Common use of State Pledge Clause in Contracts

State Pledge. System Restoration Bonds are “transition bonds” as such term is defined in the Securitization Law. Principal and interest due and payable on the System Restoration Bonds are payable from and secured primarily by Transition Property created and established by the Financing Order obtained from the Public Utility Commission of Texas pursuant to the Securitization Law. Transition Property consists of the rights and interests of the Seller in the relevant Financing Order, including the right to impose, collect and recover certain charges (defined in the Securitization Law as “transition charges”, including such charges as set forth in Section 36.403(f)) to be included in regular electric utility bills of existing and future electric service customers within the service territory of AEP Texas Central Company, a Texas electric utility, or its successors or assigns, as more fully described in the Financing Order. Under the laws of the State of Texas in effect on the Closing Date, the State of Texas has agreed for the benefit of the Holders, pursuant to Section 39.310 and Section 36.403 of the Securitization Law, as follows: “Transition bonds are not a debt or obligation of the state and are not a charge on its full faith and credit or taxing power. The state pledges, however, for the benefit and protection of financing parties and the electric utility, that it will not take or permit any action that would impair the value of transition property, or, except as permitted by Section 39.307, reduce, alter, or impair the transition charges to be imposed, collected, and remitted to financing parties, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the related transition bonds have been paid and performed in full. Any party issuing transition bonds is authorized to include this pledge in any documentation relating to those bonds.” The Issuer hereby acknowledges that the purchase of any System Restoration Bond by a Holder or the purchase of any beneficial interest in a System Restoration Bond by any Person and the Indenture Trustee’s obligations to perform hereunder are made in reliance on such agreement and pledge by the State of Texas.

State Pledge. System Restoration Bonds are “transition bonds” as such term is defined in the Securitization LawFinancing Act. Principal and interest due and payable on the System Restoration Bonds are payable from and secured primarily by Transition Property created and established by the Financing Order obtained from the Public Utility Commission of Texas pursuant to the Securitization LawFinancing Act. Transition Property consists of the rights and interests of the Seller in the relevant Financing Order, including the right to impose, collect and recover certain charges (defined in the Securitization Law Financing Act as “transition charges”, including such charges as set forth in Section 36.403(f)) to be included in regular electric utility bills of existing and future electric service customers within ETI’s Service Territory, as of the service territory date of AEP Texas Central Company, a Texas electric utilityissuance of the Financing Order, or its successors or assigns, as more fully described in the Financing Order. Under the laws of the State of Texas in effect on the Closing Date, the State of Texas has agreed for the benefit of the HoldersHolders and the Indenture Trustee, pursuant to Section Sections 39.310 and Section 36.403 of the Securitization LawFinancing Act, as follows: “Transition bonds are not a debt or obligation of the state and are not a charge on its full faith and credit or taxing power. The state pledges, however, for the benefit and protection of financing parties and the electric utility, that it will not take or permit any action that would impair the value of transition property, or, except as permitted by Section 39.307, reduce, alter, or impair the transition charges to be imposed, collected, and remitted to financing parties, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the related transition bonds have been paid and performed in full. Any party issuing transition bonds is authorized to include this pledge in any documentation relating to those bonds.” The Issuer hereby acknowledges that the purchase of any System Restoration Bond by a Holder or the purchase of any beneficial interest in a System Restoration Bond by any Person and the Indenture Trustee’s obligations to perform hereunder are made in reliance on such agreement and pledge by the State of Texas.