P&D Draft
5/3/01
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WMECO FUNDING LLC,
as Note Issuer
and
THE BANK OF NEW YORK,
as Note Trustee
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NOTE INDENTURE
Dated as of May 17, 2001
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$155,000,000
WMECO FUNDING LLC NOTES
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NOTE INDENTURE dated as of May 17, 2001, between WMECO FUNDING LLC, a
Delaware limited liability company (the "Note Issuer"), and THE BANK OF NEW
YORK, a New York banking corporation, in its capacity as trustee for the benefit
of the Holders of the Notes and as agent for itself (collectively, the "Note
Trustee").
RECITALS
The Note Issuer has duly authorized the execution and delivery of this
Note Indenture to provide for the issuance of its Notes with an aggregate
principal amount of $155,000,000 and the Note Issuer and the Note Trustee are
executing and delivering this Note Indenture in order to provide for the
issuance of the Notes.
GRANTING CLAUSE
The Note Issuer hereby Grants to the Note Trustee at the Issuance Date,
as Note Trustee for the benefit of the Holders of the Notes and the Note
Trustee, all of the Note Issuer's right, title and interest, whether now owned
or hereafter acquired, in and to (a) the Transition Property transferred by the
Seller to the Note Issuer pursuant to the Sale Agreement and all proceeds
thereof, (b) the Statutory Lien, (c) the Sale Agreement, (d) the Servicing
Agreement, (e) the Administration Agreement, (f) the Collection Account
(including all subaccounts thereof) and all amounts or investment property or
other property on deposit therein or credited thereto from time to time, (g) all
other property of whatever kind owned from time to time by the Note Issuer,
including accounts, general intangibles, equipment and inventory, (h) the
security interest with respect to the Transition Property granted by the Seller
to the Note Issuer in the Sale Agreement, (i) all present and future claims,
demands, causes and choses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind, and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing and (j) all proceeds of the foregoing (collectively, the "Collateral";
it being understood that the following do not constitute Collateral: (i) amounts
required to be released pursuant to or contemplated in the terms hereof,
including net investment earnings on the Capital Subaccount that are required to
be released to the Note Issuer pursuant to Article VIII and (ii) proceeds from
the sale of the Notes required to pay costs of issuance with respect to the
Notes or the Certificates as set forth on the flow of funds memorandum delivered
on the Issuance Date (together with any interest earnings thereon), it being
understood that such amounts described in clauses (i) and (ii) above shall not
be subject to Sections 3.10(b) or 3.19.
The foregoing Grants are made to the Note Trustee in trust to secure
the payment of principal of, interest on, the Notes, equally and ratably without
prejudice, priority or distinction, except as expressly provided in this Note
Indenture, and to secure all other Secured Obligations and compliance with the
provisions of this Note Indenture with respect to the Notes and the Servicing
Agreement, all as provided in this Note Indenture. This Note Indenture
constitutes a
security agreement within the meaning of the UCC or the Statute to the extent
that, under Massachusetts law, the provisions of the UCC or the Statute are
applicable hereto.
The Note Trustee, as trustee on behalf of the Holders of the Notes and
as agent for itself, acknowledges such Grants, accepts the trusts hereunder in
accordance with the provisions hereof and agrees to perform its duties herein
required.
AND IT IS HEREBY COVENANTED, DECLARED AND AGREED between the parties
hereto that all Notes are to be issued, countersigned and delivered and that all
of the Collateral is to be held and applied, subject to the further covenants,
conditions, releases, uses and trusts hereinafter set forth, and the Note
Issuer, for itself and any successor, does hereby covenant and agree to and with
the Note Trustee and its successors in said trust, for the benefit of the
Holders and for the Note Trustee, as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. DEFINITIONS. (a) Except as otherwise specified herein or
as the context may otherwise require, the following terms have the respective
meanings set forth below for all purposes of this Note Indenture.
"ACT" has the meaning specified in Section 11.03(a).
"ADMINISTRATION AGREEMENT" means the Administration Agreement dated as
of May 17, 2001, between Western Massachusetts Electric Company, as
Administrator, and the Note Issuer, as the same may be amended and supplemented
from time to time.
"ADMINISTRATION FEE" means the fee payable to the Administrator
pursuant to the Administration Agreement.
"ADMINISTRATOR" means Western Massachusetts Electric Company, a
Massachusetts corporation, or any successor 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.
"AGENCIES" means collectively the Massachusetts Development Finance
Agency and the Massachusetts Health and Educational Facilities Authority.
"AUTHORIZED OFFICER" means, with respect to the Note Issuer, the
Administrator or the Servicer, as applicable, any officer of such Person who is
authorized to act for such Person in matters relating to such Person and who is
identified on the list of Authorized Officers or Responsible Officers delivered
by such Person to the Note Trustee on the Issuance Date (as such
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list may be modified or supplemented by the Note Issuer, the Administrator or
the Servicer, as applicable, from time to time thereafter).
"BASIC DOCUMENTS" means, collectively, this Note Indenture, the
Certificate Indenture, the Declaration of Trust, the Sale Agreement, the
Servicing Agreement, the Administration Agreement, the Note Purchase Agreement,
the Fee and Indemnity Agreement and the Underwriting Agreement.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions or trust companies in New York, New York, Boston,
Massachusetts, Hartford, Connecticut or Wilmington, Delaware are authorized or
obligated by law, regulation or executive order to remain closed.
"CAPITAL SUBACCOUNT" has the meaning specified in Section 8.02(a).
"CERTIFICATE INDENTURE" means the Certificate Indenture dated as of May
17, 2001, between the Certificate Issuer, the Delaware Trustee and the
Certificate Trustee, as the same may be further amended and supplemented from
time to time.
"CERTIFICATE ISSUER" has the meaning specified in the Certificate
Indenture.
"CERTIFICATE TRUSTEE" means the Person acting as certificate trustee
under the Certificate Indenture.
"CERTIFICATES" has the meaning specified in the Certificate Indenture.
"CLASS" means any one of the classes of Notes.
"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 this
Note Indenture.
"COLLECTION ACCOUNT" has the meaning specified in Section 8.02(a).
"CORPORATE TRUST OFFICE" means the principal office of the Note Trustee
at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Note Indenture
is located at the address provided in Section 11.04, or at such other address as
the Note Trustee may designate from time to time by notice to the Noteholders
and the Note Issuer, or the principal corporate trust office of any successor
Note Trustee (the address of which the successor Note Trustee will notify the
Noteholders and the Note Issuer).
"COVENANT DEFEASANCE OPTION" has the meaning specified in Section
4.01(b).
"DECLARATION OF TRUST" has the meaning specified in the Certificate
Indenture.
"DEFAULT" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
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"DELAWARE TRUSTEE" means the Person acting as Delaware Trustee under
the Declaration of Trust and the Certificate Indenture.
"DELAWARE UCC" means Del. Code Xxx. tit. 6,xx.xx. 1-101 to 11-109.
"DTC AGREEMENT" has the meaning specified in the Certificate Indenture.
"DTE" means the Massachusetts Department of Telecommunications and
Energy and any successor thereto.
"ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated trust 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 Standard & Poor's, Moody's and Fitch
(if rated by Fitch) in one of its generic rating categories which signifies
investment grade.
"ELIGIBLE INSTITUTION" means (a) the corporate trust department of the
Note 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), (i) which has either a long-term unsecured debt rating of AAA by Standard
& Poor's and Fitch and Aaa by Moody's or a certificate of deposit rating of A-1+
by Standard & Poor's, F1+ by Fitch and P-1 by Moody's, or any other long-term,
short-term or certificate of deposit rating acceptable to Standard & Poor's,
Moody's and Fitch and (ii) whose deposits are insured by the FDIC. If so
qualified under clause (b) above, the Note Trustee may be considered an Eligible
Institution for the purposes of clause (a) of the definition of Eligible Deposit
Account.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, or obligations fully and
unconditionally guaranteed as to timely payment by, the United States
of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company (any depositary
institution or trust company being referred to in this definition as a
"financial institution") incorporated under the laws of the United
States of America or any State (or any domestic branch of a foreign
bank) and subject to supervision and examination by federal or state
banking or depositary 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 depositary institution or
trust company) thereof shall have a credit rating from Standard &
Poor's, Moody's and Fitch (if rated by Fitch) 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 the Seller or its
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Affiliates) whose ratings, at the time of the investment or contractual
commitment to invest therein, from Standard & Poor's, Moody's and Fitch
(if rated by Fitch) are in the highest investment category granted
thereby;
(d) investments in money market funds, which funds have a
rating from Standard & Poor's, Moody's and Fitch (if rated by Fitch) in
the highest investment category granted thereby (including funds for
which the Note Trustee or any of its Affiliates act as investment
manager or advisor);
(e) banker's acceptances issued by any depositary 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 financial institution (acting as principal)
described in clause (b) above,
(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, A-1+ by Standard & Poor's and F1+ by Fitch
(if rated by Fitch) 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, A-1+ by Standard & Poor's and F1+ by Fitch (if rated by
Fitch) at the time of purchase; or
(h) any other investment permitted by each Rating Agency;
provided, however, that, unless otherwise permitted by each Rating Agency, upon
the failure of any Eligible Institution to maintain any applicable rating set
forth in this definition or the definition of Eligible Institution, the related
investments at such institution shall be reinvested in Eligible Investments at a
successor Eligible Institution within 10 days, and provided, further, that with
respect to Moody's only, the obligor related to clauses (b), (c), (e), (f) and
(g) above must have both a long term rating of at least Aa3 and a short term
rating of at least P-1.
"EVENT OF DEFAULT" has the meaning specified in Section 5.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
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"EXPECTED AMORTIZATION SCHEDULE" means, with respect to each Class of
Notes, the schedule attached as Schedule 1 hereto.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor.
"FEE AND INDEMNITY AGREEMENT" means the fee and indemnity agreement
dated as of May 17, 2001, among the Note Trustee, the Note Issuer, the Delaware
Trustee, the Certificate Trustee, the Certificate Issuer and the Agencies, as
amended and supplemented from time to time.
"FINAL MATURITY DATE" means, with respect to any Class of Notes, the
Final Maturity Date therefor, as specified in Section 2.01(b).
"FINANCIAL ASSET" means a "financial asset" as defined in Section
8-102(a)(9) of the Massachusetts UCC.
"FITCH" means Fitch, Inc. or its successor.
"GENERAL SUBACCOUNT" has the meaning specified in Section 8.02(a).
"GRANT" means mortgage, pledge, collaterally assign and xxxxx x xxxx
upon and a security interest pursuant to this Note 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 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.
"INDEMNIFIED PERSON" has the meaning specified in Section 6.07.
"INDEPENDENT" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Note Issuer, any other obligor
upon the Notes, the Seller, the Servicer 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 Note Issuer, any such other obligor,
the Seller, the Servicer or any Affiliate of any of the foregoing Persons and
(c) is not connected with the Note Issuer, any such other obligor, the Seller,
the Servicer or any Affiliate of any of the foregoing Persons as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions; provided, however, that an individual shall be deemed to be
an Independent director of the Note Issuer notwithstanding the fact that he or
she is or has been a director of one or more other single purpose bankruptcy
remote entities which are Affiliates of the Note Issuer, the Seller, the
Servicer or any Affiliate thereof.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be
delivered to the Note Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01, made by
an Independent appraiser or other expert appointed by an Issuer Order and
consented to by the Note Trustee, and such opinion or certificate shall state
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that the signer has read the definition of "Independent" in this Note Indenture
and that the signer is Independent within the meaning thereof.
"ISSUANCE DATE" has the meaning specified in Section 2.01(c)(i).
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or request
signed in the name of the Note Issuer by any one of its Authorized Officers and
delivered to the Note Trustee.
"LEGAL DEFEASANCE OPTION" has the meaning specified in Section 4.01(b).
"LIEN" means security interest, lien, charge, pledge, equity or
encumbrance of any kind.
"MANDATORY REDEMPTION DATE" has the meaning specified in Section 10.04.
"MANDATORY REDEMPTION PRICE" has the meaning specified in Section
10.04.
"MASSACHUSETTS UCC" means the Massachusetts Uniform Commercial Code.
"MINIMUM DENOMINATION" means $1,000 or any integral multiple of $1.00
in excess thereof; provided, however, that one Note of each Class may be of a
smaller denomination.
"MOODY'S" means Xxxxx'x Investors Service Inc. or its successor.
"NEW YORK UCC" means the New York Uniform Commercial Code.
"NOTE INDENTURE" or "THIS NOTE INDENTURE" means this instrument as
originally executed and, as from time to time supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, as so supplemented or amended, or both, and shall include the
forms and terms of the Notes established hereunder.
"NOTE INTEREST RATE" has the meaning specified in Section 2.01(b).
"NOTE ISSUER" means the party named as such in this Note Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the Trust Indenture
Act, each other obligor on the Notes.
"NOTE PURCHASE AGREEMENT" has the meaning specified in the Certificate
Indenture.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
specified in Section 2.05.
"NOTE TRUSTEE" means The Bank of New York, a New York banking
corporation or its successor, as Note Trustee under this Note Indenture, or any
successor Note Trustee under this Note Indenture.
"NOTEHOLDER" or "HOLDER" means the Person in whose name a Note is
registered on the Note Register.
"NOTES" has the meaning specified in Section 2.01(a).
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"OFFICER'S CERTIFICATE" means a certificate signed by any Authorized
Officer of the Note Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Note Trustee.
"OPERATING EXPENSES" means all fees, costs and expenses of, and
indemnities owed by, the Note Issuer, including taxes payable by the Note Issuer
all amounts owed by the Note Issuer to the Note Trustee, the Certificate Issuer,
the Certificate Trustee, the Delaware Trustee, the Agencies and any other
Indemnified Person, the Servicing Fee, the Administration Fee, any fees, costs
and expenses payable or reimbursable by the Note Issuer to the Administrator,
Seller or Servicer, and legal and accounting fees, costs and expenses of the
Note Issuer and the Certificate Issuer.
"OPINION OF COUNSEL" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Note Indenture, be an
employee of or counsel to the Note Issuer and who shall be reasonably
satisfactory to the Note Trustee, and which opinion or opinions shall be
addressed to the Note Trustee, shall comply with any applicable requirements of
Section 11.01, and shall be in form and substance reasonably satisfactory to the
Note Trustee.
"OPTIONAL REDEMPTION DATE" means the Payment Date specified by the Note
Issuer for the redemption of the Notes pursuant to Section 10.01.
"OPTIONAL REDEMPTION PRICE" has the meaning specified in Section 10.01.
"OUTSTANDING" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Note Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Note
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Note Indenture or
provision made therefor, reasonably satisfactory to the Note Trustee);
and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Note Indenture
unless proof satisfactory to the Note Trustee is presented that any
such Notes are held by a protected purchaser;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes or any Class thereof have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or under
any Basic Document, Notes owned by the Note Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Note Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Notes that the
Note Trustee actually knows to be so owned shall be so disregarded. Notes so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the
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Note Trustee the pledgee's right so to act with respect to such Notes and that
the pledgee is not the Note Issuer, any other obligor upon the Notes, the Seller
or any Affiliate of any of the foregoing Persons.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes
or, if the context requires, all Notes of a Class, Outstanding at the date of
determination.
"OVERCOLLATERALIZATION SUBACCOUNT" has the meaning specified in Section
8.02(a).
"PAYING AGENT" means the Note Trustee or any other Person that meets
the eligibility standards for the Note Trustee specified in Section 6.11 and is
authorized by the Note Issuer to make payment of principal of or interest on the
Notes on behalf of the Note Issuer.
"PAYMENT DATE" has the meaning specified in Section 2.01(c)(ii).
"PERSON" means any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.06 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"PROCEEDING" means any suit in equity, action at law or other judicial
or administrative proceeding.
"PROJECTED PRINCIPAL BALANCE" means, as of any Payment Date on any
Class of Notes, the projected outstanding principal amount of such Class of
Notes for such Payment Date set forth in the Expected Amortization Schedule.
"QUARTERLY INTEREST" has the meaning specified in Section 2.01(c)(iv).
"QUARTERLY PRINCIPAL" means, with respect to any Payment Date on any
Class of Notes, the excess, if any, of the Outstanding Amount of such Class of
Notes over the outstanding principal balance of such Class of Notes specified
for such Payment Date in the Expected Amortization Schedule.
"RATING AGENCY" means, collectively, Xxxxx'x, Standard & Poor's and
Fitch. 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 Note Issuer, notice of which
designation shall be given to the Note Trustee, the Certificate Trustee and the
Servicer.
"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given ten days prior notice thereof and, except as
otherwise expressly set forth in
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the related Basic Document, that each of Standard & Poor's and Fitch shall have
notified the Servicer, the Note Issuer, the Note Trustee, the Agencies and the
Certificate Trustee in writing that such action will not result in a reduction
or withdrawal of the then current rating by such Rating Agency of any Class of
the Notes or any Class of the Certificates.
"RECORD DATE" means, with respect to a Payment Date, Optional
Redemption Date or Mandatory Redemption Date, the close of business on the last
day of the calendar month preceding the calendar month in which such Payment
Date, Optional Redemption Date or Mandatory Redemption Date occurs.
"REGISTERED HOLDER" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"REPURCHASE DATE" has the meaning specified in the Sale Agreement.
"REQUIRED CAPITAL LEVEL" means, as of any Payment Date, 0.50 percent of
the initial principal amount of the Notes.
"REQUIRED OVERCOLLATERALIZATION LEVEL" means, as of any Payment Date,
the amount required to be on deposit in the Overcollateralization Subaccount as
specified in Schedule 2 hereto.
"RESERVE SUBACCOUNT" has the meaning specified in Section 8.02(a).
"RESPONSIBLE OFFICER" means, with respect to the Note Trustee, any
officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Assistant Vice President, Secretary, Assistant
Secretary or Trust Officer or any other officer of the Note Trustee customarily
performing functions similar to those performed by any of the above designated
officers, in each case having direct responsibility for the administration of
this Note Indenture.
"SALE AGREEMENT" means the Transition Property Purchase and Sale
Agreement dated as of May 17, 2001, between the Note Issuer and the Seller, as
amended and supplemented from time to time.
"SCHEDULED MATURITY DATE" means, with respect to any Class of Notes,
the Scheduled Maturity Date therefor, as specified in Section 2.01(b).
"SECURED OBLIGATIONS" means, collectively, the payment of principal of,
and interest on, and any other amounts owing in respect of the Notes, all fees,
expenses, legal fees and expenses and other amounts due and owing to the Note
Trustee pursuant to this Note Indenture, all fees, expenses, legal fees and
expenses and other amounts due and owing to the Note Trustee pursuant to the
other Basic Documents and all amounts owed by the Note Issuer to any other
Person indemnified hereunder or under the Fee and Indemnity Agreement (including
indemnity payments and legal fees and expenses).
"SECURITIES ACCOUNT" means the Collection Account which shall be a
"securities account," as defined in Section 8-501 of the New York UCC.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES INTERMEDIARY" means the Note Trustee, acting as a
"securities intermediary," as defined in Section 8-102(a)(14) of the New York
UCC.
"SECURITY ENTITLEMENT" means a "security entitlement" as defined in
Section 8-102(a)(17) of the New York UCC.
"SERVICING AGREEMENT" means the Transition Property Servicing Agreement
dated as of May 17, 2001, between the Note Issuer and the Servicer, as amended
and supplemented from time to time.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc. or its successor.
"STATE" means any one of the 50 states of the United States of America
or the District of Columbia.
"STATUTE" means Chapter 164 of the Massachusetts Acts of 1997.
"STATUTORY LIEN" means the Lien on the Transition Property created by
Section 1H(e) of the Statute.
"SUCCESSOR SERVICER" has the meaning specified in Section 3.07(e).
"TRANSITION PROPERTY" has the meaning specified in the Sale Agreement.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as in force
on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated as of
May [__], 2001, among the Seller, the Note Issuer and Xxxxxx Brothers Inc. and
Xxxxxxx Xxxxx Xxxxxx Inc., as the representatives of the several underwriters
named therein.
"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.
(b) Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Servicing Agreement.
Section 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Note Indenture refers to a provision of the Trust Indenture Act,
the provision is incorporated by
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reference in and made a part of this Note Indenture. The following Trust
Indenture Act terms used in this Note Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Note Indenture.
"indenture trustee" or "institutional trustee" means the Note Trustee.
"obligor" on the indenture securities means the Note Issuer and any
other obligor on the indenture securities.
All other Trust Indenture Act terms used in this Note Indenture that
are defined by the Trust Indenture Act, defined by Trust Indenture Act reference
to another statute or defined by Commission rule have the meanings assigned to
them by such definitions.
Section 1.03. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles as in
effect from time to time;
(c) "or" is not exclusive;
(d) "including" means including without limitation;
(e) words in the singular include the plural and words in the
plural include the singular;
(f) the words "herein," "hereof," "hereunder" and other words
of similar import refer to this Note Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(g) all references in this Note Indenture to designated
"Articles," "Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this Note Indenture;
ARTICLE II
THE NOTES
Section 2.01. TERMS OF THE NOTES.
(a) AUTHORIZATION; DESIGNATION. The issuance of the Notes in
an aggregate initial principal amount of $155,000,000 is hereby authorized and
the Notes shall be designated as the WMECO Funding LLC Notes (the "Notes"), and
further denominated as Class A-1.
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(b) INITIAL PRINCIPAL AMOUNT; NOTE INTEREST RATE; SCHEDULED
MATURITY DATE; FINAL MATURITY DATE. The Notes of each Class shall have the
initial principal amount, bear interest at the rates per annum and shall have
Scheduled Maturity Dates and Final Maturity Dates as set forth below:
Class Initial Principal Note Interest Scheduled Final Maturity
Amount Rate Maturity Date Date
A-1 $ %
The Note Interest Rate shall be computed on the basis of a 360-day year
of twelve 30-day months.
The Notes shall be issuable in not less than Minimum Denominations.
(c) AUTHENTICATION DATE; PAYMENT DATES; EXPECTED AMORTIZATION
SCHEDULE FOR PRINCIPAL; QUARTERLY INTEREST.
(i) AUTHENTICATION DATE. The Notes that are authenticated
and delivered by the Note Trustee to or upon the order of the Note
Issuer on May 17, 2001 (the "Issuance Date") shall have as their date
of authentication May 17, 2001.
(ii) PAYMENT DATES. The Payment Dates for the Notes shall be
December 1, March 1, June 1 and September 1 of each year or, if any
such date is not a Business Day, the next succeeding Business Day,
commencing on December 1, 2001 and continuing until the earlier of
repayment of the Notes in full or the Final Maturity Date for Class A-1
of the Notes.
(iii) EXPECTED AMORTIZATION SCHEDULE FOR PRINCIPAL. Unless an
Event of Default shall have occurred and be continuing and the unpaid
principal amount of all Notes and accrued interest thereon has been
declared to be due and payable, on each Payment Date, the Note Trustee
shall pay to the Noteholders of record as of the related Record Date
amounts payable pursuant to Section 8.02(d) as principal, in the
following order and priority: (1) to the holders of the Class A-1
Notes, until the Outstanding Amount of such Class of Notes thereof has
been reduced to zero; provided, however, that in no event shall a
principal payment pursuant to this Section 2.01(c)(iii) on any Class on
a Payment Date be greater than the amount that reduces the Outstanding
Amount of such Class of Notes to the amount specified in the Expected
Amortization Schedule. Partial payments of any scheduled amortization
payment shall be allocated within any Class of Notes pro rata.
(iv) QUARTERLY INTEREST. Quarterly Interest will be payable
on each Class of Notes on each Payment Date in an amount equal to
one-quarter of the product of (i) the applicable Note Interest Rate and
(ii) the Outstanding Amount of the related Class of Notes as of the
close of business on the preceding Payment Date after giving effect to
all
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payments of principal made to the Holders of the related Class of Notes
on such preceding Payment Date; provided, however, that with respect to
the initial Payment Date or, if no payment has yet been made, interest
on the outstanding principal balance will accrue from and including the
Issuance Date to, but excluding, that Payment Date (assuming a 360-day
year of twelve 30-day months).
Section 2.02. FORM. The Notes and the Note Trustee's certificate of
authentication shall be in substantially the forms set forth in Exhibit A, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Note Indenture and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may, consistently herewith, be determined by the officers executing
such Notes, as evidenced by their execution of such Notes. Any portion of the
text of any Note may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.
The terms of the Notes set forth in Exhibit A are part of the terms of
this Note Indenture.
Section 2.03. EXECUTION, AUTHENTICATION AND DELIVERY. The Notes shall
be executed on behalf of the Note Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Note Issuer shall bind the Note Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Note Indenture, the Note Issuer may deliver Notes executed by the Note
Issuer to the Note Trustee pursuant to an Issuer Order for authentication; and
the Note Trustee shall authenticate and deliver such Notes as in this Note
Indenture provided and not otherwise.
No Note shall be entitled to any benefit under this Note Indenture or
be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Note Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
Section 2.04. TEMPORARY NOTES. Pending the preparation of definitive
Notes, the Note Issuer may execute, and upon receipt of an Issuer Order the Note
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Note Indenture as the officers executing
such Notes may determine, as evidenced by their execution of such Notes.
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If temporary Notes are issued, the Note Issuer will cause definitive
Notes to be prepared without unreasonable delay. After the preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive Notes
upon surrender of the temporary Notes at the office or agency of the Note Issuer
to be maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Note Issuer
shall execute and the Note Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of Minimum Denominations.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Note Indenture as definitive Notes.
Section 2.05. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The
Note Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Note Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Note Trustee shall be "Note Registrar" for the purpose of registering
Notes and transfers of Notes as herein provided and shall keep and maintain the
Note Register on behalf of the Note Issuer. Upon any resignation of any Note
Registrar, the Note Issuer shall promptly appoint a successor or, if it elects
not to make such an appointment, assume the duties of Note Registrar.
If a Person other than the Note Trustee is appointed by the Note Issuer
as Note Registrar, the Note Issuer will give the Note Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Note Trustee shall have
the right to inspect the Note Register at all reasonable times and to obtain
copies thereof, and the Note Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by a Responsible Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Note Issuer to be maintained as provided in Section 3.02, the
Note Issuer shall execute, and the Note Trustee shall authenticate and the
Noteholder shall obtain from the Note Trustee, in the name of the designated
transferee or transferees, one or more new Notes in any Minimum Denominations,
of a like Class and aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any Minimum Denominations, of a like Class and aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Note Issuer shall execute, and the
Note Trustee shall authenticate and the Noteholder shall obtain from the Note
Trustee, the Notes which the Noteholder making the exchange is entitled to
receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Note Issuer, evidencing the same debt, and
entitled to the same benefits under this Note Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by (a) a written
instrument of transfer in form satisfactory to the Note Trustee duly executed by
the Holder thereof or such Holder's attorney duly authorized in
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writing, with such signature guaranteed by an institution which is a member of
one of the following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or
(iv) in such other guarantee program acceptable to the Note Trustee, and (b)
such other documents as the Note Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Note Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.04 not involving any transfer.
The preceding provisions of this Section notwithstanding, the Note
Issuer shall not be required to make and the Note Registrar need not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to the
Note.
Section 2.06. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Note Trustee, or the Note Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note, and
(ii) there is delivered to the Note Trustee such security or indemnity as may be
required by it to hold the Note Issuer and the Note Trustee harmless, then, in
the absence of notice to the Note Issuer, the Note Registrar or the Note Trustee
that such Note has been acquired by a protected purchaser, the Note Issuer shall
execute and, upon its request, the Note Trustee shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Note, a replacement Note of like Class, tenor and principal amount, bearing a
number not contemporaneously outstanding; provided, however, that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall have become or
within seven days shall be due and payable, or shall have been called for
redemption, instead of issuing a replacement Note, the Note Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Optional
Redemption Date or Mandatory Redemption Date, as applicable, without surrender
thereof. If, after the delivery of such replacement Note or payment of a
destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a protected purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the Note
Issuer and the Note Trustee shall be entitled to recover such replacement Note
(or such payment) from the Person to whom it was delivered or any Person taking
such replacement Note from such Person to whom such replacement Note was
delivered or any assignee of such Person, except a protected purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expense incurred by the Note Issuer or
the Note Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Note
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Note Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Note Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time
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enforceable by anyone, and shall be entitled to all the benefits of this Note
Indenture equally and proportionately with any and all other Notes duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.07. PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Note, the Note Issuer, the Note Trustee and any
agent of the Note Issuer or the Note Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest on such
Note and for all other purposes whatsoever, whether or not such Note be overdue,
and neither the Note Issuer, the Note Trustee nor any agent of the Note Issuer
or the Note Trustee shall be affected by notice to the contrary.
Section 2.08. PAYMENT OF PRINCIPAL AND INTEREST; INTEREST ON OVERDUE
PRINCIPAL; PRINCIPAL AND INTEREST RIGHTS PRESERVED.
(a) Any installment of interest or principal payable on any
Note which is punctually paid or duly provided for by the Note Issuer on the
applicable Payment Date shall be paid to the Person in whose name such Note (or
one or more Predecessor Notes) is registered on the Record Date for such Payment
Date, by check mailed first-class, postage prepaid to such Person's address as
it appears on the Note Register on such Record Date, except that with respect to
Notes registered on the Record Date in the name of the Certificate Trustee
payments will be made by wire transfer in immediately available funds to the
account designated by the Certificate Trustee and except for the final
installment of principal payable with respect to such Note on a Payment Date
which shall be payable as provided below. The funds represented by any such
checks returned undelivered shall be held in accordance with Section 3.03
hereof.
(b) The principal of each Note of each Class shall be paid, to
the extent funds are available therefor in the Collection Account, in
installments on each Payment Date specified in Section 2.01. Notwithstanding the
foregoing, the entire unpaid principal amount of the Notes shall be due and
payable, if not previously paid, on the date on which an Event of Default shall
have occurred and be continuing, if the Note Trustee or the Holders of the Notes
representing not less than a majority of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.02. In such event, all payments of principal on the Notes shall be
made pro rata. The Note Trustee shall notify the Person in whose name a Note is
registered at the close of business on the Record Date preceding the Payment
Date on which the Note Issuer expects that the final installment of principal of
and interest on such Note will be paid. Such notice shall be mailed no later
than five days prior to such final Payment Date and shall specify that such
final installment will be payable only upon presentation and surrender of such
Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment. Notices in connection with
redemptions of Notes shall be mailed to Noteholders as provided in Section 10.02
or 10.05, as applicable.
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(c) If the Note Issuer defaults in a payment of interest on
the Notes when due, the Note Issuer shall be required to pay such defaulted
interest (plus interest on such defaulted interest at the applicable Note
Interest Rate to the extent lawful) to the Persons who are Noteholders on a
subsequent special record date, which date shall be at least five Business Days
prior to the payment date. The Note Issuer shall fix or cause to be fixed any
such special record date and payment date, and, at least 20 days before any such
special record date, the Note Issuer shall mail to each affected Noteholder a
notice that states the special record date, the payment date and the amount of
defaulted interest (plus interest on such defaulted interest) to be paid.
Section 2.09. CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Note Trustee, be delivered to the Note Trustee and shall
be promptly cancelled by the Note Trustee. The Note Issuer may at any time
deliver to the Note Trustee for cancellation any Notes previously authenticated
and delivered hereunder which the Note Issuer may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the Note
Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section, except as expressly permitted by this
Note Indenture. All cancelled Notes may be held or disposed of by the Note
Trustee in accordance with its standard retention or disposal policy as in
effect at the time.
Section 2.10. AUTHENTICATION AND DELIVERY OF NOTES. On the Issuance
Date, the Notes shall be executed by the Note Issuer and delivered to the Note
Trustee for authentication and thereupon the same shall be authenticated and
delivered by the Note Trustee upon Issuer Request and upon delivery by the Note
Issuer to the Note Trustee, and receipt by the Note Trustee, or the causing to
occur by the Note Issuer, of the following:
(a) NOTE ISSUER ACTION. An Issuer Order authorizing and
directing the authentication and delivery of the Notes by the Note Trustee and
specifying the principal amount of Notes to be authenticated.
(b) AUTHORIZATIONS.
(i) An Opinion of Counsel that no authorization, approval or
consent of any Massachusetts, Delaware or federal governmental body or
bodies at the time having jurisdiction in the premises is required to
be obtained by the Note Issuer for the valid issuance, authentication
and delivery of such Notes, except for such registrations as are
required under the blue sky and securities laws of any State or such
authorizations, approvals or consents of governmental bodies that have
been obtained.
(ii) An Opinion of Counsel that no authorization, approval or
consent of any Massachusetts, Delaware or federal governmental body or
bodies at the time having jurisdiction in the premises is required for
the valid execution and delivery by the Note Issuer of each of the
Basic Documents to which the Note Issuer is a party, except for such
authorizations, approvals or consents of governmental bodies that have
been obtained.
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(c) AUTHORIZING CERTIFICATE. A certificate of an Authorized
Officer of the Note Issuer certifying that the Note Issuer has duly authorized
the execution and delivery of this Note Indenture and the execution,
authentication and delivery of the Notes.
(d) THE COLLATERAL. The Note Issuer shall have caused all
Collateral to have been Granted to the Note Trustee and will have caused all
filings pursuant to the Statute, the Massachusetts UCC, the Delaware UCC and any
other applicable law as are necessary to cause the Note Trustee to have a first
priority perfected security interest in the Collateral to have been duly made.
(e) CERTIFICATES OF THE NOTE ISSUER AND THE SELLER.
(i) An Officer's Certificate from the Note Issuer, dated as of
the Issuance Date to the effect that:
(A) the Note Issuer is not in Default under this Note
Indenture and that the issuance of the Notes applied for will not result in any
Default or in any material breach of any of the terms, conditions or provisions
of or constitute a default under any material indenture, mortgage, deed of trust
or other agreement or instrument to which the Note Issuer is a party or by which
it or its property is bound or any order of any court or administrative agency
entered in any Proceeding to which the Note Issuer is a party or by which it or
its property may be bound or to which it or its property may be subject;
(B) all conditions precedent provided in this Note
Indenture relating to the authentication and delivery of the Notes applied for
have been complied with;
(C) all instruments furnished to the Note Trustee pursuant
to this Note Indenture conform to the requirements set forth in this Note
Indenture and constitute all of the documents required to be delivered hereunder
for the Note Trustee to authenticate and deliver the Notes applied for, and all
conditions precedent provided for in this Note Indenture relating to the
authentication and delivery of the Notes have been complied with;
(D) the Note Issuer has not assigned any interest or
participation in the Collateral except for the Lien of this Note Indenture and
of the Statute; the Note Issuer has the power and right to Grant the Collateral
to the Note Trustee as security hereunder; and the Note Issuer, subject to the
terms of this Note Indenture, has Granted to the Note Trustee all of its right,
title and interest in and to such Collateral free and clear of any lien,
mortgage, pledge, charge, security interest, adverse claim or other encumbrance,
except the Lien of this Note Indenture and of the Statute;
(E) the Note Issuer has appointed a firm of Independent
certified public accountants as contemplated in Section 8.06;
(F) attached thereto are duly executed, true and complete
copies of the Sale Agreement and the Servicing Agreement; and
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(G) all filings with the DTE pursuant to the Statute and
all UCC financing statements with respect to the Collateral that are required to
be filed to cause the Note Trustee to have first priority perfected security
interest in the Collateral have been made.
(ii) An Officer's Certificate (as defined in the Sale
Agreement) from the Seller, dated as of the Issuance Date, to the
effect that (A) the representations and warranties set forth in Article
III of the Sale Agreement are true and correct and (B) the attached
copies of the Financing Order and Issuance Advice Letter creating the
Transition Property are true and correct.
(f) OPINION OF COUNSEL. An Opinion of Counsel, portions of
which may be delivered by counsel for the Note Issuer, portions of which may be
delivered by counsel for the Seller and the Servicer, and portions of which may
be delivered by counsel for the Certificate Issuer, dated the Issuance Date, in
each case subject to the customary exceptions, qualifications and assumptions
contained therein, to the collective effect that:
(i) the Note Indenture has been duly qualified under the
Trust Indenture Act;
(ii) the Note Issuer has the limited liability company power
and authority to execute and deliver this Note Indenture and to issue
the Notes, and this Note Indenture and the Notes have been duly
authorized and the Note Issuer is duly formed and is validly existing
in good standing under the laws of the jurisdiction of its
organization;
(iii) the Note Indenture has been duly authorized, executed
and delivered by the Note Issuer;
(iv) all instruments furnished to the Note Trustee as
conditions precedent to the delivery of the Notes conform to the
requirements of this Note Indenture and constitute all documents
required to be delivered hereunder to authorize the Note Trustee to
authenticate and deliver Notes;
(v) the Notes applied for have been duly authorized and
executed and, when authenticated in accordance with the provisions of
the Note Indenture and delivered against payment of the purchase price
therefor, will constitute valid and binding obligations of the Note
Issuer, entitled to the benefits of the Note Indenture subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
and other laws relating to or affecting the rights of creditors
generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(vi) this Note Indenture, the Sale Agreement, the Servicing
Agreement and the Fee and Indemnity Agreement are valid and binding
agreements of the Note Issuer, enforceable in accordance with their
respective terms, except as such enforceability against the Note Issuer
may be subject to bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other laws relating to or affecting the rights
of creditors generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law);
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(vii) (A) under Section 1H(d)(1) of the Statute, the
provisions of this Note Indenture are sufficient to create in favor of
the Note Trustee to secure payment of the Secured Obligations a
security interest in all right, title and interest, whether now owned
or hereafter acquired, of the Note Issuer in the Transition Property;
(B) the Financing Order authorizes the RTC Charge included in the
Transition Property; (C) the aforesaid security interest in the
Transition Property under this Note Indenture has attached to the
Transition Property or (in the case of after acquired property) will
attach as it comes into existence; (D) financing statements which
describe the Transition Property by reference to the Financing Order
have been presented for filing in the offices of the Secretary of the
Commonwealth of Massachusetts and the Town Clerk of West Springfield,
Massachusetts, and all filing fees required in connection therewith
have been paid in accordance with Article 9 of the Massachusetts UCC;
and (E) such security interest granted by the Note Issuer in the
Transition Property is valid and enforceable against the Note Issuer
and is perfected (or, in the case of any after acquired property, will
be valid, enforceable and perfected as such property comes into
existence), subject to (x) rights of any third parties holding security
interests in the Transition Property perfected in the manner described
in Section 1H(d) and (e) of the Statute prior to perfection by filing
of the security interest granted under this Note Indenture and (y)
rights arising under the first priority lien arising under Section
1H(e) of the Statute described in Section 2.10(f)(vii);
(viii) (A) the Statute creates, upon the effective date of the
Financing Order, a first priority Statutory Lien on all Transition
Property securing all obligations, then existing or subsequently
arising, under the Basic Documents to the holders of the Certificates,
the Certificate Trustee and any other entity specified in the Financing
Order including the Note Issuer, the Note Trustee and the Certificate
Issuer; (B) such Statutory Lien is valid, perfected and enforceable
against the Note Issuer and all third parties without any further
public notice; (C) the Statute provides that conflicting Statutory
Liens on Transition Property arising under Section 1H(e) of the Statute
rank in order of time of perfection;
(ix) (A) provisions of this Note Indenture create in favor
of the Note Trustee to secure payment of the Secured Obligations a
security interest in the right, title and interest, whether now owed or
hereafter acquired, of the Note Issuer in respect of the Collateral;
(B) such security interest will attach to the Collateral as it comes
into existence; (C) financing statements which describe the Collateral
have been presented for filing in the offices of the Secretary of the
Commonwealth of Massachusetts and the Town Clerk of West Springfield,
Massachusetts, and all filing fees required in connection therewith
have been paid in accordance with Article 9 of the Massachusetts UCC;
and (D) such security interest in the Sale Agreement, the Servicing
Agreement, the Administration Agreement and all accounts, general
intangibles, equipment and inventory (as such terms are defined in the
Massachusetts UCC) of the Note Issuer (the "UCC Collateral") is valid
and enforceable against the Note Issuer and is perfected (or, in the
case of any after acquired property, will be valid, enforceable and
perfected as such property comes into existence), subject to the rights
of any third parties holding security interests in the UCC Collateral
perfected in the manner described in Article 9 of the
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Massachusetts UCC prior to perfection by filing of the security
interest therein granted under this Note Indenture;
(x) either (A) the registration statement covering the
Notes and the Certificates is effective under the Securities Act and,
to the best of such counsel's knowledge and information, no stop order
suspending the effectiveness of such registration statement has been
issued under the Securities Act and no proceedings for that purpose
have been initiated or are pending or threatened by the Commission or
(B) the Notes and the Certificates are exempt from the registration
requirements under the Securities Act;
(xi) the Note Issuer is not an "investment company" or under
the "control" of an "investment company" as such terms are defined
under the Investment Company Act of 1940, as amended;
(xii) the Sale Agreement is a valid and binding agreement of
the Seller enforceable against the Seller in accordance with its terms
except as such enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other laws relating
to or affecting the rights of creditors generally and general
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(xiii) the Servicing Agreement is a valid and binding
agreement of the Servicer enforceable against the Servicer in
accordance with its terms except as such enforceability may be subject
to bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other laws relating to or affecting the rights of
creditors generally and general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);
(xiv) (A) by virtue of the Financing Order and delivery of
the fully executed Sale Agreement to the Note Issuer and the payment of
the purchase price of the Transition Property by the Note Issuer to the
Seller pursuant to the Sale Agreement, all of the Seller's right, title
and interest in the Transition Property is conveyed to the Note Issuer
pursuant to the Sale Agreement and such transfer will be treated under
the laws of The Commonwealth of Massachusetts as an absolute transfer
of all of the Seller's right, title and interest in the Transition
Property, other than for federal and state income and franchise tax
purposes; (B) such transfer of the Transition Property is perfected;
(C) a financing statement has been filed in favor of the Note Issuer
that describes in the Transition Property by reference to the Financing
Order, in accordance with Section 1(H)(f)(3) of the Statute; (D)
assuming that the Note Issuer does not have notice or knowledge of any
conflicting assignment of the Transition Property, such transfer has
priority over any other assignment of the Transition Property; and (E)
the Transition Property is free and clear of all liens created prior to
its transfer to the Note Issuer pursuant to the Sale Agreement;
(xv) (A) the Financing Order has been duly issued and
authorized by the DTE and the Financing Order, giving effect to the
Issuance Advice Letter, is effective; (B) in
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reliance on the opinion of Xxxxxxxx & Xxxxxxxxx LLP that the
Certificates are "electric rate reduction bonds" under Section 1H(a) of
the Statute, as of the issuance of the Certificates, the Certificates
are entitled to the protections provided in Sections 1H(b)(3) and
1H(c)(4) of the Statute; (C) the Financing Order is no longer subject
to appeal by any person in state courts of The Commonwealth of
Massachusetts; and (D) the Servicer is authorized to file periodic RTC
Charge adjustments to the extent necessary (but subject to any cap on
the RTC Charge specified in the Financing Order) to ensure the timely
recovery of revenues sufficient to provide for the payment of an amount
equal to the sum of the periodic RRB payment requirements for the
upcoming year, which includes indemnity obligations under the Basic
Documents;
(xvi) any state action (whether by legislative, DTE, citizen
initiative or otherwise) to revoke or limit the Financing Order, the
Issuance Advice Letter, the Transition Property or the RTC Charge in a
manner which would substantially impair the rights of
Certificateholders would be subject to a successful constitutional
contracts or takings clause defense; and
(xvii) such other matters as the Note Trustee may reasonably
require.
(g) ACCOUNTANT'S LETTER. A letter addressed to the Note Issuer
and the Note Trustee complying with the requirements of Section 11.01(a), of a
firm of Independent certified public accountants of recognized national
reputation to the effect that (i) such accountants are Independent with respect
to the Note Issuer within the meaning of the Note Indenture, and are independent
public accountants within the meaning of the standards of The American Institute
of Certified Public Accountants, and (ii) with respect to the Collateral, they
have made certain specified recalculations of calculations and information
provided by the underwriters for the purpose of determining that, based on
certain specified assumptions used in calculating estimated collections based on
the initial RTC Charge, as of the Issuance Date such estimated collections based
on the initial RTC Charge are sufficient to pay (i) assumed Operating Expenses
when incurred, plus (ii) the Overcollateralization Amount set forth in the Final
Prospectus (as such term is defined in the Underwriting Agreement), plus (iii)
interest on the Notes at their respective Note Interest Rates when due as set
forth in the Final Prospectus, plus (iv) principal of the Notes in accordance
with the Expected Amortization Schedule set forth in the Final Prospectus and
found the calculations to be mathematically correct.
(h) RATINGS ON THE CERTIFICATES. The Note Trustee shall
receive evidence reasonably satisfactory to it that the Certificates shall have
been rated AAA by Standard & Poor's, Aaa by Moody's, and AAA by Fitch, or, in
each case, the equivalent.
(i) OTHER REQUIREMENTS. Such other documents, certificates,
agreements, instruments or opinions as the Note Trustee may reasonably require.
Section 2.11. RELEASE OF COLLATERAL. Subject to Section 11.01, the Note
Trustee shall release property from the Lien of this Note Indenture only as
specified in Section 8.02 or upon receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel and Independent Certificates in
accordance with Trust Indenture Act xx.xx. 314(c) and 314(d)(l) or an
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Opinion of Counsel in lieu of such Independent Certificates to the effect that
the Trust Indenture Act does not require any such Independent Certificates.
ARTICLE III
COVENANTS
Section 3.01. PAYMENT OF PRINCIPAL AND INTEREST. The Note Issuer will
duly and punctually pay the principal of and interest on the Notes in accordance
with the terms of the Notes and this Note Indenture. Amounts properly withheld
under the Code by any Person from a payment to any Noteholder of interest or
principal shall be considered as having been paid by the Note Issuer to such
Noteholder for all purposes of this Note Indenture.
Section 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Note Issuer will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange. The
Note Issuer hereby initially appoints the Note Trustee to serve as its agent for
the foregoing purposes. The Note Issuer will give prompt written notice to the
Note Trustee of the location, and of any change in the location, of any such
office or agency. If at any time the Note Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Note Trustee with the address
thereof, such surrenders may be made at the Corporate Trust Office, and the Note
Issuer hereby appoints the Note Trustee as its agent to receive all such
surrenders.
Section 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Section 8.02(a), all payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Collection Account
pursuant to Section 8.02(d) shall be made on behalf of the Note Issuer by the
Note Trustee or by another Paying Agent, and no amounts so withdrawn from the
Collection Account for payments of Notes shall be paid over to the Note Issuer
except as provided in this Section and Section 8.02.
The Note Issuer will cause each Paying Agent other than the Note
Trustee to execute and deliver to the Note Trustee an instrument in which such
Paying Agent shall agree with the Note Trustee (and if the Note Trustee acts as
Paying Agent, it hereby so agrees), subject to the provisions of this Section,
that such Paying Agent will:
(a) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided and pay such sums to such Persons as herein provided;
(b) give the Note Trustee and the Certificate Trustee notice
of any Default by the Note Issuer (or any other obligor upon the Notes) of which
it has actual knowledge in the making of any payment required to be made with
respect to the Notes;
(c) at any time during the continuance of any such Default,
upon the written request of the Note Trustee, forthwith pay to the Note Trustee
all sums so held in trust by such Paying Agent;
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(d) immediately resign as a Paying Agent and forthwith pay to
the Note Trustee all sums held by it in trust for the payment of Notes if at any
time it ceases to meet the standards required to be met by a Paying Agent at the
time of its appointment; and
(e) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
The Note Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Note Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the Note Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Note Trustee upon the
same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Note Trustee, such Paying Agent
shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds or other
applicable abandoned property law, any money held by the Note Trustee or any
Paying Agent in trust for the payment of any amount due with respect to any Note
and remaining unclaimed for two years after such amount has become due and
payable shall be discharged from such trust and be paid to the Note Issuer on
Issuer Request; and, subject to Section 11.16, the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Note Issuer for
payment thereof (but only to the extent of the amounts so paid to the Note
Issuer), and all liability of the Note Trustee or such Paying Agent with respect
to such trust money shall thereupon cease; provided, however, that the Note
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Note Issuer cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Note Issuer. The Note Trustee
may also adopt and employ, at the expense of the Note Issuer, any other
reasonable means of notification of such repayment (including mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Note Trustee or
of any Paying Agent, at the last address of record for each such Holder).
Section 3.04. EXISTENCE. The Note Issuer will keep in full effect its
existence, rights and franchises as a limited liability company under the laws
of the State of Delaware (unless, subject to the provisions of Section 3.10, it
becomes, or any successor Note Issuer hereunder is or becomes, organized under
the laws of any other State or of the United States of America, in which case
the Note Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this Note
Indenture, the Notes, the Collateral and each other instrument or agreement
included in the Collateral.
Section 3.05. PROTECTION OF COLLATERAL. The Note Issuer will from time
to time execute and deliver all such supplements and amendments hereto and all
such filings with the DTE
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pursuant to the Statute, financing statements, continuation statements,
instruments of further assurance and other instruments, and will take such other
action necessary or advisable to:
(a) maintain or preserve the Lien and security interest (and
the priority thereof) of this Note Indenture or carry out more effectively the
purposes hereof;
(b) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Note Indenture;
(c) enforce any of the Collateral;
(d) preserve and defend title to the Collateral and the rights
of the Note Trustee and the Noteholders in such Collateral against the claims of
all Persons and parties, including the challenge by any party to the validity or
enforceability of the Financing Order, any Advice Letter or the Transition
Property or any proceeding relating thereto and institute any action or
proceeding necessary to compel performance by the DTE or The Commonwealth of
Massachusetts of any of its obligations or duties under the Statute, the
Financing Order or any Advice Letter; or
(e) pay any and all taxes levied or assessed upon all or any
part of the Collateral.
The Note Issuer hereby designates the Note Trustee its agent and
attorney-in-fact to execute any filings with the DTE pursuant to the Statute,
financing statement, continuation statement or other instrument required by the
Note Trustee pursuant to this Section, it being understood that the Note Trustee
shall have no such obligation. The Note Trustee agrees not to execute any such
filing (other than UCC financing statements, continuation statements or
amendments) prior to a Default unless the Note Issuer shall have failed to make
any such filing on a timely basis, which shall mean at least five Business Days
prior to the expiration date for such filing.
The Note Issuer hereby agrees to file promptly after the date hereof,
and the Note Trustee hereby authorizes the filing of, financing statements in
lieu of continuation statements with respect to the financing statements filed
in Massachusetts and Connecticut on or prior to the Issuance Date that name the
Note Issuer as debtor in accordance with the provisions of Article 9 of the
Delaware UCC to take effect after June 30, 2001.
Section 3.06. OPINIONS AS TO COLLATERAL.
(a) On the Issuance Date, the Note Issuer shall furnish to the
Note Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, (i) such action has been taken (and reciting the details of such
action) with respect to the recording and filing of this Note Indenture and any
other requisite documents, and with respect to the execution and filing of any
filings with the DTE pursuant to the Statute, financing statements and
continuation statements, as are necessary to perfect the Lien of this Note
Indenture, or (ii) no such action is necessary to make such Lien effective.
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(b) Prior to the effectiveness of any amendment to the Sale
Agreement, the Note Issuer shall furnish to the Note Trustee an Opinion of
Counsel either (i) stating that, in the opinion of such counsel, all filings,
including filings with the DTE pursuant to the Statute and any UCC financing
statements, have been executed and filed that are necessary fully to preserve
and protect the interest of the Note Issuer and the Note Trustee in the
Transition Property and the proceeds thereof, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest.
(c) The Note Issuer shall furnish to the Note Trustee not
later than March 31 of each year (commencing with March 31, 2002), an Opinion of
Counsel either stating that, in the opinion of such counsel, (A) such action has
been take (and reciting the details of such action or referring to prior
Opinions of Counsel in which such details are given) with respect to the
recording and filing of this Note Indenture and any other requisite documents,
and with respect to the execution and filing of any filings with the DTE
pursuant to the Statute, financing statements and continuation statements, as
are necessary to maintain and continue the perfection and priority of the Lien
of this Note Indenture until March 31 of the following year, or (B) no such
action is necessary to maintain such Lien.
Section 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING; COMMISSION
FILINGS.
(a) The Note Issuer (i) will diligently pursue any and all
actions to enforce its rights under each instrument or agreement included in the
Collateral and (ii) will not take any action and will use its reasonable efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's covenants or obligations under any such instrument or
agreement or that would result in the amendment, hypothecation, subordination,
termination or discharge of, or impair the validity or effectiveness of, any
such instrument or agreement, except, in each case, as expressly permitted in
this Note Indenture, the Sale Agreement, the Servicing Agreement or such other
instrument or agreement.
(b) The Note Issuer may contract with other Persons to assist
it in performing its duties under this Note Indenture, and any performance of
such duties by a Person identified to the Note Trustee in an Officer's
Certificate of the Note Issuer shall be deemed to be action taken by the Note
Issuer. Initially, the Note Issuer has contracted with the Administrator and the
Servicer to assist the Note Issuer in performing its duties under this Note
Indenture.
(c) The Note Issuer will punctually perform and observe all of
its obligations and agreements contained in this Note Indenture, the Basic
Documents and in the instruments and agreements included in the Collateral,
including filing or causing to be filed all filings with the DTE pursuant to the
Statute, UCC financing statements and continuation statements required to be
filed by it by the terms of this Note Indenture, the Sale Agreement and the
Servicing Agreement in accordance with and within the time periods provided for
herein and therein. Except as otherwise expressly permitted therein, the Note
Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the written consent of the Note
Trustee (which consent shall not be withheld if (i) the Note Trustee shall have
received an Officer's Certificate stating that such waiver, amendment,
modification, supplement or termination shall not adversely affect in any
material respect the interests of the
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Noteholders or the holders of Certificates and (ii) the Rating Agency Condition
shall have been satisfied with respect thereto) or the Holders of at least a
majority of the Outstanding Amount of Notes.
(d) If the Note Issuer shall have knowledge of the occurrence
of a Servicer Default under the Servicing Agreement, the Note Issuer shall
promptly give written notice thereof to the Note Trustee, the Certificate
Trustee, the Agencies and the Rating Agencies, and shall specify in such notice
the action, if any, the Note Issuer is taking with respect to such default. If a
Servicer Default shall arise from the failure of the Servicer to perform any of
its duties or obligations under the Servicing Agreement with respect to the
Transition Property, including the RTC Charge, the Note Issuer shall take all
reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice to the
Servicer, the Note Trustee, the Certificate Trustee, the Agencies and the Rating
Agencies of termination of the Servicer's rights and powers pursuant to Section
7.01 of the Servicing Agreement, the Note Issuer, subject to the approval of the
DTE pursuant to the Financing Order, shall appoint a successor Servicer (the
"Successor Servicer") with the Note Trustee's prior written consent thereto
(which consent shall not be unreasonably withheld), and such Successor Servicer
shall accept its appointment by a written assumption in a form acceptable to the
Note Issuer and the Note Trustee. A Person shall qualify as a Successor Servicer
only if such Person satisfies the requirements of the Servicing Agreement. If
within 30 days after the delivery of the notice referred to above, the Note
Issuer shall not have obtained such a new Servicer, the Note Trustee may
petition the DTE or a court of competent jurisdiction to appoint a Successor
Servicer. In connection with any such appointment, the Note Issuer may make such
arrangements for the compensation of such successor as it and such successor
shall agree, subject to the limitations set forth below and in the Servicing
Agreement, and in accordance and in compliance with Section 7.02 of the
Servicing Agreement, the Note Issuer shall enter into an agreement with such
successor for the servicing of the Transition Property (such agreement to be in
form and substance reasonably satisfactory to the Note Trustee).
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Servicing Agreement, the Note Trustee shall promptly notify the
Note Issuer, the Noteholders, the Certificate Trustee, the Agencies and the
Rating Agencies. As soon as a Successor Servicer is appointed, the Note Issuer
shall notify the Note Trustee, the Noteholders, the Certificate Trustee, the
Agencies and the Rating Agencies of such appointment, specifying in such notice
the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the
assignment granted to the Note Trustee under this Note Indenture or the rights
of the Note Trustee hereunder, the Note Issuer agrees that it will not, without
the prior written consent of the Note Trustee (which consent shall not be
withheld if (i) the Note Trustee shall have received an Officer's Certificate
stating that such amendment, modification, waiver, supplement, termination or
surrender shall not adversely affect in any material respect the interests of
the Noteholders or the holders of Certificates and (ii) the Rating Agency
Condition shall have been satisfied with respect thereto) or the Holders of at
least a majority in Outstanding Amount of the Notes, amend, modify, waive,
supplement, terminate or surrender, or agree to any amendment, modification,
waiver,
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supplement, termination or surrender of, the terms of any Collateral or the
Basic Documents, or waive timely performance or observance of any material term
by the Seller or the Servicer under the Sale Agreement or the Servicing
Agreement, respectively. If any such amendment, modification, supplement or
waiver shall be so consented to by the Note Trustee or such Holders, the Note
Issuer agrees to execute and deliver, in its own name and at its own expense,
such agreements, instruments, consents and other documents as shall be necessary
or appropriate in the circumstances. The Note Issuer agrees that no such
amendment, modification, supplement or waiver shall adversely affect the rights
of the Holders of the Notes or Certificates Outstanding at the time of any such
amendment, modification, supplement or waiver, except as otherwise agreed to by
the Holders in accordance with the Basic Documents.
(h) The Note Issuer shall file with the Commission such
periodic reports, if any, as are required from time to time under Section 13 or
15(d) of the Exchange Act.
(i) The Note Issuer shall make all filings required under the
Statute relating to the transfer of the ownership or security interest in the
Transition Property other than those required to be made by the Seller pursuant
to the Basic Documents.
Section 3.08. NEGATIVE COVENANTS. So long as any Notes are Outstanding,
the Note Issuer shall not:
(a) except as expressly permitted by this Note Indenture,
sell, transfer, exchange or otherwise dispose of any of the properties or assets
of the Note Issuer, including those included in the Collateral, unless directed
to do so by the Note Trustee in accordance with Article V;
(b) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than amounts
properly withheld from such payments under the Code) or assert any claim against
any present or former Noteholder by reason of the payment of the taxes levied or
assessed upon any part of the Collateral;
(c) terminate its existence or dissolve or liquidate in whole
or in part; or
(d) (i) permit the validity or effectiveness of this Note
Indenture to be impaired, or permit the Lien of this Note Indenture to be
amended, subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to the Notes under this
Note Indenture except as may be expressly permitted hereby, (ii) permit any
lien, charge, excise, claim, security interest, mortgage or other encumbrance
(other than the Lien of this Note Indenture and the Statutory Lien) to be
created by the Note Issuer on or extend to or otherwise arise upon or burden the
Collateral or any part thereof or any interest therein or the proceeds thereof
or (iii) subject to the Statutory Lien, permit the Lien of this Note Indenture
not to constitute a valid first priority security interest in the Collateral.
Section 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Note Issuer will
deliver to the Note Trustee, the Certificate Trustee and the Rating Agencies not
later than March 31 of each year (commencing with March 31, 2002), an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that
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(a) a review of the activities of the Note Issuer during the
preceding twelve months ended December 31 (or, in the case of the Officer's
Certificate to be delivered on or before March 31, 2002, the period of time from
the date of this Note Indenture until December 31, 2001), and of performance
under this Note Indenture has been made under such Authorized Officer's
supervision; and
(b) to such Authorized Officer's knowledge, based on such
review, the Note Issuer has complied with all conditions and covenants under
this Note Indenture throughout such twelve month period, or, if there has been a
default in so complying with any such condition or covenant, specifying each
such default known to such Authorized Officer and the nature and status thereof.
Section 3.10. NOTE ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
(a) The Note Issuer shall not consolidate or merge with or
into any other Person, unless
(i) the Person (if other than the Note Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any State
and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Note Trustee, in form and substance
reasonably satisfactory to the Note Trustee, the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Note
Indenture on the part of the Note Issuer to be performed or observed,
all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Note Issuer shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the Note Trustee)
to the effect that such transaction will not have any material adverse
tax consequence to the Note Issuer, the Certificate Issuer, any
Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the Lien created
by this Note Indenture shall have been taken; and
(vi) the Note Issuer shall have delivered to the Note Trustee
an Officer's Certificate and an Opinion of Counsel each stating that
such consolidation or merger and such supplemental note indenture
comply with this Section 3.10 and that all conditions precedent herein
provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act).
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(b) Except as specifically provided herein, the Note Issuer
shall not convey or transfer any of its properties or assets, including those
included in the Collateral, to any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Note Issuer the conveyance or transfer of
which is hereby restricted shall (A) be a United States citizen or a
Person organized and existing under the laws of the United States of
America or any State, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Note Trustee, in
form and substance reasonably satisfactory to the Note Trustee, the due
and punctual payment of the principal of and interest on all Notes and
the performance or observance of every agreement and covenant of this
Note Indenture on the part of the Note Issuer to be performed or
observed, all as provided herein, (C) expressly agrees by means of such
supplemental note indenture that all right, title and interest so
conveyed or transferred shall be subject and subordinate to the rights
of Holders of the Notes, (D) unless otherwise provided in the
supplemental note indenture referred to in clause (B) above, expressly
agrees to indemnify, defend and hold harmless the Note Trustee against
and from any loss, liability or expense arising under or related to
this Note Indenture and the Notes and (E) expressly agrees by means of
such supplemental note indenture that such Person (or if a group of
Persons, then one specified Person) shall make all filings with the
Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Note Issuer shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the Note Trustee)
to the effect that such transaction will not have any material adverse
tax consequence to the Note Issuer, the Certificate Issuer, any
Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the Lien created
by this Note Indenture shall have been taken; and
(vi) the Note Issuer shall have delivered to the Note Trustee
an Officer's Certificate and an Opinion of Counsel each stating that
such conveyance or transfer and such supplemental note indenture comply
with this Section 3.10 and that all conditions precedent herein
provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act).
Section 3.11. SUCCESSOR OR TRANSFEREE.
(a) Upon any consolidation or merger of the Note Issuer in
accordance with Section 3.10(a), the Person formed by or surviving such
consolidation or merger (if other than the Note Issuer) shall succeed to, and be
substituted for, and may exercise every right and power
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of, the Note Issuer under this Note Indenture with the same effect as if such
Person had been named as the Note Issuer herein.
(b) Except as set forth in Section 6.07, upon a conveyance or
transfer of all the assets and properties of the Note Issuer pursuant to Section
3.10(b), WMECO Funding LLC will be released from every covenant and agreement of
this Note Indenture to be observed or performed on the part of the Note Issuer
with respect to the Notes immediately upon the delivery of written notice by
WMECO Funding LLC to the Note Trustee stating that WMECO Funding LLC is to be so
released.
Section 3.12. NO OTHER BUSINESS. The Note Issuer shall not engage in
any business other than financing, purchasing, owning and managing the
Transition Property in the manner contemplated by this Note Indenture and the
Basic Documents and activities incidental thereto.
Section 3.13. NO BORROWING. The Note Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
Section 3.14. SERVICER'S OBLIGATIONS. The Note Issuer shall enforce the
Servicer's compliance with all of the Servicer's material obligations under the
Servicing Agreement.
Section 3.15. NO ADDITIONAL NOTES. The Note Issuer shall not issue any
additional Notes hereunder, except pursuant to Section 2.05 or Section 2.06.
Section 3.16. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except
as otherwise contemplated by the Sale Agreement, the Servicing Agreement or this
Note Indenture, the Note Issuer shall not make any loan or advance or credit to,
or guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
Section 3.17. CAPITAL EXPENDITURES. Other than expenditures in an
aggregate amount not to exceed $25,000 in any calendar year, the Note Issuer
shall not make any expenditure (by long-term or operating lease or otherwise)
for capital assets (either realty or personalty).
Section 3.18. NON-ROUTINE PERIODIC ADJUSTMENT. The Note Issuer agrees
that it shall not consent to a Non-Routine Periodic Adjustment pursuant to
Section 4.01(c) of the Servicing Agreement unless the Rating Agency Condition
shall have been satisfied.
Section 3.19. RESTRICTED PAYMENTS. The Note Issuer shall not, directly
or indirectly, while the Notes are Outstanding (a) pay any dividend or make any
distribution (by reduction of capital or otherwise), whether in cash, property,
securities or a combination thereof, to any owner of a beneficial interest in
the Note Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Note Issuer, (b) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or (c) set
aside or otherwise segregate any amounts for any such purpose; provided,
however, that, if no Event of Default shall have occurred and be continuing, the
Note Issuer may make, or cause to be made, any such
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distributions to any owner of a beneficial interest in the Note Issuer or
otherwise with respect to any ownership or equity interest or security in or of
the Note Issuer using funds distributed to the Note Issuer pursuant to Section
8.02 to the extent that such distributions would not cause the amount of the
Capital Subaccount to decline below the Required Capital Level. The Note Issuer
will not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Note Indenture and the Basic
Documents.
Section 3.20. NOTICE OF EVENTS OF DEFAULT. The Note Issuer agrees to
give the Note Trustee, the Certificate Trustee, the Agencies and the Rating
Agencies prompt written notice of each Event of Default hereunder and each
default on the part of the Seller or the Servicer of its obligations under the
Sale Agreement or the Servicing Agreement, respectively.
Section 3.21. FURTHER INSTRUMENTS AND ACTS. Upon request of the Note
Trustee, the Note Issuer will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Note Indenture. The Note Issuer will take all
actions, and make all filings, necessary to obtain and maintain a first priority
perfected security interest in the Collateral in favor of the Note Trustee.
Section 3.22. XXXXX IN CHIEF EXECUTIVE OFFICE OR JURISDICTION OF
ORGANIZATION. The Note Issuer shall not change its chief executive office or the
jurisdiction of its formation without previously having delivered to the Note
Trustee an Opinion of Counsel to the effect that all actions have been taken,
and all filings have been made, as are necessary to continue and maintain the
first priority perfected security interest of the Note Trustee in the
Collateral.
Section 3.23. NOTICE TO RATING AGENCIES OF AMENDMENT OF OTHER BASIC
DOCUMENTS. Promptly after the execution of any amendment to any of the Basic
Documents (other than this Note Indenture), the Note Issuer shall mail to the
Rating Agencies a notice setting forth in general terms the substance of such
amendment and enclosing a copy thereof. Any failure of the Note Issuer to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such amendment. If any amendment requires
satisfaction of the Rating Agency Condition, the notice requirements contained
in this Section 3.23 are in addition to the notice requirements that may
otherwise apply. Notice to the Rating Agencies of the execution by the Note
Issuer and the Note Trustee of any supplemental indenture pursuant to Section
9.01 or Section 9.02 shall be given by the Note Trustee in accordance with such
Section.
ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 4.01. SATISFACTION AND DISCHARGE OF NOTE INDENTURE; DEFEASANCE.
(a) This Note Indenture shall cease to be of further effect
with respect to the Notes and the Note Trustee, on reasonable demand of and at
the expense of the Note Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Note Indenture with respect to the Notes,
when
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(i) either
all Notes theretofore authenticated and delivered (other than (A) Notes that
have been mutilated, destroyed, lost or stolen and that have been replaced or
paid as provided in Section 2.06 and (B) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the Note
Issuer and thereafter repaid to the Note Issuer or discharged from such trust,
as provided in Section 3.03) have been delivered to the Note Trustee for
cancellation; or the Scheduled Maturity Date or Redemption Date has occurred
with respect to all Notes not theretofore delivered to the Note Trustee for
cancellation, and the Note Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Note Trustee cash, in trust for such purpose, in
an amount sufficient to pay and discharge the entire indebtedness on such Notes
not theretofore delivered to the Note Trustee for cancellation on the Scheduled
Maturity Date therefor;
(ii) the Note Issuer has paid or caused to be paid all other
sums payable hereunder by the Note Issuer; and
(iii) the Note Issuer has delivered to the Note Trustee an
Officer's Certificate, an Opinion of Counsel and (if required by the
Trust Indenture Act or the Note Trustee) an Independent Certificate
from a firm of certified public accountants, each meeting the
applicable requirements of Section 11.01(a) and each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Note Indenture with respect to the Notes have
been complied with.
(b) Subject to Sections 4.01(c) and 4.02, the Note Issuer at
any time may terminate (i) all its obligations under this Note Indenture with
respect to the Notes ("Legal Defeasance Option") or (ii) its obligations under
Sections 3.04, 3.05, 3.06, 3.07, 3.08, 3.09, 3.10, 3.12, 3.13, 3.14, 3.15, 3.16,
3.17 and 3.18 and the operation of Section 5.01(d) ("Covenant Defeasance
Option") with respect to the Notes. The Note Issuer may exercise the Legal
Defeasance Option notwithstanding its prior exercise of the Covenant Defeasance
Option.
If the Note Issuer exercises the Legal Defeasance Option, the maturity
of the Notes may not be accelerated because of an Event of Default. If the Note
Issuer exercises the Covenant Defeasance Option, the maturity of the Notes may
not be accelerated because of an Event of Default specified in Section 5.01(d).
Upon satisfaction of the conditions set forth herein to the exercise of
the Legal Defeasance Option or the Covenant Defeasance Option, the Note Trustee,
on reasonable demand of and at the expense of the Note Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of the obligations
that are terminated pursuant to such exercise.
(c) Notwithstanding Sections 4.01(a) and 4.01(b), (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal and interest, (iv) Sections 4.03, 4.04 and 11.18, (v) the rights,
obligations and immunities of the Note Trustee hereunder (including the rights
of the Note Trustee under Section 6.07 and the obligations of the Note Trustee
under Section 4.03) and (vi) the rights of Noteholders as beneficiaries hereof
with respect to the property deposited
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with the Note Trustee payable to all or any of them, shall survive until the
Notes, as to which this Note Indenture or certain obligations hereunder have
been satisfied and discharged pursuant to Section 4.01(a) or 4.01(b), have been
paid in full. Thereafter, the obligations in Sections 4.04, 6.07 and 11.18 shall
survive.
Section 4.02. CONDITIONS TO DEFEASANCE. The Note Issuer may exercise
the Legal Defeasance Option or the Covenant Defeasance Option of Notes only if:
(a) the Note Issuer irrevocably deposits or causes to be
deposited in trust with the Note Trustee cash or U.S. Government Obligations for
the payment of principal of and interest on each such Note to the Scheduled
Maturity Date, Optional Redemption Date or Mandatory Redemption Date therefor,
as applicable;
(b) the Note Issuer delivers to the Note Trustee a certificate
from a nationally recognized firm of Independent accountants expressing its
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any deposited
cash without investment will provide cash at such times and in such amounts
(but, in the case of the Legal Defeasance Option only, not more than such
amounts) as will be sufficient to pay in respect of the Notes (i) subject to
clause (ii), principal in accordance with the Expected Amortization Schedule
therefor, (ii) if to be redeemed, the Optional Redemption Price or Mandatory
Redemption Price, as applicable, therefor on the related Optional Redemption
Date or Mandatory Redemption Date, as applicable and (iii) interest when due;
(c) in the case of the Legal Defeasance Option, 91 days pass
after the deposit is made and during the 91-day period no Default specified in
Section 5.01(e) or (f) occurs which is continuing at the end of the period;
(d) no Default has occurred and is continuing on the day of
such deposit and after giving effect thereto;
(e) in the case of an exercise of the Legal Defeasance Option,
the Note Issuer shall have delivered to the Note Trustee an Opinion of Counsel
stating that (i) the Note Issuer has received from, or there has been published
by, the Internal Revenue Service a ruling, or (ii) since the date of execution
of this Note Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such opinion shall
confirm that, the Holders of the Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such legal defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such legal defeasance had not
occurred;
(f) in the case of an exercise of the Covenant Defeasance
Option, the Note Issuer shall have delivered to the Note Trustee an Opinion of
Counsel to the effect that the Holders of the Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such covenant
defeasance had not occurred; and
35
(g) the Note Issuer delivers to the Note Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the satisfaction and discharge of the Notes to the extent
contemplated by this Article IV have been complied with.
Before or after a deposit pursuant to this Section 4.02, the Note
Issuer may make arrangements satisfactory to the Note Trustee for the redemption
of such Notes at a future date in accordance with Article X.
Section 4.03. APPLICATION OF TRUST MONEY. All moneys or U.S. Government
Obligations deposited with the Note Trustee pursuant to Section 4.01 or 4.02
shall be held in trust and applied by it, in accordance with the provisions of
the Notes and this Note Indenture, to the payment, either directly or through
any Paying Agent, as the Note Trustee may determine, to the Holders of the
particular Notes for the payment or redemption of which such moneys have been
deposited with the Note Trustee, of all sums due and to become due thereon for
principal and interest, but such moneys need not be segregated from other funds
except to the extent required herein or in the Servicing Agreement or required
by law.
Section 4.04. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Note Indenture or the Covenant
Defeasance Option or Legal Defeasance Option with respect to the Notes, all
moneys then held by any Paying Agent other than the Note Trustee under the
provisions of this Note Indenture with respect to such Notes shall, upon demand
of the Note Issuer, be paid to the Note Trustee to be held and applied according
to Section 3.03 and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
ARTICLE V
REMEDIES
Section 5.01. EVENTS OF DEFAULT. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue for a period
of five days; or
(b) default in the payment of the then unpaid principal of any
Note on the Final Maturity Date; or
(c) default in the payment of the Optional Redemption Price
for the Notes on the Optional Redemption Date therefor, or a default in the
payment of the Mandatory Redemption Price for the Notes on the Mandatory
Redemption Date;
(d) (i) default in the observance or performance in any
material respect of any covenant or agreement of the Note Issuer made in this
Note Indenture (other than a covenant or agreement, a default in the observance
or performance of which is elsewhere in this
36
Section specifically dealt with), or (ii) any representation or warranty of the
Note Issuer made in this Note Indenture or in any certificate or other writing
delivered pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when the same shall have been
made, and, in any case under clause (i) or clause (ii), such default shall
continue or not be cured, or the circumstance or condition in respect of which
such misrepresentation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of 30 days after there shall have been given,
by registered or certified mail, to the Note Issuer by the Note Trustee or to
the Note Issuer and the Note Trustee by the Holders of at least 25 percent of
the Outstanding Amount of the Notes, a written notice specifying such default or
incorrect representation or warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(e) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Note Issuer or any
substantial part of the Collateral 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 of the Note Issuer or for any substantial part
of the Collateral, or ordering the winding-up or liquidation of the Note
Issuer's affairs, and such decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
(f) the commencement by the Note Issuer 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 the Note Issuer to the entry
of an order for relief in an involuntary case under any such law, or the consent
by the Note Issuer to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
the Note Issuer or for any substantial part of the Collateral, or the making by
the Note Issuer of any general assignment for the benefit of creditors, or the
failure by the Note Issuer generally to pay its debts as such debts become due,
or the taking of action by the Note Issuer in furtherance of any of the
foregoing.
The Note Issuer shall deliver to a Responsible Officer of the Note
Trustee, the Certificate Trustee and the Rating Agencies, within five Business
Days after an Authorized Officer of the Note Issuer has knowledge of the
occurrence thereof, written notice in the form of an Officer's Certificate of
any event which with the giving of notice and the lapse of time would become an
Event of Default under clause (d), its status and what action the Note Issuer is
taking or proposes to take with respect thereto.
Section 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default should occur and be continuing, then and in every such case the
Note Trustee or the Holders of Notes representing not less than a majority of
the Outstanding Amount of the Notes may declare all the Notes to be immediately
due and payable, by a notice in writing to the Note Issuer (and to the Note
Trustee if given by Noteholders), and upon any such declaration the unpaid
principal amount of the Notes, together with accrued and unpaid interest thereon
through the date of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Note Trustee as
37
hereinafter in this Article V provided, the Holders of Notes representing a
majority of the Outstanding Amount of the Notes, by written notice to the Note
Issuer and the Note Trustee, may rescind and annul such declaration and its
consequences if:
(a) the Note Issuer has paid or deposited with the Note
Trustee a sum sufficient to pay:
(i) all payments of principal of and interest on all Notes
and all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had not
occurred; and
(ii) all sums paid or advanced by the Note Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Note Trustee and its agents and counsel and all amounts due
under the Fee and Indemnity Agreement; and
(b) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration, have
been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent Default or impair any
right consequent thereto.
Section 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
NOTE TRUSTEE.
(a) The Note Issuer covenants that if (i) default is made in
the payment of any interest on any Note when the same becomes due and payable,
and such default continues for a period of five days, (ii) default is made in
the payment of the then unpaid principal of any Note on the Final Maturity Date
for such Note or (iii) default is made in the payment of the Optional Redemption
Price or Mandatory Redemption Price, as applicable, for any Note on the Optional
Redemption Date or Mandatory Redemption Date, as applicable, therefor, the Note
Issuer will, upon demand of the Note Trustee, pay to it, for the benefit of the
Holders of the Notes, the whole amount then due and payable on such Notes for
principal and interest, with interest upon the overdue principal and, to the
extent payment at such rate of interest shall be legally enforceable, upon
overdue installments of interest, at the respective rate borne by the Notes of
the applicable Class and in addition thereto such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Note
Trustee and its agents and counsel and an amount sufficient to cover all amounts
required to be paid by the Note Issuer under the Fee and Indemnity Agreement.
(b) Subject to Section 11.16, in case the Note Issuer shall
fail forthwith to pay such amounts upon such demand, the Note Trustee, in its
own name and as trustee of an express trust, may institute a Proceeding for the
collection of the sums so due and unpaid, and may prosecute such Proceeding to
judgment or final decree, and may enforce the same against the Note Issuer or
other obligor upon such Notes and collect in the manner provided by law out of
the property of the Note Issuer or other obligor upon such Notes, wherever
situated, the moneys adjudged or decreed to be payable.
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(c) If an Event of Default occurs and is continuing, the Note
Trustee may, as more particularly provided in Section 5.04, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders, by
such appropriate Proceedings as the Note Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Note Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Note Trustee by this Note Indenture or by law.
(d) In case there shall be pending, relative to the Note
Issuer or any other obligor upon the Notes or any Person having or claiming an
ownership interest in the Collateral, Proceedings under Title 11 of the United
States Code or any other applicable federal or state bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Note Issuer or its property or such
other obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Note Issuer or other obligor upon the Notes, or to the creditors
or property of the Note Issuer or such other obligor, the Note Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Note Trustee shall have made any demand pursuant to the provisions of this
Section, shall be entitled and empowered, by intervention in such Proceedings or
otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of (A) the Note Trustee (including any
claim for reasonable compensation to the Note Trustee and each
predecessor Note Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Note Trustee and each
predecessor Note Trustee, except as a result of negligence or willful
misconduct), (B) the Noteholders and (C) each Person for whom a claim
may be made under the Fee and Indemnity Agreement, allowed in such
Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings; and
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the Note
Trustee on their behalf;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Note Trustee, and, in the event that the Note Trustee shall
consent to the making of payments directly to such Noteholders, to pay to the
Note Trustee (or such other beneficiary of the Fee and Indemnity Agreement) such
amounts as shall be sufficient to cover reasonable compensation and other
amounts owing hereunder to the Note Trustee or such Person, each predecessor
Note Trustee and their respective agents, attorneys and counsel, and all other
reasonable expenses and liabilities incurred, and all
39
advances made, by the Note Trustee and each predecessor Note Trustee except as a
result of negligence or willful misconduct.
(e) Nothing herein contained shall be deemed to authorize the
Note Trustee to authorize or consent to or vote for or accept or adopt on behalf
of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Note Trustee to vote in respect of the claim of any Noteholder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Note Indenture, or under any of the Notes, may be enforced by the Note Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or proceedings
instituted by the Note Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Note Trustee, each predecessor
Note Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Note Trustee (and also
any Proceedings involving the interpretation of any provision of this Note
Indenture to which the Note Trustee shall be a party), the Note Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
Section 5.04. REMEDIES; PRIORITIES.
(a) If an Event of Default shall have occurred and be
continuing, the Note Trustee may do one or more of the following (subject to
Section 5.05):
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then payable on the
Notes or under this Note Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Note Issuer and any other obligor upon such Notes moneys
adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Note Indenture with respect to the
Collateral;
(iii) exercise any remedies of a secured party under the UCC,
the Statute or other applicable law and take any other appropriate
action to protect and enforce the rights and remedies of the Note
Trustee and the Holders of the Notes; and
(iv) sell the Collateral or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Note Trustee may not sell or otherwise liquidate any
portion of the Collateral following an Event of Default, other than an Event of
Default described in Section 5.01(a), (b) or (c), unless (A) the Holders of 100
percent of the Outstanding Amount of the Notes consent thereto, (B) the proceeds
of such sale or liquidation distributable to the Noteholders are
40
sufficient to discharge in full all amounts then due and unpaid upon such Notes
for principal and interest after taking into account payment of all amounts due
prior thereto pursuant to the priorities set forth in Section 8.02(d) or (C) the
Note Trustee determines that the Collateral will not continue to provide
sufficient funds for all payments on the Notes as they would have become due if
the Notes had not been declared due and payable, and the Note Trustee obtains
the consent of Holders of 66-2/3 percent of the Outstanding Amount of the Notes.
In determining such sufficiency or insufficiency with respect to clause (B) and
(C), the Note Trustee may, but need not, obtain and conclusively rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
(b) If the Note Trustee collects any money pursuant to this
Article V, it shall pay out such money in accordance with the priorities set
forth in Section 8.02(d).
Section 5.05. OPTIONAL POSSESSION OF THE COLLATERAL. If the Notes have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Note Trustee may, but need not, elect to maintain possession of
the Collateral. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Note Trustee shall take such desire into account
when determining whether or not to maintain possession of the Collateral. In
determining whether to maintain possession of the Collateral, the Note Trustee
may, but need not, obtain and conclusively rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the
Collateral for such purpose.
Section 5.06. LIMITATION OF SUITS. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Note Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder and each Holder agrees, by its acceptance of any Note, to
the fullest extent permitted by law, not to avail itself of any remedies in the
Statute or to utilize or enforce the Statutory Lien, unless:
(a) such Holder previously has given written notice to the
Note Trustee of a continuing Event of Default;
(b) the Holders of not less than 25 percent of the Outstanding
Amount of the Notes have made written request to the Note Trustee to institute
such Proceeding in respect of such Event of Default in its own name as Note
Trustee hereunder;
(c) such Holder or Holders have offered to the Note Trustee
indemnity satisfactory to it against the costs, expenses and liabilities to be
incurred in complying with such request;
(d) the Note Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such Proceedings;
and
(e) no direction inconsistent with such written request has
been given to the Note Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes;
41
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Note Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Note Indenture, except in
the manner herein provided.
In the event the Note Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Note Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Note Indenture.
Section 5.07. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST. Notwithstanding any other provisions in this Note Indenture, the
Holder of any Note shall have the right, which is absolute and unconditional,
(a) to receive payment of (i) the interest, if any, on such Note on or after the
due dates thereof expressed in such Note or in this Note Indenture, (ii) the
unpaid principal, if any, of such Notes on or after the Final Maturity Date
therefor or (iii) in the case of redemption, receive payment of the unpaid
principal of and interest, if any, on such Note on or after the Optional
Redemption Date or Mandatory Redemption Date, as applicable, therefor and (b) to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.
Section 5.08. RESTORATION OF RIGHTS AND REMEDIES. If the Note Trustee
or any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Note Indenture and such Proceeding has been discontinued or abandoned
for any reason or has been determined adversely to the Note Trustee or to such
Noteholder, then and in every such case the Note Issuer, the Note Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Note Trustee and the Noteholders shall
continue as though no such Proceeding had been instituted.
Section 5.09. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Note Trustee or to the Noteholders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.10. DELAY OR OMISSION NOT A WAIVER. No delay or omission of
the Note Trustee or any Noteholder to exercise any right or remedy accruing upon
any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the Note
Trustee or to the Noteholders may be exercised from time to time, and as often
as may be deemed expedient, by the Note Trustee or by the Noteholders, as the
case may be.
Section 5.11. CONTROL BY NOTEHOLDERS. The Holders of a majority of the
Outstanding Amount of the Notes (or, if less than all Classes are affected, the
affected Class or Classes) shall
42
have the right to direct the time, method and place of conducting any Proceeding
for any remedy available to the Note Trustee with respect to the Notes of such
Class or Classes or exercising any trust or power conferred on the Note Trustee
with respect to such Class or Classes; provided, however, that
(a) such direction shall not be in conflict with any rule of
law or with this Note Indenture;
(b) subject to the express terms of Section 5.04, any
direction to the Note Trustee to sell or liquidate the Collateral shall be by
the Holders of Notes representing not less than 100 percent of the Outstanding
Amount of the Notes;
(c) if the conditions set forth in Section 5.05 have been
satisfied and the Note Trustee elects to retain the Collateral pursuant to such
Section, then any direction to the Note Trustee by Holders of Notes representing
less than 100 percent of the Outstanding Amount of the Notes to sell or
liquidate the Collateral shall be of no force and effect; and
(d) the Note Trustee may take any other action deemed proper
by the Note Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.01, the Note Trustee need not take
any action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
Section 5.12. WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Holders of Notes of not less than a majority of the Outstanding Amount of the
Notes may waive any past Default or Event of Default and its consequences except
a Default (a) in payment of principal of or interest on any of the Notes or (b)
in respect of a covenant or provision hereof which cannot be modified or amended
without the consent of the Holder of each Note or of all Classes affected, which
Defaults may be waived only by the Holders of each Note, or each affected Class,
as the case may be. In the case of any such waiver, the Note Issuer, the Note
Trustee and the Holders of the Notes shall be restored to their former positions
and rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Note Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
Section 5.13. UNDERTAKING FOR COSTS. All parties to this Note Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Note Indenture, or in any
suit against the Note Trustee for any action taken, suffered or omitted by it as
Note Trustee, the filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to
43
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to (a) any suit instituted by
the Note Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10 percent of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of (i) interest on any Note on or after the due
dates expressed in such Note and in this Note Indenture, (ii) the unpaid
principal, if any, of any Note on or after the Final Maturity Date therefor or
(iii) in the case of redemption, the unpaid principal of and interest on any
Note on or after the Optional Redemption Date or Mandatory Redemption Date, as
applicable, therefor.
Section 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Note Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Note Indenture; and the Note Issuer (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Note Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 5.15. ACTION ON NOTES. The Note Trustee's right to seek and
recover judgment on the Notes or under this Note Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Note Indenture. Neither the lien of this Note Indenture nor any
rights or remedies of the Note Trustee or the Noteholders shall be impaired by
the recovery of any judgment by the Note Trustee against the Note Issuer or by
the levy of any execution under such judgment upon any portion of the Collateral
or upon any of the assets of the Note Issuer.
Section 5.16. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Note Trustee to do
so and at the Note Issuer's expense, the Note Issuer agrees to take all such
lawful action as the Note Trustee may reasonably request to compel or secure the
performance and observance by the Seller and the Servicer, as applicable, of
each of their obligations to the Note Issuer under or in connection with the
Sale Agreement and the Servicing Agreement, respectively, in accordance with the
terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Note Issuer under or in connection with the
Sale Agreement and the Servicing Agreement, respectively, to the extent and in
the manner directed by the Note Trustee, including the transmission of notices
of default on the part of the Seller or the Servicer thereunder and the
institution of legal or administrative actions or proceedings to compel or
secure performance by the Seller or the Servicer of each of their obligations
under the Sale Agreement and the Servicing Agreement, respectively.
(b) If an Event of Default has occurred, the Note Trustee may,
and, at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of 66-2/3 percent of
the Outstanding Amount of the Notes shall, subject to Article VI, exercise all
rights, remedies, powers, privileges and claims of the Note Issuer against the
Seller or the Servicer under or in connection with the Sale Agreement and the
44
Servicing Agreement, respectively, including the right or power to take any
action to compel or secure performance or observance by the Seller or the
Servicer of each of their obligations to the Note Issuer thereunder and to give
any consent, request, notice, direction, approval, extension or waiver under the
Sale Agreement or the Servicing Agreement, respectively, and any right of the
Note Issuer to take such action shall be suspended.
ARTICLE VI
THE NOTE TRUSTEE
Section 6.01. DUTIES OF NOTE TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Note Trustee shall exercise the rights and powers vested in it by this Note
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Note Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Note Indenture
and no implied covenants or obligations shall be read into this Note
Indenture against the Note Trustee; and
(ii) in the absence of bad faith on its part, the Note Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Note Trustee and conforming to the
requirements of this Note Indenture; however, the Note Trustee shall
examine the certificates and opinions to determine whether or not they
appear on their face to conform to the requirements of this Note
Indenture.
(c) The Note Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(ii) the Note Trustee shall not be liable for any error of
judgment or exercise of its discretion which is made in good faith by a
Responsible Officer unless it is proved that the Note Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Note Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) Every provision of this Note Indenture that in any way
relates to the Note Trustee is subject to paragraphs (a) , (b) and (c) of this
Section.
(e) The Note Trustee shall not be liable for interest on any
money received by it except as the Note Trustee may agree in writing with the
Note Issuer.
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(f) Money held in trust by the Note Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Note Indenture, the Sale Agreement or the Servicing Agreement.
(g) No provision of this Note Indenture shall require the Note
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or indemnity satisfactory to it against such risk or
liability is not reasonably assured to it.
(h) Every provision of this Note Indenture relating to the
conduct or affecting the liability of or affording protection to the Note
Trustee shall be subject to the provisions of this Section and to the provisions
of the Trust Indenture Act.
(i) In the event that the Note Trustee is also acting as
Paying Agent or Note Registrar hereunder, this Article VI shall also be afforded
to such Paying Agent or Note Registrar.
(j) Under no circumstances shall the Note Trustee be liable
for any indebtedness of the Note Issuer, the Servicer or the Seller evidenced by
or arising under the Notes or any Basic Document.
Section 6.02. RIGHTS OF NOTE TRUSTEE. Subject to the provisions of
Trust Indenture Act ss. 315:
(a) the Note Trustee may be conclusively rely and shall be
fully protected in acting or refraining from acting in reliance upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture or other, paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties and the Note Trustee need not investigate any matter or fact
stated in such document;
(b) any request or direction of the Note Issuer mentioned
herein shall be sufficiently evidenced by a Request;
(c) whenever in the administration of this Note Indenture the
Note Trustee shall deem if desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Note Trustee
(unless other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, conclusively rely upon an Officers' Certificate of the
Note Issuer;
(d) the Note Trustee may consult with counsel and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Note Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Note Indenture at the request
or direction of any of the Noteholders pursuant to this Note Indenture, unless
such Noteholders shall have offered to the Note Trustee
46
reasonable security or indemnity satisfactory to it against the cost, expenses
(including reasonable legal fees and expenses) and liabilities that might be
incurred by it in compliance with such request or direction;
(f) the Note Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture or other paper or document;
(g) the Note Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, attorneys, custodians or nominees and the Note Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any agent, attorney, custodian or nominee appointed with due
care by it hereunder;
(h) the Note Trustee shall not liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of Notes relating to the time, method and place of
conducting any proceeding for any remedy available to the Note Trustee, or
exercising any trust or power conferred upon the Note Trustee, under this Note
Indenture;
(i) the Note Trustee shall not be required to expend or risk
its own funds in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or indemnity satisfactory to it against
such risk is not reasonably assured to it;
(j) the Note Trustee shall not be personally liable for any
action taken or suffered or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Note Indenture; provided, however, that the
Note Trustee's conduct does not constitute willful misconduct, negligence or bad
faith;
(k) in the event that the Note Trustee is also acting as
Paying Agent, authenticating agent or Note Registrar hereunder, the rights and
protections afforded to the Note Trustee pursuant to this Article VI shall also
be afforded to such Paying Agent, authenticating agent or Note Registrar;
(l) the Note Trustee shall not be charged with knowledge of an
Event of Default unless a Responsible Officer obtains actual knowledge or such
event or the Note Trustee receives written notice of such event from the Note
Issuer, the Servicer or a majority of the Holders of Notes of the Class or
Classes so affected; and
(m) without limiting its rights under bankruptcy law, when the
Note Trustee incurs expenses or renders services in connection with the
insolvency or bankruptcy of any party hereto or with the Basic Documents to
which it is a party, such expenses (including the fees and expenses of its
counsel) and the compensation for such services are intended to constitute
expenses of administration under any bankruptcy or insolvency law.
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Section 6.03. INDIVIDUAL RIGHTS OF NOTE TRUSTEE. The Note Trustee in
its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Note Issuer or its affiliates with the same
rights it would have if it were not Note Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Note Trustee must comply with Sections 6.11 and 6.12.
Section 6.04. NOTE TRUSTEE'S DISCLAIMER. The Note Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Note Indenture or the Notes, it shall not be accountable for the Note
Issuer's use of the proceeds from the Notes, and it shall not be responsible for
any statement of the Note Issuer in the Note Indenture or in any document issued
in connection with the sale of the Notes or in the Notes other than the Note
Trustee's certificate of authentication.
Section 6.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing
and if it is actually known to a Responsible Officer of the Note Trustee, the
Note Trustee shall mail to the Agencies, each Holder of Notes and to the Rating
Agencies notice of the Default within 30 days after it has such knowledge.
Section 6.06. REPORTS BY NOTE TRUSTEE TO HOLDERS.
(a) So long as the Note Trustee is the Note Registrar and
Paying Agent, it shall deliver to each Noteholder such information in its
possession as may be required to enable such Holder to prepare its federal and
state income tax returns.
(b) On or prior to each Payment Date therefor, the Note
Trustee will deliver to each Holder of Notes on such Payment Date a statement as
provided and prepared by the Servicer which will include (to the extent
applicable) the following information as to the Notes with respect to such
Payment Date or the period since the previous Payment Date, as applicable:
(i) the amount of the distribution to Noteholders allocable
to principal (such amount to be expressed as an aggregate dollar amount
and as a dollar amount per $1,000 of original principal amount);
(ii) the amount of the distribution to Noteholders allocable
to interest (such amount to be expressed as an aggregate dollar amount
and as a dollar amount per $1,000 of original principal amount);
(iii) the Outstanding Amount of the Notes, after giving effect
to payments allocated to principal reported under (i) above; and
(iv) the difference, if any, between the Outstanding Amount
of the Notes and the Projected Principal Balance as of such Payment
Date, after giving effect to distributions to be made on such Payment
Date.
(c) On or prior to each Payment Date therefor, the Note
Trustee will deliver to each Holder of Notes on such Payment Date a statement
which will include the following information:
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(i) the balance of amounts on deposit in the Reserve
Subaccount after giving effect to payments and allocations made or to
be made on such Payment Date;
(ii) the balance of amounts on deposit in the
Overcollateralization Subaccount after giving effect to payments and
allocations made or to be made on such Payment Date; and
(iii) the balance of amounts on deposit in the Capital
Subaccount after giving effect to payments and allocations made or to
be made on such Payment Date.
(d) The Note Issuer shall send a copy of each Certificate of
Compliance delivered to it pursuant to Section 3.03 of the Servicing Agreement
and each Annual Accountant's Report delivered to it pursuant to Section 3.04 of
the Servicing Agreement to the Note Trustee, the Noteholders and the Rating
Agencies.
If the Note Trustee is also serving as the Certificate Trustee, it
shall also prepare the statements required to be delivered to Certificateholders
pursuant to Section 4.02(d) of the Certificate Indenture.
Section 6.07. COMPENSATION AND INDEMNITY. The Note Issuer shall pay to
the Note Trustee from time to time reasonable compensation for its services. The
Note Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Note Issuer shall reimburse the Note Trustee
for all reasonable out-of-pocket expenses, disbursements and advances incurred
or made by it, including costs of collection, in addition to the compensation
for its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Note Trustee's agents, counsel,
accountants and experts. The Note Issuer shall indemnify, defend and hold
harmless the Note Trustee and any of its affiliates, officials, officers,
directors, employees, consultants, counsel and agents (the "Indemnified
Persons") from and against any and all losses, claims, actions, suits, taxes,
damages, expenses (including, without limitation, legal fees and expenses) and
liabilities (including liabilities under state or federal securities laws) of
any kind and nature whatsoever (collectively, "Expenses"), to the extent that
such Expenses arise out of or are imposed upon or asserted against such
Indemnified Persons with respect to the creation, administration, operation,
enforcement or termination of this trust and the performance by the Note Trustee
of its duties hereunder, the failure of the Note Issuer or any other Person
(other than the Person being indemnified) to perform its obligations hereunder
or under any of the Basic Documents, or otherwise in connection with the Basic
Documents or the transactions contemplated thereby, provided, however, that the
Note Issuer is not required to indemnify any Indemnified Person for any Expenses
that result from the willful misconduct or gross negligence of such Indemnified
Person and, provided, further, that any Expenses payable to any Indemnified
Person hereunder shall be paid to the Note Trustee for deposit into and
distribution from the Collection Account in accordance with Article VIII. The
willful misconduct or negligence of any Note Trustee shall not affect the rights
of any predecessor or successor Note Trustee hereunder. The Note Issuer shall
not be required to indemnify an Indemnified Person for any amount paid or
payable by such Indemnified Person pursuant to this Section 6.07 in the
settlement of any action, proceeding or investigation without the written
consent of the Note Issuer, which consent shall not be unreasonably withheld.
Promptly after receipt by an Indemnified Person of notice of its involvement in
any action, proceeding or investigation, such Indemnified Person shall, if a
claim
49
for indemnification in respect thereof is to be made against the Note Issuer
under this Section 6.07, notify the Note Issuer in writing of such involvement.
Failure by an Indemnified Person to so notify the Note Issuer shall relieve the
Note Issuer from the obligation to indemnify and hold harmless such Indemnified
Person under this Section 6.07 only to the extent that the Note Issuer suffers
actual prejudice as a result of such failure. With respect to any action,
proceeding or investigation brought by a third party for which indemnification
may be sought under this Section 6.07, the Note Issuer shall be entitled to
assume the defense of any such action, proceeding or investigation. Upon
assumption by the Note Issuer of the defense of any such action, proceeding or
investigation, the Indemnified Person shall have the right to participate in
such action or proceeding and to retain its own counsel. The Note Issuer shall
be entitled to appoint counsel of the Note Issuer's choice at the Note Issuer's
expense to represent the Indemnified Person in any action, proceeding or
investigation for which a claim of indemnification is made against the Note
Issuer under this Section 6.07 (in which case the Note Issuer shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person except as set forth below); provided,
however, that such counsel shall be reasonably satisfactory to the Indemnified
Person. Notwithstanding the Note Issuer's election to appoint counsel to
represent the Indemnified Person in an action, proceeding or investigation, the
Indemnified Person shall have the right to employ separate counsel (including
local counsel), and the Note Issuer shall bear the reasonable fees, costs and
expenses of such separate counsel if (i) the use of counsel chosen by the Note
Issuer to represent the Indemnified Person would present such counsel with a
conflict of interest, (ii) the actual or potential defendants in, or targets of,
any such action include both the Indemnified Person and the Note Issuer and the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the Note Issuer, (iii) the Note Issuer shall not have employed
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person within a reasonable time after notice of the institution of
such action or (iv) the Note Issuer shall authorize the Indemnified Person to
employ separate counsel at the expense of the Note Issuer. Notwithstanding the
foregoing, the Note Issuer shall not be obligated to pay for the fees, costs and
expenses of more than one separate counsel for the Indemnified Persons (in
addition to local counsel). The Note Issuer will not, without the prior written
consent of the Indemnified Person, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought under this Section
6.07, (whether or not the Indemnified Person is an actual or potential party to
such claim or action) unless such settlement, compromise or consent includes an
unconditional release of the Indemnified Person from all liability arising out
of such claim, action, suit or proceeding. Indemnification under this Section
6.07 shall include reasonable fees and out-of-pocket expenses of investigation
and litigation (including reasonable attorneys' fees and expenses), except as
otherwise provided in this Agreement.
The Note Issuer's payment obligations to the Note Trustee pursuant to
this Section shall survive the discharge of this Note Indenture or the earlier
resignation or removal of the Note Trustee. When the Note Trustee incurs
expenses after the occurrence of a Default specified in Section 5.01(e) or (f)
with respect to the Note Issuer, the expenses are intended to constitute
expenses of administration under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or similar law.
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Section 6.08. REPLACEMENT OF NOTE TRUSTEE. The Note Trustee may resign
at any time by so notifying the Note Issuer, provided, however, that no such
resignation shall be effective until either (a) the Collateral has been
completely liquidated and the proceeds of the liquidation distributed to the
Noteholders or (b) a successor trustee having the qualifications set forth in
Section 6.11 has been designated and has accepted such trusteeship. The Holders
of a majority in Outstanding Amount of the Notes may remove the Note Trustee by
so notifying the Note Trustee and may appoint a successor Note Trustee with the
prior written consent of the Note Issuer which shall not be unreasonably
withheld. The Note Issuer shall remove the Note Trustee if:
(a) the Note Trustee fails to comply with Section 6.11;
(b) the Note Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the
Note Trustee or its property; or
(d) the Note Trustee otherwise becomes incapable of acting.
The Note Issuer may remove the Note Trustee if the Note Trustee fails
to perform its obligations hereunder in any material respect and shall not have
cured such failure within 30 days after written notice thereof from the Note
Issuer.
If the Note Trustee resigns or is removed or if a vacancy exists in the
office of Note Trustee for any reason (the Note Trustee in such event being
referred to herein as the retiring Note Trustee), the Note Issuer shall promptly
appoint a successor Note Trustee.
A successor Note Trustee shall deliver a written acceptance of its
appointment to the retiring Note Trustee and to the Note Issuer. Thereupon the
resignation or removal of the retiring Note Trustee shall become effective, and
the successor Note Trustee shall have all the rights, powers and duties of the
Note Trustee under this Note Indenture. The successor Note Trustee shall mail a
notice of its succession to Noteholders and to the Rating Agencies. The retiring
Note Trustee shall promptly transfer all property held by it as Note Trustee to
the successor Note Trustee.
If a successor Note Trustee does not take office within 60 days after
the retiring Note Trustee resigns or is removed, the retiring Note Trustee, the
Note Issuer or the Holders of a majority in Outstanding Amount of the Notes may
petition any court of competent jurisdiction for the appointment of a successor
Note Trustee.
If the Note Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the Note
Trustee and the appointment of a successor Note Trustee.
Notwithstanding the replacement of the Note Trustee pursuant to this
Section, the Note Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Note Trustee.
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Section 6.09. SUCCESSOR NOTE TRUSTEE BY MERGER. If the Note Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Note Trustee. The successor Note Trustee
shall mail a notice of its merger, conversion, consolidation or transfer to the
Rating Agencies and the Note Issuer.
In case at the time such successor or successors by merger, conversion,
consolidation or transfer to the Note Trustee shall succeed to the trusts
created by this Note Indenture any of the Notes shall have been authenticated
but not delivered, any such successor to the Note Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such Notes
so authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Note Trustee may authenticate such Notes
either in the name of any predecessor hereunder or in the name of the successor
to the Note Trustee; and in all such cases such certificates shall be valid for
all purposes hereunder and under the Notes.
Section 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of this Note
Indenture, at any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Collateral may at the time be located, the
Note Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Collateral, and to vest
in such Person or Persons, in such capacity and for the benefit of the
Noteholders, such title to the Collateral, or any part hereof, and, subject to
the other provisions of this Section, such powers, duties, obligations, rights
and trusts as the Note Trustee may consider necessary or desirable. The Note
Trustee shall give prompt written notice to the Noteholders of the appointment
of any co-trustee or separate trustee.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Note Trustee shall be conferred or imposed upon and
exercised or performed by the Note Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Note Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Note Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Collateral or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Note Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
52
(iii) the Note Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Note
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Note Indenture
and the conditions of this Article VI. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Note Trustee or separately, as may be provided therein, subject to all the
provisions of this Note Indenture, specifically including every provision of
this Note Indenture relating to the conduct of, affecting the liability of, or
affording protection to, the Note Trustee. Every such instrument shall be filed
with the Note Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Note Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Note Indenture on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Note Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 6.11. ELIGIBILITY; DISQUALIFICATION. The Note Trustee shall at
all times satisfy the requirements of Trust Indenture Act ss. 310(a) and Section
26(a)(i) of the Investment Company Act of 1940. The Note Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and it shall have a long term debt
rating of A (or the equivalent thereof) or better by all of the Rating Agencies
from which a rating is available. The Note Trustee shall comply with Trust
Indenture Act ss. 310(b), including the optional provision permitted by the
second sentence of Trust Indenture Act ss. 310(b)(9); provided, however, that
there shall be excluded from the operation of Trust Indenture Act ss. 310(b)(1)
any indenture or indentures under which other securities of the Note Issuer are
outstanding if the requirements for such exclusion set forth in Trust Indenture
Act ss. 310(b)(1) are met.
Section 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST NOTE ISSUER.
The Note Trustee shall comply with Trust Indenture Act ss. 311(a), excluding any
creditor relationship listed in Trust Indenture Act ss. 311(b). A Note Trustee
who has resigned or been removed shall be subject to Trust Indenture Act ss.
311(a) to the extent indicated.
Section 6.13. REPRESENTATIONS AND WARRANTIES OF NOTE TRUSTEE. The Note
Trustee hereby represents and warrants that:
(a) the Note Trustee is a banking corporation validly existing
in good standing under the laws of New York; and
(b) the Note Trustee has full power (including trust powers),
authority and legal right to execute, deliver and perform this Note Indenture
and the Basic Documents to which
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the Note Trustee is a party and has taken all necessary action to authorize the
execution, delivery, and performance by it of this Note Indenture and such Basic
Documents.
Section 6.14. COVENANTS OF THE NOTE TRUSTEE. The Note Trustee hereby
covenants and agrees as follows:
(a) the Note Trustee will establish the Collection Account as
a Securities Account;
(b) the financial institution that is the Note Trustee, acting
as Securities Intermediary, will identify the Collection Account in its records
as a Securities Account of the Note Trustee and will identify the Note Trustee
in such records as the Person having the Security Entitlement against the
Securities Intermediary with respect to the Securities Account and all Security
Entitlements carried in the Securities Account;
(c) the financial institution that is the Note Trustee, acting
as Securities Intermediary, will maintain accurate and complete records of the
Financial Assets in the Securities Account such that the Collateral is
objectively determinable;
(d) the financial institution that is the Note Trustee, acting
as Securities Intermediary, will in the ordinary course of its business,
maintain securities accounts for its customers, will act in that capacity in
holding the Securities Account under this Note Indenture and will at all times
be located in and maintain its books and records relating to all of these
securities in the State of New York;
(e) the financial institution that is the Note Trustee, acting
as Securities Intermediary, will treat all Eligible Investments as Financial
Assets and will duly hold the Eligible Investments in the Securities Account;
and
(f) the financial institution that is the Note Trustee, acting
as Securities Intermediary, will not agree to comply with entitlement orders of
any Person other than the Note Trustee with respect to the Securities Account or
any Security Entitlements carried in the Securities Account and agrees to comply
with entitlement orders of the Note Trustee without the consent of any other
Person.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. NOTE ISSUER TO FURNISH NOTE TRUSTEE NAMES AND ADDRESSES
OF NOTEHOLDERS. The Note Issuer will furnish or cause to be furnished to the
Note Trustee (a) not more than five days after the earlier of (i) each Record
Date and (ii) six months after the last Record Date, a list, in such form as the
Note Trustee may reasonably require, of the names and addresses of the Holders
of Notes as of such Record Date, (b) at such other times as the Note Trustee may
request in writing, within 30 days after receipt by the Note Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as the
Note Trustee is the Note Registrar, no such list shall be required to be
furnished.
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Section 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS.
(a) The Note Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Note Trustee as provided in
Section 7.01 and the names and addresses of Holders of Notes received by the
Note Trustee in its capacity as Note Registrar. The Note Trustee may destroy any
list furnished to it as provided in such Section 7.01 upon receipt of a new list
so furnished.
(b) Noteholders may communicate pursuant to Trust Indenture
Act ss. 312(b) with other Noteholders with respect to their rights under this
Note Indenture or under the Notes.
(c) The Note Issuer, the Note Trustee and the Note Registrar
shall have the protection of Trust Indenture Actss. 312(c).
Section 7.03. REPORTS BY NOTE ISSUER.
(a) The Note Issuer shall:
(i) so long as the Note Issuer is required to file such
documents with the Commission, file with the Note Trustee, within 15
days after the Note Issuer is required to file the same with the
Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Note Issuer may be required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act;
(ii) file with the Note Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Note Issuer with the conditions and
covenants of this Note Indenture as may be required from time to time
by such rules and regulations; and
(iii) supply to the Note Trustee (and the Note Trustee shall
transmit by mail to all Noteholders described in Trust Indenture Act
ss. 313(c)) such summaries of any information, documents and reports
required to be filed by the Note Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) as may be required by rules and
regulations prescribed from time to time by the Commission.
(b) Unless the Note Issuer otherwise determines, the fiscal
year of the Note Issuer shall end on December 31 of each year.
Section 7.04. REPORTS BY NOTE TRUSTEE. If required by Trust Indenture
Act ss. 313(a), within 60 days after December 31 of each year, commencing
December 31, 2001, the Note Trustee shall mail to each Holder of Notes as
required by Trust Indenture Act ss. 313(c) a brief report dated as of such date
that complies with Trust Indenture Act ss. 313(a). The Note Trustee also shall
comply with Trust Indenture Act ss. 313(b).
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A copy of each report at the time of its mailing to Noteholders shall
be filed by the Note Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Note Issuer shall notify the Note
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Note Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Note Trustee, the Certificate Trustee or the Delaware Trustee
pursuant to this Note Indenture, the Certificate Indenture and the Fee and
Indemnity Agreement. The Note Trustee shall apply all such money received by it
as provided in this Note Indenture. Except as otherwise expressly provided in
this Note Indenture, if any default occurs in the making of any payment or
performance under any agreement or instrument that is part of the Collateral,
the Note Trustee may take such action as may be appropriate to enforce such
payment or performance, subject to Article VI, including the institution and
prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this Note
Indenture and any right to proceed thereafter as provided in Article V.
Section 8.02. COLLECTION ACCOUNT.
(a) Prior to the Issuance Date, the Note Issuer shall open, at
the Note Trustee's Corporate Trust Office, or at another Eligible Institution,
one or more segregated trust accounts in the Note Trustee's name for the deposit
of RTC Charge Payments and other amounts remitted under the Servicing Agreement
(collectively, the "Collection Account"). The Note Trustee shall hold the
Collection Account for the benefit of Noteholders, the Note Trustee and the
other Persons indemnified hereunder or under the Fee and Indemnity Agreement.
The Collection Account will consist of four subaccounts (which need not be
separate bank accounts): a general subaccount (the "General Subaccount"), a
reserve subaccount (the "Reserve Subaccount"), an overcollateralization
subaccount (the "Overcollateralization Subaccount") and a capital subaccount
(the "Capital Subaccount"). All amounts in the Collection Account not allocated
to any other subaccount shall be allocated to the General Subaccount. Prior to
the initial Payment Date, all amounts in the Collection Account (other than
funds deposited into the Capital Subaccount, together with interest earnings
thereon) shall be allocated to the General Subaccount. All references to the
Collection Account shall be deemed to include reference to all subaccounts
contained therein. Withdrawals from and deposits to each of the foregoing
subaccounts of the Collection Account shall be made as set forth in Section
8.02. The Collection Account shall at all times be maintained in an Eligible
Deposit Account and only the Note Trustee shall have access to the Collection
Account for the purpose of making deposits in and withdrawals from the
Collection Account in accordance with this Note Indenture. Funds in the
Collection Account shall not be commingled with any other moneys. Except as
provided in Section 8.03, all moneys deposited from time to time in the
Collection Account, all deposits therein pursuant to this Note Indenture, and
all investments made in Eligible Investments with
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such moneys, including all income or other gain from such investments, shall be
held by the Note Trustee in the Collection Account as part of the Collateral as
herein provided.
(b) The Note Trustee shall have sole dominion and exclusive
control over all moneys in the Collection Account and shall apply such amounts
therein as provided in this Section 8.02.
(c) All RTC Charge Payments and other remittances under the
Servicing Agreement shall be deposited in the General Subaccount as provided in
Section 4.03 of the Servicing Agreement. All deposits to and withdrawals from
the Collection Account and all allocations to the subaccounts of the Collection
Account shall be made by the Note Trustee in accordance with the written
instructions provided by the Servicer in the Quarterly Servicer Certificate or
as otherwise provided herein.
(d) On any Business Day upon which the Note Trustee receives a
written request from the Administrator stating that any Operating Expense
payable by the Note Issuer (but only as described in clauses (i) through (iv)
below) will become due and payable prior to the next succeeding Payment Date,
and setting forth the amount and nature of such Operating Expenses, as well any
supporting documentation that the Note Trustee may reasonably request, the Note
Trustee, upon receipt of such information, will make payment of such Operating
Expenses on or before the date such payment is due from amounts on deposit in
the General Subaccount, the Reserve Subaccount, the Overcollateralization
Subaccount and the Capital Subaccount, in that order and only to the extent
required to make such payment.
On each Payment Date or, for any amount payable under clauses (i)
through (iv) below, on any Business Day, the Note Trustee shall apply all
amounts on deposit in the Collection Account, including all net earnings thereon
(other than on amounts in the Capital Subaccount), to pay the following amounts,
in accordance with the Quarterly Servicer Certificate, in the following
priority:
(i) all amounts owed by the Note Issuer to the Note Trustee,
the Certificate Trustee, the Delaware Trustee, the Note Trustee, their
respective Authorized Agents, the Trust, the Agencies, The Commonwealth
of Massachusetts, the Executive Office for Administration and Finance
of The Commonwealth of Massachusetts and their respective affiliates,
officials, officers, directors, employees, consultants, counsel and
agents (including indemnity payments and legal fees and expenses) shall
be paid, as incurred, FIRST to the Note Trustee, the Certificate
Trustee or the Delaware Trustee (subject to Section 6.07) and SECOND to
such other Persons. provided, however, that each payment by the Note
Trustee on behalf of the Note Issuer pursuant to this clause (i) may
only be made if and to the extent that such payment will not cause the
occurrence of an Event of Default; and provided, further, that the
amount paid by the Note Trustee on behalf of the Note Issuer pursuant
to this clause (i) to (A) the Note Trustee, the Certificate Trustee and
the Delaware Trustee shall not in the aggregate (from the Issuance
Date) exceed $10 million and (B) such other Persons shall not in the
aggregate (from the Issuance Date) exceed $5 million, unless, in each
case, each Rating Agency shall have been given ten days' prior notice
thereof and Standard & Poor's shall have notified the Servicer, the
Note Issuer, the Note Trustee, the Agencies and the Certificate Trustee
in writing that
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such action will not result in a reduction or withdrawal of the then
current rating by such Rating Agency of any Class of the Notes or any
Class of the Certificates;
(ii) the Servicing Fee for such Payment Date and all unpaid
Servicing Fees from prior Payment Dates shall be paid to the Servicer;
(iii) the Administration Fee and all unpaid Administration
Fees from prior Payment Dates shall be paid to the Administrator;
(iv) so long as no Default or Event of Default shall have
occurred and be continuing or would result from such payment, all other
Operating Expenses shall be paid to the Persons entitled thereto (other
than the Persons referred to in clause (i) above); provided, however,
that the amount of such other Operating Expenses paid by the Note
Trustee from, but not including, the previous Payment Date to, and
including, the current Payment Date shall not in the aggregate exceed
$100,000;
(v) (A) any overdue Quarterly Interest (together with, to
the extent lawful, interest on such overdue Quarterly Interest at the
applicable Note Interest Rate) and (B) Quarterly Interest for such
Payment Date shall be paid to the Noteholders;
(vi) (A) principal due and payable on the Notes (x) as a
result of an Event of Default or (y) on the Final Maturity Date of the
Notes, shall be paid to the Noteholders and (B) Quarterly Principal for
such Payment Date shall be paid to the Noteholders;
(vii) unpaid Operating Expenses shall be paid to the Persons
entitled thereto;
(viii) the amount, if any, by which the Required Capital Level
with respect to all Outstanding Notes exceeds the amount in the Capital
Subaccount (disregarding any interest earnings held in the Capital
Subaccount which have not been remitted to the Note Issuer) as of such
Payment Date shall be allocated to the Capital Subaccount;
(ix) the amount, if any, by which the Required
Overcollateralization Level, with respect to all Outstanding Notes,
exceeds the amount in the Overcollateralization Subaccount as of such
Payment Date shall be allocated to the Overcollateralization
Subaccount; and
(x) the balance, if any, shall be allocated to the Reserve
Subaccount for distribution on subsequent Payment Dates.
After principal of and interest on all Notes, and all of the other
foregoing amounts, have been paid in full, the balance, if any, shall be paid to
the Note Issuer, free from the Lien of this Note Indenture.
In the case of any deficiency in the amount required under clause (v)
above, amounts available to make payments under clause (v) above will be
allocated among each Class of Notes pro rata based upon the respective amounts
of interest owed on the Notes of each Class, and allocated and paid to holders
within each Class pro rata based upon the respective principal amount of Notes
held. In the case of any deficiency in the amount required under clause (vi)
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above, amounts available to make payments under clause (vi) above will be
allocated among each Class of Notes pro rata based upon the respective principal
amount of Notes due (in the case of clause (vi)(A)(x) above) or scheduled to be
paid (in the case of clauses (vi)(A)(y) and (vi)(B) above, based on the
priorities set forth in Section 2.01(c)(iii) and according to the expected
amortization schedule for such Class), and allocated and paid to the holders
within each Class pro rata based upon the principal amount of Notes held.
(e) If on any Payment Date, or for any amounts payable under
clauses (i) through (iv) above, on any Business Day, funds on deposit in the
General Subaccount are insufficient to make the payments contemplated by clauses
(i) through (vi) of Section 8.02(d), the Note Trustee shall (i) first, draw from
amounts on deposit in the Reserve Subaccount, (ii) second, draw from amounts on
deposit in the Overcollateralization Subaccount and (iii) third, draw from
amounts on deposit in the Capital Subaccount, in each case, up to the amount of
such shortfall in order to make the payments contemplated by clauses (i) through
(vi) of Section 8.02(d). In addition, if on any Payment Date funds on deposit in
the General Subaccount are insufficient to make the allocations contemplated by
clauses (viii) and (ix) above, the Note Trustee shall draw from amounts on
deposit in the Reserve Subaccount to make such allocations.
(f) On any Optional Redemption Date or Mandatory Redemption
Date, the Note Trustee shall pay to the Noteholders the Optional Redemption
Price or Mandatory Redemption Price, as the case may be.
(g) On the last day of each month, if the amount in the
Capital Subaccount exceeds the Required Capital Level, the Note Trustee shall
pay to the Note Issuer, upon receipt of an Issuer Request, free from the Lien of
this Note Indenture, all amounts in the Capital Subaccount in excess of the
Required Capital Level.
Section 8.03. GENERAL PROVISIONS REGARDING THE COLLECTION ACCOUNT.
(a) So long as no Default or Event of Default shall have
occurred and be continuing, all or a portion of the funds in the Collection
Account shall be invested in Eligible Investments and reinvested by the Note
Trustee upon Issuer Order; provided, however, that (i) such Eligible Investments
shall not mature later than the Business Day prior to the next Payment Date and
(ii) such Eligible Investments shall not be sold, liquidated or otherwise
disposed of at a loss prior to the maturity thereof. All income or other gain
from investments of moneys deposited in the Collection Account shall be
deposited by the Note Trustee in the Collection Account, and any loss resulting
from such investments shall be charged to the Collection Account; provided,
however, that all income or other gain from investments of moneys deposited in
the Capital Subaccount shall be retained in the Capital Subaccount, and any loss
resulting from such investments shall be charged to the Capital Subaccount. The
Note Issuer will not direct the Note Trustee to make any investment of any funds
or to sell any investment held in the Collection Account unless the security
interest Granted and perfected in such account will continue to be perfected in
such investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Note Trustee
to make any such investment or sale, if requested by the Note Trustee, the Note
Issuer shall deliver to the Note Trustee an Opinion of Counsel, reasonably
acceptable to the Note Trustee, to such effect. In no event shall the Note
Trustee be liable for the selection of Eligible
59
Investments or for investment losses incurred thereon. The Note Trustee shall
have no liability in respect of losses incurred as a result of the liquidation
of any Eligible Investment prior to its stated maturity or the failure of the
Note Issuer to provide timely written investment direction. The Note Trustee
shall have no obligation to invest or reinvest any amounts held hereunder in the
absence of written investment direction pursuant to an Issuer Order. If the
rating of the Eligible Institution, which may be the Note Trustee's Corporate
Trust Office, falls below the rating requirements set forth in clause (b)(i) of
the definition of Eligible Institution, the Note Trustee shall notify the
Delaware Trustee and the Certificate Indenture provides that the Delaware
Trustee, on behalf of the Certificate Issuer, shall, within one month after
notice of such rating change, cause the Collection Account to be transferred to
an institution meeting the requirements set forth in clause (b)(i) of the
definition of "Eligible Institution."
(b) Subject to Section 6.01(c), the Note Trustee shall not in
any way be held liable by reason of any insufficiency in the Collection Account
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Note Trustee's failure to make payments on such
Eligible Investments issued by the Note Trustee, in its commercial capacity as
principal obligor and not as trustee, in accordance with their terms.
(c) If (i) the Note Issuer shall have failed to give written
investment directions for any funds on deposit in the Collection Account to the
Note Trustee by 11:00 a.m. Eastern Time (or such other time as may be agreed by
the Note Issuer and Note Trustee) on any Business Day; or (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable pursuant to Section
5.02; then the Note Trustee shall, to the fullest extent practicable, invest and
reinvest funds in the Collection Account in one or more investments described
under paragraph (d) of the definition of Eligible Investments.
Section 8.04. RELEASE OF COLLATERAL.
(a) The Note Trustee may, and when required by the provisions
of this Note Indenture shall, execute instruments to release property from the
Lien of this Note Indenture, or convey the Note Trustee's interest in the same,
in a manner and under circumstances that are not inconsistent with the
provisions of this Note Indenture. No party relying upon an instrument executed
by the Note Trustee as provided in this Article VIII shall be bound to ascertain
the Note Trustee's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any moneys.
(b) The Note Trustee shall, at such time as there are no Notes
Outstanding, release any remaining portion of the Collateral that secured the
Notes from the lien of this Note Indenture and release to the Note Issuer or any
other Person entitled thereto any funds then on deposit in the Collection
Account. The Note Trustee shall release property from the lien of this Note
Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the Trust Indenture Act) Independent Certificates in accordance with
Trust Indenture Act xx.xx. 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.01.
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(c) Promptly after the execution by the Note Issuer and the
Note Trustee of any supplemental indenture pursuant to this Section, the Note
Trustee shall mail to the Rating Agencies a notice setting forth in general
terms the substance of such supplemental indenture and enclosing a copy thereof.
Any failure of the Note Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture. If any such supplemental indenture requires satisfaction
of the Rating Agency Condition, the notice requirements contained in this
Section 9.01 are in addition to the notice requirements that may otherwise
apply.
Section 8.05. OPINION OF COUNSEL. The Note Trustee shall receive at
least seven days' notice when requested by the Note Issuer to take any action
pursuant to Section 8.04(a), accompanied by copies of any instruments involved,
and the Note Trustee shall also require, as a condition to such action, an
Opinion of Counsel, in form and substance reasonably satisfactory to the Note
Trustee, stating the legal effect of any such action, outlining the steps
required to complete the same, and concluding that all conditions precedent to
the taking of such action have been complied with and such action will not
materially and adversely impair the security for the Notes or the rights of the
Noteholders in contravention of the provisions of this Note Indenture; provided,
however, that such Opinion of Counsel shall not be required to express an
opinion as to the fair value of the Collateral. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Note Trustee in
connection with any such action.
Section 8.06. REPORTS BY INDEPENDENT ACCOUNTANTS. As of the Issuance
Date, the Note Issuer shall appoint a firm of Independent certified public
accountants of recognized national reputation for purposes of preparing and
delivering the reports or certificates of such accountants required by this Note
Indenture. In the event such firm requires the Note Trustee to agree to the
procedures performed by such firm, the Note Issuer shall direct the Note Trustee
in writing to so agree; it being understood and agreed that the Note Trustee
will deliver such letter of agreement in conclusive reliance upon the direction
of the Note Issuer, and the Note Trustee makes no independent inquiry or
investigation to, and shall have no obligation or liability in respect of, the
sufficiency, validity or correctness of such procedures. Upon any resignation by
such firm the Note Issuer shall provide written notice thereof to the Note
Trustee and shall promptly appoint a successor thereto that shall also be a firm
of Independent certified public accountants of recognized national reputation.
If the Note Issuer shall fail to appoint a successor to a firm of Independent
certified public accountants that has resigned within 15 days after such
resignation, the Note Trustee shall promptly notify the Note Issuer of such
failure in writing. If the Note Issuer shall not have appointed a successor
within 10 days thereafter the Note Trustee shall promptly appoint a successor
firm of Independent certified public accountants of recognized national
reputation; provided, however, that the Note Trustee shall have no liability
with respect to such appointment if the Note Trustee acted with due care with
respect thereto. The fees of such Independent certified public accountants and
its successor shall be payable by the Note Issuer.
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ARTICLE IX
SUPPLEMENTAL NOTE INDENTURES
Section 9.01. SUPPLEMENTAL NOTE INDENTURES WITHOUT CONSENT OF
NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes but with
prior notice to the Rating Agencies, the Note Issuer and the Note Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution
thereof), in form reasonably satisfactory to the Note Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Note Indenture, or better to
assure, convey and confirm unto the Note Trustee any property subject
or required to be subjected to the lien of this Note Indenture, or to
subject to the lien of this Note Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Note Issuer, and
the assumption by any such successor of the covenants of the Note
Issuer herein and in the Notes contained;
(iii) to add to the covenants of the Note Issuer, for the
benefit of the Holders of the Notes, or to surrender any right or power
herein conferred upon the Note Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Note Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental note indenture which may be
inconsistent with any other provision herein or in any supplemental
note indenture or to make any other provisions with respect to matters
or questions arising under this Note Indenture or in any supplemental
note indenture; provided, however, that such action shall not adversely
affect the interests of the Holders of the Notes or holders of the
Certificates;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Note Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Note Indenture to such extent as shall be necessary to effect the
qualification of this Note Indenture under the Trust Indenture Act or
under any similar federal statute hereafter enacted and to add to this
Note Indenture such other provisions as may be expressly required by
the Trust Indenture Act.
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The Note Trustee is hereby authorized to join in the execution of any
such supplemental note indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Note Issuer and the Note Trustee, when authorized by
an Issuer Order, may, also without the consent of any of the Holders of the
Notes, enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Note Indenture or of modifying in any manner the rights of
the Holders of the Notes under this Note Indenture; provided, however, that (i)
such action shall not, as evidenced by an Officer's Certificate, adversely
affect in any material respect the interests of the Noteholders or the holders
of Certificates and (ii) the Rating Agency Condition shall have been satisfied
with respect thereto.
(c) Promptly after the execution by the Note Issuer and the
Note Trustee of any supplemental indenture pursuant to this Section, the Note
Trustee shall mail to the Rating Agencies a notice setting forth in general
terms the substance of such supplemental indenture and enclosing a copy thereof.
Any failure of the Note Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture. If any such supplemental indenture requires satisfaction
of the Rating Agency Condition, the notice requirements contained in this
Section 9.01 are in addition to the notice requirements that may otherwise
apply.
Section 9.02. SUPPLEMENTAL NOTE INDENTURES WITH CONSENT OF NOTEHOLDERS.
The Note Issuer and the Note Trustee, when authorized by an Issuer Order, also
may, with prior notice to the Rating Agencies, the Agencies and with the consent
of the Holders of not less than a majority of the Outstanding Amount of the
Notes of each Class to be affected, by Act of such Holders delivered to the Note
Issuer and the Note Trustee, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Note Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Note Indenture;
provided, however, that no such supplemental note indenture shall, without the
consent of the Holder of each Outstanding Note of each Class affected thereby:
(a) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof or the
interest rate thereon, change the provisions of this Note Indenture relating to
the application of collections on, or the proceeds of the sale of, the
Collateral to payment of principal of or interest on the Notes, or change any
place of payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of the provisions of this Note Indenture requiring the application
of funds available therefor, as provided in Article V, to the payment of any
such amount due on the Notes on or after the respective due dates thereof (or,
in the case of optional or mandatory redemption, on or after the Optional
Redemption Date or Mandatory Redemption Date, as applicable);
(b) reduce the percentage of the Outstanding Amount of the
Notes or of a Class thereof, the consent of the Holders of which is required for
any such supplemental note indenture, or the consent of the Holders of which is
required for any waiver of compliance with
63
certain provisions of this Note Indenture or certain defaults hereunder and
their consequences provided for in this Note Indenture;
(c) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(d) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Note Trustee to direct the Note Issuer to sell or
liquidate the Collateral pursuant to Section 5.04;
(e) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional provisions
of this Note Indenture or the Basic Documents cannot be modified or waived
without the consent of the Holder of each Outstanding Note affected thereby;
(f) modify any of the provisions of this Note Indenture in
such manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date (including the
calculation of any of the individual components of such calculation) or to
affect the rights of the Holders of Notes to the benefit of any provisions for
the mandatory redemption of the Notes contained herein; or
(g) permit the creation of any lien ranking prior to or on a
parity with the Lien of this Note Indenture with respect to any part of the
Collateral or, except as otherwise permitted or contemplated herein, terminate
the Lien of this Note Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the Lien of this Note
Indenture.
The Note Trustee, after consultation with the Certificate Trustee, may
in its discretion determine whether or not any Notes or Certificates of a Class
would be affected by any supplemental note indenture and any such determination
shall be conclusive upon the Holders of all Notes and holders of all
Certificates of such Class, whether theretofore or thereafter authenticated and
delivered hereunder. Neither the Note Trustee nor the Certificate Trustee shall
be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental note indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Note Issuer and the Note Trustee of
any supplemental note indenture pursuant to this Section, the Note Trustee shall
mail, to the Rating Agencies, the Certificate Trustee, the Agencies and the
Holders of the Notes to which such amendment or supplemental note indenture
relates, a notice setting forth in general terms the substance of such
supplemental note indenture and enclosing a copy thereof. Any failure of the
Note Trustee to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental note indenture.
If any such supplemental indenture requires satisfaction of the Rating Agency
Condition, the notice requirements contained in this Section 9.02 are in
addition to the notice requirements that may otherwise apply.
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Section 9.03. EXECUTION OF SUPPLEMENTAL NOTE INDENTURES. In executing
any supplemental note indenture permitted by this Article IX or the
modifications thereby of the trusts created by this Note Indenture, the Note
Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02,
shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental note indenture is authorized or permitted by this
Note Indenture. The Note Trustee may, but shall not be obligated to, enter into
any such supplemental note indenture that affects the Note Trustee's own rights,
duties, liabilities or immunities under this Note Indenture or otherwise.
Section 9.04. EFFECT OF SUPPLEMENTAL NOTE INDENTURE. Upon the execution
of any supplemental note indenture pursuant to the provisions hereof, this Note
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to each Class of Notes affected thereby, and the
respective rights, limitations of rights, obligations, duties, liabilities and
immunities under this Note Indenture of the Note Trustee, the Note Issuer and
the Holders of the Notes shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental note indenture shall be and be
deemed to be part of the terms and conditions of this Note Indenture for any and
all purposes. If required by the Note Trustee, Notes may bear a notation in form
approved by the Note Trustee as to any matter provided for in such supplemental
note indenture. If the Note Issuer or the Note Trustee shall so determine, new
Notes so modified as to conform, in the opinion of the Note Trustee and the Note
Issuer, to any such supplemental note indenture may be prepared and executed by
the Note Issuer and authenticated and delivered by the Note Trustee in exchange
for Outstanding Notes.
Section 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of
this Note Indenture and every supplemental note indenture executed pursuant to
this Article IX shall conform to the requirements of the Trust Indenture Act as
then in effect so long as this Note Indenture shall then be qualified under the
Trust Indenture Act.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. OPTIONAL REDEMPTION BY NOTE ISSUER. The Note Issuer may,
at its option, redeem all, but not less than all, of the Notes on any Payment
Date if, after giving effect to payments that would otherwise be made on such
Payment Date, the Outstanding Amount has been reduced to less than five percent
of the initial principal balance thereof at a price equal to the outstanding
principal amount of the Notes to be redeemed plus accrued and unpaid interest
thereon at the Note Interest Rate to the Optional Redemption Date (such price
being called the "Optional Redemption Price"). If the Note Issuer shall elect to
redeem the Notes pursuant to this Section 10.01, it shall furnish written notice
(which notice shall state all items listed in Section 10.02) of such election to
the Note Trustee, the Certificate Trustee, the Agencies and the Rating Agencies
not later than 25 days prior to the Optional Redemption Date and shall deposit
with the Note Trustee not later than one Business Day prior to the Optional
Redemption Date the Optional Redemption Price of the Notes to be redeemed
whereupon all such Notes shall be due and payable on the Optional Redemption
Date upon the furnishing of a notice complying with Section 10.02 to each Holder
of the Notes pursuant to this Section 10.01.
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Section 10.02. FORM OF OPTIONAL REDEMPTION NOTICE. Notice of redemption
under Section 10.01 shall be given by the Note Trustee by first-class mail,
postage prepaid, mailed not less than five days nor more than 25 days prior to
the Optional Redemption Date to each Holder of Notes to be redeemed, as of the
close of business on the Record Date preceding the Optional Redemption Date at
such Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Optional Redemption Date;
(ii) the Optional Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Optional Redemption Price (which shall be the office or
agency of the Note Issuer to be maintained as provided in Section
3.02).
Notice of redemption of the Notes to be redeemed shall be given by the
Note Trustee in the name and at the expense of the Note Issuer. Failure to give
notice of redemption, or any defect therein, to any Holder of any Note selected
for redemption shall not impair or affect the validity of the redemption of any
other Note.
Section 10.03. NOTES PAYABLE ON OPTIONAL REDEMPTION DATE OR PAYMENT
DATE. Notice of redemption having been given as provided in Section 10.02, the
Notes to be redeemed shall on the Optional Redemption Date become due and
payable at the Optional Redemption Price and (unless the Note Issuer shall
default in the payment of the Optional Redemption Price) no interest shall
accrue on the Optional Redemption Price for any period after the date to which
accrued interest is calculated for purposes of calculating the Optional
Redemption Price.
Section 10.04. MANDATORY REDEMPTION BY NOTE ISSUER. If the Seller is
required to repurchase the Transition Property pursuant to Section 5.01(b) of
the Sale Agreement, or elects to repurchase the Transition Property pursuant to
Section 5.01(e) of the Sale Agreement, the Note Issuer shall be required to
redeem all outstanding Notes on or before the fifth Business Day following the
Repurchase Date (such date of mandatory redemption, the "Mandatory Redemption
Date") for a purchase price equal to the then outstanding principal amount of
the Notes plus accrued and unpaid interest thereon at the Note Interest Rate to
the later of (i) the Mandatory Redemption Date and (ii) the Special Distribution
Date (as defined in the Certificate Indenture) with respect to the related
Certificates (such price being called the "Mandatory Redemption Price"). If the
Note Issuer is required to redeem the Notes pursuant to this Section 10.04, it
shall furnish written notice (which notice shall state all items listed in
Section 10.05) of such redemption to the Note Trustee, the Certificate Trustee,
the Agencies and the Rating Agencies not later than one Business Day before such
Repurchase Date and shall deposit with the Note Trustee, not later than 12:00
noon Eastern Time on the Repurchase Date, the Mandatory Redemption Price of the
Notes to be redeemed whereupon all such Notes shall be due and payable on the
Mandatory Redemption Date upon the furnishing of a notice complying with Section
10.05 to each Holder of the Notes pursuant to this Section 10.04.
Section 10.05. FORM OF MANDATORY REDEMPTION NOTICE. Notice of
redemption under Section 10.04 hereof shall be given by the Note Trustee by
first-class mail, postage prepaid,
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mailed not less than five days prior to the Mandatory Redemption Date to each
Holder of Notes to be redeemed, as of the close of business on the Record Date
preceding the Mandatory Redemption Date at such Holder's address appearing in
the Note Register.
All notices of redemption shall state:
(i) the Mandatory Redemption Date;
(ii) the Mandatory Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Mandatory Redemption Price (which shall be the office or
agency of the Note Issuer to be maintained as provided in Section
3.02).
Notice of redemption of the Notes to be redeemed shall be given by the
Note Trustee in the name and at the expense of the Note Issuer. Failure to give
notice of redemption, or any defect therein, to any Holder of any Note selected
for redemption shall not impair or affect the validity of the redemption of any
other Note.
Section 10.06. NOTES PAYABLE ON MANDATORY REDEMPTION DATE OR PAYMENT
DATE. Notice of redemption having been given as provided in Section 10.05, the
Notes to be redeemed shall on the Mandatory Redemption Date become due and
payable at the Mandatory Redemption Price and (unless the Note Issuer shall
default in the payment of the Mandatory Redemption Price) no interest shall
accrue on the Mandatory Redemption Price for any period after the date to which
accrued interest is calculated for purposes of calculating the Mandatory
Redemption Price.
ARTICLE XI
MISCELLANEOUS
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon any application or request by the Note Issuer to the
Note Trustee to take any action under any provision of this Note Indenture, the
Note Issuer shall furnish to the Note Trustee (i) an Officer's Certificate
stating that all conditions precedent, if any, provided for in this Note
Indenture relating to the proposed action have been complied with, (ii) an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required by
the Trust Indenture Act) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Note
Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Note Indenture shall include:
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(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other
property or securities with the Note Trustee that is to be made the basis for
the release of any property or securities subject to the Lien of this Note
Indenture, the Note Issuer shall, in addition to any obligation imposed in
Section 11.01(a) or elsewhere in this Note Indenture, furnish to the Note
Trustee an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within 90 days of such
deposit) to the Note Issuer of the Collateral or other property or securities to
be so deposited.
(ii) Whenever the Note Issuer is required to furnish to the
Note Trustee an Officer's Certificate certifying or stating the opinion
of any signer thereof as to the matters described in clause (i) above,
the Note Issuer shall also deliver to the Note Trustee an Independent
Certificate as to the same matters, if the fair value to the Note
Issuer of the securities to be so deposited and of all other such
securities made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Note Issuer, as set
forth in the certificates delivered pursuant to clause (i) above and
this clause (ii), is ten percent or more of the Outstanding Amount of
the Notes, but such a certificate need not be furnished with respect to
any securities so deposited, if the fair value thereof to the Note
Issuer as set forth in the related Officer's Certificate is less than
$25,000 or less than one percent of the Outstanding Amount of the
Notes.
(iii) Whenever any property or securities are to be released
from the lien of this Note Indenture other than pursuant to Section
8.02, the Note Issuer shall also furnish to the Note Trustee an
Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such
release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will
not impair the security under this Note Indenture in contravention of
the provisions hereof.
(iv) Whenever the Note Issuer is required to furnish to the
Note Trustee an Officer's Certificate certifying or stating the opinion
of any signer thereof as to the matters described in clause (iii)
above, the Note Issuer shall also furnish to the Note
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Trustee an Independent Certificate as to the same matters if the fair
value of the property or securities and of all other property, or
securities released from the Lien of this Note Indenture (other than
pursuant to Section 8.02) since the commencement of the then-current
calendar year, as set forth in the certificates required by clause
(iii) above and this clause (iv), equals 10 percent or more of the
Outstanding Amount of the Notes, but such certificate need not be
furnished in the case of any release of property or securities if the
fair value thereof as set forth in the related Officer's Certificate is
less than $25,000 or less than one percent of the then Outstanding
Amount of the Notes.
(v) Notwithstanding Section 2.11 or any other provision of
this Section, the Note Issuer may (A) collect, liquidate, sell or
otherwise dispose of the Transition Property and the RTC Charge as and
to the extent permitted or required by the Basic Documents, (B) cause
the Note Trustee to make cash payments out of the Collection Account as
and to the extent permitted or required by the Basic Documents and (C)
exercise its Legal Defeasance Option or its Covenant Defeasance Option,
as applicable, pursuant to Article IV.
Section 11.02. FORM OF DOCUMENTS DELIVERED TO NOTE TRUSTEE.
(a) In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.
(b) Any certificate or opinion of an Authorized Officer of the
Note Issuer may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his or her
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Seller, the Note Issuer or the
Administrator, stating that the information with respect to such factual matters
is in the possession of the Servicer, the Seller, the Note Issuer or the
Administrator, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
(c) Whenever in this Note Indenture, in connection with any
application or certificate or report to the Note Trustee, it is provided that
the Note Issuer shall deliver any document as a condition of the granting of
such application, or as evidence of the Note Issuer's compliance with any term
hereof, it is intended that the truth and accuracy, at the time of the granting
of such application or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Note Issuer to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Note Trustee's right to
rely upon the
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truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
(d) Where any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements, opinions or
other instruments under this Note Indenture, they may, but need not, be
consolidated and form one instrument.
Section 11.03. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Note Indenture to be given or
taken by Noteholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Note Trustee, and, where it is hereby expressly required, to
the Note Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Note Indenture and (subject to Section 6.01) conclusive
in favor of the Note Trustee and the Note Issuer, if made in the manner provided
in this Section.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved in any manner that the Note Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Note Trustee or the Note Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 11.04. NOTICES.
(a) Unless otherwise specifically provided herein, all
requests, notices, directions, consents and waivers required under the terms and
provisions of this Note Indenture shall be in English and in writing, and any
such request, notice, direction, consent or waiver may be given by first class
United States mail or reputable overnight, courier service, facsimile
transmission or electronic mail (confirmed by telephone, United States mail or
reputable overnight courier service in the case of notice by facsimile
transmission or electronic mail) or any other customary means of communication,
and any such request, notice, direction, consent or waiver shall be effective
when delivered, or if mailed, three days after deposit in the United States mail
with proper postage for ordinary mail prepaid,
if to the Agencies, to:
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Massachusetts Development Finance Agency
00 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
and
Massachusetts Health and Educational Facilities Authority
00 Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
if to the Certificate Issuer, to:
The Bank of New York (Delaware), as Delaware Trustee for the
Massachusetts RRB Special Purpose Trust WMECO-1
Xxxxx Xxxx Center
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Facsimile: (___) ___-____
Telephone: (___) ___-____
with a copy to:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxxxx 00 Xxxx
Xxx Xxxx, XX 00000
Attention: ABS Unit
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(with copies to the Agencies at the addresses listed herein)
if to the Note Issuer, to:
WMECO Funding LLC
x/x Xxxxxxx Xxxxxxxxxxxxx Electric Company
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Email: xxxxxxx@xx.xxx
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with a copy to:
Western Massachusetts Electric Company
c/o Northeast Utilities Service Company
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Assistant Treasurer-Finance
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Email: xxxxxxx@xx.xxx
if to the Note Trustee or the Certificate Trustee, to:
The Bank of New York, as trustee
000 Xxxxxxx Xxxxxx
Xxxxx 00 Xxxx
Xxx Xxxx, XX 00000
Attention: ABS Unit
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
if to the Rating Agencies, to:
Standard & Poor's Ratings Services
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Surveillance Department
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Xxxxx'x Investors Service
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
and
Fitch, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Surveillance
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Email: xxxx@xxxxxxxxxxxx.xxx
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Section 11.05. NOTICES TO NOTEHOLDERS; WAIVER. Where this Note
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Noteholder's address as it appears on the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Noteholders is given
by mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder shall affect the sufficiency of such notice
with respect to other Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
Where this Note Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Note
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event of Noteholders when such notice is required to be
given pursuant to any provision of this Note Indenture, then any manner of
giving such notice as shall be satisfactory to the Note Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Note Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
Section 11.06. CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Note Indenture by any of the provisions of the
Trust Indenture Act, such required provision shall control.
The provisions of Trust Indenture Act xx.xx. 310 through 317 that
impose duties on any Person (including the provisions automatically deemed
included herein unless expressly excluded by this Note Indenture) are a part of
and govern this Note Indenture, whether or not physically contained herein.
Section 11.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 11.08. SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Note Indenture and the Notes by the Note Issuer shall bind its successors
and assigns, whether so expressed or not.
All agreements of the Note Trustee in this Note Indenture shall bind
its successors.
Section 11.09. SEVERABILITY. In case any provision in this Note
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
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Section 11.10. BENEFITS OF NOTE INDENTURE. Nothing in this Note
Indenture or in the Notes, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, and the Noteholders, and
any other party secured hereunder, and any other Person with an ownership
interest in any part of the Collateral, any benefit or any legal or equitable
right, remedy or claim under this Note Indenture.
Section 11.11. LEGAL HOLIDAYS. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Note Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.12. GOVERNING LAW. THIS NOTE INDENTURE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS. THE PERFECTION OF ANY INTERESTS IN THE SECURITIES ACCOUNT AND THE
SECURITIES ENTITLEMENTS SHALL BE DETERMINED BY THE LAWS OF THE STATE OF NEW
YORK.
Section 11.13. COUNTERPARTS. This Note Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.14. RECORDING OF NOTE INDENTURE. If this Note Indenture is
subject to recording in any appropriate public recording offices, such recording
is to be effected by the Note Issuer and at its expense accompanied by an
Opinion of Counsel (which may be counsel to the Note Trustee or any other
counsel reasonably acceptable to the Note Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Note Trustee under this Note Indenture.
Section 11.15. NO RECOURSE TO CERTAIN PERSONS. No recourse may be
taken, directly or indirectly, with respect to the obligations of the Note
Issuer or the Note Trustee on the Notes or under this Note Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Note Trustee in its individual capacity, (ii) any owner of a
membership interest in the Note Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Note Trustee in its individual
capacity, any holder of a membership interest in the Note Issuer or the Note
Trustee or of any successor or assign of the Note Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Note Trustee has no such obligations in its individual
capacity).
Section 11.16. NO RECOURSE TO NOTE ISSUER. Notwithstanding any
provision of this Note Indenture or any Supplemental Note Indenture to the
contrary, Noteholders shall have no recourse against the Note Issuer, but shall
look only to the Collateral, with respect to any amounts due to the Noteholders
hereunder.
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Section 11.17. INSPECTION. The Note Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Note Trustee, during the
Note Issuer's normal business hours, to examine all the books of account,
records, reports, and other papers of the Note Issuer, to make copies and
extracts therefrom, to cause such books to be audited by Independent certified
public accountants, and to discuss the Note Issuer's affairs, finances and
accounts with the Note Trustee's officers, employees, and Independent certified
public accountants, all at such reasonable times and as often as may be
reasonably requested. The Note Trustee shall and shall cause its representatives
to hold in confidence all such information except to the extent disclosure may
be required by law (and all reasonable applications for confidential treatment
are unavailing) and except to the extent that the Note Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder.
Notwithstanding anything herein to the contrary, the foregoing shall not be
construed to prohibit (i) disclosure of any and all information that is or
becomes publicly known, or information obtained by the Note Trustee from sources
other than the Note Issuer, provided such parties are rightfully in possession
of such information and do not have an obligation of confidentiality, (ii)
disclosure of any and all information (A) if required to do so by any applicable
statute, law, rule or regulation, (B) pursuant to any subpoena, civil
investigative demand or similar demand or request of any court or regulatory
authority exercising its proper jurisdiction, (C) in any preliminary or final
offering circular, registration statement or contract or other document
pertaining to the transactions contemplated by this Note Indenture or the Basic
Documents approved in advance by the Note Issuer or (D) to any affiliate,
independent or internal auditor, agent, employee or attorney of the Note Trustee
having a need to know the same, provided that such parties agree to be bound by
the confidentiality provisions contained in this Section 11.17, or (iii) any
other disclosure authorized by the Note Issuer.
Section 11.18. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Note Indenture, but subject to the DTE's right to order the
sequestration and payment of revenues arising with respect to the Transition
Property notwithstanding any bankruptcy, reorganization or other insolvency
proceedings with respect to the debtor, pledgor or transferor of the Transition
Property pursuant to [Sections 1H(d)(5) and 1H(e) of the Statute], the Note
Trustee shall not, prior to the date which is one year and one day after the
termination of this Note Indenture with respect to the Note Issuer, petition or
otherwise invoke or cause the Note Issuer or the Certificate Issuer to invoke
the process of any court or governmental authority for the purpose of commencing
or sustaining a case against the Note Issuer or the Certificate 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 Note Issuer or the Certificate Issuer or any substantial part of the
property of the Note Issuer or the Certificate Issuer, or ordering the winding
up or liquidation of the affairs of the Note Issuer or the Certificate Issuer.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
75
IN WITNESS WHEREOF, the Note Issuer and the Note Trustee have caused
this Note Indenture to be duly executed by their respective officers, thereunto
duly authorized, all as of the day and year first above written.
WMECO FUNDING LLC
By:
---------------------------------
Name: Xxxxx X. Xxxxx
Title: President
THE BANK OF NEW YORK,
as Note Trustee
By:
----------------------------------
Name:
Title:
SCHEDULE 1
EXPECTED AMORTIZATION SCHEDULE
OUTSTANDING PRINCIPAL AMOUNT
Payment Date Class A-1
------------ ---------
Closing $
SCHEDULE 2
REQUIRED OVERCOLLATERALIZATION LEVEL SCHEDULE
Payment Date Required Payment Date Required
Overcollateralization Overcollateralization
Level Level
$ $
EXHIBIT A
FORM OF NOTE
REGISTERED
NO. [ ] $ [ ]
SEE REVERSE FOR CERTAIN DEFINITIONS
THE PRINCIPAL OF THIS CLASS A-1 NOTE WILL BE PAID IN INSTALLMENTS AS
SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS
A-1 NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
WMECO FUNDING LLC NOTES
CLASS A-1
Interest Rate Original Principal Amount Final Maturity Date
[ ]% $[ ]
PRINCIPAL AMOUNT:
WMECO Funding LLC, a limited liability company formed and existing
under the laws of the State of Delaware (herein referred to as the "Note
Issuer"), for value received, hereby promises to pay to Massachusetts RRB
Special Purpose Trust WMECO-1, or registered assigns, the Original Principal
Amount shown above in quarterly installments on the Payment Dates and in the
amounts specified on the reverse hereof or, if less, the amounts determined
pursuant to Section 8.02 of the Note Indenture, in each year, commencing on the
date determined as provided on the reverse hereof and ending on or before the
Final Maturity Date and to pay interest, at the Interest Rate shown above, on
each December 1, March 1, June 1 and September 1 or if any such day is not a
Business Day, the next succeeding Business Day, commencing on December 1, 2001
and continuing until the earlier of the payment of the principal hereof or the
Final Maturity Date (each a "Payment Date"), on the principal amount of this
Class A-1 Note. Interest on this Class A-1 Note will accrue for each Payment
Date from the most recent Payment Date on which interest has been paid to but
excluding such Payment Date or, if no interest has yet been paid, from May 17,
2001. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Such principal of and interest on this Class A-1 Note shall be paid in
the manner specified on the reverse hereof.
The principal of and interest on this Class A-1 Note are payable in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts. All payments made by
the Note Issuer with respect to this Class A-1 Note shall be applied first to
interest due and payable on this Class A-1 Note as provided above and
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then to the unpaid principal of this Class A-1 Note, all in the manner set forth
in Section 8.02 of the Note Indenture.
Reference is made to the further provisions of this Class A-1 Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Class A-1 Note.
The Holder of this Class A-1 Note by the acceptance hereof agrees to be
bound by the terms of the Note Indenture.
Unless the certificate of authentication hereon has been executed by
the Note Trustee whose name appears below by manual signature, this Class A-1
Note shall not be entitled to any benefit under the Note Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Note Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: _________ ___, _______
WMECO FUNDING LLC
By:
---------------------------------
Name:
Title:
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NOTE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: [ ], ____
This is one of the Notes referred to in the within-mentioned Note
Indenture.
THE BANK OF NEW YORK,
as Note Trustee or
By:
---------------------------------
Name:
Title:
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[REVERSE OF NOTE]
This Class A-1 Note is one of a duly authorized issue of Notes of the
Note Issuer, designated as its WMECO Funding LLC Notes (herein called the
"Notes"), issuable in one or more Classes, and further designated as a Class A-1
Note (collectively with all other Class A-1 Notes of this issue, the "Class A-1
Notes"), all issued under a Note Indenture dated as of May 17, 2001 (together
with all amendments and supplements thereto, the "Note Indenture"), between the
Note Issuer and The Bank of New York, as Note Trustee (the "Note Trustee," which
term includes any successor trustee under the Note Indenture), to which Note
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Note
Issuer, the Note Trustee and the Holders of the Notes. All terms used in this
Class A-1 Note that are defined in the Note Indenture shall have the meanings
assigned to them in the Note Indenture.
The Class A-1 Notes and the other Classes of Notes issued by the Note
Issuer are and will be equally and ratably secured by the collateral pledged as
security therefor, as provided in the Note Indenture.
The principal of this Class A-1 Note shall be payable on each Payment
Date only to the extent that amounts in the Collection Account are available
therefor, and only until the outstanding principal balance thereof on such
Payment Date (after giving effect to all payments of principal, if any, made on
such Payment Date) has been reduced to the principal balance specified in the
Expected Amortization Schedule which is attached to the Note Indenture as
Schedule A, unless payable earlier either because (x) an Event of Default shall
have occurred and be continuing and the Note Trustee or the Holders of Notes
representing not less than a majority of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in accordance with
Section 5.02 of the Note Indenture, (y) the Note Issuer, at its option, shall
have called for the redemption of the Notes pursuant to Section 10.01 of the
Note Indenture or (z) the Note Issuer shall have called for the redemption of
the Notes pursuant to Section 10.04 of the Note Indenture if the Seller is
required to repurchase the Transition Property pursuant to Section 5.01(b) of
the Sale Agreement. Actual principal payments may, however, be made in lesser
than expected amounts and at later than expected times as determined pursuant to
Section 8.02 of the Note Indenture. The entire unpaid principal amount of this
Class A-1 Note shall be due and payable on the earlier of the Final Maturity
Date hereof, the Optional Redemption Date, if any, and the Mandatory Redemption
Date, if any, herefor. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable, if not then previously
paid, on the date on which an Event of Default shall have occurred and be
continuing and the Note Trustee or the Holders of the Notes representing not
less than a majority of the Outstanding Amount of the Notes have declared the
Notes to be immediately due and payable in the manner provided in Section 5.02
of the Note Indenture. All principal payments on the Class A-1 Notes shall be
made pro rata to the Class A-1 Noteholders entitled thereto based on the
respective principal amounts of the Class A-1 Notes held by them.
Payments of interest on this Class A-1 Note due and payable on each
Payment Date, together with the installment of principal shall be made by check
mailed first-class, postage prepaid, to the Person whose name appears as the
Registered Holder of this Class A-1 Note (or one or more Predecessor Notes) on
the Note Register as of the close of business on the Record
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Date, except that with respect to Notes registered on the Record Date in the
name of the Certificate Trustee, payments will be made by wire transfer in
immediately available funds to the account designated by the Certificate Trustee
and except for the final installment of principal payable with respect to this
Class A-1 Note on a Payment Date which shall be payable as provided below. Such
checks shall be mailed to the Person entitled thereto at the address of such
Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Class A-1 Note be submitted for notation of payment.
Any reduction in the principal amount of this Class A-1 Note (or any one or more
Predecessor Notes) effected by any payments made on any Payment Date shall be
binding upon all future Holders of this Class A-1 Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Note Indenture, for payment in full of the then remaining unpaid
principal amount of this Class A-1 Note on a Payment Date, then the Note
Trustee, in the name of and on behalf of the Note Issuer, will notify the Person
who was the Registered Holder hereof as of the Record Date preceding such
Payment Date by notice mailed no later than five days prior to such final
Payment Date and shall specify that such final installment will be payable only
upon presentation and surrender of this Class A-1 Note and shall specify the
place where this Class A-1 Note may be presented and surrendered for payment of
such installment.
The Note Issuer shall pay interest on overdue installments of interest
at the Note Interest Rate to the extent lawful.
As provided in the Note Indenture, the Class A-1 Notes may be redeemed,
in whole but not in part, at the option of the Note Issuer on any Payment Date
at the Optional Redemption Price if, after giving effect to payments that would
otherwise be made on such Payment Date, the Outstanding Amount of the Notes has
been reduced to less than five percent of the initial principal balance thereof.
In addition, as provided in the Note Indenture, if the Seller is required to
repurchase the Transition Property pursuant to Section 5.01(b) of the Sale
Agreement, the Note Issuer will be required to redeem all outstanding Notes,
including the Class A-1 Notes, on or before the fifth Business Day following the
Repurchase Date (as defined in the Sale Agreement).
As provided in the Note Indenture and subject to certain limitations
set forth therein, the transfer of this Class A-1 Note may be registered on the
Note Register upon surrender of this Class A-1 Note for registration of transfer
at the office or agency designated by the Note Issuer pursuant to the Note
Indenture, duly endorsed by, or accompanied by (a) a written instrument of
transfer in form satisfactory to the Note Trustee duly executed by the Holder
hereof or his attorney duly authorized in writing, with such signature
guaranteed by an institution which is a member of one of the following
recognized Signature Guaranty Programs: (i) The Securities Transfer Agent
Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program
(MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other
guarantee program acceptable to the Note Trustee, and (b) such other documents
as the Note Trustee may require, and thereupon one or more new Class A-1 Notes
of Minimum Denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Class A-1 Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
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registration of transfer or exchange, other than exchanges pursuant to Section
2.04 of the Note Indenture not involving any transfer.
Each Noteholder, by acceptance of a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Note Issuer or the Note Trustee on the Notes or under the Note Indenture
or any certificate or other writing delivered in connection therewith, against
(i) the Note Trustee in its individual capacity, (ii) any owner of a membership
interest in the Note Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Note Trustee in its individual capacity,
any holder of a membership interest in the Note Issuer or the Note Trustee or of
any successor or assign of the Note Trustee in its individual capacity, except
as any such Person may have expressly agreed (it being understood that the Note
Trustee has no such obligations in its individual capacity).
Prior to the due presentment for registration of transfer of this Class
A-1 Note, the Note Issuer, the Note Trustee and any agent of the Note Issuer or
the Note Trustee may treat the Person in whose name this Class A-1 Note is
registered (as of the day of determination) as the owner hereof for the purpose
of receiving payments of principal of and interest on this Class A-1 Note and
for all other purposes whatsoever, whether or not this Class A-1 Note be
overdue, and neither the Note Issuer, the Note Trustee nor any such agent shall
be affected by notice to the contrary.
The Note Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Note Issuer and the rights of the Holders of the Notes under
the Note Indenture at any time by the Note Issuer with the consent of the
Holders of Notes representing a majority of the Outstanding Amount of all Notes
at the time Outstanding of each Class to be affected. The Note Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Note Issuer with certain provisions of
the Note Indenture and certain past defaults under the Note Indenture and their
consequences. Any such consent or waiver by the Holder of this Class A-1 Note
(or any one of more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Class A-1 Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Class A-1
Note. The Note Indenture also permits the Note Trustee to amend or waive certain
terms and conditions set forth in the Note Indenture without the consent of
Holders of the Notes issued thereunder.
The term "Note Issuer" as used in this Class A-1 Note includes any
successor to the Note Issuer under the Note Indenture.
The Note Issuer is permitted by the Note Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Note
Trustee and the Holders of Notes under the Note Indenture.
The Class A-1 Notes are issuable only in registered form in
denominations as provided in the Note Indenture, subject to certain limitations
therein set forth.
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This Class A-1 Note and the Note Indenture shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts,
without reference to its conflict of law provisions, and the obligations, rights
and remedies of the parties hereunder and thereunder shall be determined in
accordance with such laws.
No reference herein to the Note Indenture and no provision of this
Class A-1 Note or of the Note Indenture shall alter or impair the obligation of
the Note Issuer, which is absolute and unconditional, to pay the principal of
and interest on this Class A-1 Note at the times, place, and rate, and in the
coin or currency herein prescribed.
The Holder of this Class A-1 Note by the acceptance hereof agrees that,
notwithstanding any provision of the Note Indenture to the contrary, the Holder
shall have no recourse against the Note Issuer, but shall look only to the
Collateral, with respect to any amounts due to the Holder under this Class A-1
Note.
B-7
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee: _________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
================================================================================
(name and address of assignee)
the within Class A-1 Note and all rights thereunder, and hereby irrevocably
constitutes and appoints __________________, attorney, to transfer said Class
A-1 Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:
---------------------------------- ----------------------------------
Signature Guaranteed:
---------------------------------------- ----------------------------------
------------------------------------
* NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Class A-1 Note in
every particular, without alteration, enlargement or any change whatsoever.
B-8
ARTICLE I Definitions and Incorporation by Reference.................................................2
Section 1.01. Definitions...........................................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act....................................11
Section 1.03. Rules of Construction................................................................12
ARTICLE II The Notes.................................................................................12
Section 2.01. Terms of the Notes...................................................................12
Section 2.02. Form.................................................................................14
Section 2.03. Execution, Authentication and Delivery...............................................14
Section 2.04. Temporary Notes......................................................................14
Section 2.05. Registration; Registration of Transfer and Exchange..................................15
Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes...........................................16
Section 2.07. Persons Deemed Owner.................................................................17
Section 2.08. Payment of Principal and Interest; Interest on Overdue Principal; Principal and
Interest Rights Preserved............................................................17
Section 2.09. Cancellation.........................................................................18
Section 2.10. Authentication and Delivery of Notes.................................................18
Section 2.11. Release of Collateral................................................................23
ARTICLE III Covenants.................................................................................24
Section 3.01. Payment of Principal and Interest....................................................24
Section 3.02. Maintenance of Office or Agency......................................................24
Section 3.03. Money for Payments To Be Held in Trust...............................................24
Section 3.04. Existence............................................................................25
Section 3.05. Protection of Collateral.............................................................25
Section 3.06. Opinions as to Collateral............................................................26
Section 3.07. Performance of Obligations; Servicing; Commission Filings............................27
Section 3.08. Negative Covenants...................................................................29
Section 3.09. Annual Statement as to Compliance....................................................29
Section 3.10. Note Issuer May Consolidate, etc., Only on Certain Terms.............................30
Section 3.11. Successor or Transferee..............................................................31
Section 3.12. No Other Business....................................................................32
Section 3.13. No Borrowing.........................................................................32
Section 3.14. Servicer's Obligations...............................................................32
Section 3.15. No Additional Notes..................................................................32
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Section 3.16. Guarantees, Loans, Advances and Other Liabilities....................................32
Section 3.17. Capital Expenditures.................................................................32
Section 3.18. Non-Routine Periodic Adjustment......................................................32
Section 3.19. Restricted Payments..................................................................32
Section 3.20. Notice of Events of Default..........................................................33
Section 3.21. Further Instruments and Acts.........................................................33
Section 3.22. Xxxxx in Chief Executive Office or Jurisdiction of Organization......................33
Section 3.23. Notice to Rating Agencies of Amendment of Other Basic Documents......................33
ARTICLE IV Satisfaction and Discharge; Defeasance....................................................33
Section 4.01. Satisfaction and Discharge of Note Indenture; Defeasance.............................33
Section 4.02. Conditions to Defeasance.............................................................35
Section 4.03. Application of Trust Money...........................................................36
Section 4.04. Repayment of Moneys Held by Paying Agent.............................................36
ARTICLE V Remedies..................................................................................36
Section 5.01. Events of Default....................................................................36
Section 5.02. Acceleration of Maturity; Rescission and Annulment...................................37
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Note Trustee.................38
Section 5.04. Remedies; Priorities.................................................................40
Section 5.05. Optional Possession of the Collateral................................................41
Section 5.06. Limitation of Suits..................................................................41
Section 5.07. Unconditional Rights of Noteholders To Receive Principal and Interest................42
Section 5.08. Restoration of Rights and Remedies...................................................42
Section 5.09. Rights and Remedies Cumulative.......................................................42
Section 5.10. Delay or Omission Not a Waiver.......................................................42
Section 5.11. Control by Noteholders...............................................................42
Section 5.12. Waiver of Past Defaults..............................................................43
Section 5.13. Undertaking for Costs................................................................43
Section 5.14. Waiver of Stay or Extension Laws.....................................................44
Section 5.15. Action on Notes......................................................................44
Section 5.16. Performance and Enforcement of Certain Obligations...................................44
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ARTICLE VI The Note Trustee..........................................................................45
Section 6.01. Duties of Note Trustee...............................................................45
Section 6.02. Rights of Note Trustee...............................................................46
Section 6.03. Individual Rights of Note Trustee....................................................48
Section 6.04. Note Trustee's Disclaimer............................................................48
Section 6.05. Notice of Defaults...................................................................48
Section 6.06. Reports by Note Trustee to Holders...................................................48
Section 6.07. Compensation and Indemnity...........................................................49
Section 6.08. Replacement of Note Trustee..........................................................51
Section 6.09. Successor Note Trustee by Merger.....................................................52
Section 6.10. Appointment of Co-Trustee or Separate Trustee........................................52
Section 6.11. Eligibility; Disqualification........................................................53
Section 6.12. Preferential Collection of Claims Against Note Issuer................................53
Section 6.13. Representations and Warranties of Note Trustee.......................................53
Section 6.14. Covenants of the Note Trustee........................................................54
ARTICLE VII Noteholders' Lists and Reports............................................................54
Section 7.01. Note Issuer To Furnish Note Trustee Names and Addresses of Noteholders...............54
Section 7.02. Preservation of Information; Communications to Noteholders...........................55
Section 7.03. Reports by Note Issuer...............................................................55
Section 7.04. Reports by Note Trustee..............................................................55
ARTICLE VIII Accounts, Disbursements and Releases......................................................56
Section 8.01. Collection of Money..................................................................56
Section 8.02. Collection Account...................................................................56
Section 8.03. General Provisions Regarding the Collection Account..................................59
Section 8.04. Release of Collateral................................................................60
Section 8.05. Opinion of Counsel...................................................................61
Section 8.06. Reports by Independent Accountants...................................................61
ARTICLE IX Supplemental Note Indentures..............................................................62
Section 9.01. Supplemental Note Indentures Without Consent of Noteholders..........................62
Section 9.02. Supplemental Note Indentures with Consent of Noteholders.............................63
Section 9.03. Execution of Supplemental Note Indentures............................................64
Section 9.04. Effect of Supplemental Note Indenture................................................65
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Section 9.05. Conformity with Trust Indenture Act..................................................65
ARTICLE X Redemption of Notes.......................................................................65
Section 10.01. Optional Redemption by Note Issuer...................................................65
Section 10.02. Form of Optional Redemption Notice...................................................65
Section 10.03. Notes Payable on Optional Redemption Date or Payment Date............................66
Section 10.04. Mandatory Redemption by Note Issuer..................................................66
Section 10.05. Form of Mandatory Redemption Notice..................................................66
Section 10.06. Notes Payable on Mandatory Redemption Date or Payment Date...........................67
ARTICLE XI Miscellaneous.............................................................................67
Section 11.01. Compliance Certificates and Opinions, etc............................................67
Section 11.02. Form of Documents Delivered to Note Trustee..........................................69
Section 11.03. Acts of Noteholders..................................................................70
Section 11.04. Notices..............................................................................70
Section 11.05. Notices to Noteholders; Waiver.......................................................73
Section 11.06. Conflict with Trust Indenture Act....................................................73
Section 11.07. Effect of Headings and Table of Contents.............................................73
Section 11.08. Successors and Assigns...............................................................73
Section 11.09. Severability.........................................................................73
Section 11.10. Benefits of Note Indenture...........................................................74
Section 11.11. Legal Holidays.......................................................................74
Section 11.12. GOVERNING LAW........................................................................74
Section 11.13. Counterparts.........................................................................74
Section 11.14. Recording of Note Indenture..........................................................74
Section 11.15. No Recourse to Certain Persons.......................................................74
Section 11.16. No Recourse to Note Issuer...........................................................74
Section 11.17. Inspection...........................................................................75
Section 11.18. Nonpetition Covenants................................................................75
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