SERIES SUPPLEMENT
Exhibit 10.5
This SERIES SUPPLEMENT dated as of September 18, 2019 (this “Supplement”), by and between AEP TEXAS RESTORATION FUNDING LLC, a limited liability company created under the laws of the State of Delaware (the “Issuer”),
and U.S. Bank National Association, a national banking association (“BANK”), in its capacity as indenture trustee (the “Indenture Trustee”) for the benefit of the Secured Parties under the Indenture dated as of September 18, 2019, by
and between the Issuer and BANK, in its capacity as Indenture Trustee and in its separate capacity as a securities intermediary (the “Indenture”).
PRELIMINARY STATEMENT
Section 9.01 of the Indenture provides, among other things, that the Issuer and the Indenture Trustee may at any time enter into an indenture supplemental to the Indenture for the purposes of authorizing the
issuance by the Issuer of the System Restoration Bonds and specifying the terms thereof. The Issuer has duly authorized the creation of the System Restoration Bonds with an initial aggregate principal amount of $235,282,000 to be known as AEP Texas
Restoration Funding LLC System Restoration Bonds (the “System Restoration Bonds”), and the Issuer and the Indenture Trustee are executing and delivering this Supplement in order to provide for the System Restoration Bonds.
All terms used in this Supplement that are defined in the Indenture, either directly or by reference therein, have the meanings assigned to them therein, except to the extent such terms are defined or modified in this
Supplement or the context clearly requires otherwise. In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Indenture, the terms and provisions of this Supplement
shall govern.
GRANTING CLAUSE
With respect to the System Restoration Bonds, the Issuer hereby Grants to the Indenture Trustee, as Indenture Trustee for the benefit of the Secured Parties of the System Restoration Bonds, all of the Issuer’s right,
title and interest (whether now owned or hereafter acquired or arising) in and to (a) the Transition Property created under and pursuant to the Financing Order, and transferred by the Seller to the Issuer pursuant to the Sale Agreement (including, to
the fullest extent permitted by law, the right to impose, collect and receive System Restoration Charges, all revenues, collections, claims, rights, payments, money or proceeds of or arising from the System Restoration Charges authorized in the
Financing Order and any Tariffs filed pursuant thereto and any contractual rights to collect such System Restoration Charges from Customers and REPs), (b) all System Restoration Charges related to the Transition Property, (c) the Sale Agreement and
the Xxxx of Sale executed in connection therewith and all property and interests in property transferred under the Sale Agreement and the Xxxx of Sale with respect to the Transition Property and the System Restoration Bonds, (d) the Servicing
Agreement, the Intercreditor Agreement, the Administration Agreement and any subservicing, agency, intercreditor, administration or collection agreements executed in connection therewith, to the extent related to the foregoing Transition Property and
the System Restoration Bonds, (e) the Collection Account, all subaccounts thereof and all amounts of cash, instruments, investment property or other assets on deposit therein or credited thereto from time to time and all Financial Assets and
securities entitlements carried therein or credited thereto, (f) all rights to compel the Servicer to file for and obtain adjustments to the System Restoration Charges in accordance with Section 39.307 (as incorporated through Section 36.403(a)) of
the Securitization Law, the Financing Order or any Tariff filed in connection therewith, (g) all deposits, guarantees, surety bonds, letters of credit and other forms of credit support provided by or on behalf of REPs pursuant to such Financing Order
or Tariff, including investment earnings thereon and all amounts on deposit in the REP Deposit Accounts; (h) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, whether such claims, demands,
causes and choses in action constitute Transition Property, accounts, general intangibles, instruments, contract rights, chattel paper or proceeds of such items or any other form of property, (i) all accounts, chattel paper, deposit accounts,
documents, general intangibles, goods, instruments, investment property, letters of credit, letters-of-credit rights, money, commercial tort claims and supporting obligations related to the foregoing, (j) all payments on or under, and all proceeds in
respect of, any or all of the foregoing; it being understood that the following do not constitute System Restoration Bond Collateral: (i) cash that has been released pursuant to Section 8.02(e)(xii) of the Indenture and,
following retirement of all Outstanding System Restoration Bonds, cash that has been released pursuant to Section 8.02(e)(xiv) of the Indenture and (ii) amounts deposited with the Issuer on the Closing Date, for payment of costs of issuance
with respect to the System Restoration Bonds (together with any interest earnings thereon), it being understood that such amounts described in clauses (i) and (ii) above shall not be subject to Section 3.17 of the Indenture.
The foregoing Grant is made in trust to secure the payment of principal of and premium, if any, interest on, and any other amounts owing in respect of, the System Restoration Bonds and all fees, expenses, counsel fees
and other amounts due and payable to the Indenture Trustee equally and ratably without prejudice, priority or distinction, except as expressly provided in the Indenture, to secure compliance with the provisions of the Indenture with respect to the
System Restoration Bonds, all as provided in the Indenture and to secure the performance by the Issuer of all of its obligations under the Indenture (collectively, the “Secured Obligations”). The Indenture and this Series Supplement constitute a
security agreement within the meaning of the Securitization Law and under the UCC to the extent that the provisions of the UCC are applicable hereto.
The Indenture Trustee, as indenture trustee on behalf of the Secured Parties of the System Restoration Bonds, acknowledges such Grant and accepts the trusts under this Supplement and the Indenture in accordance with the
provisions of this Supplement and the Indenture.
SECTION 1. Designation. The System Restoration Bonds shall be designated generally as the System Restoration Bonds, and further denominated as Tranches A-1 through A-2.
SECTION 2. Initial Principal Amount; System Restoration Bond Interest Rate; Scheduled Payment Date; Final Maturity Date. The System Restoration Bonds of each Tranche shall have the initial principal amount, bear
interest at the rates per annum and shall have the Scheduled Final Payment Dates and the Final Maturity Dates set forth below:
| Tranche |
|
Initial Principal Amount |
|
System Restoration Bond Interest Rate |
|
Scheduled Final Payment Date |
|
Maturity Date |
| A-1 |
|
117,641,000 |
|
2.0558%
|
|
2/1/2025 |
|
2/1/2027 |
| A-2 |
|
117,641,000 |
|
2.2939%
|
|
8/1/2029 |
|
8/1/2031 |
The System Restoration Bond Interest Rate shall be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 3. Authentication Date; Payment Dates; Expected Amortization Schedule for Principal; Periodic Interest; No Premium; Other Terms.
(a) Authentication Date. The System Restoration Bonds that are authenticated and delivered by the Indenture Trustee to or upon the order of the Issuer on September 18, 2019 (the “Closing Date”)
shall have as their date of authentication September 18, 2019.
(b) Payment Dates. The Payment Dates for the System Restoration Bonds are February 1 and August 1 of each year or, if any such date is not a Business Day, the next succeeding Business Day, commencing on
February 1, 2020 (the “Initial Payment Date”) and continuing until the earlier of repayment of the Tranche A-2 System Restoration Bonds in full and the Final Maturity Date Tranche A-2 System Restoration Bonds.
(c) Expected Amortization Schedule for Principal. Unless an Event of Default shall have occurred and be continuing on each Payment Date, the Indenture Trustee shall distribute to the Holders of record as
of the related Record Date amounts payable pursuant to Section 8.02(e) of the Indenture as principal, in the following order and priority: (1) to the holders of the Tranche A-1 System Restoration Bonds, until the Outstanding Amount of such
Tranche of System Restoration Bonds thereof has been reduced to zero; and (2) to the holders of the Tranche A-2 System Restoration Bonds, until the Outstanding Amount of such Tranche of System Restoration Bonds thereof has been reduced to zero; provided,
however, that in no event shall a principal payment pursuant to this Section 3(c) on any Tranche on a Payment Date be greater than the amount necessary to reduce the Outstanding Amount of such Tranche of System Restoration Bonds to the
amount specified in the Expected Amortization Schedule which is attached as Schedule A hereto for such Tranche and Payment Date.
(d) Periodic Interest. Periodic Interest will be payable on each Tranche of the System Restoration Bonds on each Payment Date in an amount equal to one-half of the product of (i) the applicable System
Restoration Bond Interest Rate and (ii) the Outstanding Amount of the related Tranche of System Restoration Bonds as of the close of business on the preceding Payment Date after giving effect to all payments of principal made to the Holders of the
related Tranche of System Restoration Bonds on such preceding Payment Date; provided, however, that with respect to the Initial Payment Date, or, if no payment has yet been made, interest on the outstanding principal balance will
accrue from and including the Closing Date to, but excluding, the following Payment Date.
(e) Book-Entry System Restoration Bonds. The System Restoration Bonds shall be Book-Entry System Restoration Bonds and the applicable provisions of Section 2.11 of the Indenture shall apply to
the System Restoration Bonds.
(f) Waterfall Caps. The amount payable with respect to the System Restoration Bonds pursuant to Section 8.02(e)(i) shall not exceed $100,000 annually.
SECTION 4. Minimum Denominations. The System Restoration Bonds shall be issuable in the Minimum Denomination and integral multiples of $1,000 in excess thereof.
SECTION 5. Certain Defined Terms. Article I of the Indenture provides that the meanings of certain defined terms used in the Indenture shall be as defined in Appendix A to the Indenture.
Additionally, Article II of the Indenture provides certain terms will have the meanings specified in the related Supplement. With respect to the System Restoration Bonds, the following definitions shall apply:
“Initial Payment Date” has the meaning set forth in Section 3 of this Supplement.
“Minimum Denomination” shall mean $100,000 or integral multiples of $1,000 in excess thereof, except for one bond of each tranche which may be of a smaller denomination.
“System Restoration Bond Interest Rate” has the meaning set forth in Section 2 of this Supplement.
“Payment Date” has the meaning set forth in Section 3(b) of this Supplement.
“Periodic Interest” has the meaning set forth in Section 3(d) of this Supplement.
“Closing Date” has the meaning set forth in Section 3(a) of this Supplement.
SECTION 6. Delivery and Payment for the System Restoration Bonds; Form of the System Restoration Bonds. The Indenture Trustee shall deliver the System Restoration Bonds to the Issuer when
authenticated in accordance with Section 2.03 of the Indenture. The System Restoration Bonds of each Tranche shall be in the form of Exhibits A-1 through A-2 hereto.
SECTION 7. Ratification of Agreement. As supplemented by this Supplement, the Indenture is in all respects ratified and confirmed and the Indenture, as so supplemented by this Supplement,
shall be read, taken, and construed as one and the same instrument. This Supplement amends, modifies and supplemented the Indenture only in so far as it relates to the System Restoration Bonds.
SECTION 8. Counterparts. This Supplement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall
together constitute but one and the same instrument.
SECTION 9. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER
THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND SECTIONS 9-301 THROUGH 9-306 OF THE NY UCC), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS; PROVIDED THAT THE
CREATION, ATTACHMENT AND PERFECTION OF ANY LIENS CREATED UNDER THE INDENTURE IN TRANSITION PROPERTY, AND ALL RIGHTS AND REMEDIES OF THE INDENTURE TRUSTEE AND THE HOLDERS WITH RESPECT TO THE TRANSITION PROPERTY, SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS.
SECTION 10. Issuer Obligation. No recourse may be taken directly or indirectly, by the Holders with respect to the obligations of the Issuer on the System Restoration Bonds, under the
Indenture or under this Supplement or any certificate or other writing delivered in connection herewith or therewith, against (i) any owner of a beneficial interest in the Issuer (including AEP Texas) or (ii) any shareholder, partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture Trustee, the Managers or any owner of a beneficial interest in the Issuer (including AEP Texas) in its individual capacity, or of any successor or assign of any of them in
their respective individual or corporate capacities, except as any such Person may have expressly agreed. Each Holder by accepting a System Restoration Bond specifically confirms the nonrecourse nature of these obligations, and waives and releases
all such liability. The waiver and release are part of the consideration for issuance of the System Restoration Bonds.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Supplement to be duly executed by their respective officers thereunto duly authorized as of the first day of the month and
year first above written.
|
By:
|
/s/ Xxxxx X. Xxxxxxx | ||
|
Name:
|
Xxxxx X. Xxxxxxx | ||
|
Title:
|
Assistant Treasurer | ||
|
U.S. Bank National Association, as Indenture Trustee
|
|||
|
By:
|
/s/ Xxxxxxxx X. Xxxxx | ||
|
Name:
|
Xxxxxxxx X. Xxxxx | ||
|
Title:
|
Assistant Vice President | ||
SCHEDULE A
EXPECTED AMORTIZATION SCHEDULE
OUTSTANDING PRINCIPAL BALANCE
|
DATE
|
Tranche A‑1
|
Tranche A‑2
|
||||||
|
Issuance Date
|
$
|
117,641,000
|
$
|
117,641,000
|
||||
|
2/1/2020
|
$
|
114,331,459
|
$
|
117,641,000
|
||||
|
8/1/2020
|
$
|
103,240,917
|
$
|
117,641,000
|
||||
|
2/1/2021
|
$
|
92,036,376
|
$
|
117,641,000
|
||||
|
8/1/2021
|
$
|
80,716,663
|
$
|
117,641,000
|
||||
|
2/1/2022
|
$
|
69,280,595
|
$
|
117,641,000
|
||||
|
8/1/2022
|
$
|
57,726,976
|
$
|
117,641,000
|
||||
|
2/1/2023
|
$
|
46,054,597
|
$
|
117,641,000
|
||||
|
8/1/2023
|
$
|
34,262,238
|
$
|
117,641,000
|
||||
|
2/1/2024
|
$
|
22,348,665
|
$
|
117,641,000
|
||||
|
8/1/2024
|
$
|
10,312,632
|
$
|
117,641,000
|
||||
|
2/1/2025
|
$
|
---
|
$
|
115,793,881
|
||||
|
8/1/2025
|
$
|
---
|
$
|
103,506,941
|
||||
|
2/1/2026
|
$
|
---
|
$
|
91,079,076
|
||||
|
8/1/2026
|
$
|
---
|
$
|
78,508,669
|
||||
|
2/1/2027
|
$
|
---
|
$
|
65,794,086
|
||||
|
8/1/2027
|
$
|
---
|
$
|
52,933,674
|
||||
|
2/1/2028
|
$
|
---
|
$
|
39,925,758
|
||||
|
8/1/2028
|
$
|
---
|
$
|
26,768,649
|
||||
|
2/1/2029
|
$
|
---
|
$
|
13,460,634
|
||||
|
8/1/2029
|
$
|
---
|
$
|
---
|
||||
|
2/1/2030
|
$
|
---
|
$
|
---
|
||||
|
8/1/2030
|
$
|
---
|
$
|
---
|
||||
|
2/1/2031
|
$
|
---
|
$
|
---
|
||||
|
8/1/2031
|
$
|
---
|
$
|
---
|
||||
