Exhibit 4.1
FPL RECOVERY FUNDING LLC,
as Issuer,
and
THE BANK OF NEW YORK,
as Trustee and Securities Intermediary
---------------------
FORM OF INDENTURE
Dated as of ______, 2007
---------------------
Securing Senior Secured Bonds, Series A
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions....................................................2
Section 1.02 Incorporation by Reference of the Trust Indenture Act..........2
Section 1.03 Rules of Construction..........................................3
ARTICLE II
THE BONDS
Section 2.01 Form...........................................................3
Section 2.02 Execution, Authentication and Delivery.........................4
Section 2.03 Amount Issuable; Designation; Denominations; Initial Principal
Amount; Interest; Scheduled Final Payment Date; Final Maturity
Date; Payment of Principal and Interest........................5
Section 2.04 Temporary Bonds................................................7
Section 2.05 Registration; Registration of Transfer and Exchange............7
Section 2.06 Mutilated, Destroyed, Lost or Stolen Bonds.....................9
Section 2.07 Persons Deemed Owner..........................................10
Section 2.08 [RESERVED]....................................................10
Section 2.09 Cancellation..................................................10
Section 2.10 Conditions to the Authentication and Delivery of Bonds........10
Section 2.11 Book-Entry Bonds..............................................12
Section 2.12 Notices to Clearing Agency....................................13
Section 2.13 Definitive Bonds..............................................13
Section 2.14 Tax Treatment.................................................13
Section 2.15 Authenticating Agents.........................................13
ARTICLE III
COVENANTS
Section 3.01 Payment of Principal and Interest.............................14
Section 3.02 Maintenance of Office or Agency...............................14
Section 3.03 Money for Payments to Be Held in Trust........................15
Section 3.04 Existence.....................................................16
Section 3.05 Protection of Collateral......................................16
Section 3.06 Opinions as to Collateral.....................................17
Section 3.07 Performance of Obligations; SEC Filings.......................17
Section 3.08 Negative Covenants............................................19
Section 3.09 Annual Statement as to Compliance.............................19
i
Section 3.10 Issuer May Consolidate, etc., Only on Certain Terms...........20
Section 3.11 Successor or Transferee.......................................22
Section 3.12 No Other Business.............................................22
Section 3.13 No Borrowing..................................................22
Section 3.14 Guarantees, Loans, Advances and Other Liabilities.............22
Section 3.15 Capital Expenditures..........................................22
Section 3.16 Restricted Payments...........................................22
Section 3.17 Notice of Events of Default...................................23
Section 3.18 Inspection....................................................23
Section 3.19 Sale Agreement, Administration Agreement and Servicing
Agreement ....................................................23
Section 3.20 Removal of Administrator......................................25
Section 3.21 Further Instruments and Acts..................................25
Section 3.22 Compliance with Laws..........................................25
ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 4.01 Satisfaction and Discharge of Indenture; Defeasance...........26
Section 4.02 Conditions to Defeasance......................................27
Section 4.03 Application of Trust Money....................................28
Section 4.04 Repayment of Money Held by Paying Agent.......................28
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01 Events of Default.............................................28
Section 5.02 Acceleration of Maturity; Rescission and Annulment............29
Section 5.03 Collection of Indebtedness and Suits for Enforcement by
Trustee ......................................................30
Section 5.04 Remedies......................................................32
Section 5.05 Optional Preservation of the Collateral.......................33
Section 5.06 Limitation of Proceedings.....................................34
Section 5.07 Unconditional Rights of Bondholders To Receive Principal
and Interest .................................................34
Section 5.08 Restoration of Rights and Remedies............................35
Section 5.09 Rights and Remedies Cumulative................................35
Section 5.10 Delay or Omission Not a Waiver................................35
Section 5.11 Control by Bondholders........................................35
Section 5.12 Waiver of Past Defaults.......................................36
Section 5.13 Undertaking for Costs.........................................36
Section 5.14 Waiver of Stay or Extension Laws..............................36
Section 5.15 Action on Bonds...............................................36
ii
ARTICLE VI
THE TRUSTEE
Section 6.01 Duties and Liabilities of Trustee.............................36
Section 6.02 Rights of Trustee.............................................38
Section 6.03 Individual Rights of Fiduciaries..............................38
Section 6.04 Trustee's Disclaimer..........................................38
Section 6.05 Notice of Defaults............................................39
Section 6.06 Reports by Trustee to Holders.................................39
Section 6.07 Compensation and Indemnity....................................40
Section 6.08 Replacement of Trustee and Securities Intermediary............41
Section 6.09 Successor Trustee by Merger...................................42
Section 6.10 Appointment of Co-Trustee or Separate Trustee.................42
Section 6.11 Eligibility; Disqualification.................................43
Section 6.12 Preferential Collection of Claims Against Issuer..............43
Section 6.13 Representations and Warranties of the Trustee.................43
Section 6.14 Rights of the Fiduciaries.....................................44
Section 6.15 Custody of Collateral.........................................44
ARTICLE VII
BONDHOLDERS' LISTS AND REPORTS
Section 7.01 Issuer to Furnish Trustee Names and Addresses of Bondholders..46
Section 7.02 Preservation of Information; Communications to Bondholders....47
Section 7.03 Reports by Issuer.............................................47
Section 7.04 Reports by Trustee............................................47
Section 7.05 Provision of Servicer Reports.................................48
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01 Collection of Money...........................................48
Section 8.02 Collection Account............................................48
Section 8.03 Release of Collateral.........................................51
Section 8.04 Opinion of Counsel............................................52
Section 8.05 Reports by Independent Accountants............................52
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01 Supplemental Indentures Without Consent of Bondholders........52
Section 9.02 Supplemental Indentures With Consent of Bondholders...........53
Section 9.03 Commission Condition..........................................55
iii
Section 9.04 Execution of Supplemental Indentures..........................56
Section 9.05 Effect of Supplemental Indenture..............................56
Section 9.06 Conformity with Trust Indenture Act...........................57
Section 9.07 Reference in Bonds to Supplemental Indentures.................57
ARTICLE X
REDEMPTION OF BONDS
Section 10.01 Optional Redemption by Issuer.................................57
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions..........................57
Section 11.02 Form of Documents Delivered to Trustee........................58
Section 11.03 Acts of Bondholders...........................................58
Section 11.04 Notices, etc., to Trustee, Issuer, Rating Agencies [and
Irish Stock Exchange].........................................59
Section 11.05 Notices to Bondholders; Waiver................................60
Section 11.06 Issuer Obligation.............................................60
Section 11.07 Alternative Payment and Notice Provisions.....................61
Section 11.08 Conflict with Trust Indenture Act.............................61
Section 11.09 No Petition...................................................61
Section 11.10 Successors and Assigns........................................61
Section 11.11 Severability..................................................62
Section 11.12 Benefits of Indenture.........................................62
Section 11.13 Governing Law.................................................62
Section 11.14 Legal Holidays................................................62
Section 11.15 Additional Information........................................62
Section 11.16 Counterparts..................................................62
Section 11.17 No Recourse to Issuer.........................................62
Exhibit A FORM OF BOND................................................A-1
Exhibit B SERVICING CRITERIA TO BE ADDRESSED BY TRUSTEE IN
ASSESSMENT OF COMPLIANCE....................................B-1
Schedule A EXPECTED SINKING FUND SCHEDULE..............................S-1
APPENDIX A MASTER DEFINITIONS.................................Appendix A-1
iv
Tie Sheet
---------
Reconciliation and Tie between Trust Indenture Act of 1939 and this Indenture*
TIA Section Indenture Section(s)
----------- --------------------
Section 310 (a)(1)................. 6.11
(a)(2)................. 6.11
(a)(3)................. 6.10(b)(i)
(a)(4)................. Not Applicable
(b).................... 6.11
Section 311 (a).................... 6.12
(b).................... 6.12
(c).................... Not Applicable
Section 312 (a).................... 7.01, 7.02
(b).................... 7.02(b)
(c).................... 7.02(c)
Section 313 (a).................... 7.04(a)
(b).................... 7.04(a)
(c).................... 7.04(a)
(d).................... 7.04(b)
Section 314 (a).................... 7.03(a), 3.09
(b).................... 3.06
(c).................... 2.10 and 11.01
(d)(1)................. 8.03
(d)(2)................. Not Applicable
(d)(3)................. Not Applicable
(e).................... 11.01
Section 315 (a).................... 6.01(b)
(b).................... 6.05
(c).................... 6.01(a)
(d)(1)................. 6.01(c)
(e)..................... 5.13
Section 316 (a)(1)(A).............. 5.11
(a)(1)(B).............. 5.12
(b).................... 5.07
Section 317 (a).................... 5.03
(b).................... 3.03
Section 318 (a).................... 11.08
(c).................... 11.08
* This Tie Sheet shall not, for any purpose, be deemed to be part of this
Indenture.
This INDENTURE, dated as of ______, 2007, is between FPL RECOVERY
FUNDING LLC, a Delaware limited liability company, as Issuer, and THE BANK OF
NEW YORK, a New York banking corporation, in its capacity as trustee for the
benefit of the Storm-Recovery Bondholders and as agent for itself
(collectively, the "Trustee") and in its separate capacity as a securities
intermediary (the "Securities Intermediary").
The Issuer has duly authorized the execution and delivery of this
Indenture and the creation and issuance of Bonds issuable hereunder to be of
substantially the tenor set forth herein.
The Bonds shall be non-recourse obligations and shall be secured by
and payable solely out of the proceeds of the Series A Storm-Recovery Property
and the other Collateral.
All things necessary to (a) make the Bonds, when executed by the
Issuer and authenticated and delivered by the Trustee hereunder and issued by
the Issuer according to the terms hereof, valid obligations, and (b) make this
Indenture a valid agreement of the Issuer, in each case, in accordance with
their respective terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That the Issuer, in consideration of the purchase of the Bonds by
the Holders of the Bonds for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, has hereby executed and delivered
this Indenture, and
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee, as trustee for the benefit
of (i) the Holders of the Bonds from time to time issued and Outstanding and
(ii) the Trustee, a security interest in all of the Issuer's right, title and
interest whether now owned or hereafter acquired, in, to and under: (a) all
Series A Storm-Recovery Property transferred by the Seller to the Issuer
pursuant to the Sale Agreement and all proceeds thereof; (b) the Sale
Agreement; (c) the Xxxx of Sale; (d) the Servicing Agreement to the extent it
relates to the Series A Storm-Recovery Property; (e) the Administration
Agreement; (f) the Collection Account and all Subaccounts thereof (including
the General Subaccount, the Capital Subaccount, the Excess Funds Subaccount and
any Defeasance Subaccount) and all cash, securities, instruments, investment
property or other assets deposited in or credited to the Collection Account or
any Subaccount thereof from time to time or purchased with funds therefrom
other than the proceeds from the sale of the Bonds used to pay (1) the costs of
issuance of the Bonds and other Qualified Costs of the Issuer and (2) the
purchase price of the Series A Storm-Recovery Property paid pursuant to the
Sale Agreement; (g) all present and future claims, demands, causes of action
and choses in action in respect of any or all of the foregoing and all payments
on or under and all proceeds of every kind and nature whatsoever in respect of
any or all of the foregoing, including all proceeds of the conversion thereof,
voluntary or involuntary, into cash or other liquid property, all accounts,
accounts receivable, general intangibles, chattel paper, documents, money,
investment property, deposit accounts, notes, drafts, acceptances, letters of
credit, letter of credit rights, insurance proceeds, condemnation awards,
rights to payment of any and every kind and other forms of obligations and
receivables, instruments and other property which at any time constitute
all or part of or are included in the proceeds of any of the foregoing
(collectively, the "Collateral").
Alternatively, if but only if, contrary to the agreement of the
parties and the Financing Order, any transfer of any Series A Storm-Recovery
Property from the Seller to the Issuer referred to in clause (a) in the
preceding paragraph is determined by a court not to be a true sale as
contemplated by the Statute, then the Issuer, pursuant to Section 2.01(c) of
the Sale Agreement, for and on behalf of FPL as FPL's agent, hereby Grants (the
"Alternative Grant") to the Trustee, as trustee for the benefit of (A) the
Holders of the Bonds from time to time issued and Outstanding and (B) the
Trustee, a first priority security interest in all of FPL's right, title and
interest whether now owned or hereafter acquired, in, to and under the Series A
Storm-Recovery Property, and the term "Collateral" as defined in this Indenture
shall include the Alternative Grant.
Such Grants are made to the Trustee to have and to hold in trust to
secure the payment of Principal of, and Interest on, and any other amounts
owing in respect of, the Bonds and all fees, expenses, counsel fees and other
amounts due and owing to the Trustee (collectively, the "Secured Obligations")
equally and ratably without prejudice, preference, priority or distinction,
except as expressly provided in this Indenture, and to secure performance by
the Issuer of all of the Issuer's obligations under this Indenture, all as
provided in this Indenture.
The Trustee, as trustee on behalf of the Holders of the Bonds, and
acting on behalf of itself, acknowledges such Grants, accepts the trusts
hereunder in accordance with the provisions hereof and agrees to perform its
duties herein required.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions. Capitalized terms used but not otherwise
defined in this Indenture have the respective meanings set forth in Appendix A
hereto unless the context otherwise requires. This Indenture shall be construed
in accordance with the Rules of Construction.
Section 1.02 Incorporation by Reference of the Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. Each of the
following TIA terms used in this Indenture has the following meaning:
"indenture securities" means the Bonds.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule have the meaning
assigned to them by such definitions.
2
Section 1.03 Rules of Construction. In addition to the rules of
construction set forth in Appendix A hereto:
(a) any headings preceding the texts of the Articles and Sections
of this Indenture, and any table of contents, tie sheet or marginal notes
appended to copies hereof, shall be solely for convenience of reference, and
shall not constitute a part of this Indenture, nor shall they affect its
meaning, construction or effect;
(b) in the event that any provision of this Indenture shall be held
to be invalid in any circumstance, such invalidity shall not affect any other
provision or circumstances;
(c) unless otherwise specified, references to Sections or Articles
in any Supplemental Indenture are to Sections or Articles thereof; and
(d) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision, unless context indicates the reference
is to a Supplemental Indenture or Bond.
ARTICLE II
THE BONDS
Section 2.01 Form. (a) The Bonds and the Trustee's certificate of
authentication shall be in substantially the forms set forth in Exhibit A, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed
thereon as may, consistently herewith, be determined by the Managers of the
Issuer executing such Bonds, as evidenced by the execution of such Bonds by the
Managers or an Authorized Officer of the Issuer. Each Bond shall be dated the
date of its authentication.
(b) The Bonds shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the Managers of the Issuer executing
such Bonds, as evidenced by their execution of such Bonds.
(c) Each shall be dated the date of its authentication. The terms
of the Bonds set forth in Exhibit A are part of the terms of this Indenture.
(d) Each Bond shall include the following State Pledge by the State
of Florida as provided in Section 366.8260(11) of the Statute:
The State of Florida pledges to and agrees with bondholders, the
owners of the storm-recovery property, and other financing parties
that the State will not:
1. Alter the provisions of [the Statute], which make the
storm-recovery charges imposed by a financing order irrevocable,
binding and nonbypassable charges;
3
2. Take or permit any action that impairs or would impair the
value of the storm-recovery property; or
3. Except as allowed under [the Statute], reduce, alter or
impair storm-recovery charges that are to be imposed, collected,
and remitted for the benefit of the bondholders and other financing
parties until any and all principal, interest, premium, financing
costs and other fees, expenses or charges incurred, and any
contracts to be performed, in connection with the related bonds
have been paid and performed in full.
Nothing in this [State Pledge] shall preclude limitation or
alteration if full compensation is made by law for the full
protection of the storm-recovery charges collected pursuant to a
financing order and of the holders of bonds and any assignee or
financing party entering into a contract with the electric utility.
The State Pledge is hereby incorporated into this Indenture
and made a part hereof.
Each Bond shall also include on its face the following disclosure
required by Section 366.8260(9) of the Statute:
Neither the full faith and credit nor the taxing power of the
State of Florida is pledged to the payment of the principal of, or
interest on, this Senior Secured Bond.
Section 2.02 Execution, Authentication and Delivery. (a) The Bonds
shall be executed on behalf of the Issuer by a Manager. The signature of any
such Manager on the Bonds may be manual or facsimile.
(b) Bonds bearing the manual or facsimile signature of any
individual who was at any time a Manager shall bind the Issuer, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Bonds.
(c) At any time after the execution and delivery of this Indenture,
the Issuer may deliver Bonds executed on behalf of the Issuer to the Trustee
pursuant to an Issuer Order for authentication; and the Trustee shall
authenticate and deliver such Bonds as provided in this Indenture and not
otherwise.
(d) No Bond shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Bond a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Bond shall be conclusive evidence,
and the only evidence, that such Bond has been duly authenticated and delivered
hereunder.
4
Section 2.03 Amount Issuable; Designation; Denominations; Initial
Principal Amount; Interest; Scheduled Final Payment Date; Final Maturity Date;
Payment of Principal and Interest.
(a) The aggregate principal amount of Bonds that may be
authenticated and delivered under this Indenture is $_____________. No
Additional Bonds may be issued under this Indenture.
(b) The Bonds shall be designated "FPL Recovery Funding LLC Senior
Secured Bonds, Series A" and further denominated as Tranches A-1 through A-4.
All Bonds of the same Tranche shall be identical in all respects except for the
denominations thereof. All Bonds of the same Tranche shall be in all respects
equally and ratably entitled to the benefits hereof without preference,
priority, or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Indenture.
(c) Except as provided in Section 2.13, the Bonds shall be issuable
as registered Book-Entry Bonds in the Authorized Denominations.
(d) The Bonds of each Tranche shall have the initial principal
amounts, bear interest at the rates per annum and shall have Scheduled Final
Payment Dates and Final Maturity Dates as set forth below:
Scheduled
Principal Final Payment Final
Tranche Amount Interest Rate Date Maturity Date
------- ------ ------------- ------------- -------------
X-0
X-0
X-0
X-0
(e) Principal of, and Interest on, the Bonds shall be payable on
February 1 and August 1 or, if any such date is not a Business Day, on the next
Business Day (each, a "Payment Date"), commencing on the Payment Date in
February 1, 2008 (the "Initial Payment Date"), and continuing until the earlier
of repayment of each Tranche in full and the applicable Final Maturity Date for
such Tranche.
(f) The Bonds shall accrue Interest, at the applicable Interest
Rate, payable on each Payment Date as follows:
(i) Interest shall be computed on the basis of a 360-day
year of twelve 30-day months.
(ii) On the Initial Payment Date, Interest will be payable
in an amount equal to the number of days from and including the Series
Issuance Date to, but
5
excluding, the Initial Payment Date, divided by 360, times the product of
the Interest Rate and the initial principal amount of such Tranche.
(iii) On each Payment Date after the Initial Payment Date,
Interest will be payable in an amount equal to the number of days from
and including the preceding Payment Date to, but excluding, the current
Payment Date, divided by 360, times the product of the Interest Rate and
the Outstanding Amount of the Series or Tranche as of the close of
business on the preceding Payment Date after giving effect to all
payments of principal on such preceding Payment Date.
(iv) The Issuer shall pay interest on overdue installments
of Interest at the applicable Interest Rate to the extent lawful.
(g) Unless an Event of Default shall have occurred and be
continuing, on each Payment Date, the Trustee shall distribute to the Holders
of the Bonds of record as of the related Record Date amounts payable pursuant
to Section 8.02(d)(vi) as Principal, in the following order and priority: (1)
to the Holders of the Tranche A-1 Bonds, until the Outstanding Amount of such
Tranche of Bonds has been reduced to zero; (2) to the Holders of the Tranche
A-2 Bonds, until the Outstanding Amount of such Tranche of Bonds has been
reduced to zero; (3) to the Holders of the Tranche A-3 Bonds, until the
Outstanding Amount of such Tranche of Bonds has been reduced to zero; and (4)
to the Holders of the Tranche A-4 Bonds, until the Outstanding Amount of such
Tranche of Bonds has been reduced to zero; and in no event shall a Principal
payment pursuant to this Section 2.03(g) on any Tranche on a Payment Date be
greater than the amount necessary to reduce the Outstanding Amount of such
Tranche of Bonds to the amount specified in the Expected Sinking Fund Schedule
for such Tranche and Payment Date, except in the case of an acceleration of the
Bonds following an Event of Default.
(h) The Principal of each Bond shall be payable in installments on
each Payment Date specified in the Expected Sinking Fund Schedule, but only to
the extent that money is available for such payment pursuant to Section 8.02;
and installments of Principal not paid when scheduled to be paid shall be paid
upon receipt of money available for such purpose, in the order set forth in the
applicable Expected Sinking Fund Schedule. Failure to pay installments of
Principal in accordance with the applicable Expected Sinking Fund Schedule
because money is not available to make such payments pursuant to Section 8.02
shall not constitute a Default or Event of Default under this Indenture.
Notwithstanding the foregoing, the entire Outstanding Principal amount of the
Bonds of any Tranche shall be due and payable, if not previously paid, either:
(i) on the Final Maturity Date therefor or (ii) on the date on which the Bonds
of any Tranche have been declared immediately due and payable in accordance
with Section 5.02. The Trustee shall notify the Person in whose name a Bond is
registered, and any other Person required under this Indenture, at the close of
business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of Principal of and Interest on such Bond
will be paid. Such notice shall be mailed no later than 10 days prior to such
Scheduled Final Payment Date and shall specify that such final installment of
Principal and Interest will be payable only upon presentation and surrender of
such Bond and shall specify the place where such Bond may be presented and
surrendered for payment of such installment.
6
(i) Any installment of Interest or Principal payable on any Bond
which is punctually paid or duly provided for by the Issuer on the applicable
Payment Date shall be paid to the Person in whose name such Bond (or one or
more predecessors of such Bond) is registered as of the close of business on
the Record Date for such Payment Date either (i) by check mailed first-class,
postage prepaid to such Person's address as it appears on the Bond Register on
such Record Date or (ii) with respect to Bonds registered on a Record Date in
the name of the nominee of the Clearing Agency (initially such nominee to be
Cede & Co.), payments will be made in accordance with the DTC Agreement, except
for the final installment of Principal payable with respect to such Bond on a
Payment Date, which shall be payable as provided in Section 2.03(h). The funds
represented by any such checks or other amounts returned undelivered shall be
held in accordance with Section 3.03.
(j) If the Issuer defaults in a payment of Interest and/or
Principal on the Bonds when due, the Issuer shall pay such defaulted Interest
and/or Principal to the Persons who are Bondholders on a special record date,
which date shall be at least five Business Days prior to the payment date
established for the payment of such defaulted Interest and/or Principal (the
"Special Payment Date"). The Issuer shall fix or cause to be fixed any such
special record date and Special Payment Date, and, at least 15 days before any
such special record date, the Trustee, at the written direction of the Issuer,
shall mail to each affected Bondholder a notice that states the special record
date, the Special Payment Date and the amount of defaulted Interest to be paid.
Section 2.04 Temporary Bonds. (a) Pending the preparation of
Definitive Bonds pursuant to Section 2.13 or, in the case of Bonds held in a
book-entry only system by a Clearing Agency, a Manager on behalf of the Issuer
may execute, and upon receipt of an Issuer Order the Trustee shall authenticate
and deliver, temporary Bonds of the tenor of the Definitive Bonds in lieu of
which they are issued and with such variations not inconsistent with this
Indenture as the Manager executing such Bonds may determine, as evidenced by
execution of such Bonds.
(b) If temporary Bonds are issued, the Issuer will cause Definitive
Bonds to be prepared without unreasonable delay except where temporary Bonds
are held by a Clearing Agency. After the preparation of Definitive Bonds, the
temporary Bonds shall be exchangeable for Definitive Bonds upon surrender of
the temporary Bonds at the office or agency of the Issuer to be maintained as
provided in Section 3.02, without charge to any Holder of the Bonds. Upon
surrender for cancellation of any one or more temporary Bonds, a Manager on
behalf of the Issuer shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like Tranche and aggregate initial principal
amount of Definitive Bonds in Authorized Denominations. Until so exchanged, the
temporary Bonds shall in all respects be entitled to the same benefits under
this Indenture as Definitive Bonds.
Section 2.05 Registration; Registration of Transfer and Exchange.
(a) The Issuer shall cause to be kept a register (the "Bond Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Bonds and the registration of transfers
of Bonds. The Trustee shall be the initial registrar (the Trustee or any
successor thereof in such capacity, the "Registrar") for the purpose of
registering Bonds and transfers of Bonds. Upon any resignation of any
Registrar, the Issuer shall promptly appoint a successor or, if it elects not
to make such an appointment, assume the duties of Registrar.
7
(b) If a Person other than the Trustee is appointed by the Issuer
as Registrar, the Issuer shall give each Fiduciary prompt written notice of the
appointment of such Registrar and of the location, and any change in the
location, of the Bond Register; the Trustee and any such Fiduciary shall have
the right to inspect the Bond Register at all reasonable times and to obtain
copies thereof; and shall have the right to rely upon a certificate executed on
behalf of the Registrar by a duly authorized officer thereof as to the names
and addresses of the Holders of the Bonds and the original and principal
amounts and number of such Bonds separately stated by Tranche).
(c) Upon surrender for registration of transfer of any Bond at the
office or agency of the Issuer to be maintained as provided in Section 3.02,
provided that the requirements of Section 8-401 of the Delaware UCC are met, a
Manager on behalf of the Issuer shall execute, and the Trustee shall
authenticate and the Bondholder shall obtain from the Trustee, in the name of
the designated transferee or transferees, one or more new Bonds in any
Authorized Denominations, of a like Tranche and aggregate initial principal
amount. The Trustee may rely upon the Administrator with respect to the
determination of whether the requirements of Section 8-401 of the Delaware UCC
are met.
(d) At the option of the Bondholders, Bonds may be exchanged for
other Bonds of a like Tranche and aggregate initial principal amount in
Authorized Denominations, upon surrender of the Bonds to be exchanged at such
office or agency as provided in Section 3.02. Whenever any Bonds are so
surrendered for exchange, provided that the requirements of Section 8-401 of
the Delaware UCC are met (as determined by the Issuer) a Manager on behalf of
the Issuer shall execute, and the Trustee shall authenticate and the Bondholder
shall obtain from the Trustee, the Bonds which the Bondholder making the
exchange is entitled to receive. The Trustee may rely upon the Administrator
with respect to the determination of whether the requirements of Section 8-401
of the Delaware UCC are met.
(e) All Bonds issued upon any registration of transfer or exchange
of Bonds shall be the valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Bonds
surrendered upon such registration of transfer or exchange.
(f) Every Bond presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in the form reasonably satisfactory to the Trustee duly
executed by, the Holder thereof or such Holder's attorney duly authorized in
writing, with such signature guaranteed by an Eligible Guarantor Institution in
the form set forth in such Bond.
(g) No service charge shall be made to a Holder of the Bonds for
any registration of transfer or exchange of Bonds but, other than in respect of
exchanges pursuant to Section 2.04 or 9.07 not involving any transfer, the
Issuer may require payment by such Holder of the Bonds of a sum sufficient to
cover any tax or other charge that may be imposed in connection with any
registration of transfer or exchange of Bonds, including the fees and expenses
of the Trustee.
8
(h) All cancelled Bonds may be held or disposed of by the Trustee
in accordance with its standard retention or disposal policy as in effect at
the time unless the Issuer shall direct by an Issuer Order that they be
destroyed or returned to it; provided, that such Issuer Order is timely and the
Bonds have not been previously disposed of by the Trustee.
(i) The preceding provisions of this Section 2.05 notwithstanding,
the Issuer shall not be required to make, and the Registrar need not register,
transfers or exchanges of Bonds after the Record Date preceding the date on
which final payment of Principal is to be made with respect to such Bond.
Section 2.06 Mutilated, Destroyed, Lost or Stolen Bonds. (a) If (i)
any mutilated Bond is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Bond,
(ii) there is delivered to the Trustee such security or indemnity as may be
required by it to hold the Issuer and the Trustee harmless and (iii) the
requirements of Section 8-405 of the Delaware UCC are met, then, in the absence
of notice to the Issuer, the Registrar or the Trustee that such Bond has been
acquired by a Protected Purchaser, a Manager on behalf of the Issuer shall
execute, and upon a Manager's request the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Bond, a replacement Bond of like Tranche, tenor and initial principal
amount in Authorized Denominations, bearing a number not contemporaneously
outstanding; provided, that if any such destroyed, lost or stolen Bond, but not
a mutilated Bond, shall have become or within seven days shall be due and
payable, instead of issuing a replacement Bond, the Issuer may pay such
destroyed, lost or stolen Bond when so due or payable without surrender
thereof. If, after the delivery of such replacement Bond or payment of a
destroyed, lost or stolen Bond pursuant to the proviso to the preceding
sentence, a Protected Purchaser of the original Bond in lieu of which such
replacement Bond was issued presents for payment such original Bond, the Issuer
and the Trustee shall be entitled to recover such replacement Bond (or such
payment) from the Person to whom it was delivered or any Person taking such
replacement Bond from such Person to whom such replacement Bond was delivered
or any assignee of such Person, except a Protected Purchaser, and shall be
entitled to recover upon the security or indemnity provided therefor to the
extent of any loss, damage, cost or expense incurred by the Issuer or the
Trustee in connection therewith.
(b) Every replacement Bond issued pursuant to this Section 2.06 in
replacement of any mutilated, destroyed, lost or stolen Bond shall constitute
an original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Bond shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Bonds duly issued hereunder. As a
condition to the issuance of any replacement Bond under this Section 2.06, the
Issuer and/or the Trustee may require the payment by the Holder of such Bond of
a sum sufficient to cover any tax or other charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee) in connected therewith.
(c) The provisions of this Section 2.06 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Bonds.
9
Section 2.07 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Bond, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may, subject to Section 2.06, treat the Person in
whose name any Bond is registered (as of the close of business on the day of
determination) as the owner of such Bond for the purpose of receiving payments
of Principal of and Interest on such Bond and for all other purposes
whatsoever, whether or not such Bond be overdue, and neither the Issuer, the
Trustee nor any agent of the Issuer or the Trustee shall be affected by notice
to the contrary.
Section 2.08 [RESERVED]
Section 2.09 Cancellation. All Bonds surrendered for payment,
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
the Trustee. The Issuer may at any time deliver to the Trustee for cancellation
any Bonds previously authenticated and delivered hereunder which the Issuer may
have acquired in any manner, and all Bonds so delivered shall be promptly
canceled by the Trustee. No Bonds shall be authenticated in lieu of or in
exchange for any Bonds canceled as provided in this Section 2.09, except as
expressly permitted by this Indenture. All canceled Bonds may be held or
disposed of by the Trustee in accordance with its standard retention or
disposal policy as in effect at the time unless the Issuer shall timely direct
by an Issuer Order that they be destroyed or returned to it; provided, that
such Issuer Order is timely and the Bonds have not been previous disposed of by
the Trustee.
Section 2.10 Conditions to the Authentication and Delivery of
Bonds.
(a) The Bonds shall be executed by a Manager on behalf of the
Issuer and delivered to the Trustee for authentication and thereupon the same
shall be authenticated and delivered by the Trustee and upon delivery by the
Issuer, at the Issuer's expense, to the Trustee of the following:
(i) Issuer Order. An Issuer Order authorizing and
directing the authentication and delivery of the Bonds by the Trustee and
specifying the principal amount of the Bonds, as set forth in Section
2.03.
(ii) Resolutions of Issuer. A certified resolution of the
Managers authorizing the execution and delivery of the Bonds applied for
and the execution, authentication and delivery of such Bonds.
(iii) Issuer Certificate. An Officer's Certificate of the
Issuer dated as of the Closing Date, (A) stating:
(1) that no Default has occurred and is
continuing under this Indenture and that the issuance of the
Bonds being issued will not result in any Default;
(2) that the Issuer has not assigned any interest
or participation in the Collateral except for the Grants
contained in this Indenture; that the Issuer has the power
and authority to Grant the Collateral to the Trustee as
security hereunder; and that the Issuer, subject
10
to the terms of this Indenture, has Granted to the Trustee a
first priority perfected security interest in all right,
title and interest in, to and under the Collateral free and
clear of any Lien, except the Lien of this Indenture;
(3) that the Issuer has appointed a firm of
independent certified public accountants as contemplated in
Section 8.05;
(4) that attached thereto are duly executed, true
and complete copies of the Sale Agreement, the Xxxx of Sale
and the Servicing Agreement;
(5) that all financing statements with respect to
the Collateral which are required to be filed in the Florida
Secured Transaction Registry under the Statute or under the
Delaware or New York UCC or the uniform commercial code of
any other jurisdiction by the terms of the Sale Agreement,
the Servicing Agreement or this Indenture have been filed as
required;
(6) that the Bonds have received a rating of
"AAA" by Standard & Poor's, "Aaa" by Moody's and "AAA" by
Fitch; and
(7) that all conditions precedent provided in
this Indenture relating to the authentication and delivery of
the Bonds have been complied with; and
(B) instructing the Trustee, following the
authentication and delivery of the Bonds, to apply the proceeds of
the sale of the Bonds on the funding date, according to the wiring
instructions provided in such Officer's Certificate.
(iv) Seller Certificate. An Officer's Certificate of the
Seller, dated as of the Closing Date, to the effect that (1) the Sale
Agreement is a valid and binding agreement of the Seller, enforceable
against the Seller in accordance with its terms except as such
enforceability may be subject to bankruptcy, insolvency, reorganization
and other similar laws affecting the rights of creditors generally and
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law); and (2) the
representations and warranties made by the Seller in Article Three of the
Sale Agreement are true and correct as of the Closing Date;
(v) Servicer Certificate. An Officer's Certificate of the
Servicer, dated as of the Closing Date, to the effect that (1) the
Servicing Agreement is a valid and binding agreement of the Servicer,
enforceable against the Servicer in accordance with its terms except as
such enforceability may be subject to bankruptcy, insolvency,
reorganization and other similar laws affecting the rights of creditors
generally and general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law); and (2)
no Servicer Default exists and no event that with the passage of time or
the giving of notice or both will become a Servicer Default has occurred
and is continuing;
11
(vi) Sale Agreement Legal Opinion. A copy of any Opinion
of Counsel in form and substance satisfactory to the Trustee delivered
pursuant to Section 2.02(e) of the Sale Agreement;
(vii) Servicing Agreement Legal Opinion. A copy of the
Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee delivered pursuant to Section 3.05(a) of the Servicing Agreement;
(viii) Tax Matters Legal Opinion. An opinion of Independent
tax counsel (as selected by the Seller, and in form and substance
reasonably satisfactory to the Issuer and the Trustee) to the effect that
(a) the Issuer will not be subject to United States federal income tax as
an entity separate from its sole owner and that the Storm-Recovery Bonds
will be treated as debt of the Issuer's sole owner for United States
federal income tax purposes; and (b) for United States federal income tax
purposes, the issuance of the Storm-Recovery Bonds will not result in
gross income to the Seller; and
(ix) Conditions Precedent Legal Opinion. An Opinion or
Opinions of Counsel to the effect that the conditions precedent to the
delivery of Bonds have been satisfied.
Section 2.11 Book-Entry Bonds. The Bonds, upon original issuance,
will be issued in the form of a typewritten Bond or Bonds representing the
Book-Entry Bonds, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer pursuant to the DTC Agreement.
Such Bond shall initially be registered on the Bond Register in the name of
Cede & Co., the nominee of the initial Clearing Agency, and no beneficial owner
of a Bond will receive a definitive Bond representing such beneficial owner's
interest in such Bond, except as provided in Section 2.13. Unless and until
definitive, fully registered Bonds (the "Definitive Bonds") have been issued to
Bondholders pursuant to Section 2.13:
(a) the provisions of this Section 2.11 shall be in full force and
effect;
(b) the Issuer, the Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture (including the
payment of Principal of and Interest on the Bonds and the giving of
instructions or directions hereunder) as the sole Holder of the Bonds, and
shall have no obligation to the beneficial owners of Bonds;
(c) to the extent that this Section 2.11 conflicts with any other
provision of this Indenture, this Section shall control;
(d) the rights of beneficial owners of Bonds shall be exercised
only through the Clearing Agency and the Clearing Agency Participants and shall
be limited to those established by law and agreements between such beneficial
owners of Bonds and the Clearing Agency or the Clearing Agency Participants;
pursuant to the DTC Agreement, unless and until Definitive Bonds are issued
pursuant to Section 2.13, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
payments of Principal of and Interest on the Bonds to such Clearing Agency
Participants; and
12
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Bonds evidencing a
specified portion of the Outstanding Amount of the Bonds or a Tranche thereof,
the Clearing Agency shall be deemed to represent such portion only to the
extent that it has received instructions to such effect from beneficial owners
of Bonds and/or Clearing Agency Participants owning or representing,
respectively, such required portion of the beneficial interest in the Bonds of
such Tranche and has delivered such instructions to the Trustee.
Section 2.12 Notices to Clearing Agency. Whenever a notice or other
communication to the Bondholders is required under this Indenture, unless and
until Definitive Bonds shall have been issued pursuant to Section 2.13, the
Trustee shall give all such notices and communications specified herein to be
given to Bondholders to the Clearing Agency in accordance with the DTC
Agreement, and shall have no obligation to the beneficial owners of Bonds.
Section 2.13 Definitive Bonds. (a) If (i) the Issuer or the
Clearing Agency advises the Trustee in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities as depository
with respect to any Tranche of Bonds and the Issuer is unable to locate a
qualified successor, (ii) the Issuer, at its option, advises the Trustee in
writing that it elects to terminate the book-entry system through the Clearing
Agency with respect to any Tranche of Bonds or (iii) after the occurrence of an
Event of Default, owners of beneficial interests aggregating at least a
majority of the Outstanding Amount of the Bonds of all Tranches advise the
Trustee through the Clearing Agency in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best
interests of such owners, then the Clearing Agency shall notify its affected
participants and the Trustee of the occurrence of any such event and of the
availability of Definitive Bonds to affected participants requesting the same.
Upon surrender to the Trustee of the typewritten Bond or Bonds representing the
Book-Entry Bonds by the Clearing Agency, accompanied by registration
instructions, a Manager on behalf of the Issuer shall execute and the Trustee
shall authenticate the Definitive Bonds in accordance with the instructions of
the Clearing Agency. None of the Issuer, the Registrar or the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Bonds, the Trustee shall recognize the Holders of the Definitive
Bonds as Bondholders.
(b) Definitive Bonds will be transferable and exchangeable at the
offices of the Registrar. With respect to any transfer of such listed Bonds,
the new Definitive Bonds registered in the names specified by the transferee
and the original transferor shall be available at the offices of such transfer
agent.
Section 2.14 Tax Treatment. The Issuer, by entering into this
Indenture, and each Bondholder, by its acceptance of a Bond (and each
beneficial owner by its acceptance of an interest in the applicable Book-Entry
Bond) agree that the Bonds shall be treated as indebtedness for all purposes,
including federal, state and local income, single business and franchise tax
purposes.
13
Section 2.15 Authenticating Agents. The Trustee may appoint one or
more Persons (each, an "Authenticating Agent") with power to act on its behalf
and subject to its direction in the authentication of Bonds in connection with
issuance, transfers and exchanges under Sections 2.02, 2.04, 2.05, 2.06, 2.09,
2.13 and 4.02 as fully to all intents and purposes as though each such
Authenticating Agent had been expressly authorized by those Sections to
authenticate such Bonds. For all purposes of this Indenture, the authentication
of Bonds by an Authenticating Agent pursuant to this Section shall be deemed to
be the authentication of Bonds "by the Trustee."
Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any entity resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation succeeding to all or substantially all of the
corporate trust business of any Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, without the execution or filing of any
document or any further act on the part of the parties hereto or such
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee. The Trustee may at any time terminate the
agency of any Authenticating Agent by giving written notice of termination to
such Authenticating Agent. Upon receiving such notice of resignation or upon
such a termination, the Trustee may appoint a successor Authenticating Agent.
The Administrator agrees to pay to each Authenticating Agent from
time to time, reasonable compensation for its services. The provisions of
Section 6.04 shall be applicable to any Authenticating Agent.
ARTICLE III
COVENANTS
Section 3.01 Payment of Principal and Interest. The Issuer will
duly and punctually pay the Principal of and Interest on the Bonds pursuant to
the terms of the Bonds and this Indenture; accordingly, except on the Final
Maturity Date for a Tranche of the Bonds or upon the acceleration of the Bonds
pursuant to Section 5.02, the Issuer shall only be obligated to pay the
Principal of such Bonds on each Payment Date therefor to the extent money is
available for such payment pursuant to Section 8.02. Amounts properly withheld
under the Code by any Person from a payment to any Bondholder of Interest or
Principal shall be considered as having been paid by the Issuer to such
Bondholder for all purposes of this Indenture.
Section 3.02 Maintenance of Office or Agency. The Issuer will
maintain in the Borough of Manhattan, the City of New York, an office or agency
where Bonds may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Issuer in respect of the Bonds and
this Indenture may be served. The Issuer hereby initially appoints the Trustee
to serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Seller and the Trustee of the location and identity, and
of any change in the location or identity, of any such office or agency. If at
any time the Issuer shall fail to maintain
14
any such office or agency or shall fail to furnish the Trustee and each such
agent with the address thereof, such surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints
the Trustee as its agent to receive all such surrenders, notices and demands.
Section 3.03 Money for Payments to Be Held in Trust. (a) As
provided in Section 8.02(a), all payments of Principal of and Interest on the
Bonds that are to be made from amounts withdrawn from the Collection Account
pursuant to Section 8.02(d) or Section 4.03 shall be made on behalf of the
Issuer by the Trustee or by another Paying Agent, and no amounts so withdrawn
from the Collection Account for payments of Bonds shall be paid to the Issuer
except as provided in this Section 3.03 and in Section 8.02.
(b) The Issuer shall cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it
hereby so agrees), subject to this Section 3.03, that such Paying Agent will:
(i) hold all sums held by it for the payment of Principal
of or Interest on the Bonds in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee, the Commission, and the Rating
Agencies notice of any Default by the Issuer (or any other obligor upon
the Bonds) of which the Paying Agent has actual knowledge in the making
of any payment required to be made with respect to the Bonds;
(iii) at any time during the continuance of any such
Default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith
pay to the Trustee all sums held by the Paying Agent in trust for the
payment of Bonds if at any time the Paying Agent ceases to meet the
standards required to be met by a Paying Agent at the time of its
appointment; and
15
(v) comply with all requirements of the Code with respect
to the withholding from any payments made by it on any Bonds of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
(c) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which the sums were held by such Paying Agent; and upon
such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
(d) Subject to applicable laws with respect to abandoned property,
any money held by the Trustee or any Paying Agent in trust for the payment of
any amount of Principal of or Interest on any Bond and remaining unclaimed for
two years after such amount has become due and payable shall be discharged from
such trust and be paid to the Issuer; and the Holder of such Bond shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Trustee or such Paying Agent with respect to such
trust money shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Issuer cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in The City of New York, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Issuer. The Trustee may also adopt and employ,
at the expense of the Issuer, any other reasonable means of notification of
such repayment (including mailing notice of such repayment to Holders whose
right to or interest in money due and payable but not claimed is determinable
from the records of a Fiduciary, at the last address of record for each such
Holder).
Section 3.04 Existence. Subject to Section 3.10, the Issuer shall
keep in full effect its existence, rights and franchises as a limited liability
company under the laws of the State of Delaware (unless it becomes, or any
successor Issuer hereunder is or becomes, organized as a different legal entity
or organized under the laws of any other state or of the United States, in
which case the Issuer will keep in full effect its existence, rights and
franchises as such entity or under the laws of such other jurisdiction) and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity
and enforceability of this Indenture, the Bonds, the Collateral and each other
instrument or agreement included therein.
Section 3.05 Protection of Collateral. (a) The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Trustee on
behalf of the Bondholders and the Trustee to be prior to all other liens in
respect of the Collateral, and the Issuer shall take all actions necessary to
obtain and maintain, for the benefit of the Trustee on behalf of the
Bondholders and the Trustee a first lien on and a first priority, perfected
security interest in the Collateral. The Issuer shall from time to time execute
and deliver all such supplements and amendments hereto and all such filings,
financing statements, continuation statements,
16
instruments of further assurance and other instruments, and shall take such
other action, necessary or advisable to:
(i) maintain and preserve the Grants, Lien and first priority
security interest (and the perfection thereof) of this Indenture or carry
out more effectively the purposes hereof, including following any
consolidation, merger or sale of the Issuer;
(ii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral;
(iv) preserve and defend title to the Collateral and the
rights of the Trustee and the Bondholders in the Collateral against the
claims of all Persons and parties; or
(v) pay any and all taxes levied or assessed upon all or
any part of the Collateral.
(b) The Issuer hereby authorizes the Trustee to act as its agent
and attorney-in-fact to execute any filing with the Commission, financing
statement, continuation statement or other instrument required by the Trustee
pursuant to this Section 3.05.
Section 3.06 Opinions as to Collateral. (a) On or before [_____] in
each calendar year, while any Bonds are Outstanding, commencing [___________],
[_____], the Issuer shall furnish to the Trustee an Opinion or Opinions of
Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the execution and filing pursuant to the Statute and
the UCC of any filings, including any financing statements and continuation
statements, as are necessary to maintain the Lien and security interest created
by this Indenture, and the first priority thereof, and reciting the details of
such action (or stating that in the opinion of such counsel, no such action is
necessary to maintain and perfect such Lien and security interest, or the first
priority thereof). Such Opinion of Counsel shall also describe the filings
pursuant to the Statute and the UCC that will, in the opinion of such counsel,
be required to maintain the perfection of the Lien and security interest of
this Indenture and the first priority thereof, until [_____] in the following
calendar year.
(b) Prior to the effectiveness of any amendment to the Sale
Agreement or the Servicing Agreement, the Issuer shall furnish to the Trustee
an Opinion of Counsel either (i) stating that, in the opinion of such counsel,
all filings, including filings pursuant to the Statute and the UCC, as
applicable, have been executed and filed that are necessary fully to preserve
and protect the interest of the Issuer and the Trustee in the Series A
Storm-Recovery Property and the proceeds thereof, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such details
are given, or (ii) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest.
Section 3.07 Performance of Obligations; SEC Filings. (a) The
Issuer (i) shall diligently pursue all actions to enforce its rights under the
Collateral and (ii) shall not take any action and will use its best efforts not
to permit any action to be taken by others that would
17
release any Person from any of such Person's covenants or obligations under any
Collateral instrument or agreement or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except, in each
case, as expressly provided in the Basic Documents.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Issuer Officer's Certificate shall
be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Administrator to assist the Issuer in performing its duties
under this Indenture.
(c) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in the Indenture, the Basic Documents and
in the instruments and agreements comprising the Collateral.
(d) The Issuer shall not waive timely performance or observance by
the Seller of its respective duties or obligations under the Basic Documents if
such waiver would reasonably be expected to materially adversely affect the
Bondholders or the Customers.
(e) The Issuer shall file with the SEC periodic reports in respect
of the Bonds pursuant to the Exchange Act, subject to the Issuer's right to
suspend such filing pursuant to Section 15(d) of the Exchange Act. The Issuer
shall also, to the extent required under applicable SEC rules and regulations,
furnish or file in the periodic reports and other reports required to be filed
with the SEC in respect of the Bonds the following information with respect to
Outstanding Bonds to the extent such information is reasonably available to the
Issuer:
(i) Monthly Servicer Certificates in the form set forth as
Exhibit C to the Servicing Agreement (to be included in the next Form
10-D or Form 10-K filed subsequent to the respective Monthly Servicer
Certificate);
(ii) a statement reporting the balance in the Collection
Account and the balance in each Subaccount of the Collection Account as
of the end of each quarter or the most recent date available (to be
included in the next Form 10-D or Form 10-K filed);
(iii) a statement showing the balance of Outstanding Bonds
that reflects the actual periodic payments made on the Bonds versus the
expected periodic payments (to be included in the next Form 10-D or Form
10-K filed);
(iv) the Semiannual Servicer Certificate in the form set
forth as Exhibit G to the Servicing Agreement (to be filed with the next
Form 10-D, Form 10-K or Form 8-K filed);
(v) the text (or a link to the website where a reader can
find the text) of each true-up filing in respect to the series of
Outstanding Bonds and the results of each true-up filing (to be filed
with the next Form 10-D, Form 10-K or Form 8-K filed);
18
(vi) any change in the long-term or short-term credit ratings
of the Servicer assigned by the Rating Agencies below "investment grade"
ratings (to be filed or furnished in a Form 8-K or Form 10-K, if
appropriate); and
(vii) material adverse legislative or regulatory
developments directly relevant to the series of Outstanding Bonds (to be
filed or furnished in a Form 8-K or Form 10-K, if appropriate).
In addition, the Issuer shall, to the extent permitted by and consistent with
the Issuer's obligations under applicable law, cause to be posted on the
website associated with the Issuer's parent:
(A) the Final Prospectus for the Bonds or any
Additional Bonds;
(B) all information required to be filed by the Issuer
with the SEC, and the information to be submitted in items (i)
through (vii) of this paragraph (e) above as such information
becomes available; and
(C) a current organization chart for the Issuer and the
Servicer (unless the Servicer is not related to the Issuer in which
case the Servicer will post two separate organization charts), in
each case disclosing the parent company and material subsidiaries
of the Servicer and the Issuer.
Section 3.08 Negative Covenants. The Issuer shall not:
(a) except as expressly permitted by this Indenture, the Sale
Agreement, the Servicing Agreement or any other Basic Document, sell, transfer,
exchange or otherwise dispose of any of the Collateral, unless directed to do
so by the Trustee in accordance with Article V;
(b) claim any credit on, or make any deduction from the Principal
or Interest payable in respect of, the Bonds (other than amounts properly
withheld from such payments under the Code or other tax laws) or assert any
claim against any present or former Bondholder by reason of the payment of
taxes levied or assessed upon the Issuer or any part of the Collateral;
(c) (i) permit the validity or effectiveness of this Indenture to
be impaired, or permit the Lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Bonds under this
Indenture except as may be expressly permitted hereby, (ii) permit any Lien
(other than the Lien created by this Indenture) to be created on or extend to
or otherwise arise upon or burden the Collateral or any part thereof, any
interest therein or the proceeds thereof or (iii) permit the Lien of this
Indenture not to constitute a continuing valid first priority security interest
in the Collateral;
(d) dissolve or liquidate in whole or in part;
(e) take any action which is the subject of a Rating Agency
Condition without satisfying the Rating Agency Condition;
19
(f) issue any Additional Bonds unless such Additional Bonds are
rated "AAA" by Standard & Poor's, "Aaa" by Moody's and "AAA" by Fitch; or
(g) issue any Storm-Recovery Bonds other than the Bonds or any
Additional Bonds.
Section 3.09 Annual Statement as to Compliance. The Issuer will
deliver to the Trustee and the Commission, within 120 days after the end of
each fiscal year of the Issuer (commencing with the fiscal year 200_), an
Issuer Officer's Certificate stating, as to the Manager signing such Issuer
Officer's Certificate, that
(a) a review of the activities of the Issuer during such fiscal
year (or relevant portion thereof) and of performance under this Indenture has
been made under such Manager's supervision; and
(b) to the best of such Manager's knowledge, based on such review,
the Issuer has complied in all material respects with all conditions and
covenants under this Indenture throughout such fiscal year (or relevant portion
thereof), or, if there has been a default in complying with any such condition
or covenant, describing each such default and the nature and status thereof.
Section 3.10 Issuer May Consolidate, etc., Only on Certain
Terms. (a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger or to whom substantially all of
such assets are sold shall be a Person organized and existing under the
laws of the United States or any state and shall expressly assume by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, the due and punctual payment
of the Principal of and Interest on all Bonds and the performance or
observance of every agreement and covenant of this Indenture to be
performed or observed by the Issuer;
(ii) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger or to whom substantially all of
such assets are sold shall expressly assume all obligations and succeed
to all rights of the Issuer under the Sale Agreement, the Administration
Agreement and the Servicing Agreement pursuant to an assignment and
assumption agreement executed and delivered to the Trustee, in form
reasonably satisfactory to the Trustee;
(iii) immediately after giving effect to such consolidation,
merger or sale, no Default or Event of Default shall have occurred and be
continuing;
(iv) the Rating Agency Condition shall have been satisfied
with respect to such consolidation or merger or sale;
(v) the Issuer shall have received an Opinion of Counsel
(and shall have delivered and addressed copies thereof to the Trustee,
the Servicer and the Rating Agencies) to the effect that such
consolidation, merger or sale (i) will not have any
20
material adverse tax consequence to the Issuer or any Bondholder, (ii)
complies with this Indenture and all of the conditions precedent herein
relating to such transaction and (iii) will result in the Trustee
maintaining a continuing valid perfected security interest in the
Collateral;
(vi) neither the Series A Storm-Recovery Property, the
Financing Order, nor the rights of the Seller, the Servicer or the Issuer
under the Statute or the Financing Order, shall be impaired thereby;
(vii) any action as is necessary to maintain the Lien
created by this Indenture shall have been taken; and
(viii) the Issuer shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such Supplemental Indenture comply with this
Article and that all conditions precedent provided for in this Indenture
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
(b) Other than as specifically contemplated by the Basic Documents,
any Additional Indentures or Subsequent Sale Agreement, the Issuer shall not
convey or transfer all or substantially all of its properties or assets,
including those included in the Collateral, to any other Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties or assets of the Issuer shall (A) be a United States citizen
or a Person organized and existing under the laws of the United States or
any state, (B) expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of and interest on
all Bonds and the performance or observance of every agreement and
covenant of this Indenture and each other Basic Document, Additional
Indenture and Subsequent Sale Agreement on the part of the Issuer to be
performed or observed, all as provided herein, (C) expressly agree by
means of such Supplemental Indenture that all right, title and interest
so conveyed or transferred shall be subject and subordinate to the rights
of Bondholders, (D) unless otherwise provided in such Supplemental
Indenture, expressly agree to indemnify, defend and hold harmless the
Issuer against and from any loss, liability or expense arising under or
related to this Indenture and the Bonds and (E) expressly agree by means
of such Supplemental Indenture that such Person (or if a group of
Persons, then one specified Person) shall make all filings with the SEC
(and any other appropriate Person) required by the Exchange Act in
connection with the Bonds;
(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to FPL and the Trustee) to the
effect that such transaction
21
will not have any material adverse federal tax consequence to the Issuer
or any Bondholder;
(v) any action that is necessary to maintain the Lien
created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such Supplemental Indenture comply with this
Article and that all conditions precedent provided for in this Indenture
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
Section 3.11 Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10, the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon any sale by the Issuer of substantially all of its assets
in a sale which complies with Section 3.10, the Issuer will be released from
every covenant and agreement of this Indenture to be observed or performed on
the part of the Issuer with respect to the Bonds and from every covenant and
agreement of the Sale Agreement, the Administration Agreement and the Servicing
Agreement to be observed or performed by the Issuer.
Section 3.12 No Other Business. The Issuer shall not engage in any
business other than (a) purchasing and owning Storm-Recovery Property, issuing
Storm-Recovery Bonds, paying Principal and Interest on the Bonds, pledging its
interest in the Collateral to the Trustee under this Indenture in order to
secure the Secured Obligations, pledging its interest in Subsequent
Storm-Recovery Property and other collateral in to the trustee under any
Additional Indenture in order to secure any Additional Bonds or other Secured
Obligations under such Additional Indenture, entering into the Basic Documents
relating to the Bonds and any Additional Indenture or Subsequent Sale Agreement
in connection with any Additional Bonds and performing its obligations
thereunder and performing activities that are necessary, suitable or convenient
to accomplish these purposes or are incidental thereto and (b) as contemplated
by the Basic Documents and any Additional Indenture or Subsequent Sale
Agreement.
Section 3.13 No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Bonds and any other indebtedness contemplated by
the Basic Documents, any Additional Indenture or Subsequent Sale Agreement.
Section 3.14 Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Basic Documents, any Additional Indenture or
Subsequent Sale Agreement, the Issuer shall not make any loan or advance or
credit to, or guarantee (directly or indirectly or by an instrument having the
effect of assuring another's payment or performance on any obligation or
capability of so doing or otherwise), endorse or otherwise become contingently
liable, directly or indirectly, in connection with the obligations, stocks or
dividends of, or own,
00
xxxxxxxx, xxxxxxxxxx or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person, other than any Eligible Investments.
Section 3.15 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty) other than the Storm-Recovery Property and an
office lease in compliance with the Issuer LLC Agreement.
Section 3.16 Restricted Payments. The Issuer shall not, directly or
indirectly, (a) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest in, or ownership security of, the
Issuer, (b) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or security or (c) set aside or otherwise
segregate any amounts for any such purpose; but if no Event of Default shall
have occurred and be continuing or would otherwise result from such payment,
the Issuer may make, or cause to be made, any such distributions to any owner
of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest or security in or of the Issuer using funds either
distributed to the Issuer pursuant to Section 8.02(d) or which are not
otherwise subject to the Lien of this Indenture, to the extent that such
distributions would not cause the book value of the remaining equity in the
Issuer to decline below 0.5% of the original principal amount of the Bonds. The
Issuer will not, directly or indirectly, make payments to or distributions from
the Collection Account except in accordance with this Indenture and the Basic
Documents, any Additional Indenture or Subsequent Sale Agreement.
Section 3.17 Notice of Events of Default. The Issuer agrees to
deliver to the Trustee, the Commission and the Rating Agencies written notice
in the form of an Issuer Officer's Certificate of any Default or Event of
Default hereunder or any default or event of default under any of the other
Basic Documents, its status and what action the Issuer is taking or proposes to
take with respect thereto within five Business Days after the occurrence
thereof.
Section 3.18 Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Trustee and any
representative of the Commission, during the Issuer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Issuer, to make copies and extracts therefrom, to cause such books to be
audited annually by Independent certified public accountants, and to discuss
the Issuer's affairs, finances and accounts with the Issuer's officers,
employees and Independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Trustee and the
Commission shall and shall cause its representatives to hold in confidence all
such information except to the extent disclosure may be required by law (and
all reasonable applications for confidential treatment are unavailing) and
except to the extent that the Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
23
Section 3.19 Sale Agreement, Administration Agreement and Servicing
Agreement. (a) The Issuer agrees to take all such lawful actions to enforce its
rights under the Sale Agreement, the Administration Agreement and the Servicing
Agreement and to compel or secure the performance and observance in all
material respects by the Seller, the Administrator and the Servicer of each of
their obligations to the Issuer under or in connection with the Sale Agreement,
the Administration Agreement and the Servicing Agreement, respectively, in
accordance with the terms thereof. So long as no Event of Default occurs and is
continuing, the Issuer may exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the
Sale Agreement, the Administration Agreement and the Servicing Agreement.
(b) If an Event of Default occurs and is continuing, the Trustee
may, and, at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Commission or of the Holders
of a majority of the Outstanding Amount of the Bonds shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the
Seller, the Administrator or the Servicer under or in connection with the Sale
Agreement, the Administration Agreement and the Servicing Agreement,
respectively, including the right or power to take any action to compel or
secure performance or observance by the Seller, the Administrator or the
Servicer of each of their obligations to the Issuer thereunder and to give any
consent, request, notice, direction, approval, extension or waiver under the
Sale Agreement, the Administration Agreement and the Servicing Agreement, and
any right of the Issuer to take such action shall be suspended.
(c) If the Issuer, the Seller or the Servicer proposes to amend,
modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, waiver, supplement, termination, or surrender of, the terms of
the Sale Agreement, the Administration Agreement or the Servicing Agreement, or
to waive timely performance or observance thereunder by the Seller, the
Administrator or the Servicer, respectively, and such action does not
materially and adversely affect the interests of any Bondholders (as evidenced
by an Opinion of Counsel), then the Trustee shall consent to such action, but
only after satisfaction of the Commission Condition (as described in Section
9.03 hereof, or alternatively, if applicable, Section 6.01 or the Sale
Agreement or Section 8.01(b) of the Servicing Agreement) is satisfied.
(d) If the Issuer, the Seller or the Servicer proposes to amend,
modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, waiver, supplement, termination, or surrender of, the terms of
the Sale Agreement, the LLC Agreement, the Administration Agreement or the
Servicing Agreement, or to waive timely performance or observance thereunder by
the Seller, the Administrator or the Servicer, respectively, in each case in
such a way as would materially and adversely affect the interests of any
Bondholders, the Issuer shall, first notify the Rating Agencies of the proposed
amendment, modification, waiver, supplement, termination or surrender. Upon
receiving notification regarding whether the Rating Agency Condition has been
satisfied, the Issuer shall then notify the Commission and the Trustee, and the
Trustee shall notify the Bondholders of the proposal.
With respect to any such proposed action the Trustee shall consent
to such proposed action only after (i) satisfaction of the Commission Condition
(as described in Section 9.03 hereof or alternatively, if applicable, Section
6.01 or the Sale Agreement or
24
Section 8.01(b) of the Servicing Agreement) and (ii) receipt of the consent of
the Holders of a majority of the Outstanding Amount of the Bonds of each
Tranche materially and adversely affected thereby.
(e) If the Issuer shall have knowledge of the occurrence of a
Servicer Default under the Servicing Agreement or a material default which
remains uncured after the expiration of any applicable cure period by the
Administrator under the Administration Agreement, the Issuer shall promptly
give written notice thereof to the Trustee and the Rating Agencies, and shall
specify in such notice the action, if any, the Issuer is taking with respect to
such Servicer Default or material default.
(f) If a Servicer Default shall arise from the failure of the
Servicer to perform any of its duties or obligations under the Servicing
Agreement with respect to the Series A Storm-Recovery Property or the
Storm-Recovery Charge related thereto, the Issuer shall promptly take all
reasonable steps available to it to remedy such failure. The Issuer shall not
take any action to terminate the Servicer's rights and powers under the
Servicing Agreement following a Servicer Default without the prior written
consent of either (a) the Commission, or (b) the Trustee and of the Holders of
a majority of the Outstanding Amount of the Bonds so affected.
(g) As promptly as possible after the giving of notice of
termination to the Servicer and the Rating Agencies of the Servicer's rights
and powers pursuant to Section 7.01 of the Servicing Agreement, the Trustee, at
the direction either (a) of the Commission, or (b) of the Holders of not less
than a majority of the Outstanding Amount of the Bonds, shall appoint a
Successor Servicer, and such Successor Servicer shall accept its appointment by
a written assumption in a form acceptable to the Issuer and the Trustee. A
person shall qualify as a Successor Servicer only if such Person satisfies the
requirements of Section 7.04 of the Servicing Agreement. If within 30 days
after the delivery of the notice referred to above, a Successor Servicer shall
not have been appointed and accepted its appointment as such, the Trustee, at
the direction of the Holders of not less than a majority of the Outstanding
Amount of the Bonds, shall petition the Commission or a court of competent
jurisdiction to appoint a Successor Servicer. In connection with any such
appointment, the Issuer may make such arrangements for the compensation of such
Successor Servicer as it and such Successor Servicer shall agree, subject to
the limitations set forth below and in Section 7.04 of the Servicing Agreement,
and the Issuer shall enter into an agreement with such Successor Servicer for
the servicing of the Series A Storm-Recovery Property (such agreement to be in
form and substance reasonably satisfactory to the Trustee).
(h) Upon termination of the Servicer's rights and powers pursuant
to the Servicing Agreement, the Trustee shall promptly notify the Issuer, the
Commission, the Bondholders and the Rating Agencies of such termination. As
soon as a Successor Servicer is appointed, the Issuer shall notify the Trustee,
the Bondholders and the Rating Agencies of such appointment, specifying in such
notice the name and address of such Successor Servicer.
Section 3.20 Removal of Administrator. For as long as any Bonds are
Outstanding, the Issuer shall not remove the Administrator without cause
unless:
25
(a) the Rating Agency Condition shall have been satisfied with
respect to such removal; and
(b) the Commission Condition described in Section 9.03 of this
Indenture has been satisfied.
Section 3.21 Further Instruments and Acts. Upon the request of the
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably requested or proper to carry out more
effectively the purpose of this Indenture.
Section 3.22 Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability
of the Issuer to perform its obligations under the Bonds, this Indenture or any
other Basic Document.
ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 4.01 Satisfaction and Discharge of Indenture; Defeasance.
(a) This Indenture shall cease to be of further effect with respect to the
Bonds and the Trustee, on written demand of and at the expense of the Issuer,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture with respect to the Bonds, when
(i) either
(A) all Bonds theretofore authenticated and delivered
(other than (1) Bonds that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.06 and (2)
Bonds for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Issuer and thereafter
repaid to the Issuer or discharged from such trust, as provided in
Section 3.03) have been delivered to the Trustee for cancellation;
or
(B) the Scheduled Final Payment Date has occurred with
respect to all Bonds not theretofore delivered to the Trustee for
cancellation, and the Issuer has irrevocably deposited or caused to
be irrevocably deposited with the Trustee cash, in trust for such
purpose, in an amount sufficient to pay and discharge the entire
indebtedness on such Bonds not theretofore delivered to the Trustee
on the Scheduled Final Payment Date therefor;
(ii) the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer; and
(iii) the Issuer has delivered to the Trustee and to the
Commission an Issuer Officer's Certificate, an Opinion of Counsel and (if
required by the TIA or the Trustee) an Independent Certificate from a
firm of certified public accountants, each meeting the applicable
requirements of Section 11.01 and each stating that all conditions
26
precedent to the satisfaction and discharge of this Indenture with
respect to Bonds have been complied with.
(b) Subject to Sections 4.01(c) and 4.02, the Issuer at any time
may terminate (i) all its obligations under this Indenture with respect to the
Bonds ("Legal Defeasance Option") or (ii) its obligations under Sections 3.04,
3.05, 3.06 (other than with respect to amounts in the Defeasance Subaccount),
3.07, 3.08, 3.09, 3.10, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17, 3.18, 3.19, 3.20,
and 3.21 and the operation of Section 5.01(d) ("Covenant Defeasance Option").
The Issuer may exercise the Legal Defeasance Option notwithstanding its prior
exercise of the Covenant Defeasance Option.
(c) If the Issuer exercises the Legal Defeasance Option, the
maturity of the Bonds may not be accelerated pursuant to Section 5.02. If the
Issuer exercises the Covenant Defeasance Option, the maturity of the Bonds may
not be accelerated because of an Event of Default specified in Section 5.01(d).
(d) Upon satisfaction of the written conditions to the Legal
Defeasance Option or the Covenant Defeasance Option, the Trustee, on demand of
and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of the terminated obligations.
(e) Notwithstanding Sections 4.01(a) and 4.01(b), (i) rights of
registration of transfer and exchange, (ii) rights of substitution of
mutilated, destroyed, lost or stolen Bonds, (iii) rights of Bondholders to
receive payments of Principal and Interest, but only from the amounts deposited
with the Trustee for such payments, (iv) Sections 4.03 and 4.04, (v) the
rights, obligations and immunities of the Trustee hereunder (including the
rights of the Trustee under Section 6.07 and the obligations of the Trustee
under Section 4.03) and (vi) the rights of Bondholders under this Indenture
with respect to the property deposited with the Trustee payable to all or any
of them, shall survive until the Bonds as to which this Indenture or certain
obligations hereunder have been satisfied and discharged pursuant to Section
4.01(a) or 4.01(b) and have been paid in full. Thereafter, the obligations in
Sections 4.04 and 6.07 shall survive.
Section 4.02 Conditions to Defeasance. The Issuer may exercise the
Legal Defeasance Option or the Covenant Defeasance Option only if:
(i) the Issuer irrevocably deposits or causes to be
deposited in trust with the Trustee cash or U.S. Government Obligations
for the payment of Principal of and Interest to the Payment Dates
therefor, such deposit to be made in the Defeasance Subaccount;
(ii) the Issuer delivers to the Trustee a certificate from
a nationally recognized firm of Independent accountants expressing its
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited cash without investment will provide cash at such times and in
such amounts (but, in the case of the Legal Defeasance Option only, not
more than such amounts) as will be sufficient to pay in respect of the
Bonds
27
(A) Principal in accordance with the Expected Sinking Fund Schedule and
(B) Interest when due;
(iii) no Default has occurred and is continuing on the day
of such deposit and after giving effect thereto;
(iv) in the case of the Legal Defeasance Option, 95 days
pass after the deposit is made and during such 95-day period no Default
specified in Section 5.01(e) or 5.01(f) occurs which is continuing at the
end of the period;
(v) in the case of the Legal Defeasance Option, the Issuer
delivers to the Trustee an Opinion of Counsel stating that (A) the Issuer
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (B) since the date of execution of this Indenture,
there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion shall
confirm that, the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of the exercise of such Legal
Defeasance Option and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such legal defeasance had not occurred;
(vi) in the case of the Covenant Defeasance Option, the
Issuer delivers to the Trustee an Opinion of Counsel to the effect that
the Holders will not recognize income, gain or loss for federal income
tax purposes as a result of the exercise of such Covenant Defeasance
Option and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(vii) the Issuer delivers to the Trustee an Issuer
Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the satisfaction and discharge of the Bonds to
the extent contemplated by this Article IV have been complied with.
Section 4.03 Application of Trust Money. All money or U.S.
Government Obligations deposited with the Trustee pursuant to Sections 4.01 or
4.02 with respect to the Bonds shall be held in trust in the Defeasance
Subaccount and applied by it, in accordance with this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Bonds for the payment of which such
money or U.S. Government Obligations have been deposited with the Trustee, of
all sums due and to become due thereon for Principal and Interest. Such money
or U.S. Government Obligations shall be segregated and held apart solely for
paying such Bonds and such Bonds shall not be entitled to any amounts on
deposit in the Collection Account other than amounts on deposit in the
Defeasance Subaccount.
Section 4.04 Repayment of Money Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture or the Covenant
Defeasance Option or Legal Defeasance Option, all money then held by any Paying
Agent other than the Trustee under this Indenture shall, upon written demand of
the Issuer, be paid to the Trustee to be held and applied
28
according to Section 3.03 and thereupon such Paying Agent shall be released
from all further liability with respect to such money.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01 Events of Default. "Event of Default" wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of any Interest when the same becomes
due and payable and the continuation of such default for five Business Days;
(b) default in the payment of the then unpaid Principal of any Bond
of any Tranche on the Final Maturity Date therefor;
(c) [Reserved]
(d) default in the observance or performance of any material
covenant or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of which is
specifically dealt with in clause (a), (b) or (c) above), or any representation
or warranty of the Issuer made in this Indenture or in any certificate or other
writing delivered pursuant hereto or in connection herewith proving to have
been incorrect in any material respect as of the time when made, and any such
default or incorrect representation or warranty shall continue or not be cured
for a period of 30 days after the earliest of the date (i) notice has been
given to the Issuer by the Trustee, (ii) there shall have been given, by
registered or certified mail, to the Issuer by the Trustee or to the Issuer and
the Trustee by the Holders of at least 25% of the Outstanding Amount of the
Bonds of the affected Tranche, a written notice specifying such default or
incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder, or (iii) the
Issuer has knowledge of the default;
(e) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part
of the Collateral in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for the Issuer or for any substantial part of
the Collateral, or ordering the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days;
(f) the commencement by the Issuer of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by the Issuer to
the entry of an order for relief in an involuntary case under any such law, or
the consent by the Issuer to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for the Issuer
or for any substantial part of the
29
Collateral, or the making by the Issuer of any assignment for the benefit of
creditors, or the failure by the Issuer generally to pay its debts as such
debts become due, or the taking of action by the Issuer in furtherance of any
of the foregoing; or
(g) any act or failure to act by the State or any of its agencies
(including the Commission), officers or employees that violates or is not in
accordance with the State Pledge.
Section 5.02 Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default (other than an Event of Default under Section
5.01(g)) occurs and is continuing, then and in every such case either the
Trustee or the Holders of a majority of the Outstanding Amount of the Bonds
may, but need not, declare all the Bonds to be immediately due and payable, by
a notice in writing to the Issuer (and to the Trustee and the Commission if
given by Bondholders), and upon any such declaration the unpaid principal
amount of the Bonds, together with accrued and unpaid Interest thereon through
the date of acceleration, shall become immediately due and payable.
(b) At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as provided in this Article V, the Holders of a
majority of the Outstanding Amount of the Bonds, by written notice to the
Issuer, the Commission and the Trustee, may rescind and annul such declaration
and its consequences, if:
(i) the Issuer has paid or deposited with the Trustee, for
deposit in the General Subaccount of the Collection Account, a sum
sufficient to pay
(A) all payments of Principal of and Interest on all
Bonds and all other amounts that would then be due hereunder or
upon such Bonds if the Event of Default giving rise to such
acceleration had not occurred, including, to the extent lawful,
interest on overdue Interest; and
(B) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of
the Principal of the Bonds that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.12.
(c) No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
Section 5.03 Collection of Indebtedness and Suits for Enforcement
by Trustee. (a) The Issuer covenants that if default is made in the payment of
(i) any Interest on any Bond when such Interest becomes due and payable and
such Default continues for five Business Days, or (ii) default is made in the
payment of the then unpaid Principal of any Bond on the Final Maturity Date
therefor, the Issuer shall, upon demand of the Trustee, pay to it, for the
benefit of the Holders, the whole amount then due and payable on such Bonds for
Principal and Interest, with Interest upon the overdue Principal and, to the
extent payment at such rate of Interest shall
30
be legally enforceable, upon overdue installments of Interest, at the
respective Interest Rate of the Bonds or the applicable Tranche of the Bonds
and, in addition thereto, such amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel and other
amounts due and owning to the Trustee pursuant to Section 6.07.
(b) In case the Issuer shall fail forthwith to pay the amounts
specified in clause (a) above upon such demand, the Trustee, in its own name
and as trustee of an express trust, may institute a Proceeding for the
collection of the sums so due and unpaid, and may prosecute such Proceeding to
judgment or final decree, and may enforce the same against the Issuer or other
obligor upon such Bonds and collect the monies adjudged or decreed to be
payable in the manner provided by law out of the property of the Issuer or
other obligor upon such Bonds, wherever situated, the money adjudged or decreed
to be payable.
(c) If an Event of Default occurs and is continuing, the Trustee
may, as more particularly provided in Section 5.04, in its discretion, proceed
to protect and enforce its rights and the rights of the Bondholders, by such
appropriate Proceedings as the Trustee shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of any covenant
or agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right
vested in the Trustee by this Indenture or by law including foreclosing or
otherwise enforcing the Lien on the Series A Storm-Recovery Property securing
the Bonds or applying to the Commission or a court of competent jurisdiction
for sequestration of revenues arising from such Series A Storm-Recovery
Property.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Bonds or any Person having or claiming an ownership
interest in the Collateral, Proceedings under Title 11 of the United States
Code or any other applicable federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Bonds, or to the creditors or
property of the Issuer or such other obligor, the Trustee, irrespective of
whether the Principal of any Bonds shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to this Section 5.03, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim for the whole amount of
Principal and Interest owing and unpaid in respect of the Bonds and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and
their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence or
bad faith) and of the Bondholders allowed in such Proceedings;
31
(ii) unless prohibited by applicable law and regulations,
to vote on behalf of the Holders of Bonds in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any money or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Bondholders and of the Trustee
on their behalf; and
(iv) to file such proofs of claim and other documents as
may be necessary or advisable in order to have the claims of the Trustee
or the Holders allowed in any judicial proceedings relative to the
Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of the Bondholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to
the making of payments directly to the Bondholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel,
and all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
(e) Nothing herein shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Bondholder any plan of reorganization, arrangement, adjustment or composition
affecting the Bonds or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Bondholder in any such
proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Bonds, may be prosecuted and enforced by the
Trustee without the possession of any of the Bonds or the production thereof in
any trial or other Proceedings, and any such action or Proceedings instituted
by the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, subject to the payment of the expenses,
disbursements and compensation of the Trustee, each predecessor Trustee and
their respective agents and attorneys, be for the ratable benefit of the
Holders of the Bonds.
(g) In any Proceedings brought by the Trustee (and also any
Proceedings to which the Trustee shall be a party involving the interpretation
of this Indenture), the Trustee shall be held to represent all the Holders of
the Bonds, and it shall not be necessary to make any Bondholder a party to any
such Proceedings.
Section 5.04 Remedies. (a) If an Event of Default (other than an
Event of Default under Section 5.01(g)) occurs and is continuing, the Trustee
may do one or more of the following (subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee
of an express trust for the collection of all amounts then payable on the
Bonds or under this Indenture, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Issuer and any other
obligor upon such Bonds money adjudged due;
32
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Collateral;
(iii) exercise any remedies of a secured party under the
UCC or the Statute or any other applicable law and take any other
appropriate action to protect and enforce the rights and remedies of the
Trustee and the Holders;
(iv) sell the Collateral or any portion thereof or rights
or interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; and
(v) exercise all rights, remedies, powers, privileges and
claims of the Issuer against the Seller, the Administrator, the Servicer
under or in connection with the Sale Agreement, the Administration
Agreement or the Servicing Agreement, as provided in Section 3.19(b);
but the Trustee may not sell or otherwise liquidate any portion of the
Collateral following an Event of Default, other than an Event of Default
described in Section 5.01(a), 5.01(b) or 5.01(c) (if any), unless (A) the
Holders of all of the Outstanding Amount of the Bonds consent thereto, (B) the
proceeds of such sale or liquidation distributable to the Bondholders are
sufficient to discharge in full all amounts then due and unpaid upon such Bonds
for Principal and Interest, or (C) the Trustee determines that the Collateral
will not continue to provide sufficient funds for all payments on the Bonds as
they would have become due if the Bonds had not been declared due and payable
and the Trustee obtains the consent of Holders of 66 2/3% of the Outstanding
Amount of the Bonds. In determining such sufficiency or insufficiency with
respect to clause (B) and (C), the Trustee may, but need not, obtain and
conclusively rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Collateral for such purpose.
(b) If an Event of Default under Section 5.01(g) occurs and is
continuing, the Trustee, for the benefit of the Holders, shall be entitled and
empowered to the extent permitted by applicable law to institute or participate
in Proceedings reasonably necessary to compel performance of or to enforce the
State Pledge and to collect any monetary damages incurred by the Holders or the
Trustee as a result of any such Event of Default, and may prosecute any such
Proceeding to final judgment or decree. Such remedy shall be the only remedy
that the Trustee may exercise if the only Event of Default that has occurred
and is continuing is an Event of Default under Section 5.01(g).
Section 5.05 Optional Preservation of the Collateral. If the Bonds
have been declared to be due and payable under Section 5.02 following an Event
of Default and such declaration and its consequences have not been rescinded
and annulled, the Trustee may, but need not, elect, as provided in Section
5.11(c), to maintain possession of the Collateral and not sell or liquidate the
same and apply proceeds as if there had been no declaration of acceleration. It
is the desire of the parties hereto and the Bondholders that there be at all
times sufficient funds for the payment of Principal of and Interest on the
Bonds, and the Trustee shall take such desire into account when determining
whether or not to maintain possession of the Collateral or sell or liquidate
the same. In determining whether to maintain possession of the Collateral or
sell or
33
liquidate the same, the Trustee may, but need not, obtain and conclusively rely
upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
Section 5.06 Limitation of Proceedings. (a) No Holder of any Bond
shall have any right to institute any Proceeding, judicial or otherwise, or to
avail itself of any remedies provided in the Statute, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding
Amount of the Bonds have made written request to the Trustee to institute
such Proceeding in respect of such Event of Default in its own name as
Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against the
costs, expenses and liabilities to be incurred in complying with such
request;
(iv) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders of
a majority of the Outstanding Amount of the Bonds;
it being understood and intended that no one or more Holders of Bonds shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Bonds or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all Holders
of the Storm-Recovery Bonds.
(b) In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders, each
representing less than a majority of the Outstanding Amount of the Bonds, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
Section 5.07 Unconditional Rights of Bondholders To Receive
Principal and Interest. Notwithstanding any other provision in this Indenture,
the Holder of any Bond shall have the right, which is absolute and
unconditional, (a) to receive payment of (i) the Interest, if any, on such Bond
on the due dates thereof expressed in such Bond and in this Indenture or (ii)
the unpaid Principal, if any, of such Bond on the Final Maturity Date and (b)
to institute suit for the enforcement of any such payment; and such right shall
not be impaired without the consent of such Holder.
34
Section 5.08 Restoration of Rights and Remedies. If the Trustee or
any Bondholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Trustee or to such
Bondholder, then and in every such case the Issuer, the Trustee and the
Bondholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Bondholders shall continue as
though no such Proceeding had been instituted.
Section 5.09 Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Trustee or to the Bondholders is
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
Section 5.10 Delay or Omission Not a Waiver. No delay or omission
of the Trustee or any Bondholder to exercise any right or remedy accruing upon
any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Trustee or to the Bondholders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Bondholders, as the case
may be.
Section 5.11 Control by Bondholders. The Holders of a majority of
the Outstanding Amount of the Bonds (or, if less than all Tranches are
affected, the affected Tranches) shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Trustee with respect to the Bonds of such Tranches or exercising any trust or
power conferred on the Trustee with respect to such Tranches; provided, that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to Section 5.04, any direction to the Trustee to sell
or liquidate the Collateral shall be by the Holders of Bonds representing all
of the Outstanding Amount of the Bonds;
(c) if the conditions set forth in Section 5.05 have been satisfied
and the Trustee elects to retain the Collateral pursuant to such Section and
not to sell or liquidate the same, then any direction to the Trustee by Holders
of Bonds representing less than all of the Outstanding Amount of the Bonds to
sell or liquidate the Collateral shall be of no force and effect;
(d) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction;
(e) subject to Section 6.01, the Trustee need not take any action
that it determines might involve it in liability for which it reasonably
believes it will not be adequately
35
indemnified against the costs, expenses and liabilities which might be incurred
by it in complying with this request; and
(f) the Trustee need not take any action that it determines might
materially and adversely affect the rights of any Bondholders not consenting to
such action.
Section 5.12 Waiver of Past Defaults. Prior to the declaration of
the acceleration of the maturity of the Bonds as provided in Section 5.02, the
Holders of a majority of the Outstanding Amount of the Bonds, with the written
consent of the Commission, may waive any past Default or Event of Default and
its consequences except a Default (a) in payment of Principal of or Interest on
any of the Bonds or (b) in respect of a covenant or provision hereof which
cannot be modified or amended without the consent of the Holder of each Bond of
all Tranches affected. In the case of any such waiver, the Issuer, the Trustee
and the Holders of the Bonds shall be restored to their former positions and
rights hereunder; such Default shall cease to exist and be deemed to have been
cured and not to have occurred, and any Event of Default arising therefrom
shall be deemed to have been cured and not to have occurred, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereto.
Section 5.13 Undertaking for Costs. All parties to this Indenture
agree, and each Bondholder and Bond Owner, by accepting a Bond or a beneficial
interest therein, shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but this
Section 5.13 shall not apply to any suit instituted by (a) the Trustee, (b) any
Bondholder, or group of Bondholders, in each case holding in the aggregate more
than 10% of the Outstanding Amount of the Bonds or (c) any Bondholder for the
enforcement of the payment of (i) Interest on any Bond on or after the due
dates expressed in such Bond and in this Indenture or (ii) the unpaid
Principal, if any, of any Bond on or after the Final Maturity Date therefor.
Section 5.14 Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
Section 5.15 Action on Bonds. The Trustee's right to seek and
recover judgment on the Bonds or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the Lien of this Indenture nor any rights or
remedies of the Trustee or the Bondholders shall be impaired by the
36
recovery of any judgment by the Trustee against the Issuer or by the levy of
any execution under such judgment upon any portion of the Collateral or upon
any of the assets of the Issuer.
ARTICLE VI
THE TRUSTEE
Section 6.01 Duties and Liabilities of Trustee. (a) If an Event of
Default has occurred and is continuing, the Trustee shall exercise the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such its own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this clause (c) does not limit the effect of clause
(b) of this Section 6.01;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by an Authorized Officer unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it hereunder.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to clauses (a), (b) and (c) of this Section 6.01.
(e) The Trustee shall not be liable for interest on any money
received by it except as provided in this Indenture or as the Trustee may agree
in writing with the Issuer.
(f) Money held in trust by the Trustee need not be segregated from
other funds held by the Trustee except to the extent required by law or this
Indenture, the Sale Agreement or the Servicing Agreement.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any liability, financial or
otherwise, in the performance of any
37
of its duties hereunder or in the exercise of any of its rights or powers, if
it shall have reasonable grounds to believe that repayments of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 6.01 and of the TIA.
(i) Under no circumstances shall the Trustee be liable for any
indebtedness of the Issuer, the Servicer or the Seller evidenced by or arising
under the Bonds or any Basic Document.
(j) On or before [_________] of each fiscal year ending December
31, the Trustee shall (1) deliver to the Issuer a report (in form and substance
reasonably satisfactory to the Issuer and addressed to the Issuer and signed by
an authorized officer of the Trustee) regarding the Trustee's assessment of
compliance, during the immediately preceding fiscal year ending December 31,
with each of the applicable servicing criteria specified on Exhibit B hereto as
required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB and (2) deliver to the Issuer a report of an Independent
registered public accounting firm reasonably acceptable to the Issuer that
attests to and reports on, in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act, the assessment of
compliance made by the Trustee and delivered pursuant to clause (1).
Section 6.02 Rights of Trustee. (a) The Trustee may conclusively
rely and shall be protected in acting upon or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, note, direction, demand, election or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Issuer Officer's Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
an Issuer Officer's Certificate or an Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent attorney, custodian, or nominee appointed with due care by it
hereunder.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers, and which does not constitute willful misconduct, negligence
or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Bonds shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or
38
suffered by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
Section 6.03 Individual Rights of Fiduciaries. The Trustee, subject
to Sections 6.11 and 6.12, and each other Fiduciary, in its respective
individual or other capacity may become the owner or pledgee of Bonds and may
otherwise deal with the Issuer or its Affiliates with the same rights it would
have if it were not a Fiduciary.
Section 6.04 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Bonds. The Trustee shall not be accountable for the
Issuer's use of the proceeds from the Bonds, and the Trustee shall not be
responsible for any statement of the Issuer in this Indenture or in any
document issued in connection with the sale of the Bonds or in the Bonds other
than the Trustee's certificate of authentication. The Trustee shall not be
responsible for the form, character, genuineness, sufficiency, value or
validity of any of the Collateral, or for or in respect of the validity or
sufficiency of the Bonds (other than the certificate of authentication for the
Bonds) or the Basic Documents and the Trustee shall in no event assume or incur
any liability, duty or obligation to any Holder, other than as expressly
provided for in this Indenture. The Trustee shall not be liable for the default
or misconduct of the Issuer, the Seller, the Servicer or the Member or any
Manager of the Issuer under any Basic Document or otherwise, and the Trustee
shall have no obligation or liability to perform the obligations of the Issuer.
Section 6.05 Notice of Defaults. If a Default occurs and is
continuing and is known to an Authorized Officer of the Trustee, the Trustee
shall mail to each Rating Agency, to the Commission and to each Holder of Bonds
notice of the Default within 90 days after it occurs. Except in the case of a
Default in payment of Principal of or Interest on any Bond, the Trustee may
withhold the notice if and so long as a committee of its Authorized Officers in
good faith determines that withholding the notice is in the interests of
Bondholders.
Section 6.06 Reports by Trustee to Holders. (a) So long as Bonds
are Outstanding and the Trustee is the Bond Registrar and Paying Agent, within
the prescribed period of time for tax reporting purposes after the end of each
calendar year, the Trustee shall mail to each relevant current or former Holder
a statement concerning certain information in its possession for the purposes
of the Holder's preparation of its federal and state income tax returns.
(b) On or prior to each Payment Date or Special Payment Date
therefor, the Trustee will deliver to each Holder of Bonds as of the Record
Date for such Payment Date or the Holder of Bonds as of the special record date
in connection with a Special Payment Date and the Commission a statement as
provided and prepared by the Servicer which will include (to the extent
applicable) the following information as to the Bonds with respect to such
Payment Date, Special Payment Date or the period since the previous Payment
Date, as applicable:
(i) the amount paid to Holders in respect of principal,
such amount to be expressed as a dollar amount per thousands of dollars
of original principal amount thereof;
39
(ii) the amount paid to Holders in respect of interest, such
amount to be expressed as a dollar amount per thousands of dollars of
original principal amount thereof;
(iii) the aggregate Outstanding Amount of the Bonds, after
giving effect to payments to be made in respect of principal reported
under (i) above;
(iv) the difference, if any, between the amount specified
in subsection (iii) above and the principal amount scheduled to be
outstanding on that Payment Date according to the Expected Sinking Fund
Schedule;
(v) the amount, if any, on deposit in the Capital Subaccount
as of such Payment Date, after giving effect to payments to be made on
such Payment Date and the Required Capital Amount;
(vi) the amount, if any, on deposit in the Excess Funds
Subaccount as of such Payment Date, after giving effect to payments to be
made on such Payment Date;
(vii) the amount paid or to be paid to the Trustee since
the preceding Payment Date, after giving effect to the payments to be
made on such Payment Date;
(viii) the amount paid or to be paid to the Servicer since
the preceding Payment Date, after giving effect to the payments to be
made on such Payment Date; and
(ix) any other transfers and payments made pursuant to
this Indenture, after giving effect to the payments to be made on such
Payment Date;
The Trustee's responsibility for disbursing the information
described in this clause (b) to Bondholders is limited to the availability,
timeliness and accuracy of the information provided by the Servicer pursuant to
Section 3.01 of the Servicing Agreement.
(c) The Issuer shall send a copy of each of the Certificate of
Compliance delivered to it pursuant to Section 3.04 of the Servicing Agreement
with respect to the Series A Storm-Recovery Property and the Annual
Accountant's Report delivered to it pursuant to Section 3.05 of the Servicing
Agreement with respect to the Series A Storm-Recovery Property to the Trustee,
the Rating Agencies and the Commission. A copy of such certificate and report
may be obtained by any Bondholder by a request in writing to the Trustee.
Section 6.07 Compensation and Indemnity. (a) The Issuer shall pay
to the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall reimburse the Trustee for all
reasonable out-of-pocket expenses, disbursements and advances incurred or made
by it, including costs of collection, in addition to the compensation for its
40
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, officers, directors,
employees, counsel, accountants and experts. The Issuer shall indemnify and
hold harmless the Trustee and its agents, officers, directors, employees,
counsel, accountants and experts from and against any and all costs, damages,
expenses, losses, liabilities or other amounts whatsoever (including counsel
fees) incurred by the Trustee in connection with the administration of this
trust, the enforcement of this trust and all of the Trustee's rights, powers
and duties under this Indenture and the performance by the Trustee of the
duties and obligations of the Trustee pursuant to this Indenture. The Trustee
shall notify the Issuer promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Issuer shall not relieve the Issuer of
its obligations hereunder. The Issuer shall defend the claim and the Trustee
may have separate counsel. The Issuer shall pay the fees and expenses of such
counsel for the Trustee.
(b) The Issuer need not reimburse any expense, disbursement,
advance or indemnify against any loss, liability or expense incurred by the
Trustee (i) through the Trustee's own willful misconduct, negligence or bad
faith or (ii) to the extent the Trustee was reimbursed for or indemnified
against any such loss, liability or expense by the Seller pursuant to the Sale
Agreement or by the Servicer pursuant to the Servicing Agreement.
(c) When the Trustee incurs expenses after the occurrence of a
Default specified in Section 5.01(e) or 5.01(f) with respect to the Issuer, the
expenses are intended to constitute expenses of administration under Title 11
of the United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law. The obligations of the Issuer under this Section
6.07 shall survive the termination of this Indenture and the earlier
resignation or removal of the Trustee.
Section 6.08 Replacement of Trustee and Securities Intermediary.
(a) No resignation of removal of the Trustee shall become effective until the
acceptance of appointment by the successor Trustee pursuant to this Section.
The Trustee may resign at any time upon 30 days' prior written notice by so
notifying the Issuer. The Issuer may remove the Trustee with or without cause
at any time, with prior notice to the Rating Agencies, upon 30 days' prior
written notice, and shall remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) the Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of
the Trustee or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
Any removal or resignation of the Trustee shall also constitute a removal or
resignation of the Securities Intermediary.
(b) If a vacancy exists in the office of Trustee, the Issuer shall
promptly appoint a successor Trustee and Securities Intermediary.
41
(c) In addition, the Holders of a majority in Outstanding Amount of
the Bonds may remove the Trustee by so notifying the Issuer and the Trustee and
such Holders may appoint a successor Trustee and Securities Intermediary.
(d) A successor Trustee shall deliver a written acceptance of its
appointment as the Trustee and as the Securities Intermediary to the Retiring
Trustee and to the Issuer. Thereupon the resignation or removal of the Retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee and Securities Intermediary, as
applicable, under this Indenture. No resignation or removal of the Trustee
shall become effective until the acceptance of the appointment by a successor
Trustee. The successor Trustee shall mail a notice of its succession to
Bondholders. The Retiring Trustee shall promptly transfer all property held by
it as Trustee to the successor Trustee.
(e) If a successor Trustee does not take office within 60 days
after the Retiring Trustee resigns or is removed, the Retiring Trustee, the
Issuer or the Holders of a majority in Outstanding Amount of the Bonds may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(f) If the Trustee fails to comply with Section 6.11, any
Bondholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(g) Notwithstanding the replacement of the Trustee pursuant to this
Section 6.08, the Issuer's obligations under Section 6.07 shall continue for
the benefit of the Retiring Trustee.
Section 6.09 Successor Trustee by Merger. (a) If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association shall, without any further act, be the successor Trustee; provided,
however, that such corporation or banking association must be otherwise
qualified and eligible under Section 6.11. Notice of any such event shall be
promptly given to each Rating Agency by the successor Trustee.
(b) In case at the time such successor or successors by merger,
conversion, consolidation or transfer shall succeed to the trusts created by
this Indenture any of the Bonds shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any Retiring Trustee, and deliver such Bonds so
authenticated; and in case at that time any of the Bonds shall not have been
authenticated, any successor to the Trustee may authenticate such Bonds either
in the name of any Retiring Trustee hereunder or in the name of the successor
to the Trustee; and in all such cases such certificates shall have the full
force and effect granted by the Bonds or by this Indenture and this force and
effect shall be equal to any certificate issued by the Trustee.
Section 6.10 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Collateral may at the
42
time be located, the Trustee shall have the power and may execute and deliver
all instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of
the Collateral, and to vest in such Persons, in such capacity and for the
benefit of the Bondholders, such title to the Collateral, or any part hereof,
and, subject to the other provisions of this Section 6.10, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 6.11 and no
notice to Bondholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.08. Notice of any such appointment shall be
promptly given to each Rating Agency and to the Commission by the Trustee.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations (including the
holding of title to the Collateral or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
43
Section 6.11 Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a) and Section 26(a)(1)
of the Investment Company Act. The Trustee shall have a combined capital and
surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition and it shall have a long-term debt rating of "BBB-"
or better by Standard & Xxxx'x, "Xxx0" or better by Moody's and "BBB-" or
better by Fitch. The Trustee shall comply with TIA Section 310(b), including
the optional provision permitted by the second sentence of TIA Section
310(b)(9); and there shall be excluded from the operation of TIA Section
310(b)(1) any indenture or indentures under which other securities of the
Issuer are outstanding if the requirements for such exclusion set forth in TIA
Section 310(b)(1) are met.
Section 6.12 Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
Section 6.13 Representations and Warranties of the Trustee. The
Trustee hereby represents and warrants that:
(a) the Trustee is a banking corporation validly existing in good
standing under the laws of the State of New York;
(b) the Trustee has full power, authority and legal right to
execute, deliver and perform this Indenture and the Basic Documents to which
the Trustee is a party and has taken all necessary action to authorize the
execution, delivery and performance by it of this Indenture and such Basic
Documents; and
(c) the Indenture is an enforceable obligation of the Trustee.
Section 6.14 Rights of the Fiduciaries. The Fiduciaries shall be
afforded under each Supplemental Indenture the same rights, protections,
immunities and indemnities afforded each of them under the original Indenture
as if specifically set forth therein.
Section 6.15 Custody of Collateral. (a) The Trustee shall hold such
of the Collateral (and any other collateral that may be granted to the Trustee)
as consists of instruments, deposit accounts, negotiable documents, goods,
letters of credit, and advices of credit in the State of New York.
(b) The Trustee shall hold such of the Collateral as constitute
investment property through the Securities Intermediary (which, as of the date
hereof, is The Bank of New York). Such investment property shall be delivered
as follows (terms used in the following provisions that are not otherwise
defined are used as defined in Article 8 of the NY UCC):
(i) in the case of each certificated security (other than
a clearing corporation security (as defined below)), by:
44
(A) the delivery of such certificated security to the
Securities Intermediary registered in the name of the Securities
Intermediary or its affiliated nominee or endorsed to the
Securities Intermediary or in blank,
(B) the Securities Intermediary continuously indicating
by book-entry that such certificated security is credited to the
Collection Account, and
(C) the Securities Intermediary maintaining continuous
possession of such certificated security in the State of New York;
(ii) in the case of each uncertificated security (other
than a clearing corporation security), by causing:
(A) such uncertificated security to be continuously
registered on the books of the issuer thereof to the Securities
Intermediary, and
(B) the Securities Intermediary continuously indicating
by book-entry that such uncertificated security is credited to the
Collection Account;
(iii) in the case of each security in the custody of or
maintained on the books of a clearing corporation or its nominee (a
"clearing corporation security"), by causing:
(A) the relevant clearing corporation to credit such
clearing corporation security to the securities account of the
Securities Intermediary, and
(B) the Securities Intermediary continuously indicating
by book-entry that such clearing corporation security is credited
to the Collection Account;
(iv) in the case of each security issued or guaranteed by
the United States of America or agency or instrumentality thereof and
that is maintained in book-entry records of the Federal Reserve Bank of
New York ("FRBNY") (each such security, a "government security"), by
causing:
(A) the creation of a security entitlement to such
government security by the credit of such government security to
the securities account of the Securities Intermediary at the FRBNY,
and
(B) the Securities Intermediary continuously indicating
by book-entry that such government security is credited to the
Collection Account;
(v) in the case of each security entitlement not governed
by clauses (i) through (iv) above, by:
(A) causing a securities intermediary (x) to indicate
by book-entry that the underlying "financial asset" (as defined in
Section 8-102(a)(9) of
45
the NY UCC) has been credited to be the Securities Intermediary's
securities account, (y) to receive a financial asset from the
Securities Intermediary or acquiring the underlying financial asset
for the Securities Intermediary, and in either case, accepting it
for credit to the Securities Intermediary's securities account or
(z) to be become obligated under other law, regulation or rule to
credit the underlying financial asset to the Security
Intermediary's securities account;
(B) the making by such securities intermediary of
entries on its books and records continuously identifying such
security entitlement as belonging to the Securities Intermediary
and continuously indicating by book-entry that such securities
entitlement is credited to the Securities Intermediary's securities
account; and
(C) the Securities Intermediary continuously indicating
by book-entry that such security entitlement (or all rights and
property of the Securities Intermediary representing such
securities entitlement) is credited to the Collection Account; and
(vi) in the case of cash or money, by:
(A) the delivery of such cash or money to the
Securtities Intermediary;
(B) the Securities Intermediary treating such cash or
money as a financial asset maintained by such Securities
Intermediary for credit to the Collection Account in accordance
with the provisions of Article 8 of the NY UCC; and
(C) causing the Securities Intermediary to continuously
indicate by book-entry that such cash or money is credited to the
Collection Account.
(c) The Securities Intermediary hereby cofirms the following with
respect to the Collection Account: (i) the Collection Account shall be a
"securities account" within the meaning of Section 8-501 of the NY UCC to which
financial assets are or may be credited, (ii) the Securities Intermediary shall
act in the capacity of a "securities intermediary" within the meaning of
Section 8-102(a)(14) of the NY UCC with respect to the Collection Account,
(iii) the Securities Intermediary shall treat the Trustee as the sole
"entitlement holder" within the meaning of Section 8-102(a)(7) of the
Collection Account and the sole Person entitled to exercise the rights that
comprise any financial asset credited to the Collection Account, (iv) the
Securities Intermediary will not agree with any Person other than the Trustee
to comply with entitlement orders originated by such other Person, and (v) all
securities, securities entitlements, financial assets and other investment
property shall be credited by the Securities Intermediary to the Collection
Account as provided herein.
(d) The Securities Intermediary hereby agrees that each item of
property (whether investment property, financial asset, security or cash)
credited to the Collection Account shall be treated as a "financial asset"
within the meaning of Article 8-102(a)(9) of the UCC.
46
(e) Notwithstanding anything to the contrary and for the avoidance
of doubt, if at any time the Securities Intermediary shall receive any
notifications or entitlement orders from the Trustee directing it to transfer
or redeem any financial asset or other property relating to the Collection
Account, the Securities Intermediary shall comply with such notification or
other entitlement order without further consent by the Issuer or any other
Person.
(f) The Securities Intermediary's jurisdiction (as defined in
Section 8-110 of the NY UCC) shall be the State of New York.
(g) The Securities Account and the property credited thereto shall
not be subject to any Lien, right of set-off in favor of the Securities
Intermediary or anyone claiming through it (other than the Trustee).
(h) Except as permitted by this Section 6.15, or elsewhere in this
Indenture, the Trustee shall not hold the Collateral through an agent or a
nominee.
ARTICLE VII
BONDHOLDERS' LISTS AND REPORTS
Section 7.01 Issuer to Furnish Trustee Names and Addresses of
Bondholders. Should the Trustee not be the Registrar or, if the Bonds are
issued as Definitive Bonds, the Issuer shall cause to be furnished to the
Trustee (a) not more than five days after the earlier of (i) each Record Date
and (ii) three months after the most recent Record Date, a list, in such form
as the Trustee may reasonably require, of the names and addresses of the
Holders of Bonds as of such Record Date, (b) at such other times as the Trustee
may request in writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished.
Section 7.02 Preservation of Information; Communications to
Bondholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Bonds
contained in the most recent list furnished to the Trustee as provided in
Section 7.01 and the names and addresses of Holders of Bonds received by the
Trustee in its capacity as Registrar or Paying Agent. The Trustee may destroy
any list furnished to it as provided in such Section 7.01 upon receipt of a new
list so furnished.
(b) Bondholders may communicate with other Bondholders pursuant to
Section 312(b) of the TIA, with respect to their rights under this Indenture or
under the Bonds.
(c) The Issuer, the Trustee and the Registrar shall have the
protection of Section 312(c) of the TIA.
Section 7.03 Reports by Issuer. (a) The Issuer shall:
(i) file with the Trustee
47
and the Commission within 15 days after the Issuer is required to file
the same with the SEC, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may from time to time by rules and
regulations prescribe) which the Issuer may be required to file with the
SEC pursuant to Section 13 or 15(d) of the Exchange Act; and these
filings shall be deemed to have occurred with respect to all documents
that are available to the public on the XXXXX filing system;
(ii) file with the Trustee, the Commission and the SEC in
accordance with rules and regulations prescribed from time to time by
the SEC, such additional information, documents and reports with respect
to compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and these filings shall be deemed to have occurred with
respect to all documents that are available to the public on the XXXXX
filing system; and
(iii) supply to the Trustee and the Commission (and the
Trustee shall transmit by mail to all Bondholders described in TIA
Section 313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of
this Section 7.03(a) as may be required by rules and regulations
prescribed from time to time by the SEC.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04 Reports by Trustee. (a) If required by TIA Section
313(a), within 60 days after the end of each fiscal year of the Issuer,
commencing not more than 12 months after the issuance of the Bonds, the Trustee
shall mail to each Holder of Bonds as required by TIA Section 313(c) a brief
report dated as of such date that complies with TIA Section 313(a). The Trustee
also shall comply with TIA Section 313(b).
(b) A copy of each report at the time of its mailing to Bondholders
shall be filed or furnished by the Trustee with the SEC and each stock
exchange, if any, on which the Bonds are listed (to the extent required by the
rules of the SEC or such exchange). The Issuer shall notify the Trustee if and
when the Bonds are listed on any stock exchange.
Section 7.05 Provision of Servicer Reports. Upon the written
request of any Bondholder to the Trustee addressed to the Corporate Trust
Office, the Trustee shall provide such Bondholder with a copy of any Basic
Document, any report or certificate provided by the Servicer referred to in
Section 3.01 of the Servicing Agreement, a copy of the Certificate of
Compliance referred to in Section 3.04 of the Servicing Agreement, a copy of
the Annual Accountant's Report referred to in Section 3.05 of the Servicing
Agreement or a copy of any report or certificate provided by the Servicer under
any Basic Document.
48
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01 Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as
otherwise expressly provided in this Indenture, if any default occurs in the
making of any payment or performance under any agreement or instrument that is
part of the Collateral, the Trustee may take such action as may be appropriate
to enforce such payment or performance, including the institution and
prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
Section 8.02 Collection Account. (a) (i) On or prior to the Closing
Date for a Series of Bonds issued hereunder, the Issuer shall open, at the
Trustee's Corporate Trust Office, or at another Eligible Institution, one or
more segregated trust accounts in the Trustee's name for the benefit of the
Holders (collectively, the "Collection Account"). The Collection Account shall
initially be divided into Subaccounts, which need not be separate bank
accounts: a general subaccount (the "General Subaccount"), a capital subaccount
(a "Capital Subaccount"); and a reserve subaccount (the "Excess Funds
Subaccount"). Prior to depositing funds or U.S. Government Obligations in the
Collection Account pursuant to Section 4.01 or 4.02, the Issuer shall establish
a defeasance subaccount (the "Defeasance Subaccount") for which funds shall be
deposited, as a subaccount of the Collection Account. All amounts in the
Collection Account not allocated to any other Subaccount shall be allocated to
the General Subaccount. Prior to the Initial Payment Date, all amounts in the
Collection Account (other than funds deposited into the Capital Subaccount, up
to the Required Capital Amount) shall be allocated to the General Subaccount.
All references to the Collection Account shall be deemed to include reference
to all Subaccounts contained therein. Withdrawals from and deposits to each of
the foregoing Subaccounts of the Collection Account shall be made as set forth
in Sections 4.01, 4.02, 4.03, 4.04 and 8.02. Only the Trustee shall have access
to the Collection Account for the purpose of making deposits in and withdrawals
from the Collection Account in accordance with this Indenture. Funds in the
Collection Account shall not be commingled by the Issuer or the Trustee with
any other money. All money deposited from time to time in the Collection
Account, all deposits therein pursuant to this Indenture, and all investments
made in Eligible Investments with such money, including all income or other
gain from such investments, shall be held by the Trustee in the Collection
Account as part of the Collateral.
(b) All or a portion of the funds in the Collection Account shall
be invested in Eligible Investments and reinvested by the Trustee upon Issuer
Order; except that each Defeasance Subaccount shall be invested only in U.S.
Government Obligations deposited by the Issuer with the Trustee pursuant to
Section 4.01 or 4.02. All income or other gain from investment of money in the
Collection Account shall be deposited by the Trustee in the Collection Account,
and any loss resulting from such investments shall be charged to the Collection
Account, except that any such gain or loss from investments of money in the
Capital
49
Subaccount shall be deposited to or credited to the Capital Subaccount. The
Issuer shall not direct the Trustee to make any investment of any funds or to
sell any investment held in the Collection Account unless the security interest
granted and perfected in such account will continue to be perfected in such
investment or the proceeds of such sale, in either case without any further
action by any Person; and in connection with any direction to the Trustee to
make any such investment or sale, if requested by the Trustee, the Issuer shall
deliver to the Trustee an Opinion of Counsel, acceptable to the Trustee, to
such effect. Subject to Section 6.01(c), the Trustee shall not in any way be
held liable for the selection of Eligible Investments or for investment losses
incurred thereon except for losses attributable to the Trustee's failure to
make payments on such Eligible Investments issued by the Trustee, in its
commercial capacity as principal obligor and not as Trustee, in accordance with
their terms. The Trustee shall have no liability in respect of losses incurred
as a result of the liquidation of any Eligible Investment prior to its stated
maturity or the failure of the Issuer to provide timely written investment
direction. The Trustee shall have no obligation to invest or reinvest any
amounts held hereunder in the absence of written investment direction pursuant
to an Issuer Order.
(c) Any Series A Storm-Recovery Charges remitted by the Servicer to
the Trustee pursuant to the Servicing Agreement, any Indemnity Amounts remitted
to the Trustee by the Seller or the Servicer or otherwise received by the
Trustee or the Issuer with respect to that Series of Bonds and any other
proceeds of Collateral received by the Servicer, the Issuer or the Trustee with
respect to that Series of Bonds, shall be deposited in the General Subaccount.
(d) On each Payment Date, by 12:00 noon (New York City time), or if
such day is not a Business Day, on the following Business Day, the Trustee
shall, at the direction of the Servicer as set forth in an Officer's
Certificate, apply all amounts on deposit in the General Subaccount of the
Collection Account and any investment earnings on the Subaccounts in the
Collection Account in the following priority:
(i) to the Trustee all amounts due and owing the Trustee
(or the Allocable Share of such Operating Expenses, if Additional Bonds
are Outstanding) as of such Payment Date including Indemnity Amounts
provided that payment of Indemnity Amounts will be limited to $10,000,000
in the aggregate unless the Issuer has satisfied the Rating Agency
Condition;
(ii) to the Servicer, the Servicing Fee for such Payment
Date and all unpaid Servicing Fees from prior Payment Dates payable with
respect to such Series;
(iii) to the Administrator, the administration fee payable
under Section 2 of the Administration Agreement (or the Allocable Share
of such fees, if Additional Bonds are Outstanding) and to the Independent
Managers, their fees (or the Allocable Share of such fees, if Additional
Bonds are Outstanding), together with any unpaid fees for any prior
period;
(iv) so long as no Event of Default has occurred and is
continuing or would be caused by such payment, all Operating Expenses
(including the Allocable Share of all Operating Expenses not directly
attributable to the Bonds or the trusts administered
50
hereunder) other than distributions in accordance with clauses (d)(i),
(ii) and (iii) above shall be paid to the Persons entitled thereto;
(v) an amount equal to the Interest then due and owing on
such Payment Date, including past due interest, and if the amount is
insufficient to make the payment due, then such amount shall be allocated
Pro Rata;
(vi) payment of the principal due and payable on each
Tranche of the Bonds as a result of the Final Maturity Date or any
acceleration under Section 5.02 and, after payment of such amounts,
payment of the principal due and payable on each Tranche of Bonds
according to the Expected Sinking Fund Schedule, and if the amount is
insufficient to make the payment due, then such amount shall be allocated
Pro Rata;
(vii) all remaining unpaid Operating Expenses (or the
Allocable Share of such Operating Expenses if Additional Bonds are
Outstanding) and Indemnity Amounts shall be paid to the Persons entitled
thereto;
(viii) any amount necessary to replenish any shortfalls in
the Capital Subaccount below the Required Capital Amount shall be
allocated to the Capital Subaccount;
(ix) provided that no Event of Default has occurred and is
continuing, all interest earnings on amounts in the Capital Subaccount
shall be paid to the Issuer free from the Lien of this Indenture; and
(x) the balance, if any, shall be allocated to the Excess
Funds Subaccount.
(e) "Pro Rata" means with respect to the Bonds or any Tranche of
Bonds, the ratio (i) in the case of clause (d)(v) above, the numerator of which
is the aggregate amount of Interest payable with respect to the Bonds or such
Tranche on such Payment Date and the denominator of which is the sum of the
aggregate amounts of Interest payable with respect to the Bonds or such
Tranche; and (ii) in the case of other clauses in clause (d) above, the
numerator of which is the aggregate amount of Principal scheduled to be paid or
payable on such Payment Date with respect to all Bonds or any Tranche of Bonds
on such Payment Date and the denominator of which is the sum of the aggregate
amounts of Principal scheduled to be paid or payable with respect to all
Outstanding Tranches on such Payment Date.
(f) If, on any Payment Date, funds on deposit in the General
Subaccount are insufficient to make the payments and allocations contemplated
by subclauses (d)(i) through (viii) above for the Bonds, the Trustee shall, at
the direction of the Servicer, draw from amounts on deposit in the following
Subaccounts in the following order up to the amount of such shortfall, in order
to make such payments and allocations:
(i) from the Excess Funds Subaccount, Pro Rata, for
payments and allocations contemplated by subclauses (d)(i) through
(viii);
51
(ii) from the Capital Subaccount, Pro Rata, for payments
and allocations contemplated by subclauses (d)(i) through (vii).
(g) In the event that the Trustee requests payment of an Indemnity
Amount pursuant to clause (d)(i) above which requires the satisfaction of the
Rating Agency Condition, the Issuer shall, or shall cause the Servicer, to make
application to the rating agencies to satisfy such condition as quickly as
practicable.
Section 8.03 Release of Collateral. (a) All money and other
property withdrawn from the Collection Account by the Trustee for payment to
the Issuer as provided in this Indenture in accordance with Section 8.02 shall
be deemed released from this Indenture when so withdrawn and applied in
accordance with the provisions of Article VIII, without further notice to, or
release or consent by, the Trustee.
(b) Other than as provided for in clause (a) above, the Trustee
shall release property from the Lien of this Indenture only as and to the
extent permitted by the Basic Documents and only upon receipt of an Issuer
Request accompanied by an Issuer Officer's Certificate, an Opinion of Counsel
and Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.01, or an Opinion
of Counsel in lieu of such Independent Certificates to the effect that the TIA
does not require any such Independent Certificate.
(c) Subject to the payment of its fees and expenses pursuant to
Section 6.07, the Trustee may, and when required by this Indenture shall,
execute instruments to release property from the Lien of this Indenture, or
convey the Trustee's interest in the same, in a manner and under circumstances
that are not inconsistent with this Indenture. No party relying upon an
instrument executed by the Trustee as provided in this Article VIII shall be
bound to ascertain the Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any money.
(d) Subject to Section 8.03(b), the Trustee shall, at such time as
there are no Bonds Outstanding and all sums due the Trustee pursuant to Section
6.07 have been paid, release any remaining portion of the Collateral that
secured the Bonds from the Lien of this Indenture and release to the Issuer or
any other Person entitled thereto any funds or investments then on deposit in
or credited to the Collection Account.
Section 8.04 Opinion of Counsel. The Trustee shall receive at least
five days written notice when requested by the Issuer to take any action
pursuant to Section 8.03, accompanied by copies of any instruments involved,
and the Trustee shall also require, as a condition to such action, an Opinion
of Counsel, in form and substance reasonably satisfactory to the Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking
of such action have been complied with and such action will not materially and
adversely impair the security for the Bonds or the rights of the Bondholders in
contravention of this Indenture; which Opinion of Counsel shall not be required
to express an opinion as to the fair value of the Collateral. Counsel rendering
any such opinion may rely, without independent investigation, on the accuracy
and
52
validity of any certificate or other instrument delivered to the Trustee in
connection with any such action.
Section 8.05 Reports by Independent Accountants. The Issuer shall
appoint a firm of Independent certified public accountants of recognized
national reputation for purposes of preparing and delivering the reports or
certificates of such accountants required by this Indenture. Upon any
resignation by such firm, the Issuer shall promptly appoint a successor thereto
that shall also be a firm of Independent certified public accountants of
recognized national reputation. If the Issuer shall fail to appoint a successor
to a firm of Independent certified public accountants that has resigned within
15 days after such resignation, the Trustee shall promptly notify the Issuer of
such failure in writing. If the Issuer shall not have appointed a successor
within 10 days thereafter, the Trustee shall promptly appoint a successor firm
of Independent certified public accountants of recognized national reputation.
The fees of each firm of Independent certified public accountants shall be
payable by the Issuer.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01 Supplemental Indentures Without Consent of
Bondholders. (a) Without the consent of the Holders but with prior notice to
the Rating Agencies, the Issuer and the Trustee, when authorized by an Issuer
Order, at any time and from time to time, may enter into one or more indentures
supplemental hereto, in form reasonably satisfactory to the Trustee, for any of
the following purposes:
(i) to correct or amplify the description of the Collateral,
or better to assure, convey and confirm unto the Trustee the Collateral,
or to subject to the Lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any applicable successor of the covenants of the Issuer
herein and in the Bonds;
(iii) to add to the covenants of the Issuer, for the
benefit of the Bondholders, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to the Trustee for the benefit of the Bondholders and the
Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein or in any offering document used in connection with the initial
offer and sale of Bonds or to make any other provisions with respect to
matters or questions arising under this Indenture which will not be
inconsistent with other provisions of this Indenture; so long as (i) such
action does not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Bondholder and (ii) the
Rating Agency Condition has been satisfied;
53
(vi) to provide for the acceptance of the appointment by a
successor Trustee and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the requirements
of Article VI;
(vii) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to provide for
Definitive Bonds or to effect the qualification of this Indenture under
the TIA or under any similar federal statute hereafter enacted and to add
to this Indenture such other provisions as may be expressly required by
the TIA; or
(viii) to authorize the appointment of any Fiduciary for
any Tranche of Bonds required or advisable in connection with the listing
of any Tranche on any stock exchange, and otherwise to amend this
Indenture to incorporate any changes requested or required by any
governmental authority, stock exchange authority or Fiduciary for any
Tranche in connection with that listing;
provided, however, that no such Supplemental Indenture (i) may materially
adversely affect the interest of any Bondholder and (ii) will be permitted
unless an Opinion of Counsel is delivered to the Trustee to the effect that
such Supplemental Indenture will not cause the Issuer to be characterized for
federal income tax purposes as an association or publicly traded partnership
taxable as a corporation or otherwise have any material adverse impact on the
federal income taxation of any Bonds Outstanding or any Bondholder. A
Supplemental Indenture shall be deemed not to materially adversely affect the
interests of any Bondholder if (i) the Person requesting such Supplemental
Indenture obtains and delivers to the Trustee an Opinion of Counsel to that
effect or (ii) the Rating Agency Condition is satisfied.
(b) The Trustee is hereby authorized to join in the execution of
any such Supplemental Indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
Section 9.02 Supplemental Indentures With Consent of Bondholders.
(a) The Issuer and the Trustee, when authorized by an Issuer Order, also may,
upon satisfaction of the Rating Agency Condition (in each case, accompanied by
the form of the proposed Supplemental Indenture) and with the consent of the
Holders of not less than a majority of the Outstanding Amount of each Tranche
to be affected, by Act of such Holders delivered to the Issuer and the Trustee,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders under this Indenture; but no such Supplemental Indenture shall, without
the consent of the Holder of each Outstanding Bond of each Tranche affected
thereby:
(i) change the date of payment of any installment of
Principal of or Interest on any Bond, or reduce the principal amount
thereof, the Interest Rate thereon, change the calculation or timing of
payments, change the provisions of this Indenture and any related
applicable Supplemental Indenture relating to the application of
collections
54
on, or the proceeds of the sale of, the Collateral to payment of
Principal or Interest, or change the currency in which, any Bond or the
Interest thereon is payable;
(ii) impair the right to institute suit for the
enforcement of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any such
amount due on the Bonds on or after the respective due dates thereof;
(iii) reduce the percentage of the Outstanding Amount of
the Bonds or of a Tranche thereof, the consent of the Holders of which is
required for any such Supplemental Indenture, or the consent of the
Holders of which is required for any waiver of compliance with this
Indenture or defaults hereunder and their consequences provided for in
this Indenture or modify or alter the proviso to the definition of
"Outstanding";
(iv) reduce the portion of the Outstanding Amount required
to direct the Trustee to direct the Issuer to sell or liquidate the
Collateral pursuant to Section 5.04 or to preserve the Collateral
pursuant to Section 5.05.
(v) reduce the percentage of the Outstanding Amount of a
Tranche of Bonds, the consent of the Holders of which is required for any
amendments to the Sale Agreement, the Administration Agreement or the
Servicing Agreement;
(vi) modify any of the provisions of this Indenture in
such manner so as to affect the amount of any payment of Interest or
Principal payable on any Bond on any Payment Date or change the Expected
Sinking Fund Schedule or Final Maturity Date of any Tranche;
(vii) decrease the Required Capital Amount with respect to
the Bonds;
(viii) decrease the portion of the aggregate principal
amount of Bonds required to amend the Sections of this Indenture which
specify the applicable portion thereof necessary to amend this Indenture
or any other Basic Document; or
(ix) permit the creation of any Lien ranking prior to or
on a parity with the Lien of this Indenture with respect to any part of
the Collateral or, except as otherwise contemplated herein, terminate the
Lien of this Indenture on any property at any time subject hereto or
deprive any Holder of the security provided by the Lien of this
Indenture.
(b) It shall not be necessary for any Act of Bondholders under this
Section 9.02 to approve the particular form of any proposed Supplemental
Indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
(c) Promptly after the execution by the Issuer and the Trustee of
any Supplemental Indenture pursuant to this Section 9.02, the Trustee shall
mail to the Holders to which such Supplemental Indenture relates a notice
setting forth in general terms the substance of such Supplemental Indenture.
Any failure of the Trustee to mail such notice, or any defect
55
therein, shall not, however, in any way impair or affect the validity of any
such Supplemental Indenture.
Section 9.03 Commission Condition. Notwithstanding anything to the
contrary in this Section 9.01 or 9.02, no indenture or indentures supplemental
to this Indenture, nor any waiver required by Section 5.12 hereof, shall be
effective except upon satisfaction of the conditions precedent in this Section
9.03.
(a) At least 15 days prior to the effectiveness of any such
Supplemental Indenture or other action and after obtaining the other necessary
approvals set forth in Section 9.02 (except that the consent of the Trustee may
be subject to the consent of Bondholders if such consent is required or sought
by the Trustee in connection with such Supplemental Indenture) or prior to the
effectiveness of any waiver of a default approved by the Holders of a majority
of the Outstanding Amount of Bonds as provided in Section 5.12, the Servicer
shall have delivered to the Commission's executive director and general counsel
written notification of any proposed amendment, which notification shall
contain:
(i) a reference to Docket No. 060038-EI;
(ii) an Officer's Certificate stating that the proposed
Supplemental Indenture has been approved by all parties to this Indenture
or alternatively, the waiver of default has been approved by the Holders
of a majority of the Outstanding Amount of Bonds; and
(iii) a statement identifying the person to whom the
Commission is to address any response to the proposed Supplemental
Indenture or to request additional time.
(b) If the Commission or an authorized representative of the
Commission, within 15 days (subject to extension as provided in Section
9.03(c)) of receiving a notification complying with Section 9.03(a), shall have
delivered to the office of the person specified in Section 9.03(a)(iii) a
written statement that the Commission might object to the proposed Supplemental
Indenture, or to the waiver of default, then, subject to clause (d) below, such
proposed amendment or modification, or the waiver of default, shall not be
effective unless and until the Commission subsequently delivers a written
statement that it does not object to such proposed Supplemental Indenture.
(c) If the Commission or an authorized representative of the
Commission, within 15 days of receiving a notification complying with Section
9.03(a), shall have delivered to the office of the person specified in Section
9.03(a)(iii) a written statement requesting an additional amount of time not to
exceed thirty days (or, in the case of a waiver of default, 15 days) in which
to consider such proposed Supplemental Indenture, then such proposed
Supplemental Indenture shall not be effective if, within such extended period,
the Commission shall have delivered to the office of the person specified in
clause (d) below a written statement
56
as described in subparagraph (iii), unless and until the Commission
subsequently delivers a written statement that it does not object to such
proposed Supplemental Indenture.
(d) If (A) the Commission or an authorized representative of the
Commission, shall not have delivered written notice that the Commission might
object to such proposed Supplemental Indenture, or the waiver of default,
within the time periods described in subparagraphs (iii) or (iii), whichever is
applicable, or (B) the Commission or authorized representative of the
Commission, has delivered such written notice but does not within 60 days of
the delivery of the notification in (a) above, provide subsequent written
notice confirming that it does in fact object and the reasons therefore or
advise that it has initiated a proceeding to determine what action it might
take with respect to the matter, then the Commission shall be conclusively
deemed not to have any objection to the proposed amendment or modification or
waiver of default, as the case may be, and such amendment or modification or
waiver of default, as the case may be, may subsequently become effective upon
satisfaction of the other conditions specified in Section 9.01 or 9.02.
(e) Following the delivery of a statement from the Commission or an
authorized representative of the Commission to the Servicer under subparagraph
(iii), the Servicer and the Issuer shall have the right at any time to withdraw
from the Commission further consideration of any proposed Supplemental
Indenture, modification or waiver of default.
(f) For the purpose of this Section 9.03, an "authorized
representative of the Commission" means any person authorized to act on behalf
of the Commission, as evidenced by an Opinion of Counsel (which may be the
general counsel) to the Commission.
Section 9.04 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any Supplemental Indenture or the
modifications thereby of the trusts created by this Indenture, the Trustee
shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be
fully protected in relying upon, an Opinion of Counsel stating that the
execution of such Supplemental Indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
Supplemental Indenture that affects the Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
Section 9.05 Effect of Supplemental Indenture. Upon the execution
of any Supplemental Indenture pursuant hereto, this Indenture shall be and be
deemed to be modified and amended in accordance therewith, and the respective
rights, limitations of rights, obligations, duties, liabilities and immunities
under this Indenture of the Trustee, the Issuer and the Holders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms of any such
Supplemental Indenture shall be and be deemed to be part of this Indenture for
all purposes.
Section 9.06 Conformity with Trust Indenture Act. Every amendment
of this Indenture and every Supplemental Indenture executed pursuant to this
Article IX shall conform to the requirements of the TIA as then in effect so
long as this Indenture shall then be qualified under the TIA.
57
Section 9.07 Reference in Bonds to Supplemental Indentures. Bonds
authenticated and delivered after the execution of any Supplemental Indenture
pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
Supplemental Indenture. If the Issuer or the Trustee shall so determine, new
Bonds so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such Supplemental Indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Bonds.
ARTICLE X
REDEMPTION OF BONDS
Section 10.01 Optional Redemption by Issuer. The Issuer may not
optionally redeem the Bonds of any Tranche.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions. (a) Upon any
application or request by the Issuer to the Trustee to take any action under
this Indenture, the Issuer shall furnish to the Trustee (i) an Issuer Officer's
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with, (ii) an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required by
the TIA) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section 11.01, except that, in the
case of any such application or request as to which the furnishing of such
documents is specifically required by this Indenture, no additional certificate
or opinion need be furnished.
(b) Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition and
the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or investigation as
is necessary to enable such signatory to express an informed opinion as
to whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each
such signatory, such condition or covenant has been complied with.
58
Section 11.02 Form of Documents Delivered to Trustee. (a) In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents. Where any Person is
required to make, give or execute two or more applications, requests, consents,
certificates, statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
(b) Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer
or Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or officers
of the Servicer or the Seller or a Manager or Managers of the Issuer, stating
that the information with respect to such factual matters is in the possession
of the Servicer, the Seller or the Issuer, unless such Authorized Officer or
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
(c) Whenever in this Indenture, in connection with any application
or certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
VI.
Section 11.03 Acts of Bondholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Bondholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Bondholders in person or by agents duly appointed in writing; and except
as herein otherwise expressly provided such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Bondholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01) conclusive in favor of the Trustee and the
Issuer, if made in the manner provided in this Section 11.03.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
59
(c) The ownership of Bonds shall be proved by the Bond Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Bonds shall bind the Holder of
every Bond issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by
the Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Bond.
Section 11.04 Notices, etc., to Trustee, Issuer, Rating Agencies.
(a) Any request, demand, authorization, direction, notice, consent, waiver or
Act of Bondholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to or filed with:
(i) the Trustee by any Bondholder or by the Issuer, or
(ii) the Issuer by the Trustee or by any Bondholder, or
(iii) the Commission by the Seller, the Issuer or the Trustee
shall be sufficient if in English and in writing, and sent by United States
first-class mail, reputable overnight courier service, facsimile transmission
or electronic mail (confirmed by telephone, United States first-class mail or
reputable overnight courier service in the case of notice by facsimile
transmission or electronic mail) or any other customary means of communication,
and any such request, demand, authorization, direction, notice, consent, waiver
or Act shall be effective when delivered or transmitted, or if mailed, five
days after deposit in the United States first-class mail with proper postage
for first-class mail prepaid, in the case of the Trustee, addressed to the
Trustee at its Corporate Trust Office, in the case of the Commission, addressed
to the Florida Public Services Commission at 0000 Xxxxxxx Xxx Xxxx.,
Xxxxxxxxxxx, Xxxxxxx, 00000-0000, Attention: Executive Director and General
Counsel and in the case of the Issuer, addressed to: FPL Recovery Funding LLC,
000 Xxxxxxxx Xxxx., Xxxx Xxxxx, Xxxxxxx 00000, Attention: Treasurer, or at any
other address previously furnished in writing to the Trustee by the Issuer. The
Issuer shall promptly transmit any notice received by it from the Bondholders
to the Trustee.
(b) Notices required to be given to the Rating Agencies by the
Issuer, the Trustee or a Manager shall be in writing, delivered personally, via
facsimile transmission, by reputable overnight courier or by first-class mail,
postage prepaid, to: (i) in the case of Moody's: Xxxxx'x Investors Service,
Inc., Attention: ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000; (ii) in the case of Standard & Poor's: Standard & Poor's Ratings
Services, a Division of the XxXxxx-Xxxx Companies, Inc., 00 Xxxxx Xxxxxx, Xxx
Xxxx, XX 00000, Attention: Asset Backed Surveillance Department and (iii) in
the case of Fitch: Fitch, Inc., 0 Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: ABS Surveillance.
60
Section 11.05 Notices to Bondholders; Waiver. (a) Where this
Indenture provides for notice to Bondholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and delivered by first-class mail, postage prepaid, to each Bondholder affected
by such event, at the address of such Bondholder as it appears on the Bond
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Bondholders is given by mail, neither the failure to mail such notice nor any
defect in any notice so mailed to any particular Bondholder shall affect the
sufficiency of such notice with respect to other Bondholders, and any notice
that is mailed in the manner herein provided shall conclusively be presumed to
have been duly given.
(b) Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Bondholders shall be filed with the Trustee
but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such a waiver.
(c) In case, by reason of the suspension of regular mail service as
a result of a strike, work stoppage or similar activity, it shall be
impractical to deliver notice in accordance with clause (a) of this Section
11.05 to the Holders when such notice is required to be given pursuant to this
Indenture, then any manner of giving such notice as shall be reasonably
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
(d) Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance constitute
a Default or Event of Default.
Section 11.06 Issuer Obligation. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer or the Trustee on
the Bonds or under this
61
Indenture or any certificate or other writing delivered in connection herewith
or therewith, against (i) the Trustee or the Managers in their respective
individual capacities, (ii) any owner of a membership interest in the Issuer
(including FPL) or (iii) any shareholder, partner, owner, beneficiary, agent,
officer, or employee of the Issuer, the Trustee, the Managers or any owner of a
membership interest in the Issuer (including FPL) in its respective 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 in writing (it being understood that none of the Trustee, the
Managers or FPL has any such obligations in their respective individual or
corporate capacities).
Section 11.07 Alternative Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Bonds to the
contrary, the Issuer may enter into any agreement with any Holder of a Bond
providing for a method of payment, or notice by the Trustee or any Paying Agent
to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices. The Issuer will furnish to the Trustee
a copy of each such agreement and the Trustee will cause payments to be made
and notices to be given in accordance with such agreements.
Section 11.08 Conflict with Trust Indenture Act. (a) If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this Indenture by any of the provisions of
the TIA, such required provision shall control.
(b) The provisions of TIA Sections 310 through 317 that impose
duties on any person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
Section 11.09 No Petition. The Trustee, by entering into this
Indenture, and each Bondholder, by accepting a Bond and each beneficial owner
of any Bond, by accepting an interest in the Bonds, hereby covenants and agrees
(or shall be deemed to have covenanted and agreed) that prior to the date which
is one (1) year and one (1) day after the payment in full of the Tranche A-[4]
[Last Tranche] Senior Secured Bonds it shall not institute against the Issuer,
or join in the institution against the Issuer of, or acquiesce, petition or
otherwise invoke or cause the Issuer to invoke the process of any Governmental
Authority for the purpose of commencing or sustaining an involuntary case
against the Issuer under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
the property of the Issuer or ordering the winding up or liquidation of the
affairs of the Issuer.
Section 11.10 Successors and Assigns. (a) All covenants and
agreements in this Indenture and the Bonds by the Issuer shall bind its
successors and permitted assigns, whether so expressed or not.
(b) All agreements of the Trustee in this Indenture shall bind its
successors.
(c) The Trustee shall provide prior notice to the Rating Agencies
of any assignment of the obligations under this Indenture.
62
Section 11.11 Severability. In case any provision in this Indenture
or in the Bonds shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
Section 11.12 Benefits of Indenture. Nothing in this Indenture or
in the Bonds, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, the Bondholders, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
Section 11.13 Governing Law. THIS INDENTURE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS, PROVIDED THAT THE LAWS OF THE STATE OF FLORIDA
SHALL GOVERN THE CREATION, ATTACHMENT, PERFECTION AND ENFORCEMENT OF THE
SECURITY INTEREST HEREUNDER IN THE STORM-RECOVERY PROPERTY UNDER THE STATUTE.
Section 11.14 Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then payment need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date on which nominally due, and no Interest
shall accrue for the period from and after any such nominal date.
Section 11.15 Additional Information. The Trustee shall provide to
each Rating Agency any relevant information that such Rating Agency may
reasonably request from time to time that the Trustee possesses or can acquire
through commercially reasonable efforts and without unreasonable expense.
Section 11.16 Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument
Section 11.17 No Recourse to Issuer. Notwithstanding any provision
of this Indenture, Holders shall have no recourse against the Issuer, but shall
look only to the Collateral with respect to any amounts due to the Holders
hereunder and under the Bonds. Nothing contained in this Section shall be
construed to limit the obligations for which the Seller has expressly committed
itself under the terms of the Sale Agreement or for which the Servicer has
expressly committed itself under the terms of the Servicing Agreement.
63
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed and delivered by a Manager and an officer,
respectively, thereof, each thereunto duly authorized, all as of the day and
year first above written.
FPL RECOVERY FUNDING LLC,
as Issuer, and as agent of FPL for
purposes of the Alternative Grant
By: ____________________________________
Name:
Title: Manager
THE BANK OF NEW YORK,
as Trustee and as Securities Intermediary
By: ____________________________________
Name:
Title: Manager
64
EXHIBIT A
FORM OF BOND
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO THE NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
REGISTERED $________
No. R-1 CUSIP NO.
SEE REVERSE FOR CERTAIN DEFINITIONS
THE PRINCIPAL OF THIS TRANCHE A-[ ] SENIOR SECURED BOND WILL BE PAID IN
INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT
OF THIS TRANCHE A-[ ] SENIOR SECURED BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. THE HOLDER OF THIS TRANCHE A-[ ] SENIOR
SECURED BOND HAS NO RECOURSE TO THE ISSUER HEREOF AND AGREES TO LOOK ONLY TO
THE COLLATERAL, AS DESCRIBED IN THE INDENTURE REFERRED TO ON THE REVERSE
HEREOF, FOR PAYMENT OF ANY AMOUNTS DUE HEREUNDER. ALL OBLIGATIONS OF THE ISSUER
OF THIS TRANCHE A-[ ] SENIOR SECURED BOND UNDER THE TERMS OF THE INDENTURE WILL
BE RELEASED AND DISCHARGED UPON PAYMENT IN FULL HEREOF OR AS OTHERWISE PROVIDED
IN SECTION 3.10(B) OR ARTICLE IV OF THE INDENTURE. THE HOLDER OF THIS TRANCHE
A-[ ] SENIOR SECURED BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE DATE
WHICH IS ONE (1) YEAR AND ONE (1) DAY AFTER THE PAYMENT IN FULL OF THE SERIES A
TRANCHE A-[ ] SENIOR SECURED BONDS [LAST TRANCHE], IT WILL NOT INSTITUTE
AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST, THE ISSUER ANY
BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS
OR OTHER SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED STATES OR ANY STATE OF
THE UNITED STATES. NOTHING IN THIS PARAGRAPH SHALL PRECLUDE, OR BE DEEMED TO
ESTOP, SUCH HOLDER (A) FROM TAKING OR OMITTING TO TAKE ANY ACTION PRIOR TO SUCH
DATE IN (I) ANY CASE OR PROCEEDING VOLUNTARILY FILED OR COMMENCED BY OR ON
A-1
BEHALF OF THE ISSUER UNDER OR PURSUANT TO ANY SUCH LAW OR (II) ANY INVOLUNTARY
CASE OR PROCEEDING PERTAINING TO THE ISSUER WHICH IS FILED OR COMMENCED BY OR
ON BEHALF OF A PERSON OTHER THAN SUCH HOLDER AND IS NOT JOINED IN BY SUCH
HOLDER (OR ANY PERSON TO WHICH SUCH HOLDER SHALL HAVE ASSIGNED, TRANSFERRED OR
OTHERWISE CONVEYED ANY PART OF THE OBLIGATIONS OF THE ISSUER HEREUNDER) UNDER
OR PURSUANT TO ANY SUCH LAW, OR (B) FROM COMMENCING OR PROSECUTING ANY LEGAL
ACTION WHICH IS NOT AN INVOLUNTARY CASE OR PROCEEDING UNDER OR PURSUANT TO ANY
SUCH LAW AGAINST THE ISSUER OR ANY OF ITS PROPERTIES.
NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF
FLORIDA IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, OR INTEREST ON, THIS
SENIOR SECURED BOND.
A-2
FPL RECOVERY FUNDING LLC
SENIOR SECURED BONDS, SERIES A, TRANCHE A-[ ].
Initial Scheduled Final
Interest Rate Principal Amount Payment Date Final Maturity Date
------------- ---------------- --------------- -------------------
FPL Recovery Funding LLC, a limited liability company formed and existing
under the laws of the State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to the registered Holder hereof, or
registered assigns, the initial principal amount shown above in semiannual
installments on the Payment Dates (as defined below) and in the amounts
determined as specified on the reverse hereof or, if less, the amounts
determined pursuant to Section 8.02 of the Indenture, in each year, commencing
on [ ], 200_ and ending on or before the Final Maturity Date, to pay the entire
unpaid principal hereof on the Final Maturity Date and to pay interest, at the
Interest Rate shown above at a fixed rate, on each February 1 and August 1, and
if any such day is not a Business Day, the next succeeding Business Day,
commencing on [ ], 200_ and continuing until the earlier of the payment of the
principal hereof and the Final Maturity Date (each a "Payment Date"), on the
principal amount of this Tranche A-[ ] Senior Secured Bond outstanding from
time to time. Interest will be computed (i) for the first Payment Date, on the
basis of the number of days (determined on the basis of a 360-day year of
twelve 30-day months) from and including the Series Issuance Date, to but
excluding the Initial Payment Date, divided by 360, multiplied by [ ]%,
multiplied by the initial principal amount of the Tranche A-[ ] Senior Secured
Bonds, and (ii) for each succeeding Payment Date, the number of days
(determined on the basis of a 360-day year of twelve 30-day months) from and
including the preceding Payment Date to, but excluding, the current Payment
Date, divided by 360, multiplied by [ ]%, multiplied by the Outstanding Amount
of the Tranche A-[ ] Senior Secured 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 Tranche A-[ ] Senior Secured Bonds on such preceding Payment
Date. Such principal of and interest on this Tranche A-[ ] Senior Secured Bond
shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Tranche A-[ ] Senior Secured Bond
are payable in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts. All
payments made by the Issuer with respect to this Tranche A-[ ] Senior Secured
Bond shall be applied first to interest due and payable on this Tranche A-[ ]
Senior Secured Bond as provided above and then to the unpaid principal of this
Tranche A-[ ] Senior Secured Bond, all in the manner set forth in Section 8.02
of the Indenture.
Reference is made to the further provisions of this Tranche A-[ ] Senior
Secured Bond set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Tranche A-[ ] Senior Secured
Bond.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Tranche A-[ ] Senior
Secured Bond shall not be entitled to any benefit under the Indenture referred
to on the reverse hereof, or be valid or obligatory for any purpose.
A-3
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an authorized Manager of the Issuer.
Dated: _________, 2007
FPL RECOVERY FUNDING LLC
By: ________________________________
Name:
Title: Manager
A-4
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: _________, 2007
This is one of the Tranche A-[ ] Senior Secured Bonds of the Series A
Senior Secured Bonds, designated above and referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
as Trustee,
By: ___________________________________
Name:
Title:
A-5
REVERSE OF SENIOR SECURED BOND
This Tranche A-[ ] Senior Secured Bond is one of a duly authorized issue
of Senior Secured Bonds of the Issuer, designated as its Senior Secured Bonds,
Series A (herein called the "Senior Secured Bonds"), issued and to be issued in
one or more Series, which Series are issuable in one or more Tranches. The
Series A Senior Secured Bonds consist of four Tranches, including the Series A
Senior Secured Bonds, Tranche A-[ ] (herein called the "Tranche A-[ ] Senior
Secured Bonds"). The Tranche A-[ ] Senior Secured Bonds have been issued under
an indenture dated as of [ ], 2007 (the "Indenture"), between the Issuer and
The Bank of New York, as Trustee (the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the Collateral
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the
Holders of the Senior Secured Bonds and the terms and conditions under which
additional Senior Secured Bonds may be issued. All terms used in this Tranche
A-[ ] Senior Secured Bond that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in the Indenture.
The Tranche A-[ ] Senior Secured Bonds and the other Tranches of Series A
Senior Secured Bonds will be equally and ratably secured by the Collateral
pledged as security therefor as provided in the Indenture.
The principal of this Tranche A-[ ] Senior Secured Bond shall be payable
on each Payment Date only to the extent that amounts in the Collection Account
are available therefor, and only until the outstanding principal balance of the
Tranche A-[ ] Senior Secured Bonds on such Payment Date (after giving effect to
all payments of principal, if any, made on such Payment Date) has been reduced
to the principal balance specified in the Expected Sinking Fund Schedule which
is attached to the Indenture as Schedule A, unless payable earlier because an
Event of Default has occurred and is continuing and the Trustee or the Holders
of Senior Secured Bonds representing a majority of the Outstanding Amount of
the Senior Secured Bonds of all Series have declared the Senior Secured Bonds
to be immediately due and payable in accordance with Section 5.02 of the
Indenture (unless such declaration shall have been rescinded and annulled in
accordance with Section 5.02 of the Indenture). However, actual principal
payments may be made in lesser than expected amounts and at later than expected
times as determined pursuant to Section 8.02 of the Indenture. The entire
unpaid principal amount of this Tranche A-[ ] Senior Secured Bond shall be due
and payable on the earlier of the Final Maturity Date hereof. Notwithstanding
the foregoing, the entire unpaid principal amount of the Senior Secured Bonds
shall be due and payable, if not then previously paid, on the date on which an
Event of Default shall have occurred and be continuing and the Trustee or the
Holders of the Senior Secured Bonds of all Series representing a majority of
the Outstanding Amount of the Senior Secured Bonds have declared the Senior
Secured Bonds to be immediately due and payable in the manner provided in
Section 5.02 of the Indenture (unless such declaration shall have been
rescinded and annulled in accordance with Section 5.02 of the Indenture). All
principal payments on the Tranche A-[ ] Senior Secured Bonds shall be made pro
rata to the Tranche A-[ ] Senior Secured Bondholders entitled thereto based on
the respective principal amounts of the Tranche A-[ ] Senior Secured Bonds held
by them.
A-6
Payments of interest on this Tranche A-[ ] Senior Secured Bond due and
payable on each Payment Date, together with the installment of principal
payable on this Tranche A-[ ] Senior Secured Bond on such Payment Date shall be
made by check mailed first-class, postage prepaid, to the Person whose name
appears as the Registered Holder of this Tranche A-[ ] Senior Secured Bond (or
one or more predecessors of such Senior Secured Bond) in the Senior Secured
Bond Register as of the close of business on the Record Date or in such other
manner as may be provided in the Indenture, except that with respect to Tranche
A-[ ] Senior Secured Bonds registered on the Record Date in the name of a
Clearing Agency (initially such nominee to be Cede & Co.) or its nominee,
payments will be made by wire transfer in immediately available funds to the
account designated by such Clearing Agency and except for the final installment
of principal payable with respect to this Tranche A-[ ] Senior Secured Bond on
a Payment Date which shall be payable as provided below. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears in the Senior Secured Bond Register as of the applicable Record Date
without requiring that this Tranche A-[ ] Senior Secured Bond be submitted for
notation of payment. Any reduction in the principal amount of this Tranche A-[
] Senior Secured Bond (or any one or more predecessors to such Senior Secured
Bond) effected by any payments made on any Payment Date shall be binding upon
all future Holders of this Tranche A-[ ] Senior Secured Bond and of any Tranche
A-[ ] Senior Secured Bond issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal and interest and interest amount of this
Tranche A-[ ] Senior Secured Bond on a Payment Date, then the Trustee, in the
name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof at the close business on the Record Date immediately
preceding such Payment Date by notice mailed no later than ten days prior to
such final Payment Date and shall specify that such final installment will be
payable to the Registered Holder hereof as of the Record Date immediately
preceding such final Payment Date and only upon presentation and surrender of
this Tranche A-[ ] Senior Secured Bond and shall specify the place where this
Tranche A-[ ] Senior Secured Bond may be presented and surrendered for payment
of such installment.
The Issuer shall pay interest on overdue installments of interest and
principal on this Tranche A-[ ] Senior Secured Bond, to the extent payment at
such rate of Interest shall be legally enforceable, at the Interest Rate of
these Tranche A-[ ] Senior Secured Bonds.
This Tranche A-[ ] Senior Secured Bond is a storm-recovery bond as such
term is defined in the Statute. Principal and interest due and payable on this
Senior Secured Bond are payable from and secured primarily by storm-recovery
property authorized by a financing order issued by the Florida Public Service
Commission pursuant to the Statute. Storm-recovery property includes the
irrevocable right to impose and collect certain non-bypassable charges (defined
in the Statute as "storm-recovery charges") to be paid by all customers
receiving transmission or distribution services from Florida Power & Light
Company, a Florida utility, or its successors or assignees under Florida Public
Service Commission-approved rate schedules or under special contracts.
A-7
The Statute provides that:
The [State of Florida] pledges to and agrees with bondholders, the
owners of the storm-recovery property, and other financing parties that
the State will not:
1. Alter the provisions of [the Statute], which make the
storm-recovery charges imposed by a financing order irrevocable, binding
and nonbypassable charges;
2. Take or permit any action that impairs or would impair the value
of the storm-recovery property; or
3. Except as allowed under [the Statute], reduce, alter or impair
storm-recovery charges that are to be imposed, collected, and remitted
for the benefit of the bondholders and other financing parties until any
and all principal, interest, premium, financing costs and other fees,
expenses or charges incurred, and any contracts to be performed, in
connection with the related bonds have been paid and performed in full.
Nothing in this [State Pledge] shall preclude limitation or
alteration if full compensation is made by law for the full protection of
the storm-recovery charges collected pursuant to a financing order and of
the holders of bonds and any assignee or financing party entering into a
contract with the electric utility.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Tranche A-[ ] Senior Secured Bond may be
registered in the Senior Secured Bond Register upon surrender of this Tranche
A-[ ] Senior Secured Bond for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an Eligible Guarantor Institution,
and thereupon one or more new Tranche A-[ ] Senior Secured Bonds of any
Authorized Denominations and in the same aggregate initial principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Tranche
A-[ ] Senior Secured Bond, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange.
Each Senior Secured Bondholder, by acceptance of a Senior Secured Bond,
covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer or the Trustee on the Senior
Secured Bonds or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Trustee or the Managers in
their respective individual capacities, (ii) any owner of a membership interest
in the Issuer (including FPL) or (iii) any shareholder, partner, owner,
beneficiary, agent, officer or employee of the Trustee, the Managers or any
owner of a membership interest in the Issuer (including FPL) in its respective
individual or corporate capacities, or of any successor or assign of any of
them in their individual or corporate capacities, except as any such Person may
have expressly agreed in writing (it being understood that none of the Trustee,
the Managers or FPL has any such obligations in their respective individual or
corporate capacities).
A-8
Prior to the due presentment for registration of transfer of this Tranche
A-[ ] Senior Secured Bond, the Issuer, the Trustee and any agent of the Issuer
or the Trustee may treat the Person in whose name this Tranche A-[ ] Senior
Secured Bond is registered (as of the day of determination) as the owner hereof
for the purpose of receiving payments of principal of and interest on this
Tranche A-[ ] Senior Secured Bond and for all other purposes whatsoever,
whether or not this Tranche A-[ ] Senior Secured Bond may be overdue, and
neither the Issuer, the Trustee nor any such agent shall be affected by notice
to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Senior Secured Bonds under the
Indenture at any time by the Issuer with the consent of the Holders of Senior
Secured Bonds representing a majority of the Outstanding Amount of all Senior
Secured Bonds at the time Outstanding of each Tranche to be affected and upon
satisfaction of the Rating Agency Condition and Commission Condition. The
Indenture also contains provisions permitting the Holders of Senior Secured
Bonds representing specified percentages of the Outstanding Amount of the
Senior Secured Bonds of all Tranches, on behalf of the Holders of all the
Senior Secured Bonds, to waive compliance by the Issuer with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences with the satisfaction of the Commission Condition. Any such
consent or waiver by the Holder of this Tranche A-[ ] Senior Secured Bond (or
any one of more predecessors of such Senior Secured Bonds) shall be conclusive
and binding upon such Holder and upon all future Holders of this Tranche A-[ ]
Senior Secured Bond and of any Tranche A-[ ] Senior Secured Bond issued upon
the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Tranche A-[
] Senior Secured Bond. The Indenture also permits the Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the consent of
Holders of the Senior Secured Bonds issued thereunder, but with the
satisfaction of the Commission Condition.
The term "Issuer" as used in this Tranche A-[ ] Senior Secured Bond
includes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Trustee and the Holders of
Senior Secured Bonds under the Indenture.
The Tranche A-[ ] Senior Secured Bonds are issuable only in registered
form in Authorized Denominations as provided in the Indenture, subject to
certain limitations therein set forth.
This Tranche A-[ ] Senior Secured Bond and the Indenture shall be
governed by and construed in accordance with the laws of the State of New York
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws, provided that the laws of the State of
Florida shall govern the creation, attachment, perfection and enforcement of
the security interest hereunder in the Storm-Recovery Property under the
statute.
No reference herein to the Indenture and no provision of this Tranche
A-[ ] Senior Secured Bond or of the Indenture shall alter or impair the
obligation of the Issuer, which is
A-9
absolute and unconditional, to pay the principal of and interest on this
Tranche A-[ ] Senior Secured Bond at the times and rate and in the currency
herein prescribed.
The Holder of this Tranche A-[ ] Senior Secured Bond by the acceptance
hereof agrees that, notwithstanding any provision of the Indenture to the
contrary, the Holder shall have no recourse against the Issuer, but shall look
only to the Collateral, with respect to any amounts due to the Holder under
this Tranche A-[ ] Senior Secured Bond.
The Issuer and the Trustee, by entering into the Indenture, and the
Holders and any Persons holding a beneficial interest in any Tranche A-[ ]
Senior Secured Bond, by acquiring any Tranche A-[ ] Senior Secured Bond or
interest therein, (i) express their intention that, solely for the purpose of
federal taxes and, to the extent consistent with applicable state, local and
other tax law, solely for the purpose of state, local and other taxes, the
Tranche A-[ ] Senior Secured Bonds qualify under applicable tax law as
indebtedness of the sole owner of the Issuer secured by the Collateral and (ii)
solely for purposes of federal taxes and, to the extent consistent with
applicable state, local and other tax law, solely for purposes of state, local
and other taxes, so long as any of the Tranche A-[ ] Senior Secured Bonds are
outstanding, agree to treat the Tranche A-[ ] Senior Secured Bonds as
indebtedness of the sole owner of the Issuer secured by the Collateral unless
otherwise required by appropriate taxing authorities.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
A-10
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
______________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ___
(name and address of assignee)
the within Tranche A-[ ] Senior Secured Bond and all rights thereunder, and
hereby irrevocably constitutes and appoints
(name and address of appointee)
attorney, to transfer said Tranche A-[ ] Senior Secured Bond on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: _______________
_____________________________*
Signature Guaranteed:
_____________________________*
* NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Tranche A-[
] Senior Secured Bond in every particular, without alteration,
enlargement or any change whatsoever.
A-11
EXHIBIT B
SERVICING CRITERIA TO BE ADDRESSED
BY TRUSTEE IN ASSESSMENT OF COMPLIANCE
---------------------------------------------------------------------------------------------------
Applicable
Reg AB Trustee
Reference Servicing Criteria Responsibility
---------------------------------------------------------------------------------------------------
General Servicing Considerations
---------------------------------------------------------------------------------------------------
Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
1122(d)(1)(i) accordance with the transaction agreements.
---------------------------------------------------------------------------------------------------
If any material servicing activities are outsourced to third
parties, policies and procedures are instituted to monitor the
third party's performance and compliance with such servicing
1122(d)(1)(ii) activities.
---------------------------------------------------------------------------------------------------
Any requirements in the transaction agreements to
maintain a back-up servicer for the pool assets are
1122(d)(1)(iii) maintained.
---------------------------------------------------------------------------------------------------
A fidelity bond and errors and omissions policy is in effect on
the party participating in the servicing function throughout the
reporting period in the amount of coverage required by and
otherwise in accordance with the terms of the transaction
1122(d)(1)(iv) agreements.
---------------------------------------------------------------------------------------------------
Cash Collection and Administration
---------------------------------------------------------------------------------------------------
Payments on pool assets are deposited into the X
appropriate custodial bank accounts and related bank
clearing accounts no more than two (2) business days
following receipt, or such other number of days
1122(d)(2)(i) specified in the transaction agreements.
---------------------------------------------------------------------------------------------------
Disbursements made via wire transfer on behalf of an X
obligor or to an investor are made only by authorized
1122(d)(2)(ii) personnel.
---------------------------------------------------------------------------------------------------
Advances of funds or guarantees regarding collections, cash
flows or distributions, and any interest or other fees charged
for such advances, are made, reviewed and approved as specified
1122(d)(2)(iii) in the transaction agreements.
---------------------------------------------------------------------------------------------------
The related accounts for the transaction, such as X
cash reserve accounts or accounts established as a
form of overcollateralization, are separately
maintained (e.g., with respect to commingling of
1122(d)(2)(iv) cash) as set forth in the transaction agreements.
---------------------------------------------------------------------------------------------------
Each custodial account is maintained at a federally insured
depository institution as set forth in the transaction
agreements. For purposes of this criterion, "federally insured
depository institution" with respect to a foreign financial
institution means a foreign financial institution that meets the
requirements of Rule 13k-1(b)(1) of the Securities
1122(d)(2)(v) Exchange Act.
---------------------------------------------------------------------------------------------------
Unissued checks are safeguarded so as to prevent unauthorized
1122(d)(2)(vi) access.
---------------------------------------------------------------------------------------------------
Reconciliations are prepared on a monthly basis for all
asset-backed securities related bank accounts, including
custodial accounts and related bank clearing accounts. These
reconciliations are (A) mathematically accurate; (B) prepared
within thirty (30) calendar days after the bank statement cutoff
date, or such other number of days specified in the transaction
agreements; (C) reviewed and approved by someone other than the
person who prepared the reconciliation; and (D) contain
explanations for reconciling items. These reconciling items are
resolved within ninety (90) calendar days of their original
identification, or such other number of days specified in the
1122(d)(2)(vii) transaction agreements.
---------------------------------------------------------------------------------------------------
Investor Remittances and Reporting
---------------------------------------------------------------------------------------------------
1122(d)(3)(i) Reports to investors, including those to be filed with the SEC,
are maintained in accordance with the transaction agreements and
applicable SEC requirements. Specifically, such reports (A) are
prepared in accordance with timeframes and other terms set forth
in the transaction agreements; (B) provide information
calculated in accordance with the terms specified in the
transaction agreements; (C) are filed with the SEC as required
by its rules and regulations; and (D) agree with investors' or
the trustee's records as to the total unpaid principal balance
and number of pool assets serviced by the servicer.
---------------------------------------------------------------------------------------------------
Amounts due to investors are allocated and remitted X
in accordance with timeframes, distribution priority
and other terms set forth in the transaction
1122(d)(3)(ii) agreements.
---------------------------------------------------------------------------------------------------
Disbursements made to an investor are posted within two (2) X
business days to the servicer's investor records, or such other
number of days specified in
1122(d)(3)(iii) the transaction agreements.
---------------------------------------------------------------------------------------------------
B-1
---------------------------------------------------------------------------------------------------
Applicable
Reg AB Trustee
Reference Servicing Criteria Responsibility
---------------------------------------------------------------------------------------------------
Amounts remitted to investors per the investor X
reports agree with cancelled checks, or other form of
1122(d)(3)(iv) payment, or custodial bank statements.
---------------------------------------------------------------------------------------------------
Pool Asset Administration
---------------------------------------------------------------------------------------------------
1122(d)(4)(i) Collateral or security on pool assets is maintained X*
as required by the transaction agreements or related
pool asset documents.
---------------------------------------------------------------------------------------------------
Pool assets and related documents are safeguarded as
1122(d)(4)(ii) required by the transaction agreements.
---------------------------------------------------------------------------------------------------
Any additions, removals or substitutions to the asset pool are
made, reviewed and approved in accordance with any conditions or
1122(d)(4)(iii) requirements in the transaction agreements.
---------------------------------------------------------------------------------------------------
Payments on pool assets, including any payoffs, made in
accordance with the related pool asset documents are posted to
the servicer's obligor records maintained no more than two (2)
business days after receipt, or such other number of days
specified in the transaction agreements, and allocated to
principal, interest or other items (e.g., escrow) in
1122(d)(4)(iv) accordance with the related pool asset documents.
---------------------------------------------------------------------------------------------------
The servicer's records regarding the pool assets agree with the
1122(d)(4)(v) servicer's records with respect to an obligor's unpaid principal balance.
---------------------------------------------------------------------------------------------------
Changes with respect to the terms or status of an obligor's pool
assets (e.g., loan modifications or re-agings) are made,
reviewed and approved by authorized personnel in accordance with
1122(d)(4)(vi) the transaction agreements and related pool asset documents.
---------------------------------------------------------------------------------------------------
Loss mitigation or recovery actions (e.g., forbearance plans,
modifications and deeds in lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated, conducted and
concluded in accordance with the timeframes or other
1122(d)(4)(vii) requirements established by the transaction agreements.
---------------------------------------------------------------------------------------------------
Records documenting collection efforts are maintained during the
period a pool asset is delinquent in accordance with the
transaction agreements. Such records are maintained on at least
a monthly basis, or such other period specified in the
transaction agreements, and describe the entity's activities in
monitoring delinquent pool assets including, for example, phone
calls, letters and payment rescheduling plans in cases where
1122(d)(4)(viii) delinquency is deemed temporary (e.g., illness or unemployment).
---------------------------------------------------------------------------------------------------
Adjustments to interest rates or rates of return for pool assets
with variable rates are computed based on the related pool asset
1122(d)(4)(ix) documents.
---------------------------------------------------------------------------------------------------
Regarding any funds held in trust for an obligor (such as escrow
accounts): (A) such funds are analyzed, in accordance with the
obligor's pool asset documents, on at least an annual basis, or
such other period specified in the transaction agreements; (B)
interest on such funds is paid, or credited, to obligors in
accordance with applicable pool asset documents and state laws;
and (C) such funds are returned to the obligor within thirty
(30) calendar days of full repayment of the related pool assets,
1122(d)(4)(x) or such other number of days specified in the transaction agreements.
---------------------------------------------------------------------------------------------------
Payments made on behalf of an obligor (such as tax or insurance
payments) are made on or before the related penalty or
expiration dates, as indicated on the appropriate bills or
notices for such payments, provided that such support has been
received by the servicer at least thirty (30) calendar days
prior to these dates, or such other number of days specified
1122(d)(4)(xi) in the transaction agreements.
---------------------------------------------------------------------------------------------------
Any late payment penalties in connection with any payment to be
made on behalf of an obligor are paid from the servicer's funds
and not charged to the obligor, unless the late payment was due
1122(d)(4)(xii) to the obligor's error or omission.
---------------------------------------------------------------------------------------------------
Disbursements made on behalf of an obligor are posted within two
(2) business days to the obligor's records maintained by the
servicer, or such other number of days specified in the transaction
1122(d)(4)(xiii) agreements.
---------------------------------------------------------------------------------------------------
Delinquencies, charge-offs and uncollectible accounts
are recognized and recorded in accordance with the transaction
1122(d)(4)(xiv) agreements.
---------------------------------------------------------------------------------------------------
Any external enhancement or other support, identified in Item
1114(a)(1) through (3) or Item 1115 of Regulation AB, is
1122(d)(4)(xv) maintained as set forth in the transaction agreements.
---------------------------------------------------------------------------------------------------
* Solely with respect to its custodial functions relating to the Collection
Account.
B-2
Schedule A
EXPECTED SINKING FUND SCHEDULE
[To be provided]
S-1
APPENDIX A
MASTER DEFINITIONS
[See Servicing Agreement, Exhibit 99.1]
Appendix A-1
