15, 2033, for the 2033 notes; and |
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September 1, 2038, for the 2038 notes. |
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Indentures
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The 2012 notes, 2015 notes, 2032 notes and 2033 notes are issued under the
Indenture and Deed of Trust dated as of May 1, 2002, as amended and
supplemented (May 2002 Indenture), between us and The Bank of New York Mellon
(formerly the Bank of New York), as trustee (Trustee). |
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The 2013 notes, 2018 notes, 2038 notes and the debentures are issued under
the Indenture dated as of August 1, 2002, as amended and supplemented (August
2002 Indenture), between us and the Trustee. |
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We refer to each of the May 2002 Indenture and the August 2002 Indenture in
this prospectus as an Indenture, and together as the Indentures. |
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Interest Rate
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The securities accrue interest at the following rates: |
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6.375%, for the 2012 notes; |
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5.950%, for the 2013 notes; |
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6.375%, for the 2015 notes; |
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6.800%, for the 2018 notes; |
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7.000%, for the debentures; |
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7.000%, for the 2032 notes; |
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7.250%, for the 2033 notes; and |
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7.500%, for the 2038 notes. |
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Interest is calculated on the basis of a 360-day year consisting of twelve
30-day months, and with respect to any period less than a full month, on the
basis of the actual number of days elapsed during the period. |
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Interest Payment Dates
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We pay interest in US dollars on the securities semi-annually for: |
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the 2012 notes on May 1 and November 1 of each year; |
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the 2013 notes on March 1 and September 1 of each year; |
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the 2015 notes on January 15 and July 15 of each year; |
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the 2018 notes on March 1 and September 1 of each year; |
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the debentures on March 1 and September 1 of each year; |
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the 2032 notes on May 1 and November 1 of each year; |
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the 2033 notes on January 15 and July 15 of each year; and |
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the 2038 notes on March 1 and September 1 of each year. |
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Ranking
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The securities are senior secured obligations of Oncor and will rank pari
passu with our other secured indebtedness. The securities are senior in right
of payment to all subordinated indebtedness. At December 31, 2010, we had
approximately $4.825 billion aggregate principal amount of senior secured
debt outstanding and $383 million of short term debt
outstanding under our revolving credit facility, all of which is secured by the
Collateral (as defined below). Our secured indebtedness does not
include $667 million, as of December 31, 2010, of transition bonds issued by our bankruptcy remote financing subsidiary, which transition bonds are not secured by the Collateral. |
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Collateral
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Our obligations under the securities are secured by a lien on certain of our
transmission and distribution assets, mortgaged under our Deed of Trust (as
amended, Deed of Trust), dated as of May 15, 2008, from us to The Bank of New
York Mellon (formerly The Bank of New York), as collateral agent, as
described in the Deed of Trust (Collateral). See Description of the
Securities Deed of Trust. |
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Optional Redemption
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We may at our option redeem all or part of the securities at the respective
make-whole redemption prices discussed in this prospectus under
Description of the Securities May 2002 Indenture Optional Redemption
and Description of the Securities August 2002 Indenture Optional
Redemption, plus accrued and unpaid interest to the redemption date. |
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Limitation of Secured Debt
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If any of the securities are outstanding under the Indentures, we will not
issue, incur or assume any debt secured by a lien upon any of our property
(other than Excepted Property, as defined in the Indentures), except for
certain permitted secured debt, unless the securities are also secured by
that lien, without the consent of the holders of a majority in principal
amount of all outstanding securities issued under the Indentures, including
the securities. See Description of the Securities May 2002 Indenture
Limitation on Secured Debt and Description of the Securities August 2002
Indenture Limitation on Secured Debt. |
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Risk Factors
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You should consider carefully all of the information set forth in this
prospectus prior to investing in the securities. In particular, we urge you
to consider carefully the factors set forth under the heading Risk Factors. |
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Trading Market
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We have not listed and do not intend to list any of the securities on any
securities exchange. Certain financial institutions have informed us that
they intend to make a market in the securities. However, these financial
institutions may cease their market-making efforts at any time. If no active
trading market exists, you may not be able to resell the securities at their
fair market value or at all. |
4
Summary Consolidated Financial Data of Oncor and Subsidiary
The following table sets forth our summary historical consolidated financial data as of and
for the periods indicated. The summary financial data as of December 31, 2010 and 2009 and for each
of the three fiscal years ended December 31, 2010, 2009 and 2008, have been derived from our
audited historical consolidated financial statements and related notes included in our 2010 Form
10-K. The summary financial data as of December 31, 2007 and 2006, for the Successor period from
October 11, 2007 through December 31, 2007 and Predecessor period from January 1, 2007 through
October 10, 2007 and for the year ended December 31, 2006 have been derived from our historical
consolidated financial statements that are not included in our 2010 Form 10-K.
The summary consolidated financial data should be read in conjunction with Selected Financial
Data and Managements Discussion and Analysis of Financial Condition and Results of Operations
in our 2010 Form 10-K and our audited consolidated financial statements and related notes appearing
in our 2010 Form 10-K, which is incorporated by reference herein.
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Successor (a) |
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Predecessor |
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December 31, |
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December 31, |
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2010 |
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2009 |
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2008 |
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2007 |
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2006 |
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(millions of dollars, except ratios) |
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Total assets end of year |
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$ |
16,846 |
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$ |
16,232 |
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$ |
15,706 |
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$ |
15,434 |
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$ |
10,709 |
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Property, plant & equipment net end of year |
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9,676 |
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9,174 |
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8,606 |
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8,069 |
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7,608 |
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Goodwill |
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4,064 |
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4,064 |
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4,064 |
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4,894 |
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25 |
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Capitalization end of year |
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Long-term debt, less amounts due currently |
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$ |
5,333 |
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$ |
4,996 |
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$ |
5,101 |
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$ |
3,702 |
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$ |
3,811 |
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Shareholders equity |
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2,975 |
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Membership interests |
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6,988 |
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6,847 |
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6,799 |
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7,618 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
12,321 |
|
|
$ |
11,843 |
|
|
$ |
11,900 |
|
|
$ |
11,320 |
|
|
$ |
6,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization ratios end of year (b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, less amounts due currently |
|
|
43.3 |
% |
|
|
42.2 |
% |
|
|
42.9 |
% |
|
|
32.7 |
% |
|
|
56.2 |
% |
Shareholders equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43.8 |
|
Membership interests |
|
|
56.7 |
|
|
|
57.8 |
|
|
|
57.1 |
|
|
|
67.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
In October 2007, in connection with the merger of Texas Energy Future Merger Sub
Corp. with and into EFH Corp., Oncor was converted from a Texas corporation to a
Delaware limited liability company. The consolidated financial statements of the
Successor reflect the application of purchase accounting. |
|
(b) |
|
For purposes of reporting to the Public Utility Commission of Texas, the regulatory
capitalization ratio at December 31, 2010 was 59.7% debt and
40.3% equity. See Note 9 to the consolidated financial statements in
our 2010 Form 10-K
for additional information regarding the regulatory capitalization ratio. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor (a) |
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from October 11, 2007 |
|
|
Period from January 1, 2007 |
|
|
|
|
|
|
Year Ended December 31, |
|
|
through
December 31, |
|
|
through October 10, |
|
|
Year Ended December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
2006 |
|
|
|
(millions of dollars, except ratios) |
|
Operating revenues |
|
$ |
2,914 |
|
|
$ |
2,690 |
|
|
$ |
2,580 |
|
|
$ |
533 |
|
|
$ |
1,967 |
|
|
$ |
2,449 |
|
Net income (loss) (b) |
|
$ |
352 |
|
|
$ |
320 |
|
|
$ |
(487 |
) |
|
$ |
64 |
|
|
$ |
263 |
|
|
$ |
344 |
|
|
Capital expenditures |
|
$ |
1,020 |
|
|
$ |
998 |
|
|
$ |
919 |
|
|
$ |
162 |
|
|
$ |
580 |
|
|
$ |
880 |
|
|
Ratio of earnings to fixed charges (c) |
|
|
2.60 |
|
|
|
2.40 |
|
|
|
|
|
|
|
2.30 |
|
|
|
2.68 |
|
|
|
2.74 |
|
|
Embedded interest cost on long-term debt
end of period (d) |
|
|
6.5 |
% |
|
|
6.6 |
% |
|
|
6.7 |
% |
|
|
6.7 |
% |
|
|
6.6 |
% |
|
|
6.5 |
% |
5
|
|
|
(a) |
|
In October 2007, in connection with the merger of Texas Energy Future Merger Sub Corp. with and into EFH Corp., Oncor was converted from a Texas corporation to a Delaware limited liability company. The consolidated financial
statements of the Successor reflect the application of purchase accounting. |
|
(b) |
|
Amount in 2008 includes an $860 million goodwill impairment charge. |
|
(c) |
|
Fixed charges exceeded earnings by $266 million for the year ended December 31, 2008. |
|
(d) |
|
Represents the annual interest and amortization of any discounts, premiums, issuance costs and any deferred gains/losses on reacquisitions divided by the carrying value of the debt plus or minus the unamortized balance of any
discounts, premiums, issuance costs and gains/losses on reacquisitions at the end of the year and for the Predecessor periods excludes advances from affiliates. |
6
RISK FACTORS
You should carefully consider the risk factors set forth below and the risk factors
incorporated herein by reference to our 2010 Form 10-K as well as the other information contained
and incorporated by reference in this prospectus before deciding to invest in the securities. Any
of these risks could materially and adversely affect our business, financial condition, operating
results or cash flow; however, these risks are not our only risks. Additional risks and
uncertainties not currently known to us or those we currently view to be immaterial also may
materially and adversely affect our business, financial condition, results of operations or cash
flow. In such a case, the trading price of the securities could decline or we may not be able to
make payments of interest and principal on the securities, and you may lose all or part of your
original investment.
Risks Related to the Securities
The market price of the securities will fluctuate.
Any material differences between our actual results and the historical results contained in
our annual, quarterly and current reports filed with the SEC and incorporated by reference in this
prospectus could have a significant adverse impact on the market price of the securities, assuming
a market for the securities with no established trading market develops. In addition, any downgrade
of our credit ratings could have a significant adverse impact on the market price of the
securities.
The terms of the securities contain limited covenants and other protections.
The Indentures governing the securities contain covenants restricting our ability to take
certain actions. However, each of these covenants contains specified exceptions. In addition, these
covenants do not protect holders of the securities from all events that could have a negative
effect on the creditworthiness of the securities and the market price of the securities, assuming a
market for the securities develops.
|
|
Your ability to transfer the securities may be limited by the absence of an active trading market,
and there is no assurance that any active trading market will exist for the securities. |
We have not listed and do not intend to list the securities on any securities exchange. We
cannot assure you as to the liquidity of markets for the securities, your ability to sell the
securities or the price at which you would be able to sell the securities. The securities could
trade at prices that may be lower than their principal amount or purchase price, depending on many
factors, including prevailing interest rates, the market for similar securities, our financial and
operating performance and other factors. Certain financial institutions have informed Oncor that
they intend to make a market in the securities. However, these financial institutions may cease
their market-making efforts at any time without notice. Therefore, an active market for these
securities may not remain in effect.
Also, unless a market-making prospectus is in effect, certain financial institutions that may
be considered to be our affiliates as a result of their ownership of an interest in EFH Corp.,
including the Market Maker, may not be able to make a market in the securities. We have agreed
solely with the Market Maker to maintain a current market-making prospectus with respect to the
2013 notes, 2018 notes and 2038 notes until September 8, 2018, the tenth anniversary of the issue
date of such securities. We cannot assure you that a current market-making prospectus with respect
to the 2013 notes, 2018 notes and 2038 notes will continue to be in effect, and that the active
market for the 2013 notes, 2018 notes and 2038 notes will remain in effect. We also have no
obligation to maintain a current market-making prospectus with respect to the 2012 notes, the 2015
notes, the 2032 notes, the 2033 notes and the debentures. As a result, we cannot assure you that a
market-making prospectus with respect to these securities will continue to be current and that an
active market for the 2015 notes, the 2032 notes, the 2033 notes and the debentures will remain in
effect. If no active trading market exists for any of the securities you may not be able to resell
such securities at their fair market value or at all.
|
|
We will not be required to maintain a current market-making prospectus after September 8, 2018,
and as a result your ability to transfer the 2038 notes may be limited after that date. |
The 2038 notes will mature on September 1, 2038. However, we will not be required to maintain
a current market-marking prospectus after September 8, 2018, the tenth anniversary of the issue
date of such notes. We cannot assure you that a current market-making prospectus with respect to
the 2038 notes will exist after September 8, 2018. Unless a market-making prospectus is in effect,
certain financial institutions with an ownership interest in EFH Corp., including the Market Maker,
may not be able to make a market in the 2038 notes. As a result, we cannot assure you that an
active market for the 2038
7
notes will develop or, if developed, that it will continue after September 8, 2018. If no
active trading market exists after September 8, 2018, you may not be able to resell the 2038 notes
at their fair market value or at all.
|
|
The Indentures and the Deed of Trust permit us to incur significant additional debt. Accordingly,
the Indentures will not afford the holders of the securities protection in the event of a
highly-leveraged transaction. |
The securities and the Indentures under which the securities are issued do not place any
limitation on the amount of unsecured debt that may be incurred by us. The Indentures and the Deed
of Trust also permit us to incur a significant amount of additional secured debt, including debt
secured equally and ratably by the Collateral, subject to certain limitations, as described further
under Description of the Securities May 2002 Indenture Limitation on Secured Debt,
Description of the Securities August 2002 Indenture Limitation on Secured Debt and
Description of the Securities Deed of Trust Securing Additional Obligations. Our incurrence
of additional debt may have important consequences for holders of the securities, including making
it more difficult for us to satisfy our obligations with respect to the securities, a loss in the
trading value of the securities, if any, and a risk that the credit rating of the securities is
lowered or withdrawn. The covenants contained in the Indentures and the Deed of Trust will not
afford holders of the securities protection in the event of a highly-leveraged transaction
involving Oncor.
|
|
It may be difficult to realize the value of the Collateral securing the securities. |
Each of the assets and facilities that will be included in the Collateral is subject to the
same kinds of risks as are described under Risk Factors in our 2010 Form 10-K. We cannot provide
any assurance that any of the necessary permits, certificates or other entitlements to operate
those assets and facilities would be transferable to the Trustee or any purchaser from the Trustee
in the event of a foreclosure upon that asset or facility. The Trustees ability to foreclose on
the Collateral on behalf of the holders of the securities may be subject to perfection, the consent
of third parties and, with respect to those assets that are subject to the jurisdiction of the
Public Utility Commission of Texas (PUCT) and the US Federal Energy Regulatory Commission (FERC),
the prior approval by the PUCT and the FERC. The Trustees ability to foreclose may also be subject
to priority issues and practical problems associated with the realization of the Trustees security
interest in the Collateral. We cannot assure holders of the securities that the consents of any
third parties and approvals by governmental entities will be given when required to implement a
foreclosure on such assets, especially if we are not in compliance with the underlying permits at
the time. Accordingly, the Trustee may not have the ability to foreclose upon those assets or
assume or transfer the right to operate those facilities, and a temporary shutdown of operations
may result and the value of the Collateral may significantly decrease. Even if the Trustee assumes
the right to operate the assets and facilities, there may also be practical problems associated
with the Trustees ability to identify a qualified operator to operate and maintain the assets and
facilities. In addition, future regulatory developments or other inabilities to obtain or comply
with required permits may adversely affect the value of the Collateral.
No appraisals of any Collateral have been prepared in connection with this offering. The value
of the Collateral at any time will depend on market and other economic conditions, including the
availability of suitable buyers for the Collateral. By their nature some or all of the pledged
assets may be illiquid and may have no readily ascertainable market value. We cannot assure holders
of the securities that the fair market value of the Collateral as of the date of this prospectus
exceeds the principal amount of the debt secured thereby. The value of the assets pledged as
Collateral for the securities could be impaired in the future as a result of changing economic
conditions, our failure to implement our business strategy, competition and other future trends.
|
|
Bankruptcy laws may limit your ability to realize value from the Collateral. |
The right of the Trustee to repossess and dispose of the Collateral upon the occurrence of an
event of default under the Indentures is likely to be significantly impaired by applicable
bankruptcy law if a bankruptcy case were to be commenced by or against us prior to the Trustee
having repossessed and disposed of, or otherwise exercised remedies in respect of, the Collateral.
Under the US bankruptcy code, a secured creditor is prohibited from repossessing its security from
a debtor in a bankruptcy case, or from disposing of security repossessed from such debtor, without
bankruptcy court approval. Moreover, the US bankruptcy code permits the debtor to continue to
retain and to use collateral even though the debtor is in default under the applicable debt
instrument, provided that the secured creditor is given adequate protection. The meaning of the
term adequate protection may vary according to circumstances, but it is intended in general to
protect the value of the secured creditors interest in the collateral and may include cash
payments or the granting of additional security, if and at such times as the court in its
discretion determines that the value of the secured creditors interest in the collateral is
declining during the pendency of the bankruptcy case. In view of the lack of a precise definition
of the term adequate protection and the broad discretionary powers of a bankruptcy court, it is
impossible to predict (1) how long payments under the securities could be delayed following the
commencement of a bankruptcy case, (2) whether or when the Trustee could repossess or
8
dispose of the Collateral and (3) whether or to what extent holders of the securities would be
compensated for any delay in payment or loss of value of the Collateral through the requirement of
adequate protection.
In the event a bankruptcy court determines the value of the Collateral is not sufficient to
repay all amounts due on the securities and any other obligations secured by the Collateral then
the holders of the securities and such other obligations would hold secured claims to the extent of
the value of the Collateral securing such claims, and would hold unsecured claims with respect to
any shortfall. Applicable federal bankruptcy laws do not permit the payment and/or accrual of
post-petition interest, costs and attorneys fees during a debtors bankruptcy case unless the
claims are oversecured or the debtor is solvent at the time of reorganization. In addition, if we
were to become the subject of a bankruptcy case, the bankruptcy trustee or debtor may seek to avoid
certain pre-petition transfers made by us, including transfers held to be preferences or fraudulent
conveyances. While transfers to secured creditors are generally not preferential, transfers to
undersecured creditors may be subject to avoidance.
|
|
Any future pledges of Collateral may be avoidable. |
Any further pledge of Collateral in favor of the Trustee may be avoidable by the pledgor (as
debtor-in-possession) or by its trustee in bankruptcy or other third parties if certain events or
circumstances exist or occur, such that the pledge or granting of the security interest is deemed a
fraudulent conveyance or preference.
|
|
The Trustees ability to exercise remedies with respect to Collateral is limited. |
The Deed of Trust provides the Trustee on behalf of the holders of the securities with
significant remedies, including foreclosures and sale of all or parts of the Collateral. However,
the rights of the Trustee to exercise significant remedies (such as foreclosure) are, subject to
certain exceptions, generally limited to a payment default, bankruptcy of Oncor or the acceleration
of the indebtedness.
|
|
Proceeds from any sale of the Collateral upon foreclosure may be insufficient to repay the
securities in full. |
We cannot assure you that the net proceeds from a sale of the Collateral owned directly by us
securing the securities would be sufficient to repay all of the securities following a foreclosure
upon the Collateral or a liquidation of our assets.
The value of the Collateral and the amount to be received upon a sale of the Collateral will
depend upon many factors including, among others, the condition of the Collateral, the ability to
sell the Collateral in an orderly sale, the condition of the national and local economies, the
availability of buyers and similar factors. The book value of the Collateral should not be relied
on as a measure of realizable value for these assets. By their nature, portions of the Collateral
may be illiquid and may have no readily ascertainable market value. In addition, a significant
portion of the Collateral includes assets that may only be usable, and thus retain value, as part
of our existing business operations. Accordingly, any sale of the Collateral separate from the sale
of our business operations may not be feasible or of significant value.
Additionally, applicable law requires that every aspect of any foreclosure or other
disposition of Collateral be commercially reasonable. If a court were to determine that any
aspect of the Trustees exercise of remedies was not commercially reasonable, the ability of the
Trustee and the holders of the securities to recover the difference between the amount realized
through such exercise of remedies and the amount owed on the securities may be adversely affected
and, in the worst case, the holders of the securities could lose all claims for such deficiency
amount.
9
FORWARD-LOOKING STATEMENTS
This prospectus, including the information incorporated by reference into this prospectus,
contains forward-looking statements. All statements, other than statements of historical facts,
that are included in or incorporated by reference into this prospectus, or made in presentations,
in response to questions or otherwise, that address activities, events or developments that we
expect or anticipate to occur in the future including such matters as projections, capital
allocation, future capital expenditures, business strategy, competitive strengths, goals, future
acquisitions or dispositions, development or operation of facilities, market and industry
developments and the growth of our business and operations (often, but not always, through the use
of words or phrases such as will likely result, are expected to, will continue, is
anticipated, estimated, should, projection, target, goal, objective and outlook),
are forward-looking statements. Although we believe that in making any such forward-looking
statement its expectations are based on reasonable assumptions, any such forward-looking statement
involves uncertainties and is qualified in its entirety by reference to the discussion of risk
factors under Risk Factors in this prospectus and in our 2010 Form 10-K, and the following
important factors, among others, that could cause actual results to differ materially from those
projected in such forward-looking statements:
|
|
|
prevailing governmental policies and regulatory actions, including those of the Texas
Legislature, the Governor of Texas, the FERC, the PUCT, the North American
Electric Reliability Corporation, the Texas Reliability Entity, Inc., the
US Environmental Protection Agency, and the Texas Commission on Environmental Quality, with
respect to: |
|
|
|
allowed rate of return; |
|
|
|
|
permitted capital structure; |
|
|
|
|
industry, market and rate structure; |
|
|
|
|
recovery of investments; |
|
|
|
|
acquisitions and disposals of assets and facilities; |
|
|
|
|
operation and construction of facilities; |
|
|
|
|
changes in tax laws and policies, and |
|
|
|
|
changes in and compliance with environmental and safety laws and policies; |
|
|
|
legal and administrative proceedings and settlements; |
|
|
|
|
weather conditions and other natural phenomena; |
|
|
|
|
acts of sabotage, wars or terrorist activities; |
|
|
|
|
economic conditions, including the impact of a recessionary environment; |
|
|
|
|
unanticipated population growth or decline, or changes in market demand and demographic patterns; |
|
|
|
|
changes in business strategy, development plans or vendor relationships; |
|
|
|
|
unanticipated changes in interest rates or rates of inflation; |
|
|
|
|
unanticipated changes in operating expenses, liquidity needs and capital expenditures; |
|
|
|
|
inability of various counterparties to meet their financial obligations to us, including
failure of counterparties to perform under agreements; |
|
|
|
|
general industry trends; |
|
|
|
|
hazards customary to the industry and the possibility that we may not have adequate
insurance to cover losses resulting from such hazards; |
|
|
|
|
changes in technology used by and services offered by us; |
|
|
|
|
significant changes in our relationship with its employees, including the availability
of qualified personnel, and the potential adverse effects if labor disputes or grievances
were to occur; |
|
|
|
|
changes in assumptions used to estimate costs of providing employee benefits, including
pension and other postretirement employee benefits, and future funding requirements related
thereto; |
|
|
|
|
significant changes in critical accounting policies material to us; |
|
|
|
|
commercial bank and financial market conditions, access to capital, the cost of such
capital, and the results of financing and refinancing efforts, including availability of
funds in the capital markets and the potential impact of disruptions in US credit markets; |
|
|
|
|
circumstances which may contribute to future impairment of goodwill, intangible or other
long-lived assets; |
|
|
|
|
financial restrictions under our revolving credit facility and indentures governing its
debt instruments; |
|
|
|
|
our ability to generate sufficient cash flow to make interest payments on its debt
instruments; |
|
|
|
|
actions by credit rating agencies, and |
|
|
|
|
our ability to effectively execute its operational strategy. |
Any forward-looking statement speaks only as of the date on which it is made, and we undertake
no obligation to update any forward-looking statement to reflect events or circumstances after the
date on which it is made or to reflect the occurrence of unanticipated events. New factors emerge
from time to time, and it is not possible for us to predict all of them;
10
nor can we assess the impact of each such factor or the extent to which any factor, or
combination of factors, may cause results to differ materially from those contained in any
forward-looking statement.
INDUSTRY AND MARKET INFORMATION
The industry and market data and other statistical information used throughout this prospectus
are based on independent industry publications, government publications, reports by market research
firms or other published independent sources, including certain data published by Electric
Reliability Council of Texas, the independent system operator and the regional coordinator of the
various electricity systems within Texas. We did not commission any of these publications or
reports. Some data is also based on our good faith estimates, which are derived from our review of
internal surveys, as well as the independent sources listed above. Independent industry
publications and surveys generally state that they have obtained information from sources believed
to be reliable, but do not guarantee the accuracy and completeness of such information. While we
believe that each of these studies and publications is reliable, we have not independently verified
such data and we make no representation as to the accuracy of such information. Forecasts are
particularly likely to be inaccurate, especially over long periods of time, and we do not know what
assumptions regarding general economic growth are used in preparing the forecasts included in this
prospectus. Similarly, while we believe that our internal and external research is reliable, it has
not been verified by any independent sources and we make no assurances that the predictions
contained therein are accurate.
USE OF PROCEEDS
This prospectus may be delivered in connection with the resale of the securities by the Market
Maker and its affiliates in market-making transactions in the securities in the secondary market.
We will not receive any of the proceeds from such resales.
11
DESCRIPTION OF THE SECURITIES
General
The 2012 notes, 2015 notes, 2032 notes and 2033 notes (collectively, the May 2002 Indenture
securities) are issued under the May 2002 Indenture. The 2013 notes, 2018 notes, 2038 notes and the
debentures (collectively, the August 2002 Indenture securities) are issued under the August 2002
Indenture. The applicable Indenture and an officers certificate relating to the respective
securities (collectively, Officers Certificates) establish the terms of each series of the
securities. The securities are a series of debt securities that we may issue under the Indentures.
We refer to the securities and all other debt securities issued under the Indentures, collectively
as Debt Securities. We refer to the Debt Securities issued or that may be issued in the future
under the May 2002 Indenture as the May 2002 Indenture Debt Securities, and the Debt Securities
issued or that may be issued in the future under the August 2002 Indenture as the August 2002
Indenture Debt Securities. The Indentures permit Oncor to issue an unlimited amount of Debt
Securities from time to time, subject to certain limitations under the Indentures and the Deed of
Trust. See Deed of Trust Securing Additional Obligations, May 2002 Indenture
Limitation on Secured Debt and August 2002 Indenture Limitation on Secured Debt below. All
Debt Securities of any one series need not be issued at the same time, and a series may be reopened
for issuances of additional Debt Securities of such series. This means that we may from time to
time, without the consent of the existing holders of the securities of any series, create and issue
further Debt Securities having the same terms and conditions as the securities in all respects,
except for issue date, issue price and, if applicable, the initial interest payment on such Debt
Securities. Additional Debt Securities issued in this manner will be consolidated with, and will
form a single series with, the applicable series of securities.
The Indentures, the Officers Certificates for each series of securities and the Deed of Trust
contain the full legal text of the matters described in this section. Because this section is a
summary, it does not describe every aspect of the securities or the Indentures or the Deed of
Trust. This summary is subject to and qualified in its entirety by reference to all the provisions
of the Indentures, the Officers Certificates and the Deed of Trust, including definitions of
certain terms used therein. We also include references in parentheses to certain sections of the
Indentures and the Deed of Trust. Whenever we refer to particular sections or defined terms of the
Indentures or the Deed of Trust in this prospectus, those sections or defined terms are
incorporated by reference herein.
The securities and other Debt Securities issued under the Indentures will rank equally with
all of our other senior indebtedness that is secured by the Collateral. As of December 31, 2010, the aggregate amount of our secured
indebtedness outstanding was $5.208 billion, which includes $383 million of short-term debt
outstanding under our revolving credit facility. Our secured indebtedness does not include $667
million, as of December 31, 2010, of transition bonds issued by Oncor Electric Delivery Transition
Bond Company LLC, Oncors bankruptcy-remote financing subsidiary, which transition bonds are not
secured by the Collateral.
Each series of securities is represented by one or more global certificates, issued in fully
registered form and registered in the name of Cede & Co., as registered owner and as nominee for
DTC. DTC acts as securities depository for the securities, with certain exceptions. Purchases of
beneficial interests in these global certificates will be made in book-entry form. See Book-Entry
Settlement and Clearance below.
The securities may be transferred without charge, other than for applicable taxes or other
governmental charges, at The Bank of New York Mellon, New York, New York.
May 2002 Indenture
Maturity and Interest
The 2012 notes will mature on May 1, 2012, the 2015 notes will mature on January 15, 2015, the
2032 notes will mature on May 1, 2032 and the 2033 notes will mature on January 15, 2033. Interest
on the May 2002 Indenture securities of each series will:
|
|
|
be payable in US dollars at the rate of 6.375% with respect to the 2012 notes, 6.375% with
respect to the 2015 notes, 7.000% with respect to the 2032 notes, and 7.250% with respect to
the 2033 notes; |
|
|
|
|
be computed for each interest period on the basis of a 360 day year consisting of twelve
30 day months, and with respect to any period less than a full month, on the basis of the
actual number of days elapsed during the period; |
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be payable semi-annually in arrears on (1) January 15 and July 15 of each year, for the
2015 notes and the 2033 notes, and (2) May 1 and November 1 of each year, for the 2012 notes
and the 2032 notes, and in each case, at maturity; |
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accrue from, and including the last interest payment date of each of the May 2002
Indenture securities; and |
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be paid to the persons in whose names the May 2002 Indenture securities are registered at
the close of business on the record date for such May 2002 Indenture securities, as set forth
in the applicable Officers Certificate for the May 2002 Indenture securities of each series.
Oncor shall not be required to make transfers or exchanges of the May 2002 Indenture
securities for a period of 15 days before an interest payment date. |
The covenants contained in the May 2002 Indenture will not afford holders of the May 2002
Indenture securities protection in the event of a highly-leveraged transaction involving Oncor.
Optional Redemption
We may redeem the May 2002 Indenture securities, in whole or in part, at our option, at any
time prior to their maturity. We will give notice of our intent to redeem any May 2002 Indenture
securities at least 30 days prior to the redemption date. If we redeem all or any part of the May
2002 Indenture securities, we will pay a make-whole redemption price equal to the greater of
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100% of the principal amount of the May 2002 Indenture securities being redeemed; or |
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the sum of the present values of the remaining scheduled payments of principal and
interest on the May 2002 Indenture securities of the series being redeemed, discounted to the
redemption date on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day
months, at the Treasury Rate plus (1). 25% with respect to the 2012 notes, (2). 30% with
respect to the 2015 notes and 2032 notes, and (3). 35% with respect to the 2033 notes, |
plus, in each case, accrued interest to the redemption date on the May 2002 Indenture securities
being redeemed.
Treasury Rate means, with respect to any redemption date, the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue, expressed as a percentage of its principal amount, equal to the
Comparable Treasury Price for such redemption date.
Comparable Treasury Issue means the United States Treasury security selected by the
Independent Investment Banker as having a maturity comparable to the remaining term of the May 2002
Indenture securities to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the May 2002 Indenture securities.
Comparable Treasury Price means, with respect to any redemption date, (1) the average of the
bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of
its principal amount, on the third business day preceding such redemption date, as set forth in the
H.15 Daily Update of the Federal Reserve Bank or (2) if such release, or any successor release, is
not published or does not contain prices on such business day, the Reference Treasury Dealer
Quotation actually obtained by the Trustee for such redemption date.
H.15(519) means the weekly statistical release entitled H.15 (519) Selected Interest
Rates, or any successor publication, published by the Board of Governors of the Federal Reserve
System.
H.15 Daily Update means the daily update of H.15(519) available through the worldwide
website of the Board of Governors of the Federal Reserve System or any successor site or
publication.
Independent Investment Banker means the Reference Treasury Dealer.
Reference Treasury Dealer means Credit Suisse Securities (USA) LLC, with respect to the 2012
notes and the 2032 notes, and Merrill Lynch Government Securities, Inc., with respect to the 2015
notes and the 2033 notes, and their respective successors; provided, however, that if the
foregoing shall cease to be a primary US Government securities dealer in New York City (a Primary
Treasury Dealer), Oncor shall substitute therefor another Primary Treasury Dealer.
Reference Treasury Dealer Quotation means, with respect to the Reference Treasury Dealer and
any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted
in writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date.
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If, at the time notice of redemption is given, the redemption moneys are not held by the
Trustee, the redemption may be made subject to their receipt on or before the date fixed for
redemption and the notice shall be of no effect unless the moneys are so received.
Upon payment of the redemption price, on and after the redemption date interest will cease to
accrue on the May 2002 Indenture securities or portions thereof called for redemption.
Payment and Paying Agents
Interest on each May 2002 Indenture security payable on any interest payment date will be paid
to the person in whose name that note is registered at the close of business on the regular record
date for that interest payment date. However, interest payable at maturity will be paid to the
person to whom the principal is paid. If there has been a default in the payment of interest on
any May 2002 Indenture security, the defaulted interest may be paid to the holder of that May 2002
Indenture security as of the close of business on a date between 10 and 15 days before the date
proposed by Oncor for payment of such defaulted interest or in any other manner permitted by any
securities exchange on which that note may be listed, if the Trustee finds it workable. (May 2002
Indenture, Section 307.)
Principal, premium, if any, and interest on the May 2002 Indenture securities at maturity will
be payable upon presentation of the May 2002 Indenture securities at the corporate trust office of
The Bank of New York Mellon (formerly The Bank of New York), in The City of New York, as paying
agent for Oncor. However, Oncor may choose to make payment of interest by check mailed to the
address of the persons entitled to the payment. Oncor may change the place of payment on the May
2002 Indenture securities, appoint one or more additional paying agents, including Oncor, and
remove any paying agent, all at the discretion of Oncor. (May 2002 Indenture, Section 702.)
Registration and Transfer
The transfer of May 2002 Indenture securities may be registered, and such notes may be
exchanged for other securities of the same series or tranche, of authorized denominations and with
the same terms and principal amount, at the offices of the Trustee in New York, New York. (May
2002 Indenture, Section 305.) Oncor may designate one or more additional places, or change the
place or places previously designated, for registration of transfer and exchange of such May 2002
Indenture securities. (May 2002 Indenture, Section 702.) No service charge will be made for any
registration of transfer or exchange of such May 2002 Indenture securities. However, Oncor may
require payment to cover any tax or other governmental charge that may be imposed in connection
with a registration of transfer or exchange. Oncor will not be required to execute or to provide
for the registration, transfer or exchange of
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any May 2002 Indenture security during the 15 days before an interest payment date; |
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any May 2002 Indenture security during the 15 days before giving any notice of redemption;
or |
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any May 2002 Indenture security selected for redemption except the unredeemed portion of
any May 2002 Indenture security being redeemed in part. |
(May 2002 Indenture, Section 305.)
Defeasance
We will be discharged from our obligations on the May 2002 Indenture securities of a
particular series if we irrevocably deposit with the Trustee or any paying agent, other than Oncor,
sufficient cash or government securities to pay the principal, interest, any premium and any other
sums when due on the stated maturity date or a redemption date of that series of May 2002 Indenture
securities. (May 2002 Indenture, Section 801.)
Security
The May 2002 Indenture securities were initially secured by a lien on substantially all of
Oncors tangible electric transmission and distribution property located in Texas. This lien was
terminated effective as of October 25, 2005. Effective May 15, 2008, the May 2002 Indenture
securities were secured equally and ratably with Additional Secured Debt pursuant to
the Deed of Trust. The provisions of the Deed of Trust relating to the lien of the Deed of
Trust are described below under Deed of Trust.
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Additional Secured Debt means Debt under the Credit Agreement and the August 2002 Indenture
and any future Debt secured by the Deed of Trust.
Credit Agreement means the Revolving Credit Agreement, dated as of October 10, 2007, among
Oncor, JPMorgan Chase Bank, N.A., Citibank, N.A. and the other banks party thereto.
Debt means:
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our indebtedness for borrowed money evidenced by a bond, debenture, note or other written
instrument or agreement by which we are obligated to repay this borrowed money; |
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any guaranty by us of any such indebtedness of another person; and |
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any Capitalized Lease Liabilities of Oncor. |
Debt does not include, among other things:
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indebtedness under any installment sale or conditional sale agreement or any other
agreement relating to indebtedness for the deferred purchase price of property or services; |
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any trade obligations, including any obligations under power or other commodity purchase
agreements and any associated hedges or derivatives, or other obligations in the ordinary
course of business; |
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obligations under any lease agreement that are not Capitalized Lease Liabilities; or |
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any liens securing indebtedness, neither assumed nor guaranteed by us nor on which we
customarily pay interest, existing upon real estate or rights in or relating to real estate
acquired by us for substation, transmission line, transportation line, distribution line or
right of way purposes. |
Capitalized Lease Liabilities means the amount, if any, shown as liabilities on our
unconsolidated balance sheet for capitalized leases of electric transmission and distribution
property not owned by us, which amount shall be determined in accordance with generally accepted
accounting principles and practices applicable to the type of business in which we are engaged.
Limitation on Secured Debt
So long as any of the May 2002 Indenture Debt Securities remain outstanding, subject to the
limitations described under Deed of Trust Securing Additional Obligations, we will not
issue any Secured Debt other than Permitted Secured Debt, in each case as defined below, without
the consent of the holders of a majority in principal amount of the outstanding May 2002 Indenture
Debt Securities of all series with respect to which this covenant is made, considered as one class;
provided, however, that this covenant will not prohibit the creation or existence of any Secured
Debt if either:
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we make effective a provision whereby all May 2002 Indenture securities and other affected
May 2002 Indenture Debt Securities then outstanding will be secured equally and ratably with
this Secured Debt; or |
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we deliver to the Trustee bonds, notes or other evidences of indebtedness secured by the
lien which secures this Secured Debt in an aggregate principal amount equal to the aggregate
principal amount of the May 2002 Indenture securities and other affected May 2002 Indenture
Debt Securities then outstanding and meeting the other requirements set forth in the May 2002
Indenture. |
Secured Debt means Debt created, issued, incurred or assumed by Oncor which is secured by a
lien upon any of our property, other than Excepted Property (as defined in the May 2002 Indenture).
For purposes of this covenant, any Capitalized Lease Liabilities of ours will be deemed to be Debt
secured by a lien on our property.
Permitted Secured Debt means, as of any particular time:
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Secured Debt which matures less than one year from the date of the issuance or incurrence
and is not extendible at the option of the issuer; and any refundings, refinancings and/or
replacements of any such Secured Debt by or with |
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Secured Debt that matures less than one year from the date of such refunding,
refinancing and/or replacement and is not extendible at the option of the issuer; |
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Secured Debt secured by Purchase Money Liens (as defined in the May 2002 Indenture) or any
other liens existing or placed upon property at the time of, or within one hundred eighty
(180) days after, the acquisition thereof by Oncor, and any refundings, refinancings and/or
replacements of any such Secured Debt; provided, however, that no such Purchase Money Lien or
other lien shall extend to or cover any of Oncors property other than (1) the property so
acquired and improvements, extensions and additions to such property and renewals,
replacements and substitutions of or for the property or any part or parts of the property
and (2) with respect to Purchase Money Liens, other property subsequently acquired by Oncor; |
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Secured Debt relating to governmental obligations the interest on which is not included in
gross income for purposes of federal income taxation pursuant to Section 103 of the Internal
Revenue Code of 1986, as amended (the Code), or any successor provision of law, for the
purpose of financing or refinancing, in whole or in part, costs of acquisition or
construction of property to be used by Oncor, to the extent that the lien which secures the
Secured Debt is required either by applicable law or by the issuer of such governmental
obligations or is otherwise necessary in order to establish or maintain the exclusion from
gross income; and any refundings, refinancings and/or replacements of any Secured Debt by or
with similar Secured Debt; |
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Secured Debt (1) which is related to the construction or acquisition of property not
previously owned by Oncor or (2) which is related to the financing of a project involving the
development or expansion of Oncors property and (3) in either case, the obligee in respect
of which has no recourse to Oncor or any of Oncors property other than the property
constructed or acquired with the proceeds of such transaction or the project financed with
the proceeds of such transaction or the proceeds of such property or such project; and any
refundings, refinancings and/or replacements of any such Secured Debt by or with Secured Debt
described in clause (3) above; and |
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in addition to the Permitted Secured Debt described above, Secured Debt not otherwise so
permitted in an aggregate principal amount not exceeding the greater of 10% of our Net
Tangible Assets or 10% of our Capitalization. |
Net Tangible Assets means the amount shown as total assets on our unconsolidated balance
sheet, less (1) intangible assets including, but without limitation, such items as goodwill,
trademarks, trade names, patents, unamortized debt discount and expense and other regulatory assets
carried as assets on our unconsolidated balance sheet and (2) appropriate adjustments, if any, on
account of minority interests. Net Tangible Assets shall be determined in accordance with
generally accepted accounting principles and practices applicable to the type of business in which
we are engaged.
Capitalization means the total of all the following items appearing on, or included in, our
unconsolidated balance sheet; (1) liabilities for indebtedness maturing more than 12 months from
the date of determination, and (2) common stock, common stock expense, accumulated other
comprehensive income or loss, preferred stock, preference stock, premium on common stock and
retained earnings (however the foregoing may be designated), less, to the extent not otherwise
deducted, the cost of shares of our capital stock held in treasury, if any. Capitalization shall
be determined in accordance with generally accepted accounting principles and practices applicable
to the type of business in which we are engaged, and may be determined as of the date not more than
60 days prior to the happening of the event for which the determination is being made.
(May 2002 Indenture, Section 707.)
Consolidation, Merger and Conveyance of Assets
Under the terms of the May 2002 Indenture, we may not consolidate with or merge into any other
entity or convey, transfer or lease as or substantially as an entirety to any entity our Electric
Utility Property, unless:
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the surviving or successor entity, or an entity which acquires by conveyance or transfer
or which leases the Electric Utility Property of Oncor as or substantially as, an entirety,
is organized and validly existing under the laws of any domestic jurisdiction and it
expressly assumes our obligations on all Debt Securities then outstanding under the May 2002
Indenture; |
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in the case of a lease, the lease is made expressly subject to termination by us or by the
Trustee and by the purchaser of the property so leased at any sale thereof at any time during
the continuance of an event of default under the May 2002 Indenture;
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we will have delivered to the Trustee an officers certificate and an opinion of counsel
as provided in the May 2002 Indenture; and |
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immediately after giving effect to the transaction, no event of default under the May 2002
Indenture, or event which, after notice or lapse of time or both, would become an event of
default under the May 2002 Indenture, shall have occurred and be continuing. |
(May 2002 Indenture, Section 1201.)
In the case of the conveyance or other transfer of the Electric Utility Property as or
substantially as an entirety to any other person, upon the satisfaction of all the conditions
described above we would be released and discharged from all obligations under the May 2002
Indenture and on the May 2002 Indenture Debt Securities then outstanding unless we elect to waive
the release and discharge. (May 2002 Indenture, Section 1204.)
The May 2002 Indenture does not prevent or restrict:
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any conveyance or other transfer, or lease, of any part of our Electric Utility Property
which does not constitute the entirety, or substantially the entirety, thereof (May 2002
Indenture, Section 1205); or |
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any conveyance, transfer or lease of any of our properties where we retain Electric
Utility Property with a fair value in excess of 143% of the aggregate principal amount of all
outstanding May 2002 Indenture Debt Securities, and any other outstanding debt securities
that rank equally with, or senior to, the May 2002 Indenture Debt Securities with respect to
such Electric Utility Property. This fair value will be determined within 90 days of the
conveyance, transfer or lease by an independent expert that we select and that is approved by
the Trustee. (May 2002 Indenture, Section 1206.) |
Electric Utility Property means Oncors transmission and distribution properties of the type
subject to the lien of the May 2002 Indenture, regardless of whether the lien of the May 2002
Indenture has been released, but exclusive of certain excepted property. (May 2002 Indenture,
Section 1204).
The terms of the May 2002 Indenture do not restrict Oncor in a merger in which Oncor is the
surviving entity. (May 2002 Indenture, Section 1205.)
Highly Leveraged Transactions
The covenants in the May 2002 Indenture will not afford the holders of the securities
protection in the event of a highly leveraged transaction involving Oncor.
Events of Default
Event of default, when used in the May 2002 Indenture with respect to the May 2002 Indenture
Debt Securities, means any of the following:
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failure to pay interest on any May 2002 Indenture Debt Security for 30 days after it is
due; |
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failure to pay the principal of or any premium on any May 2002 Indenture Debt Security
when due; |
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failure to perform any other covenant in the May 2002 Indenture that continues for 90 days
after Oncor receives written notice from the Trustee, or Oncor and the Trustee receive a
written notice from the holders of at least 33% in aggregate principal amount of the
outstanding May 2002 Indenture Debt Securities; |
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events of bankruptcy, insolvency or reorganization of Oncor specified in the May 2002
Indenture; |
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sale or transfer of all or any part of the Collateral in a foreclosure of the lien on the
Collateral which secures the May 2002 Indenture Debt Securities and other Secured Debt (other
than Permitted Secured Debt); or |
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any other event of default included in any supplemental indenture or officers certificate
for a particular series of May 2002 Indenture Debt Securities. |
(May 2002 Indenture, Sections 901, 1301 and 1307.)
Remedies
If an event of default under the May 2002 Indenture occurs and is continuing, then the Trustee
or the holders of at least 33% in aggregate principal amount of the outstanding May 2002 Indenture
Debt Securities may declare the principal amount of all of the May 2002 Indenture Debt Securities
to be due and payable immediately.
At any time after a declaration of acceleration has been made and before a judgment or decree
for payment of the money due has been obtained by the Trustee, the event of default under the May
2002 Indenture giving rise to the declaration of acceleration will be considered cured, and the
declaration and its consequences will be considered rescinded and annulled, if:
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We have paid or deposited with the Trustee a sum sufficient to pay: |
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all overdue interest on all outstanding May 2002 Indenture Debt Securities; |
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the principal of and premium, if any, on the outstanding May 2002 Indenture Debt
Securities that have become due otherwise than by such declaration of acceleration and
overdue interest thereon; |
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interest on overdue interest to the extent lawful; and |
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all amounts due to the Trustee under the May 2002 Indenture; and |
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any other event of default under the May 2002 Indenture with respect to the May 2002
Indenture Debt Securities of that series has been cured or waived as provided in the May 2002
Indenture. |
(May 2002 Indenture, Section 902.)
There is no automatic acceleration, even in the event of bankruptcy, insolvency or
reorganization of Oncor.
Additional event of default remedies exist in the Deed of Trust, as described below under
Deed of Trust Event of Default Remedies.
Except as otherwise required by the Trust Indenture Act of 1939, as amended (TIA), the Trustee
is not obligated to exercise any of its rights or powers under the May 2002 Indenture at the
request, order or direction of any of the holders, unless the holders offer the Trustee a
reasonable indemnity. (May 2002 Indenture, Section 1003.) If they provide this reasonable
indemnity, the holders of a majority in principal amount of the outstanding May 2002 Indenture Debt
Securities will have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any power conferred upon the Trustee. The
Trustee is not obligated to comply with directions that conflict with law or other provisions of
the May 2002 Indenture. (May 2002 Indenture, Section 912.)
No holder of May 2002 Indenture Debt Securities will have any right to institute any
proceeding under the May 2002 Indenture, or any remedy under the May 2002 Indenture, unless:
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the holder has previously given to the Trustee written notice of a continuing event of
default under the May 2002 Indenture; |
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the holders of a majority in aggregate principal amount of the outstanding May 2002
Indenture Debt Securities of all series have made a written request to the Trustee, and have
offered reasonable indemnity to the Trustee to institute proceedings; and |
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the Trustee has failed to institute any proceeding for 60 days after notice and has not
received during such period any direction from the holders of a majority in aggregate
principal amount of the outstanding May 2002 Indenture Debt Securities, inconsistent with the
written request of the holders referred to above. |
(May 2002 Indenture, Section 907.)
However, these limitations do not apply to a suit by a holder of a May 2002 Indenture Debt
Security for payment of the principal, premium, if any, or interest on the May 2002 Indenture Debt
Security on or after the applicable due date. (May 2002 Indenture, Section 908.)
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We will provide to the Trustee an annual statement by an appropriate officer as to our
compliance with all conditions and covenants under the May 2002 Indenture. (May 2002 Indenture,
Section 705.)
Modification and Waiver
Without the consent of any holder of the May 2002 Indenture Debt Securities, we and the
Trustee may enter into one or more supplemental indentures for any of the following purposes:
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to evidence the assumption by any permitted successor of the covenants of Oncor in the May
2002 Indenture and in the May 2002 Indenture Debt Securities; |
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to add one or more covenants or other provisions for the benefit of the holders of all or
any series or tranche of May 2002 Indenture Debt Securities, or to surrender any right or
power conferred upon Oncor; |
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to add additional events of default under the May 2002 Indenture for all or any series of
the May 2002 Indenture Debt Securities; |
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to change or eliminate or add any provision to the May 2002 Indenture; provided, however,
if the change will adversely affect the interests of the holders of May 2002 Indenture Debt
Securities of any series in any material respect, the change, elimination or addition will
become effective only: |
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when the consent of the holders of May 2002 Indenture Debt Securities of such
series has been obtained in accordance with the May 2002 Indenture; or |
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when no May 2002 Indenture Debt Securities of the affected series remain
outstanding under the May 2002 Indenture; |
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to provide additional security for any May 2002 Indenture Debt Securities; |
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to establish the form or terms of May 2002 Indenture Debt Securities of any other series
as permitted by the May 2002 Indenture; |
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to provide for the authentication and delivery of bearer securities with or without
coupons; |
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to evidence and provide for the acceptance of appointment by a separate or successor
Trustee or co-trustee; |
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to provide for the procedures required for use of a noncertificated system of registration
for the May 2002 Indenture Debt Securities of all or any series; |
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to change any place where principal, premium, if any, and interest shall be payable, May
2002 Indenture Debt Securities may be surrendered for registration of transfer or exchange
and notices to us may be served; |
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to amend and restate the May 2002 Indenture as originally executed and as amended from
time to time, with such additions, deletions and other changes that do not adversely affect
the interests of the holders of May 2002 Indenture Debt Securities of any series in any
material respect; or |
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to cure any ambiguity or inconsistency. |
(May 2002 Indenture, Section 1301.)
The holders of at least a majority in aggregate principal amount of the May 2002 Indenture
Debt Securities of all series then outstanding may waive compliance by us with some restrictive
provisions of the May 2002 Indenture. (May 2002 Indenture, Section 706.) The holders of not less
than a majority in principal amount of the outstanding May 2002 Indenture Debt Securities may waive
any past default under the May 2002 Indenture, except a default in the payment of principal,
premium, if any, or interest and the covenants and provisions of the May 2002 Indenture that cannot
be modified or be amended without the consent of the holder of each outstanding May 2002 Indenture
Debt Security of any series affected. (May 2002 Indenture, Section 913.)
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The consent of the holders of a majority in aggregate principal amount of the May 2002
Indenture Debt Securities of all series then outstanding, considered as one class, is required for
all other modifications to the May 2002 Indenture. However, if less than all of the series of May
2002 Indenture Debt Securities outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the holders of a majority in aggregate principal amount of the
outstanding May 2002 Indenture Debt Securities of all series that are directly affected, considered
as one class, will be required. No such amendment or modification may without the consent of all
the holders of the May 2002 Indenture Debt Securities of all series then outstanding:
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change the stated maturity of the principal of, or any installment of principal of or
interest on, any May 2002 Indenture Debt Security, or reduce the principal amount of any May
2002 Indenture Debt Security or its rate of interest or change the method of calculating that
interest rate or reduce any premium payable upon redemption, or change the currency in which
payments are made, or impair the right to institute suit for the enforcement of any payment
on or after the stated maturity of any May 2002 Indenture Debt Security; |
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reduce the percentage in principal amount of the outstanding May 2002 Indenture Debt
Securities of any series the consent of the holders of which is required for any supplemental
indenture or any waiver of compliance with a provision of the May 2002 Indenture or any
default thereunder and its consequences, or reduce the requirements for quorum or voting; or |
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modify some of the provisions of the May 2002 Indenture relating to supplemental
indentures, waivers of some covenants and waivers of past defaults with respect to the May
2002 Indenture Debt Securities of any series. |
A supplemental indenture that changes the May 2002 Indenture solely for the benefit of one or
more particular series of May 2002 Indenture Debt Securities, or modifies the rights of the holders
of May 2002 Indenture Debt Securities of one or more series, will not affect the rights under the
May 2002 Indenture of the holders of the May 2002 Indenture Debt Securities of any other series.
(May 2002 Indenture, Section 1302.)
The May 2002 Indenture provides that May 2002 Indenture Debt Securities owned by us or anyone
else required to make payment on the May 2002 Indenture Debt Securities shall be disregarded and
considered not to be outstanding in determining whether the required holders have given a request
or consent. (May 2002 Indenture, Section 101.)
We may fix in advance a record date to determine the required number of holders entitled to
give any request, demand, authorization, direction, notice, consent, waiver or other such act of
the holders, but we shall have no obligation to do so. If we fix a record date, that request,
demand, authorization, direction, notice, consent, waiver or other act of the holders may be given
before or after that record date, but only the holders of record at the close of business on that
record date will be considered holders for the purposes of determining whether holders of the
required percentage of the outstanding May 2002 Indenture Debt Securities have authorized or agreed
or consented to the request, demand, authorization, direction, notice, consent, waiver or other act
of the holders. For that purpose, the outstanding May 2002 Indenture Debt Securities shall be
computed as of the record date.
Any request, demand, authorization, direction, notice, consent, election, waiver or other act
of a holder of any May 2002 Indenture Debt Security will bind every future holder of that May 2002
Indenture Debt Security and the holder of every May 2002 Indenture Debt Security issued upon the
registration of transfer of or in exchange for that May 2002 Indenture Debt Security. A transferee
will also be bound by acts of the Trustee or Oncor in reliance thereon, whether or not notation of
that action is made upon the May 2002 Indenture Debt Security. (May 2002 Indenture, Section 106.)
Resignation of a Trustee
The Trustee may resign at any time by giving written notice to us or may be removed at any
time by act of the holders of a majority in principal amount of all series of the May 2002
Indenture Debt Securities then outstanding delivered to the Trustee and us. No resignation or
removal of the Trustee and no appointment of a successor trustee will be effective until the
acceptance of appointment by a successor trustee. So long as no event of default or event which,
after notice or lapse of time, or both, would become an event of default has occurred and is
continuing and except with respect to a trustee appointed by act of the holders, if Oncor has
delivered to the Trustee a resolution of its Board of Directors appointing a successor trustee and
such successor has accepted the appointment in accordance with the terms of the May 2002 Indenture,
the Trustee will be deemed to have resigned and the successor will be deemed to have been appointed
as trustee in accordance with the May 2002 Indenture. (May 2002 Indenture, Section 1010.)
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Notices
Notices to holders of May 2002 Indenture securities will be given by mail to the addresses of
such holders as they may appear in the security register for May 2002 Indenture securities. (May
2002 Indenture, Section 108.)
Title
Oncor, the Trustee, and any agent of Oncors or the Trustee, may treat the person in whose
name May 2002 Indenture securities are registered as the absolute owner thereof, whether or not the
May 2002 Indenture securities may be overdue, for the purpose of making payments and for all other
purposes irrespective of notice to the contrary. (May 2002 Indenture, Section 308.)
Governing Law
The May 2002 Indenture and the May 2002 Indenture securities will be governed by, and
construed in accordance with, the laws of the State of New York except where otherwise required by
law. (May 2002 Indenture, Section 114.)
Information about the Trustee
The Trustee under the May 2002 Indenture is The Bank of New York Mellon (formerly The Bank of
New York). The Bank of New York Mellon also acts, and may act, as Collateral Agent under the Deed
of Trust and as trustee under various other indentures, trusts and guarantees of us and our
affiliates. We and our affiliates maintain deposit accounts and credit and liquidity facilities
and conduct other banking transactions with the trustee in the ordinary course of their businesses.
August 2002 Indenture
Maturity and Interest
The 2013 notes will mature on September 1, 2013, the 2018 notes will mature on September 1,
2018, the debentures will mature on September 1, 2022 and the 2038 notes will mature on September
1, 2038. Interest on the August 2002 Indenture securities will:
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be payable in US dollars at the rate of 5.950% with respect to the 2013 notes, 6.800% with
respect to the 2018 notes, 7.000% with respect to the debentures and 7.500% with respect to
the 2038 notes; |
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be computed for each interest period on the basis of a 360-day year consisting of twelve
30-day months, and with respect to any period less than a full month, on the basis of the
actual number of days elapsed during the period; |
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be payable semi-annually in arrears (1) on March 1 and September 1 of each year, for the
2013 notes, (2) on March 1 and September 1 of each year, for the 2018 notes, (3) on March 1
and September 1 of each year, for the debentures, and (4) on March 1 and September 1 of each
year, for the 2038 notes, and in each case, at maturity; |
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accrue from and including the most recent date to which interest has been paid, in the
case of the 2013 notes, the 2018 notes and the 2038 notes, and from the last interest payment
date, in the case of the debentures; and |
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be paid to the persons in whose names the August 2002 Indenture securities are registered
at the close of business on the record date for such August 2002 Indenture securities, as set
forth in the applicable Officers Certificate for the August 2002 Indenture securities. Oncor
shall not be required to make transfers or exchanges of the August 2002 Indenture securities
for a period of 15 days before an interest payment date. |
The covenants contained in the Indenture will not afford holders of the notes protection in
the event of a highly-leveraged transaction involving Oncor.
If any interest payment date, maturity date or redemption date falls on a day that is not a
business day, such interest payment date will be postponed to the next succeeding business day, and
no interest on such payment will accrue for the period from and after the interest payment date,
maturity date or redemption date to such next succeeding business day. The term business day
means, with respect to any security, any day, other than a Saturday or Sunday, which is not a day
on which banking institutions or trust companies in The City of New York are generally authorized
or required by law, regulation or executive order to remain closed.
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Optional Redemption
We may redeem the August 2002 Indenture securities, in whole or in part, at our option, at any
time prior to their maturity. We will give notice of our intent to redeem the August 2002 Indenture
securities at least 30 days prior to the redemption date. If we redeem all or any part of the
August 2002 Indenture securities, we will pay a make whole redemption price equal to the greater
of:
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100% of the principal amount of the August 2002 Indenture securities being redeemed; or |
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the sum of the present values of the remaining scheduled payments of principal and
interest (excluding the portion of any such interest accrued to the redemption date) on the
August 2002 Indenture securities being redeemed, discounted to the redemption date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus (1) 0.50%, with respect to the 2013 notes, the 2018 notes and the 2038
notes, and (2) 0.30%, with respect to the debentures; |
plus, in each case, accrued interest to the redemption date on the August 2002 Indenture
securities being redeemed.
Treasury Rate means, with respect to any redemption date, the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue, expressed as a percentage of its principal amount, equal to the
Comparable Treasury Price for such redemption date.
Comparable Treasury Issue means the United States Treasury security selected by the
Independent Investment Banker as having a maturity comparable to the remaining term of the August
2002 Indenture securities to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the August 2002 Indenture securities.
Comparable Treasury Price means, with respect to any redemption date, (1) the average of the
bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of
its principal amount, on the third business day preceding such redemption date, as set forth in the
H.15 Daily Update of the Federal Reserve Bank or (2) if such release, or any successor release, is
not published or does not contain prices on such business day, the Reference Treasury Dealer
Quotation actually obtained by the Trustee for such redemption date.
H.15 (519) means the weekly statistical release entitled H.15 (519) Selected Interest
Rates, or any successor publication, published by the Board of Governors of the Federal Reserve
System.
H.15 Daily Update means the daily update of H.15 (519) available through the worldwide
website of the Board of Governors of the Federal Reserve System or any successor site or
publication.
Independent Investment Banker means the Reference Treasury Dealer.
Reference Treasury Dealer means, with respect to the debentures, Barclays Capital Inc., and
with respect to the 2013 notes, the 2018 notes and the 2038 notes, a primary US Government
securities dealer in New York City appointed by Oncor.
Reference Treasury Dealer Quotation means, with respect to the Reference Treasury Dealer and
any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted
in writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date.
If, at the time notice of optional redemption is given, the redemption moneys are not held by
the Trustee, the redemption may be made subject to their receipt on or before the date fixed for
redemption and such notice will be of no effect unless such moneys are so received.
Upon payment of the redemption price, on and after the redemption date interest will cease to
accrue on the August 2002 Indenture securities or portions thereof called for redemption.
Payment and Paying Agents
Interest on each August 2002 Indenture security payable on any interest payment date will be
paid to the person in whose name that note is registered at the close of business on the regular
record date for that interest payment date. However, interest payable at maturity will be paid to
the person to whom the principal is paid. If there has been a default in the payment
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of interest on any August 2002 Indenture security, the defaulted interest may be paid to the holder
of that August 2002 Indenture security as of the close of business on a date between 10 and 15 days
before the date proposed by us for payment of such defaulted interest or in any other lawful manner
permitted by any securities exchange on which that August 2002 Indenture security may be listed, if
the Trustee finds it workable. (August 2002 Indenture, Section 307.)
Principal, premium, if any, and interest on the August 2002 Indenture securities at maturity
will be payable upon presentation of the August 2002 Indenture securities at the corporate trust
office of The Bank of New York Mellon, in The City of New York, as paying agent for Oncor. However,
we may choose to make payment of interest by check mailed to the address of the persons entitled to
such payment. We may change the place of payment on the August 2002 Indenture securities, appoint
one or more additional paying agents (including Oncor) and remove any paying agent, all at our
discretion. (August 2002 Indenture, Section 702.)
Registration and Transfer
The transfer of August 2002 Indenture securities may be registered, and such August 2002
Indenture securities may be exchanged for other securities of the same series or tranche of
authorized denominations and with the same terms and principal amount, at the offices of the
Trustee in New York, New York. (August 2002 Indenture, Section 305.) We may designate one or more
additional places, or change the place or places previously designated, for the registration of the
transfer and the exchange of the August 2002 Indenture securities. (August 2002 Indenture, Section
702.) No service charge will be made for any registration of transfer or exchange of the August
2002 Indenture securities. However, we may require payment to cover any tax or other governmental
charge that may be imposed in connection with such registration of transfer or exchange. We will
not be required to execute or to provide for the registration of transfer or the exchange of:
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any August 2002 Indenture security during the 15 days before an interest payment date; |
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any August 2002 Indenture security during the 15 days before giving any notice of
redemption; or |
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any August 2002 Indenture security selected for redemption in whole or in part except the
unredeemed portion of any August 2002 Indenture security being redeemed in part. |
(August 2002 Indenture, Section 305.)
Defeasance
We will be discharged from our obligations on the August 2002 Indenture securities if we
irrevocably deposit with the Trustee or any paying agent, other than Oncor, sufficient cash or US
government securities to pay the principal, interest and any premium when due on the stated
maturity date or a redemption date of that series of August 2002 Indenture securities. (August 2002
Indenture, Section 801.)
Security
The debentures were initially issued as unsecured debt securities. Effective May 15, 2008, the
debentures were secured equally and ratably with the Additional Secured Debt pursuant to the Deed
of Trust. The 2013 notes, 2018 notes and 2038 notes were issued as Secured Debt and have been
secured pursuant to the Deed of Trust since their issuance on September 8, 2008. The provisions of
the Deed of Trust relating to the lien of the Deed of Trust are described below under Deed of
Trust.
Additional Secured Debt means Debt under the Credit Agreement and the May 2002 Indenture and
any future Debt secured by the Deed of Trust.
Debt means:
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our indebtedness for borrowed money evidenced by a bond, debenture, note or other written
instrument or agreement by which we are obligated to repay such borrowed money; |
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any guaranty by us of any such indebtedness of another person; and |
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any Capitalized Lease Liabilities of Oncor. |
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Debt does not include, among other things:
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indebtedness under any installment sale or conditional sale agreement or any other
agreement relating to indebtedness for the deferred purchase price of property or services; |
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any trade obligations (including any obligations under power or other commodity purchase
agreements and any associated hedges or derivatives) or other obligations in the ordinary
course of business; |
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obligations under any lease agreement that are not Capitalized Lease Liabilities; or |
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any liens securing indebtedness, neither assumed nor guaranteed by us nor on which we
customarily pay interest, existing upon real estate or rights in or relating to real estate
acquired by us for substation, transmission line, transportation line, distribution line or
right-of-way purposes. |
Capitalized Lease Liabilities means the amount, if any, shown as liabilities on our
unconsolidated balance sheet for capitalized leases of electric transmission and distribution
property not owned by us, which amount will be determined in accordance with generally accepted
accounting principles and practices applicable to the type of business in which we are engaged.
Secured Debt means Debt created, issued, incurred or assumed by us which is secured by a
lien upon any of our property (other than Excepted Property (as defined in the August 2002
Indenture)). For purposes of this covenant, any Capitalized Lease Liabilities of ours will be
deemed to be Debt secured by a lien on our property.
Limitation on Secured Debt
So long as any of the August 2002 Indenture Debt Securities remain outstanding, subject to the
limitations described under Deed of Trust Securing Additional Obligations, we will not
issue any Secured Debt other than Permitted Secured Debt without the consent of the holders of a
majority in principal amount of the outstanding August 2002 Indenture Debt Securities of all series
with respect to which this covenant is made, considered as one class; provided, however, that this
covenant will not prohibit the creation or existence of any Secured Debt if either:
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we make effective a provision whereby all August 2002 Indenture securities and other
affected August 2002 Indenture Debt Securities then outstanding will be secured at least
equally and ratably with such Secured Debt; or |
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we deliver to the Trustee bonds, notes or other evidences of indebtedness secured by the
lien which secures such Secured Debt in an aggregate principal amount equal to the aggregate
principal amount of the August 2002 Indenture securities and other affected August 2002
Indenture Debt Securities then outstanding and meeting certain other requirements set forth
in the August 2002 Indenture. |
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Permitted Secured Debt means, as of any particular time:
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Secured Debt which matures less than one year from the date of the issuance or incurrence
and is not extendible at the option of the issuer; and any refundings, refinancings and/or
replacements of any such Secured Debt by or with similar Secured Debt that matures less than
one year from the date of such refunding, refinancing and/or replacement and is not
extendible at the option of the issuer; |
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Secured Debt secured by Purchase Money Liens (as defined in the August 2002 Indenture) or
any other liens existing or placed upon property at the time of, or within one hundred eighty
(180) days after, the acquisition thereof by us, and any refundings, refinancings and/or
replacements of any such Secured Debt; provided, however, that no such Purchase Money Lien or
other lien will extend to or cover any of our property other than (1) the property so
acquired and improvements, extensions and additions to such property and renewals,
replacements and substitutions of or for the property or any part or parts of the property
and (2) with respect to Purchase Money Liens, other property subsequently acquired by us; |
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Secured Debt relating to governmental obligations the interest on which is not included in
gross income for purposes of federal income taxation pursuant to Section 103 of the Code (or
any successor provision of law), for the purpose of
financing or refinancing, in whole or in part, costs of acquisition or construction of
property to be used by us, to the extent that the lien which secures the Secured Debt is
required either by applicable law or by the issuer of such |
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governmental obligations or is otherwise necessary in order to establish or maintain the
exclusion from gross income; and any refundings, refinancings and/or replacements of any
Secured Debt by or with similar Secured Debt; |
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Secured Debt (1) which is related to the construction or acquisition of property not
previously owned by us or (2) which is related to the financing of a project involving the
development or expansion of our property and (3) in either case, the obligee in respect of
which has no recourse to us or any of our property other than the property constructed or
acquired with the proceeds of such transaction or the project financed with the proceeds of
such transaction (or the proceeds of such property or such project); and any refundings,
refinancings and/or replacements of any such Secured Debt by or with Secured Debt described
in (3) above; and |
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in addition to the Permitted Secured Debt described above, Secured Debt not otherwise so
permitted in an aggregate principal amount not exceeding the greater of 10% of our Net
Tangible Assets or 10% of our Capitalization. |
Net Tangible Assets means the amount shown as total assets on our unconsolidated balance
sheet, less (1) intangible assets including, but without limitation, such items as goodwill,
trademarks, trade names, patents, unamortized debt discount and expense and other regulatory assets
carried as assets on our unconsolidated balance sheet and (2) appropriate adjustments, if any, on
account of minority interests. Net Tangible Assets will be determined in accordance with generally
accepted accounting principles and practices applicable to the type of business in which we are
engaged.
Capitalization means the total of all the following items appearing on, or included in, our
unconsolidated balance sheet: (1) liabilities for indebtedness maturing more than 12 months from
the date of determination and (2) common stock, common stock expense, accumulated other
comprehensive income or loss, preferred stock, preference stock, premium on common stock and
retained earnings (however the foregoing may be designated), less, to the extent not otherwise
deducted, the cost of shares of our capital stock held in our treasury, if any. Capitalization will
be determined in accordance with generally accepted accounting principles and practices applicable
to the type of business in which we are engaged, and may be determined as of the date not more than
60 days prior to the happening of the event for which the determination is being made.
(August 2002 Indenture, Section 707.)
Consolidation, Merger and Sale of Assets
Under the terms of the August 2002 Indenture, we may not consolidate with or merge into any
other entity or convey, transfer or lease our Electric Utility Property as an entirety or
substantially as an entirety to any entity, unless:
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the surviving or successor entity, or an entity which acquires by conveyance or transfer
or which leases the Electric Utility Property of Oncor as an entirety or substantially as an
entirety is organized and existing under the laws of any domestic jurisdiction and it
expressly assumes our obligations on all Debt Securities then outstanding under the August
2002 Indenture; |
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in the case of a lease, such lease is made expressly subject to termination by us or by
the Trustee and by the purchaser of the property so leased at any sale thereof at any time
during the continuance of an event of default under the August 2002 Indenture; |
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we will have delivered to the Trustee an officers certificate and an opinion of counsel
as provided in the August 2002 Indenture; and |
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immediately after giving effect to the transaction, no event of default under the August
2002 Indenture, or event which, after notice or lapse of time or both, would become an event
of default under the August 2002 Indenture, has occurred and is continuing. |
(August 2002 Indenture, Section 1201.)
In the case of the conveyance or other transfer of the Electric Utility Property as or
substantially as an entirety to any other entity, upon the satisfaction of all the conditions
described above Oncor would be released and discharged from all obligations and covenants under the
August 2002 Indenture and on the August 2002 Indenture Debt Securities then outstanding unless
Oncor elects to waive such release and discharge. (August 2002 Indenture, Section 1203.)
The August 2002 Indenture does not prevent or restrict:
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any conveyance or other transfer, or lease, of any part of our Electric Utility Property
which does not constitute the entirety, or substantially the entirety, thereof, or |
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any conveyance, transfer or lease of any of our properties where we retain Electric
Utility Property with a fair value in excess of 143% of the aggregate principal amount of all
outstanding August 2002 Indenture Debt Securities, and any other outstanding debt securities
that rank equally with, or senior to, the August 2002 Indenture Debt Securities with respect
to such Electric Utility Property. This fair value will be determined within 90 days of the
conveyance, transfer or lease by an independent expert that is approved by the Trustee. |
(August 2002 Indenture, Section 1205.)
Electric Utility Property means property of Oncor which is comprised of substantially all
tangible properties of Oncor in Texas used or useful or to be used in connection with the
transmission and distribution of electric energy, exclusive of certain excepted property. (August
2002 Indenture, Section 101.)
The terms of the August 2002 Indenture do not restrict Oncor in a merger in which Oncor is the
surviving entity. (August 2002 Indenture, Section 1204.)
Highly Leveraged Transactions
The covenants in the August 2002 Indenture will not afford the holders of the securities
protection in the event of a highly leveraged transaction involving Oncor.
Events of Default
Event of default, when used in the August 2002 Indenture with respect to August 2002
Indenture Debt Securities, means any of the following:
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failure to pay interest on any August 2002 Indenture Debt Security for 30 days after it is
due and payable; |
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failure to pay the principal of or any premium on any August 2002 Indenture Debt Security
when due and payable; |
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failure to perform or breach of any other covenant or warranty in the August 2002
Indenture that continues for 90 days after Oncor receives written notice from the Trustee, or
Oncor and the Trustee receive a written notice from the holders of at least 33% in aggregate
principal amount of the outstanding August 2002 Indenture Debt Securities; |
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events of bankruptcy, insolvency or reorganization of Oncor specified in the August 2002
Indenture; |
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sale or transfer of all or any part of the Collateral in a foreclosure of the lien on the
Collateral which secures the August 2002 Indenture Debt Securities and other Secured Debt
(other than Permitted Secured Debt); or |
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any other event of default included in any supplemental indenture or officers certificate
for a particular series of August 2002 Indenture Debt Securities. |
(August 2002 Indenture, Sections 901, 1301 and 1307.)
Remedies
If an event of default under the August 2002 Indenture occurs and is continuing, then the
Trustee or the holders of at least 33% in aggregate principal amount of the outstanding August 2002
Indenture Debt Securities may declare the principal amount of all of the August 2002 Indenture Debt
Securities to be due and payable immediately.
At any time after a declaration of acceleration has been made and before a judgment or decree
for payment of the money due has been obtained by the Trustee, the event or events of default under
the August 2002 Indenture giving rise to the declaration of acceleration will be considered cured,
and the declaration and its consequences will be considered rescinded and annulled, if:
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We have paid or deposited with the Trustee a sum sufficient to pay: |
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all overdue interest on all outstanding August 2002 Indenture Debt Securities; |
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the principal of and premium, if any, on the outstanding August 2002 Indenture
Debt Securities that have become due otherwise than by such declaration of acceleration
and overdue interest thereon; |
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interest on overdue interest to the extent lawful; and |
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all amounts due to the Trustee under the August 2002 Indenture; and |
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any other event of default under the August 2002 Indenture with respect to the August 2002
Indenture Debt Securities of a particular series has been cured or waived as provided in the
August 2002 Indenture. |
(August 2002 Indenture, Section 902.)
There is no automatic acceleration, even in the event of bankruptcy, insolvency or
reorganization of Oncor.
Additional event of default remedies exist in the Deed of Trust, as described below under
Deed of Trust Event of Default Remedies.
Except as otherwise required by the TIA, the Trustee is not obligated to exercise any of its
rights or powers under the August 2002 Indenture at the request, order or direction of any of the
holders, unless the holders offer the Trustee a reasonable indemnity. (August 2002 Indenture,
Section 1003.) If they provide this reasonable indemnity, the holders of a majority in principal
amount of the outstanding August 2002 Indenture Debt Securities will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to the Trustee, or
exercising any power conferred upon the Trustee with respect to such August 2002 Indenture Debt
Securities. The Trustee is not obligated to comply with directions that conflict with law or other
provisions of the August 2002 Indenture. (August 2002 Indenture, Section 912.)
No holder of August 2002 Indenture Debt Securities will have any right to institute any
proceeding under the August 2002 Indenture, for the appointment of a receiver or trustee, or for
any other remedy under the August 2002 Indenture, unless:
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the holder has previously given to the Trustee written notice of a continuing event of
default under the August 2002 Indenture; |
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the holders of a majority in aggregate principal amount of the outstanding August 2002
Indenture Debt Securities have made a written request to the Trustee to institute proceedings
in respect of the event of default under the August 2002 Indenture in its own name as Trustee
under the August 2002 Indenture; |
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such holder or holders have offered reasonable indemnity to the Trustee to institute
proceedings; |
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the Trustee has failed to institute any proceeding for 60 days after notice, request and
offer of indemnity; and |
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the Trustee has not received during such period any direction from the holders of a
majority in aggregate principal amount of the outstanding August 2002 Indenture Debt
Securities inconsistent with the written request of the holders referred to above. |
(August 2002 Indenture, Section 907.)
However, these limitations do not apply to a suit by a holder of an August 2002 Indenture Debt
Security for payment of the principal, premium, if any, or interest on the August 2002 Indenture
Debt Security on or after the applicable due date. (August 2002 Indenture, Section 908.)
We will provide to the Trustee an annual statement by an appropriate officer as to our
compliance with all conditions and covenants under the August 2002 Indenture. (August 2002
Indenture, Section 705.)
Modification and Waiver
Without the consent of any holder of August 2002 Indenture Debt Securities, Oncor and the
Trustee may enter into one or more supplemental indentures for any of the following purposes:
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to evidence the assumption by any permitted successor of the covenants of Oncor in the
August 2002 Indenture and in the August 2002 Indenture Debt Securities; |
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to add one or more covenants of Oncor or other provisions for the benefit of the holders
of all or any series or tranche of August 2002 Indenture Debt Securities, or to surrender any
right or power conferred upon Oncor; |
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to add additional events of default under the August 2002 Indenture for all or any series
of outstanding August 2002 Indenture Debt Securities; |
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to change or eliminate or add any provision to the August 2002 Indenture; provided,
however, that if the change, elimination or addition will adversely affect the interests of
the holders of outstanding August 2002 Indenture Debt Securities of any series or tranche in
any material respect, it will become effective only: |
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when the consent of the holders of August 2002 Indenture Debt Securities of such
series has been obtained in accordance with the August 2002 Indenture; or |
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when no August 2002 Indenture Debt Securities of the affected series remain
outstanding under the August 2002 Indenture; |
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to provide additional security for any August 2002 Indenture Debt Securities; |
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to establish the form or terms of August 2002 Indenture Debt Securities of any other
series or tranche as permitted by the August 2002 Indenture; |
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to provide for the authentication and delivery of bearer securities with or without
coupons; |
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to evidence and provide for the acceptance of appointment by a separate or successor
Trustee; |
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to provide for the procedures required for use of a non-certificated system of
registration for the August 2002 Indenture Debt Securities of all or any series or tranche; |
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to change any place where principal, premium, if any, and interest will be payable, August
2002 Indenture Debt Securities may be surrendered for registration of transfer or exchange,
and notices to Oncor may be served; |
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to amend and restate the August 2002 Indenture, as originally executed and as amended from
time to time, with such additions, deletions and other changes that do not adversely affect
the interests of the holders of August 2002 Indenture Debt Securities in any material
respect; or |
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to cure any ambiguity or inconsistency. |
(August 2002 Indenture, Section 1301.)
The holders of at least a majority in aggregate principal amount of the August 2002 Indenture
Debt Securities of all series and tranches then outstanding may waive compliance by Oncor with some
restrictive provisions of the August 2002 Indenture. (August 2002 Indenture, Section 706.) The
holders of not less than a majority in principal amount of the outstanding August 2002 Indenture
Debt Securities may waive any past default under the August 2002 Indenture, except a default in the
payment of principal, premium, if any, or interest, if any, and certain covenants and provisions of
the August 2002 Indenture that cannot be modified or be amended without the consent of the holder
of each outstanding August 2002 Indenture Debt Security of any series or tranche affected. (August
2002 Indenture, Section 913.)
If the TIA is amended after the date of the August 2002 Indenture or the Deed of Trust, as
applicable, in such a way as to require changes to the August 2002 Indenture or the Deed of Trust,
the August 2002 Indenture or the Deed of Trust, as applicable, will be deemed to be amended so as
to conform to that amendment to the TIA. Oncor and the Trustee may, without the consent of any
holders, enter into one or more supplemental indentures to evidence the amendment. (August 2002
Indenture, Section 1301; Deed of Trust, Section 7.1(f).)
The consent of the holders of a majority in aggregate principal amount of the August 2002
Indenture Debt Securities of all series then outstanding, considered as one class, is required for
all other modifications to the August 2002 Indenture. However, if less than all of the series of
August 2002 Indenture Debt Securities outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the holders of a majority in aggregate principal amount of the
outstanding August 2002 Indenture Debt Securities of all series that are directly affected,
considered as one class, will be required. If less than all of the tranches of August 2002
Indenture Debt Securities outstanding are directly affected by a proposed supplemental indenture,
then the consent only of the holders of a majority in aggregate principal amount of the outstanding
August 2002 Indenture Debt Securities of all tranches that are directly affected, considered as one
class, will be
required. No such amendment or modification may, without the consent of the holder of each
outstanding August 2002 Indenture Debt Security of each series or tranche so directly affected:
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change the stated maturity of the principal of, or any installment of principal of or
interest on, any August 2002 Indenture Debt Security, or reduce the principal amount of any
August 2002 Indenture Debt Security or its rate of interest or change the method of
calculating that interest rate or reduce any premium payable upon redemption, or change the
currency in which payments are made, or impair the right to institute suit for the
enforcement of any payment on or after the stated maturity of any August 2002 Indenture Debt
Security; |
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reduce the percentage in principal amount of the outstanding August 2002 Indenture Debt
Securities of any series or tranche the consent of the holders of which is required for any
supplemental indenture or any waiver of compliance with a provision of the August 2002
Indenture or any default thereunder and its consequences, or reduce the requirements for
quorum or voting; or |
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modify some of the provisions of the August 2002 Indenture relating to supplemental
indentures, waivers of some covenants and waivers of past defaults with respect to the August
2002 Indenture Debt Securities of any series or tranche. |
(August 2002 Indenture, Section 1302.)
A supplemental indenture that changes or eliminates any covenant or other provision of the
August 2002 Indenture which has expressly been included solely for the benefit of the holders of,
or which is to remain in effect only so long as there will be outstanding, August 2002 Indenture
Debt Securities of one or more particular series, or one or more tranches thereof, or modifies the
rights of the holders of August 2002 Indenture Debt Securities of such series or tranches with
respect to such covenant or other provision, will be deemed not to affect the rights under the
August 2002 Indenture of the holders of August 2002 Indenture Debt Securities of any other series
or tranche. (August 2002 Indenture, Section 1302.)
The August 2002 Indenture provides that August 2002 Indenture Debt Securities owned by us or
anyone else required to make payment on the August 2002 Indenture Debt Securities or their
respective affiliates will be disregarded and considered not to be outstanding in determining
whether the required holders have given a request or consent. (August 2002 Indenture, Section 101.)
We may fix in advance a record date to determine the holders entitled to give any request,
demand, authorization, direction, notice, consent, waiver or other such act of the holders, but we
will have no obligation to do so. If we fix a record date, that request, demand, authorization,
direction, notice, consent, waiver or other such act of the holders may be given before or after
that record date, but only the holders of record at the close of business on that record date will
be considered holders for the purposes of determining whether holders of the required percentage of
the outstanding securities have authorized or agreed or consented to the request, demand,
authorization, direction, notice, consent, waiver or other such act of the holders. For that
purpose, the outstanding August 2002 Indenture Debt Securities will be computed as of the record
date. Any request, demand, authorization, direction, notice, consent, election, waiver or other
such act of a holder of any August 2002 Indenture Debt Security will bind every future holder of
that August 2002 Indenture Debt Security and the holder of every August 2002 Indenture Debt
Security issued upon the registration of transfer of or in exchange for that August 2002 Indenture
Debt Security. A transferee will also be bound by acts of the Trustee or us in reliance thereon,
whether or not notation of that action is made upon the August 2002 Indenture Debt Security.
(August 2002 Indenture, Section 104.)
Resignation of a Trustee
The Trustee may resign at any time by giving written notice to us or may be removed at any
time by act of the holders of a majority in principal amount of all series of August 2002 Indenture
Debt Securities then outstanding delivered to the Trustee and us. No resignation or removal of the
Trustee and no appointment of a successor trustee will be effective until the acceptance of
appointment by a successor trustee. So long as no event which is, or after notice or lapse of time,
or both, would become, an event of default has occurred and is continuing and except with respect
to a trustee appointed by act of the holders, if Oncor has delivered to the Trustee a resolution of
its Board of Directors appointing a successor trustee and such successor has accepted the
appointment in accordance with the terms of the August 2002 Indenture, the Trustee will be deemed
to have resigned and the successor will be deemed to have been appointed as trustee in accordance
with the August 2002 Indenture. (August 2002 Indenture, Section 1010.)
Notices
Notices to holders of the August 2002 Indenture securities will be given by mail to the
addresses of such holders as they may appear in the security register for the securities of that
series. (August 2002 Indenture, Section 106.)
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Title
Prior to due presentment of an August 2002 Indenture security for registration of transfer,
Oncor, the Trustee, and any agent of Oncor or the Trustee, may treat the person in whose name any
August 2002 Indenture security is registered as the absolute owner of that security, whether or not
such security may be overdue, for the purpose of making payments and for all other purposes
irrespective of notice to the contrary. (August 2002 Indenture, Section 308.)
Governing Law
The August 2002 Indenture and the August 2002 Indenture securities provide that they will be
governed by, and construed in accordance with, the laws of the State of New York, except to the
extent that the TIA is applicable and except to the extent that the law of the State of Texas
mandatorily governs. (August 2002 Indenture, Section 112.)
Information About the Trustee
The Trustee under the August 2002 Indenture is The Bank of New York Mellon. The Bank of New
York Mellon acts, and may act, as Collateral Agent under the Deed of Trust and as trustee under
various other indentures, trusts and guarantees of us and our affiliates. We and our affiliates
maintain deposit accounts and credit and liquidity facilities and conduct other commercial and
investment banking transactions with the Trustee and its affiliates in the ordinary course of their
businesses.
Deed of Trust
Security
Except as described below under this heading and under Securing Additional Obligations,
and subject to the exceptions discussed under Release of Collateral, all Debt Securities and
other secured indebtedness of Oncor (other than the transition bonds) issued under the Indentures
will be secured equally and ratably, by a lien on all of the Collateral, which consists of our
right, title and interest in and to all property, real, personal and mixed, wherever located,
including the following property (other than Excepted Property):
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all real property owned in fee, easements and other interests in real property which are
specifically described in the Deed of Trust; |
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all facilities, machinery, equipment and fixtures for the transmission and distribution of
electric energy, including, but not limited to, all switchyards, towers, substations,
transformers, poles, lines, cables, conduits, ducts, conductors, meters, regulators and all
other property used or to be used for any or all of those purposes; |
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all buildings, offices, warehouses, structures or improvements in addition to those
referred to or otherwise included in the previous two bullets; |
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all computers, data processing, data storage, data transmission and/or telecommunications
facilities, equipment and apparatus necessary for the operation or maintenance of any
facilities, machinery, equipment or fixtures described or referred to in the second bullet
point above; and |
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all of the property listed above in the process of construction. |
Excepted Property means among other things, the following types of property: (1) cash and
securities; (2) contracts, leases and other agreements of all kinds, contract rights, bills, notes
and other instruments and chattel paper; (3) all revenues, income and earnings, all accounts,
accounts receivable, rights to payment, payment intangibles and unbilled revenues, transition
property, and all rents, tolls, issues, product and profits, claims, credits, demands and
judgments; (4) governmental and other licenses, permits, franchises, consents and allowances; (5)
intellectual property rights and other general intangibles; (6) vehicles, movable equipment,
aircraft and vessels; (7) all goods, stock in trade, wares, merchandise and inventory held for sale
or lease in the ordinary course of business; (8) materials, supplies, inventory and other personal
property consumable in the operation of the Collateral; (9) fuel; (10) tools and equipment; (11)
furniture and furnishings; (12) computers and data processing, data storage, data transmission,
telecommunications and other facilities, equipment and apparatus, which, in any case, are used
primarily for administrative or clerical purposes or are otherwise not necessary for the operation
or maintenance of the facilities, machinery, equipment or fixtures that are part of the Collateral;
(13) coal, lignite, ore, gas, oil and other minerals and timber rights; (14) electric energy, gas,
steam, water and other products generated, produced, manufactured, purchased or otherwise acquired;
(15) real property and facilities used primarily for the production or
gathering of natural gas; (16) leasehold interests; (17) all property which is or has been
released from the Deed of Trust; (18) all property located outside of the State of Texas; (19) all
property and plants used by us in the generation of electricity; and
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(20) all property not acquired or constructed by us for use in our electric transmission and
distribution business. (Deed of Trust, Section 1.)
The Deed of Trust provides that, in general, after-acquired property, other than Excepted
Property, will constitute Collateral. (Deed of Trust, Section 1.)
As described above, the Debt Securities are secured by liens on the Collateral. At December
31, 2010, the net book value of the Collateral was approximately $9.1 billion. The Debt Securities
will be secured obligations of Oncor that will rank equally with all our outstanding senior
indebtedness that is secured by the Collateral. At December 31, 2010, Oncor had $5.208 billion
aggregate principal amount of secured debt outstanding, of which $383 million aggregate principal
amount was issued under our revolving credit facility pursuant to the Credit Agreement, and $4.825
billion in aggregate principal amount were senior secured notes and debentures, all of which are
secured by the Collateral. Our secured indebtedness does not include the transition bonds issued by
Oncor Electric Delivery Transition Bond Company LLC, Oncors bankruptcy-remote financing
subsidiary, with an outstanding principal balance of $667 million as of December 31, 2010. These
transition bonds are not secured by the Collateral.
Permitted Liens
The lien granted pursuant to the Deed of Trust is subject to permitted liens described in the
Indentures and the Credit Agreement. These permitted liens include (1) liens existing at the date
of the May 2002 Indenture; (2) liens on property at the time Oncor acquires the property; (3) tax
liens and other governmental charges which are not delinquent or which are being contested in good
faith; (4) liens incurred or created in connection with or to secure the performance of bids,
tenders, contracts, leases, statutory obligations, surety bonds or appeal bonds; (5) liens securing
indebtedness, neither assumed nor guaranteed by Oncor nor on which it customarily pays interest,
existing upon real estate or rights in or relating to real estate acquired by Oncor for any
substation, transmission line, transportation line, distribution line, right of way or similar
purpose; (6) mechanics and materialmens liens; (7) certain leases and leasehold interests; (8)
rights reserved to or vested in government authorities; (9) rights of others to take minerals,
timber, electric energy or capacity, gas, water, steam or other products produced by us or by
others on our property, rights and interests of persons other than Oncor arising out of agreements
relating to the common ownership or joint use of the property; (10) liens on the interests of
persons other than us in our property; (11) liens which have been bonded or for which other
security arrangements have been made; (12) purchase money liens and liens related to the
acquisition of property; (13) liens which secure obligations under the Indentures equally and
ratably with other secured obligations of Oncor; (14) liens on our property to secure debt for
borrowed money in an aggregate principal amount not exceeding the greater of 10% of our net
tangible assets or 10% of our capitalization; (15) rights reserved to or vested in any municipality
or public authority by the terms of any right, power, franchise, grant, license or permit, or by
any provision of law, to terminate such right, power, franchise, grant, license or permit or to
purchase or recapture or to designate a purchaser of any of the property of Oncor; (16) rights
reserved to or vested in any municipality or public authority to use, control or regulate any
property of Oncor; (17) any obligations or duties to any municipality or public authority with
respect to any franchise, grant, license or permit; (18) any controls, liens, restrictions,
regulations, easements, exceptions or reservations of any municipality or public authority applying
particularly to space satellites or nuclear fuel; (19) certain judgment liens; (20) any lien
arising by reason of deposits with or giving of any form of security to any governmental entity as
a condition to the transaction of any business or the exercise of any privilege or license; (21)
any landlords lien on fixtures or movable property so long as the rent secured thereby is not in
default and (22) certain easements, licenses, restrictions, defects, irregularities and certain
deficiencies in titles.
The Indentures provide that the Trustee will have a lien, prior to the lien on behalf of the
holders of the Debt Securities, upon the Collateral for the payment of its reasonable compensation
and expenses and for indemnity against certain liabilities. (Indentures, Section 1007.)
Excepted Property
The Collateral does not include Excepted Property. The Deed of Trust provides that, in
general, after-acquired property, other than Excepted Property, will constitute Collateral. (Deed
of Trust, Section 1.) However, property that is released from the Deed of Trust will not become
subject to the lien of the Deed of Trust unless and until we execute an amendment to the Deed of
Trust subjecting that property to such lien.
Release of Collateral
Unless an event of default under the Credit Agreement, the Indentures or any other
indebtedness secured by the Deed of Trust, has occurred and is continuing, we may obtain the
release from the lien of the Deed of Trust of any part of the Collateral, or any interest in the
Collateral, other than cash held by the Collateral Agent under the Deed of Trust (the
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Collateral Agent), upon delivery to the Collateral Agent of an amount in cash equal to the amount,
if any, by which the fair value (as determined under the Deed of Trust) of the Collateral exceeds
the aggregate of:
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an amount equal to the aggregate principal amount of any obligations secured by a purchase
money lien delivered to the Collateral Agent, to be held as part of the Collateral, subject
to the limitations in the Deed of Trust; |
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an amount equal to the cost (as determined under the Deed of Trust) or fair value to us
(whichever is less), after making any deductions and any Property Additions (as defined in
the Deed of Trust) not constituting Funded Property (as defined in the Deed of Trust), except
that such deductions and additions need not be made if the Property Additions were acquired
or made within the 90-day period preceding the release; |
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an amount equal to 23/20 of an aggregate principal amount of additional obligations that
we elect to secure under the Deed of Trust; provided that we waive the right to secure the
additional obligations and any Available Bond Credits (as defined below) which were the basis
of the right to secure such amount of those additional obligations will be deemed to have
been made the basis of such release of property; |
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an amount in cash and/or an amount equal to the aggregate principal amount of any
obligations secured by purchase money lien that, in either case, is evidenced to the
Collateral Agent by a certificate of the trustee or other holder of a lien prior to the lien
of the Deed of Trust to have been received by such trustee or other holder in accordance with
the provisions of the lien in consideration for the release of such property or any part
thereof from such lien, all subject to the limitations set forth in the Deed of Trust; and |
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any taxes and expenses incidental to any sale, exchange, dedication or other disposition
of the property to be released. (Deed of Trust, Section 20.2.) |
Unless an event of default under the Credit Agreement, the Indentures or any other
indebtedness secured by the Deed of Trust, has occurred and is continuing, Collateral which is not
Funded Property (as defined in the Deed of Trust) may generally be released from the lien of the
Deed of Trust without depositing any cash or property with the Collateral Agent as long as (1) the
aggregate amount of cost or fair value to us (whichever is less) of all property which does not
constitute Funded Property (excluding the property to be released) after certain deductions and
additions, including adjustments to offset property retirements, is not less than zero or (2) the
cost or fair value (whichever is less) of property to be released does not exceed the aggregate
amount of the cost or fair value to us (whichever is less) of property additions acquired or made
within the 90-day period preceding the release. (Deed of Trust, Section 20.3.)
The Deed of Trust provides simplified procedures for the release of minor properties and
property taken by eminent domain, and provides for dispositions of certain obsolete property
without any release or consent by the Collateral Agent. Under the Deed of Trust, a property is
considered minor if the aggregate fair value of such property on any date in a given calendar year,
together with all other minor properties released in the calendar year, does not exceed the greater
of (1) $10 million, or (2) 3% of the then outstanding aggregate principal amount of the obligations
secured by the Deed of Trust. (Deed of Trust, Sections 20.1, 20.4 and 20.5.)
If we retain an interest in any property released from the lien granted under the Deed of
Trust, the Deed of Trust will not become a lien on the property or an interest in the property or
any improvements, extensions or additions to the property or renewals, replacements or
substitutions of or for the property or any part or parts thereof unless we execute and deliver to
the Collateral Agent an amendment of the Deed of Trust containing a grant, conveyance, transfer and
mortgage thereof. (Deed of Trust, Section 20.9.)
Withdrawal or Other Application of Funded Cash; Purchase Money Obligations
Except as otherwise provided in the Deed of Trust, unless an event of default under the Credit
Agreement, the Indentures or any other indebtedness secured by the Deed of Trust, has occurred and
is continuing, any Funded Cash held by the Collateral Agent, and any other cash which is required
to be withdrawn, used or applied as provided below, may (1) be withdrawn by us (i) to the extent of
the cost or fair value to us (whichever is less) of Property Additions not constituting Funded
Property, after certain deductions and additions, including adjustments to offset retirements
(except that such adjustments need not be made if such property additions were acquired or made
within the 90-day period preceding the withdrawal); (ii) in an amount equal to the aggregate
principal amount of additional obligations we would be entitled to secure; and (iii) in an amount
equal to the aggregate principal amount of outstanding obligations delivered to the Collateral
Agent; (2) upon our request, be used by the Collateral Agent for the purchase or payment of
obligations as directed or
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approved by us; and (3) be applied by the Collateral Agent to the payment at maturity or redemption
of obligations. (Deed of Trust, Section 21.)
Securing Additional Obligations
The Collateral Agent will permit securing with Collateral additional obligations that Oncor
elects to secure under the Deed of Trust, at one time or from time-to-time in accordance with the
following:
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Additional obligations may be secured on the basis of Property Additions (which do not
constitute Funded Property) in a principal amount not exceeding 85% of the cost or the fair
value to Oncor of the Property Additions (whichever is less) after making certain deductions
and additions described in the Deed of Trust; |
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Additional obligations may be secured on the basis of, and in an aggregate principal
amount not exceeding the aggregate principal amount of, Available Bond Credits; and |
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Additional obligations may be secured on the basis of, and in an aggregate principal not
exceeding the amount of, any cash deposited with the Collateral Agent for such purpose. |
Any withdrawal of cash under the last bullet above will operate as a waiver by us of our right
to secure the obligations on which it is based, and those obligations may not be secured by the
Deed of Trust. Any Property Additions which have been made the basis of any such right to secure
additional obligations that we elect to secure under the Deed of Trust will be deemed to have been
made the basis of the withdrawal of such cash. Any Available Bond Credits which have been made the
basis of any such right to secure additional obligations that Oncor elects to secure under the Deed
of Trust will be deemed to have been made the basis of the withdrawal of such cash. (Deed of Trust,
Section 22.)
Available Bond Credits equaled approximately $1.386 billion as of December 31, 2010.
Available Bond Credits will be (1) increased by the principal amount of obligations (other than
obligations secured by the Deed of Trust) paid, retired or cancelled or for the payment of which
money has been deposited with the applicable secured party representative, and (2) decreased by the
principal amount of additional obligations that Oncor elects to secure under the Deed of Trust
pursuant to provisions described under this heading.
The amount of additional potential indebtedness that could be secured by Property Additions,
subject to appraisal and a certification process of such Property Additions, was $1.161 billion as
of December 31, 2010.
Event of Default Remedies
If an event of default under the Deed of Trust occurs and is continuing, the Collateral Agent
will, at the direction of the applicable secured party, proceed to protect and enforce its rights
and the rights of the secured parties by such judicial proceedings as the applicable secured party
designates to protect and enforce any such rights. Upon the occurrence and during the continuance
of any event of default under the Deed of Trust and subject to any applicable grace, notice and
cure provision of the Credit Agreement, the August 2002 Indenture or the May 2002 Indenture, on the
direction of the applicable secured party, the Collateral Agent will, at the direction of the
applicable secured party, sell all, but not less than all of the Collateral in accordance with the
procedures set forth in the Deed of Trust. In the event of any breach of the covenants, agreements,
terms or conditions of the Deed of Trust, the Collateral Agent, to the extent permitted by
applicable law and principles of equity, will be entitled to enjoin such breach and obtain specific
performance of any such covenant, agreement, term or condition and the Collateral Agent will have
the right to invoke any equitable right or remedy as though other remedies were not provided for in
the Deed of Trust. (Deed of Trust, Section 23.)
If an event of default under the Deed of Trust has occurred and, during the continuance of
such event of default, the Collateral Agent has commenced judicial proceedings to enforce any right
under the Deed of Trust, then the Collateral Agent will, to the extent permitted by law, be
entitled, as against Oncor, to the appointment of a receiver of the Collateral and subject to the
rights, if any, of others to receive collections from former, present or future customers of the
rents, issues, profits, revenues and other income thereof, and whether or not any receiver is
appointed, the Collateral Agent will be entitled to possession and control of, and to collect and
receive the income from cash, securities and other personal property held by the Collateral Agent
under the Deed of Trust and to all other remedies available to mortgagees and secured parties under
the Uniform Commercial Code or any other applicable law. (Deed of Trust, Section 24.)
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BOOK-ENTRY SETTLEMENT AND CLEARANCE
The securities are represented by one or more global certificates in registered form without
interest coupons (collectively, the global certificates). The global certificates have been
deposited with the Trustee as custodian for DTC in New York, New York, and registered in the name
of DTC or its nominee, in each case, for credit to an account of a direct or indirect participant
in DTC as described below.
Except as set forth below, the global certificates may be transferred, in whole and not in
part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests
in the global certificates may not be exchanged for definitive certificates in registered
certificated form (certificated securities) except in the limited circumstances described below.
See Exchange of Global Certificates for Certificated Securities. Except in the limited
circumstances described below, owners of beneficial interests in the global certificates will not
be entitled to receive physical delivery of notes in certificated form.
Transfers of beneficial interests in the global certificates will be subject to the applicable
rules and procedures of DTC and its direct or indirect participants (including, if applicable,
those of Euroclear Bank S.A./N.V., as operator of the Euroclear System (Euroclear), and Clearstream
Banking, Société Anonyme (Clearstream, Luxembourg), which may change from time to time.
Depository Procedures
The following description of the operations and procedures of DTC, Euroclear and Clearstream,
Luxembourg is provided solely as a matter of convenience. These operations and procedures are
solely within the control of the respective settlement systems and are subject to changes by them.
We take no responsibility for these operations and procedures and urge investors to contact the
system or their participants directly to discuss these matters.
DTC has advised us that DTC is a limited-purpose trust company organized under the laws of the
State of New York, a banking organization within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a clearing corporation within the meaning of the New York
Uniform Commercial Code and a clearing agency registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended (Exchange Act). DTC was created
to hold securities for its participating organizations (collectively, Participants) and to
facilitate the clearance and settlement of transactions in those securities between the
Participants through electronic book-entry changes in accounts of its Participants. The
Participants include securities brokers and dealers (including the placement agents), banks, trust
companies, clearing corporations and certain other organizations. Access to DTCs system is also
available to other entities such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or indirectly
(collectively, Indirect Participants). Persons who are not Participants may beneficially own
securities held by or on behalf of DTC only through the Participants or the Indirect Participants.
The ownership interests in, and transfers of ownership interests in, each security held by or on
behalf of DTC are recorded on the records of the Participants and Indirect Participants.
DTC has also advised us that, pursuant to procedures established by it:
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DTC will credit portions of the principal amount of the global certificates to the
accounts of the Participants; and |
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ownership of these interests in the global certificates will be shown on, and the
transfer of ownership of these interests will be effected only through, records maintained
by DTC (with respect to the Participants) or by the Participants and the Indirect
Participants (with respect to other owners of beneficial interests in the global
certificates). |
Investors in the global certificates who are Participants may hold their interests therein
directly through DTC. Investors in the global certificates who are not Participants may hold their
interests therein indirectly through organizations (including Euroclear and Clearstream,
Luxembourg) that are Participants. All interests in a global certificate, including those held
through Euroclear or Clearstream, Luxembourg, may be subject to the procedures and requirements of
DTC. Those interests held through Euroclear or Clearstream, Luxembourg may also be subject to the
procedures and requirements of such systems. The laws of some states require that certain persons
take physical delivery in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in a global certificate to such persons will be limited to that
extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect
Participants, the ability of a person having beneficial interests in a global certificate to pledge
such interests to persons that do not participate in the DTC system, or otherwise take actions in
respect of such interests, may be affected by the lack of a physical certificate evidencing such
interests.
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Except as described below, owners of interests in the global certificates will not have notes
registered in their names, will not receive physical delivery of notes in certificated form and
will not be considered the registered owners or holders thereof under the Indentures for any
purpose.
Payments in respect of the principal of, and interest and premium on, a global certificate
registered in the name of DTC or its nominee will be payable to DTC in its capacity as the
registered holder under the Indentures. Under the terms of the Indentures, we and the Trustee will
treat the persons in whose names the securities, including the global certificates, are registered
as the owners of the securities for the purpose of receiving payments and for all other purposes.
Consequently, neither we, the Trustee nor any agent of ours or the Trustee has or will have any
responsibility or liability for:
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any aspect of DTCs records or any Participants or Indirect Participants records
relating to, or payments made on account of, beneficial ownership interests in the global
certificates or for maintaining, supervising or reviewing any of DTCs records or any
Participants or Indirect Participants records relating to the beneficial ownership
interests in the global certificates; or |
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any other matter relating to the actions and practices of DTC or any of its Participants
or Indirect Participants. |
DTC has advised us that its current practice, upon receipt of any payment in respect of
securities such as the securities (including principal and interest), is to credit the accounts of
the relevant Participants with the payment on the payment date unless DTC has reason to believe
that it will not receive payment on such payment date. Each relevant Participant is credited with
an amount proportionate to its beneficial ownership of an interest in the principal amount of the
relevant security as shown on the records of DTC. Payments by the Participants and the Indirect
Participants to the beneficial owners of notes will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the Indirect Participants
and will not be our responsibility or the responsibility of DTC or the Trustee. Neither we nor the
Trustee will be liable for any delay by DTC or any of the Participants or the Indirect Participants
in identifying the beneficial owners of the securities, and we and the Trustee may conclusively
rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.
Transfers between the Participants will be effected in accordance with DTCs procedures and
will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream,
Luxembourg will be effected in accordance with their respective rules and operating procedures.
Cross-market transfers between the Participants, on the one hand, and Euroclear or
Clearstream, Luxembourg participants, on the other hand, will be effected through DTC in accordance
with DTCs rules on behalf of Euroclear or Clearstream, Luxembourg, as the case may be, by its
respective depositary. However, such cross-market transactions will require delivery of
instructions to Euroclear or Clearstream, Luxembourg, as the case may be, by the counterparty in
such system in accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or Clearstream, Luxembourg, as the case may be, will, if
the transaction meets its settlement requirements, deliver instructions to its respective
depositary to take action to effect final settlement on its behalf by delivering or receiving
interests in the relevant global certificate from DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Clearstream, Luxembourg participants may not deliver instructions directly to the
depositories for Euroclear or Clearstream, Luxembourg.
DTC has advised us that it will take any action permitted to be taken by a holder of notes
only at the direction of one or more Participants to whose account DTC has credited the interests
in the global certificates and only in respect of such portion of the aggregate principal amount of
the securities as to which such Participant or Participants has or have given such direction.
However, if there is an event of default under the securities, DTC reserves the right to exchange
the global certificates for legended notes in certificated form and to distribute such notes to its
Participants.
Although DTC, Euroclear and Clearstream, Luxembourg have agreed to the foregoing procedures to
facilitate transfers of interests in the global certificates among participants in DTC, Euroclear
and Clearstream, Luxembourg, they are under no obligation to perform or to continue to perform such
procedures, and may discontinue such procedures at any time. Neither we nor the Trustee nor any of
our or its agents will have any responsibility for the performance by DTC, Euroclear or
Clearstream, Luxembourg or their respective participants or indirect participants of their
respective obligations under the rules and procedures governing their operations.
Exchange of Global Certificates for Certificated Securities
A global certificate is exchangeable for certificated securities if DTC is unwilling or unable
to continue as depositary for the global certificates and a successor depositary is not appointed
by us within 90 days. Certificated securities delivered in
exchange for any global certificate or beneficial interests in global certificates will be
registered in the names, and issued in any approved denominations, requested by or on behalf of the
depositary (in accordance with its customary procedures).
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Same Day Settlement and Payment
We will make payments in respect of the securities represented by the global certificates
(including principal, interest and premium, if any) by wire transfer of immediately available funds
to the accounts specified by DTC or its nominee. We will make all payments of principal, interest
and premium, if any, with respect to certificated securities by wire transfer of immediately
available funds to the accounts specified by the holders of the certificated securities or, if no
such account is specified, by mailing a check to each such holders registered address. The
securities represented by the global certificates are expected to trade in DTCs Same-Day Funds
Settlement System, and any permitted secondary market trading activity in such notes will,
therefore, be required by DTC to be settled in immediately available funds. We expect that
secondary trading in any certificated securities will also be settled in immediately available
funds.
Because of time-zone differences, credits of interests in the global certificates received in
Clearstream, Luxembourg or Euroclear as a result of a transaction with a DTC Participant will be
made during subsequent securities settlement processing and dated the business day following the
DTC settlement date. Such credits or any transactions involving interests in such global
certificates settled during such processing will be reported to the relevant Clearstream,
Luxembourg or Euroclear participants on such business day. Cash received in Clearstream, Luxembourg
or Euroclear as a result of sales of interests in the global certificates by or through a
Clearstream, Luxembourg participant or a Euroclear Participant to a DTC Participant will be
received with value on the DTC settlement date but will be available in the relevant Clearstream,
Luxembourg or Euroclear cash account only as of the business day following settlement in DTC.
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SUMMARY OF MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material US federal income tax and, in the case of
non-US holders (as defined below) estate tax consequences of the ownership and disposition of the
securities by a beneficial holder of the securities who holds the securities as capital assets
within the meaning of section 1221 of the Code. This discussion is based upon the Code, existing
and proposed US Treasury Regulations and judicial decisions and administrative interpretations
thereof, all as of the date hereof and all of which are subject to change, possibly with
retroactive effect, or to different interpretations. We cannot assure you that the Internal Revenue
Service (IRS) will not challenge one or more of the tax consequences described herein. We have not
obtained, nor do we intend to obtain, a ruling from the IRS or an opinion of counsel with respect
to the US federal tax consequences of purchasing, owning or disposing of the securities.
This discussion does not address all US federal tax considerations that may be relevant to a
particular holder in light of the holders circumstances or to certain categories of investors that
may be subject to special rules, such as financial institutions, regulated investment companies,
real estate investment trusts, insurance companies, tax-exempt organizations, dealers in
securities, brokers, traders in securities that elect to mark-to-market their securities, persons
who hold the securities through partnerships or other pass-through entities, controlled foreign
corporations, passive foreign investment companies, US expatriates, US holders (as defined below)
whose functional currency for US tax purposes is not the US dollar or persons who hold the
securities as part of a hedge, conversion transaction, straddle or other integrated transaction.
This discussion also does not address US federal estate or gift tax consequences, except as
discussed below for non-US holders, or the tax considerations arising under the laws of any state,
local or foreign jurisdiction or under any applicable tax treaties.
This discussion is for general purposes only. It is not written to be, and it should not be
construed to be, tax or legal advice to any holder. You should consult your own tax advisor as to
the particular tax consequences to you of the purchase, ownership and disposition of the
securities, including the effect and applicability of state, local or foreign tax laws or tax
treaties and the possible effects of changes in the tax law.
As used herein, the term US holder means a beneficial owner of a security that is, for US
federal income tax purposes:
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an individual US citizen or resident alien; |
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a corporation, or other entity taxable as a corporation for US federal income tax
purposes, that was created or organized in or under the laws of the US, any state thereof or
the District of Columbia; |
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an estate the income of which is subject to US federal income taxation regardless of its
source; or |
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a trust, if (1) a court within the US can exercise primary supervision over the trust and
one or more US persons (as defined in the Code) have the authority to control all
substantial decisions of the trust, or (2) the trust was in existence on August 20, 1996,
and elected to be treated as a US person. |
As used herein, the term non-US holder means a beneficial owner of a security that is
neither a partnership for US federal income tax purposes nor a US holder.
If a partnership (including an entity taxable as a partnership for US federal income tax
purposes) holds securities, the tax treatment of the partnership and a partner in such partnership
generally will depend upon the status of the partner and upon the activities of the partnership. If
you are a partnership holding securities, or a partner in such a partnership, you should consult
your own tax advisor regarding the tax consequences associated with the purchase, ownership and
disposition of the securities.
US Holders
Payment of Interest
Interest paid on securities generally will be taxable to a US holder as ordinary interest
income at the time it accrues or is received in accordance with the US holders method of
accounting for US federal income tax purposes.
Additional Payments on the Securities
We may be required to pay additional amounts in certain circumstances described above under
the headings Description of the Securities May 2002 Indenture Optional Redemption and
Description of the Securities August 2002
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Indenture Optional Redemption. Because we believe that the likelihood that we will make
any such additional payments on the securities is remote or that another exception applies, we
intend to take the position that the securities will not be treated as contingent payment debt
instruments. Assuming our position is respected, a US holder would be required to include in
income such additional amounts at the time payments are received or accrued, in accordance with
such US holders method of accounting for US federal income tax purposes.
Our determination that the securities are not contingent payment debt instruments is not
binding on the IRS. If the IRS were to successfully challenge our determination and the securities
were treated as contingent payment debt instruments, US holders would be required, among other
things, to accrue interest income at a higher rate than the stated interest rate on the securities
and treat as ordinary income, rather than capital gain, any gain recognized on a sale or other
taxable disposition of the securities. Our determination that the securities are not contingent
payment debt instruments is binding on US holders unless they disclose their contrary positions to
the IRS in the manner that is required by applicable US Treasury Regulations.
The remainder of this discussion assumes that the securities will not be treated as contingent
payment debt instruments. Holders of the securities are urged to consult their own tax advisors
regarding the possible application of the contingent payment debt instrument rules to the
securities.
Market Discount
A US holder that acquires securities at a market discount, that is, at a price less than the
securities stated redemption price at maturity (generally, the sum of all payments required under
securities other than payments of stated interest), may be affected by the market discount rules of
the Code. Subject to a de minimis exception, the market discount rules generally require a US
holder who acquires securities at a market discount to treat any principal payment on the
securities and any gain recognized on any disposition of the securities as ordinary income to the
extent of the accrued market discount, not previously included in income, at the time of the
principal payment or the disposition of the securities. In general, the amount of market discount
that has accrued is determined on a straight-line basis over the remaining term of securities as of
the time of acquisition, or, at the election of the holder, on a constant yield basis. An election
to apply the constant yield method applies only to the securities with respect to which it is made
and it may not be revoked.
A US holder of the securities acquired at a market discount also may elect to include the
market discount in income as it accrues, rather than deferring the income inclusion until the time
of a principal payment or the disposition of the securities. If a US holder so elects, the rules
discussed above with respect to ordinary income recognition resulting from the payment of principal
on the securities or the disposition of the securities would not apply, and the holders tax basis
in the securities would be increased by the amount of the market discount included in income at the
time it accrues. This election would apply to all market discount obligations acquired by the US
holder on or after the first day of the first taxable year to which the election applies and could
not be revoked without the consent of the IRS.
A US holder may be required to defer until maturity of the securities (or, in certain
circumstances, its earlier disposition) the deduction of all or a portion of the interest expense
attributable to debt incurred or continued to purchase or carry the securities with market
discount, unless the holder elects to include market discount in income on a current basis.
Amortizable Bond Premium
If a US holder acquires the securities for a price that exceeds the securities stated
redemption price at maturity, the US holder generally will be considered to have acquired the
securities with amortizable bond premium. A US holder may elect to amortize amortizable bond
premium on a constant yield basis. The amount amortized in any year generally will be treated as a
deduction against the holders interest income on the securities. If the amortizable bond premium
allocable to a year exceeds the amount of interest income allocable to that year, the excess is
allowed as a deduction for that year but only to the extent of the holders prior inclusions of
interest income (net of any deductions for bond premium) with respect to the securities. The
premium on the securities held by a US holder that does not make the amortization election will
decrease the gain or increase the loss otherwise recognizable on the disposition of the securities.
The election to amortize the premium on a constant yield basis generally applies to all bonds held
or subsequently acquired by the electing holder on or after the first day of the first taxable year
to which the election applies and may not be revoked without the consent of the IRS.
Sale, Redemption or Other Taxable Disposition of the Securities
Upon the sale, redemption or other taxable disposition of the securities, a US holder will
generally recognize gain or loss in an amount equal to the difference between the amount of cash
plus the fair market value of any property received (not including any amount attributable to
accrued but unpaid interest not previously included in income, which will be taxable as
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ordinary interest income) and such US holders adjusted tax basis in the securities. A US
holders adjusted tax basis in the securities generally will be its cost, increased by any market
discount previously included in income and reduced by any amortized bond premium. Except as
discussed above with respect to market discount, gain or loss recognized on the sale, retirement or
other taxable disposition of the securities will be long-term capital gain or loss if the holder
held the securities for more than one year. The deductibility of capital losses is subject to
certain limitations.
Backup Withholding and Information Reporting for US Holders
A backup withholding tax (currently at a rate of 28%) and information reporting requirements
apply in the case of certain US holders (not including corporations and other exempt recipients) to
certain payments of principal and interest on the securities, and of the proceeds from the sale or
redemption of the securities. Backup withholding applies if a holder fails to provide certain
identifying information (such as a taxpayer identification number), has been notified by the IRS
that it is subject to backup withholding for failing to report interest income in full or fails to
meet certain certification requirements. An individuals taxpayer identification number is
generally the individuals Social Security number. Any amount withheld from a payment to a US
holder under the backup withholding rules will be allowed as a credit against the holders US
federal income tax liability and may entitle the holder to a refund, provided the required
information is properly and timely submitted to the IRS.
Additional Tax on Net Investment Income
Beginning in 2013, individuals (other than nonresident alien individuals), estates and trusts
may be subject to an additional 3.8% federal tax on, among other things, interest and capital gains
from the sale or other disposition of the securities if their modified adjusted gross income
exceeds certain threshold amounts. The income thresholds range from $125,000 for married
individuals filing separately to $250,000 for married individuals filing jointly. Holders of
securities should consult their own tax advisors regarding the effect, if any, of this new tax on
their ownership and disposition of the securities.
Non-US Holders
US Federal Withholding Tax
The 30% US federal withholding tax will not apply to any payment of interest on the securities
provided that:
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the non-US holder does not actually or constructively own 10% or more of the capital or
profits interests in us within the meaning of the Code and the US Treasury Regulations; |
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the non-US holder is not a controlled foreign corporation that is related to us through
stock ownership; |
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the non-US holder is not a bank whose receipt of interest on the securities is pursuant
to a loan agreement entered into in the ordinary course of business; |
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the non-US holder conducts a trade or business in the US and the interest paid on the
securities is effectively connected with its conduct of a US trade or business (and, if
required by an applicable income tax treaty, is also attributable to a US permanent
establishment); |
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the securities remain in registered form (See Book-Entry Settlement and Clearance
Exchange of Global Certificates for Certificated Securities); and |
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the non-US holder satisfies the certification requirements described below. |
To be exempt from the withholding tax, either:
(1) the non-US holder must certify under penalties of perjury on IRS Form W-8BEN that it is
not a US person and the non-US holder must provide its name, address and US taxpayer
identification number, if any;
(2) a securities clearing organization, bank or other financial institution holding the
securities on the non-US holders behalf must certify, under penalties of perjury, that it has
received a properly executed IRS Form W-8BEN from the non-US holder and it must provide us with a
copy; or
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(3) the non-US holder must hold its securities through a qualified intermediary, and the
qualified intermediary must have sufficient information in its files indicating that the non-US
holder is not a US holder. A qualified intermediary is a bank, broker or other intermediary that
is acting out of a non-US branch or office and has signed an agreement with the IRS providing
that it will administer all or part of the US tax withholding rules under specified procedures.
If the requirements described above are not satisfied, payments of interest made to the non-US
holder will be subject to the 30% US federal withholding tax, unless the non-US holder provides us
with a properly executed (1) IRS Form W-8BEN claiming an exemption from or a reduction of
withholding under an applicable tax treaty or (2) IRS Form W-8ECI stating that interest paid on the
securities is not subject to the withholding tax because it is effectively connected with the
non-US holders conduct of a trade or business in the US (and, if required by an applicable income
tax treaty, is also attributable to a US permanent establishment).
US Federal Income Tax
If a non-US holder is engaged in a trade or business in the US and interest on the securities
is effectively connected with the conduct of that trade or business (and, if required by an
applicable income tax treaty, is also attributable to a US permanent establishment), the non-US
holder will be subject to US federal income tax on the interest on a net basis at the regular
graduated US federal income tax rates in the same general manner as if it was a US person and the
30% withholding tax will not apply provided that the appropriate certification is furnished (as
described above). In addition, if a non-US holder is a corporation for US federal income tax
purposes, it may be subject to an additional branch profits tax equal to 30% (subject to any
exemption or lower rate that may be specified by an applicable tax treaty) of its earnings and
profits, including earnings and profits from an investment in the securities, that are effectively
connected with the non-US holders conduct of a trade or business in the US (and, if required by an
applicable income tax treaty, are also attributable to a US permanent establishment, subject to
certain adjustments).
Sale, Redemption or Other Taxable Disposition of the Securities
Any gain realized on the sale, redemption or other taxable disposition of the securities
generally will not be subject to US federal income tax unless:
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that gain is effectively connected with a non-US holders conduct of a trade or business
in the US (and, if required by an applicable income tax treaty, is also attributable to a
US permanent establishment); or |
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the non-US holder is an individual who is present in the US for 183 days or more in the
taxable year of disposition and certain other conditions are satisfied, in which case the
non-US holder will be taxed at a flat 30% rate on its net US source capital gain. |
Backup Withholding and Information Reporting for Non-US Holders
Payments to non-US holders of interest on the securities and amounts withheld from such
payments, if any, generally will be reported to the IRS and the non-US holders. Backup withholding
at the applicable rate (currently 28%) will not apply to payments of principal and interest on the
securities if a non-US holder provides us a properly executed IRS Form W-8BEN as described above
(or it otherwise qualifies for an exemption) provided that neither we nor our agent know or have
reason to know that the non-US holder is a US person or that the conditions of any other exemptions
are not in fact satisfied.
The payment of the proceeds of the disposition of securities to or through the US office of a
US or foreign broker will be subject to information reporting and backup withholding unless a
non-US holder timely provides the IRS Forms described above or it otherwise qualifies for an
exemption. The proceeds of a disposition effected outside the US by a non-US holder to or through a
foreign office of a broker generally will not be subject to backup withholding or information
reporting unless certain limited exceptions apply. Copies of the information returns reporting
payments to a non-US holder may also be made available to the tax authorities in the country in
which the non-US holder resides under the provisions of an applicable income tax treaty or tax
information sharing agreement.
Any amount withheld under the backup withholding rules is allowable as a refund or credit
against the non-US holders US federal income tax liability, if any, provided that the required
information or appropriate claim for refund is properly and timely submitted to the IRS.
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US Federal Estate Tax
The securities held at the time of death by an individual who is not a citizen or resident of
the US (as specially defined for US estate tax purposes) will not be subject to US estate tax,
provided that the individual does not actually or constructively own 10% of more of the capital or
profits interests in us and income on the securities is not effectively connected with the conduct
of a trade or business in the US.
SUMMARY OF MATERIAL ERISA CONSIDERATIONS
The following is a summary of material considerations associated with an investment in the
securities by employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, as amended (ERISA); plans, individual retirement accounts and other
arrangements that are subject to Section 4975 of the Code; or plans that are subject to provisions
under any other federal, state, local, non-US or other laws, rules or regulations that are similar
to such provisions of ERISA or the Code (collectively, Similar Laws); and entities whose underlying
assets are considered to include plan assets of such employee benefit plans, plans, accounts or
arrangements (each, a Plan).
General Fiduciary Matters
ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to
Title I of ERISA and prohibit certain transactions involving the assets of a Plan subject to Title
I of ERISA or Section 4975 of the Code (an ERISA Plan) and its fiduciaries or other interested
parties.
In considering an investment in the securities with a portion of the assets of any Plan, a
fiduciary should determine whether the investment is in accordance with the documents and
instruments governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law
relating to a fiduciarys duties to the Plan including, without limitation, the prudence,
diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and
any other applicable Similar Laws.
Prohibited Transaction Issues
Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in
specified transactions involving plan assets with persons or entities who are parties in
interest, within the meaning of ERISA, or disqualified persons, within the meaning of Section
4975 of the Code, unless an exemption is available. A party in interest or disqualified person who
engages in a nonexempt prohibited transaction may be subject to excise taxes under the Code and
other penalties and liabilities under ERISA. In addition, the fiduciary of the ERISA Plan that
engages in such a nonexempt prohibited transaction may be subject to penalties and liabilities
under ERISA and/or the Code. The acquisition and/or holding of securities by an ERISA Plan with
respect to which we or the Market Maker are considered a party in interest or disqualified person
may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA
and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with
an applicable statutory, class or individual prohibited transaction exemption. Included among the
exemptions that may apply to the acquisition and holding of the securities are the US Department of
Labor prohibited transaction class exemption (PTCE) 84-14, respecting transactions determined by
independent qualified professional asset managers, PTCE 90-1, respecting transactions involving
insurance company pooled separate accounts, PTCE 91-38, respecting transactions involving bank
collective investment funds, PTCE 95-60, respecting transactions involving life insurance company
general accounts and PTCE 96-23, respecting transactions determined by in-house asset managers. In
addition, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code provide limited relief
from the prohibited transaction provisions of ERISA and Section 4975 of the Code for certain
transactions between an ERISA Plan, and a person that is a party in interest or disqualified person
solely by reason of providing services to the ERISA Plan, or a relationship to such a service
provider, provided that neither the party in interest/disqualified person nor any of its affiliates
(directly or indirectly) have or exercise any discretionary authority or control or render any
investment advice with respect to the assets of any ERISA Plan involved in the transaction and
provided further that the ERISA Plan pays no more than (or, if applicable, receives no less than)
adequate consideration in connection with the transaction. There can be no assurance that all of
the conditions of any such exemption will be satisfied.
Because of the foregoing, the securities should not be acquired or held by any person
investing plan assets of any Plan, unless such acquisition and holding will not constitute a
nonexempt prohibited transaction under ERISA or the Code or a violation of any applicable Similar
Laws.
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Representation
By acceptance of any of the securities or any interest therein, each acquirer and subsequent
transferee will be deemed to have represented and warranted that either (i) no portion of the
assets used by such acquirer or transferee to acquire or hold the securities or any interest
therein constitutes assets of any Plan or (ii) the acquisition and holding of the securities or any
interest therein by such acquirer or transferee will not constitute a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or a violation of any applicable
Similar Laws.
The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to
the complexity of these rules and the penalties that may be imposed upon persons involved in
nonexempt prohibited transactions, it is particularly important that fiduciaries or other persons
considering acquiring or holding the securities on behalf of, or with the assets of, any Plan,
consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code
or any Similar Laws to such transactions and whether an exemption from any restrictions thereunder
would be applicable to the acquisition and holding of the securities.
PLAN OF DISTRIBUTION
This prospectus is to be used by the Market Maker and its affiliates in connection with offers
and sales of the securities in market-making transactions in the secondary market effected from
time to time.
The Market Maker and its affiliates may act as principal or agent in such transactions,
including as agent for the counterparty when acting as principal or as agent for both
counterparties, and may receive compensation in the form of discounts and commissions, including
from both counterparties, when it acts as agents for both. Such sales will be made at prevailing
market prices at the time of sale, at prices related thereto or at negotiated prices. We will not
receive any of the proceeds from such sales.
The Market Maker and its affiliates are full service financial institutions engaged in various
activities, which may include securities trading, commercial and investment banking, financial
advisory, investment management, investment research, principal investment, hedging, financing and
brokerage activities. From time to time, the Market Maker and its affiliates have
provided, and may in the future provide from time to time, investment banking and commercial
banking services and financial advisory services to us for which they have in the past received,
and may in the future receive, customary fees. In addition, the Market Maker and certain of its
affiliates have provided, and may in the future provide from time to time, certain investment
banking and commercial banking services and financial advisory services for certain of our
affiliates and for the members of the Sponsor Group and certain of their affiliates, for which they
have received, or will receive, customary fees. In the ordinary course of their various businesses,
the Market Maker and its affiliates may make or hold a broad array of investments and actively
trade debt and equity securities (or related derivative securities) and financial instruments
(including bank loans) for their own account and for the accounts of their customers, and such
investment and securities activities may involve our securities and/or instruments. The Market
Maker and its respective affiliates may also make investment recommendations and/or publish or
express independent research views in respect of such securities or instruments and may at any time
hold, or recommend to clients that they acquire, long and/or short positions in such securities and
instruments.
The Market Maker is one of the members of the Sponsor Group. The Sponsor Group indirectly owns
80.03% of our outstanding equity interests through Oncor Holdings, which is a wholly-owned indirect
subsidiary of EFH Corp. An affiliate of the Market Maker owns a significant membership interest of
the general partner of Texas Holdings, the parent of EFH Corp., as well as a limited partnership
interest in Texas Holdings. Pursuant to our amended and restated limited liability agreement, the
Sponsor Group has the right to designate two individuals to serve on our Board of Directors.
Thomas D. Ferguson, an employee of the Market Maker and Jeffrey Liaw, who serves in the energy and
industrial investing practice of TPG Capital, L.P., are currently directors of Oncor appointed by
the Sponsor Group. Each of Scott Lebovitz, Kenneth Pontarelli and Thomas D. Ferguson, who are
members of EFH Corp.s board of directors, are employees of the Market Maker or its affiliates.
Mr. Pontarelli is also a member of the board of managers of Energy Future Intermediate Holdings
Company LLC, the direct parent of Oncor Holdings.
An affiliate of the Market Maker is a co-documentation agent, joint lead arranger and joint
lead bookrunner for, and a lender under, our revolving credit facility. The Market Maker acted as
joint book running manager and initial purchaser in connection with the private placement of the
2013 notes, 2018 notes and 2038 notes on September 8, 2008 and received a customary underwriting
discount in connection with those transactions. In October 2010, pursuant to an exchange offer, we
issued approximately $324 million aggregate principal amount of 5.000% senior secured notes due
2017 in exchange for an equivalent principal amount of our outstanding 6.375% senior secured notes
due 2012 and approximately $126 million
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aggregate principal amount of 5.750% senior secured notes due 2020 in exchange for an
equivalent principal amount of our outstanding 5.950% senior secured notes due 2013. The Market
Maker served as senior co-dealer manager in that exchange offer and received customary fees in
connection with that transaction. The Market Maker and/or its affiliates currently own, and may
from time to time trade, the securities for their own accounts in connection with their principal
activities. Such sales may be made pursuant to this prospectus or otherwise pursuant to an
applicable exemption from registration. Additionally, in the future, the Market Maker and/or its
affiliates may, from time to time, own the securities as a result of market-making activities. An
affiliate of the Market Maker has been a party to certain interest rate hedging transactions with
us in the past
and may, from time to time, participate in such transactions with us in the future,
and is currently a party to certain commodity transactions with our affiliates.
We have been advised by the Market Maker that, subject to applicable laws and regulations, the
Market Maker or its affiliates currently intend to make a market in the securities. However, the
Market Maker is not obligated to do so, and any such market-making may be interrupted or
discontinued at any time without notice. In addition, such market-making activity will be subject
to the limits imposed by the Securities Act and the Exchange Act. We cannot assure you that an
active trading market will be sustained. See Risk Factors Risks Related to the Securities
Your ability to transfer the securities may be limited by the absence of an active trading market,
and there is no assurance that any active trading market will exist for the securities and Risk
Factors Risks Related to the Securities We will not be required to maintain a current
market-making prospectus after September 8, 2018, and as a result your ability to transfer the 2038
notes may be limited after that date.
Pursuant to registration rights agreement entered into among us and representatives of the
Market Maker, we have agreed to indemnify the Market Maker against certain liabilities under the
Securities Act.
The registration rights agreement also provides that we will bear all expenses in connection
with the performance of our obligations under the registration rights agreement relating to the
market-making activities of the Market Maker and its affiliates.
LEGAL MATTERS
The validity and enforceability of the securities has been passed upon for us by Baker &
McKenzie LLP, Dallas, Texas..
EXPERTS
The consolidated financial statements incorporated in this prospectus by reference from
Oncors Annual Report on Form 10-K, and the effectiveness of Oncor Electric Delivery Company LLCs
internal control over financial reporting have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in their reports, which are incorporated
herein by reference. Such financial statements have been so incorporated in reliance upon the
reports of such firm given upon their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form S-3 under the Securities Act with
respect to the securities. This prospectus, which forms a part of the registration statement, does
not contain all of the information set forth in the registration statement. For further information
with respect to us and the securities, reference is made to the registration statement. Statements
contained in this prospectus as to the contents of any contract or other document are not
necessarily complete.
We file annual, quarterly and current reports and other information with the SEC. You may read
and copy any document we have or will file with the SEC at the SECs public website (www.sec.gov)
or at the Public Reference Room of the SEC located at 100 F Street, N.E., Washington, DC 20549.
Copies of such materials can be obtained from the Public Reference Room of the SEC at prescribed
rates. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public
Reference Room.
You should rely only upon the information provided in this prospectus. We have not authorized
anyone to provide you with different information. You should not assume that the information in
this prospectus is accurate as of any date other than the date of this prospectus.
43
INCORPORATION BY REFERENCE
The SEC allows us to incorporate certain information into this prospectus by reference to
other documents that we file with the SEC. This means that we can disclose important information to
you for purposes of this prospectus by referring you to other documents that have been filed
separately with the SEC.
We incorporate into this prospectus by reference:
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our Annual Report on Form 10-K for the year ended December 31, 2010 that we filed with
the SEC on February 18, 2011; and |
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our Current Reports on Form 8-K, that we filed with the SEC on January 7 and January 12,
2011. |
Any future filings we make with the SEC under sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act prior to the termination of this offering, including all such documents we may file
with the SEC after the date of the initial registration statement and prior to the effectiveness of
the registration statement (excluding any information furnished under Items 2.02 or 7.01 in any
Current Report on Form 8-K and any other information that is deemed furnished and not filed with
the SEC), will also be incorporated by reference into this prospectus and deemed to be part of this
prospectus from the date of the filing of such reports and documents. These additional documents
include periodic reports, such as annual reports on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K (other than information furnished and not filed by us under any item of
any current report on Form 8-K, including the related exhibits, which is deemed not to be
incorporated by reference in this prospectus). You should review these filings as they may disclose
changes in our business, prospects, financial condition or other affairs after the date of this
prospectus. The information that we file later with the SEC under sections 13(a), 13(c), 14 or
15(d) of the Exchange Act will automatically update and supersede previous information included or
incorporated by reference in this prospectus.
Copies of our filings with the SEC are available free of charge by writing to Oncor Electric
Delivery Company LLC, 1616 Woodall Rodgers Frwy, Dallas, Texas 75202, Attention: Investor
Relations, or by telephoning us at 214-486-2000. Copies of any and all reports or documents that
are incorporated by reference in this prospectus may be accessed at our website at
http://www.oncor.com by selecting Investor Information under the News tab. Except as otherwise
stated in these reports, the information contained on our website or available by hyperlink from
our website is not incorporated into this prospectus or other documents that we file with, or
furnish to, the SEC.
The information incorporated by reference is an important part of this prospectus. You should
rely only upon the information provided in this prospectus and the information incorporated into
this prospectus by reference. We have not authorized anyone to provide you with different
information. You should not assume that the information in this prospectus is accurate as of any
date other than the date of this prospectus.
SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to directors, officers or persons controlling the registrant pursuant to the foregoing provisions,
the registrant has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
44
ONCOR ELECTRIC DELIVERY COMPANY LLC
$375,595,000 6.375% Senior Secured Notes due 2012
$523,722,000 5.950% Senior Secured Notes due 2013
$500,000,000 6.375% Senior Secured Notes due 2015
$550,000,000 6.800% Senior Secured Notes due 2018
$800,000,000 7.000% Debentures due 2022
$500,000,000 7.000% Senior Secured Notes due 2032
$350,000,000 7.250% Senior Secured Notes due 2033
$300,000,000 7.500% Senior Secured Notes due 2038
Prospectus
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The registration rights agreement relating to certain of the securities of Oncor being
registered hereby provides that Oncor will bear all expenses in connection with the performance of
its obligations under the registration rights agreement relating to the market-making activities of
the Market Maker and its affiliates in those securities. Oncors estimated expenses with respect to
the distribution of securities pursuant to this registration statement, including those securities
that are included in this registration statement but are not required to be registered pursuant to
the registration rights agreement, include printer expenses of approximately $5,000, legal fees
(including legal fees of the Market Makers counsel payable pursuant to the terms of the
registration rights agreement) of approximately $25,500 and accounting fees of approximately
$15,000 for an approximate aggregate amount of $45,500.
Item 15. Indemnification of Directors and Officers.
Oncor is a limited liability company formed under the Delaware Limited Liability Company Act
(DLLCA).
Delaware Limited Liability Company Act
Section 18-108 of the DLLCA provides that, subject to such standards and restrictions, if any,
as are set forth in its limited liability company agreement, a limited liability company may, and
shall have the power to, indemnify and hold harmless any member or manager or other person from and
against any and all claims and demands whatsoever.
Second Amended and Restated Limited Liability Company Agreement of Oncor
Our Second Amended and Restated Limited Liability Company Agreement, as amended (Limited
Liability Company Agreement) provides for the indemnification of (i) each officer, director, board
observer and employee of Oncor, (ii) each of the members of Oncor, (iii) each officer, director and
employee of each member of Oncor, and (iv) each affiliate of each member of Oncor and of each
direct or indirect shareholder of any such affiliate or such shareholders affiliates ((i)-(iv)
individually, a Covered Person and collectively, Covered Persons). Section 21 of our Limited
Liability Company Agreement provides as follows:
(a) To the fullest extent permitted by law, no Covered Person shall be liable to Oncor or any
other person that is a party to or is otherwise bound by the Limited Liability Company Agreement
for any loss, damage or claim incurred by reason of any act or omission performed or omitted by
such Covered Person in good faith on behalf of Oncor and in a manner reasonably believed to be
within the scope of the authority conferred on such Covered Person by the Limited Liability Company
Agreement, except that a Covered Person shall be liable for any such loss, damage or claim incurred
by reason of such Covered Persons fraud, gross negligence or willful misconduct.
(b) To the fullest extent permitted by applicable law, (i) each officer and director of Oncor,
(ii) each member of Oncor and each officer, director, employee, equityholder and agent of each
member of Oncor and (iii) any employee of Oncor with whom Oncor enters into a written
indemnification agreement approved by majority of Oncors board of directors ((i)-(iii)
individually, an Indemnified Person and collectively, Indemnified Persons), shall be entitled to
indemnification from Oncor for any loss, damage or claim incurred by such Indemnified Person by
reason of any act or omission performed or omitted by such Indemnified Person in good faith on
behalf of Oncor and in a manner reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by the Limited Liability Company Agreement, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of such Indemnified Persons fraud, gross negligence
or willful misconduct with respect to such acts or omissions; provided, however,
that any indemnity under Section 21 of the Limited Liability Company Agreement by Oncor shall be
provided out of and to the extent of Oncor assets only, and no member of Oncor shall have any
personal liability on account thereof.
(c) To the fullest extent permitted by applicable law, expenses (including reasonable legal
fees) incurred by an Indemnified Person defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by Oncor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by Oncor of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is
not entitled to be indemnified as authorized in Section 21 of the Limited Liability Company
Agreement.
(d) An Indemnified Person shall be fully protected in relying in good faith upon the records
of Oncor and upon such information, opinions, reports or statements presented to Oncor by any
person as to matters the Indemnified Person reasonably believes are within such other persons
professional or expert competence and who has been selected with reasonable care by or on behalf of
Oncor, including information, opinions, reports or statements as to the value and amount of the
assets, liabilities, or any other facts pertinent to the existence and amount of assets from which
distributions to Oncors members might properly be paid.
(e) To the extent that, at law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to Oncor or to any other Indemnified Person, an
Indemnified Person acting under the Limited Liability Company Agreement shall not be liable to
Oncor or to any other Indemnified Person for its good faith reliance on the provisions of the
Limited Liability Company Agreement or any approval or authorization granted by Oncor or any other
Indemnified Person. The provisions of the Limited Liability Company Agreement, to the extent that
they restrict or eliminate the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity, are agreed by Oncors members to replace such other duties and liabilities of
such Indemnified Person.
The Limited Liability Company Agreement also provides that the provisions of Section 21 of the
Limited Liability Company Agreement shall survive any termination of the Limited Liability Company
Agreement.
Certain Other Arrangements
In addition to indemnification by Oncor pursuant to its Limited Liability Company Agreement,
Oncor maintains a directors and officers liability insurance policy that covers the directors and
officers of Oncor in amounts that Oncor believes are customary for companies similarly situated,
including for liabilities in connection with the registration, offering and sale of the securities.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits:
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Previously Filed* |
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With File |
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As |
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Exhibits |
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Number |
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Exhibit |
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(4) |
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Instruments Defining the Rights of Security Holders, Including Indentures. |
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4(a)
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333-100240
Form S-4 (filed
October 2, 2002)
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4(a)
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Indenture and Deed of Trust,
dated as of May 1, 2002,
between Oncor Electric Delivery
Company LLC and The Bank of New
York, as Trustee. |
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4(b)
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001-12833
Form 8-K (filed
October 31, 2005)
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10.1
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Supplemental Indenture No. 1,
dated October 25, 2005, to
Indenture and Deed of Trust,
dated as of May 1, 2002,
between Oncor Electric Delivery
Company LLC and The Bank of New
York. |
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4(c)
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333-100240
Form S-4 (filed
October 2, 2002)
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4(b)
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Officers Certificate, dated
May 6, 2002, establishing the
terms of Oncor Electric
Delivery Company LLCs 6.375%
Senior Notes due 2012 and
7.000% Senior Notes due 2032. |
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4(d)
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333-106894
Form S-4 (filed
July 9, 2003)
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4(c)
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Officers Certificate, dated
December 20, 2002, establishing
the terms of Oncor Electric
Delivery Company LLCs 6.375%
Senior Notes due 2015 and
7.250% Senior Notes due 2033. |
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4(e)
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333-100240
Form 10-Q (filed
May 15, 2008)
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4(b)
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Supplemental Indenture No. 2,
dated May 15, 2008, to
Indenture and Deed of Trust,
dated as of May 1, 2002,
between Oncor Electric Delivery
Company LLC and The Bank of New
York. |
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4(f)
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333-100242
Form S-4 (filed
October 2, 2002)
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4(a)
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Indenture (for Unsecured Debt
Securities), dated as of August
1, 2002, between Oncor Electric
Delivery Company LLC and The
Bank of New York, as Trustee. |
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Previously Filed* |
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With File |
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As |
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Exhibits |
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Number |
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Exhibit |
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4(g)
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333-100240
Form 10-Q (filed
May 15, 2008)
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4(c)
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Supplemental Indenture No. 1,
dated May 15, 2008, to
Indenture and Deed of Trust,
dated as of August 1, 2002,
between Oncor Electric Delivery
Company LLC and The Bank of New
York. |
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4(h)
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333-100242
Form S-4 (filed
October 2, 2002)
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4(b)
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Officers Certificate, dated
August 30, 2002, establishing
the terms of Oncor Electric
Delivery Company LLCs 5%
Debentures due 2007 and 7%
Debentures due 2022. |
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4(i)
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333-100240
Form 8-K (filed
September 9, 2008)
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4.1
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Officers Certificate, dated
September 8, 2008, establishing
the terms of Oncor Electric
Delivery Company LLCs 5.95%
Senior Secured Notes due 2013,
6.80% Senior Secured Notes due
2018 and 7.50% Senior Secured
Notes due 2038. |
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4(j)
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333-100240
Form 10-Q (filed
November 6, 2008)
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4(c)
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Investor Rights Agreement,
dated as of November 5, 2008,
by and among Oncor Electric
Delivery Company LLC, Oncor
Electric Delivery Holdings
Company LLC, Texas Transmission
Investment LLC and Energy
Future Holdings Corp. |
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4(k)
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333-100240
Form 10-Q (filed
November 6, 2008)
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4(d)
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Registration Rights Agreement,
dated as of November 5, 2008,
by and among Oncor Electric
Delivery Company LLC, Oncor
Electric Delivery Holdings
Company LLC, Energy Future
Holdings Corp. and Texas
Transmission Investment LLC. |
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4(l)
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333-100240
Form 10-Q (filed
May 15, 2008)
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4(a)
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Deed of Trust, Security
Agreement and Fixture Filing,
dated as of May 15, 2008, by
Oncor Electric Delivery Company
LLC, as Grantor, to and for the
benefit of The Bank of New
York, as Collateral Agent. |
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4(m)
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333-100240
2008
Form 10-K
(filed March 3,
2009)
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4(n)
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First Amendment to Deed of
Trust, dated as of March 2,
2009, by and between Oncor
Electric Delivery Company LLC
and The Bank of New York Mellon
(formerly The Bank of New York)
as Trustee and Collateral
Agent. |
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4(n)
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333-100240
Form 8-K (filed
September 3, 2010)
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10.1
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Second Amendment to Deed of
Trust, Security Agreement and
Fixture Filing dated as of
September 3, 2010 by and
between Oncor Electric Delivery
Company LLC, as Grantor, to and
for the benefit of The Bank of
New York Mellon, as Collateral
Agent. |
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4(o)
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333-100240
Form 8-K (filed
September 16, 2010)
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4.1
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Officers Certificate, dated
September 13, 2010,
establishing the terms of
Oncors 5.25% Senior Secured
Notes due 2040. |
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4(p)
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333-100240
Form 8-K (filed
September 16, 2010)
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4.2
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Registration Rights Agreement,
dated September 13, 2010, among
Oncor and the representatives
of the initial purchasers of
Oncors 5.25% Senior Secured
Notes due 2040. |
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4(q)
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333-100240
Form 8-K (filed
October 12, 2010)
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4.1
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Officers Certificate, dated
October 8, 2010, establishing
the terms of Oncors 5.00%
Senior Secured Notes due 2017
and 5.75% Senior Secured Notes
due 2020. |
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4(r)
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333-100240
Form 8-K (filed
October 12, 2010)
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4.2
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Registration Rights Agreement,
dated October 8, 2010, among
Oncor and the dealer managers
named therein. |
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(5) |
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Opinion re Legality. |
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Previously Filed* |
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With File |
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As |
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Exhibits |
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Number |
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Exhibit |
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5(a)
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333-158387
Form S-1 (filed
April 3, 2009)
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5(a)
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Opinion of Baker & McKenzie LLP. |
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(12) |
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Statement Regarding Computation of Ratios. |
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12(a)
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333-100240
2010 Form 10-K
(filed February 18,
2011)
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12(a)
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Computation of Ratio of
Earnings to Fixed Charges, and
Ratio of Earnings to Combined
Fixed Charges and Preference
Dividends. |
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(23) |
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Consents of Experts and Counsel. |
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23(a)
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Consent of Baker & McKenzie LLP
(included as part of the
opinion filed as Exhibit 5(a)
hereto). |
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23(b)
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Consent of Deloitte & Touche
LLP, an independent registered
public accounting firm. |
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(25) |
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Statement of Eligibility of Trustee. |
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25(a))
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333-100240
Form S-4 (filed
October 2, 2002)
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25
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Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 6.375% Senior
Secured Notes due 2012 and the
7.000% Senior Secured Notes due
2032. |
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25(b)
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333-100242
Form S-4 (filed
October 2, 2002)
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25
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Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 7.000% Debentures
due 2022. |
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25(c)
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333-106894
Form S-4 (filed
July 9, 2003)
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25
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Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 6.375% Senior
Secured Notes due 2015 and the
7.250% Senior Secured Notes due
2033. |
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25(d)
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333-157914
Form S-4 (filed
March 13, 2009)
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25(a)
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Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 5.95% Senior
Secured Notes due 2013 |
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25(e)
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333-157914
Form S-4 (filed
March 13, 2009)
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25(b)
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Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 6.80% Senior
Secured Notes due 2018 |
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25(f)
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333-157914
Form S-4 (filed
March 13, 2009)
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25(c)
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Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 7.50% Senior
Secured Notes due 2038 |
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Incorporated herein by reference. |
(b) The consolidated financial statement schedules are included in the audited consolidated
financial statements or notes thereto incorporated by reference into this registration statement.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate offering price
set forth in the Calculation of Registration Fee table in the effective
registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any material
change to such information in the registration statement.
provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) above do not
apply if the information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement, or is contained in a form
of prospectus filed pursuant to Rule 424(b) that is part of the registration statement
(2) that, for the purpose of determining any liability under the Securities Act, each
such post-effective amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the offering;
(4) that, for the purpose of determining liability under the Securities Act to any
purchaser,
(i) Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be
deemed to be part of the registration statement as of the date the filed prospectus
was deemed part of and included in the registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or
(b)(7) as part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of
providing the information required by Section 10(a) of the Securities Act shall be
deemed to be part of and included in the registration statement as of the earlier of
the date such form of prospectus is first used after effectiveness or the date of the
first contract of sale of securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer and any person that is at
that date an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement to
which that prospectus relates, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus that
is part of the registration statement will, as to a purchaser with a
time of contract
of sale prior to such effective date, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such effective date; and
(5) that, for the purpose of determining liability of the registrant under the
Securities Act to any purchaser in the initial distribution of the securities, the
undersigned registrant undertakes that in a primary offering of securities of the
undersigned registrant pursuant to this registration statement, regardless of the
underwriting method used to sell the securities to the purchaser, if the securities are
offered or sold to such purchaser by means of any of the following communications, the
undersigned registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
(ii) any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned registrant or used or referred to by the undersigned
registrant;
(iii) the portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its securities
provided by or on behalf of the undersigned registrant; and
(iv) any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
(b) That, for purposes of determining any liability under the Securities Act, each filing of
the registrants annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plans annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for listing on Form S-3 and
has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Dallas, State of Texas, on March 11, 2011.
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ONCOR ELECTRIC DELIVERY COMPANY LLC
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By: |
/s/ Robert S. Shapard
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Name: |
Robert S. Shapard |
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Title: |
Chairman of the Board and Chief Executive |
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KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints E. Allen Nye, Jr. and Kevin R. Fease and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all amendments (including
pre-and post-effective amendments) to this registration statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933 (and further amendments,
including post-effective amendments thereto), and to file the same with all exhibits thereto, and
other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the dates indicated.
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Signature |
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Title |
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Date |
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/s/ Robert S. Shapard
Robert S. Shapard
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Chairman of the Board and Chief Executive
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March 11, 2011 |
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/s/ David M. Davis
David M. Davis
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Senior Vice President and Chief Financial Officer
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March 11, 2011 |
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/s/ Richard C. Hays
Richard C. Hays
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Controller
(Principal Accounting Officer)
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March 11, 2011 |
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/s/ Nora Mead Brownell
Nora Mead Brownell
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Director
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March 11, 2011 |
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/s/ Richard C. Byers
Richard C. Byers
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Director
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March 11, 2011 |
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/s/ Thomas M. Dunning
Thomas M. Dunning
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Director
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March 11, 2011 |
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/s/ Robert A. Estrada
Robert A. Estrada
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Director
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March 11, 2011 |
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/s/ Thomas D. Ferguson
Thomas D. Ferguson
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Director
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March 11, 2011 |
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/s/ Monte E. Ford
Monte E. Ford
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Director
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March 11, 2011 |
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Signature |
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Title |
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Date |
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/s/ William T. Hill, Jr.
William T. Hill, Jr.
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Director
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March 11, 2011 |
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/s/ Jeffrey Liaw
Jeffrey Liaw
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Director
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March 11, 2011 |
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/s/ Richard W. Wortham III
Richard W. Wortham III
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Director
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March 11, 2011 |
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/s/ Steven J. Zucchet
Steven J. Zucchet
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Director
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March 11, 2011 |
EXHIBIT INDEX
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Previously Filed* |
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|
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With File |
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As |
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|
|
|
Exhibits |
|
Number |
|
Exhibit |
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(4) |
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Instruments Defining the Rights of Security Holders, Including Indentures. |
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4(a)
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333-100240
Form S-4 (filed
October 2, 2002)
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4(a)
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|
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|
Indenture and Deed of Trust,
dated as of May 1, 2002,
between Oncor Electric Delivery
Company LLC and The Bank of New
York, as Trustee. |
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|
|
|
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|
|
|
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4(b)
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|
001-12833
Form 8-K (filed
October 31, 2005)
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|
10.1
|
|
|
|
Supplemental Indenture No. 1,
dated October 25, 2005, to
Indenture and Deed of Trust,
dated as of May 1, 2002,
between Oncor Electric Delivery
Company LLC and The Bank of New
York. |
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|
|
|
|
|
|
|
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4(c)
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|
333-100240
Form S-4 (filed
October 2, 2002)
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4(b)
|
|
|
|
Officers Certificate, dated
May 6, 2002, establishing the
terms of Oncor Electric
Delivery Company LLCs 6.375%
Senior Notes due 2012 and
7.000% Senior Notes due 2032. |
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4(d)
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333-106894
Form S-4 (filed
July 9, 2003)
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4(c)
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|
|
|
Officers Certificate, dated
December 20, 2002, establishing
the terms of Oncor Electric
Delivery Company LLCs 6.375%
Senior Notes due 2015 and
7.250% Senior Notes due 2033. |
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|
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|
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4(e)
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333-100240
Form 10-Q (filed
May 15, 2008)
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4(b)
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|
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Supplemental Indenture No. 2,
dated May 15, 2008, to
Indenture and Deed of Trust,
dated as of May 1, 2002,
between Oncor Electric Delivery
Company LLC and The Bank of New
York. |
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4(f)
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333-100242
Form S-4 (filed
October 2, 2002)
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4(a)
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|
|
|
Indenture (for Unsecured Debt
Securities), dated as of August
1, 2002, between Oncor Electric
Delivery Company LLC and The
Bank of New York, as Trustee. |
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4(g)
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333-100240
Form 10-Q (filed
May 15, 2008)
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4(c)
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|
|
|
Supplemental Indenture No. 1,
dated May 15, 2008, to
Indenture and Deed of Trust,
dated as of August 1, 2002,
between Oncor Electric Delivery
Company LLC and The Bank of New
York. |
|
|
|
|
|
|
|
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4(h)
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|
333-100242
Form S-4 (filed
October 2, 2002)
|
|
4(b)
|
|
|
|
Officers Certificate, dated
August 30, 2002, establishing
the terms of Oncor Electric
Delivery Company LLCs 5%
Debentures due 2007 and 7%
Debentures due 2022. |
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4(i)
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333-100240
Form 8-K (filed
September 9, 2008)
|
|
4.1
|
|
|
|
Officers Certificate, dated
September 8, 2008, establishing
the terms of Oncor Electric
Delivery Company LLCs 5.95%
Senior Secured Notes due 2013,
6.80% Senior Secured Notes due
2018 and 7.50% Senior Secured
Notes due 2038. |
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4(j)
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333-100240
Form 10-Q (filed
November 6, 2008)
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4(c)
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|
|
|
Investor Rights Agreement,
dated as of November 5, 2008,
by and among Oncor Electric
Delivery Company LLC, Oncor
Electric Delivery Holdings
Company LLC, Texas Transmission
Investment LLC and Energy
Future Holdings Corp. |
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4(k)
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333-100240
Form 10-Q (filed
November 6, 2008)
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4(d)
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Registration Rights Agreement,
dated as of November 5, 2008,
by and among Oncor Electric
Delivery Company LLC, Oncor
Electric Delivery Holdings
Company LLC, Energy Future
Holdings Corp. and Texas
Transmission Investment LLC. |
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|
|
|
|
Previously Filed* |
|
|
|
|
|
|
|
|
With File |
|
As |
|
|
|
|
Exhibits |
|
Number |
|
Exhibit |
|
|
|
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4(l)
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|
333-100240
Form 10-Q (filed
May 15, 2008)
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4(a)
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|
|
|
Deed of Trust, Security
Agreement and Fixture Filing,
dated as of May 15, 2008, by
Oncor Electric Delivery Company
LLC, as Grantor, to and for the
benefit of The Bank of New
York, as Collateral Agent. |
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|
|
|
|
|
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4(m)
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|
333-100240
2008 Form 10-K
(filed March 3,
2009)
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4(n)
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|
First Amendment to Deed of
Trust, dated as of March 2,
2009, by and between Oncor
Electric Delivery Company LLC
and The Bank of New York Mellon
(formerly The Bank of New York)
as Trustee and Collateral
Agent. |
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|
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|
|
|
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4(n)
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|
333-100240
Form 8-K (filed
September 3, 2010)
|
|
10.1
|
|
|
|
Second Amendment to Deed of
Trust, Security Agreement and
Fixture Filing dated as of
September 3, 2010 by and
between Oncor Electric Delivery
Company LLC, as Grantor, to and
for the benefit of The Bank of
New York Mellon, as Collateral
Agent. |
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|
|
|
|
|
|
|
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4(o)
|
|
333-100240
Form 8-K (filed
September 16, 2010)
|
|
4.1
|
|
|
|
Officers Certificate, dated
September 13, 2010,
establishing the terms of
Oncors 5.25% Senior Secured
Notes due 2040. |
|
|
|
|
|
|
|
|
|
4(p)
|
|
333-100240
Form 8-K (filed
September 16, 2010)
|
|
4.2
|
|
|
|
Registration Rights Agreement,
dated September 13, 2010, among
Oncor and the representatives
of the initial purchasers of
Oncors 5.25% Senior Secured
Notes due 2040. |
|
|
|
|
|
|
|
|
|
4(q)
|
|
333-100240
Form 8-K (filed
October 12, 2010)
|
|
4.1
|
|
|
|
Officers Certificate, dated
October 8, 2010, establishing
the terms of Oncors 5.00%
Senior Secured Notes due 2017
and 5.75% Senior Secured Notes
due 2020. |
|
|
|
|
|
|
|
|
|
4(r)
|
|
333-100240
Form 8-K (filed
October 12, 2010)
|
|
4.2
|
|
|
|
Registration Rights Agreement,
dated October 8, 2010, among
Oncor and the dealer managers
named therein. |
|
|
|
|
|
|
|
|
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(5) |
|
Opinion re Legality. |
|
|
|
|
|
|
|
|
|
5(a)
|
|
333-158387
Form S-1 (filed
April 3, 2009)
|
|
5(a)
|
|
|
|
Opinion of Baker & McKenzie LLP. |
|
|
|
|
|
|
|
|
|
(12) |
|
Statement Regarding Computation of Ratios. |
|
|
|
|
|
|
|
|
|
12(a)
|
|
333-100240
2010 Form 10-K
(filed February 18,
2011)
|
|
12(a)
|
|
|
|
Computation of Ratio of
Earnings to Fixed Charges, and
Ratio of Earnings to Combined
Fixed Charges and Preference
Dividends. |
|
|
|
|
|
|
|
|
|
(23) |
|
Consents of Experts and Counsel. |
|
|
|
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|
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|
23(a)
|
|
|
|
|
|
|
|
Consent of Baker & McKenzie LLP
(included as part of the
opinion filed as Exhibit 5(a)
hereto). |
|
|
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23(b)
|
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Consent of Deloitte & Touche
LLP, an independent registered
public accounting firm. |
|
|
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|
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|
|
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(25) |
|
Statement of Eligibility of Trustee. |
|
|
|
|
|
|
|
|
|
25(a))
|
|
333-100240
Form S-4 (filed
October 2, 2002)
|
|
25
|
|
|
|
Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 6.375% Senior
Secured Notes due 2012 and the
7.000% Senior Secured Notes due
2032. |
|
|
|
|
|
|
|
|
|
|
|
Previously Filed* |
|
|
|
|
|
|
|
|
With File |
|
As |
|
|
|
|
Exhibits |
|
Number |
|
Exhibit |
|
|
|
|
25(b)
|
|
333-100242
Form S-4 (filed
October 2, 2002)
|
|
25
|
|
|
|
Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 7.000% Debentures
due 2022. |
|
|
|
|
|
|
|
|
|
25(c)
|
|
333-106894
Form S-4 (filed
July 9, 2003)
|
|
25
|
|
|
|
Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 6.375% Senior
Secured Notes due 2015 and the
7.250% Senior Secured Notes due
2033. |
|
|
|
|
|
|
|
|
|
25(d)
|
|
333-157914
Form S-4 (filed
March 13, 2009)
|
|
25(a)
|
|
|
|
Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 5.95% Senior
Secured Notes due 2013 |
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|
|
|
|
|
|
|
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25(e)
|
|
333-157914
Form S-4 (filed
March 13, 2009)
|
|
25(b)
|
|
|
|
Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 6.80% Senior
Secured Notes due 2018 |
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|
|
|
|
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25(f)
|
|
333-157914
Form S-4 (filed
March 13, 2009)
|
|
25(c)
|
|
|
|
Form T-1 Statement of
Eligibility under the Trust
Indenture Act of 1939 of The
Bank of New York Mellon with
respect to the Indenture
governing the 7.50% Senior
Secured Notes due 2038 |
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* |
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Incorporated herein by reference. |