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EXHIBIT 10.2
FORM OF GRANT AGREEMENT
AGREEMENT RELATING TO GRANT OF
INTANGIBLE TRANSITION PROPERTY
between
COMMONWEALTH EDISON COMPANY
and
COMED FUNDING, LLC
Dated as of [_____________], 1998
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.01. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS. . . . . . . . . . . . . . . 3
ARTICLE II
GRANT OF TRANSITION PROPERTY. . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.01. GRANT OF TRANSITION PROPERTY . . . . . . . . . . . . . . . 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMED . . . . . . . . . . . . . . . . . 4
SECTION 3.01. ORGANIZATION AND GOOD STANDING . . . . . . . . . . . . . . 4
SECTION 3.02. DUE QUALIFICATION. . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.03. POWER AND AUTHORITY. . . . . . . . . . . . . . . . . . . . 5
SECTION 3.04. BINDING OBLIGATION . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.05. NO VIOLATION . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.06. NO PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.07. APPROVALS. . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.08. THE 1998 TRANSITION PROPERTY . . . . . . . . . . . . . . . 7
ARTICLE IV
COVENANTS OF COMED. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 4.01. CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . .11
SECTION 4.02. NO LIENS . . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 4.03. DELIVERY OF COLLECTIONS. . . . . . . . . . . . . . . . . .12
SECTION 4.04. NOTICE OF LIENS. . . . . . . . . . . . . . . . . . . . . .12
SECTION 4.05. COMPLIANCE WITH LAW. . . . . . . . . . . . . . . . . . . .12
SECTION 4.06. COVENANTS RELATED TO TRANSITION PROPERTY . . . . . . . . .12
SECTION 4.07. PROTECTION OF TITLE. . . . . . . . . . . . . . . . . . . .13
SECTION 4.08. NONPETITION COVENANTS. . . . . . . . . . . . . . . . . . .14
SECTION 4.09. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 4.10. CONTRACTS FOR NON-TARIFFED SERVICES. . . . . . . . . . . .15
ARTICLE V
COMED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
SECTION 5.01. LIABILITY OF COMED; INDEMNITIES. . . . . . . . . . . . . .16
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, COMED. . . . . . . . . . . . . . . . . . . . . . . .18
SECTION 5.03. LIMITATION ON LIABILITY OF COMED AND OTHERS. . . . . . . .19
ARTICLE VI
MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . .20
SECTION 6.01. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . .20
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SECTION 6.02. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . .21
SECTION 6.03. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . .21
SECTION 6.04. LIMITATIONS ON RIGHTS OF OTHERS. . . . . . . . . . . . . .22
SECTION 6.05. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 6.06. SEPARATE COUNTERPARTS. . . . . . . . . . . . . . . . . . .22
SECTION 6.07. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 6.08. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . .22
SECTION 6.09. ASSIGNMENTS TO NOTE ISSUER AND INDENTURE TRUSTEE . . . . .22
SCHEDULE 3.06. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
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AGREEMENT RELATING TO GRANT OF INTANGIBLE TRANSITION PROPERTY (as the same
may be hereafter amended, supplemented or otherwise modified from time to time,
this "Agreement") dated as of __________ 1998, between COMMONWEALTH EDISON
COMPANY, an Illinois corporation ("ComEd"), and COMED FUNDING, LLC, a Delaware
limited liability company (the "Grantee").
WHEREAS, ComEd filed the Application with the ICC pursuant to Section
18-103 of the Funding Law requesting the issuance of a transitional funding
order;
WHEREAS, ComEd requested in the Application that the transitional funding
order (i) establish, create and grant rights, in favor of the Grantee, in and to
"intangible transition property" (as defined in Section 18-102 of the Funding
Law) in the aggregate amount of $6,323,000,000; and (ii) establish and create
"instrument funding charges" as defined in Section 18-102 of the Funding Law,
granting the right to impose and receive certain non-bypassable charges
expressed in cents per kilowatt hour from and after the effective date of the
associated tariff;
WHEREAS, the ICC issued the 1998 Funding Order on July 21, 1998, which
created and established the intangible transition property requested by ComEd in
the Application;
WHEREAS, the 1998 Funding Order granted to and vested in the Grantee, as
current and original property rights, and not by assignment from ComEd, all
right, title and interest to impose and receive the IFCs authorized by and under
the 1998 Funding Order and all related revenues, collections, claims, payments,
money or proceeds thereof, including all right, title and interest of the
Grantee in, to and under the 1998 Funding Order; and
WHEREAS, the Grantee has agreed to (i) transfer the 1998 Transition
Property to the Note Issuer pursuant to the Sale Agreement, and (ii) pay ComEd
the net proceeds received by the Grantee from the Note Issuer in connection with
such transfer;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in that certain
Indenture (including Appendix A thereto) dated as of the date hereof, between
ComEd Transitional Funding Trust, as the Note Issuer, and Xxxxxx Trust and
Savings Bank, as the Indenture Trustee, as the same may be amended, supplemented
or otherwise modified from time to time.
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) "AGREEMENT" shall have the meaning set forth in the preamble hereto.
(b) Non-capitalized terms used herein which are defined in the Public
Utilities Act shall, as the context requires, have the meanings assigned to such
terms in the Public Utilities Act, but without giving effect to amendments to
the Public Utilities Act after the date hereof which have a material adverse
effect on the Note Issuer or the Holders.
(c) All terms defined in this Agreement shall have the defined meaning when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(d) The words "hereof," "herein," "hereunder" and words of similar import,
when used in this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation".
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(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter forms of such terms.
ARTICLE II
GRANT OF TRANSITION PROPERTY
SECTION 2.01. GRANT OF TRANSITION PROPERTY. In consideration of ComEd's
actions in requesting that the 1998 Transition Property be created and vested in
the Grantee, the Grantee agrees to remit to ComEd the net proceeds remitted to
it by the Note Issuer from the sale of the Notes. To the extent that,
notwithstanding the Funding Law, the Application and the 1998 Funding Order,
applicable law provides that ComEd has any interest in the 1998 Transition
Property or any part thereof, ComEd sells, transfers, assigns, sets over and
otherwise conveys to the Grantee without recourse (subject to the obligations
herein) all of ComEd's right, title and interest, if any, in, to and under the
1998 Transition Property (such grant of the 1998 Transition Property, and such
sale, transfer, assignment, set over and conveyance, include, to the fullest
extent permitted by the Funding Law, the assignment of all revenues,
collections, claims, rights, payments, money or proceeds of or arising from the
IFCs pursuant to the 1998 Funding Order and the 1998 Initial Tariff, including,
without limitation, any Allocable IFC Revenue Amounts. Such sale, transfer,
assignment, set over and conveyance by ComEd is expressly stated to be an
absolute transfer, and pursuant to Section 18-108 of the Funding Law, shall be
treated as an absolute transfer (as in a true sale), and not as a pledge or
other financing, of the 1998 Transition Property. The previous sentence is the
express statement referred to in Section 18-108 of the Funding Law. To the
extent that, notwithstanding the Funding Law, the Application and the 1998
Funding Order, ComEd is deemed to have any interest in the 1998 Transition
Property or
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any part thereof under applicable law, and if the foregoing sale, transfer,
assignment, set over and conveyance is held not to be an absolute transfer (as
in a true sale) as contemplated under Section 18-108 of the Funding Law, then
such sale, transfer, assignment, set over and conveyance shall be treated as a
pledge of the 1998 Transition Property and ComEd shall be deemed to have granted
a security interest to the Grantee in the 1998 Transition Property. ComEd takes
the position that it has no rights in the 1998 Transition Property to which such
a security interest could attach.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMED
ComEd makes the following representations and warranties, as of the Closing
Date, on which the Grantee has relied in assigning the 1998 Transition Property
to the Note Issuer. These representations and warranties shall survive (i) the
grant of the 1998 Transition Property to the Grantee pursuant to the 1998
Funding Order and the 1998 Initial Tariff, (ii) to the extent that ComEd has any
interest in the 1998 Transition Property or any part thereof, the sale,
transfer, assignment, set over and conveyance by ComEd contemplated hereby,
(iii) the sale, transfer, assignment, set over and conveyance of the 1998
Transition Property and Related Assets to the Note Issuer and (iv) the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
SECTION 3.01. ORGANIZATION AND GOOD STANDING. ComEd is duly organized and
validly existing as a corporation in good standing under the laws of the State
of Illinois, with the power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and has the requisite power,
authority and legal right to request that the ICC issue the 1998 Funding Order.
ComEd is engaged in the generation, transmission, distribution and sale of
electricity to the public in Illinois, is a public utility within the meaning of
Section 3-105 of the Public Utilities Act and is
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an electric utility within the meaning of the Funding Law and Article XVI of the
Public Utilities Act.
SECTION 3.02. DUE QUALIFICATION. ComEd is duly qualified to do business
as a corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of property or
the conduct of its business shall require such qualifications, licenses or
approvals (except where the failure to so qualify would not be reasonably likely
to have a material adverse effect on ComEd's business, operations, assets,
revenues or properties).
SECTION 3.03. POWER AND AUTHORITY. ComEd has the requisite power and
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery and performance of this Agreement have been duly
authorized by ComEd by all necessary corporate action.
SECTION 3.04. BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of ComEd enforceable against ComEd in accordance
with its terms, subject to applicable insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws relating to or affecting creditors'
rights generally from time to time in effect and to general principles of equity
(including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a proceeding in
equity or at law.
SECTION 3.05. NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
(i) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under, the
Articles of Incorporation or by-laws of ComEd, or any indenture, agreement or
other instrument to which ComEd is a party or by which it shall be bound; (ii)
result in the
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creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument; or (iii) violate any
law or any order, rule or regulation applicable to ComEd of any court or of any
Federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over ComEd or its properties.
SECTION 3.06. NO PROCEEDINGS. [Except as set forth on Schedule 3.06],
there are no proceedings or investigations pending or, to ComEd's knowledge,
threatened, before any court, Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over ComEd or
its properties involving or relating to ComEd or the Grantee or to ComEd's
knowledge, any other Person: (i) asserting the invalidity of the Funding Law,
this Agreement, any of the other Basic Documents or the Notes, (ii) seeking to
prevent the grant of the 1998 Transition Property to the Grantee or the
consummation of any of the transactions contemplated by this Agreement or any of
the other Basic Documents, (iii) seeking any determination or ruling that could
reasonably be expected to materially and adversely affect ComEd's performance of
its obligations under, or the validity or enforceability of, this Agreement, any
of the other Basic Documents or the Notes, or (iv) which could reasonably be
expected to adversely affect the Federal or state income tax attributes of the
Notes.
SECTION 3.07. APPROVALS. No approval, authorization, consent, order or
other action of, or filing with, any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with ComEd's execution and delivery of this Agreement, ComEd's
performance of the transactions contemplated hereby or ComEd's fulfillment of
the terms hereof, except (i) those that have been obtained or made and (ii)
filings to be made by ComEd with the ICC pursuant to the 1998 Funding Order and
the Funding Law relating to ComEd's use of proceeds from the transactions
contemplated hereby and the final terms of each Series of Notes issued pursuant
to the Indenture.
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SECTION 3.08. THE 1998 TRANSITION PROPERTY.
(a) INFORMATION. All information provided by ComEd to the Grantee with
respect to the 1998 Transition Property (including the 1998 Funding Order and
the 1998 Initial Tariff) is correct in all material respects.
(b) TITLE. It is the intention of the parties hereto that the vesting of
the 1998 Transition Property in the Grantee as contemplated by the 1998 Funding
Order shall be irrevocable and enforceable against ComEd and its successors and
that no interest in or title to the 1998 Transition Property shall be part of
ComEd's estate in the event of the filing of a bankruptcy petition by or against
ComEd under any bankruptcy law. Accordingly, ComEd reaffirms that it has no
right, title or interest in and to the 1998 Transition Property and any sale,
transfer, assignment, set over and conveyance which may nonetheless be
contemplated by Section 2.01 hereof shall constitute an absolute transfer to the
Grantee, within the meaning of Section 18-108 of the Funding Law, of any right,
title and interest ComEd may otherwise have had in the 1998 Transition Property
(or any part thereof) created by, under and pursuant to the 1998 Funding Order,
such transfer is irrevocable and enforceable against ComEd and its successors,
and no interest in or title to the 1998 Transition Property shall be part of
ComEd's estate in the event of the filing of a bankruptcy petition by or against
ComEd under any bankruptcy law. No portion of the 1998 Transition Property has
been sold, transferred, assigned, pledged or otherwise conveyed by ComEd to any
Person other than the Grantee. Immediately prior to the sale, transfer,
assignment, set over and conveyance contemplated hereunder, ComEd's right, title
and interest in and to the 1998 Transition Property, if any, is free and clear
of all Liens and rights of any other Person, and no offsets, defenses or
counterclaims exist or have been asserted with respect thereto. ComEd, in its
capacity as Servicer or otherwise, will not at any time assert any Lien against
or with respect to any of the 1998 Transition Property.
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(c) TRANSFER FILINGS. The 1998 Transition Property has been validly granted
and transferred to the Grantee pursuant to the 1998 Funding Order and, to the
extent applicable, this Agreement, the Grantee owns all right, title and
interest to the 1998 Transition Property, free and clear of all Liens and rights
of any other Person (other than Liens created pursuant to the Sale Agreement and
the Indenture), and all filings to be made by ComEd (including filings with the
ICC under the Funding Law) necessary in any jurisdiction to give the Grantee a
perfected ownership interest in the 1998 Transition Property, free and clear of
all Liens, have been made. No further action is required under Illinois law to
maintain such ownership interest in the 1998 Transition Property. No further
action, other than any filings or other steps required to be taken with respect
to proceeds or on account of events occurring after the date hereof by Sections
9-103, 9-304, 9-306, 9-402(7) or 9-403(2)-(3) of the UCC, is required to
maintain such first priority perfected ownership interest in the Related Assets.
(d) STATE PLEDGE. Under the laws of the State of Illinois and the United
States in effect on the Closing Date, the State of Illinois has agreed with the
Holders, pursuant to Section 18-105(b) of the Funding Law, as follows:
"(b) The State pledges to and agrees with the holders of any
transitional funding instruments who may enter into contracts with an
electric utility, grantee, assignee or issuer pursuant to this Article
XVIII that the State will not in any way limit, alter, impair or reduce the
value of intangible transition property created by, or instrument funding
charges approved by, a transitional funding order so as to impair the terms
of any contract made by such electric utility, grantee, assignee or issuer
with such holders or in any way impair the rights and remedies of such
holders until the pertinent grantee instruments or, if the related
transitional funding order does not provide for the issuance of grantee
instruments, the pertinent transitional funding instruments and interest,
premium and other fees, costs and charges related thereto, as the case may
be, are fully paid and discharged. Electric utilities, grantees and
issuers are authorized to include these pledges and agreements of the State
in any contract with the holders of transitional funding instruments or
with any assignees pursuant to this Article XVIII and any assignees are
similarly authorized to include these pledges and agreements of the State
in any contract with any issuer, holder or any other assignee. Nothing in
this Article XVIII shall preclude the State of Illinois from requiring
adjustments as may
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otherwise be allowed by law to the electric utility's base rates,
transition charges, delivery services charges, or other charges for
tariffed services, so long as any such adjustment does not directly affect
or impair any instrument funding charges previously authorized by a
transitional funding order issued by the [ICC]."
As a result of the foregoing pledge, the State of Illinois may not, except as
provided in the succeeding sentence, in any way limit, alter, impair or reduce
the value of the 1998 Transition Property or the IFCs in a manner substantially
impairing the Indenture or the rights and remedies of the Holders, until the
Notes, together with interest thereon, are fully paid and discharged.
Notwithstanding the immediately preceding sentence, the State would be allowed
to effect a temporary impairment of the Holders' rights if it could be shown
that such impairment was necessary to advance a significant and legitimate
public purpose.
(e) 1998 FUNDING ORDER AND TARIFFS; OTHER APPROVALS. Under the laws of the
State of Illinois and the United States in effect on and at all relevant times
before the Closing Date, (i) ComEd was authorized to file the Application, (ii)
ComEd filed the Application with the ICC on April 22, 1998, in proper form,
requesting the issuance of a transitional funding order; (iii) the 1998 Funding
Order and 1998 Initial Tariff established, created and granted rights in and to
intangible transition property in an aggregate amount of $6.323 billion, and the
1998 Transition Property and the right to impose and collect IFCs constitute
current and original property rights vested in the Grantee; (iv) the 1998
Funding Order has been duly entered by the ICC, is in full force and effect; (v)
the 1998 Initial Tariff is in full force and effect and is not subject to
modification by the ICC except as provided under the Funding Law; (vi) as of the
issuance of the Notes, the Notes are entitled to the protections provided in
Section 18-104(c) of the Funding Law and, accordingly, the 1998 Funding Order is
not revocable by the ICC; (vii) neither the State of Illinois nor the ICC may
reduce, postpone, impair or terminate the 1998 Transition Property or the 1998
Funding Order; (viii) the process by which the 1998 Funding Order was adopted
and approved
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and the 1998 Initial Tariff was filed, and the 1998 Funding Order and the 1998
Initial Tariff themselves, comply with all applicable laws, rules and
regulations; and (ix) no other approval, authorization, consent, order or other
action of, or filing with, any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with the creation and grant of the 1998 Transition Property, except
those that have been obtained or made and those filings described in Section
3.07.
(f) ASSUMPTIONS. The assumptions used in calculating the IFCs are
reasonable and made in good faith.
(g) CREATION OF 1998 TRANSITION PROPERTY. Upon the effectiveness of the
1998 Initial Tariff: (i) all of the 1998 Transition Property constitutes a
current property right vested in the Grantee; (ii) the 1998 Transition Property
includes, without limitation, (A) the right, title and interest in and to the
IFCs authorized under the 1998 Funding Order, as adjusted from time to time, (B)
the right, title and interest in and to all revenues, collections, claims,
payments, money or proceeds of or arising from the IFCs set forth in the 1998
Initial Tariff, and (C) all rights to obtain adjustments to the IFCs pursuant to
the 1998 Funding Order; and (iii) the Grantee is entitled to impose and collect
the IFCs described in the 1998 Funding Order and the 1998 Initial Tariff in an
aggregate amount equal to the principal amount of the Notes, all interest
thereon, all amounts required to be deposited in the Reserve Subaccount, the
Overcollateralization Subaccount and (to the extent payable from the proceeds of
the IFCs) the Capital Subaccount, and all related fees, costs and expenses in
respect of the Notes until they have been paid in full, subject only to the
$6.323 billion limitation set forth in the 1998 Funding Order as to the maximum
dollar amount of 1998 Transition Property created thereunder.
(h) PROPERTY OF GRANTEE. To the fullest extent permitted by the Funding
Law and all other applicable law, the 1998 Transition Property and the right to
impose and collect IFCs contem-
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plated thereunder constitute current property rights of the Grantee and its
assigns, including the Note Issuer and its assigns (including the Indenture
Trustee on behalf of the Holders), which property has been placed beyond the
reach of ComEd and its creditors, as in a true sale, and which property rights
may not be limited, altered, impaired, reduced or otherwise terminated by any
subsequent actions of ComEd or any third party and which shall, to the full
extent permitted by law, be enforceable against ComEd, its successors and
assigns, and all other third parties (including judicial lien creditors)
claiming an interest therein by or through ComEd or its successors and assigns.
ARTICLE IV
COVENANTS OF COMED
SECTION 4.01. CORPORATE EXISTENCE. So long as any of the Notes are
outstanding, ComEd (a) will keep in full force and effect its existence, rights
and franchises as a corporation under the laws of the State of Illinois (unless
it becomes, or any successor to ComEd hereunder is or becomes, organized under
the laws of any other State or of the United States of America, in which case
ComEd will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction), (b) will obtain and preserve its qualification
to do business, in each case to the extent that in each such jurisdiction such
existence or qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and any of the other Basic Documents to which
ComEd is a party and each other instrument or agreement necessary or appropriate
to the proper administration of this Agreement and the transactions contemplated
hereby and (c) at all times hereafter, neither ComEd nor any successor will
cause or permit the Grantee or the Note Issuer to elect to be classified as an
association taxable as a corporation for federal income tax purposes.
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SECTION 4.02. NO LIENS. Except for the conveyances hereunder, ComEd (i)
will not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on, any of the 1998 Transition
Property or any interest therein, (ii) will not at any time assert any Lien
against or with respect to any of the 1998 Transition Property in its capacity
as Servicer or otherwise, (iii) will not seek to limit, alter, impair, reduce or
otherwise terminate the property rights of the Grantee or any assignee of the
Grantee, and (iv) shall defend the right, title and interest of the Grantee in,
to and under the 1998 Transition Property against all claims of third parties
claiming through or under ComEd.
SECTION 4.03. DELIVERY OF COLLECTIONS. If ComEd receives collections in
respect of the IFCs or the proceeds thereof, or in replacement therefor,
including, without limitation, any Allocable IFC Revenue Amounts, ComEd agrees
to hold such payments in trust for the Servicer and to pay the Servicer all
payments received by ComEd in respect thereof as soon as practicable after
receipt thereof by ComEd, but in no event later than [ ] Business Days after
such receipt.
SECTION 4.04. NOTICE OF LIENS. ComEd shall notify the Grantee, the Note
Issuer and the Indenture Trustee promptly after becoming aware of any Lien on
any of the 1998 Transition Property other than the conveyances hereunder, under
the Sale Agreement and under the Indenture.
SECTION 4.05. COMPLIANCE WITH LAW. ComEd shall comply with its
organizational or governing documents and all laws, treaties, rules, regulations
and determinations of any governmental instrumentality applicable to it, except
to the extent that failure to so comply would not materially adversely affect
the Grantee's, the Note Issuer's or the Indenture Trustee's interests in the
1998 Transition Property or under any of the Basic Documents, or ComEd's
performance of its obligations hereunder or under any of the other Basic
Documents to which it is party.
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SECTION 4.06. COVENANTS RELATED TO THE 1998 TRANSITION PROPERTY AND THE
NOTES.
(a) So long as any of the Notes are outstanding, ComEd shall indicate in
its financial statements that it is not the owner of the 1998 Transition
Property.
(b) So long as any of the Notes are outstanding, ComEd shall not own or
purchase any Notes.
(c) ComEd agrees that upon the creation and grant of the 1998 Transition
Property to the Grantee pursuant to the 1998 Funding Order and, to the extent
applicable, this Agreement, (i) to the fullest extent permitted by law,
including applicable ICC Regulations, the Grantee shall have all of the rights
of the owner of the 1998 Transition Property (including all of the rights
originally held by ComEd, if any, with respect to the 1998 Transition Property),
including the right (subject to the terms of the Servicing Agreement) to
exercise any and all rights and remedies to collect any amounts payable by any
Customer or third party collection agent, including any ARES, in respect of the
1998 Transition Property, notwithstanding any objection or direction to the
contrary by ComEd and (ii) any payment by any Customer or third party collection
agent, including any ARES, to the Grantee (or to the Servicer for the benefit of
the Grantee) shall discharge such Customer's or third party's obligations in
respect of the 1998 Transition Property to the extent of such payment,
notwithstanding any objection or direction to the contrary by ComEd.
(d) So long as any of the Notes are outstanding, (i) except with respect to
federal and other applicable taxes, ComEd shall not make any statement or
reference in respect of the 1998 Transition Property that is inconsistent with
the ownership interest of the Grantee, and (ii) ComEd shall not take any action
in respect of the 1998 Transition Property except solely in its capacity as the
Servicer under the Servicing Agreement or as otherwise contemplated by the Basic
Documents.
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(e) So long as any of the Notes are outstanding, ComEd shall not initiate
any material changes with respect to its policies and procedures pertaining to
credit (including requirements for deposits from Customers), billing,
collections (including procedures for disconnection of service for non-payment)
and restoration of service after disconnection, and shall not initiate any
changes in any ICC tariffs relating to the foregoing matters which are likely to
adversely affect ComEd's ability to make timely recovery of amounts billed to
Customers, except for any such changes required by applicable law.
(f) If ComEd determines that aggregate dollar amount of IFC Charges to be
imposed and collected is reasonably likely to exceed the maximum dollar amount
of Intangible Transition Property authorized by the 1998 Funding Order and any
Subsequent Funding Orders and any Notes remain outstanding, ComEd shall make a
good faith effort to take any and all subsequent regulatory action with the ICC
to obtain an order permitting the creation of additional Intangible Transition
Property in an amount sufficient to pay such Notes in full.
SECTION 4.07. PROTECTION OF TITLE. ComEd shall execute and file such
filings, including filings with the ICC pursuant to the Funding Law, and cause
to be executed and filed such filings, all in such manner and in such places as
may be required by law fully to preserve, maintain, and protect the interests of
the Grantee in the 1998 Transition Property, including all filings required
under the Funding Law relating to the grant of the 1998 Transition Property to
the Grantee. ComEd shall deliver (or cause to be delivered) to the Grantee
file-stamped copies of, or filing receipts for, any document filed as provided
above, promptly following such filing. ComEd shall institute any action or
proceeding necessary to compel performance by the ICC or the State of Illinois
of any of their obligations or duties under the Funding Law, the 1998 Funding
Order, the 1998 Initial Tariff or any amendatory tariff filed pursuant to
Section 18-104(k) of the Funding Law, and ComEd agrees to take such legal or
administrative actions, including defending against
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or instituting and pursuing legal actions and appearing or testifying at
hearings or similar proceedings, as may be reasonably necessary to protect the
Grantee from claims, state actions or other actions or proceedings of third
parties which, if successfully pursued, would result in a breach of any
representation set forth in Article III hereof. The costs of any such actions
or proceedings will be payable by ComEd. ComEd designates the Grantee as its
agent and attorney-in-fact to execute any filings with the ICC or other
instruments required by the Grantee pursuant to this Section, it being
understood that the Grantee shall have no obligation to execute any such
instruments.
SECTION 4.08. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the ICC's right
to order the sequestration and payment of revenues arising with respect to the
1998 Transition Property notwithstanding any bankruptcy, reorganization or other
insolvency proceedings with respect to ComEd, the Grantee or any other grantee
or assignee of the 1998 Transition Property pursuant to Section 18-107(c)(4) of
the Funding Law, ComEd shall not, prior to the date which is one year and one
day after the termination of the Indenture, acquiesce, petition or otherwise
invoke or cause or join with any other Person to invoke the process of any court
or governmental authority for the purpose of commencing or sustaining a case
against the Grantee or the Note Issuer under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of or for the Grantee
or the Note Issuer or any substantial part of the property of the Grantee or the
Note Issuer, or ordering the winding up or liquidation of the affairs of the
Grantee or the Note Issuer.
SECTION 4.09. TAXES. So long as any of the Notes are outstanding, ComEd
shall, and shall cause each of its subsidiaries to, pay all material taxes,
assessments and governmental charges imposed upon it or any of its properties or
assets or with respect to any of its franchises,
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business, income or property before any penalty accrues thereon if the failure
to pay any such taxes, assessments and governmental charges would, after any
applicable grace periods, notices or other similar requirements, result in a
lien on the 1998 Transition Property; PROVIDED that no such tax need be paid if
ComEd or one of its subsidiaries is contesting the same in good faith by
appropriate proceedings promptly instituted and diligently conducted and if
ComEd or such subsidiary has established appropriate reserves as shall be
required in conformity with generally accepted accounting principles.
SECTION 4.10. CONTRACTS FOR NON-TARIFFED SERVICES. Neither ComEd nor any
successor thereto shall enter into any contract with any Customer obligated (or
who would, but for such contract, be obligated) to pay IFCs if, as a result
thereof, such Customer would not receive tariffed services, unless the contract
provides that the Customer will pay an amount to the Grantee or its assigns, as
applicable, equal to the amount such Customer would pay in IFCs if the services
provided under such contract were tariffed services. Any revenues received by
ComEd or such successor from any such contract services shall, to the extent of
the authorized amount of the IFCs included therein (or deemed included therein
pursuant to the 1998 Funding Order and this Section), be deemed to be proceeds
of, and included in, the 1998 Transition Property.
ARTICLE V
COMED
SECTION 5.01. LIABILITY OF COMED; INDEMNITIES.
(a) ComEd shall indemnify the Grantee, the Note Issuer, the Indenture
Trustee, the Delaware Trustee and the Holders, and each of their respective
officers, directors, employees and agents for, and defend and hold harmless each
such Person from and against, any and all taxes (other than any taxes imposed on
the Holders) (i) that may at any time be imposed on or asserted
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against any such Person as a result of the grant of the 1998 Transition Property
to the Grantee, or (ii) that may be imposed on or asserted against any such
Person under existing law as of the Closing Date as a result of the Grantee's
ownership and assignment of the 1998 Transition Property, the Note Issuer's
issuance and sale of the Notes, or the other transactions contemplated herein,
including, in each case, any sales, gross receipt, general corporation, tangible
personal property, privilege or license taxes.
(b) ComEd shall indemnify the Grantee, the Note Issuer, the Indenture
Trustee, the Delaware Trustee and the Holders and each of their respective
officers, directors, employees and agents for, and defend and hold harmless each
such Person from and against, any and all liabilities, obligations, losses,
claims, actions, suits, damages, payments, and reasonable costs or expenses, of
any kind whatsoever (collectively, "Losses") that may be imposed on, incurred by
or asserted against any such Person as a result of (i) ComEd's willful
misconduct, bad faith or gross negligence in the performance of its duties or
observance of its covenants under this Agreement, or ComEd's reckless disregard
of its obligations and duties under this Agreement and (ii) ComEd's breach of
any of its representations or warranties contained in this Agreement (including
without limitation the representations and warranties specified in Sections
3.01, 3.03, 3.04, 3.05, 3.08(b), 3.08(c), 3.08(d), 3.08(e) or 3.08(g).
(c) ComEd shall pay any and all taxes levied or assessed upon all or any
part of the Grantee's property or assets based on existing law as of the Closing
Date.
(d) Indemnification under Sections 5.01(b) through 5.01(d) shall survive
the termination of this Agreement and shall include reasonable fees and expenses
of investigation and litigation (including reasonable attorneys' fees and
expenses).
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, COMED. Any Person (a) into which ComEd may be merged or consolidated, (b)
which may result
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from any merger or consolidation to which ComEd shall be a party or (c) which
may succeed to the properties and assets of ComEd substantially as a whole,
which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of ComEd hereunder, shall be the successor to ComEd
under this Agreement without further act on the part of any of the parties to
this Agreement; PROVIDED, HOWEVER, that (i) immediately after giving effect to
such transaction, no representation or warranty made pursuant to Article III
shall have been breached and (if ComEd is the Servicer) no Servicer Default, and
no event which, after notice or lapse of time, or both, would become a Servicer
Default shall have occurred and be continuing, (ii) ComEd shall have delivered
to the Grantee, the Note Issuer and the Indenture Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, (iii) ComEd shall have
delivered to the Grantee, the Note Issuer and the Indenture Trustee an Opinion
of Counsel either (x) stating that, in the opinion of such counsel, all filings
to be made by ComEd, including filings with the ICC pursuant to the Funding Law,
have been executed and filed that are necessary to fully preserve and protect
the interest of the Grantee in the 1998 Transition Property and reciting the
details of such filings, or (y) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interests, (iv) the
Rating Agencies shall have received prior written notice of such transaction and
(v) ComEd shall have delivered to the Grantee, the Note Issuer, the Delaware
Trustee and the Indenture Trustee an opinion of independent tax counsel and/or a
ruling from the Internal Revenue Service (as selected by, and in form and
substance reasonably satisfactory to, ComEd) to the effect that such
consolidation or merger will not result in a material adverse federal income tax
consequence to ComEd, the Grantee, the Note Issuer, the Delaware Trustee, the
Indenture Trustee or the then
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existing Holders. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with clauses
(i), (ii), (iii) and (iv) above shall be conditions to the consummation of any
transaction referred to in clauses (a), (b) or (c) above. When any Person
acquires the properties and assets of ComEd substantially as a whole and becomes
the successor to ComEd in accordance with the terms of this Section 5.02, then
upon the satisfaction of all of the other conditions of this Section 5.02, ComEd
shall automatically and without further notice be released from its obligations
hereunder.
SECTION 5.03. LIMITATION ON LIABILITY OF COMED AND OTHERS. ComEd and any
director or officer or employee or agent of ComEd may rely in good faith on the
advice of counsel or on any document of any kind, PRIMA FACIE properly executed
and submitted by any Person, respecting any matters arising hereunder. Subject
to Section 4.07, ComEd shall not be under any obligation to appear in, prosecute
or defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. AMENDMENT. The Agreement may be amended by ComEd and the
Grantee, with prior written notice given to the Rating Agencies and the prior
written consent of the Note Issuer, but without the consent of any of the
Holders, to cure any ambiguity, to correct or supplement any provisions in this
Agreement or for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions in this Agreement or of modifying in
any manner the rights of the Holders; PROVIDED, HOWEVER, that such action shall
not, as evidenced by a ComEd Officer's Certificate delivered to the Note Issuer,
adversely affect in any material respect the interests of any Holder.
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This Agreement may also be amended from time to time by ComEd and the
Grantee, with prior written notice given to the Rating Agencies and the prior
written consent of the Note Issuer, the Indenture Trustee and Holders holding
not less than a majority of the Outstanding Amount of the Notes of all Series
affected thereby, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders; PROVIDED, HOWEVER, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, IFC Collections or (b) reduce the aforesaid percentage of the
Outstanding Amount of the Notes, the Holders of which are required to consent to
any such amendment, without the consent of the Holders of all the outstanding
Notes.
Promptly after the execution of any such amendment or consent, the Grantee
shall furnish a copy of such amendment or consent to the Note Issuer, the
Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Holders pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof.
SECTION 6.02. NOTICES. All demands, notices and communications upon or to
ComEd, the Grantee, the Note Issuer, the Indenture Trustee or the Rating
Agencies under this Agreement shall be in writing, personally delivered, mailed
or sent by telecopy or other similar form of rapid transmission, and shall be
deemed to have been duly given upon receipt (a) in the case of ComEd, to
Commonwealth Edison Company, 00 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, (b) in the case of the Grantee, to ComEd Funding, LLC, c/o
Commonwealth Edison Company, 00 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, (c) in the case of the Note Issuer, to Transitional Funding
Trust, c/o First Union Trust Company, National Association,
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One Xxxxxx Square, 000 Xxxx Xxxxxx 0xx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attn:
Corporate Trust Administration, (d) in the case of the Indenture Trustee, at the
Corporate Trust Office, (e) in the case of Moody's, to Xxxxx'x Investors
Service, Inc., ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, (f) in the case of Standard & Poor's, to Standard & Poor's Corporation,
00 Xxxxxxxx (00xx Xxxxx), Xxx Xxxx, Xxx Xxxx 00000, Attention of Asset Backed
Surveillance Department, (g) in the case of Fitch, to Fitch Investors Service,
L.P., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Commercial
Asset-Backed Securities, or (h) in the case of Duff & Xxxxxx, to Xxxx & Xxxxxx
Credit Rating Co., 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention of Asset Based Monitoring Group, or as to each of the foregoing, at
such other address as shall be designated by written notice to the other
parties.
SECTION 6.03. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 5.02, this Agreement may not be
assigned by ComEd.
SECTION 6.04. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of ComEd, the Grantee, the Note Issuer, the
Indenture Trustee, the Delaware Trustee and the Holders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the 1998 Transition
Property or under or in respect of this Agreement or any covenants, conditions
or provisions contained herein.
SECTION 6.05. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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SECTION 6.06. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 6.07. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 6.08. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 6.09. ASSIGNMENTS TO NOTE ISSUER AND INDENTURE TRUSTEE. ComEd
acknowledges and consents to any transfer, pledge, assignment or grant of a
security interest by the Grantee to the Note Issuer pursuant to the Sale
Agreement, and by the Note Issuer to the Indenture Trustee for the benefit of
the Holders pursuant to the Indenture, of all right, title and interest of the
Grantee in, to and under the 1998 Transition Property and the proceeds thereof,
and the assignment of any or all of the Grantee's rights and obligations
hereunder to the Note Issuer and the Indenture Trustee. ComEd agrees that the
Note Issuer and the Indenture Trustee, as assignees, shall, subject to the terms
of the Basic Documents, have the right to enforce this Agreement and to exercise
directly all of the Grantee's rights and remedies under this Agreement
(including without limitation, the right to give or withhold any consents or
approvals of the Grantee to be given or withheld hereunder), and acknowledges
that with respect to the sale, transfer, assignment, set over and conveyance of
the 1998 Transition Property and Related Assets to the Note Issuer and the
pledge thereof to the Indenture Trustee pursuant to the Indenture, the
22
Note Issuer and the Indenture Trustee have relied on the representations and
warranties made by ComEd herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
COMMONWEALTH EDISON
COMPANY
By:
----------------------------
Name:
Title:
COMED FUNDING, LLC, Grantee
By:
----------------------------
Name:
Title:
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SCHEDULE 3.06
PROCEEDINGS
None, except:
[insert any applicable proceedings]
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