FORM OF RATE STABILIZATION PROPERTY PURCHASE AND SALE AGREEMENT by and between RSB BONDCO LLC, Issuer and BALTIMORE GAS AND ELECTRIC COMPANY, Seller Dated as of ________ __, 2007
Exhibit
10.1
FORM
OF
by
and between
Issuer
and
BALTIMORE
GAS AND ELECTRIC COMPANY,
Seller
Dated
as of ________ __, 2007
TABLE
OF CONTENTS
Page
|
ARTICLE
I
DEFINITIONS
|
||
|
SECTION
1.01.
|
Definitions
|
1
|
|
SECTION
1.02.
|
Other
Definitional Provisions
|
1
|
|
ARTICLE
II
CONVEYANCE
OF RATE STABILIZATION PROPERTY
|
||
|
SECTION
2.01.
|
Conveyance
of Initial Rate Stabilization Property
|
2
|
|
SECTION
2.02.
|
Conveyance
of Subsequent Rate Stabilization Property
|
2
|
|
SECTION
2.03.
|
Conditions
to Conveyance of Rate Stabilization Property
|
3
|
|
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLER
|
||
|
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
|
5
|
|
SECTION
3.06.
|
No
Proceedings
|
5
|
|
SECTION
3.07.
|
Approvals
|
6
|
|
SECTION
3.08.
|
The
Rate Stabilization Property
|
6
|
|
SECTION
3.09.
|
Limitations
on Representations and Warranties
|
10
|
|
ARTICLE
IV
COVENANTS
OF THE SELLER
|
||
|
SECTION
4.01.
|
Existence
|
10
|
|
SECTION
4.02.
|
No
Liens
|
10
|
|
SECTION
4.03.
|
Delivery
of Collections
|
10
|
|
SECTION
4.04.
|
Notice
of Liens
|
11
|
|
SECTION
4.05.
|
Compliance
with Law
|
11
|
|
SECTION
4.06.
|
Covenants
Related to Rate Stabilization Bonds and Rate Stabilization
Property
|
11
|
|
SECTION
4.07.
|
Protection
of Title
|
12
|
|
SECTION
4.08.
|
Nonpetition
Covenants
|
13
|
|
SECTION
4.09.
|
Taxes
|
13
|
|
SECTION
4.10.
|
Issuance
Advice Letter
|
13
|
|
SECTION
4.11.
|
Tariff
|
13
|
i
|
SECTION
4.12.
|
Notice
of Breach to Rating Agencies, Etc.
|
14
|
|
SECTION
4.13.
|
Use
of Proceeds
|
14
|
|
SECTION
4.14.
|
Further
Assurances
|
14
|
|
ARTICLE
V
THE
SELLER
|
||
|
SECTION
5.01.
|
Liability
of Seller; Indemnities
|
14
|
|
SECTION
5.02.
|
Merger,
Conversion or Consolidation of, or Assumption of the Obligations
of,
Seller
|
16
|
|
SECTION
5.03.
|
Limitation
on Liability of Seller and Others
|
17
|
|
ARTICLE
VI
MISCELLANEOUS
PROVISIONS
|
||
|
SECTION
6.01.
|
Amendment
|
17
|
|
SECTION
6.02.
|
Reserved
|
17
|
|
SECTION
6.03.
|
Notices
|
17
|
|
SECTION
6.04.
|
Assignment
|
18
|
|
SECTION
6.05.
|
Limitations
on Rights of Third Parties
|
18
|
|
SECTION
6.06.
|
Severability
|
18
|
|
SECTION
6.07.
|
Separate
Counterparts
|
19
|
|
SECTION
6.08.
|
Headings
|
19
|
|
SECTION
6.09.
|
Governing
Law
|
19
|
|
SECTION
6.10.
|
Assignment
to Indenture Trustee
|
19
|
|
SECTION
6.11.
|
Limitation
of Liability
|
19
|
|
SECTION
6.12.
|
Waivers
|
19
|
EXHIBITS
|
Exhibit
A
|
Form
of Xxxx of Sale
|
ii
This
RATE
STABILIZATION PROPERTY PURCHASE AND SALE AGREEMENT (this “Agreement”),
dated as of ________ __, 2007, is between RSB BONDCO LLC, a Delaware limited
liability company (the “Issuer”), and BALTIMORE GAS AND ELECTRIC COMPANY,
a Maryland corporation (together with its successors in interest to the extent
permitted hereunder, the “Seller”).
RECITALS
WHEREAS,
the Issuer desires to purchase from time to time the Rate Stabilization Property
created pursuant to the Rate Stabilization Law;
WHEREAS,
the Seller is willing to sell from time to time the Rate Stabilization Property
to the Issuer;
WHEREAS,
the Issuer, in order to finance the purchase of the Transferred Rate
Stabilization Property, will from time to time issue one or more Series of
Rate
Stabilization Bonds under the Indenture; and
WHEREAS,
the Issuer, to secure its obligations under the Rate Stabilization Bonds
of each
Series and the Indenture, will pledge, among other things, all right, title
and
interest of the Issuer in and to the Transferred Rate Stabilization Property
and
this Agreement to the Indenture Trustee for the benefit of the Secured
Parties.
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. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in that certain Indenture (including Appendix A thereto)
dated as of the date hereof between the Issuer and _________, a _________
banking corporation, in its capacity as indenture trustee (the “Indenture
Trustee”) and in its separate capacity as a securities intermediary (the
“Securities Intermediary”), as the same may be amended, restated,
supplemented or otherwise modified from time to time.
SECTION
1.02. Other
Definitional Provisions.
(a) All
terms defined in this Agreement shall have the defined meanings when used
in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.
(b) 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”.
(c) The
definitions contained in this Agreement are applicable to the singular as
well
as the plural forms of such terms.
ARTICLE
II
CONVEYANCE
OF RATE STABILIZATION PROPERTY
SECTION
2.01. Conveyance
of Initial Rate Stabilization 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 or warranty, except as set forth herein, all right, title
and
interest of the Seller in and to the Initial Rate Stabilization Property
(such
sale, transfer, assignment, setting over and conveyance of the Initial Rate
Stabilization Property includes, to the fullest extent permitted by the Rate
Stabilization Law, the right to impose, collect and receive Qualified Rate
Stabilization Charges and the assignment of all revenues, collections, claims,
rights, payments, money or proceeds of or arising from the Qualified Rate
Stabilization Charges related to the Initial Rate Stabilization Property,
as the
same may be adjusted from time to time). Such sale, transfer,
assignment, setting over and conveyance is hereby expressly stated to be
a sale
and, pursuant to Section 7-539 of the Rate Stabilization Law, shall be treated
as an absolute transfer of all of the Seller’s right, title and interest in and
to (as in a true sale), and not as a pledge or other financing of, the Initial
Rate Stabilization Property. The Seller and the Issuer agree that after giving
effect to the sale, transfer, assignment, setting over and conveyance
contemplated hereby the Seller has no right, title or interest in or to the
Initial Rate Stabilization Property to which a security interest could attach
because (i) it has sold, transferred, assigned, set over and conveyed all
right,
title and interest in and to the Initial Rate Stabilization Property to the
Issuer, and (ii) as provided in Section 7-542 of the Rate Stabilization Law,
appropriate notice has been filed and such transfer is perfected against
all
third parties, including subsequent judicial or other lien
creditors. If such sale, transfer, assignment, setting over and
conveyance is held by any court of competent jurisdiction not to be a true
sale
as provided in Section 7-539 of the Rate Stabilization Law, then such sale,
transfer, assignment, setting over and conveyance shall be treated as a pledge
of such Initial Rate Stabilization Property and as the creation of a security
interest (within the meaning of the Rate Stabilization Law and the UCC) in
the
Initial Rate Stabilization Property and, without prejudice to its position
that
it has absolutely transferred all of its rights in the Initial Rate
Stabilization Property to the Issuer, the Seller hereby grants a security
interest in the Initial Rate Stabilization Property to the Issuer (and, to
the
extent necessary to qualify the grant as a security interest under the Rate
Stabilization Law and the UCC, to the Indenture Trustee for the benefit of
the
Secured Parties to secure the right of the Issuer under the Basic Documents
to
receive the Qualified Rate Stabilization Charges and all other Initial Rate
Stabilization Property).
(b) Subject
to Section 2.03, the Issuer does hereby purchase the Initial Rate
Stabilization Property from the Seller for the consideration set forth in
Section 2.01(a).
SECTION
2.02. Conveyance
of Subsequent Rate Stabilization Property. The Seller may from
time to time offer to sell, transfer, assign, set over and convey Subsequent
Rate Stabilization Property to the Issuer, subject to the conditions specified
in Section 2.03. If any such offer is accepted by the Issuer,
such Subsequent Rate Stabilization Property shall be, subject to the
satisfaction or waiver of the conditions specified in Section 2.03, sold,
transferred,
2
assigned,
set over and conveyed to the Issuer effective on the Subsequent Transfer
Date
specified in the related Addition Notice. The terms of the Xxxx of
Sale with respect to such Subsequent Rate Stabilization Property shall be
binding as if set forth herein.
SECTION
2.03. Conditions
to Conveyance of Rate Stabilization Property. The obligation of
the Issuer to purchase Rate Stabilization Property on any Transfer Date shall
be
subject to the satisfaction or waiver by the Issuer of each of the following
conditions:
(i) on
or prior to such Transfer Date, the Seller shall have delivered to the Issuer
a
duly executed Xxxx of Sale identifying the Rate Stabilization Property to
be
conveyed on that Transfer Date;
(ii) on
or prior to such Transfer Date, the Seller shall have received a Qualified
Rate
Order creating the Transferred Rate Stabilization Property;
(iii) as
of such Transfer Date, the Seller is 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;
(iv) as
of such Transfer Date, the representations and warranties of the Seller set
forth in this Agreement shall be true and correct with the same force and
effect
as if made on such Transfer Date (except to the extent that they relate to
an
earlier date); on and as of such Transfer Date, no breach of any covenant
or
agreement of the Seller contained in this Agreement has occurred and is
continuing; and no Servicer Default shall have occurred and be
continuing;
(v) as
of such Transfer Date, (A) the Issuer shall have sufficient funds available
to
pay the purchase price for the Transferred Rate Stabilization Property to
be
conveyed on such date and (B) all conditions to the issuance of one or more
Series of Rate Stabilization Bonds intended to provide such funds set forth
in
the Indenture shall have been satisfied or waived;
(vi) on
or prior to such Transfer Date, the Seller shall have taken all action required
to transfer to the Issuer ownership of the Rate Stabilization Property to
be
conveyed on such date, free and clear of all Liens other than Liens created
by
the Issuer pursuant to the Basic Documents and to perfect such transfer,
including, without limitation, filing any statements or filings under the Rate
Stabilization Law or the UCC; and the Issuer or the Servicer, on behalf of
the
Issuer, shall have taken any action required for the Issuer to grant the
Indenture Trustee a first priority perfected security interest in the Rate
Stabilization Bond Collateral and maintain such security interest as of such
date;
(vii) in
the case of a sale of Subsequent Rate Stabilization Property only, on or
prior
to the Subsequent Transfer Date, the Seller shall have provided the Issuer
and
the Rating Agencies with a timely Addition Notice;
(viii) the
Seller shall have delivered to the Rating Agencies and the Issuer any Opinions
of Counsel required by the Rating Agencies;
3
(ix) the
Seller shall have received and delivered to the Issuer and the Indenture
Trustee: (i) an opinion of outside tax counsel (as selected by the
Seller, and in form and substance reasonably satisfactory to the Issuer and
the
Indenture Trustee) to the effect that the Issuer will not be subject to United
States federal income tax as an entity separate from its sole owner and that
the
Rate Stabilization Bonds will be treated as debt of the Issuer's sole owner
for
United States federal income tax purposes, (ii) an opinion of outside tax
counsel (as selected by the Seller, and in form and substance reasonably
satisfactory to the Issuer and the Indenture Trustee) or, if the Seller so
chooses, a ruling from the Internal Revenue Service (unless the Internal
Revenue
Service has announced that it will not rule on the issues described in this
paragraph), in either case to the effect that, for United States federal
income
tax purposes, the issuance of the Rate Stabilization Bonds will not result
in
gross income to the Seller and (iii) in the case of a subsequent issuance
of
Rate Stabilization Bonds only, an opinion of outside tax counsel (as selected
by
the Seller, and in form and substance reasonably satisfactory to the Issuer
and
the Indenture Trustee) to the effect that such issuance will not adversely
affect the characterization of any then outstanding Rate Stabilization Bonds
as
obligations of the Issuer's sole owner. The opinion of outside tax
counsel described above may, if the Seller so chooses, be conditioned on
the
receipt by the Seller of one or more letter rulings from the Internal Revenue
Service (unless the Internal Revenue Service has announced that it will not
rule
on the issues described in this paragraph) and in rendering such opinion
outside
tax counsel shall be entitled to rely on the rulings contained in such letter
rulings and to rely on the representations made, and information supplied,
to
the Internal Revenue Service in connection with such letter
rulings;
(x) on
and as of such Transfer Date, each of the LLC Agreement, the Servicing
Agreement, the Administration Agreement, this Agreement, the Indenture, any
issued Qualified Rate Order, any issued Tariff and the Rate Stabilization
Law
shall be in full force and effect;
(xi) the
Rating Agency Condition shall have been satisfied with respect to any
outstanding Rate Stabilization Bonds; and
(xii) the
Seller shall have delivered to the Indenture 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
Subject
to Section 3.10, the Seller makes the following representations and
warranties, as of each Transfer Date, and the Seller acknowledges that the
Issuer has relied thereon in acquiring the Transferred Rate Stabilization
Property. The Seller agrees that (i) the Issuer may assign the right
to enforce the following representations and warranties to the Indenture
Trustee
and (ii) the representations and warranties inure to the benefit of the Issuer
and the Indenture Trustee.
SECTION
3.01. Organization and
Good
Standing. The Seller is duly organized and validly existing and
is in good standing under the laws of the state of its organization, with
the
requisite corporate or other power and authority to own its properties as
such
properties are currently owned and to conduct its business as such business
is
now conducted by it, and has the
4
requisite
corporate or other power and authority to obtain Qualified Rate Orders and
own,
sell, assign and transfer the rights and interests under such Qualified Rate
Orders to the Issuer whereupon (subject to the effectiveness of the related
Issuance Advice Letter) such rights and interests will become Rate Stabilization
Property.
SECTION
3.02. Due
Qualification. The Seller is duly qualified to do business and is
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 or obtain such licenses and approvals would not
be
reasonably likely to have a material adverse effect on the Seller’s business,
operations, assets, revenues or properties).
SECTION
3.03. Power and
Authority. The Seller has the requisite corporate or other 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 all necessary action on the part of the Seller under its
organizational or governing documents and laws.
SECTION
3.04. Binding
Obligation. This Agreement constitutes a legal, valid and binding
obligation of the Seller enforceable against it in accordance with its terms,
subject to applicable insolvency, reorganization, moratorium, fraudulent
transfer and other laws relating to or affecting creditors’ or secured parties’
rights generally from time to time in effect and to general principles of
equity
(including 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 and will not:
(i)
conflict with or 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
Seller’s organizational documents, or any indenture or other agreement or
instrument to which the Seller is a party or by which it or any of its
properties is bound; (ii) result in the creation or imposition of any Lien
upon
any of the Seller’s properties pursuant to the terms of any such indenture,
agreement or other instrument (other than any Lien that may be granted in
the
Issuer’s favor or any Lien created by the Issuer pursuant to Section 7-542 of
the Rate Stabilization Law); or (iii) violate any existing law or any existing
order, rule or regulation applicable to the Seller of any Governmental Authority
having jurisdiction over the Seller or its properties.
SECTION
3.06. No
Proceedings. There are no proceedings pending and, to the
Seller’s knowledge, there are no proceedings threatened and, to the Seller’s
knowledge, there are no investigations pending or threatened, before any
Governmental Authority having jurisdiction over the Seller or its properties
involving or relating to the Seller or the Issuer or, to the Seller’s knowledge,
any other Person: (i) asserting the invalidity of the Rate Stabilization
Law,
any Qualified Rate Order, this Agreement, any of the other Basic Documents
or
the Rate Stabilization Bonds of any Series, (ii) seeking to prevent the issuance
of the Rate Stabilization Bonds of such Series 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 the performance by the Seller of
5
its
obligations under, or the validity or enforceability of, the Rate Stabilization
Law, any Qualified Rate Order, this Agreement, any of the other Basic Documents
or the Rate Stabilization Bonds of any Series or (iv) seeking to adversely
affect the federal income tax or state income or franchise tax classification
of
the Rate Stabilization Bonds of any Series as debt. No petition for a
referendum seeking to prevent the Rate Stabilization Law from becoming effective
or seeking to repeal the Rate Stabilization Law has been filed.
SECTION
3.07. Approvals. Except
for UCC financing statement filings and other filings under the UCC and the
Rate
Stabilization Law, including filings with the Maryland State Department of
Assessments and Taxation, no approval, authorization, consent, order or other
action of, or filing with, any Governmental Authority 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
and
those that the Seller, in its capacity as Servicer under the Servicing
Agreement, is required to make in the future pursuant to the Servicing
Agreement.
SECTION
3.08. The
Transferred Rate Stabilization Property.
(a) Information. Subject
to subsection (f) below, at each Transfer Date, all written information,
as amended or supplemented from time to time, provided by the Seller to the
Issuer with respect to the Transferred Rate Stabilization Property (including
the Expected Amortization Schedule, the Qualified Rate Order and the final
Issuance Advice Letter relating thereto) is true and correct in all material
respects.
(b) Title. It
is the intention of the parties hereto that (other than for federal income
tax
purposes and, to the extent consistent with applicable state tax law, state
income and franchise tax purposes) the transfers and assignments herein
contemplated each constitute a sale and absolute transfer of the Transferred
Rate Stabilization Property from the Seller to the Issuer and that no interest
in, or right or title to, the Transferred Rate Stabilization Property shall
be
part of the Seller’s estate in the event of the filing of a bankruptcy petition
by or against the Seller under any bankruptcy law. No portion of the
Transferred Rate Stabilization Property has been sold, transferred, assigned
or
pledged or otherwise conveyed by the Seller to any Person other than the
Issuer,
and no security agreement, financing statement or equivalent security or
lien
instrument listing the Seller as debtor covering all or any part of the
Transferred Rate Stabilization Property is on file or of record in any
jurisdiction, except such as may have been filed, recorded or made in favor
of
the Issuer or the Secured Parties in connection with the Basic
Documents. The Seller has not authorized the filing of and is not
aware (after due inquiry) of any financing statement against it that
includes a description of collateral including the Transferred Rate
Stabilization Property other than any financing statement filed, recorded
or
made in favor of the Issuer or the Secured Parties in connection with the
Basic
Documents. The Seller is not aware (after due inquiry) of any
judgment or tax lien filings against either the Seller or the
Issuer. At each applicable Transfer Date, immediately prior to the
sale of such Transferred Rate Stabilization Property hereunder, the Seller
is
the original and the sole owner of such Transferred Rate Stabilization Property
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.
6
(c) Transfer
Filings. On such Transfer Date, immediately upon the sale
hereunder, the Transferred Rate Stabilization Property shall be validly
transferred and sold to the Issuer, the Issuer shall own all such Transferred
Rate Stabilization Property free and clear of all Liens (except for any Lien
created in favor of the Secured Parties pursuant to Section 7-542 of the
Rate
Stabilization Law or any Lien that may be granted under the Basic Documents)
and
all filings and action to be made or taken by the Seller (including, without
limitation, filings with the Maryland State Department of Assessments and
Taxation under the Rate Stabilization Law) necessary in any jurisdiction
to give
the Issuer a perfected ownership interest (subject to any Lien created in
favor
of the Secured Parties pursuant to Section 7-542 of the Rate Stabilization
Law
and any Lien that may be granted under the Basic Documents) in the Transferred
Rate Stabilization Property have been made or taken. No further
action is required to maintain such ownership interest (subject to any Lien
created in favor of the Secured Parties pursuant to Section 7-542 of the
Rate
Stabilization Law and any Lien that may be granted under the Basic Documents)
and to give the Indenture Trustee a first priority perfected security interest
in the Transferred Rate Stabilization Property. All filings and
action have also been made or taken to perfect the security interest in the
Transferred Rate Stabilization Property granted by the Seller to the Issuer
(subject to any Lien created in favor of the Secured Parties pursuant to
Section
7-542 of the Rate Stabilization Law and any Lien that may be granted under
the
Basic Documents) and, to the extent necessary, the Indenture Trustee pursuant
to
Section 2.01, in the case of the Initial Rate Stabilization Property, or
Section 2.02, in the case of Subsequent Rate Stabilization
Property.
(d) Qualified
Rate Order, Issuance Advice Letter and Tariff; Other
Approvals. On each Transfer Date, under the laws of the State of
Maryland (including the Rate Stabilization Act) and the United States in
effect
on such Transfer Date, (i) the Rate Stabilization Law is in full force and
effect; (ii) the Qualified Rate Order pursuant to which the rights and interests
of the Seller, including the right to impose, collect and receive the Qualified
Rate Stabilization Charges and, in and to the Rate Stabilization Property
transferred on such date, have been created, is Final and non-appealable
and is
in full force and effect; (iii) as of the issuance of the Rate Stabilization
Bonds, the Rate Stabilization Bonds are entitled to the protection provided
in
the Rate Stabilization Law and, accordingly, the Qualified Rate Order, the
Qualified Rate Stabilization Charges and the Issuance Advice Letter are not
revocable by the PSC; (iv) as of the issuance of the Rate Stabilization Bonds,
the Tariff is in full force and effect and is not subject to modification
by the
PSC except as provided under Sections 7-531, 7-533 and 7-534 of the Rate
Stabilization Law; (v) the process by which the Qualified Rate Order creating
the Rate Stabilization Property transferred on such date was adopted and
approved, and such Qualified Rate Order, Issuance Advice Letter and Tariff
themselves, comply with all applicable laws, rules and regulations; (vi)
the
Issuance Advice Letter and the Tariff relating to the Rate Stabilization
Property transferred on such date have been filed in accordance with the
Qualified Rate Order creating the Rate Stabilization Property transferred
on
such date and an officer of the Seller has provided the certification to
the PSC
required by the Issuance Advice Letter; and (vii) no other approval,
authorization, consent, order or other action of, or filing with, any
Governmental Authority, is required in connection with the creation of the
Rate
Stabilization Property transferred on such date, except those that have been
obtained or made.
(e) State
Action. Under the Rate Stabilization Law, the State of Maryland
has pledged, for the benefit and protection of financing parties and BGE,
that
it will not take or allow
7
any
action that would impair the value of the Rate Stabilization Property
transferred on such date, or, except as allowed in accordance with Sections
7-531, 7-533 and 7-534 of the Rate Stabilization Law, reduce, alter or impair
the Qualified Rate Stabilization Charges to be imposed, collected, and remitted
to financing parties until the principal, interest and premium and any other
charges incurred and contracts to be performed in connection with the Rate
Stabilization Bonds of such Series relating to such Rate Stabilization Property
have been paid and performed in full. Under the laws of the United
States, neither the State of Maryland nor the PSC could constitutionally
take
any action of a legislative character including the repeal or amendment of
the
Rate Stabilization Law, which would substantially limit, alter or impair
the
Rate Stabilization Property or other rights vested in the Holders pursuant
to
the Qualified Rate Order or substantially limit, alter or reduce the value
or
amount of the Rate Stabilization Property, unless such action is a reasonable
exercise of the sovereign powers of the State of Maryland and of a character
reasonable and appropriate to further a significant and legitimate public
purpose, and, under the takings clauses of the United States and Maryland
Constitutions, the State of Maryland could not repeal or amend the Rate
Stabilization Law, and neither the State of Maryland nor the PSC could take
any
other action in contravention of the pledge quoted above without paying just
compensation to the Holders, as determined by a court of competent jurisdiction,
if doing so would constitute a permanent appropriation of a substantial property
interest of the Holders in the Rate Stabilization Property and deprive the
Holders of their reasonable expectations arising from their investments in
the
Rate Stabilization Bonds. The Seller, however, does not represent or
warrant that, even if a court were to award just compensation, it would be
sufficient to pay the full amount of principal and interest on the Rate
Stabilization Bonds.
(f) Assumptions. On
each Transfer Date, based upon the information available to the Seller on
such
date, the assumptions used in calculating the Qualified Rate Stabilization
Charges are reasonable and are made in good faith. Notwithstanding
the foregoing, the Seller makes no representation or warranty, express or
implied, that amounts actually collected arising from those Qualified Rate
Stabilization Charges will in fact be sufficient to meet the payment obligations
on the related Rate Stabilization Bonds or that the assumptions used in
calculating such Qualified Rate Stabilization Charges will in fact be
realized.
(g) Creation
of Rate Stabilization Property. Upon the effectiveness of the
Qualified Rate Order, the Issuance Advice Letter and the Tariff with respect
to
the Transferred Rate Stabilization Property and the transfer of such Rate
Stabilization Property pursuant to this Agreement: (i) the rights and interests
of the Seller under the Qualified Rate Order, including the right to impose,
collect and receive the Qualified Rate Stabilization Charges established
in the
Qualified Rate Order, become Rate Stabilization Property; (ii) the Transferred
Rate Stabilization Property constitutes a present property right vested in
the
Issuer; (iii) the Transferred Rate Stabilization Property
includes (A) the right, title and interest of the Seller in the
Qualified Rate Order and the Qualified Rate Stabilization Charges and (B)
the
right to impose, collect and obtain periodic adjustments (with respect to
adjustments, in the manner and with the effect provided in Section
4.01(b) of the Servicing Agreement) of such Qualified Rate Stabilization
Charges, and the rates and other charges authorized by the Qualified Rate
Order
and all revenues, collections, claims, payments, money or proceeds of or
arising
from the Qualified Rate Stabilization Charges; (iv) the owner of the Transferred
Rate Stabilization Property is legally entitled to xxxx Qualified Rate
Stabilization Charges and collect payments in respect of the Qualified Rate
Stabilization Charges in the aggregate sufficient to pay the interest on
and
8
principal
of the Rate Stabilization Bonds of such Series in accordance with the Indenture,
to pay the fees and expenses of servicing the Rate Stabilization Bonds of
such
Series, to replenish the Capital Subaccount to the Required Capital Level
until
the Rate Stabilization Bonds of such Series are paid in full or until the
last
date permitted for the collection of payments in respect of the Qualified
Rate
Stabilization Charges under the Qualified Rate Order, whichever is earlier,
and
the other provisions of the Qualified Rate Order do not prohibit the owner
of
the Transferred Rate Stabilization Property from obtaining adjustments and
effecting allocations to the Qualified Rate Stabilization Charges in order
to
collect payments of such amounts; and (v) the Transferred Rate Stabilization
Property is not subject to any Lien other than the Lien created by the Basic
Documents.
(h) Nature
of Representations and Warranties. The representations and
warranties set forth in this Section 3.08, insofar as they involve
conclusions of law, are made not on the basis that the Seller purports to
be a
legal expert or to be rendering legal advice, but rather to reflect the parties’
good faith understanding of the legal basis on which the parties are entering
into this Agreement and the other Basic Documents and the basis on which
the
Holders are purchasing the Rate Stabilization Bonds, and to reflect the parties’
agreement that, if such understanding turns out to be incorrect or inaccurate,
the Seller will be obligated to indemnify the Issuer and its permitted assigns
(to the extent required by and in accordance with Section 5.01), and that
the Issuer and its permitted assigns will be entitled to enforce any rights
and
remedies under the Basic Documents, on account of such inaccuracy to the
same
extent as if the Seller had breached any other representations or warranties
hereunder.
(i) Prospectus. As
of the date hereof, the information describing the Seller under the caption
“The
Seller, Initial Servicer and Sponsor” in the prospectus dated ________ __, 2007
relating to the Rate Stabilization Bonds is true and correct in all material
respects.
(j) Solvency. After
giving effect to the sale of the Rate Stabilization Property hereunder, 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 purpose;
(iii) is
not engaged in nor does it expect to engage in a business for which its
remaining property represents an unreasonably small portion of its
capital;
(iv) reasonably
believes that it will be able to pay its debts as they come due;
and
(v) is
able to pay its debts as they mature and does not intend to incur, or believes
that it will not incur, indebtedness that it will not be able to repay at
its
maturity.
(k) No
Court Order. There is no order by any court providing for the
revocation, alteration, limitation or other impairment of the Rate Stabilization
Law, the Qualified Rate Order, the Issuance Advice Letter, the Transferred
Rate
Stabilization Property or the Qualified
9
Rate
Stabilization Charges or any rights arising under any of them or that seeks
to
enjoin the performance of any obligations under the Qualified Rate
Order.
SECTION
3.09. Survival of
Representations and Warranties The representations and warranties
set forth in this Article III shall survive the execution and delivery of
this Agreement, shall be deemed re-made on each Transfer Date and may not
be
waived by any party hereto except pursuant to a written agreement executed
in
accordance with Article VI and as to which the Rating Agency Condition
has been satisfied.
SECTION
3.10. Limitations
on Representations and Warranties. Without prejudice to any of
the other rights of the parties, the Seller will not be in breach of any
representation or warranty, as a result of a change in law by means of any
legislative enactment, constitutional amendment, voter initiative or
referendum. THE SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, THAT BILLED QUALIFIED RATE STABILIZATION CHARGES WILL BE ACTUALLY
COLLECTED FROM CUSTOMERS.
ARTICLE
IV
COVENANTS
OF THE SELLER
SECTION
4.01. Existence. Subject
to its rights and obligations under Section 5.02, so long as any of the
Rate Stabilization Bonds of any Series are Outstanding, the Seller (a) will
keep
in full force and effect its existence and remain in good standing under
the
laws of the jurisdiction of its organization, (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, the other Basic Documents
to
which the Seller is a party and each other instrument or agreement necessary
or
appropriate to the proper administration of this Agreement and the transactions
contemplated hereby or to the extent necessary for the Seller to perform
its
obligations hereunder or thereunder and (c) will continue to operate its
electric transmission and distribution system to provide electric delivery
service to Customers located within its service territory, as such service
territory was defined at the time of issuance of the Qualified Rate Order
(or,
if transmission and distribution are split, to provide distribution service
directly to such Customers).
SECTION
4.02. No
Liens. Except for the conveyances hereunder or any Lien under
Section 7-542 of the Rate Stabilization Law for the benefit of the Issuer
(as
the Issuer) and the Secured Parties, the Seller will not sell, pledge, assign
or
transfer, or grant, create, incur, assume or suffer to exist any Lien on,
any of
the Transferred Rate Stabilization Property, or any interest therein, and
the
Seller shall defend the right, title and interest of the Issuer and the
Indenture Trustee, on behalf of the Secured Parties, in, to and under the
Transferred Rate Stabilization Property against all claims of third parties
claiming through or under the Seller. BGE, in its capacity as Seller,
will not at any time assert any Lien against, or with respect to, any of
the
Transferred Rate Stabilization Property.
SECTION
4.03. Delivery of
Collections. In the event that the Seller receives Collections in
respect of the Qualified Rate Stabilization Charges or the proceeds thereof
other than in its capacity as the Servicer, the Seller agrees to remit to
the
Servicer, on behalf of the
10
Issuer,
all payments received by it in respect thereof as soon as practicable after
receipt thereof. Prior to such remittance to the Servicer by the
Seller, the Seller agrees that such amounts are held by it in trust for the
Issuer and the Indenture Trustee. If the Seller becomes a party to
any future trade receivables purchase and sale arrangement or similar
arrangement under which it sells all or any portion of its accounts receivables,
the Seller and the other parties to such arrangement shall enter into an
intercreditor agreement in connection therewith and the terms of the
documentation evidencing such trade receivables purchase and sale arrangement
or
similar arrangement shall expressly exclude Qualified Rate Stabilization
Charges
from any receivables or other assets pledged or sold under such
arrangement.
SECTION
4.04. Notice of
Liens. The Seller shall notify the Issuer and the Indenture
Trustee promptly after becoming aware of any Lien on any of the Transferred
Rate
Stabilization Property, other than the conveyances hereunder, any Lien under
the
Basic Documents or any Lien under Section 7-542 of the Rate Stabilization
Law or
the UCC for the benefit of the Issuer or the Secured Parties.
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 Authority applicable to it, except
to the
extent that failure to so comply would not materially adversely affect the
Issuer’s or the Indenture Trustee’s interests in the Transferred Rate
Stabilization Property or under any of the other Basic Documents to which
the
Seller is party or the Seller’s performance of its obligations hereunder or
under any of the other Basic Documents to which it is party.
SECTION
4.06. Covenants
Related to Rate Stabilization Bonds and Rate Stabilization
Property.
(a) So
long as any of the Rate Stabilization Bonds are outstanding, the Seller shall
treat the Rate Stabilization Bonds as debt for all purposes and specifically
as
debt of the Issuer, other than for financial reporting, state or federal
regulatory or tax purposes or as required under the Public Utility Holding
Company Act of 2005 and the Federal Power Act.
(b) Solely
for the purposes of federal taxes and, to the extent consistent with applicable
state, local and other tax law, for purposes of state, local and other taxes,
so
long as any of the Rate Stabilization Bonds are outstanding, the Seller agrees
to treat the Rate Stabilization Bonds as indebtedness of the Seller (as the
sole
owner of the Issuer) secured by the Rate Stabilization Bond Collateral unless
otherwise required by appropriate taxing authorities.
(c) So
long as any of the Rate Stabilization Bonds are outstanding, the Seller shall
disclose in its financial statements that the Issuer and not the Seller is
the
owner of the Transferred Rate Stabilization Property and that the assets
of the
Issuer are not available to pay creditors of the Seller or its Affiliates
(other
than the Issuer).
(d) So
long as any of the Rate Stabilization Bonds are outstanding, the Seller shall
not own or purchase any Rate Stabilization Bonds.
11
(e) So
long as the Rate Stabilization Bonds are outstanding, the Seller shall disclose
the effects of all transactions between the Seller and the Issuer in accordance
with generally accepted accounting principles.
(f) The
Seller agrees that, upon the sale by the Seller of the Transferred Rate
Stabilization Property to the Issuer pursuant to this Agreement, (i) to the
fullest extent permitted by law, including applicable Requirements of Law,
the
Issuer shall have all of the rights originally held by the Seller with respect
to the Transferred Rate Stabilization 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 Collector
in respect of the Transferred Rate Stabilization Property, notwithstanding
any
objection or direction to the contrary by the Seller (and the Seller agrees
not
to make any such objection or to take any such contrary action) and (ii)
any
payment by any Customer or Third-Party Collector directly to the Issuer shall
discharge such Customer’s or Third-Party Collector’s obligations, if any, to the
Seller in respect of the Transferred Rate Stabilization Property to the extent
of such payment, notwithstanding any objection or direction to the contrary
by
the Seller.
(g) So
long as any of the Rate Stabilization Bonds are outstanding, (i) in all
proceedings relating directly or indirectly to the Transferred Rate
Stabilization Property, the Seller shall affirmatively certify and confirm
that
it has sold all of its rights and interests in and to such property (other
than
for financial reporting or tax purposes), (ii) the Seller shall not make
any
statement or reference in respect of the Transferred Rate Stabilization Property
that is inconsistent with the ownership interest of the Issuer (other than
for
financial accounting or tax purposes or as required under the Public Utility
Holding Company Act of 2005 and the Federal Power Act), (iii) the Seller
shall
not take any action in respect of the Transferred Rate Stabilization Property
except solely in its capacity as the Servicer thereof pursuant to the Servicing
Agreement or as otherwise contemplated by the other Basic Documents, (iv)
the
Seller shall not sell Rate Stabilization Property under a separate Qualified
Rate Order in connection with the issuance of additional Rate Stabilization
Bonds unless the Rating Agency Condition shall have been satisfied, and (v)
neither the Seller nor the Issuer shall take any action, file any tax return,
or
make any election inconsistent with the treatment of the Issuer, for purposes
of
federal taxes and, to the extent consistent with applicable state, local
and
other tax law, for purposes of state, local and other taxes, as a disregarded
entity that is not separate from the Seller (or, if relevant, from another
sole
owner of the Issuer).
SECTION
4.07. Protection
of Title. The Seller shall execute and file such filings,
including, without limitation, filings with the Maryland State Department
of
Assessments and Taxation pursuant to the Rate Stabilization Law and filings
required under the UCC, and cause to be executed and filed such filings,
all in
such manner and in such places as may be required by law to fully preserve,
maintain, protect and perfect the ownership interest of the Issuer and the
Indenture Trustee in the Transferred Rate Stabilization Property, including,
without limitation, all filings required under the Rate Stabilization Law
and
the UCC relating to the transfer of the ownership of the rights and interest
in
the Transferred Rate Stabilization Property by the Seller to the Issuer or
the
pledge of the Issuer’s interest in such Transferred Rate Stabilization Property
to the Indenture Trustee. The Seller shall deliver or cause to be delivered
to
the Issuer and the Indenture Trustee file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following
such
filing. The Seller shall institute any action or
12
proceeding
necessary to compel performance by the PSC, the State of Maryland or any
of
their respective agents, of any of their obligations or duties under the
Rate
Stabilization Law, any Qualified Rate Order or any Issuance Advice Letter,
and
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 Secured Parties 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
or any covenant set forth in Article IV and (ii) to block or overturn any
attempts to cause a repeal, modification or amendment of the Rate Stabilization
Law, the Qualified Rate Order, any Issuance Advice Letter or the rights of
Holders by legislative enactment or constitutional amendment that would be
materially adverse to the Issuer or the Secured Parties or which would otherwise
cause an impairment of the rights of the Issuer or the Secured
Parties. The costs of any action described in this Section
4.07 shall be payable from the Collection Account as an Operating Expense
in
accordance with Section 8.02(e) of the Indenture. The Seller’s
obligations pursuant to this Section 4.07 shall survive and continue
notwithstanding that payment of such Operating Expense may be delayed pursuant
to the terms of the Indenture (it being understood that the Seller may be
required initially to advance its own funds to satisfy its obligations
hereunder).
SECTION
4.08. Nonpetition
Covenants. Notwithstanding any prior termination of this
Agreement or the Indenture, the Seller, solely in its capacity as a creditor
of
the Issuer, shall not, prior to the date which is one year and one day after
the
termination of the Indenture and payment in full of the Rate Stabilization
Bonds
or any other amounts owed under the Indenture, petition or otherwise invoke
or
cause the Issuer to invoke the process of any Government Authority for the
purpose of commencing or sustaining an involuntary case against the Issuer
under
any federal or state bankruptcy, insolvency or similar law, 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
4.09. Taxes. So long
as any of the Rate Stabilization Bonds are outstanding, the Seller shall,
and
shall cause each of its subsidiaries to, pay all taxes, 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 Transferred Rate Stabilization
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.
SECTION
4.10. Issuance
Advice Letter. The Seller hereby agrees not to withdraw the
filing of any Issuance Advice Letter with the PSC.
SECTION
4.11. Tariff. The
Seller hereby agrees to make all reasonable efforts to keep each Tariff in
full
force and effect at all times.
13
SECTION
4.12. Notice of
Breach to Rating Agencies, Etc. Promptly after obtaining
knowledge thereof, in the event of a breach in any material respect (without
regard to any materiality qualifier contained in such representation, warranty
or covenant) of any of the Seller’s representations, warranties or covenants
contained herein, the Seller shall promptly notify the Issuer, the Indenture
Trustee and the Rating Agencies of such breach. For the avoidance of
doubt, any breach which would adversely affect scheduled payments on the
Rate
Stabilization Bonds will be deemed to be a material breach for purposes of
this
Section 4.12.
SECTION
4.13. Use of
Proceeds. The Seller shall use the proceeds of the sale of the
Rate Stabilization Property in accordance with the Qualified Rate Order and
the
Rate Stabilization Law.
SECTION
4.14. Further
Assurances. Upon the request of the Issuer, the Seller shall
execute and deliver such further instruments and do such further acts as
may be
reasonably necessary to carry out more effectually the provisions and purposes
of this Agreement.
ARTICLE
V
THE
SELLER
SECTION
5.01. Liability
of Seller; Indemnities.
(a) The
Seller shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Seller under this
Agreement.
(b) The
Seller shall indemnify the Issuer and the Indenture Trustee (for the benefit
of
the Secured Parties) and each of their respective officers, directors,
employees, trustees, managers and agents for, and defend and hold harmless
each
such Person from and against, any and all taxes (other than taxes imposed
on
Bondholders as a result of their ownership of a Rate Stabilization Bond)
that
may at any time be imposed on or asserted against any such Person as a result
of
the sale of the Transferred Rate Stabilization Property to the Issuer, including
any franchise, sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes but excluding any taxes imposed as a
result
of a failure of such Person to withhold or remit taxes with respect to payments
on any Rate Stabilization Bond.
(c) The
Seller shall indemnify the Issuer and the Indenture Trustee (for the benefit
of
the Secured Parties) and each of their respective officers, directors,
employees, trustees, managers, and agents for, and defend and hold harmless
each
such Person from and against, any and all taxes (other than taxes imposed
on
Bondholders as a result of their ownership of a Rate Stabilization Bond)
that
may at any time be imposed on or asserted against any such Person as
a result of the Issuer’s ownership and assignment of the Transferred Rate
Stabilization Property, the issuance and sale by the Issuer of the Rate
Stabilization Bonds or the other transactions contemplated in the Basic
Documents, including any franchise, sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes but excluding any
taxes
imposed as a result of a failure of such Person to withhold or remit taxes
with
respect to payments on any Rate Stabilization Bond.
(d) The
Seller shall indemnify the Issuer, the Indenture Trustee (for the benefit
of the
Secured Parties) and each of their respective officers, directors, employees
and
agents for, and
14
defend
and hold harmless each such Person from and against all Losses that may be
imposed on, incurred by or asserted against each such Person, in each such
case,
as a result of the Seller’s breach of any of its representations, warranties or
covenants contained in this Agreement.
(e) Indemnification
under Sections 5.01(b), 5.01(c), 5.01(d) and 5.01(f)
shall include reasonable out-of-pocket fees and expenses of investigation
and
litigation (including reasonable attorney’s fees and expenses), except as
otherwise expressly provided in this Agreement.
(f) The
Seller shall indemnify the Indenture Trustee (for itself) and the Independent
Managers, and any of their respective affiliates, officers, directors, employees
and agents (each, an “Indemnified Person”) for, and defend and hold
harmless each such Person from and against, any and all Losses incurred by
any
of such Indemnified Persons as a result of the Seller’s breach of any of its
representations and warranties or covenants contained in this Agreement,
except
to the extent of Losses either resulting from the willful misconduct, bad
faith
or gross negligence of such Indemnified Person or resulting from a breach
of a
representation or warranty made by such Indemnified Person in any of the
Basic
Documents that gives rise to the Seller’s breach. The Seller shall not be
required to indemnify an Indemnified Person for any amount paid or payable
by
such Indemnified Person in the settlement of any action, proceeding or
investigation without the prior written consent of the Seller which consent
shall not be unreasonably withheld. Promptly after receipt by an Indemnified
Person of notice of the commencement of any action, proceeding or investigation,
such Indemnified Person shall, if a claim in respect thereof is to be made
against the Seller under this Section 5.01(f), notify the Seller in
writing of the commencement thereof. Failure by an Indemnified Person to
so
notify the Seller shall relieve the Seller from the obligation to indemnify
and
hold harmless such Indemnified Person under this Section 5.01(f) only to
the extent that the Seller suffers actual prejudice as a result of such failure.
With respect to any action, proceeding or investigation brought by a third
party
for which indemnification may be sought under this Section 5.01(f), the
Seller shall be entitled to conduct and control, at its expense and with
counsel
of its choosing that is reasonably satisfactory to such Indemnified Person,
the
defense of any such action, proceeding or investigation (in which case the
Seller shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by the Indemnified Person except as set forth below);
provided that the Indemnified Person shall have the right to participate
in such
action, proceeding or investigation through counsel chosen by it and at its
own
expense. Notwithstanding the Seller’s election to assume the defense of any
action, proceeding or investigation, the Indemnified Person shall have the
right
to employ separate counsel (including local counsel), and the Seller shall
bear
the reasonable fees, costs and expenses of such separate counsel if (i) the
defendants in any such action include both the Indemnified Person and the
Seller
and the Indemnified Person shall have reasonably concluded that there may
be
legal defenses available to it that are different from or additional to those
available to the Seller, (ii) the Seller shall not have employed counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person within a reasonable time after notice of the institution of such action,
(iii) the Seller shall authorize the Indemnified Person to employ separate
counsel at the expense of the Seller or (iv) in the case of the Indenture
Trustee, such action exposes the Indenture Trustee to a material risk of
criminal liability or forfeiture or a Servicer Default has occurred and is
continuing. Notwithstanding the foregoing, the Seller shall not be
obligated to pay for the fees, costs and expenses of more than one separate
counsel for the Indemnified Persons collectively other than one local counsel,
if appropriate.
15
(g) The
Seller shall indemnify the Servicer (if the Servicer is not the Seller) for
the
costs of any action instituted by the Servicer pursuant to Section
5.02(d) of the Servicing Agreement which are not paid as Operating Expenses
in accordance with the priorities set forth in Section 8.02(e) of the
Indenture.
(h) The
remedies provided in this Agreement are the sole and exclusive remedies against
the Seller for breach of its representations and warranties in this
Agreement.
(i) Indemnification
under this Section 5.01 shall survive any repeal of, modification of, or
supplement to, or judicial invalidation of, the Rate Stabilization Law or
any
Qualified Rate Order and shall survive the resignation or removal of the
Indenture Trustee or the termination of this Agreement and will rank in priority
with other general, unsecured obligations of the Seller.
SECTION
5.02. Merger,
Conversion or Consolidation of, or Assumption of the Obligations of,
Seller. Any Person (a) into which the Seller may be merged,
converted or consolidated and which is a Permitted Successor, (b) that may
result from any merger, conversion or consolidation to which the Seller shall
be
a party and which is a Permitted Successor, (c) that may succeed to the
properties and assets of the Seller substantially as a whole and which is
a
Permitted Successor, (d) which is a successor entity resulting from the division
of the Seller into two or more Persons and which is a Permitted Successor,
or
(e) which otherwise succeeds to all or substantially all of the electric
transmission and distribution business of the Seller (or, if transmission
and
distribution are not provided by a single entity, which provides electric
delivery service directly to Customers located in BGE’s service
territory as it existed on the date of adoption of the Qualified Rate Order)
(a
“Permitted Successor”) and which Person in any of the foregoing cases
executes an agreement of assumption to perform all of the obligations of
the
Seller hereunder (including the Seller’s obligations under Section 5.01
incurred at any time prior to or after the date of such assumption), shall
be
the successor to the Seller 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,
warranty or covenant made pursuant to Article III or Article
IVshall be breached and 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) the Seller shall have delivered to the Issuer,
the Indenture Trustee and each Rating Agency an Officer’s Certificate and an
Opinion of Counsel from external counsel stating that such consolidation,
merger, division or succession and such agreement of assumption comply with
this
Section 5.02 and that all conditions precedent, if any, provided for in
this Agreement relating to such transaction have been complied with, (iii)
the
Seller shall have delivered to the Issuer, the Indenture Trustee and each
Rating
Agency an Opinion of Counsel from external counsel of the Seller either (A)
stating that, in the opinion of such counsel, all filings to be made by the
Seller and the Issuer, including filings with the PSC pursuant to the Rate
Stabilization Law, have been authorized, executed and filed that are necessary
to fully preserve and protect the respective interest of the Issuer and the
Indenture Trustee in all of the Transferred Rate Stabilization 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, (iv) the Seller shall have delivered to the Issuer, the Indenture
Trustee, the Rating Agencies and the PSC an Opinion of Counsel from independent
tax counsel stating that, for federal income tax purposes, such consolidation,
conversion, merger, division or succession and such agreement of assumption
will
not result in a material federal income tax
16
consequence
to the Issuer or the Holders of Rate Stabilization Bonds and (v) the Seller
shall have given the Rating Agencies prior written notice of such transaction.
When any Person (or more than one Person) acquires the properties and assets
of
the Seller substantially as a whole or otherwise becomes the successor, whether
by merger, conversion, consolidation, sale, transfer, lease, management contract
or otherwise, to all or substantially all of the electric transmission and
distribution business of the Seller (or, if transmission and distribution
are
not provided by a single entity, provides electric delivery service directly
to
Customers located in BGE’s service territory as it existed on the date of
issuance of the Qualified Rate Order) in accordance with the terms of this
Section 5.02, then upon satisfaction of all of the other conditions of
this Section 5.02, the preceding Seller shall automatically and without
further notice be released from all of its obligations hereunder.
SECTION
5.03. Limitation
on Liability of Seller and Others. The Seller and any director,
officer, 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 4.07, 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 that in its opinion
may involve it in any expense or liability.
ARTICLE
VI
MISCELLANEOUS
PROVISIONS
SECTION
6.01. Amendment. This
Agreement may be amended in writing by the Seller and the Issuer, with (i)
the
prior written consent of the Indenture Trustee, (ii) the satisfaction of
the
Rating Agency Condition and (iii) if any amendment would adversely affect
in any
material respect the interest of any Holder of the Rate Stabilization Bonds,
the
consent of a majority of the Holders of each affected Tranche or Series of
Rate
Stabilization Bonds. 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 Indenture
Trustee shall be entitled to receive and rely upon an Opinion of Counsel
from
external counsel of the Seller stating that the execution of such amendment
is
authorized or permitted by this Agreement and the Opinion of Counsel referred
to
in Section 3.01(c)(i) of the Servicing Agreement. The Issuer and the
Indenture Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Indenture Trustee’s own rights, duties or immunities
under this Agreement or otherwise.
SECTION
6.02. Reserved.
SECTION
6.03. Notices. All
demands, notices and communications upon or to the Seller, the Issuer, the
Indenture Trustee, or the Rating Agencies under this Agreement shall be
sufficiently given for all purposes hereunder if in writing, and
delivered personally, sent by documented delivery service or, to the
extent receipt is confirmed telephonically, sent by telecopy or other form
of
electronic transmission:
17
(a) in
the case of the Seller, to Baltimore Gas and Electric Company, at 000 X.
Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000-0000, Attention: ___________, Telephone:
(000)
000-0000, Facsimile: __________;
(b) in
the case of the Issuer, to RSB BondCo LLC at Xxxxx 000, 000 Xxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: [Manager], Telephone: (000) 000-0000,
Facsimile: (000) 000-0000;
(c) in
the case of the Indenture Trustee, to the Corporate Trust Office;
(d) in
the case of the PSC, Xxxxxxx X. Xxxxxxxx Tower, 0 Xx. Xxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxx, Xxxxxxxx 00000, Attention: _______, Telephone: (000)
000-0000, Facsimile: ________;
(e) in
the case of Moody’s, to Xxxxx’x Investors Service, Inc., ABS Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telephone:
(000) 000-0000, Facsimile: (000) 000-0000;
(f) in
the case of Standard & Poor’s, to Standard & Poor’s Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc., 00 Xxxxx Xxxxxx, 00xx Xxxxx,
Xxx
Xxxx, Xxx Xxxx 00000, Attention: Asset Backed Surveillance Department,
Telephone: (000) 000-0000, Facsimile: (000) 000-0000;
(g) in
the case of Fitch, to Fitch Ratings, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, XX
00000,
Attention: ABS Surveillance, Telephone: (000) 000-0000, Facsimile:
(000) 000-0000; or
(h) as
to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION
6.04. 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
6.05. Limitations
on Rights of Third Parties. The provisions of this Agreement are
solely for the benefit of the Seller, the Issuer, the Indenture Trustee (for
the
benefit of the Secured Parties) and the other Persons expressly referred
to
herein, and such Persons shall have the right to enforce the relevant provisions
of this Agreement. 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 Rate Stabilization Property or under or in respect of this
Agreement or any covenants, conditions or provisions contained
herein.
SECTION
6.06. 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 remainder of
such
provision (if any) or the remaining provisions hereof (unless such construction
shall be unreasonable), and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision
in any
other jurisdiction.
18
SECTION
6.07. 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
6.08. 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
6.09. Governing
Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MARYLAND, 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
6.10. Assignment
to Indenture Trustee. The Seller hereby acknowledges and consents
to any mortgage, pledge, assignment and grant of a security interest by the
Issuer to the Indenture Trustee pursuant to the Indenture for the benefit
of the
Secured Parties of all right, title and interest of the Issuer in, to and
under
this Agreement, the Transferred Rate Stabilization Property and the proceeds
thereof and the assignment of any or all of the Issuer’s rights hereunder to the
Indenture Trustee for the benefit of the Secured Parties.
SECTION
6.11. Limitation
of Liability. It is expressly understood and agreed by the
parties hereto that this Agreement is executed and delivered by the Indenture
Trustee, not individually or personally but solely as Indenture Trustee on
behalf of the Secured Parties, in the exercise of the powers and authority
conferred and vested in it. The Indenture Trustee in acting hereunder
is entitled to all rights, benefits, protections, immunities and indemnities
accorded to it under the Indenture.
SECTION
6.12. Waivers. Any
term or provision of this Agreement may be waived, or the time for its
performance may be extended, by the party or parties entitled to the benefit
thereof; provided, however, that no such waiver delivered by the
Issuer shall be effective unless the Indenture Trustee has given its prior
written consent thereto. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any
party,
it is authorized in writing by an authorized representative of such
party. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any
part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
[REMAINDER
OF
PAGE INTENTIONALLY LEFT BLANK]
19
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.
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RSB
BONDCO LLC, as Issuer
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By:
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Name:
Title:
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BALTIMORE
GAS AND ELECTRIC COMPANY, as Seller
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By:
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Name:
Title:
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ACKNOWLEDGED
AND ACCEPTED:
_________,
as
Indenture Trustee
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By:
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Name:
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Title:
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EXHIBIT
A
FORM
OF
XXXX OF SALE
This
Xxxx
of Sale is being delivered pursuant to the Rate Stabilization Property Purchase
and Sale Agreement, dated as of ________ __, 2007 (the “Sale Agreement”),
by and between Baltimore Gas and Electric Company (the “Seller”) and RSB
BondCo LLC (the “Issuer”). All capitalized terms used but not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Sale Agreement.
In
consideration of the Issuer’s delivery to or upon the order of the Seller of
$[_____],
the Seller
does hereby irrevocably sell, transfer, assign, set over and otherwise convey
to
the Issuer, without recourse or warranty, except as set forth in the Sale
Agreement, all right, title and interest of the Seller in and to the [Initial][Subsequent]
Rate
Stabilization Property identified on Schedule 1 hereto (such sale,
transfer, assignment, setting over and conveyance of the [Initial][Subsequent]
Rate
Stabilization Property includes, to the fullest extent permitted by the Rate
Stabilization Law, the right to impose, collect and receive Qualified Rate
Stabilization Charges and the assignment of all revenues, collections, claims,
rights, payments, money or proceeds of or arising from the Qualified Rate
Stabilization Charges related to the [Initial][Subsequent]
Rate
Stabilization Property, as the same may be adjusted from time to
time). Such sale, transfer, assignment, setting over and conveyance
is hereby expressly stated to be a sale and, pursuant to Section 7-539 of
the
Rate Stabilization Law and other applicable law, shall be treated as an absolute
transfer of all of the Seller’s right, title and interest in and to (as in a
true sale), and not as a pledge or other financing of, the [Initial][Subsequent]
Rate
Stabilization Property. The Seller and the Issuer agree that after giving
effect
to the sale, transfer, assignment, setting over and conveyance contemplated
hereby the Seller has no right, title or interest in or to the [Initial][Subsequent]
Rate
Stabilization Property to which a security interest could attach because
(i) it
has sold, transferred, assigned, set over and conveyed all right in and to
the
[Initial][Subsequent]
Rate
Stabilization Property to the Issuer, and (ii) as provided in Section 7-542
of
the Rate Stabilization Law, appropriate notice has been filed and such transfer
is perfected against all third parties, including subsequent judicial or
other
lien creditors. If such sale, transfer, assignment, setting over and
conveyance is held by any court of competent jurisdiction not to be a true
sale
as provided in Section 7-539 of the Rate Stabilization Law, then such sale,
transfer, assignment, setting over and conveyance shall be treated as a pledge
of such [Initial][Subsequent]
Rate
Stabilization Property and as the creation of a security interest (within
the
meaning of the Rate Stabilization Law and the UCC) in the [Initial][Subsequent]
Rate
Stabilization Property and, without prejudice to its position that it has
absolutely transferred all of its rights in the [Initial][Subsequent]
Rate
Stabilization Property to the Issuer, the Seller hereby grants a security
interest in the [Initial][Subsequent]
Rate
Stabilization Property to the Issuer (and, to the extent necessary to qualify
the grant as a security interest under the Rate Stabilization Law and the
UCC,
to the Indenture Trustee for the benefit of the Secured Parties to secure
the
right of the Issuer under the Basic Documents to receive the Qualified Rate
Stabilization Charges and all other [Initial][Subsequent]
Rate
Stabilization Property).
EXHIBIT
A
1
The
Issuer does hereby purchase the [Initial][Subsequent]
Rate
Stabilization Property from the Seller for the consideration set forth in
the
preceding paragraph.
The
Seller and the Issuer each acknowledge and agree that the purchase price
for the
[Initial][Subsequent]
Rate
Stabilization Property sold pursuant to this Xxxx of Sale and the Sale Agreement
is equal to its fair market value at the time of sale.
The
Seller confirms that (i) each of the representations and warranties on the
part
of the Seller contained in the Sale Agreement are true and correct in all
respects on the date hereof as if made on the date hereof and (ii) each
condition precedent that must be satisfied under Section 2.03 of the Sale
Agreement has been satisfied upon or prior to the execution and delivery
of this
Xxxx of Sale by the Seller.1
This
Xxxx
of Sale 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.
THIS
XXXX
OF SALE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND,
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 LAW.
EXHIBIT
A
2
IN
WITNESS WHEREOF, the Seller and the Issuer have duly executed this Xxxx of
Sale
as of the ___ day of ___________, ______.
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By:
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Name:
Title:
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BALTIMORE
GAS AND ELECTRIC COMPANY
|
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By:
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Name:
Title:
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EXHIBIT
A
3
SCHEDULE
1
to
XXXX
OF
SALE
[INITIAL][SUBSEQUENT]
RATE
STABILIZATION PROPERTY
EXHIBIT
A
4
