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EXHIBIT 10.1
TRANSITION PROPERTY PURCHASE AND SALE AGREEMENT
between
BEC FUNDING LLC
Note Issuer
and
BOSTON EDISON COMPANY
Seller
Dated as of July ___, 1999
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS....................................................................................1
Section 1.01. DEFINITIONS........................................................................1
ARTICLE II. CONVEYANCE OF TRANSITION PROPERTY.............................................................5
Section 2.01. CONVEYANCE OF TRANSITION PROPERTY..................................................5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER....................................................6
Section 3.01. ORGANIZATION AND GOOD STANDING.....................................................6
Section 3.02. DUE QUALIFICATION..................................................................6
Section 3.03. POWER AND AUTHORITY................................................................6
Section 3.04. BINDING OBLIGATION. ...............................................................7
Section 3.05. NO VIOLATION.......................................................................7
Section 3.06. NO PROCEEDINGS.....................................................................7
Section 3.07. APPROVALS..........................................................................7
Section 3.08. THE TRANSITION PROPERTY. ..........................................................8
Section 3.09. LIMITATIONS ON REPRESENTATIONS AND WARRANTIES......................................9
ARTICLE IV. COVENANTS OF THE SELLER.....................................................................10
Section 4.01. CORPORATE EXISTENCE...............................................................10
Section 4.02. NO LIENS..........................................................................10
Section 4.03. DELIVERY OF COLLECTIONS...........................................................10
Section 4.04. NOTICE OF LIENS...................................................................10
Section 4.05. COMPLIANCE WITH LAW...............................................................10
Section 4.06. COVENANTS RELATED TO NOTES AND TRANSITION PROPERTY................................10
Section 4.07. PROTECTION OF TITLE...............................................................11
Section 4.08. NONPETITION COVENANTS.............................................................12
Section 4.09. TAXES.............................................................................12
Section 4.10. ADDITIONAL SALES OF TRANSITION PROPERTY...........................................12
ARTICLE V. THE SELLER...................................................................................12
Section 5.01. LIABILITY OF SELLER; INDEMNITIES..................................................12
Section 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF,
SELLER...........................................................................................16
Section 5.03. LIMITATION ON LIABILITY OF SELLER AND OTHERS......................................16
ARTICLE VI. MISCELLANEOUS PROVISIONS....................................................................16
Section 6.01. AMENDMENT.........................................................................16
Section 6.02. NOTICES...........................................................................17
Section 6.03. ASSIGNMENT........................................................................17
Section 6.04. LIMITATIONS ON RIGHTS OF THIRD PARTIES............................................17
Section 6.05. SEVERABILITY......................................................................17
Section 6.06. SEPARATE COUNTERPARTS.............................................................18
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Section 6.07. HEADINGS..........................................................................18
Section 6.08. GOVERNING LAW.....................................................................18
Section 6.09. ASSIGNMENT TO NOTE TRUSTEE........................................................18
Section 6.10. LIMITATION OF LIABILITY...........................................................18
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This TRANSITION PROPERTY PURCHASE AND SALE AGREEMENT, dated as of July ___,
1999, is between BEC Funding LLC, a Delaware limited liability company (the
"NOTE ISSUER"), and Boston Edison Company, a Massachusetts corporation (together
with its successors in interest to the extent permitted hereunder, the
"SELLER").
RECITALS
WHEREAS, the Note Issuer desires to purchase the Transition Property (as
defined herein) created pursuant to the Statute and the Financing Order (each as
defined herein); and
WHEREAS, the Seller is willing to sell the Transition Property to the Note
Issuer.
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. Whenever used in this Agreement, the following
words and phrases shall have the following meanings:
"ADMINISTRATION AGREEMENT" means the Administration Agreement dated as of
the date hereof between Boston Edison Company, as Administrator, and the Note
Issuer, as amended and supplemented from time to time.
"AGENCIES" means, collectively, the Massachusetts Development Finance
Agency and the Massachusetts Health and Educational Facilities Authority.
"AGREEMENT" means this Transition Property Purchase and Sale Agreement, as
amended and supplemented from time to time.
"BACK-UP SECURITY INTEREST" has the meaning specified in Section 2.01.
"BASIC DOCUMENTS" means, collectively, this Agreement, the Note Indenture,
the Certificate Indenture, the Servicing Agreement, the Administration
Agreement, the Note Purchase Agreement, the Underwriting Agreement and the Fee
and Indemnity Agreement.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in New York, New York, Boston,
Massachusetts or Wilmington, Delaware are authorized or obligated by law,
regulation or executive order to remain closed.
"CERTIFICATE INDENTURE" means the Certificate Indenture dated as of July
___, 1999, between the Certificate Issuer and the Certificate Trustee, as
amended and supplemented from time to time.
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"CERTIFICATE TRUSTEE" means the Person acting as trustee under the
Certificate Indenture.
"CERTIFICATEHOLDERS" has the meaning specified in Section 1.01(a) of the
Certificate Indenture.
"CERTIFICATES" means the Massachusetts RRB Special Purpose Trust BEC-1 Rate
Reduction Certificates issued under the Certificate Indenture.
"CLOSING DATE" means July __, 1999.
"COLLECTION ACCOUNT" has the meaning specified in Section 8.02(a) of the
Note Indenture.
"CORPORATE TRUST OFFICE" has the meaning specified in Section 1.01(a) of
the Note Indenture.
"CUSTOMERS" means all classes of retail users of the Seller's distribution
system within its geographic service territory as in effect on July 1, 1997.
"DATE OF BREACH" means, with respect to the repurchase obligation specified
in Section 5.01(b), the date of breach of a representation or warranty that
triggers such repurchase obligation.
"DECLARATION OF TRUST" means the Declaration of Trust dated as of July ___,
1999, among the Agencies and the Delaware Trustee, as amended and supplemented
from time to time.
"DELAWARE TRUSTEE" means the Person acting as trustee under the Declaration
of Trust.
"DTE" means the Massachusetts Department of Telecommunications and Energy
and any successor thereto.
"DTE REGULATIONS" has the meaning specified in Section 1.01 of the
Servicing Agreement.
"DUFF & XXXXXX" means Duff & Xxxxxx Credit Rating Co. or its successor.
"FEE AND INDEMNITY AGREEMENT" means the fee and indemnity agreement dated
as of July ___, 1999 among the Note Issuer, the Delaware Trustee, the
Certificate Trustee, the Trust and the Agencies.
"FINANCING ORDER" means the order of the XXX, XXX-00-000, issued on April
2, 1999, as further clarified by the Order on the Massachusetts Development
Finance Agency's and
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Massachusetts Health and Educational Facilities Authority's Motion for
Clarification dated May 21, 1999.
"FITCH" means Fitch IBCA, Inc. or its successor.
"INDEMNIFIED PERSON" has the meaning specified in Section 5.01(h).
"ISSUANCE ADVICE LETTER" means the initial Issuance Advice Letter, dated
July ___, 1999, filed with the DTE by the Seller pursuant to the Financing
Order.
"LIEN" means a security interest, lien, charge, pledge or encumbrance of
any kind.
"LOSSES" has the meaning specified in Section 5.01(e).
"MOODY'S" means Xxxxx'x Investors Service, Inc. or its successor.
"NOTE INDENTURE" means the Note Indenture dated as of July __, 1999,
between the Note Issuer and the Note Trustee, as amended and supplemented from
time to time.
"NOTE ISSUER" has the meaning set forth in the preamble of this Agreement.
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement dated as of the
date hereof between the Note Issuer and the Trust, as amended and supplemented
from time to time.
"NOTE REGISTER" has the meaning specified in Section 2.05 of the Note
Indenture.
"NOTE TRUSTEE" means the Person acting as trustee under the Note Indenture.
"NOTEHOLDER" or "HOLDER" means the Person in whose name a Note is
registered on the Note Register.
"NOTES" means the BEC Funding LLC Notes issued under the Note Indenture.
"OFFICER'S CERTIFICATE" means a certificate signed by the chairman of the
board, the chief executive officer, the president, the vice chairman of the
board, any vice president, the treasurer, any assistant treasurer, the clerk,
any assistant clerk, the controller or the finance manager of the Seller.
"OPINION OF COUNSEL" means one or more written opinions of counsel who may
be an employee of or counsel to the party providing such opinion of counsel,
which counsel shall be reasonably acceptable to the party receiving such opinion
of counsel.
"OUTSTANDING AMOUNT" has the meaning specified in Section 1.01(a) of the
Note Indenture.
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"OVERCOLLATERALIZATION SUBACCOUNT" has the meaning specified in Section
8.02(a) of the Note Indenture.
"PERSON" means any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"RATING AGENCIES" means, collectively, S&P, Moody's, Fitch and Xxxx &
Xxxxxx.
"REPURCHASE DATE" means the date that is five Business Days after the date
that is (i) if the terms of Section 5.01(b)(i)(A) and Section 5.01(b)(i)(B)(2)
are applicable, two Business Days after the Date of Breach if the Seller fails
to make the deposit required by Section 5.01(b)(i)(B)(2) or 90 days after the
Date of Breach if the Seller makes the deposit required by Section
5.01(b)(i)(B)(2); (ii) if the terms of Section 5.01(b)(ii) are applicable, 90
days after the Date of Breach; and (iii) if the terms of Section 5.01(b)(i)(A)
and Section 5.01(b)(i)(B)(1) are applicable, 90 days after the Date of Breach.
"REQUIRED OVERCOLLATERALIZATION LEVEL" has the meaning specified in Section
1.01(a) of the Note Indenture.
"REPURCHASE PRICE" has the meaning specified in Section 5.01(b)(i).
"RTC CHARGE" means the portion (which may become all) of the Seller's
Transition Charge designated pursuant to the Financing Order as the RTC Charge,
as the same may be adjusted from time to time as provided in the Financing
Order.
"RTC CHARGE COLLECTIONS" has the meaning specified in Section 1.01 of the
Servicing Agreement.
"SELLER" has the meaning set forth in the preamble of this Agreement.
"SERVICER DEFAULT" means an event specified in Section 7.01 of the
Servicing Agreement.
"SERVICING AGREEMENT" means the Transition Property Servicing Agreement
dated as of the date hereof between Boston Edison Company, as Servicer, and the
Note Issuer, as amended and supplemented from time to time.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw
Hill Companies, Inc. or its successor.
"STATUTE" means Chapter 164 of the Massachusetts Acts of 1997, entitled An
Act Relative to Restructuring the Electric Utility Industry in the Commonwealth,
Regulating the Provision of Electricity and Other Services, and Promoting
Enhanced Consumer Protections Therein.
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"TRANSITION CHARGE" means the "access charge" as defined in Boston Edison
Company's Restructuring Settlement Agreement, D.P.U. Docket Nos. 96-100 and
96-23 and subsequent filings with the DTE pursuant thereto.
"TRANSITION PROPERTY" means the transition property that exists under
paragraph 7 of the Financing Order.
"TRUST" or "CERTIFICATE ISSUER" means Massachusetts RRB Special Purpose
Trust BEC-1, a Delaware business trust.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated as of July
___, 1999 among Boston Edison Company, the Note Issuer, the Certificate Issuer
and the underwriters named therein.
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 TRANSITION PROPERTY
Section 2.01. CONVEYANCE OF TRANSITION PROPERTY. In consideration of the
Note 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 Note Issuer, WITHOUT RECOURSE OR WARRANTY, except as specifically
set forth herein, all right, title and interest of the Seller in and to the
Transition Property (such sale, transfer, assignment, setting over and
conveyance of the Transition Property includes, to the fullest extent permitted
by the Statute, the assignment of all revenues, collections, claims, payments,
money or proceeds of or arising from the RTC Charge pursuant to the Financing
Order). Such sale, transfer, assignment, setting over and conveyance is hereby
expressly stated to be a sale and, pursuant to Section 1H(f)(1) of Chapter 164
of the Massachusetts General Laws, shall be treated as an absolute transfer of
all of the Seller's right, title and interest in (as in a true sale), and not as
a pledge or other financing of, the Transition Property. 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 1H(f)(1) of
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Chapter 164 of the Massachusetts General Laws, then such sale, transfer,
assignment, setting over and conveyance shall be treated as the creation of a
security interest in the Transition Property and, without prejudice to its
position that it has absolutely transferred all of its rights in the Transition
Property to the Note Issuer, the Seller hereby grants a security interest in the
Transition Property to the Note Issuer (the "BACK-UP SECURITY INTEREST"). The
Seller and the Note Issuer agree that the Seller has no rights in the Transition
Property to which such a security interest could attach because it has sold all
rights in the Transition Property to the Note Issuer pursuant to Section
1H(f)(1) of Chapter 164 of the Massachusetts General Laws.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to Section 3.09 hereof, the Seller makes the following
representations and warranties, as of the Closing Date, on which the Note Issuer
has relied in acquiring the Transition Property.
Section 3.01. ORGANIZATION AND GOOD STANDING. The Seller is duly organized
and validly existing as a corporation in good standing under the laws of The
Commonwealth of Massachusetts, with the requisite corporate 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 requisite
corporate power and authority to own the Transition Property.
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
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
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 corporate action on the part of the Seller.
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:
(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
articles of organization or by-laws of the Seller, or any material indenture,
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agreement or other instrument to which the Seller is a party or by which it 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 under the Basic
Documents or any Lien created pursuant to Section 1H(e) of Chapter 164 of the
Massachusetts General Laws); or (iii) violate any existing law or any existing
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. Except as set forth on Schedule 3.06, 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 court, federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller or its properties involving or relating to
the Seller or the Note Issuer or, to the Seller's knowledge, any other Person:
(i) asserting the invalidity of this Agreement, any of the other Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the issuance
of the Notes or the Certificates 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 might materially and adversely affect
the performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, any of the other Basic Documents, the Notes
or the Certificates or (iv) seeking to adversely affect the federal or state
income tax classification of the Notes or the Certificates as debt.
Section 3.07. APPROVALS. No approval, authorization, consent, order or
other action of, or filing with, any court, federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with 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 TRANSITION PROPERTY.
(a) Title. It is the intention of the parties hereto that the transfer and
assignment herein contemplated constitute a sale of the Transition Property from
the Seller to the Note Issuer and that no interest in, or title to, the
Transition 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 Transition Property has been sold, transferred, assigned
or pledged by the Seller to any Person other than the Note Issuer. On the
Closing Date, immediately upon the sale hereunder, the Seller has transferred
the Transition Property to the Note Issuer, free and clear of all Liens, except
for any Lien created pursuant to Section 1H(e) of Chapter 164 of the
Massachusetts General Laws and any Lien that may be granted under the Basic
Documents.
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(b) TRANSFER FILINGS. On the Closing Date, immediately upon the sale
hereunder, the Transition Property has been validly transferred and sold to the
Note Issuer, the Note Issuer shall own all such Transition Property free and
clear of all Liens (except for any Lien created pursuant to Section 1H(e) of
Chapter 164 of the Massachusetts General Laws and any Lien that may be granted
under the Basic Documents) and all filings to be made by the Seller (including
filings with the DTE under the Statute) necessary in any jurisdiction to give
the Note Issuer an ownership interest (subject to any Lien created pursuant to
Section 1H(e) of Chapter 164 of the Massachusetts General Laws and any Lien that
may be granted under the Basic Documents) in the Transition Property have been
made. No further action is required to maintain such ownership interest (subject
to any Lien created pursuant to Section 1H(e) of Chapter 164 of the
Massachusetts General Laws and any Lien that may be granted under the Basic
Documents). Filings have also been made to the extent required by Massachusetts
General Laws Chapter 106, xx.xx. 9-403(2)-(3), 9-306, 9-402(7) and 9-103 to
perfect the Back-Up Security Interest granted by the Seller to the Note Issuer
(subject to any Lien created pursuant to Section 1H(e) of Chapter 164 of the
Massachusetts General Laws and any Lien that may be granted under the Basic
Documents).
(c) FINANCING ORDER AND ISSUANCE ADVICE LETTER; OTHER APPROVALS. On the
Closing Date, under the laws of The Commonwealth of Massachusetts and the United
States in effect on the Closing Date, (i) the Financing Order pursuant to which
the Transition Property has been created is in full force and effect; (ii) the
Certificateholders are entitled to the protections of the Statute and,
accordingly, the Financing Order is not revocable by the DTE; (iii) The
Commonwealth of Massachusetts may not alter the provisions of the Statute that
make the RTC Charge irrevocable and binding, limit or alter the Transition
Property or the Financing Order, and all rights thereunder, in a manner that
would substantially impair the rights of the Certificateholders, absent a
demonstration by The Commonwealth of Massachusetts that an impairment is
narrowly-tailored and is necessary to advance an important public interest, such
as a "great public calamity" until the Certificates, together with interest
thereon, are fully met and discharged; (iv) the DTE may not, either by
rescinding, altering or amending the Financing Order, in any way reduce or
impair the value of the Transition Property either directly or indirectly by
taking reimbursable transition costs amounts into account when setting other
rates for the Seller, in a manner that would substantially impair the rights of
Certificateholders, absent a demonstration by The Commonwealth of Massachusetts
that an impairment is narrowly-tailored and is necessary to advance an important
public interest, such as a "great public calamity", until the Certificates,
together with interest thereon, are fully met and discharged; (v) the process by
which the Financing Order was adopted and approved, and the Financing Order and
Issuance Advice Letter themselves, comply with all applicable laws, rules and
regulations; (vi) the Issuance Advice Letter has been filed in accordance with
the Financing Order; and (vii) no other approval, authorization, consent, order
or other action of, or filing with, any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with the creation of the Transition Property, except those that have
been obtained or made.
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(d) ASSUMPTIONS. On the Closing Date, based upon the information available
to the Seller on the Closing Date, the assumptions used in calculating the
initial RTC Charge are reasonable and are made in good faith. Notwithstanding
the foregoing, the Seller makes no representation or warranty that the
assumptions used in calculating such RTC Charge will in fact be realized.
(e) CREATION OF TRANSITION PROPERTY. Upon the effectiveness of the
Financing Order and the Issuance Advice Letter: (i) all of the Transition
Property constitutes an existing property right; (ii) the Transition Property
includes the right, title and interest in and to all revenues, collections,
claims, payments, money, or proceeds of or arising from the RTC Charge, as
adjusted from time to time pursuant to the Financing Order, and all rights to
obtain adjustments to the RTC Charge pursuant to the Financing Order; and (iii)
the owner of the Transition Property is legally entitled to collect payments in
respect of the RTC Charge in the aggregate sufficient to pay the interest on and
principal of the Notes, to pay the fees and expenses of servicing the Notes and
the Certificates, to replenish the Capital Subaccount to the Required Capital
Level and to fund the Overcollateralization Subaccount to the Required
Overcollateralization Level until the Notes and the Certificates are paid in
full. Notwithstanding the foregoing, the Seller makes no representation or
warranty that any amounts actually collected in respect of the RTC Charge will
in fact be sufficient to meet payment obligations with respect to the Notes and
the Certificates.
(f) PROSPECTUS. As of the date hereof, the information describing the
Seller in "The Seller and Servicer" section of the prospectus dated July ___,
1999 offering the Notes and the Certificates is correct in all material
respects.
Section 3.09. 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 a legislative enactment, constitutional amendment or voter initiative.
Notwithstanding anything to the contrary in this Agreement, the Seller makes no
representation or warranty that any amounts actually collected in respect of the
RTC Charge will in fact be sufficient to meet payment obligations with respect
to the Notes and the Certificates or that the assumptions used in calculating
the RTC Charge will in fact be realized nor shall the Seller be obligated to
reduce, or accept a reduction of, any rates or charges to which it would
otherwise be entitled in respect of services rendered or to be rendered to
Customers in order to permit the payment of the RTC Charge.
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ARTICLE IV. COVENANTS OF THE SELLER
Section 4.01. CORPORATE EXISTENCE. So long as any of the Notes are
outstanding, the Seller (a) will keep in full force and effect its existence,
rights and franchises as a corporation under the laws of the jurisdiction of its
organization and (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.
Section 4.02. NO LIENS. Except for the conveyances hereunder or any Lien
under Section 1H(e) of Chapter 164 of the Massachusetts General Laws or for the
benefit of the Note Issuer, the Seller will not sell, pledge, assign or
transfer, or grant, create, or incur any Lien on, any of the Transition
Property, or any interest therein, and the Seller shall defend the right, title
and interest of the Note Issuer and the Note Trustee in, to and under the
Transition Property against all claims of third parties claiming through or
under the Seller. Boston Edison Company, in its capacity as Seller, will not at
any time assert any Lien against, or with respect to, any of the Transition
Property.
Section 4.03. DELIVERY OF COLLECTIONS. If the Seller receives any payments
in respect of the RTC Charge or the proceeds thereof when it is not acting as
the Servicer, the Seller agrees to pay to the Servicer all payments received by
it in respect thereof as soon as practicable after receipt thereof by it.
Section 4.04. NOTICE OF LIENS. The Seller shall notify the Note Issuer and
the Note Trustee promptly after becoming aware of any Lien on any of the
Transition Property, other than the conveyances hereunder, any Lien under the
Basic Documents or any Lien under Section 1H(e) of Chapter 164 of the
Massachusetts General Laws or for the benefit of the Note Issuer.
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
it, except to the extent that failure to so comply would not adversely affect
the Note Issuer's or the Note Trustee's interests in the Transition 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 NOTES AND TRANSITION PROPERTY.
(a) So long as any of the Notes are outstanding, the Seller shall treat
the Notes as debt of the Note Issuer, other than for financial accounting or tax
reporting purposes.
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(b) So long as any of the Notes are outstanding, the Seller shall indicate
in its financial statements that it is not the owner of the Transition Property.
(c) So long as any of the Notes or Certificates are outstanding, the
Seller shall not own or purchase any Notes or Certificates.
(d) The Seller agrees that, upon the sale by the Seller of the Transition
Property to the Note Issuer pursuant to this Agreement, (i) to the fullest
extent permitted by law, including applicable DTE Regulations, the Note Issuer
shall have all of the rights originally held by the Seller with respect to the
Transition Property, including the right (subject to the terms of the Servicing
Agreement) to exercise any and all rights and remedies to collect any amounts
payable by any Customer in respect of the Transition Property, notwithstanding
any objection or direction to the contrary by the Seller and (ii) any payment by
any Customer to the Note Issuer shall discharge such Customer's obligations in
respect of the Transition Property to the extent of such payment,
notwithstanding any objection or direction to the contrary by the Seller.
(e) So long as any of the Notes are outstanding, (i) the Seller shall not
make any statement or reference in respect of the Transition Property that is
inconsistent with the ownership interest of the Note Issuer (other than for
financial accounting or tax reporting purposes), and (ii) the Seller shall not
take any action in respect of the Transition Property except solely in its
capacity as the Servicer thereof pursuant to the Servicing Agreement or as
otherwise contemplated by the Basic Documents.
Section 4.07. PROTECTION OF TITLE. The Seller shall execute and file such
filings, including filings with the DTE 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 ownership interest
of the Note Issuer in the Transition Property, including all filings required
under the Statute relating to the transfer of the ownership interest in the
Transition Property by the Seller to the Note Issuer. The Seller shall deliver
(or cause to be delivered) to the Note Issuer 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 proceeding
necessary to compel performance by the DTE or The Commonwealth of Massachusetts
of any of their obligations or duties under the Statute or the Financing Order,
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 to
protect the Note Issuer and the Certificateholders 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. The
costs of any such actions or proceedings will be payable by the Note Issuer.
Section 4.08. NONPETITION COVENANTS. Notwithstanding any prior termination
of this Agreement or the Note Indenture, but subject to the DTE's right to order
the sequestration and payment of revenues arising with respect to the Transition
Property notwithstanding any bankruptcy, reorganization or other insolvency
proceedings with respect to the Seller pursuant to
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Section 1H(d)(5) of the Statute, the Seller shall not, prior to the date which
is one year and one day after the termination of the Note Indenture, petition or
otherwise invoke or cause the Note Issuer to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Note 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 Note Issuer or any substantial
part of the property of the Note Issuer, or ordering the winding up or
liquidation of the affairs of the Note Issuer.
Section 4.09. TAXES. So long as any of the Notes are outstanding, the
Seller shall, and shall cause each of its subsidiaries to, pay all material
taxes, assessments and governmental charges imposed upon it or any of its
properties or assets or with respect to any of its franchises, 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
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.
Section 4.10. ADDITIONAL SALES OF TRANSITION PROPERTY. So long as any of
the Notes are outstanding, the Seller shall not sell any transition property (as
defined in the Statute) to secure another issuance of electric rate reduction
bonds (as defined in the Statute) if it would cause the then existing ratings on
the Certificates from the Rating Agencies to be downgraded.
Section 4.11. ISSUANCE ADVICE LETTER. The Seller hereby agrees not to
withdraw the filing of the Issuance Advice Letter with the DTE.
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) (i) In the event of a breach by the Seller of any representation and
warranty specified in Sections 3.08(c) or 3.08(e) that has a material adverse
effect on the Certificateholders, the Seller shall repurchase the Transition
Property from the Note Issuer at a purchase price equal to the then outstanding
principal amount of the Notes and all accrued and unpaid interest thereon,
excluding any premium or penalty of any kind (the "REPURCHASE PRICE"), as of the
Repurchase Date; provided, however, that the Seller shall not be obligated to
repurchase the Transition Property if (A) within 90 days after the date of
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
Certificateholders as a result of such breach and (B) either (1) if the Seller
had, immediately prior to the breach, a long term debt rating of at least "A3"
by Moody's and "BBB"
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by S&P or the equivalent of "BBB" by any other Rating Agency, and the Seller
enters into a binding agreement with the Note Issuer to pay any amounts
necessary so that all interest payments due on the Notes during such 90-day
period will be paid in full, or (2) 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 Note 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 Notes during
such 90-day period.
(ii) In the event of a breach by the Seller of any representation and
warranty specified in Sections 3.01, 3.03, 3.04, 3.05, 3.08(a) or 3.08(b) that
has a material adverse effect on the Certificateholders, if within 90 days after
the date of occurrence thereof such breach has not been cured or the Seller has
not taken remedial action such that there is not and will not be a material
adverse effect on the Certificateholders as a result of such breach, then the
Seller shall repurchase the Transition Property from the Note Issuer for the
Repurchase Price on the Repurchase Date.
(iii) Notwithstanding any other provision of this Agreement, upon the
payment by the Seller of the Repurchase Price pursuant to this Section 5.01(b),
neither the Note Issuer nor any other Person shall have any other claims, rights
or remedies against the Seller under, arising from or with respect to this
Agreement, except as set forth in Section 5.01(h).
(c) The Seller shall indemnify the Note Issuer, the Note Trustee (for the
benefit of the Noteholders) and the Certificate Trustee (for the benefit of the
Certificateholders) for, and defend and hold harmless each such Person from and
against, any and all taxes (other than taxes imposed on Noteholders or
Certificateholders solely as a result of their ownership of Notes or
Certificates, respectively) that may at any time be imposed on or asserted
against any such Person under existing law as of the Closing Date as a result of
the sale of the Transition Property to the Note Issuer, including any sales,
gross receipts, general corporation, tangible personal property, privilege or
license taxes.
(d) The Seller shall indemnify the Note Issuer, the Note Trustee (for the
benefit of the Noteholders) and the Certificate Trustee (for the benefit of the
Certificateholders) for, and defend and hold harmless each such Person from and
against, any and all taxes (other than taxes imposed on Noteholders or
Certificateholders solely as a result of their ownership of Notes or
Certificates, respectively) that may be imposed on or asserted against any such
Person under existing law as of the Closing Date as a result of the issuance and
sale by the Note Issuer of the Notes, the issuance and sale by the Trust of the
Certificates or the other transactions contemplated herein, including any sales,
gross receipts, general corporation, tangible personal property, privilege or
license taxes.
(e) The Seller shall indemnify the Note Issuer, the Note Trustee (for the
benefit of the Noteholders) and the Certificate Trustee (for the benefit of the
Certificateholders) for, and defend and hold harmless each such Person from and
against, any and all liabilities, obligations, losses, claims, damages,
payments, costs or expenses of any kind whatsoever (collectively, "LOSSES") that
may be imposed on, incurred by or asserted against each such Person as a result
of (i) the Seller's willful misconduct or gross negligence in the performance of
its duties or observance of its covenants under this Agreement, or (ii) the
Seller's breach in any material respect of any of its representations and
warranties contained in this Agreement (other than the representations and
warranties
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specified in Sections 3.01, 3.03, 3.04, 3.05, 3.08(a), 3.08(b), 3.08(c) or
3.08(e), the breach of which are subject to the repurchase obligation set forth
in Section 5.01(b)); provided, however, that the Seller may, at its election and
in full satisfaction of its obligations under this Section 5.01(e), repurchase
the Transition Property at the Repurchase Price, in which case neither the Note
Issuer nor any other Person shall have any other claims, rights or remedies
against the Seller under, arising from or with respect to this Agreement, except
as set forth in Section 5.01(h).
(f) Indemnification under Sections 5.01(c), 5.01(d), 5.01(e) and 5.01(h)
shall include reasonable out-of-pocket fees and expenses of investigation and
litigation (including reasonable attorneys' fees and expenses), except as
otherwise provided in this Agreement.
(g) 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 a legislative enactment, constitutional amendment or
voter initiative. Notwithstanding anything to the contrary in this Agreement,
the Seller makes no representation or warranty that any amounts actually
collected in respect of the RTC Charge will in fact be sufficient to meet
payment obligations with respect to the Notes and the Certificates or that the
assumptions used in calculating the RTC Charge will in fact be realized nor
shall the Seller be obligated to reduce, or accept a reduction of, any rates or
charges to which it would otherwise be entitled in respect of services rendered
or to be rendered to customers in order to permit the payment of the RTC Charge.
(h) The Seller shall indemnify and hold harmless the Note Trustee (for
itself), the Delaware Trustee, the Certificate Trustee (for itself), the
Certificate Issuer, the Agencies and any of their respective affiliates,
officers, directors, employees and agents (each an "INDEMNIFIED PERSON") against
any and all Losses incurred by any of such Indemnified Persons as a result of
(i) the Seller's willful misconduct or gross negligence in the performance of
its duties or observance of its covenants under this Agreement or (ii) the
Seller's breach in any material respect of any of its representations and
warranties contained in this Agreement, except to the extent of Losses either
resulting from the willful misconduct or gross negligence of any Indemnified
Person or resulting from a breach of a representation or warranty made by any
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 written consent of the Seller,
which consent shall not be unreasonably withheld. Promptly after receipt by an
Indemnified Person of notice of its involvement in any action, proceeding or
investigation, such Indemnified Person shall, if a claim for indemnification in
respect thereof is to be made against the Seller under this Section 5.01(h),
notify the Seller in writing of such involvement. 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(h)
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(h),
the Seller shall be entitled to assume the defense of any such action,
proceeding or investigation. Upon assumption by the Seller of the defense of any
such
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action, proceeding or investigation, the Indemnified Person shall have the right
to participate in such action or proceeding and to retain its own counsel. The
Seller shall be entitled to appoint counsel of the Seller's choice at the
Seller's expense to represent the Indemnified Person in any action, proceeding
or investigation for which a claim of indemnification is made against the Seller
under this Section 5.01(h) (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, however, that such
counsel shall be reasonably satisfactory to the Indemnified Person.
Notwithstanding the Seller's election to appoint counsel to represent the
Indemnified Person in an 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 use of counsel chosen by the Seller to
represent the Indemnified Person would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, 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, (iii) 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 or (iv) the
Seller shall authorize the Indemnified Person to employ separate counsel at the
expense of the Seller. 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 other than local counsel. The Seller will
not, without the prior written consent of the Indemnified Person, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought under this Section 5.01(h) (whether or not the
Indemnified Person is an actual or potential party to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of the Indemnified Person from all liability arising out of such claim, action,
suit or proceeding.
(i) The remedies of the Note Issuer, the Note Trustee (for the benefit of
the Noteholders) and the Certificate Trustee (for the benefit of the
Certificateholders) provided in this Agreement are each such Person's sole and
exclusive remedies against the Seller for breach of its representations and
warranties in this Agreement.
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,
(b) that may result from any merger or consolidation to which the Seller shall
be a party or (c) that may succeed to the properties and assets of the Seller
substantially as a whole, which Person in any of the foregoing cases executes an
agreement of assumption to perform every obligation of the Seller hereunder,
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) if
the Seller is the Servicer, no Servicer Default, and no event which, after
notice or lapse of time, or both, would become a Servicer Default shall have
occurred and be continuing, (ii) the Seller shall have delivered to the Note
Issuer and the Note Trustee an Officers' Certificate stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions
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precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, (iii) the Seller shall have delivered to the Note
Issuer and the Note Trustee an Opinion of Counsel either (A) stating that, in
the opinion of such counsel, all filings to be made by the Seller, including
filings with the DTE pursuant to the Statute, have been executed and filed that
are necessary to fully preserve and protect the interest of the Note Issuer in
the 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 and (iv) the Rating Agencies shall have
received prior written notice of such transaction. When any Person acquires the
properties and assets of the Seller substantially as a whole and becomes the
successor to the Seller 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
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.
ARTICLE VI. MISCELLANEOUS PROVISIONS
Section 6.01. AMENDMENT. This Agreement may be amended by the Seller and
the Note Issuer, with ten Business Days' prior written notice given to the
Rating Agencies and the prior written consent of the Note Trustee, but without
the consent of any of the Noteholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions in
this Agreement or of modifying in any manner the rights of the Noteholders;
provided, however, that such action shall not, as evidenced by an Officer's
Certificate delivered to the Note Issuer and the Note Trustee, adversely affect
in any material respect the interests of any Noteholder.
This Agreement may also be amended from time to time by the Seller and the
Note Issuer, with ten Business Days' prior written notice given to the Rating
Agencies and the prior written consent of the Note Trustee and the prior written
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes affected thereby, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders.
It shall not be necessary for the consent of Noteholders pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Note 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.
The Note Trustee may, but shall not
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be obligated to, enter into any such amendment which affects the Note Trustee's
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 Note Issuer, the Note Trustee, or the Rating Agencies under this
Agreement shall be in writing, personally delivered, mailed or sent by telecopy
or other similar form of rapid transmission, and shall be deemed to have been
duly given upon receipt (a) in the case of the Seller, to Boston Edison Company,
at 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000, Attention of __________, (b) in the
case of the Note Issuer, to BEC Funding LLC, 000 Xxxxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxx, XX 00000, Attention of Xxxxxx X. Xxxxxx, Xx., (c) in the case of the
Note Trustee, to it 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 S&P, to Standard & Poor's, 00 Xxxxx
Xxxxxx, 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, XX 00000, Attention of ABS Surveillance, (g) in
the case of Duff & Xxxxxx, to Xxxx & Xxxxxx Credit Rating Co., 00 Xxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000, Attention of Asset-Backed Monitoring Group or
(h) as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
Section 6.03. 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 THIRD PARTIES. The provisions of
this Agreement are solely for the benefit of the Seller, the Note Issuer, the
Note Trustee 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 Transition Property or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
Section 6.05. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 6.06. SEPARATE COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 6.07. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
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Section 6.08. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of The Commonwealth of Massachusetts, 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 NOTE TRUSTEE. The Seller hereby acknowledges
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Note Issuer to the Note Trustee pursuant to the Note Indenture
for the benefit of the Noteholders of all right, title and interest of the Note
Issuer in, to and under the Transition Property and the proceeds thereof and the
assignment of any or all of the Note Issuer's rights and obligations hereunder
to the Note Trustee.
Section 6.10. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that this Agreement is executed and delivered by
the Note Trustee, not individually or personally but solely as Note Trustee on
behalf of the Holders of the Notes, in the exercise of the powers and authority
conferred and vested in it.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
BEC FUNDING LLC,
Note Issuer
By:_______________________________
Name:
Title:
BOSTON EDISON COMPANY,
Seller
By:_____________________________
Name:
Title:
Acknowledged and Accepted:
BANK OF NEW YORK,
not in its individual capacity
but solely as Note Trustee
By:___________________________
Name:
Title:
S-1
