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INTANGIBLE TRANSITION PROPERTY
SALE AGREEMENT
between
PECO ENERGY TRANSITION TRUST
Issuer
and
PECO ENERGY COMPANY
Seller
Dated as of [_________], 1998
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
SECTION 1.01. Definitions..................................................2
SECTION 1.02. Other Definitional Provisions................................8
ARTICLE II
Conveyance of Intangible Transition Property
SECTION 2.01. Conveyance of Initial Intangible
Transition Property.................................9
SECTION 2.02. Conveyance of Subsequent Intangible
Transition Property................................11
SECTION 2.03. Conditions to Conveyance of Intangible
Transition Property................................11
ARTICLE III
Representations and Warranties of Seller
SECTION 3.01. Organization and Good Standing..............................14
SECTION 3.02. Due Qualification...........................................14
SECTION 3.03. Power and Authority.........................................14
SECTION 3.04. Binding Obligation..........................................15
SECTION 3.05. No Violation................................................15
SECTION 3.06. No Proceedings..............................................16
SECTION 3.07. Approvals...................................................16
SECTION 3.08. The Intangible Transition Property..........................17
ARTICLE IV
Covenants of the Seller
SECTION 4.01. Corporate Existence.........................................22
SECTION 4.02. No Liens or Conveyances.....................................23
SECTION 4.03. Delivery of Collections.....................................23
SECTION 4.04. Notice of Liens.............................................24
SECTION 4.05. Compliance with Law.........................................24
SECTION 4.06. Covenants Related to Intangible Transition
Property...........................................24
SECTION 4.07. Notice of Indemnification Events............................26
SECTION 4.08. Protection of Title.........................................26
Contents, p. ii
Page
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SECTION 4.09. Taxes ...................................................27
ARTICLE V
The Seller
SECTION 5.01. Liability of Seller; Indemnities and
Liquidated Damages.................................28
SECTION 5.02. Merger or Consolidation of, or Assumption
of the Obligations of, Seller......................35
SECTION 5.03. Limitation on Liability of Seller
and Others.........................................37
SECTION 5.04. Opinions of Counsel.........................................37
ARTICLE VI
Miscellaneous Provisions
SECTION 6.01. Amendment...................................................38
SECTION 6.02. Notices ...................................................39
SECTION 6.03. Assignment..................................................40
SECTION 6.04. Limitations on Rights of Others.............................40
SECTION 6.05. Severability................................................40
SECTION 6.06. Separate Counterparts.......................................41
SECTION 6.07. Headings ...................................................41
SECTION 6.08. Governing Law...............................................41
SECTION 6.09. Assignment to Bond Trustee..................................41
SECTION 6.10. Nonpetition Covenant........................................42
SECTION 6.11. Limitation of Liability of Issuer Trustee...................43
SECTION 6.12. Perfection..................................................43
INTANGIBLE TRANSITION PROPERTY SALE AGREEMENT dated as
of [______], 1998, between PECO ENERGY TRANSITION TRUST, a
Delaware business trust (the "Issuer"), and PECO ENERGY
COMPANY, a Pennsylvania corporation, and its successors in
interest to the extent permitted hereunder, as Seller (the
"Seller").
WHEREAS the Issuer desires to purchase from time to time Intangible
Transition Property created pursuant to the Statute and the Qualified Rate
Order;
WHEREAS the Seller is willing to sell Intangible Transition Property to the
Issuer;
WHEREAS the Issuer, in order to finance the purchase of the Transferred
Intangible Transition Property, will from time to time issue Transition Bonds
under the Indenture;
WHEREAS the Issuer, to secure its obligations under all Transition Bonds
and the Indenture, will pledge its right, title and interest in the Transferred
Intangible Transition Property to the Bond Trustee for the benefit of the
Transition Bondholders; and
WHEREAS the Issuer has determined that the transactions contemplated by the
Basic Documents are in the
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best interest of the Issuer and its creditors and represent a prudent and
advisable course of action that does not impair the rights and interests of the
Issuer's creditors.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. (a) Whenever used in this Agreement, each of the
following words and phrases shall have the following meaning:
"Addition Notice" means, with respect to the transfer of Subsequent
Intangible Transition Property to the Issuer pursuant to Section 2.02, notice,
which shall be given by the Seller to the Issuer and the Rating Agencies not
later than 10 days prior to the related Subsequent Transfer Date, specifying the
Subsequent Transfer Date for such Subsequent Intangible Transition Property.
"Agreement" means this Intangible Transition Property Sale Agreement, as
the same may be amended and supplemented from time to time.
"Xxxx of Sale" means a xxxx of sale substantially in the form of Exhibit A
hereto.
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"Business Day" has the meaning specified in the Master Servicing Agreement.
"Competitive Transition Charges" has the meaning specified in the Master
Servicing Agreement.
"Corporate Trust Office" means,(i) with respect to the Bond Trustee, 000
Xxxxxxx Xxxxxx, Xxxxx 12 East, New York, New York 10286, Attention: Asset Backed
Finance Unit, or the principal corporate trust office of any successor Bond
Trustee (the address of which the successor Bond Trustee will notify the
Transition Bondholders and the Issuer), and (ii) with respect to the Issuer
Trustee, c/o First Union Trust Company, National Association, One Xxxxxx Square,
000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: [ ].
"Customers" has the meaning specified in the Master Servicing Agreement.
"De Minimis Loss Amount" has the meaning specified in Section 5.01(c)(iii).
"Duff" has the meaning specified in the Master Servicing Agreement.
"Fitch" has the meaning specified in the Master Servicing Agreement.
"Indemnification Event" has the meaning specified in Section 5.01(c)(i).
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"Indenture" means the Indenture dated as of [________], 1998, between the
Issuer and the Bond Trustee, as the same may be amended and supplemented from
time to time.
"Initial Intangible Transition Property" means the Intangible Transition
Property, as identified in the related Xxxx of Sale, sold to the Issuer on the
Initial Transfer Date pursuant to this Agreement in connection with the issuance
of the Series [__________] Transition Bonds.
"Initial Loss Calculation Date" has the meaning specified in Section
5.01(c)(ii).
"Initial Transfer Date" means [_____________], 1998.
"Intangible Transition Charges" has the meaning specified in the Master
Servicing Agreement.
"Intangible Transition Property" has the meaning specified in the Master
Servicing Agreement.
"ITC Collections" has the meaning specified in the Master Servicing
Agreement.
"Lien" has the meaning specified in the Master Servicing Agreement.
"Liquidated Damages Amount" means an amount equal to the sum of (i) all
amounts due to the Bond Trustee or the Issuer Trustee in respect of expenses or
indemnity payments, (ii) the then outstanding principal amount of the Transition
Bonds as of the Liquidated Damages Redemption Date and unpaid interest accrued
thereon to such date and (iii)
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amounts due to the Issuer in respect of any other fees or Operating Expenses of
the Issuer or indemnity payments.
"Liquidated Damages Payment Date" means the date that is (i) 90 days after
the date of a breach of a representation or warranty specified in Section
3.08(b),(c),(d)(i), (d)(ii), (d)(iv) or (f) if the Seller (A) has the long term
debt ratings specified by, and enters into the binding agreement described in,
Section 5.01(d)(i)(B)(i) or (B) does not have such long term debt ratings but
makes the deposit required by Section 5.01(d)(i)(B)(ii) or (ii) in all other
cases, two Business Days after the date of such breach.
"Losses" has the meaning specified in the Master Servicing Agreement.
"Master Servicing Agreement" means the Master Servicing Agreement dated as
of [ ], 1998, among the Issuer, the Servicer and any Other Issuers, as the same
may be amended and supplemented from time to time.
"Monthly Allocation Date" has the meaning specified in the Master Servicing
Agreement.
"Moody's" has the meaning specified in the Master Servicing Agreement.
"Mortgage" has the meaning specified in the Master Servicing Agreement.
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"Officers' Certificate" means a certificate signed by (a) the chairman of
the board, the president, the vice chairman of the board, the executive vice
president or any vice president and (b) a treasurer, assistant treasurer,
secretary or assistant secretary of the Seller or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel who may
be an employee of or counsel to the Seller or the Servicer, which counsel shall
be reasonably acceptable to the Bond Trustee, the Issuer or the Rating Agencies,
as applicable, and which shall be in form reasonably satisfactory to the Bond
Trustee, if applicable.
"Other Issuer" means any Person other than the Issuer that issues Other
Transition Bonds secured by Intangible Transition Property sold by the Seller to
such Person in accordance with Section 4.02 of this Agreement.
"Other Transition Bonds" means "transition bonds" (as defined in the
Statute) issued by any Other Issuer.
"PECO Energy" has the meaning specified in the Master Servicing Agreement.
"PUC" has the meaning specified in the Master Servicing Agreement.
"PUC Regulations" has the meaning specified in the Master Servicing
Agreement.
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"Qualified Rate Order" has the meaning specified in the Master Servicing
Agreement.
"Qualified Transition Expenses" has the meaning specified in the Master
Servicing Agreement.
"Rate Class" has the meaning specified in the Master Servicing Agreement.
"Retained Intangible Transition Property" means Intangible Transition
Property other than (i) the Transferred Intangible Transition Property and (ii)
any Intangible Transition Property sold to Other Issuers.
"Serviced Intangible Transition Property" has the meaning specified in the
Master Servicing Agreement.
"Servicer" means PECO Energy, as the servicer of the Intangible Transition
Property, and each successor to PECO Energy (in the same capacity) pursuant to
Section 5.03 or 6.04 of the Master Servicing Agreement.
"Servicer Default" means an event specified in Section 6.01 of the Master
Servicing Agreement.
"Standard & Poor's" has the meaning specified in the Master Servicing
Agreement.
"Statute" has the meaning specified in the Master Servicing Agreement.
"Subsequent Intangible Transition Property" means Intangible Transition
Property, as identified in the related Xxxx of Sale, sold to the Issuer on any
Subsequent Transfer
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Date in connection with the issuance of a Series of Transition Bonds.
"Subsequent Transfer Date" means any date on which Subsequent Intangible
Transition Property is to be transferred to the Issuer pursuant to Section 2.02.
"Third Party" has the meaning specified in the Master Servicing Agreement.
"Transferred Intangible Transition Property" means, collectively, the
Initial Intangible Transition Property and any Subsequent Intangible Transition
Property.
"Trust Agreement" means the Amended and Restated Trust Agreement dated as
of July [ ], 1998, among the Seller, the Issuer Trustee and the other trustees
named therein, as the same may be amended and supplemented from time to time.
"UCC" has the meaning specified in the Master Servicing Agreement.
(b) Except as otherwise specified herein or as the context may otherwise
require, each of the following terms has the meaning set forth in the Indenture
for all purposes of this Agreement, and the definitions of such terms are
equally applicable both to the singular and plural forms of such terms:
Term Section of the Indenture
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Adjustment Date ............................................ 1.01(a)
Affiliate .................................................. 1.01(a)
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Basic Documents............................................. 1.01(a)
Bond Trustee................................................ 1.01(a)
Capital Subaccount.......................................... 1.01(a)
Collateral.................................................. 1.01(a)
Collection Account.......................................... 1.01(a)
General Subaccount.......................................... 1.01(a)
Holders or Transition
Bondholders .............................................. 1.01(a)
Issuer Trustee.............................................. 1.01(a)
Liquidated Damages.......................................... 1.01(a)
Liquidated Damages Redemption
Date...................................................... 1.01(a)
Loss Subaccount............................................. 1.01(a)
Operating Expenses.......................................... 1.01(a)
Overcollateralization Amount................................ 1.01(a)
Person...................................................... 1.01(a)
Rating Agency............................................... 1.01(a)
Rating Agency Condition..................................... 1.01(a)
Reserve Subaccount.......................................... 1.01(a)
Series...................................................... 1.01(a)
Transition Bonds............................................ 1.01(a)
SECTION 1.02. Other Definitional Provisions. (a) 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".
(b) 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 genders of such terms.
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ARTICLE II
Conveyance of Intangible Transition Property
SECTION 2.01. Conveyance of Initial Intangible Transition Property. (a) In
consideration of the Issuer's delivery to or upon the order of the Seller of
$[______________], subject to the conditions specified in Section 2.03, the
Seller does hereby irrevocably sell, transfer, assign, set over and otherwise
convey to the Issuer, without recourse (subject to the obligations herein), all
right, title and interest of the Seller in and to the Initial Intangible
Transition Property (such sale, transfer, assignment, set over and conveyance of
the Initial Intangible Transition Property includes, to the fullest extent
permitted by the Statute, the assignment of all revenues, collections, claims,
rights, payments, money or proceeds of or arising from the Intangible Transition
Charges related to the Initial Intangible Transition Property, as the same may
be adjusted from time to time). Such sale, transfer, assignment, set over and
conveyance is hereby expressly stated to be a sale and, pursuant to Section
2812(e) of the Statute, shall be treated as an absolute transfer of all of the
Seller's right, title and interest (as in a true sale), and not as a pledge or
other financing, of the Initial Intangible Transition Property. The preceding
sentence is the statement referred to in
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Section 2812(e) of the Statute. The Seller agrees and confirms that after giving
effect to the sale contemplated hereby it has no rights in the Initial
Intangible Transition Property to which a security interest of creditors of the
Seller could attach because it has sold all rights in the Initial Intangible
Transition Property to the Issuer pursuant to Section 2812(e) of the Statute.
(b) Subject to the conditions specified in Section 2.03, the Issuer does
hereby purchase the Initial Intangible Transition Property from the Seller for
the consideration set forth in paragraph (a) above.
(c) The Seller and the Issuer each acknowledge and agree that the purchase
price for the Initial Intangible Transition Property sold pursuant to this
Agreement is equal to its fair market value at the time of sale.
SECTION 2.02. Conveyance of Subsequent Intangible Transition Property. The
Seller may from time to time offer to sell additional Intangible Transition
Property to the Issuer, subject to the conditions specified in Section 2.03. If
any such offer is accepted by the Issuer, such Subsequent Intangible Transition
Property shall be sold to the Issuer effective on the Subsequent Transfer Date
specified in the related Addition Notice, subject to the satisfaction or waiver
of the conditions specified in Section 2.03.
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SECTION 2.03. Conditions to Conveyance of Intangible Transition Property.
The Seller shall be permitted to sell Intangible Transition Property to the
Issuer only upon the satisfaction or waiver of each of the following conditions:
(i) on or prior to the Initial Transfer Date or Subsequent
Transfer Date, as applicable, the Seller shall have delivered to the
Issuer a duly executed Xxxx of Sale identifying the Intangible
Transition Property to be conveyed on that date;
(ii) as of the Initial Transfer Date or the Subsequent Transfer
Date, as applicable, the Seller was not insolvent and will not have
been made insolvent by such sale and the Seller is not aware of any
pending insolvency with respect to itself;
(iii) as of the Initial Transfer Date or the Subsequent Transfer
Date, as applicable, no breach by the Seller of its representations,
warranties or covenants in this Agreement shall exist; and no Servicer
Default shall have occurred and be continuing;
(iv) as of the Initial Transfer Date or the Subsequent Transfer
Date, as applicable, (A) the Issuer shall have sufficient funds
available to pay the purchase price for the Transferred Intangible
Transition Property to be conveyed on such date and
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(B) all conditions to the issuance of one or more Series of Transition
Bonds intended to provide such funds set forth in the Indenture shall
have been satisfied or waived;
(v) on or prior to the Initial Transfer Date or Subsequent
Transfer Date, as applicable, the Seller shall have taken all action
required to transfer to the Issuer ownership of the Transferred
Intangible Transition Property to be conveyed on such date, free and
clear of all Liens other than Liens created by the Issuer pursuant to
the Indenture; and the Issuer or the Servicer, on behalf of the
Issuer, shall have taken any action required for the Issuer to grant
the Bond Trustee a first priority perfected security interest in the
Collateral and maintain such security interest as of such date;
(vi) in the case of a sale of Subsequent Intangible Transition
Property only, on or prior to such Subsequent Transfer Date, the
Seller shall have provided the Issuer and the Rating Agencies with a
timely Addition Notice;
(vii) the Seller shall have delivered to the Rating Agencies and
the Issuer (A) an Opinion of Counsel with respect to the transfer of
the Transferred Intangible Transition Property then being conveyed to
the Issuer
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substantially in the form of Exhibit B hereto and (B) the Opinion of
Counsel required by Section 5.04(a); and
(viii) the Seller shall have delivered to the Bond Trustee and
the Issuer an Officers' Certificate confirming the satisfaction of
each condition precedent specified in this Section 2.03.
ARTICLE III
Representations and Warranties of Seller
As of the Initial Transfer Date and as of any Subsequent Transfer Date, as
applicable, the Seller makes the following representations and warranties on
which the Issuer has relied and will rely in acquiring Transferred Intangible
Transition Property. The representations and warranties shall survive the sale
of Transferred Intangible Transition Property to the Issuer and the pledge
thereof to the Bond Trustee pursuant to the Indenture.
SECTION 3.01. Organization and Good Standing. The Seller is a corporation
duly organized and in good standing under the laws of the Commonwealth of
Pennsylvania, with corporate power and authority to own its properties and
conduct its business as currently owned or conducted.
SECTION 3.02. Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
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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 the Seller's
business, operations, assets, revenues, properties or prospects).
SECTION 3.03. Power and Authority. The Seller has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms; the
Seller has full corporate power and authority to own the Intangible Transition
Property and sell and assign the Initial Intangible Transition Property, in the
case of the Initial Transfer Date, and the Subsequent Intangible Transition
Property, in the case of each Subsequent Transfer Date, as applicable, and the
Seller has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and performance of this
Agreement has been duly authorized by the Seller by all necessary corporate
action.
SECTION 3.04. Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Seller enforceable against the Seller in
accordance with its terms subject to bankruptcy, receivership, insolvency,
fraudulent transfer, reorganization, moratorium or other laws affecting
creditors' rights generally from time to time
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in effect and to general principles of equity (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
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the Seller, or any indenture, agreement
or other instrument to which the Seller is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of its
properties (other than the lien of the Mortgage on the Seller's interest in this
Agreement) pursuant to the terms of any such indenture, agreement or other
instrument; nor violate any law or any order, rule or regulation applicable to
the Seller of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Seller or its properties.
SECTION 3.06. No Proceedings. There are no proceedings or investigations
pending or, to the Seller's best knowledge, threatened, before any court,
Federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties (i)
asserting the invalidity of the
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Basic Documents or the Transition Bonds, (ii) seeking to prevent the issuance of
the Transition Bonds or the consummation of any of the transactions contemplated
by the Basic Documents or the Transition Bonds or (iii) except as disclosed by
the Seller to the Issuer, seeking any determination or ruling that could
reasonably be expected to materially and adversely affect the performance by the
Seller of its obligations under, or the validity or enforceability of, the Basic
Documents or the Transition Bonds.
SECTION 3.07. Approvals. Except for UCC continuation filings, 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 the execution and delivery by the
Seller of this Agreement, the performance by the Seller of the transactions
contemplated hereby or the fulfillment by the Seller of the terms hereof, except
those that have been obtained or made.
SECTION 3.08. The Intangible Transition Property. (a) Information. All
information provided by the Seller to the Issuer with respect to the Transferred
Intangible Transition Property is correct in all material respects.
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(b) Effect of Transfer. The transfers and assignments herein contemplated
constitute sales of the Initial Intangible Transition Property or the Subsequent
Intangible Transition Property, as the case may be, from the Seller to the
Issuer and the beneficial interest in and title to the Transferred Intangible
Transition Property would not be part of the debtor's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any bankruptcy
law.
(c) Transfer Filings. The Seller is the sole owner of the Intangible
Transition Property being sold to the Issuer on the Initial Transfer Date or
Subsequent Transfer Date, as applicable; the Transferred Intangible Transition
Property has been validly transferred and sold to the Issuer free and clear of
all Liens other than Liens created by the Issuer pursuant to the Indenture. All
filings, including filings with the PUC under the Statute, necessary in any
jurisdiction to give the Issuer a valid ownership interest in the Transferred
Intangible Transition Property, free and clear of all Liens of the Seller or
anyone claiming through the Seller and to give the Bond Trustee a first priority
perfected security interest in the Transferred Intangible Transition Property
have been made, other than any such filings (except for filings with the PUC
under the Statute and UCC filings with the Secretary of
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State of the State of Delaware) the absence of which would not have an adverse
impact on (i) the ability of the Servicer to collect Intangible Transition
Charges with respect to the Serviced Intangible Transition Property or (ii) the
rights of the Issuer or the Bond Trustee with respect to the Transferred
Intangible Transition Property.
(d) Irrevocable; Process Valid; No Litigation; Etc. (i) The Qualified Rate
Order has been issued by the PUC in accordance with the Statute, such order and
the process by which it was issued comply with all applicable laws, rules and
regulations, and such order is in full force and effect. (ii) As of the date of
issuance of any Series of Transition Bonds, such Transition Bonds are entitled
to the protections provided by the Statute and, accordingly, the provisions of
the Qualified Rate Order relating to Intangible Transition Property and
Intangible Transition Charges are not revocable by the PUC. (iii) (a) Under the
Statute, neither the Commonwealth of Pennsylvania nor the PUC may limit, alter
or in any way impair or reduce the value of Intangible Transition Property or
Intangible Transition Charges approved by the Qualified Rate Order or any rights
thereunder, except such a limitation or alteration may be made by the
Commonwealth of Pennsylvania or the PUC if adequate compensation is made by law
for the full protection of the Intangible Transition Charges and of
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Transition Bondholders; and (b) under the Contract Clauses of the Constitutions
of the Commonwealth of Pennsylvania and the United States, the Commonwealth of
Pennsylvania and the PUC cannot take any action that substantially impairs the
rights of the Transition Bondholders unless such action is a reasonable exercise
of the Commonwealth of Pennsylvania's sovereign powers and appropriate to
further a legitimate public purpose, and, under the Takings Clauses of the
Pennsylvania and United States Constitutions, in the event such action
constitutes a permanent appropriation of the property interest of Transition
Bondholders in the Intangible Transition Property and deprives the Transition
Bondholders of their reasonable expectations arising from their investments in
Transition Bonds, unless just compensation, as determined by a court of
competent jurisdiction, is provided to Transition Bondholders. (iv) There is no
order by any court providing for the revocation, alteration, limitation or other
impairment of the Statute, Qualified Rate Order, Intangible Transition Property
or the Intangible Transition Charges or any rights arising under any of them or
which seeks to enjoin the performance of any obligations under the Qualified
Rate Order. (v) No other approval, authorization, consent, order or other action
of, or filing with, any court, Federal or state regulatory body, administrative
agency or other
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governmental instrumentality is required in connection with the creation of the
Intangible Transition Property, except those that have been obtained or made.
(vi) Except as disclosed by the Seller to the Issuer there are no proceedings or
investigations pending, or to the Seller's best knowledge, threatened before any
court, Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties challenging the Qualified Rate Order or the Statute. (vii) No failure
on the Initial Transfer Date or any Subsequent Transfer Date or any time
thereafter to satisfy any condition imposed by the Statute with respect to the
recovery of stranded costs will adversely affect the creation or sale hereunder
of Intangible Transition Property or the right to collect Intangible Transition
Charges.
(e) Assumptions. The assumptions used in calculating Intangible Transition
Charges are reasonable and made in good faith.
(f) Creation of Intangible Transition Property. (i) The Intangible
Transition Property other than the Retained Intangible Transition Property
constitutes a current property right, (ii) the Intangible Transition Property
includes, without limitation, (A) the irrevocable right of the Issuer and any
Other Issuers to receive through
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Intangible Transition Charges an amount sufficient to recover all of the
Seller's Qualified Transition Expenses described in the Qualified Rate Order in
an amount equal to the aggregate principal amount of Transition Bonds and Other
Transition Bonds plus an amount sufficient to provide for any credit enhancement
(including the Overcollateralization Amount relating to each Series of
Transition Bonds), to fund any reserves, and to pay interest, premium, if any,
servicing fees and other expenses relating to the Transition Bonds and Other
Transition Bonds, and (B) all right, title and interest of the Seller or its
assignee applicable to the Transition Bonds and Other Transition Bonds in the
Qualified Rate Order and in all revenues, collections, claims, payments, money
or proceeds of or arising from the Intangible Transition Charges applicable to
the Transition Bonds and Other Transition Bonds set forth in the Qualified Rate
Order to the extent that in accordance with the Statute, the Qualified Rate
Order and the rates and charges authorized under the Qualified Rate Order are
declared to be irrevocable and (iii) paragraphs four through nineteen of the
Qualified Rate Order, including the right to collect Intangible Transition
Charges, have been declared to be irrevocable by the PUC.
(g) Solvency. After giving effect to the sale of any Transferred Intangible
Transition Property hereunder,
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the Seller (i) is solvent and expects to remain solvent, (ii) is adequately
capitalized to conduct its business and affairs considering its size and the
nature of its business and intended purposes, (iii) is not engaged in nor does
it expect to engage in a business for which its remaining property represents an
unreasonably small capital, (iv) believes that it will be able to pay its debts
as they come due and that such belief is reasonable and (v) is able to pay its
debts as they mature and does not intend to incur, or believe that it will
incur, indebtedness that it will not be able to repay at its maturity.
ARTICLE IV
Covenants of the Seller
SECTION 4.01. Corporate Existence. Subject to Section 5.02, so long as any
of the Transition Bonds are outstanding, the Seller will keep in full force and
effect its corporate existence and remain in good standing, in each case under
the laws of the jurisdiction of its incorporation, and will obtain and preserve
its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and the Trust Agreement and each other
instrument or agreement to which the Seller is a party necessary to the proper
administration of this Agreement and the transactions contemplated hereby.
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SECTION 4.02. No Liens or Conveyances. Except for the
conveyances hereunder, the Seller 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 Intangible Transition Property, whether now existing or hereafter
created, or any interest therein, other than, with respect to Retained
Intangible Transition Property, the Lien of the Mortgage; provided, that the
Seller may sell Retained Intangible Transition Property to Other Issuers if (i)
the Rating Agency Condition is satisfied with respect to all outstanding
Transition Bonds and (ii) each such Other Issuer is, or prior to such sale
becomes, a party to the Master Servicing Agreement as an "Issuer" (as defined in
the Master Servicing Agreement). The Seller shall not at any time assert any
Lien against or with respect to any Serviced Intangible Transition Property, and
shall defend the right, title and interest of the Issuer, the Bond Trustee, as
assignee of the Issuer, and any Other Issuers in, to and under the Intangible
Transition Property, whether now existing or hereafter created, against all
claims of third parties claiming through or under the Seller.
SECTION 4.03. Delivery of Collections. If the Seller receives collections
in respect of the Intangible Transition Charges or the proceeds thereof, the
Seller agrees to pay the Servicer all payments received by the
25
Seller in respect thereof as soon as practicable after receipt thereof by the
Seller, but in no event later than two Business Days after such receipt.
SECTION 4.04. Notice of Liens. The Seller shall notify the Issuer Trustee
and the Bond Trustee promptly after becoming aware of any Lien on any Intangible
Transition Property other than the conveyances hereunder or under the Indenture,
conveyances to Other Issuers (and related pledges) or, in the case of Retained
Intangible Transition Property, the Lien of the Mortgage.
SECTION 4.05. Compliance with Law. The Seller hereby agrees to comply with
its organizational or governing documents and all laws, treaties, rules,
regulations and determinations of any governmental instrumentality applicable to
the Seller, except to the extent that failure to so comply would not adversely
affect the Issuer's, the Bond Trustee's or any Other Issuer's interests in the
Intangible Transition Property or under any of the Basic Documents or the
Seller's performance of its obligations hereunder or under any of the other
Basic Documents to which it is a party.
SECTION 4.06. Covenants Related to Intangible Transition Property. (a) So
long as any of the Transition Bonds are outstanding, the Seller shall treat the
Transition Bonds as debt of the Seller for Federal income tax purposes.
26
(b) So long as any of the Transition Bonds are outstanding, the Seller
shall (i) clearly disclose in its financial statements that it is not the owner
of the Serviced Intangible Transition Property and that the assets of the Issuer
are not available to pay creditors of the Seller or any of its Affiliates and
(ii) clearly disclose the effects of all transactions between the Seller and the
Issuer in accordance with generally accepted accounting principles.
(c) The Seller agrees that upon the sale by the Seller of the Transferred
Intangible Transition Property to the Issuer pursuant to this Agreement, (i) to
the fullest extent permitted by law, including applicable PUC Regulations, the
Issuer shall have all of the rights originally held by the Seller with respect
to the Transferred Intangible Transition Property (other than the rights of an
electric distribution company set forth in Section 2807 of the Statute),
including the right to collect any amounts payable by any Customer or Third
Party in respect of such Transferred Intangible Transition Property,
notwithstanding any objection or direction to the contrary by the Seller and
(ii) any payment by any Customer or Third Party to the Issuer shall discharge
such Customer's or such Third Party's obligations in respect of such Transferred
Intangible Transition Property to the extent of such
27
payment, notwithstanding any objection or direction to the contrary by the
Seller.
(d) So long as any of the Transition Bonds are outstanding, (i) the Seller
shall not make any statement or reference in respect of the Transferred
Intangible Transition Property that is inconsistent with the ownership thereof
by the Issuer and (ii) the Seller shall not take any action in respect of the
Serviced Intangible Transition Property except solely in its capacity as the
Servicer thereof pursuant to the Master Servicing Agreement or as otherwise
contemplated by the Basic Documents.
SECTION 4.07. Notice of Indemnification Events. The Seller shall deliver to
the Issuer and the Bond Trustee promptly after having obtained knowledge
thereof, written notice in an Officer's Certificate of any Indemnification Event
or any event which, with the giving of notice or the passage of time, would
become an Indemnification Event.
SECTION 4.08. Protection of Title. The Seller shall execute and file such
filings, including filings with the PUC pursuant to the Statute, 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
Issuer in the Transferred Intangible Transition Property, including all
28
filings required under the Statute relating to the transfer of the ownership or
security interest in the Transferred Intangible Transition Property by the
Seller to the Issuer. The Seller shall deliver (or cause to be delivered) to the
Issuer file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing. The Seller agrees to
take such legal or administrative actions, including defending against or
instituting and pursuing legal actions and appearing or testifying at hearings
or similar proceedings, as may be reasonably necessary (i) to protect the Issuer
and the Transition Bondholders from claims, state actions or other actions or
proceedings of third parties which, if successfully pursued, would result in a
breach of any representation or warranty set forth in Article III or (ii) to
block or overturn any attempts to cause a repeal of, modification of or
supplement to the Statute or the Qualified Rate Order or the rights of holders
of Intangible Transition Property by legislative enactment or constitutional
amendment that would be adverse to the holders of Intangible Transition
Property.
SECTION 4.09. Taxes. So long as any of the Transition Bonds are
outstanding, the Seller shall, and shall cause each of its subsidiaries (other
than the Issuer) to, pay all material taxes, including gross receipts taxes,
29
assessments and governmental charges imposed upon it or any of its properties or
assets or with respect to any of its franchises, 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 Intangible
Transition Property; provided that no such tax need be paid if the Seller or one
of its subsidiaries is contesting the same in good faith by appropriate
proceedings promptly instituted and diligently conducted and if the Seller or
such subsidiary has established appropriate reserves as shall be required in
conformity with generally accepted accounting principles.
ARTICLE V
The Seller
SECTION 5.01. Liability of Seller; Indemnities and Liquidated Damages. (a)
The Seller shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Seller under the Agreement.
(b) The Seller shall indemnify the Issuer and the Bond Trustee, for itself
and on behalf of the Transition Bondholders, and each of their respective
trustees, officers, directors and agents for, and defend and hold
30
harmless each such Person from and against, any and all taxes (other than any
taxes imposed on Transition Bondholders solely as a result of their ownership of
Transition Bonds) that may at any time be imposed on or asserted against any
such Person as a result of the acquisition or holding of the Transferred
Intangible Transition Property by the Issuer or the issuance and sale by the
Issuer of the Transition Bonds, including any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes.
(c)(i) The Seller shall indemnify the Issuer and the Bond Trustee, on
behalf of the Transition Bondholders, and each of their respective trustees,
officers, directors, and agents for, and defend and hold harmless each such
Person from and against, any and all Losses that may be imposed on, incurred by
or asserted against any such Person as a result of (x) the Seller's wilful
misconduct, bad faith or gross negligence in the performance of its duties or
observance of its covenants under this Agreement, (y) the Seller's reckless
disregard of its obligations and duties under this Agreement or (z) the Seller's
breach of any of its representations or warranties contained in this Agreement
other than those contained in Sections 3.08(b), 3.08(c), 3.08(d)(i), (ii) and
(iv) and 3.08(f) (any event described in any of the foregoing clauses
31
(x), (y) or (z), an "Indemnification Event"); provided, however, that the amount
of such Losses (other than those payable pursuant to Section 5.01(e)) for which
the Seller shall be obligated to provide indemnification shall not exceed the
Liquidated Damages Amount. Amounts on deposit in the Reserve Subaccount and the
Capital Subaccount shall not be available to satisfy any Losses for which
indemnification is provided in this Agreement.
(ii) If an Indemnification Event shall occur, upon receipt of written
notice thereof by the Seller from the Issuer or the Bond Trustee, the Seller
shall notify the Servicer of the occurrence of such event so that the Servicer
may, pursuant to Section 8 of Annex 1 to the Master Servicing Agreement,
calculate (x) on the day which is 90 days after receipt of such notice by the
Seller (the "Initial Loss Calculation Date") the amount of Losses expected to be
incurred as a result of such Indemnification Event from and including the time
of its occurrence through and including the next Monthly Allocation Date after
the Initial Loss Calculation Date and (y) to the extent that Losses may be
incurred as a result of such Indemnification Event in an amount exceeding the
amount of Losses calculated pursuant to clause (x) above and unless the Seller
has paid Liquidated Damages with respect to such Indemnification Event pursuant
to the penultimate sentence of this
32
Section 5.01(c)(ii), not later than each Monthly Allocation Date succeeding the
Initial Loss Calculation Date, the amount of Losses expected to be incurred as a
result of such Indemnification Event from but excluding such Monthly Allocation
Date through and including the next Monthly Allocation Date. All such
calculations shall be subject to the approval of the Bond Trustee. If such
Indemnification Event shall continue unremedied beyond the Initial Loss
Calculation Date, the Seller shall pay to the Bond Trustee, as assignee of the
Issuer, for deposit into the General Subaccount of the Collection Account, (x)
on the Monthly Allocation Date immediately following the Initial Loss
Calculation Date, the amount of Losses calculated pursuant to clause (x) and
clause (y) of the preceding sentence with respect to such Monthly Allocation
Date and (y) on each subsequent Monthly Allocation Date, the amount of Losses
calculated as of such date pursuant to clause (y) of the preceding sentence.
With respect to Indemnification Events occurring as a result of the breach of
the Seller's representations or warranties contained in Sections 3.01, 3.03,
3.04, 3.05 and 3.08(d)(iii), (v) and (vi) of this Agreement for which the full
amount of Losses attributable thereto are reasonably expected to be incurred
beyond a twelve-month period immediately succeeding the occurrence of such
Indemnification Event, the Seller shall, except as
33
otherwise provided in clause (iii) below, pay to the Bond Trustee, as assignee
of the Issuer, for deposit into the General Subaccount of the Collection
Account, the Liquidated Damages Amount on the first Monthly Allocation Date
following the expiration of such twelve-month period. Upon payment pursuant to
this Section 5.01(c)(ii), the Seller shall have no further obligations with
respect to such Losses to the extent of such payments.
(iii) With respect to any Losses described in Section 5.01(c)(ii) above,
the full amount of which is reasonably expected not to exceed 1/12th of 1% of
the annual outstanding balance of Transition Bonds per Monthly Allocation Date
(the "De Minimis Loss Amount"), the Seller, on the Monthly Allocation Date
immediately following the Initial Loss Calculation Date, shall pay to the Bond
Trustee, as assignee of the Issuer, for deposit in the Loss Subaccount of the
Collection Account, the aggregate expected amount of such Losses for all Monthly
Allocation Dates on which such Losses are expected to be incurred, following
which the Seller's obligation to pay indemnification or Liquidated Damages, as
applicable, as a result of such Losses shall be waived so long as the actual
Losses incurred on any Monthly Allocation Date do not exceed the De Minimis Loss
Amount. If the aggregate amount of such Losses incurred as of any Monthly
Allocation Date exceeds the
34
amounts paid by the Seller to the Bond Trustee, as assignee of the Issuer, with
respect thereto, the Seller shall pay to the Bond Trustee, as assignee of the
Issuer, on the next Monthly Allocation Date, the amount of such excess for such
Monthly Allocation Date and the expected amount of excess for all subsequent
Monthly Allocation Dates.
(d)(i) In the event of a breach by the Seller of any representation and
warranty specified in Section 3.08(b), 3.08(c), 3.08(d)(i), (ii) or (iv) or
3.08(f) that has a material adverse effect on the Transition Bondholders, the
Seller shall pay to the Bond Trustee, as assignee of the Issuer, for deposit
into the General Subaccount of the Collection Account the Liquidated Damages
Amount on the Liquidated Damages Payment Date; provided, however, that the
Seller shall not be obligated to pay the Liquidated Damages Amount pursuant to
this Section 5.01(d)(i) if (A) within 90 days after the date of the occurrence
thereof such breach is cured or the Seller takes remedial action such that there
is not and will not be a material adverse effect on the Transition Bondholders
as a result of such breach and (B) either (i) if the Seller had, immediately
prior to the breach, a long term debt rating of at least ["A3"] by Moody's and
["BBB"] by Standard & Poor's and the equivalent of ["BBB"] by any other Rating
Agency, the Seller enters into a binding agreement with the Issuer to pay any
amounts
35
necessary so that all interest payments due on the Transition Bonds during such
90-day period will be paid in full, or (ii) if the Seller does not have such
long term debt ratings, the Seller deposits, within two Business Days after such
breach, an amount in escrow with the Bond Trustee sufficient, taking into
account amounts on deposit in the Collection Account which will be available for
such purpose, to pay all interest payments which will become due on the
Transition Bonds during such 90-day period. In the event that within such 90-day
period (i) such breach is cured or (ii) the Seller takes the remedial action
specified by Section 5.01(d)(i)(A), any amounts paid by the Seller to the Bond
Trustee, as assignee of the Issuer pursuant to Section 5.01(d)(i)(B), which have
not been distributed pursuant to the Indenture shall be returned to the Seller
at the end of such 90-day period.
(ii) Upon the payment by the Seller of the Liquidated Damages Amount
pursuant to this Section 5.01(d), neither the Issuer nor any other Person shall
have any other claims, rights or remedies against the Seller for a breach of the
representations and warranties specified in Section 3.08(b), (c), (d)(i),
(d)(ii), (d)(iv) or (f).
(e) The Seller shall indemnify the Bond Trustee and the Issuer Trustee and
their respective officers, directors and agents for, and defend and hold
harmless each
36
such Person from and against, any and all Losses that may be imposed upon,
incurred by or asserted against any such Person as a result of the acceptance or
performance of the trusts and duties contained herein and in the Indenture,
except to the extent that any such Loss shall be due to the wilful misfeasance,
bad faith or gross negligence of the Bond Trustee or the Issuer Trustee, as
applicable. Such amounts shall be deposited into the Collection Account and
distributed in accordance with the Indenture.
(f) The Seller's indemnification obligations under Section 5.01(b),(c), (d)
and (e) for events occurring prior to the removal or resignation of the Bond
Trustee or the termination of this Agreement shall survive the resignation or
removal of the Bond Trustee or the termination of this Agreement and shall
include reasonable fees and expenses of investigation and litigation (including
the Bond Trustee's reasonable attorney's fees and expenses).
SECTION 5.02. Merger or Consolidation of, or Assumption of the Obligations
of, Seller. Any Person (a) into which the Seller may be merged or consolidated
and which succeeds to the major part of the electric distribution business of
the Seller, (b) which results from the division of the Seller into two or more
Persons and which succeeds to the major part of the electric distribution
business of the Seller, (c) which may result
37
from any merger or consolidation to which the Seller shall be a party and which
succeeds to the major part of the electric distribution business of the Seller,
(d) which may succeed to the properties and assets of the Seller substantially
as a whole and which succeeds to the major part of the electric distribution
business of the Seller or (e) which may otherwise succeed to the major part of
the electric distribution business of the Seller, which Person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Seller under this Agreement, shall be the successor to the Seller
hereunder without the execution or filing of any document or any further act by
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 no Servicer Default, and no
event that, after notice or lapse of time, or both, would become a Servicer
Default, shall have occurred and be continuing, (ii) the Seller shall have
delivered to the Issuer and the Bond 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) the
38
Rating Agencies shall have received prior written notice of such transaction and
(iv) the Seller shall have delivered to the Issuer and the Bond Trustee an
Opinion of Counsel either (A) stating that, in the opinion of such counsel, all
filings, including filings with the PUC pursuant to the Statute, have been
executed and filed that are necessary fully to preserve and protect the interest
of the Issuer in the Transferred Intangible Transition Property and reciting the
details of such filings or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interests.
Notwithstanding anything herein to the contrary, the execution of the above
described agreement of assumption and compliance with clauses (i), (ii), (iii)
and (iv) above shall be conditions precedent to the consummation of any
transaction referred to in clauses (a), (b), (c), (d) or (e) above.
SECTION 5.03. Limitation on Liability of Seller and Others. The Seller and
any director or officer or employee or agent of the Seller 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 5.04, the Seller shall not be under any obligation
to appear in, prosecute or defend any legal action that is not incidental to its
obligations under this Agreement, and
39
that in its opinion may involve it in any expense or liability.
SECTION 5.04. Opinions of Counsel. The Seller shall deliver to the Issuer
and the Bond Trustee: (a) promptly after the execution and delivery of this
Agreement and of each amendment hereto or to the Master Servicing Agreement and
on each Subsequent Transfer Date, an Opinion of Counsel either (i) to the effect
that, in the opinion of such counsel, all filings, including filings with the
PUC pursuant to the Statute, that are necessary to fully preserve and protect
the interests of the Issuer in the Intangible Transition Property have been
executed and filed, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (ii) to the effect
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest; and (b) within 90 days after the beginning
of each calendar year beginning with the first calendar year beginning more than
three months after the Initial Transfer Date, an Opinion of Counsel, dated as of
a date during such 90-day period, either (ii) to the effect that, in the opinion
of such counsel, all filings with the PUC pursuant to the Statue, have been
executed and filed that are necessary to preserve fully and protect fully the
interest of the Issuer in the Intangible Transition Property, and
40
reciting the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (ii) to the effect that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interest. Each Opinion of Counsel referred to in clause (a) or (b) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
ARTICLE VI
Miscellaneous Provisions
SECTION 6.01. Amendment. This Agreement may be amended by the Seller and
the Issuer, with the consent of the Bond Trustee. Promptly after the execution
of any such amendment or consent, the Issuer shall furnish written notification
of the substance of such amendment or consent to each of the Rating Agencies.
Prior to the execution of any amendment to this Agreement, the Issuer and
the Bond Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and the Opinion of Counsel referred to in Section 5.04(a). The
Issuer and the Bond Trustee may, but shall not be obligated to, enter into any
such amendment
41
which affects their own rights, duties or immunities under this Agreement or
otherwise.
SECTION 6.02. Notices. All demands, notices and communications upon or to
the Seller, the Issuer or the Issuer Trustee, the Bond Trustee or the Rating
Agencies under this Agreement shall be in writing, delivered personally, via
facsimile, reputable overnight courier or by certified mail, return-receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Seller, to PECO Energy Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX
00000, Attention of Vice President, Finance and Treasurer, (b) in the case of
the Issuer, the Issuer Trustee or any other trustee of the Issuer, at the
Corporate Trust Office, (c) in the case of the Bond Trustee, at the Corporate
Trust Office, (d) in the case of Moody's, to Xxxxx'x Investors Service, Inc.,
ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, (e) 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, (f) in the case of Fitch, to Fitch IBCA, Inc., Xxx Xxxxx Xxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and (h) in the case of Duff, to Duff & Xxxxxx
Credit Rating Company, 00 X. Xxxxxx Xxxxxx (00xx Xxxxx), Xxxxxxx, Xxxxxxxx
00000; or, as to each of the
42
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 the Seller.
SECTION 6.04. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Issuer, the Issuer
Trustee and the Bond Trustee, on behalf of itself and the Transition
Bondholders, 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 Collateral 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.
SECTION 6.06. Separate Counterparts. This Agreement may be executed by the
parties hereto in separate
43
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 Commonwealth of Pennsylvania, 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. Assignment to Bond Trustee. The Seller hereby acknowledges
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Bond Trustee pursuant to the Indenture for the
benefit of the Transition Bondholders of all right, title and interest of the
Issuer in, to and under the Transferred Intangible Transition Property and the
proceeds thereof and the assignment of any or all of the Issuer's rights
hereunder to the Bond Trustee. In no event shall The Bank of New York have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer, hereunder or in any of the certificates, notices
44
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer.
SECTION 6.10. Nonpetition Covenant. Notwithstanding any prior termination
of this Agreement or the Indenture, but subject to the PUC's rights to order the
sequestration and payment of revenues arising with respect to the Intangible
Transition Property notwithstanding any bankruptcy, reorganization or other
insolvency proceedings with respect to the debtor, pledgor or transferor of the
Intangible Transition Property pursuant to Section 2812(d)(3)(v) of the Statute,
the Seller shall not, prior to the date which is one year and one day after the
termination of the Indenture, petition or otherwise invoke or cause the Issuer
to invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the 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 the
Issuer or any substantial part of the property of the Issuer, or ordering the
winding up or liquidation of the affairs of the Issuer.
SECTION 6.11. Limitation of Liability of Issuer Trustee. Notwithstanding
anything contained herein to the contrary, this Agreement has been countersigned
by First Union Trust Company, National Association not in its
45
individual capacity but solely in its capacity as Issuer Trustee of the Issuer
and in no event shall First Union Trust Company, National Association in its
individual capacity have any liability for warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer. For all purposes of this Agreement, in
the performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Issuer hereunder, the Issuer Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII, VIII and IX of the Trust Agreement.
SECTION 6.12. Perfection. In accordance with Section 2812(e) of the
Statute, upon the execution and delivery of this Agreement and the related Xxxx
of Sale, the transfer of the Initial Intangible Transition Property will be
perfected as against all third persons, including any judicial lien creditors,
and upon the execution and delivery of a Xxxx of Sale and, if applicable, a
supplement to this Agreement, a transfer of Subsequent Intangible Transition
46
Property will be perfected against all third persons, including any judicial
lien creditors.
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.
PECO ENERGY TRANSITION TRUST,
by First Union Trust
Company, National
Association, not in its
individual capacity but
solely as Issuer Trustee
on behalf of the Trust,
by
______________________________
Title:
PECO ENERGY COMPANY, Seller,
by
______________________________
Title:
Acknowledged and Accepted:
THE BANK OF NEW YORK, not in its
individual capacity but
solely as Bond Trustee
on behalf of the Transition
Bondholders,
by
______________________________
Title:
