EXHIBIT 10.3
INTANGIBLE TRANSITION PROPERTY SERVICING AGREEMENT
between
PP&L Transition Bond Company LLC
Issuer
and
PP&L, INC.,
Servicer
Dated as of , 1999
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions....................................................
SECTION 1.02. Other Definitional Provisions..................................
ARTICLE II
APPOINTMENT AND AUTHORIZATION OF SERVICER
SECTION 2.01. Appointment of Servicer; Acceptance of Appointment.............
SECTION 2.02. Authorization..................................................
SECTION 2.03. Dominion and Control over Serviced Intangible Transition
Property.......................................................
ARTICLE III
BILLING SERVICES
SECTION 3.01. Duties of Servicer.............................................
SECTION 3.02. Collection and Allocation of Intangible Transition Charges.....
SECTION 3.03. Servicing and Maintenance Standards............................
SECTION 3.04. Servicer's Certificates........................................
SECTION 3.05. Annual Statement as to Compliance; Notice of Default...........
SECTION 3.06. Annual Independent Certified Public Accountants' Report........
SECTION 3.07. Intangible Transition Property Documentation..................
SECTION 3.08. Computer Records; Audits of Documentation......................
SECTION 3.09. Defending Intangible Transition Property Against Claims........
SECTION 3.10. Opinions of Counsel............................................
ARTICLE IV
SERVICES RELATED TO INTANGIBLE TRANSITION CHARGES ADJUSTMENTS
SECTION 4.01. Intangible Transition Charges Adjustments......................
ARTICLE V
THE SERVICER
SECTION 5.01. Representations and Warranties of Servicer.....................
SECTION 5.02. Indemnities of Servicer; Release of Claims.....................
SECTION 5.03. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer...................................................
SECTION 5.04. Assignment of Servicer's Obligations...........................
SECTION 5.05. Limitation on Liability of Servicer and Others.................
SECTION 5.06. PP&L, Inc. Not To Resign as Servicer...........................
SECTION 5.07. Quarterly Servicing Fee........................................
SECTION 5.08. Servicer Expenses..............................................
SECTION 5.09. Appointments...................................................
SECTION 5.10. Remittances....................................................
SECTION 5.11. Protection of Title............................................
ARTICLE VI
SERVICER DEFAULT
SECTION 6.01. Servicer Default...............................................
SECTION 6.02. Notice of Servicer Default.....................................
SECTION 6.03. Waiver of Past Defaults........................................
SECTION 6.04. Appointment of Successor.......................................
SECTION 6.05. Cooperation with Successor.....................................
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01. Amendment......................................................
SECTION 7.02. Notices........................................................
SECTION 7.03. Assignment.....................................................
SECTION 7.04. Limitations on Rights of Others................................
SECTION 7.05. Severability...................................................
SECTION 7.06. Separate Counterparts..........................................
SECTION 7.07. Headings.......................................................
SECTION 7.08. Governing Law..................................................
SECTION 7.09. Assignment to Bond Trustee.....................................
SECTION 7.10. Nonpetition Covenants..........................................
SECTION 7.11. Addition of Issuers............................................
SECTION 7.12. Termination....................................................
EXHIBIT A Servicing Procedures
ANNEX 1 ITC Adjustment Process and Reports - PP&L Transition Bond
Company LLC
SERVICING AGREEMENT dated as of , 1999 (this "Agreement") between
PP&L Transition Bond Company LLC, a Delaware limited liability company (the
"Issuer"), and PP&L, INC., a Pennsylvania corporation ("PP&L"), as the
servicer of the Intangible Transition Property (together with each
successor to PP&L (in the same capacity) pursuant to Section 5.03 or 6.02,
the "Servicer").
WHEREAS the Servicer is willing to service the Intangible
Transition Property purchased from the Seller by the Issuer; and
WHEREAS the Issuer, in connection with ownership of Serviced
Intangible Transition Property, desires to engage the Servicer to carry out
the functions described herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used but not
otherwise defined in this Agreement have the respective meanings set forth
in Appendix A hereto
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section, Annex,
Schedule and Exhibit references contained in this Agreement are references
to Sections, Annexes, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(b) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms.
ARTICLE II
APPOINTMENT AND AUTHORIZATION OF SERVICER
SECTION 2.01. APPOINTMENT OF SERVICER; ACCEPTANCE OF APPOINTMENT.
Subject to Section 5.04 and Article VI, the Issuer hereby appoints the
Servicer, and the Servicer hereby accepts such appointment, to perform the
Servicer's obligations pursuant to this Agreement on behalf of and for the
benefit of the Issuer in accordance with the terms of this Agreement. This
appointment and the Servicer's acceptance thereof may not be revoked except
in accordance with the express terms of this Agreement.
SECTION 2.02. AUTHORIZATION. With respect to all or any portion of
the Serviced Intangible Transition Property, the Servicer shall be, and
hereby is, authorized and empowered by the Issuer to:
(a) execute and deliver, on behalf of itself or the Issuer, as the
case may be, any and all instruments, documents or notices, and
(b) on behalf of itself or the Issuer, as the case may be, make
any filing and participate in proceedings of any kind with any governmental
authorities, including with the PUC.
The Issuer shall furnish the Servicer with such documents as have
been prepared by the Servicer for execution by the Issuer, and with such
other documents as may be in the Issuer's possession, as necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. Upon the written request of the Servicer,
the Issuer shall furnish the Servicer with any powers of attorney or other
documents necessary or appropriate to enable the Servicer to carry out its
duties hereunder.
SECTION 2.03. DOMINION AND CONTROL OVER SERVICED INTANGIBLE
TRANSITION PROPERTY. Notwithstanding any other provision herein, the
Servicer and the Issuer agree that the Issuer shall have dominion and
control over the Serviced Intangible Transition Property, and the Servicer,
in accordance with the terms hereof, is acting solely as the servicing
agent of the Issuer with respect to the Serviced Intangible Transition
Property. The Servicer hereby agrees that it shall not take any action that
is not authorized by this Agreement, that is not consistent with its
customary procedures and practices, or that shall impair the rights of the
Issuer with respect to the Serviced Intangible Transition Property, in each
case unless such action is required by law or court or regulatory order.
ARTICLE III
BILLING SERVICES
SECTION 3.01. DUTIES OF SERVICER. The Servicer, as agent for the
Issuer (to the extent provided herein), shall have the following duties:
(a) Duties of Servicer Generally. The Servicer will manage,
service, administer and make collections in respect of the Serviced
Intangible Transition Property. The Servicer's duties will include:
(i) calculating and billing the Intangible Transition Charges and
collecting (from Customers and Third Parties, as applicable) and posting
all ITC Collections;
(ii) responding to inquiries by Customers, Third Parties, the PUC,
or any federal, local or other state governmental authority with respect to
the Serviced Intangible Transition Property and the Intangible Transition
Charges;
(iii) accounting for ITC Collections, investigating delinquencies,
processing and depositing collections, making periodic remittances and
furnishing periodic reports to the Issuer, the Trustee and the Rating
Agencies;
(iv) selling, as the agent for the Issuer, as its interest may
appear, defaulted or written off accounts in accordance with the Servicer's
usual and customary practices; and
(v) taking action in connection with Intangible Transition Charge
Adjustments as is set forth herein.
Anything to the contrary notwithstanding, the duties of the
Servicer set forth in this Agreement shall be qualified in their entirety
by the Pennsylvania Public Utility Code and any PUC Regulations, orders or
directions as in effect at the time such duties are to be performed.
Without limiting the generality of this Section 3.01(a), in furtherance of
the foregoing, the Servicer hereby agrees that it shall also have, and
shall comply with, the duties and responsibilities relating to data
acquisition, usage and xxxx calculation, billing, customer service
functions, collections, payment processing and remittance set forth in
Exhibit A hereto.
(b) Notification of Laws and Regulations. The Servicer shall
immediately notify the Issuer, the Trustee and the Rating Agencies in
writing of any laws or PUC Regulations, orders or directions hereafter
promulgated that have a material adverse effect on the Servicer's ability
to perform its duties under this Agreement.
(c) Other Information. Upon the reasonable request of the Issuer,
the Trustee or any Rating Agency, the Servicer shall provide to the Issuer,
the Trustee or the Rating Agency, as the case may be, any public financial
information in respect of the Servicer, or any material information
regarding the Intangible Transition Property to the extent it is reasonably
available to the Servicer, that may be reasonably necessary and permitted
by law for the Issuer, the Trustee or the Rating Agency to monitor the
performance by the Servicer hereunder. In addition, so long as any of the
Transition Bonds of any Series are outstanding, the Servicer shall provide
to the Issuer and to the Trustee, within a reasonable time after written
request therefor, any information available to the Servicer or reasonably
obtainable by it that is necessary to calculate the Intangible Transition
Charges applicable to each Customer Class.
SECTION 3.02. COLLECTION AND ALLOCATION OF INTANGIBLE TRANSITION
CHARGES.
(a) The Servicer shall use all reasonable efforts, consistent with
its customary servicing procedures, to collect all amounts owed in respect
of Intangible Transition Charges as and when the same shall become due and
shall follow such collection procedures as it follows with respect to
collection activities that the Servicer conducts for itself or others. The
Servicer shall not change the amount of or reschedule the due date of any
scheduled payment of Intangible Transition Charges, except as contemplated
in this Agreement or as required by law or court or PUC order or directive;
provided, however, that the Servicer may take any of the foregoing actions
to the extent that such action would be in accordance with customary
billing and collection practices of the Servicer with respect to billing
and collection activities that it conducts for itself.
(b) As specified in [cite PUC order], any amounts received by the
Servicer from a Customer that represent a partial payment toward an
outstanding balance will be applied in the following manner:
[(i) If the Customer has a Pre-Retail Access balance, the payment
will be applied as follows:
(A) to the outstanding Pre-Retail Access balance or the
installment amount for a payment agreement on this amount;
(B) to Intangible Transition Charges and Competitive
Transition Charges;
(C) to transmission and distribution charges;
(D) to supply charges; and
(E) to non-basic services charges.
If the Customer has a Post-Retail Access balance,] partial
payments will be applied to the Pre-Retail Access balance,
according to the terms of the Pre-Retail Access payment agreement,
before being applied to any other outstanding Post-Retail Access
charges.
(ii) For a Customer with no Pre-Retail Access balance but with a
Post- Retail Access balance, the payment will be applied as
follows:
(A) to the balance due for prior Intangible Transition Charges,
Competitive Transition Charges and transmission and
distribution charges;
(B) to current Intangible Transition Charges and Competitive
Transition Charges;
(C) to current transmission and distribution charges;
(D) to the balance due for prior supply charges;
(E) to current supply charges; and
(F) to non-basic services.
SECTION 3.03. PAYMENT OF ITC COLLECTIONS. The Servicer shall
periodically prepare a Collections Curve for each Billing Month. The
Servicer agrees to remit actual ITC Collections for any Billing Month to
the Trustee for deposit in the Collection Account not later than the
Remittance Date immediately following the Reconciliation Date for such
Billing Month. In addition, the Servicer shall make periodic payments on
account of ITC Collections to the Trustee for deposit in the Collection
Account. On each Monthly Remittance Date, for so long as the Servicer has
satisfied the conditions of Section 5.10(b), the Servicer shall remit to
the Trustee for each of the seven preceding Billing Months an amount equal
to the amount of ITC Collections estimated to have been received during the
preceding calendar month, based on the applicable Collections Curve for
each Customer Class then in effect, for those Billing Months. On each Daily
Remittance Date, if the Servicer has not satisfied the conditions of
Section 5.10(b), the Servicer shall remit to the Trustee for each of the
seven preceding Billing Months an amount equal to (x) the amount of ITC
Collections estimated to have been received during the preceding calendar
month, based on the applicable Collections Curve for each Customer Class
then in effect, for those Billing Months, divided by (y) the number of
Business Days in the current month.
On or before the Reconciliation Date for each Billing Month, the
Servicer shall determine whether there exists a Curve Payment Shortfall or
an Excess Curve Payment with respect to such Billing Month. In the event
that there is a Curve Payment Shortfall with respect to the applicable
Billing Month, the Servicer shall pay the Curve Payment Shortfall to the
Trustee for deposit into the Collection Account on that Reconciliation
Date. In the event that there is an Excess Curve Payment for the applicable
Billing Month, the Servicer may either (i) reduce the amount that the
Servicer is required to remit to the Trustee for deposit in the Collection
Account on the corresponding Remittance Date (and, if necessary, succeeding
Remittance Dates) by the amount of the Excess Curve Payment, or (ii)
require the Trustee to pay to the Servicer from the Collection Account the
amount of the Excess Curve Payment which payment shall become the property
of the Servicer. Any Excess Curve Payment or Curve Payment Shortfall for a
Reconciliation Date shall not affect the underlying Collection Curve
Payments otherwise due on that date.
SECTION 3.04. SERVICING AND MAINTENANCE STANDARDS. The Servicer
shall, on behalf of the Issuer:
(a) manage, service, administer and make collections in respect of
the Serviced Intangible Transition Property with reasonable care and in
compliance with applicable law, including all applicable PUC Regulations
and guidelines, using the same degree of care and diligence that the
Servicer exercises with respect to billing and collection activities that
the Servicer conducts for itself and others;
(b) follow standards, policies and procedures in performing its
duties as Servicer that are customary in the electric distribution
industry;
(c) use all reasonable efforts, consistent with its customary
servicing procedures, to enforce and maintain the Issuer's and the
Trustee's rights in respect of the Intangible Transition Property; and
(d) calculate Intangible Transition Charges in compliance with the
Competition Act, the Qualified Rate Order and any applicable tariffs;
except where the failure to comply with any of the foregoing would not
materially and adversely affect the Issuer's or the Trustee's interest in
the Serviced Intangible Transition Property. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of all or any portion of the Serviced Intangible
Transition Property, which, in the Servicer's judgment, may include the
taking of legal action pursuant to Section 3.10 hereof or otherwise.
SECTION 3.05. SERVICER'S CERTIFICATES. The Servicer will provide
to the Issuer and to the Trustee the statements and certificates specified
in Annex 1.
SECTION 3.06. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF
DEFAULT.
(a) The Servicer shall deliver to the Issuer, to the Trustee and to
each Rating Agency, on or before March 31 of each year beginning March 31,
2000, an Officers' Certificate, stating that:
(i) a review of the activities of the Servicer during the preceding
calendar year (or relevant portion thereof) and of its performance
under this Agreement has been made under such officers' supervision
and
(ii) to the best of such officers' knowledge, based on such review,
the Servicer has fulfilled all its obligations under this Agreement
throughout such period or, if there has been a default in the
fulfillment of any such obligation, describing each such default.
(b) The Servicer shall deliver to the Issuer, to the Trustee and to
each Rating Agency, promptly after having obtained knowledge thereof, but
in no event later than five Business Days thereafter, written notice in an
Officers' Certificate of any event which with the giving of notice or lapse
of time, or both, would become a Servicer Default under Section 6.01 or a
default under any other Basic Document.
SECTION 3.07. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORT.
(a) The Servicer shall cause a firm of independent certified public
accountants (which may also provide other services to the Servicer or the
Seller) to prepare, and the Servicer shall deliver to the Issuer, to the
Trustee and to each Rating Agency, on or before March 31 of each year,
beginning March 31, 2000 to and including the March 31 succeeding the
retirement of all Transition Bonds, a report addressed to the Servicer (the
"Annual Accountant's Report"), which may be included as part of the
Servicer's customary auditing activities, to the effect that such
firm has performed certain procedures in connection with the Servicer's
compliance with its obligations under this Agreement during the preceding
calendar year (or, in the case of the first Annual Accountant's Report, the
period of time from the first Sale Date until December 31, 1999),
identifying the results of such procedures and including any exceptions
noted. In the event such accounting firm requires the Trustee or the Issuer
to agree or consent to the procedures performed by such firm, the Issuer
shall direct the Trustee in writing to so agree; it being understood and
agreed that the Trustee will deliver such letter of agreement or consent in
conclusive reliance upon the direction of the Issuer, and the Trustee will
not make any independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
(b) The Annual Accountant's Report shall also indicate that the
accounting firm providing such report is independent of the Servicer within
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
SECTION 3.08. INTANGIBLE TRANSITION PROPERTY DOCUMENTATION. To
assure uniform quality in servicing the Serviced Intangible Transition
Property and to reduce administrative costs, the Servicer shall keep on
file, in accordance with its customary procedures, all Intangible
Transition Property Documentation.
SECTION 3.09. COMPUTER RECORDS; AUDITS OF DOCUMENTATION.
(a) Safekeeping. The Servicer shall maintain accurate and complete
accounts, records and computer systems pertaining to the Intangible
Transition Property and the Intangible Transition Property Documentation in
accordance with its standard accounting procedures and in sufficient detail
to permit reconciliation between payments or recoveries on (or with respect
to) Intangible Transition Charges and the ITC Collections from time to time
remitted to the Trustee pursuant to Section 5.10 and to enable the Issuer
to comply with this Agreement and the Indenture. The Servicer shall
conduct, or cause to be conducted, periodic audits of the Intangible
Transition Property Documentation held by it under this Agreement and of
the related accounts, records and computer systems, in such a manner as
shall enable the Issuer and the Trustee, as pledgee of the Issuer, to
verify the accuracy of the Servicer's record keeping. The Servicer shall
promptly report to the Issuer and to the Trustee any failure on the
Servicer's part to hold the Intangible Transition Property Documentation
and maintain its accounts, records and computer systems as herein provided
and promptly take appropriate action to remedy any such failure. Nothing
herein shall be deemed to require an initial review or any periodic review
by the Issuer or the Trustee of the Intangible Transition Property
Documentation.
(b) Maintenance of and Access to Records. The Servicer shall maintain
the Intangible Transition Property Documentation at 0 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxx or at such other office as shall be specified to
the Issuer and to the Trustee by written notice not later than 30 days
prior to any change in location. The Servicer shall permit the Issuer and
the Trustee or their respective duly authorized representatives, attorneys,
agents or auditors at any time during normal business hours to inspect,
audit and make copies of and abstracts from the Servicer's records
regarding the Intangible Transition Property and Intangible Transition
Charges and the Intangible Transition Property Documentation. The failure
of the Servicer to provide access to such information as a result of an
obligation or applicable law (including PUC Regulations) prohibiting
disclosure of information regarding customers shall not constitute a breach
of this Section 3.09(b).
SECTION 3.10. DEFENDING INTANGIBLE TRANSITION PROPERTY AGAINST
CLAIMS. The Servicer shall institute any action or proceeding necessary to
compel performance by the PUC or the Commonwealth of Pennsylvania of any of
their obligations or duties under the Competition Act or the Qualified Rate
Order with respect to the Intangible Transition Property. The costs of any
such action reasonably allocated by the Servicer to the Serviced Intangible
Transition Property shall be payable from ITC Collections as an Operating
Expense in accordance with the Indenture. The Servicer's obligations
pursuant to this Section 3.10 shall survive and continue notwithstanding
the fact that the payment of Operating Expenses pursuant to the Indenture
may be delayed (it being understood that the Servicer may be required to
advance its own funds to satisfy its obligations hereunder).
SECTION 3.11. OPINIONS OF COUNSEL. The Servicer shall deliver to
the Issuer and to the Trustee:
(a) promptly after the execution and delivery of this Agreement and
of each amendment hereto, promptly after the execution of the Sale
Agreement and of each amendment thereto and on each Sale Date, an Opinion
of Counsel either:
(i) to the effect that, in the opinion of such counsel, all filings,
including filings with the PUC pursuant to the Competition Act that
are necessary to fully preserve and protect the interests of the
Trustee in the Serviced Intangible Transition Property have been
executed and filed, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are
given, or
(ii) to the effect that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest; and
(b) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the first Sale Date, an Opinion of Counsel, dated as of a date during
such 90-day period, either:
(i) to the effect that, in the opinion of such counsel, all filings
with the PUC pursuant to the Competition Act have been executed and
filed that are necessary to preserve fully and protect fully the
interest of the Trustee in the Serviced Intangible Transition
Property, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or
(ii) to the effect that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (a) or (b) above shall
specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
ARTICLE IV
SERVICES RELATED TO INTANGIBLE TRANSITION CHARGES ADJUSTMENTS
SECTION 4.01. INTANGIBLE TRANSITION CHARGES ADJUSTMENTS. The
Servicer shall perform the calculations and take the actions relating to
adjusting the Intangible Transition Charges, as set forth in Annex 1.
ARTICLE V
THE SERVICER
SECTION 5.01. REPRESENTATIONS AND WARRANTIES OF SERVICER. The
Servicer makes the following representations and warranties as of each Sale
Date, on which the Issuer has relied and will rely in acquiring Serviced
Intangible Transition Property. The representations and warranties shall
survive the sale of any of the Serviced Intangible Transition Property to
the Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is a corporation
duly organized and in good standing under the laws of the state of its
incorporation, with the corporate power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is presently conducted and to execute, deliver and carry out the
terms of this Servicing Agreement, and has the power, authority and legal
right to service the Serviced Intangible Transition Property.
(b) Due Qualification. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in, all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing
of the Serviced Intangible Transition Property as required by this
Agreement) requires such qualifications, licenses or approvals (except
where the failure to so qualify would not be reasonably likely to have a
material adverse effect on the Servicer's business, operations, assets,
revenues, properties or prospects or adversely affect the servicing of the
Serviced Intangible Transition Property).
(c) Power and Authority. The Servicer has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms;
and the execution, delivery and performance of this Agreement have been
duly authorized by the Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable against the Servicer in
accordance with its terms subject to bankruptcy, receivership, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof will not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the Servicer, or any indenture,
agreement or other instrument to which the Servicer is a party or by which
it is bound; or result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument; or violate any law or any order, rule or regulation
applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties.
(f) Approvals. Except for filings with the PUC for adjusting
Intangible Transition Charges pursuant to Section 4.01 and Annex 1 and UCC
continuation filings, no approval, authorization, consent, order or other
action of, or filing with, any court, federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with the execution and delivery by the Servicer of this
Agreement, the performance by the Servicer of the transactions contemplated
hereby or the fulfillment by the Servicer of the terms hereof, except those
that have been obtained or made.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's best knowledge, threatened before any court,
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties:
(i) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability against the Servicer of,
this Agreement; or
(ii) relating to the Servicer and which might materially and
adversely affect the treatment of the Transition Bonds as debt for
federal or state income tax purposes.
(h) Reports and Certificates. Each report and certificate delivered
in connection with any filing made to the PUC by the Servicer on behalf of
the Issuer with respect to Intangible Transition Charges or Intangible
Transition Charges Adjustments will constitute a representation and
warranty by the Servicer that each such report or certificate, as the case
may be, is true and correct in all material respects; provided, however,
that to the extent any such report or certificate is based in part upon or
contains assumptions, forecasts or other predictions of future events, the
representation and warranty of the Servicer with respect thereto will be
limited to the representation and warranty that such assumptions, forecasts
or other predictions of future events are reasonable based upon historical
performance.
SECTION 5.02. INDEMNITIES OF SERVICER; RELEASE OF CLAIMS.
(a) The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Servicer under
this Agreement.
(b) The Servicer shall indemnify the Issuer and the Trustee (for
itself and on behalf of the Transition Bondholders) and each of their
respective trustees, members, managers, officers, directors, employees and
agents for, and defend and hold harmless each such Person from and against,
any and all Losses that may be imposed upon, incurred by or asserted
against any such Person as a result of
(i) the Servicer's wilful misconduct, bad faith or gross negligence
in the performance of its duties or observance of its covenants under
this Agreement or the Servicer's reckless disregard of its
obligations and duties under this Agreement;
(ii) the Servicer's breach of any of its representations or
warranties in this Agreement; and
(iii) litigation and related expenses relating to its status and
obligations as Servicer.
(c) If any action, claim, demand or proceeding (including any
governmental investigation) shall be brought or asserted against a party
(the"indemnified party") entitled to any indemnification provided for under
this Section 5.02, such indemnified party shall promptly notify the
Servicer in writing; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except
to the extent the Servicer shall have been actually prejudiced as a result
of such failure.
(d) The Servicer shall indemnify the Trustee and its respective
officers, directors and agents for, and defend and hold harmless each such
Person from and against, any and all Losses that may be imposed upon,
incurred by or asserted against any such Person as a result of the
acceptance or performance of the trusts and duties contained herein and in
the Indenture, except to the extent that any such Loss shall be due to the
wilful misconduct, bad faith or gross negligence of the Trustee. Such
amounts with respect to the Trustee shall be deposited and distributed in
accordance with the Indenture.
(e) The Servicer's indemnification obligations under Section 5.02(b)
and (d) for events occurring prior to the removal or resignation of the
Trustee or the termination of this Agreement shall survive the resignation
or removal of the Trustee or the termination of this Agreement and shall
include reasonable costs, fees and expenses of investigation and litigation
(including the Issuer's and the Trustee's reasonable attorneys' fees and
expenses).
(f) Except to the extent expressly provided for in this Agreement,
the Sale Agreement or the Formation Documents (including the Servicer's
claims with respect to the Quarterly Servicing Fees and the Seller's claim
for payment of the purchase price of Intangible Transition Property), the
Servicer hereby releases and discharges the Issuer (including its Member,
managers, officers, employees and agents, if any), and the Trustee
(including its respective officers, directors and agents) (collectively,
the "Released Parties") from any and all actions, claims and demands
whatsoever, which the Servicer, in its capacity as Servicer or Seller,
shall or may have against any such Person relating to the Serviced
Intangible Transition Property or the Servicer's activities with respect
thereto other than any actions, claims and demands arising out of the
wilful misconduct, bad faith or gross negligence of the Released Parties.
SECTION 5.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER. Any Person:
(a) into which the Servicer may be merged or consolidated and which
succeeds to all or substantially all of the electric distribution
business of the Servicer,
(b) which results from the division of the Servicer into two or more
Persons and which succeeds to all or substantially all of the
electric distribution business of the Servicer,
(c) which may result from any merger or consolidation to which the
Servicer shall be a party and which succeeds to all or substantially
all of the electric distribution business of the Servicer,
(d) which may succeed to the properties and assets of the Servicer
substantially as a whole and which succeeds to all or substantially
all of the electric distribution business of the Servicer or
(e) which may otherwise succeed to all or substantially all of the
electric distribution business of the Servicer,
which Person in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Servicer under this
Agreement,
shall be the successor to the Servicer under this Agreement without the
execution or filing of any document or any further act by any of the
parties to this Agreement; provided, however, that:
(i) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 5.01 shall have
been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default,
shall have occurred and be continuing,
(ii) the Servicer shall have delivered to the Issuer and the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of
assumption comply with this Section 5.03 and that all conditions
precedent, if any, provided for in this Agreement relating to such
transaction have been complied with,
(iii) the Servicer shall have delivered to the Issuer and to the
Trustee an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, all filings
to be made by the Servicer, including filings with the PUC
pursuant to the Competition Act, that are necessary fully to
preserve and protect the interests of the Issuer in the
Serviced Intangible Transition Property have been executed and
filed and reciting the details of such filings or
(B) stating that, in the opinion of such counsel, no such
action is necessary to preserve and protect such interests.
(iv) the Rating Agencies shall have received prior written notice of
such transaction; and
(v) the Servicer shall have delivered to the Issuer and the Trustee
an opinion of independent tax counsel (as selected by, and in form
and substance reasonably satisfactory to, the Servicer, and which may
be based on a ruling from the Internal Revenue Service) to the effect
that, for federal income tax purposes, such consolidation or merger
will not result in a material adverse federal income tax consequence
to the Servicer, the Issuer, the Trustee or the then existing
Transition Bondholders.
The Servicer shall not consummate any transaction referred to in clauses
(a), (b), (c), (d) or (e) above except upon execution of the above
described agreement of assumption and compliance with clauses (i), (ii),
(iii), (iv) and (v) above. When any Person acquires the properties and
assets of the Servicer substantially as a whole and becomes the successor
to the Servicer in accordance with the terms of this Section 5.03, then
upon the satisfaction of all of the other conditions of this Section 5.03,
the Servicer shall automatically and without further notice be released
from its obligations hereunder.
SECTION 5.04. ASSIGNMENT OF SERVICER'S OBLIGATIONS. Pursuant to
paragraph 17 of the Qualified Rate Order in which the PUC authorizes PP&L
to contract with an alternative party to perform PP&L's obligations
contemplated in the Qualified Rate Order, the Servicer may assign its
obligations hereunder to any electric distribution company (as such term is
defined in the Competition Act) which succeeds to [all or substantially
all] of PP&L's electric distribution business [upon the satisfaction of the
requirements specified in Section 5.03].
SECTION 5.05. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. The
Servicer shall not be liable to the Issuer or the Trustee, except as
provided under this Agreement, for any action taken or for refraining from
the taking of any action pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall not protect the
Servicer against any liability that would otherwise be imposed by reason of
wilful misconduct, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of obligations and duties under
this Agreement. The Servicer and any director or officer or employee or
agent of the Servicer may rely in good faith on the advice of counsel
reasonably acceptable to the Trustee or on any document of any kind, prima
facie properly executed and submitted by any Person, respecting any matters
arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action
that is not incidental to its duties to service the Serviced Intangible
Transition Property in accordance with this Agreement or related to its
obligation to pay indemnification, and that in its reasonable opinion may
cause it to incur any expense or liability.
SECTION 5.06. PP&L NOT TO RESIGN AS SERVICER. Subject to the
provisions of Sections 5.03 and 5.04, PP&L shall not resign from the
obligations and duties imposed on it as Servicer under this Agreement
except upon a determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law. Notice of
any such determination permitting the resignation of PP&L shall be
communicated to the Issuer, to the Trustee and to each Rating Agency at the
earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time), and any
such determination shall be evidenced by an Opinion of Counsel to such
effect delivered to the Issuer and the Trustee concurrently with or
promptly after such notice. No such resignation shall become effective
until a successor Servicer shall have assumed the servicing obligations and
duties hereunder of the Servicer in accordance with Section 6.02.
SECTION 5.07. QUARTERLY SERVICING FEE. The Issuer agrees to pay
the Servicer on [the Business Day preceding] each Payment Date, solely to
the extent amounts are available therefor in accordance with the Indenture,
the Quarterly Servicing Fee with respect to all Series of Transition Bonds.
For so long as PP&L is the Servicer, the Quarterly Servicing Fee shall be
$312,500. The Servicer shall be entitled to retain as additional
compensation net investment income on ITC Collections related to Serviced
Intangible Transition Property received by the Servicer during any
Collection Period and the late fees, if any, paid by Customers to the
Servicer. The foregoing fees constitute a fair and reasonable price for the
obligations to be performed by the Servicer.
SECTION 5.08. SERVICER EXPENSES. Except as otherwise expressly
provided herein, the Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder, including fees
and disbursements of independent accountants and counsel, taxes imposed on
the Servicer and expenses incurred in connection with reports to Transition
Bondholders.
SECTION 5.09. APPOINTMENTS. The Servicer may at any time appoint a
subservicer to perform all or any portion of its obligations as Servicer
hereunder; provided, however, that the Rating Agency Condition shall have
been satisfied in connection therewith; provided further that the Servicer
shall remain obligated and be liable to the Issuer for the servicing and
administering of the Serviced Intangible Transition Property in accordance
with the provisions hereof without diminution of such obligation and
liability by virtue of the appointment of such subservicer and to the same
extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Serviced Intangible Transition
Property. The fees and expenses of the subservicer shall be as agreed
between the Servicer and its subservicer from time to time, and none of the
Issuer, the Trustee or the Transition Bondholders shall have any
responsibility therefor.
SECTION 5.10. REMITTANCES.
(a) The Servicer shall remit all ITC Collections (from whatever
source) in accordance with Section 3.03, and all proceeds of other
Collateral of the Issuer, if any, received by the Servicer, to the Trustee
for deposit pursuant to the Indenture, not later than each Daily Remittance
Date.
(b) Notwithstanding the foregoing clause (a):
(i) as long as PP&L or any successor to PP&L's electric
distribution business remains the Servicer,
(ii) no Servicer Default has occurred and is continuing, and
(iii)
(A) PP&L or such successor maintains a short-term rating of
"A-1" or better by Standard & Poor's, "P-1" or better by
Moody's and "F-1" or better by Fitch (and for five Business
Days following a reduction in either such rating), or
(B) the Rating Agency Condition shall have been satisfied (and
any conditions or limitations imposed by the Rating Agencies
in connection therewith are complied with),
the Servicer need not make the daily remittances required by clause
(a), but in lieu thereof, shall remit all ITC Collections (from
whatever source) in accordance with Section 3.03, and all proceeds of
other Collateral of the Issuer, if any, received by the Servicer
during any Collection Period, to the Trustee for deposit pursuant to
the Indenture, not later than the corresponding Monthly Remittance
Date.
SECTION 5.11. PROTECTION OF TITLE. The Servicer shall execute and
file such filings, including filings with the PUC pursuant to the
Competition Act, and cause to be executed and filed such filings, all in
such manner and in such places as may be required by law fully to preserve,
maintain, and protect the interests of the Issuer in the Serviced
Intangible Transition Property, including all filings required under the
Competition Act relating to the transfer of the ownership or security
interest in the Serviced Intangible Transition Property by the Seller to
the Issuer or any security interest granted by the Issuer in the Serviced
Intangible Transition Property. The Servicer shall deliver (or cause to be
delivered) to the Issuer file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
ARTICLE VI
SERVICER DEFAULT
SECTION 6.01. SERVICER DEFAULT. If any one of the following events
(a "Servicer Default") occurs and is continuing:
(a) any failure by the Servicer to remit to the Trustee, on
behalf of the Issuer, any required remittance that continues unremedied for
a period of five Business Days after written notice of such failure is
received by the Servicer from the Issuer or the Trustee; or
(b) any failure by the Servicer duly to observe or perform in any
material respect any other covenant or agreement of the Servicer set forth
in this Agreement or any other Basic Document to which it is a party in
such capacity, which failure
(i) materially and adversely affects the Intangible Transition
Property, and
(ii) continues unremedied for a period of 60 days after written
notice of such failure has been given to the Servicer by the
Issuer or by the Trustee or after discovery of such failure by an
officer of the Servicer; or
(c) any representation or warranty made by the Servicer in this
Agreement proves to have been incorrect when made, which has a material
adverse effect on the Issuer or the Transition Bondholders and which
material adverse effect continues unremedied for a period of 60 days after
the date on which written notice thereof shall have been given to the
Servicer by the Issuer or the Trustee or after discovery of such failure by
an officer of the Servicer, as the case may be; or
(d) an Insolvency Event occurs with respect to the Servicer;
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, the Trustee, with the consent of the Holders of a
majority of the outstanding principal amount of the Transition Bonds of all
Series, by notice then given in writing to the Servicer (a "Termination
Notice") may terminate all the rights and obligations (other than the
indemnification obligations set forth in Section 5.02 hereof and the
obligation under Section 6.02 to continue performing its functions as
Servicer until a successor Servicer is appointed) of the Servicer under
this Agreement. In addition, upon a Servicer Default described in Section
6.01(a), the Issuer and the Trustee shall be entitled to apply to the PUC
for sequestration and payment to the Trustee of revenues arising with
respect to the Serviced Intangible Transition Property.
On or after the receipt by the Servicer of a Termination Notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Serviced Intangible Transition Property, the related
Intangible Transition Charges or otherwise, shall, upon appointment of a
successor Servicer pursuant to Section 6.02, without further action, pass
to and be vested in such successor Servicer and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such
Termination Notice, whether to complete the transfer of the Intangible
Transition Property Documentation and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer, the
Trustee and the Issuer in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including the
transfer to the successor Servicer for administration by it of all cash
amounts that shall at the time be held by the predecessor Servicer for
remittance, or shall thereafter be received by it with respect to the
Serviced Intangible Transition Property or the related Intangible
Transition Charges. As soon as practicable after receipt by the Servicer of
such Termination Notice, the Servicer shall deliver the Intangible
Transition Property Documentation to the successor Servicer. All reasonable
costs and expenses (including attorneys fees and expenses) incurred in
connection with transferring the Intangible Transition Property
Documentation to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section shall be paid
by the predecessor Servicer upon presentation of reasonable documentation
of such costs and expenses. Termination of PP&L as Servicer shall not
terminate PP&L's rights or obligations under the Contribution Agreement.
SECTION 6.02. NOTICE OF SERVICER DEFAULT. The Servicer shall
deliver to the Issuer, to the Trustee and to each Rating Agency promptly
after having obtained knowledge thereof, but in no event later than five
Business Days thereafter, written notice in an Officer's Certificate of any
event or circumstance which, with the giving of notice or the passage of
time, would become a Servicer Default under Section 6.01.
SECTION 6.03. WAIVER OF PAST DEFAULTS. The Trustee, with the
consent of Holders of the majority of the outstanding principal amount of
the Transition Bonds of all Series, may waive in writing any default by the
Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required remittances to the
Trustee of ITC Collections from Serviced Intangible Transition Property in
accordance with Section 5.10 of this Agreement. Upon any such waiver of a
past default, such default shall cease to exist, and any Servicer Default
arising therefrom shall be deemed to have been remedied for every purpose
of this Agreement. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereto.
SECTION 6.04. APPOINTMENT OF SUCCESSOR.
(a) Upon the Servicer's receipt of a Termination Notice pursuant
to Section 6.01 or the Servicer's resignation in accordance with the terms
of this Agreement, the predecessor Servicer shall continue to perform its
functions as Servicer under this Agreement and shall be entitled to receive
the requisite portion of the Quarterly Servicing Fees, until a successor
Servicer shall have assumed in writing the obligations of the Servicer
hereunder as described below. In the event of the Servicer's removal or
resignation hereunder, the Trustee shall appoint a successor Servicer, with
the consent of the Holders of a majority of the outstanding principal
amount of the Transition Bonds of all Series, and the successor Servicer
shall accept its appointment by a written assumption in form acceptable to
the Issuer and the Trustee. If, within 30 days after the delivery of the
Termination Notice, a new Servicer shall not have been appointed and
accepted such appointment, the Trustee may petition the PUC or a court of
competent jurisdiction to appoint a successor Servicer under this
Agreement. A Person shall qualify as a successor Servicer only if:
(i) such Person is permitted under PUC Regulations to perform the
duties of the Servicer pursuant to the Competition Act, the
Qualified Rate Order and this Agreement,
(ii) the Rating Agency Condition shall have been satisfied, and
(iii) such Person enters into a servicing agreement with the
Issuer having substantially the same provisions as this
Agreement.
(b) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer under this Agreement
and shall be subject to all the responsibilities, duties and liabilities
arising thereafter relating thereto placed on the predecessor Servicer and
shall be entitled to the Quarterly Servicing Fees and all the rights
granted to the predecessor Servicer by the terms and provisions of this
Agreement.
(c) The successor Servicer may not resign unless it is prohibited
from serving as such by law.
SECTION 6.05. COOPERATION WITH SUCCESSOR. The Servicer covenants
and agrees with the Issuer that it will, on an ongoing basis, cooperate
with the successor Servicer and provide whatever information is, and take
whatever actions are, reasonably necessary to assist the successor Servicer
in performing its obligations hereunder.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01. AMENDMENT. This Agreement may be amended by the
Servicer and the Issuer, with the consent of the Trustee. Promptly after
the execution of any such amendment or consent, the Issuer shall furnish
written notification of the substance of such amendment or consent to each
of the Rating Agencies.
Prior to the execution of any amendment to this Agreement, the
Issuer and the Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel
referred to in Section 3.11. The Issuer and the Trustee may, but shall not
be obligated to, enter into any such amendment which affects their own
rights, duties or immunities under this Agreement or otherwise.
SECTION 7.02. NOTICES. All demands, notices and communications
upon or to the Servicer, the Issuer, the Trustee or the Rating Agencies
under this Agreement shall be in writing, delivered personally, via
facsimile, reputable overnight courier or by first class mail, postage
prepaid, and shall be deemed to have been duly given upon receipt
(a) in the case of the Servicer, to PP&L, 0 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxx, XX 00000, Attention of Treasurer;
(b) in the case of the Issuer, to PP&L Transition Bond Company
LLC, 0 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000, Attention of Managers;
(c) the Trustee, at the address provided for notices or
communications to such Person in the Indenture;
(d) in the case of Moody's, to Xxxxx'x Investors Service, Inc.,
ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000;
(e) in the case of Standard & Poor's, to Standard & Poor's
Corporation, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
(f) in the case of Fitch, to Fitch IBCA, Inc., 0 Xxxxx Xxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000;
or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
SECTION 7.03. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 5.03 and 5.04 and as
provided in the provisions of this Agreement concerning the resignation of
the Servicer, this Agreement may not be assigned by the Servicer.
SECTION 7.04. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of
this Agreement are solely for the benefit of the Servicer, the Issuer and
the Trustee, on behalf of itself and the Transition Bondholders, and
nothing in this Agreement, whether express or implied, shall be construed
to give to any other Person any legal or equitable right, remedy or claim
in any Collateral or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 7.05. SEVERABILITY. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 7.06. SEPARATE COUNTERPARTS. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 7.07. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 7.08. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Pennsylvania, without
reference to its conflict of law provisions, and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance
with such laws.
SECTION 7.09. ASSIGNMENT TO THE TRUSTEE. The Servicer hereby
acknowledges and consents to any pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the
benefit of any Transition Bondholders of all right, title and interest of
the Issuer in, to and under the Serviced Intangible Transition Property
owned by the Issuer and the proceeds thereof and the assignment of any or
all of the Issuer's rights hereunder to the Trustee. In no event shall the
Trustee have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer, hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
SECTION 7.10. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the PUC's
rights to order the sequestration and payment of revenues arising with
respect to the Serviced Intangible Transition Property notwithstanding any
bankruptcy, reorganization or other insolvency proceedings with respect to
the debtor, pledgor or transferor of the Serviced Intangible Transition
Property pursuant to Section 2812(d)(3)(v) of the Competition Act, the
Servicer shall not, prior to the date which is one year and one day after
the termination of the Indenture, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any
federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of the property of
the Issuer, or ordering the winding up or liquidation of the affairs of the
Issuer.
SECTION 7.11. TERMINATION. This Agreement shall terminate when all
Transition Bonds have been retired, redeemed or defeased in full.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective officers as of the day and year
first above written.
PP&L TRANSITION BOND
COMPANY LLC
By: ________________________________
Title: Manager
PP&L, INC., as Servicer
By: ________________________________
Title:
Acknowledged and Accepted:
THE BANK OF NEW YORK, not in its
individual capacity but solely as
Trustee on behalf of the Holders
of the Transition Bonds
By: ________________________________
Title:
ANNEX 1
TO
SERVICING AGREEMENT
The Servicer agrees to comply with the following with respect to PP&L
Transition Bond Company LLC (the "Issuer"):
SECTION 1. DEFINITIONS.
(a) Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Appendix A to the Servicing Agreement
dated as of July , 1999, between the Issuer and PP&L, Inc., as
Servicer.
(b) Whenever used in this Annex 1, the following words and phrases
shall have the following meanings:
Adjustment Request means an application filed by the Servicer with
the PUC for revised Intangible Transition Charges pursuant to Section
5(b) of this Annex.
SECTION 2. CALCULATION DATE STATEMENTS. For each Calculation
Date, the Servicer will provide to the Issuer and the Trustee a statement
indicating
(a) the Transition Bond Balance and the Projected Transition Bond
Balance for each Series as of the immediately preceding Payment Date,
(b) the amount on deposit in the Overcollateralization Subaccount and
the Scheduled Overcollateralization Level as of the immediately
preceding Payment Date,
(c) the amount on deposit in the Capital Subaccount and the required
Capital Subaccount balance as of the immediately preceding Payment
Date;
(d) the amount on deposit in the Reserve Subaccount as of the
immediately preceding Payment Date;
(e) the Projected Transition Bond Balance and the Servicer's
projection of the Transition Bond Balance for the Payment Date
immediately preceding the next succeeding Adjustment Date;
(f) the Scheduled Overcollateralization Level and the Servicer's
projection of the amount on deposit in the Overcollateralization
Subaccount for the Payment Date immediately preceding the next
succeeding Adjustment Date;
(g) the required Capital Subaccount balance and the Servicer's
projection of the amount on deposit in the Capital Subaccount for the
Payment Date immediately preceding the next succeeding Adjustment
Date; and
(h) the Servicer's projection of the amount on deposit in the Reserve
Subaccount for the Payment Date immediately preceding the next
succeeding Adjustment
Date;
SECTION 3. REMITTANCE DATE STATEMENTS. [On or before each
Remittance Date,] the Servicer will prepare and furnish to the Issuer and
the Trustee a statement setting forth the aggregate amount remitted or to
be remitted by the Servicer to the Trustee for deposit on such Remittance
Date pursuant to the Indenture.
SECTION 4. PAYMENT DATE STATEMENTS. On or before each Payment
Date, the Servicer will prepare and furnish to the Issuer and to the
Trustee a statement setting forth the transfers and payments to be made in
respect of such Payment Date pursuant to [Section 8.02(d)] of the Indenture
and the amounts thereof and the amounts to be paid to Holders of Transition
Bonds of each Series pursuant to Section [8.02(e)] of the Indenture.
SECTION 5. INTANGIBLE TRANSITION CHARGES ADJUSTMENTS.
(a) Prior to each Calculation Date, the Servicer shall calculate
(i) the Transition Bond Balance as of each Calculation Date (a
written copy of which shall be delivered by the Servicer to the
Trustee within five days following such Calculation Date) and
(ii) the revised Intangible Transition Charges with respect to
the Serviced Intangible Transition Property for the then-current
calendar year and each subsequent Calendar year, such that the
Servicer projects that ITC Collections therefrom allocable to the
Issuer will be sufficient so that:
(A) the Transition Bond Balance on the Payment Date
immediately preceding the next Adjustment Date will equal the
Projected Transition Bond Balance as of such date or, if
earlier with respect to any Series or Class of Transition
Bonds, by the Expected Final Payment Date therefor, taking
into account any amounts on deposit in the Reserve Subaccount,
(B) the amount on deposit in the Overcollateralization
Subaccount on the Payment Date immediately preceding the next
Adjustment Date, or if earlier with respect to any Series or
Class of Transition Bonds, by the Expected Final Payment Date
therefor, will equal the Calculated Overcollateralization
Level for such date, taking into account amounts on deposit in
the Reserve Subaccount,
(C) the amount on deposit in the Capital Subaccount on the
Payment Date immediately preceding the next Adjustment Date,
or if earlier with respect to any Series or Class of
Transition Bonds, by the Expected Final Payment Date therefor,
will equal its required level for such date, taking into
account any amounts on deposit in the Reserve Subaccount, and
(D) thereafter the ITC Collections will provide for
amortization of the remaining outstanding principal amount of
each Series in accordance with the Expected Amortization
Schedule therefor, payment of interest on each Series when due
and deposits to the Overcollateralization Subaccount such that
the balance therein will equal the Calculated
Overcollateralization Level on each Payment Date.
(b) On each Calculation Date, the Servicer shall take the following
actions:
(i) For each Calculation Date, except for those Calculation Dates
commencing twelve months prior to the last scheduled date for the
payment of principal on each Series of Transition Bonds, the
Servicer shall make annual reconciliation filings with the PUC on
October 1 of each year. These filings shall include:
(A) actual over-collections of Intangible Transition Charges
or under-collections of Intangible Transition Charges
(collectively, "Over/Under Collections") for the eight months
from the beginning of the current calendar year until August
31,
(B) an estimate of Over/Under Collections for the four months
ending on the immediately following December 31 and
(C) forecasts of other items as permitted by the Qualified
Rate Order.
On December 15, the Servicer shall file actual Over/Under
Collection data as of November 30, replacing the estimates
submitted on October 1; the December 15 filing shall include a
tariff supplement and supporting data setting forth new
Intangible Transition Charges to become effective on the next
January 1.
(ii) Commencing twelve months prior to the last scheduled date
for the payment of principal on each Series of Transition Bonds,
the Servicer shall have the right at its option to make interim
reconciliation filings as often as monthly in order to minimize
any possible Over/Under Collection of Intangible Transition
Charges until the next interim reconciliation adjustment becomes
effective; these interim adjustments, which may be monthly or
quarterly as determined by the Servicer after consultation with
the Rating Agencies, will become effective on the first day of
the next calendar month, with not less than fifteen days notice.
Such interim reconciliation filings will be based upon, inter
alia, the cumulative differences between:
(A) the amount needed in order to provide for amortization of
the remaining outstanding principal amount of each Series in
accordance with the Expected Amortization Schedule therefor,
payment of interest on each Series when due, deposits to the
Overcollateralization Subaccount such that the balance therein
will equal the Calculated Overcollateralization Level on each
Payment Date and replenishment of any withdrawals from the
Capital Account, and
(B) actual remittances of Intangible Transition Charges to the
Trustee.
(c) On each Adjustment Date, the Servicer shall
(i) take all reasonable actions and make all reasonable efforts
in order to effectuate all adjustments approved by the PUC to the
Intangible Transition Charges, and
(ii) promptly send to the Trustee copies of all material notices
and documents relating to such adjustments.
APPENDIX A
MASTER DEFINITIONS
[To be used in connection with the Servicing Agreement,
the Administration Agreement and the Indenture]
The definitions contained in this Appendix A are applicable to the singular
as well as the plural forms of such terms.
Act has the meaning specified in Section 11.03 of the Indenture.
Adjustment Date means (i) January 1 of each year through January 1,
2008 and (ii) the first day of each month or calendar quarter
thereafter in respect of which the Servicer requests the PUC to
approve an Intangible Transition Charge Adjustment.
Administration Agreement means the Administration Agreement dated as
of July __, 1999, between PP&L, as Administrator, and the Issuer.
Administrator means PP&L as administrator under the Administration
Agreement.
Affiliate means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, control when
used with respect to any specified Person means the power to direct
the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms controlling and controlled have meanings
correlative to the foregoing.
Annual Accountant's Report has the meaning assigned to that term in
Section 3.07 of the Servicing Agreement.
Assignment means the Assignment executed and delivered by PP&L in
favor of CEP Securities Co. LLC pursuant to, and in the form set
forth in Exhibit A of, the Contribution Agreement.
Authorized Denominations means, with respect to any Series or Class
of Transition Bonds, $1,000 and integral multiples thereof, or such
other denominations as may be specified in the Series Supplement
therefor.
[Authorized Officer means, with respect to the Issuer, any Manager or
the Member of the Issuer and, with respect to the Member of the
Issuer, any officer who is authorized to act for the Member in
matters relating to the Issuer and who is identified on the list of
Authorized Officers delivered by the Member to the Trustee as of the
date hereof (as such list may be modified or supplemented from time
to time thereafter).]
Basic Documents means the Issuer LLC Agreement, the Issuer
Certificate of Formation, the Contribution Agreement, the Assignment,
the Sale Agreement, the Servicing Agreement, the Administration
Agreement, the Indenture and any Bills of Sale.
Billing Month means a particular calendar month during which Intangible
Transition Charges are billed to Customers.
Xxxx of Sale means any xxxx of sale issued by CEP Securities to the
Issuer pursuant to the Sale Agreement evidencing the sale of
Intangible Transition Property by CEP Securities to the Issuer.
Bond Rate means, with respect to each Series or, if applicable, each
Class of Transition Bonds, the rate at which interest accrues on the
principal balance of Transition Bonds of such Series or Class, as
specified in the Series Supplement therefor.
Book-Entry Transition Bonds means beneficial interests in the
Transition Bonds, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section
2.11 of the Indenture.
Business Day means any day other than a Saturday or Sunday or a day
on which banking institutions in the City of Allentown, Pennsylvania,
or in the City of New York, New York are required or authorized by
law or executive order to remain closed.
Calculation Date means, with respect to any Adjustment Date, (i)
________ of each year through [2008] and (ii) thereafter, the
fifteenth day of the month preceding such Adjustment Date.
Capital Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
CEP Securities means CEP Securities Co. LLC, a Delaware limited
liability company, or its successor.
Class means, with respect to any Series, any one of the classes of
Transition Bonds of that Series, as specified in the Series
Supplement for that Series.
Class Final Maturity Date in relation to the Notes issued means the
Final Maturity Date of a Class, as specified in the Series Supplement
for the related Series.
Clearing Agency means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
Clearing Agency Participant means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency.
Code means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
Collateral has the meaning specified in the Granting Clause of the
Indenture.
Collection Account has the meaning specified in Section 8.02(a) of
the Indenture.
Collection Period means the period from and including the first day
of a calendar month to but excluding the first day of the next
calendar month.
Collections Curve means a separate forecast prepared by the Servicer
for each Customer Class of the percentages of amounts billed in a
Billing Month that are expected to be received during each of the
following seven months.
Collections Curve Payment means, with respect to a Billing Month, the
sum of the amounts paid to the Trustee over a seven-month period
following that Billing Month based on the Collections Curves for that
Billing Month.
Commission means the U.S. Securities and Exchange Commission, and any
successor thereof.
Competition Act means the Pennsylvania Electricity Generation
Customer Choice and Competition Act, Chapter 28 of Title 66 of the
Pennsylvania Consolidated Statutes, 66 Pa. C.S., Sections 2801, et
seq.
Competitive Transition Charges means the competitive transition
charges that PP&L may impose on Customers pursuant to the Competition
Act and the Qualified Rate Order.
Contract Rights has the meaning specified in Section 2.01 of the
Contribution Agreement.
Contributed Property has the meaning specified in Section 2.01 of the
Contribution Agreement.
Contribution Agreement means the Contribution Agreement, dated as of
May 13, 1999, among PP&L, Group, Reserves and CEP Securities, as
amended by the Amendment thereto dated July __, 1999, as the same may
be further amended and supplemented from time to time.
Corporate Trust Office means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at date of the execution of this Indenture
is located at , New York, NY , Attention: _______ or at such other
address as the Trustee may designate from time to time by notice to
the Transition Bondholders and the Issuer, or the principal corporate
trust office of any successor Trustee (the address of which the
successor Trustee will notify the Transition Bondholders and the
Issuer).
Covenant Defeasance Option has the meaning specified in Section 4.01
of the Indenture.
Curve Payment Shortfall means, with respect to each Billing Month and
the Reconciliation Date for such Billing Month, the excess of actual
ITC Collections the Servicer has received for that Billing Month over
the Collections Curve Payments previously made to the Trustee for
that Billing Month.
Customer Class means each of the customer classes specified in the
Qualified Rate Order.
Customers means each person that
(a) was a retail customer of electric service of PP&L located
within PP&L's service territory on January 1, 1997 or that became
a retail customer of electric service of PP&L located within
PP&L's service territory after January 1, 1997,
(b)is still located within PP&L's service territory, and
(c) is receiving distribution service from PP&L.
Daily Remittance Date means, if the Servicer has not satisfied the
conditions of Section 5.10(b) of the Servicing Agreement, each
Business Day of each calendar month.
Default means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
Defeasance Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
Definitive Transition Bonds has the meaning specified in Section 2.11
of the Indenture.
DTC Agreement means the agreement between the Issuer, the Trustee and
The Depository Trust Company, as the initial Clearing Agency, dated
as of the Closing Date, relating to the Transition Bonds,
substantially in the form of Exhibit C of the Indenture, as the same
may be amended and supplemented from time to time.
Eligible Deposit Account means either:
(a) a segregated account with an Eligible Institution or
(b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws
of the United States of America or any State (or any domestic
branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as
any of the securities of such depository institution shall have a
credit rating from each Rating Agency in one of its generic
rating categories which signifies investment grade.
Eligible Guarantor Institution means a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as "an eligible
guarantor institution," including (as such terms are defined
therein):
(a) a bank;
(b) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;
(c) a credit union;
(d) a national securities exchange, registered securities
association or clearing agency; or
(e) a savings association that is a participant in a securities
transfer association.
Eligible Institution means:
(a) the corporate trust department of the Trustee or
(b) a depository institution organized under the laws of the
United States of America or any State (or any domestic branch of
a foreign bank), which
(i) has either
(A) a long-term unsecured debt rating of "AAA" by Standard &
Poor's and "Al" by Moody's or
(B) a certificate of deposit rating of "A-1+" by Standard &
Poor's and "P-1" by Moody's, or any other long-term,
short-term or certificate of deposit rating acceptable to
the Rating Agencies and
(ii) whose deposits are insured by the FDIC.
Eligible Investments mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or
registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depositors institution or trust company incorporated under the
laws of the United States of America or any State thereof (or any
domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities; provided, however, that at the time of the investment
or contractual commitment to invest therein, the commercial paper
or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person
other than such depository institution or trust company) thereof
shall have a credit rating from each of the Rating Agencies in the
highest investment category granted thereby;
(c) commercial paper or other short term obligations of any
corporation organized under the laws of the United States of
America (other than PP&L) whose ratings, at the time of the
investment or contractual commitment to invest therein, from each
of the Rating Agencies are in the highest investment category
granted thereby;
(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest investment category granted
thereby (including funds for which the Trustee or any of its
Affiliates act as investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations
of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository
institution or trust company (acting as principal) described in
clause (b) above;
(g) repurchase obligations with respect to any security or whole
loan entered into with
(i) a depository institution or trust company (acting as
principal) described in clause (b) above (except that the
rating referred to in the proviso in this clause (b) shall be
A-1 or higher in the case of Standard & Poor's) (any depository
institution or trust company being referred to in this
definition as a "financial institution"),
(ii) a broker/dealer (acting as principal) registered as a
broker or dealer under Section 15 of the Exchange Act (any
broker/dealer being referred to in this definition as a
"broker/dealer"), the unsecured short-term debt obligations of
which are rated P-1 by Moody's and at least A-1 by
Standard & Poor's at the time of entering into this repurchase
obligation, or
(iii) an unrated broker/dealer, acting as principal, that is a
wholly-owned subsidiary of a non-bank or bank holding company
the unsecured short-term debt obligations of which are rated
P-1 by Moody's and at least A-1 by Standard & Poor's at the
time of purchase; or
(h) any other investment permitted by each of the Rating Agencies;
provided, however, that:
(i) any book-entry security, instrument or security having a
maturity of one month or less that would be an Eligible
Investment but for its failure (or the failure of the obligor
thereon) to have the rating specified above shall be an
Eligible Investment if such book-entry security, instrument or
security (or the obligor thereon) has a long-term unsecured
debt rating of at least "A2" by Moody's (or the equivalent
thereof by the other Rating Agencies) or a short-term rating of
at least "P-1" by Moody's (or the equivalent thereof by the
other Rating Agencies) and
(ii) any book-entry security, instrument or security having a
maturity of greater than one month that would be an Eligible
Investment but for its failure (or the failure of the obligor
thereon) to have the rating specified above shall be an
Eligible Investment if such book-entry security, instrument or
security (or the obligor thereon) has a long-term unsecured
debt rating of at least "A1" by Moody's (or the equivalent
thereof by the other Rating Agencies) and a short-term rating
of at least "P-1" by Moody's (or the equivalent thereof by the
other Rating Agencies).
Event of Default has the meaning specified in Section 5.01 of the
Indenture.
Excess Curve Payment means, with respect to each Billing Month and
the Reconciliation Date for such Billing Month, the excess of the
Collections Curve Payments previously made to the Trustee for that
Billing Month over actual ITC Collections the Servicer has received
for that Billing Month.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Executive Officer means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer,
Chief Information Officer, President, Executive Vice President, any
Vice President, the Secretary or the Treasurer of such corporation;
and with respect to any limited liability company, any manager
thereof.
Expected Amortization Schedule means, with respect to each Series or,
if applicable, each Class of Transition Bonds, the expected
amortization schedule for principal thereof, as specified in the
Series Supplement therefor.
Expected Final Payment Date means, with respect to each Series or, if
applicable, each Class of Transition Bonds, the date when all
interest and principal is scheduled to be paid for that Series or
Class in accordance with the Expected Amortization Schedule, as
specified in the Series Supplement therefor.
FDIC means the Federal Deposit Insurance Corporation or any
successor.
Final Maturity Date means, for each Series or, if applicable, each
Class of Transition Bonds, the date by which all principal and
interest on the Transition Bonds is required to be paid, as specified
in the Series Supplement therefor.
Financing Issuance means an issuance of a new Series of Transition
Bonds under the Indenture to provide funds to finance the purchase by
the Issuer of Intangible Transition Property.
Fitch means Fitch IBCA, Inc., or its successor.
Formation Documents means, collectively, the Issuer LLC Agreement,
the Issuer Certificate of Formation and any other document pursuant
to which the Issuer is formed or governed, as the same may be amended
and supplemented from time to time.
General Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
Grant means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and xxxxx x xxxx
upon and a security interest in and right of set-off against,
deposit, set over and confirm pursuant to this Indenture. A Grant of
the Collateral or of any other agreement or instrument shall include
all rights, powers and options (but none of the obligations) of the
Granting party thereunder, including the immediate and continuing
right to claim for, collect, receive and give receipt for principal,
interest and other payments in respect of the Collateral and all
other moneys payable thereunder, to give and receive notices and
other communications, to make waivers or other agreements, to
exercise all rights and options, to bring Proceedings in the name of
the Granting party or otherwise and generally to do and receive
anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
Group means CEP Group, Inc., a Pennsylvania corporation, or its
successor.
Holder or Transition Bondholder means the Person in whose name a
Transition Bond of any Series or Class is registered on the
Transition Bond Register.
Indemnification Event means an event which triggers PP&L's obligation
to indemnify CEP Securities, the Issuer and the Trustee, for itself
and on behalf of the Transition Bondholders, and each of their
respective managers, officers, directors and agents, pursuant to
Section 5.01 of the Contribution Agreement.
Indemnity Amounts means any indemnification obligations payable by
PP&L pursuant to Section 5.01 of the Contribution Agreement or the
Servicer pursuant to Section 5.01 of the Servicing Agreement, as
applicable.
Indenture means the Indenture dated as of July __, 1999, between the
Issuer and the Trustee, as the same may be amended and supplemented
from time to time by one or more indentures supplemental hereto, and
shall include the forms and terms of the Transition Bonds established
thereunder.
Independent means, when used with respect to any specified Person, that
the Person
(a) is in fact independent of the Issuer, any other obligor upon
the Transition Bonds, PP&L, Group, Reserves, CEP Securities and
any Affiliate of any of the foregoing Persons,
(b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor,
PP&L, Group, Reserves, CEP Securities or any Affiliate of any of
the foregoing Persons and
(c) is not connected with the Issuer, any such other obligor,
PP&L, Group, Reserves, CEP Securities or any Affiliate of any of
the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing
similar functions.
Independent Certificate means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section
11.01 of the Indenture, made by an Independent appraiser or other
expert appointed by an Issuer Order and approved by the Trustee in
the exercise of reasonable care, and such opinion or certificate
shall state that the signer has read the definition of "Independent"
in this Appendix A and that the signer is Independent within the
meaning thereof.
Initial Intangible Transition Property means the Intangible
Transaction Property sold by the Seller to the Issuer as of the
Initial Transfer Date pursuant to the Sale Agreement.
Initial Transfer Date means the Series Issuance Date for the first
Series of Transition Bonds.
Insolvency Event means, with respect to a specified Person,
(a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any
substantial part of its property in an involuntary case 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 such Person or for any substantial part of its
property, or ordering the winding-up or liquidation of such
Person's affairs, and such decree or order shall remain unstayed
and in effect for a period of 90 consecutive days or
(b) the commencement by such Person of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such
Person to the entry of an order for relief in an involuntary case
under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its
debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
Intangible Transition Charge Adjustment means each adjustment to
Intangible Transition Charges related to the Transferred Intangible
Transition Property made in accordance with Section 4.01 of the
Servicing Agreement and the Issuer Annex [or in connection with the
conveyance to the Issuer of Intangible Transition Property or the
redemption or refunding by the Issuer of Transition Bonds].
Intangible Transition Charge Adjustment Process means the process by
which Intangible Transition Charges are adjusted pursuant to the
Servicing Agreement and the Competition Act.
Intangible Transition Charges means the intangible transition charges
authorized by the PUC to be imposed on all Customers by PP&L or its
successor to recover Qualified Transition Expenses pursuant to the
Competition Act and the Qualified Rate Order.
Intangible Transition Property means the irrevocable right of PP&L or
its successor or assignee to collect Intangible Transition Charges
from Customers to recover through the issuance of Transition Bonds
the Qualified Transition Expenses described in the Qualified Rate
Order, including all right, title and interest of PP&L or its
successor or assignee in such order and in all revenues, collections,
claims, payments, money or proceeds of or arising from Intangible
Transition Charges pursuant to such order, and all proceeds of any of
the foregoing.
Intangible Transition Property Documentation means all documents
relating to the Intangible Transition Property, including copies of
the Qualified Rate Order and all documents filed with the PUC in
connection with any Intangible Transition Charges Adjustment, as
described in Section 3.08 of the Servicing Agreement.
Interest means, for any Payment Date for any Series or Class of
Transition Bonds, the sum, without duplication, of:
(a) an amount equal to the amount of interest accrued at the
applicable interest rates from the prior Payment Date with
respect to that Series or Class;
(b) any unpaid interest, to the extent permitted by law, plus
any interest accrued on this unpaid interest;
(c) if the Transition Bonds have been declared due and payable,
all accrued and unpaid interest thereon; and
(d) with respect to a Series or Class to be redeemed prior to
the next Payment Date, the amount of interest that will be
payable as interest on the Series on that Redemption Date.
Issuer means PP&L Transition Bond Company LLC, a Delaware limited
liability company, or its successor or the party named as such in the
Indenture until a successor replaces it and, thereafter, means the
successor.
Issuer Annex means, Annex 1 of the Servicing Agreement.
Issuer Certificate of Formation means the Certificate of Formation of
the Issuer which was filed with the Delaware Secretary of State's
Office on March 25, 1999.
Issuer LLC Agreement means the Amended and Restated Limited Liability
Company Agreement between the Issuer and PP&L, as sole Member, dated
as of July __, 1999.
Issuer Officer's Certificate means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described
in, and otherwise complying with, the applicable requirements of
Section 11.01 of the Indenture, and delivered to the Trustee. Unless
otherwise specified, any reference in the Indenture to an Officer's
Certificate shall be to an Officer's Certificate of any Authorized
Officer of the Issuer.
Issuer Opinion of Counsel means one or more written opinions of
counsel who may, except as otherwise expressly provided in the
Indenture, be employees of or counsel to the Issuer and who shall be
reasonably satisfactory to the Trustee, and which opinion or
opinions shall be addressed to the Trustee, as Trustee, and shall
comply with any applicable requirements of Section 11.01 of the
Indenture, and shall be in a form reasonably satisfactory to the
Trustee.
Issuer Order and Issuer Request means a written order or request
signed in the name of the Issuer by any one of its Authorized
Officers and delivered to the Trustee.
ITC Collections means amounts collected in respect of Intangible
Transition Charges.
Legal Defeasance Option has the meaning specified in Section 4.01(b)
of the Indenture.
Lien means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.
[Losses means collectively, any and all liabilities, obligations,
losses, damages, payments, costs or expenses of any kind whatsoever.]
Manager means any manager of the Issuer.
Member means PP&L, as the sole member of the Issuer.
Monthly Remittance Date means, if the Servicer has satisfied the
conditions of Section 5.10(b) of the Servicing Agreement, the
twentieth day of each calendar month (or if such twentieth day is not
a Business Day, the next Business day).
Moody's means Xxxxx'x Investors Service Inc., or its successor.
Officers' Certificate means a certificate signed, in the case of PP&L,
by
(a) the chairman of the board, the president, the vice chairman of
the board, the executive vice president or any vice president; and
(b) a treasurer, assistant treasurer, secretary or assistant
secretary
and, in the case of CEP Securities, by two of the Managers of CEP
Securities.
Operating Expenses means, with respect to the Issuer, all fees,
costs, expenses and indemnity payments owed by the Issuer, including
all amounts owed by the Issuer to the Trustee, the Quarterly
Servicing Fee, the quarterly fee payable by the Issuer to the
Administrator under the Administration Agreement, the fees and
expenses payable by the Issuer to the independent managers of the
Issuer, legal fees and expenses of the Servicer pursuant to Section
3.09 of the Servicing Agreement, and legal and accounting fees, costs
and expenses of the Issuer.
Opinion of Counsel means one or more written opinions of counsel who
may be an employee of or counsel to CEP Securities or PP&L, which
counsel shall be reasonably acceptable to the Trustee, the Issuer or
the Rating Agencies, as applicable, and which shall be in form
reasonably satisfactory to the Trustee, if applicable.
Outstanding with respect to Transition Bonds means, as of the date of
determination, all Transition Bonds theretofore authenticated and
delivered under the Indenture except:
(a) Transition Bonds theretofore canceled by the Transition Bond
Registrar or delivered to the Transition Bond Registrar for
cancellation;
(b) Transition Bonds or portions thereof the payment for which
money in the necessary amount has been theretofore deposited with
the Trustee or any Paying Agent in trust for the Holders of such
Transition Bonds; provided, however, that if such Transition Bonds
are to be redeemed, notice of such redemption has been duly given
pursuant to the Indenture or provision therefor, satisfactory to
the Trustee, made; and
(c) Transition Bonds in exchange for or in lieu of other
Transition Bonds which have been authenticated and delivered
pursuant to the Indenture unless proof satisfactory to the Trustee
is presented that any such Transition Bonds are held by a bona
fide purchaser;
provided that in determining whether the Holders of the requisite
Outstanding Amount of the Transition Bonds or any Series or Class
thereof have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document,
Transition Bonds owned by the Issuer, any other obligor upon the
Transition Bonds, PP&L, Group, Reserves, CEP Securities or any
Affiliate of any of the foregoing Persons shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Transition
Bonds that the Trustee knows to be so owned shall be so disregarded.
Transition Bonds so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with
respect to such Transition Bonds and that the pledgee is not the
Issuer, any other obligor upon the Transition Bonds, PP&L, Group,
Reserves, CEP Securities or any Affiliate of any of the foregoing
Persons.
Outstanding Amount means the aggregate principal amount of all
Outstanding Transition Bonds or, if the context requires, all
Outstanding Transition Bonds of a Series or Class
Outstanding at the date of determination.
Overcollateralization means, with respect to any Payment Date, an
amount that, if deposited to the Overcollateralization Subaccount,
would cause the balance in such subaccount to equal the Scheduled
Overcollateralization Level for such Payment Date, without regard to
investment earnings.
Overcollateralization Amount means, with respect to any Series of
Transition Bonds, the amount specified as such in the Series
Supplement therefor.
Overcollateralization Subaccount has the meaning specified in Section
8.02(a) of the Indenture.
Paying Agent means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 of
the Indenture and is authorized by the Issuer to make the payments of
principal of or premium, if any, or interest on the Transition Bonds
on behalf of the Issuer.
Payment Date means, with respect to each Series or, if applicable,
each Class of Transition Bonds, each date or dates specified as
Payment Dates for such Series or Class in the Series Supplement
therefor.
Person means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any
beneficiary thereof), business trust, limited liability company,
unincorporated organization or government or any agency or political
subdivision thereof.
PP&L means PP&L, Inc., a Pennsylvania corporation, or its successor.
Predecessor Transition Bond means, with respect to any particular
Transition Bond, every previous Transition Bond evidencing all or a
portion of the same debt as that evidenced by such particular
Transition Bond; and, for the purpose of this definition, any
Transition Bond authenticated and delivered under Section 2.06 in
lieu of a mutilated, lost, destroyed or stolen Transition Bond shall
be deemed to evidence the same debt as the mutilated, lost, destroyed
or stolen Transition Bond.
Post-Retail Access means any period after the time that a Customer
was permitted to choose its electricity generation supplier.
Pre-Retail Access means any period prior to the time that a Customer
was permitted to choose its electricity generation supplier.
Principal means, with respect to any Payment Date and each Series or,
if applicable, each Class of Transition Bonds:
(a)the amount of principal scheduled to be paid on such Payment Date
in accordance with the Expected Amortization Schedule;
(b)the amount of principal due on the Final Maturity Date of any
Series or Class on such Payment Date;
(c)the amount of principal due as a result of the occurrence and
continuance of an Event of Default and acceleration of the
Transition Bonds;
(d)the amount of principal and premium, if any, due as a result of a
redemption of Transition Bonds on such Payment Date; and
(e)any overdue payments of principal.
Proceeding means any suit in equity, action at law or other judicial or
administrative proceeding.
Projected Transition Bond Balance means, as of any date, the sum of
the amounts provided for in the Expected Amortization Schedules for
each outstanding Series of Transition Bonds and such date.
PUC means the Pennsylvania Public Utility Commission or any
successor.
PUC Regulations means any regulations, orders or directives
promulgated, issued or adopted by the PUC.
Qualified Rate Order means the Final Order issued by the PUC on
August 27, 1998 pursuant to the Competition Act, as such order has
been supplemented by the Supplemental Order issued by the PUC on May
21, 1999, and as such order may hereafter be further supplemented by
an order of the PUC issued pursuant to paragraph 19 of the August 27,
1998 order.
Qualified Transition Expenses has the meaning assigned to that term in
the Competition Act and the Qualified Rate Order.
Quarterly Servicing Fee means the fee payable to the Servicer on [the
Business Day preceding] each Payment Date for services rendered, in
accordance with Section 5.07 of the Servicing Agreement.
Rating Agency means any rating agency rating the Transition Bonds of
any Class or Series at the time of issuance thereof at the request of
the Issuer. If no such organization or successor is any longer in
existence, "Rating Agency" shall be a nationally recognized
statistical rating organization or other comparable Person designated
by the Issuer, notice of which designation shall be given to the
Trustee under the Indenture, the Member of the Issuer and the
Servicer.
Rating Agency Condition means, with respect to any action, the
notification in writing by each Rating Agency to the Trustee and the
Issuer that such action will not result in a reduction or withdrawal
of the then current rating by such Rating Agency of any outstanding
Series or Class of Transition Bonds.
Reconciliation Date means, with respect to any Billing Month, the
twentieth day (or if such twentieth day is not a Business Day, the
next Business day) in the eighth month after such Billing Month.
Record Date means, with respect to any Payment Date for a Series or
Class, the date set forth as such in the Series Supplement therefor.
Redemption Date means, with respect to each Series or, if applicable,
each Class of Transition Bonds, the date for the redemption of the
Transition Bonds of such Series or Class pursuant to Sections 10.01
or 10.02 of the Indenture or the Series Supplement for such Series or
Class, which in each case shall be a Payment Date.
Redemption Price has the meaning set forth in Section 10.01 of the
Indenture.
Refunding Issuance means issuance of a new Series of Transition Bonds
hereunder to pay the cost of refunding, through redemption or payment
on the Expected Final Payment Date for a Series or Class of
Transition Bonds, all or part of the Transition Bonds of such Series
or Class to the extent permitted by the terms thereof.
Registered Holder means, as of any date, the Person in whose name a
Transition Bond is registered on the Transition Bond Register on such
date.
Released Parties has the meaning specified in Section 5.02(f) of the
Servicing Agreement.
Remittance Date means a Daily Remittance Date or a Monthly Remittance
Date, as applicable.
Required Capital Amount means a capital contribution in an amount
equal to the amount specified in the related Series Supplement,
representing a capital contribution from PP&L.
Reserve Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
Reserves means CEP Reserves, Inc., a Delaware corporation, or its
successor.
Responsible Officer means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice
President, Assistant Vice President, Secretary, Assistant Secretary,
or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers
and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
Retiring Trustee means a Trustee that resigns or vacates the office
of Trustee for any reason.
Sale Agreement means the Intangible Transition Property Sale
Agreement dated July __, 1999, between the Seller and the Issuer.
Sale Date means each date on which the Seller sells, transfers,
assigns and conveys the Intangible Transition Property to the Issuer.
Scheduled Overcollateralization Level means, with respect to any
Payment Date, the amount set forth as such in [Schedule 1 of the
Indenture], as such Schedule has been adjusted in accordance with
Section 3.19 of the Indenture to reflect redemptions or defeasances
of Transition Bonds and issuances of additional Series of Transition
Bonds.
Seller means CEP Securities Co. LLC, a Delaware limited liability
company, or its successor, in its capacity as seller of the
Intangible Transition Property to the Issuer pursuant to the Sale
Agreement.
Series means any series of Transition Bonds issued and authenticated
by the Issuer pursuant to the Indenture, as specified in the Series
Supplement therefor.
Series Final Maturity Date means the Final Maturity Date for a Series.
Series Issuance Date means, with respect to any Series, the date on
which the Transition Bonds of such Series are to be originally issued
in accordance with Section 2.10 of the Indenture and the Series
Supplement for such Series.
Series Subaccount has the meaning specified in Section 8.02(a) of the
Indenture.
Series Supplement means an indenture supplemental to the Indenture
that authorizes a particular Series of Transition Bonds.
Servicer means PP&L, as the servicer of the Intangible Transition
Property, and each successor to PP&L (in the same capacity) pursuant
to Section 5.03 or 6.04 of the Servicing Agreement.
Servicer Default means an event specified in Section 6.01 of the
Servicing Agreement.
Servicing Agreement means the Servicing Agreement dated as of July
__, 1999, between the Issuer and the Servicer, as the same may be
amended and supplemented from time to time.
Standard & Poor's, or S&P, means Standard & Poor's Rating Group, a
division of The XxXxxx-Xxxx Companies, or its successor.
State means any one of the 50 states of the United States of America
or the District of Columbia.
Subsequent Intangible Transition Property means Intangible Transition
Property sold by the Seller to the Issuer as of a Subsequent Transfer
Date pursuant to the Sale Agreement.
Subsequent Sale means the sale of additional Intangible Transition
Property by the Seller to the Issuer after the Initial Transfer Date,
subject to the satisfaction of the conditions specified in the Sale
Agreement and the Indenture.
Subsequent Transfer Date means the date that a Subsequent Sale will
be effective, specified in a written notice provided by the Seller to
the Issuer pursuant to the Sale Agreement.
Successor Servicer means a successor Servicer appointed by the
Trustee pursuant to Section 6.01 of the Servicing Agreement which
will succeed to all the rights and duties of the Servicer under the
Servicing Agreement.
[Supplemental Indenture means a supplemental indenture entered into
by the Issuer and the Trustee pursuant to Article IX of the
Indenture.]
Supplemental Order means the Order of the PUC dated May 21, 1999,
supplementing the Qualified Rate Order.
Termination Notice has the meaning specified in Section 6.01 of the
Servicing Agreement.
Third Party means any third party, including any electric generation
supplier, providing billing or metering services, licensed by the PUC
pursuant to relevant provisions of the Competition Act and any PUC
order.
Transfer Date means the Initial Transfer Date or any Subsequent
Transfer Date, as applicable.
Transferred Intangible Transition Property means Intangible
Transition Property which has been sold, assigned and transferred to
the Issuer pursuant to the Sale Agreement.
Transition Bond means any of the transition bonds (as defined in the
Competition Act) issued by the Issuer pursuant to the Indenture.
Transition Bond Balance means, as of any date, the aggregate
Outstanding Amount of all Series of Transition Bonds on such date.
Transition Bond Owner means, with respect to a Book-Entry Transition
Bond, the Person who is the beneficial owner of such Book-Entry
Transition Bond, as reflected on the books of the Clearing Agency, or
on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such
Clearing Agency).
Transition Bond Register means a register, kept by the Transition
Bond Registrar on behalf of the Issuer in which, subject to such
reasonable regulations as it may prescribe, the Transition Bond
Registrar shall provide for the registration of Transition Bonds and
the registration of transfers of Transition Bonds.
Transition Bond Registrar means the Trustee, in its capacity as
keeper of the Transition Bond Register, or any successor to the
Trustee in such capacity.
Trust Indenture Act or TIA means the Trust Indenture Act of 1939 as
in force on the date hereof, unless otherwise specifically provided.
Trustee means The Bank of New York, a New York banking corporation,
or its successor or any successor Trustee under the Indenture.
UCC means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as
amended from time to time
U.S. Government Obligations means direct obligations (or certificates
representing an ownership interest in such obligations) of the United
States of America (including any agency or instrumentality thereof)
for the payment of which the full faith and credit of the United
States of America is pledged and which are not callable at the
issuer's option.
