EXHIBIT 4.4
RELIANT ENERGY TRANSITION BOND COMPANY LLC
Issuer
and
BANKERS TRUST COMPANY
Trustee
and
BANKERS TRUST COMPANY
Securities Intermediary
INDENTURE
Dated as of _____________
______________________
Securing Transition Bonds
Issuable in Series
Table of Contents
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.......................................................................... 2
SECTION 1.01. DEFINITIONS.................................................................................................... 2
SECTION 1.02. INCORPORATION BY REFERENCE OF THE TRUST INDENTURE ACT.......................................................... 2
SECTION 1.03. RULES OF CONSTRUCTION.......................................................................................... 2
ARTICLE II THE TRANSITION BONDS............................................................................................... 3
SECTION 2.01. FORM........................................................................................................... 3
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY......................................................................... 3
SECTION 2.03. DENOMINATIONS; TRANSITION BONDS ISSUABLE IN SERIES............................................................. 4
SECTION 2.04. TEMPORARY TRANSITION BONDS..................................................................................... 5
SECTION 2.05. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE............................................................ 6
SECTION 2.06. MUTILATED, DESTROYED, LOST OR STOLEN TRANSITION BONDS.......................................................... 7
SECTION 2.07. PERSONS DEEMED OWNER........................................................................................... 8
SECTION 2.08. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST; INTEREST ON OVERDUE PRINCIPAL AND PREMIUM, IF ANY;
PRINCIPAL, PREMIUM AND INTEREST RIGHTS PRESERVED............................................................... 8
SECTION 2.09. CANCELLATION................................................................................................... 9
SECTION 2.10. AMOUNT; AUTHENTICATION AND DELIVERY OF TRANSITION BONDS........................................................ 9
SECTION 2.11. BOOK-ENTRY TRANSITION BONDS.................................................................................... 14
SECTION 2.12. NOTICES TO CLEARING AGENCY..................................................................................... 15
SECTION 2.13. DEFINITIVE TRANSITION BONDS.................................................................................... 15
ARTICLE III COVENANTS......................................................................................................... 16
SECTION 3.01. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST............................................................ 16
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY................................................................................ 16
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST......................................................................... 17
SECTION 3.04. EXISTENCE...................................................................................................... 18
SECTION 3.05. PROTECTION OF TRUST ESTATE..................................................................................... 18
SECTION 3.06. OPINIONS AS TO TRUST ESTATE.................................................................................... 19
SECTION 3.07. PERFORMANCE OF OBLIGATIONS..................................................................................... 20
SECTION 3.08. NEGATIVE COVENANTS............................................................................................. 20
SECTION 3.09. ANNUAL STATEMENT AS TO COMPLIANCE.............................................................................. 21
SECTION 3.10. ISSUER MAY CONSOLIDATE, ETC.................................................................................... 21
SECTION 3.11. SUCCESSOR OR TRANSFEREE........................................................................................ 22
SECTION 3.12. NO OTHER BUSINESS.............................................................................................. 22
SECTION 3.13. NO BORROWING................................................................................................... 22
SECTION 3.14. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.............................................................. 22
SECTION 3.15. CAPITAL EXPENDITURES........................................................................................... 23
i
SECTION 3.16. RESTRICTED PAYMENTS............................................................................................ 23
SECTION 3.17. NOTICE OF EVENTS OF DEFAULT.................................................................................... 23
SECTION 3.18. INSPECTION..................................................................................................... 23
SECTION 3.19. ADJUSTED OVERCOLLATERALIZATION BALANCE SCHEDULES............................................................... 24
SECTION 3.20. SALE AGREEMENT, INTERCREDITOR AGREEMENT, ADMINISTRATION AGREEMENT AND SERVICING AGREEMENT COVENANTS............ 24
SECTION 3.21. TAXES.......................................................................................................... 26
ARTICLE IV SATISFACTION AND DISCHARGE; DEFEASANCE............................................................................. 26
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE............................................................ 26
SECTION 4.02. CONDITIONS TO DEFEASANCE....................................................................................... 28
SECTION 4.03. APPLICATION OF TRUST MONEY..................................................................................... 29
SECTION 4.04. REPAYMENT OF MONEYS HELD BY PAYING AGENT....................................................................... 29
ARTICLE V REMEDIES............................................................................................................ 30
SECTION 5.01. EVENTS OF DEFAULT.............................................................................................. 30
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT............................................................. 31
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE................................................ 32
SECTION 5.04. REMEDIES; PRIORITIES........................................................................................... 34
SECTION 5.05. OPTIONAL PRESERVATION OF THE TRUST ESTATE...................................................................... 35
SECTION 5.06. LIMITATION OF PROCEEDINGS...................................................................................... 35
SECTION 5.07. UNCONDITIONAL RIGHTS OF TRANSITION BONDHOLDERS TO RECEIVE PRINCIPAL, PREMIUM, IF ANY, AND INTEREST............. 36
SECTION 5.08. RESTORATION OF RIGHTS AND REMEDIES............................................................................. 36
SECTION 5.09. RIGHTS AND REMEDIES CUMULATIVE................................................................................. 36
SECTION 5.10. DELAY OR OMISSION NOT A WAIVER................................................................................. 37
SECTION 5.11. CONTROL BY TRANSITION BONDHOLDERS.............................................................................. 37
SECTION 5.12. WAIVER OF PAST DEFAULTS........................................................................................ 37
SECTION 5.13. UNDERTAKING FOR COSTS.......................................................................................... 38
SECTION 5.14. WAIVER OF STAY OR EXTENSION LAWS............................................................................... 38
SECTION 5.15. ACTION ON TRANSITION BONDS..................................................................................... 38
ARTICLE VI THE TRUSTEE........................................................................................................ 39
SECTION 6.01. DUTIES AND LIABILITIES OF TRUSTEE.............................................................................. 39
SECTION 6.02. RIGHTS OF TRUSTEE.............................................................................................. 40
SECTION 6.03. INDIVIDUAL RIGHTS OF TRUSTEE................................................................................... 41
SECTION 6.04. TRUSTEE'S DISCLAIMER........................................................................................... 41
SECTION 6.05. NOTICE OF DEFAULTS............................................................................................. 41
SECTION 6.06. REPORTS BY TRUSTEE TO HOLDERS.................................................................................. 41
SECTION 6.07. COMPENSATION AND INDEMNITY..................................................................................... 42
SECTION 6.08. REPLACEMENT OF TRUSTEE......................................................................................... 43
SECTION 6.09. SUCCESSOR TRUSTEE BY MERGER.................................................................................... 44
SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.................................................................. 44
SECTION 6.11. ELIGIBILITY; DISQUALIFICATION.................................................................................. 45
ii
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER............................................................... 46
SECTION 6.13. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE.................................................................. 46
ARTICLE VII TRANSITION BONDHOLDERS' LISTS AND REPORTS......................................................................... 46
SECTION 7.01. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF TRANSITION BONDHOLDERS........................................ 46
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO TRANSITION BONDHOLDERS.......................................... 46
SECTION 7.03. REPORTS BY ISSUER.............................................................................................. 47
SECTION 7.04. REPORTS BY TRUSTEE............................................................................................. 47
SECTION 7.05. PROVISION OF SERVICER REPORTS.................................................................................. 48
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES............................................................................. 48
SECTION 8.01. COLLECTION OF MONEY............................................................................................ 48
SECTION 8.02. COLLECTION ACCOUNT............................................................................................. 48
SECTION 8.03. RELEASE OF TRUST ESTATE........................................................................................ 54
SECTION 8.04. ISSUER OPINION OF COUNSEL...................................................................................... 55
SECTION 8.05. REPORTS BY INDEPENDENT ACCOUNTANTS............................................................................. 55
SECTION 8.06. REP DEPOSIT ACCOUNT............................................................................................ 55
ARTICLE IX SUPPLEMENTAL INDENTURES............................................................................................ 56
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF TRANSITION BONDHOLDERS.............................................. 56
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF TRANSITION BONDHOLDERS................................................. 57
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES........................................................................... 59
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE............................................................................... 59
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT............................................................................ 59
SECTION 9.06. REFERENCE IN TRANSITION BONDS TO SUPPLEMENTAL INDENTURES....................................................... 59
ARTICLE X REDEMPTION OF TRANSITION BONDS...................................................................................... 60
SECTION 10.01. OPTIONAL REDEMPTION BY ISSUER................................................................................. 60
SECTION 10.02. MANDATORY REDEMPTION BY ISSUER................................................................................ 60
SECTION 10.03. FORM OF REDEMPTION NOTICE..................................................................................... 60
SECTION 10.04. PAYMENT OF REDEMPTION PRICE................................................................................... 61
ARTICLE XI MISCELLANEOUS...................................................................................................... 61
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC..................................................................... 61
SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO TRUSTEE........................................................................ 62
SECTION 11.03. ACTS OF TRANSITION BONDHOLDERS................................................................................ 62
SECTION 11.04. NOTICES, ETC.................................................................................................. 63
SECTION 11.05. NOTICES TO TRANSITION BONDHOLDERS; WAIVER..................................................................... 63
SECTION 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS....................................................................... 64
SECTION 11.07. NOTICES TO LUXEMBOURG STOCK EXCHANGE.......................................................................... 64
SECTION 11.08. CONFLICT WITH TRUST INDENTURE ACT............................................................................. 65
SECTION 11.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS...................................................................... 65
SECTION 11.10. SUCCESSORS AND ASSIGNS........................................................................................ 65
SECTION 11.11. SEPARABILITY.................................................................................................. 65
SECTION 11.12. BENEFITS OF INDENTURE......................................................................................... 65
SECTION 11.13. LEGAL HOLIDAYS................................................................................................ 65
iii
SECTION 11.14. GOVERNING LAW................................................................................................. 65
SECTION 11.15. COUNTERPARTS.................................................................................................. 66
SECTION 11.16. ISSUER OBLIGATION............................................................................................. 66
SECTION 11.17. NO PETITION................................................................................................... 66
iv
INDENTURE dated as of __________, 2001, between Reliant Energy Transition
Bond Company LLC, a Delaware limited liability company (the "Issuer"), and
------
Bankers Trust Company, a New York banking corporation, in its capacity as
trustee (the "Trustee") and Bankers Trust Company, in its capacity as the
-------
Securities Intermediary hereunder, (the "Securities Intermediary").
The Issuer has duly authorized the execution and delivery of this Indenture
to provide for one or more Series of Transition Bonds, issuable as provided in
this Indenture. Each such Series of Transition Bonds will be issued only under
a separate Series Supplement to this Indenture, duly executed and delivered by
the Issuer and the Trustee. The Issuer is entering into this Indenture, and the
Trustee is accepting the trusts created hereby, each for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
each intending to be legally bound hereby.
GRANTING CLAUSE
The Issuer hereby absolutely and irrevocably Grants to the Trustee, as
trustee for the benefit of the Holders of the Transition Bonds from time to time
issued and outstanding, all of the Issuer's right, title and interest whether
now owned or hereafter acquired (and whether now existing or hereafter arising),
in, to and under (a) the Transition Property transferred by the Seller to the
Issuer from time to time pursuant to the Sale Agreement and all proceeds
thereof, (b) the Sale Agreement, (c) all Bills of Sale delivered by the Seller
pursuant to the Sale Agreement, (d) the Servicing Agreement and any
subservicing, agency, intercreditor, or collection agreements executed in
connection therewith, including, without limitation, the Intercreditor
Agreement, (e) the Administration Agreement, (f) the Collection Account and all
subaccounts thereof (including for each Series, without limitation, the General
Subaccount, the Overcollateralization Subaccount, and the REP Deposit Account,
the Capital Subaccount, and the Reserve Subaccount and any Defeasance
Subaccount) and all cash, securities, instruments, investment property or other
assets credited to or deposited in the Collection Account or any subaccount
thereof from time to time or purchased with funds therefrom, and all financial
assets and securities entitlements carried therein or credited thereto, (g) all
other property of whatever kind owned from time to time by the Issuer other than
any cash released to the Issuer by the Trustee pursuant to Section 8.02, (h) all
present and future claims, demands, causes and choses in action in respect of
any or all of the foregoing and (i) 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, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, general
intangibles, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, payment intangibles, letter-
of-credit rights, investment property, commercial tort claims, documents, rights
to payment of any and every kind, and other forms of obligations and
receivables, instruments and other property which at any time constitute all or
part of or are included in the proceeds of any of the foregoing (collectively,
the "Trust Estate").
------------
Such Grants are made to the Trustee to have and to hold in trust to secure
the payment of principal of and premium, if any, and interest on, and any other
amounts (including all fees, expenses, counsel fees and other amounts due and
owing to the Trustee, and any credit
1
enhancement provider) owing in respect of, the Transition Bonds equally and
ratably without prejudice, preference, priority or distinction, except as
expressly provided in this Indenture and to secure performance by the Issuer of
all of the Issuer's obligations under this Indenture with respect to the
Transition Bonds, all as provided in this Indenture.
The Trustee, as trustee on behalf of the Holders of the Transition Bonds,
acknowledges such Grant, accepts the trusts hereunder in accordance with the
provisions hereof and agrees to perform its duties herein required.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS. Capitalized terms used but not otherwise
defined in this Indenture have the respective meanings set forth in Appendix A
hereto unless the context otherwise requires.
SECTION 1.02. INCORPORATION BY REFERENCE OF THE TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. Each of the
following TIA terms used in this Indenture has the following meaning:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Transition Bonds.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule have the
meaning assigned to them by such definitions.
SECTION 1.03. RULES OF CONSTRUCTION.
(i) 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;
(ii) "including" means including without limitation;
(iii) with respect to terms defined in Appendix A hereto, the
meanings shall be equally applicable to both the singular and plural forms
of such terms and shall refer to either gender as may be appropriate;
(iv) unless otherwise specified, references herein to Sections or
Articles are to Sections or Articles of this Indenture; and
2
(v) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
THE TRANSITION BONDS
SECTION 2.01. FORM. The Transition Bonds and the Trustee's certificate of
authentication shall be in substantially the forms set forth in the related
Series Supplement, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture or by the
related Series Supplement and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the Managers of the Issuer executing
such Transition Bonds, as evidenced by their execution of such Transition Bonds.
Any portion of the text of any Transition Bond may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Transition
Bond. Each Transition Bond shall be dated the date of its authentication.
The Transition Bonds shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the Managers of the Issuer executing
such Transition Bonds, as evidenced by their execution of such Transition Bonds.
Each Transition Bond shall bear upon its face the designation so selected
for the Series and Class, if any, to which it belongs. The terms of all
Transition Bonds of the same Series shall be the same, unless such Series is
comprised of one or more Classes, in which case the terms of all Transition
Bonds of the same Class shall be the same.
Each Transition Bond shall state that the Texas Electric Choice Plan
provides that the State of Texas pledges "for the benefit and protection of
financing parties and the electric utility, that it will not take or permit any
action that would impair the value of the transition property, or except as
permitted . . . [through the Transition Charge Adjustment Process] . . . reduce,
alter, or impair the transition charges to be imposed, collected, and remitted
to financing parties, until the principal, interest, and premium, and any other
charges incurred and contracts to be performed in connection with the related
transition bonds have been paid and performed in full."
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY. The Transition Bonds
shall be executed on behalf of the Issuer by a Manager. The signature of any
such Manager on the Transition Bonds may be manual or facsimile.
Transition Bonds bearing the manual or facsimile signature of individuals
who were at any time Managers shall bind the Issuer, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Transition Bonds.
At any time and from time to time after the execution and delivery of this
Indenture, the Issuer may deliver Transition Bonds executed on behalf of the
Issuer to the Trustee pursuant to
3
an Issuer Order for authentication; and the Trustee shall authenticate and
deliver such Transition Bonds as in this Indenture provided and not otherwise.
No Transition Bond shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Transition
Bond a certificate of authentication substantially in the form provided for
herein executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Transition Bond shall be conclusive
evidence, and the only evidence, that such Transition Bond has been duly
authenticated and delivered hereunder.
To the extent any of the Transition Bonds are listed on the Luxembourg
Stock Exchange and the rules and regulations of such exchange so require, a
transfer or other agent appointed pursuant to Section 3.02 shall be authorized
on behalf of the Trustee to execute and deliver such certificate of
authentication.
SECTION 2.03. DENOMINATIONS; TRANSITION BONDS ISSUABLE IN SERIES. The
Transition Bonds of each Series shall be issuable as registered Transition Bonds
in Authorized Denominations.
The Transition Bonds may, at the election of and as authorized by a Manager
and set forth in a Series Supplement, be issued in one or more Series (each of
which may be comprised of one or more Classes), and shall be designated
generally as the "Transition Bonds" of the Issuer, with such further particular
designations added or incorporated in such title for the Transition Bonds of any
particular Series or Class as a Manager of the Issuer may determine and as set
forth in the Series Supplement therefor.
Each Series of Transition Bonds shall be created by a Series Supplement
authorized by a Manager and establishing the terms and provisions of such Series
and, if applicable, any Classes thereof. The several Series and Classes thereof
may differ as between Series and Classes, in respect of any of the following
matters:
(i) designation of the Series and, if applicable, the Classes
thereof;
(ii) the aggregate initial principal amount of the Transition Bonds
of the Series and, if applicable, each Class thereof;
(iii) the Bond Rate of the Series and, if applicable, each Class
thereof or the formula, if any, used to calculate the applicable Bond Rate
or Bond Rates for the Series and each Class thereof;
(iv) the Payment Dates for the Series and, if applicable, each Class
thereof;
(v) the Expected Final Payment Date of the Series, and, if
applicable, each Class thereof ;
(vi) the Series Final Maturity Date for the Series and, if
applicable, the Class Final Maturity Date for each Class thereof;
4
(vii) the Series Issuance Date for the Series;
(viii) the place or places for payments with respect to the Series
and, if applicable, each Class thereof;
(ix) the Authorized Denominations for the Series and, if
applicable, each Class thereof;
(x) the provisions, if any, for redemption of the Series by the
Issuer and, if applicable, each Class thereof;
(xi) the Expected Amortization Schedule for the Series and, if
applicable, each Class thereof;
(xii) the Overcollateralization Amount with respect to the Series;
(xiii) the Required Capital Amount with respect to the Series;
(xiv) the Calculation Dates and Adjustment Dates for the Series;
(xv) the credit enhancement, if any, applicable to the Series and
each Class thereof; and
(xvi) any other terms of the Series or Class that are not
inconsistent with the provisions of this Indenture.
SECTION 2.04. TEMPORARY TRANSITION BONDS. Pending the preparation of
definitive Transition Bonds pursuant to Section 2.13, or by agreement of the
purchasers of all Transition Bonds or, in the case of Transition Bonds held in a
book-entry only system by a Clearing Agency, a Manager on behalf of the Issuer
may execute, and upon receipt of an Issuer Order, the Trustee shall authenticate
and deliver temporary Transition Bonds which are printed, lithographed,
typewritten, mimeographed or otherwise produced of the tenor of the definitive
Transition Bonds in lieu of which they are issued and with such variations not
inconsistent with the terms of this Indenture as a Manager executing such
Transition Bonds may determine, as evidenced by its execution of such Transition
Bonds.
If temporary Transition Bonds are issued, the Issuer will cause definitive
Transition Bonds to be prepared without unreasonable delay except where
temporary Transition Bonds are held by a Clearing Agency. After the preparation
of definitive Transition Bonds, the temporary Transition Bonds shall be
exchangeable for definitive Transition Bonds upon surrender of the temporary
Transition Bonds at the office or agency of the 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 Transition Bonds, a Manager on behalf
of the Issuer shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like Series (and, if applicable, Class) and initial
principal amount of definitive Transition Bonds in Authorized Denominations.
Until so exchanged, the temporary Transition Bonds shall in all respects be
entitled to the same benefits under this Indenture as definitive Transition
Bonds.
5
SECTION 2.05. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The
Issuer shall cause to be kept a register (the "Transition Bond Register") in
------------------------
which, subject to such reasonable regulations as it may prescribe, the
Transition Bond Registrar shall provide for the registration of Transition Bonds
and the registration of transfers of Transition Bonds. The Trustee shall be
Transition Bond Registrar for the purpose of registering Transition Bonds and
transfers of Transition Bonds as herein provided. Upon any resignation of any
Transition Bond Registrar, the Issuer shall promptly appoint a successor or, if
it elects not to make such an appointment, assume the duties of Transition Bond
Registrar.
If a Person other than the Trustee is appointed by the Issuer as Transition
Bond Registrar, the Issuer shall give the Trustee and any transfer, paying, or
listing agent of the Issuer prompt written notice of the appointment of such
Transition Bond Registrar and of the location, and any change in the location,
of the Transition Bond Register, and the Trustee and any such agent shall have
the right to inspect the Transition Bond Register at all reasonable times and to
obtain copies thereof, and the Trustee shall have the right to rely conclusively
upon a certificate executed on behalf of the Transition Bond Registrar by a duly
authorized officer thereof as to the names and addresses of the Holders of the
Transition Bonds and the principal amounts and number of such Transition Bonds.
Upon surrender for registration of transfer of any Transition Bond at the
office or agency of the Issuer to be maintained as provided in Section 3.02, a
Manager on behalf of the Issuer shall execute, and the Trustee shall
authenticate and the Transition Bondholder shall obtain from the Trustee, in the
name of the designated transferee or transferees, one or more new Transition
Bonds in any Authorized Denominations of a like Series (and, if applicable,
Class) and aggregate outstanding principal amount.
At the option of the Holder, Transition Bonds may be exchanged for other
Transition Bonds of a like Series (and, if applicable, Class) and aggregate
outstanding principal amount in Authorized Denominations upon surrender of the
Transition Bonds to be exchanged at such office or agency. Whenever any
Transition Bonds are so surrendered for exchange, a Manager on behalf of the
Issuer shall execute, and the Trustee shall authenticate, and the Transition
Bondholder shall obtain from the Trustee the Transition Bonds which the
Transition Bondholder making the exchange is entitled to receive.
All Transition Bonds issued upon any registration of transfer or exchange
of Transition Bonds shall be the valid obligations of the Issuer, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Transition Bonds surrendered upon such registration of transfer or exchange.
Every Transition Bond presented or surrendered for registration of transfer
or exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in the form set forth in Exhibit A hereto or such other form as is
satisfactory to the Trustee duly executed by, the Holder thereof or such
Holder's attorney duly authorized in writing, with such signature guaranteed by
an Eligible Guarantor Institution in the form set forth in such Transition Bond.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Transition Bonds (except as may be required by the rules
and regulations of the Luxembourg
6
Stock Exchange with respect to any Transition Bonds listed thereon), but, other
than in respect of exchanges pursuant to Section 2.04 or 9.06 not involving any
transfer, the Issuer or the Trustee 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 Transition Bonds.
The preceding provisions of this Section notwithstanding, except to the
extent otherwise required by the rules and regulations of the Luxembourg Stock
Exchange with respect to any Transition Bonds listed thereon, the Issuer shall
not be required to make, and the Transition Bond Registrar need not register,
transfers or exchanges of Transition Bonds selected for redemption or transfers
or exchanges of any Transition Bond for a period of 15 days preceding the Final
Maturity Date with respect to such Transition Bond.
SECTION 2.06. MUTILATED, DESTROYED, LOST OR STOLEN TRANSITION BONDS. If
(i) any mutilated Transition Bond is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Transition Bond, and (ii) there is delivered to the Trustee such security or
indemnity as may be required by it to hold the Issuer and the Trustee harmless,
then, in the absence of written notice to the Issuer, the Transition Bond
Registrar or the Trustee that such Transition Bond has been acquired by a bona
fide purchaser, a Manager on behalf of the Issuer shall execute, and upon a
Manager's written request the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Transition Bond, a replacement Transition Bond of like Series (and, if
applicable, Class), tenor and initial principal amount in Authorized
Denominations, bearing a number not contemporaneously outstanding; provided,
--------
however, that if any such destroyed, lost or stolen Transition Bond, but not a
-------
mutilated Transition Bond, shall have become or within seven days shall be due
and payable, or shall have been called for redemption, instead of issuing a
replacement Transition Bond, the Issuer may pay such destroyed, lost or stolen
Transition Bond when so due or payable or upon the Redemption Date without
surrender thereof. If, after the delivery of such replacement Transition Bond
or payment of a destroyed, lost or stolen Transition Bond pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original
Transition Bond in lieu of which such replacement Transition Bond was issued, or
in respect of which such payment was made, presents for payment such original
Transition Bond, the Issuer and the Trustee shall be entitled to recover such
replacement Transition Bond (or such payment) from the Person to whom it was
delivered or any Person taking such replacement Transition Bond from such Person
to whom such replacement Transition Bond was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Transition Bond under this Section,
the Issuer may require the payment by the Holder of such Transition Bond 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 Trustee and its counsel) connected therewith.
Every replacement Transition Bond issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Transition Bond shall
constitute an original additional contractual obligation of the Issuer, whether
or not the mutilated, destroyed, lost or stolen Transition Bond shall be at any
time enforceable by anyone, and shall be entitled to all the
7
benefits of this Indenture equally and proportionately with any and all other
Transition Bonds 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 Transition Bonds.
SECTION 2.07. PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Transition Bond, the Issuer, the Trustee and any
agent of the Issuer or the Trustee may treat the Person in whose name any
Transition Bond is registered (as of the day of determination) as the owner of
such Transition Bond for the purpose of receiving payments of principal of and
premium, if any, and interest on such Transition Bond and for all other purposes
whatsoever, whether or not such Transition Bond be overdue, and neither the
Issuer, the Trustee nor any agent of the Issuer or the Trustee shall be affected
by notice to the contrary.
SECTION 2.08. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST;
INTEREST ON OVERDUE PRINCIPAL AND PREMIUM, IF ANY; PRINCIPAL, PREMIUM AND
INTEREST RIGHTS PRESERVED.
(a) The Transition Bonds shall accrue interest as provided in the form of
Transition Bond attached to the Series Supplement for such Transition Bonds, at
the applicable Bond Rate specified therein, and such interest shall be payable
on each Payment Date as specified therein. Any installment of interest,
principal or premium, if any, payable on any Transition Bond which is punctually
paid or duly provided for by the Issuer on the applicable Payment Date shall be
paid to the Person in whose name such Transition Bond (or one or more
Predecessor Transition Bonds) 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 Transition Bond Register on such Record Date, by wire or in
such other manner as may be provided in the related Series Supplement, except
that with respect to Transition Bonds registered on a Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee and except for the final installment of
principal and premium, if any, payable with respect to such Transition Bond on a
Payment Date which shall be payable as provided in clause (b) below. The funds
represented by any such checks returned undelivered shall be held in accordance
with Section 3.03.
(b) The principal of each Transition Bond of each Series (and, if
applicable, Class) shall be payable in installments on each Payment Date
specified in the Expected Amortization Schedule included in the form of
Transition Bond attached to the Series Supplement for such Transition Bonds, but
only to the extent that moneys are available for such payment pursuant to
Section 8.02; provided that installments of principal not paid when scheduled to
--------
be paid shall be paid upon receipt of moneys available for such purpose, in the
order set forth in the applicable Expected Amortization Schedule. Failure to pay
in accordance with such Expected Amortization Schedule because moneys are not
available pursuant to Section 8.02 to make such payments shall not constitute a
Default or Event of Default under this Indenture. Notwithstanding the foregoing,
the entire unpaid principal amount of the Transition Bonds of any Series or
Class shall
8
be due and payable, if not previously paid (i) on the Series Final Maturity Date
(or, if applicable, Class Final Maturity Date) therefor, (ii) on the date on
which the Transition Bonds of all Series have been declared immediately due and
payable in accordance with Section 5.02 or (iii) on the Redemption Date, if any,
therefor. The Trustee shall notify the Person in whose name a Transition Bond is
registered at the close of business on the Record Date preceding the Payment
Date on which the Issuer expects that the final installment of principal of and
premium, if any, and interest on such Transition Bond will be paid. Such notice
shall be mailed no later than five days prior to such expected final Payment
Date and shall specify that such final installment of principal and premium, if
any, will be payable only upon presentation and surrender of such Transition
Bond and shall specify the place where such Transition Bond may be presented and
surrendered for payment of such installment, which, so long as any Transition
Bonds are listed on the Luxembourg Stock Exchange, shall include the office of
the paying agent in Luxembourg appointed pursuant to Section 3.02. Notices in
connection with redemptions of Transition Bonds shall be mailed to Transition
Bondholders as provided in Section 10.03.
(c) If the Issuer defaults in a payment of interest on the Transition
Bonds of any Series, the Issuer shall pay defaulted interest (plus interest on
such defaulted interest at the applicable Bond Rate to the extent lawful) in any
lawful manner. The Issuer may pay such defaulted interest to the Persons who are
Transition Bondholders on a subsequent special record date, which date shall be
at least five Business Days prior to the payment date. The Issuer shall fix or
cause to be fixed any such special record date and payment date, and, at least
10 days before any such special record date, the Issuer shall mail to each
affected Transition Bondholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
SECTION 2.09. CANCELLATION. All Transition Bonds surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver to the Trustee for
cancellation any Transition Bonds previously authenticated and delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and all
Transition Bonds so delivered shall be promptly canceled by the Trustee. No
Transition Bonds shall be authenticated in lieu of or in exchange for any
Transition Bonds canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Transition Bonds may be held or
disposed of by the Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it; provided that such Issuer Order
is timely and the Transition Bonds have not been previously disposed of by the
Trustee.
SECTION 2.10. AMOUNT; AUTHENTICATION AND DELIVERY OF TRANSITION BONDS. The
aggregate principal amount of Transition Bonds that may be authenticated and
delivered under this Indenture shall not exceed $____________ plus the amount of
any Refunding Issuance. The Issuer may issue Transition Bonds of a new Series as
a Financing Issuance or a Refunding Issuance.
Transition Bonds of a new Series may from time to time be executed by a
Manager on behalf of the Issuer and delivered to the Trustee for authentication
and thereupon the same shall
9
be authenticated and delivered by the Trustee upon Issuer Request and upon
delivery by the Issuer, at the Issuer's expense, to the Trustee of the
following:
(1) Issuer Action. An Issuer Order authorizing and directing the
-------------
execution, authentication and delivery of the Transition Bonds by the Trustee
and specifying the principal amount of Transition Bonds to be authenticated.
(2) Authorizing Certificate. A certified resolution of the Managers
-----------------------
authorizing the execution and delivery of the Series Supplement for the
Transition Bonds applied for and the execution, authentication and delivery of
such Transition Bonds.
(3) Series Supplement. A Series Supplement in form satisfactory to the
-----------------
Trustee for the Series of Transition Bonds being issued, which shall set forth
the provisions and form of the Transition Bonds of such Series (and, if
applicable, each Class thereof).
(4) Certificates of the Issuer and the Seller.
-----------------------------------------
(a) An Issuer Officer's Certificate dated as of the Series
Issuance Date, stating:
(i) that no Default has occurred and is continuing under
this Indenture and that the issuance of the Transition Bonds
being issued will not result in any Default;
(ii) that the Issuer has not assigned any interest or
participation in the Trust Estate, except for the Grant contained
in this Indenture; that the Issuer has the power and authority to
Grant the Trust Estate, and to Grant a security interest in and a
Lien upon the Trust Estate, to the Trustee, free and clear of any
other security interest, Liens, adverse claims and options; and
that such security interest is a perfected security interest in
all right, title and interest in and to the Trust Estate free and
clear of any Lien, except the Lien of this Indenture;
(iii) that the Issuer has appointed the firm of independent
certified public accountants as contemplated in Section 8.05 and
identifying such firm;
(iv) that attached thereto are duly executed, true and
complete copies of the Sale Agreement, the Servicing Agreement,
the Administration Agreement, and the Intercreditor Agreement;
(v) that all filings with the PUCT pursuant to the Texas
Electric Choice Plan and the Financing Order and all filings
required under the Texas Electric Choice Plan and all UCC
financing statements and continuation statements, if any, with
respect to the Trust Estate which are required to be filed by the
terms of the Sale Agreement, the Servicing Agreement or this
Indenture have been filed as required; and
10
(vi) that all conditions precedent provided in the Basic
Documents relating to the authentication and delivery of the
Transition Bonds have been complied with.
(b) An Officer's Certificate from the Seller, dated as of the Series
Issuance Date, to the effect that, (A) in the case of the Transition
Property to be transferred to the Issuer on such date, immediately prior to
the conveyance thereof to the Issuer pursuant to the Sale Agreement, the
Seller was the sole owner of such Transition Property and such ownership
interest was perfected; such Transition Property has been validly
transferred and sold to the Issuer free and clear of all Liens (other than
Liens created by the Issuer pursuant to this Indenture) and such transfer
is absolute, irrevocable and has been perfected; the Seller has the power
and authority to own, sell and assign such Transition Property to the
Issuer; and the Seller has duly authorized such sale and assignment to the
Issuer; and (B) the attached copy of the Financing Order creating such
Transition Property is true and correct and is in full force and effect.
(5) Issuer Opinion of Counsel. An Issuer Opinion of Counsel, portions of
-------------------------
which may be delivered by counsel for the Issuer and portions of which may be
delivered by counsel for the Seller and/or the Servicer, dated as of the Series
Issuance Date subject to customary qualifications, acceptable to the Trustee, to
the collective effect that:
(a) regarding the Financing Order, that (i) such Financing Order is
final and non-appealable and in full force and effect and (ii) the
Transition Bonds being issued are authorized to be issued under the
Financing Order;
(b) regarding the Issuer:
(i) the Issuer has the power and authority to execute and
deliver the Series Supplement and this Indenture and to issue the
Transition Bonds being issued, each of the Series Supplement and this
Indenture and such Transition Bonds have been duly authorized,
executed and delivered, and the Issuer is duly organized and is
validly existing in good standing under the laws of the jurisdiction
of its organization and is in good standing in any jurisdiction where
it is required to be qualified;
(ii) no authorization, approval or consent of any governmental
body is required for the valid issuance, authentication or delivery of
such Transition Bonds, except for any such authorization, approval or
consent as already has been obtained and such registrations as are
required under the Blue Sky and securities laws of any State;
(iii) the Transition Bonds being issued, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered, will constitute valid and binding obligations of the Issuer
entitled to the benefits of the Indenture and the related Series
Supplement;
(iv) this Indenture (including the related Series Supplement),
the Sale Agreement, the Administration Agreement, the Servicing
Agreement and the
11
Intercreditor Agreement are valid and binding agreements of the
Issuer, enforceable against the Issuer in accordance with their
respective terms, except as such enforceability may be subject to
bankruptcy, insolvency, reorganization and other similar laws
affecting the rights of creditors generally and general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(c) regarding the Seller, the Servicer, Reliant Energy and the
Administrator: the Sale Agreement, the Servicing Agreement, the
Intercreditor Agreement, and the Administration Agreement are valid and
binding agreements of the Seller, the Servicer, Reliant Energy and the
Administrator, respectively (as to which any such Person is a party),
enforceable against the Seller, the Servicer, Reliant Energy and the
Administrator in accordance with their terms except as such enforceability
may be subject to bankruptcy, insolvency, reorganization and other similar
laws affecting the rights of creditors generally and general principles of
equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) upon the delivery to the Issuer of a fully executed Xxxx of Sale
pursuant to the Sale Agreement in connection with the issuance of
Transition Bonds applied for and the payment of the purchase price of the
related Transition Property by the Issuer to the Seller pursuant to such
Xxxx of Sale and the Sale Agreement,
(i) the transfer of the Transition Property purported to be
conveyed thereby by the Seller to the Issuer pursuant to such Xxxx of
Sale and the Sale Agreement conveys all of the Seller's right, title
and interest in such Transition Property to the Issuer and will be
treated under state law as an absolute transfer of all of the Seller's
right, title, and interest in such Transition Property, other than for
federal and state income tax and financial accounting purposes,
(ii) such transfer of such Transition Property is perfected
against any third party,
(iii) such transfer has a priority over any other assignment or
transfer of any interest in such Transition Property, and
(iv) such Transition Property is free and clear of all liens
created prior to its transfer to the Issuer pursuant to such Xxxx of
Sale and the Sale Agreement;
(e) to the extent that the provisions of Section 39.309 of the Texas
Electric Choice Plan apply to the grant of a security interest by the
Issuer in the Trust Estate pursuant to this Indenture, upon the giving of
value by the Trustee to the Issuer with respect to the Trust Estate,
(i) this Indenture as supplemented creates in favor of the
Trustee a security interest in the rights of the Issuer in the Trust
Estate,
(ii) such security interest is valid and enforceable against the
Issuer and third parties, and has attached,
12
(iii) such security interest will be perfected upon filing the
related notice in accordance with Section 39.309 of the Texas Electric
Choice Plan, and
(iv) such perfected security interest will be of first priority;
(f) to the extent that the provisions of Section 39.309 of the Texas
Electric Choice Plan do not apply to the grant of a security interest by
the Issuer in the Trust Estate pursuant to this Indenture, then upon the
giving of value by the Trustee to the Issuer with respect to the Trust
Estate,
(i) this Indenture as supplemented creates in favor of the
Trustee a security interest in the rights of the Issuer in the Trust
Estate,
(ii) such security interest has attached,
(iii) with respect to a security interest governed by Articles 8
and 9 of the UCC, such security interest will be perfected upon filing
of a related financing statement in accordance with Article 9 of the
UCC, and will be enforceable against third parties; and
(iv) with respect to a security interest governed by Articles 8
and 9 of the UCC, based solely on a review of UCC search reports, such
perfected security interest will be of first priority;
(g) the Indenture has been duly qualified under the Trust Indenture
Act and either (i) the Series Supplement for the Transition Bonds applied
for has been duly qualified under the Trust Indenture Act or (ii) no such
qualification of such Series Supplement is necessary;
(h) all instruments furnished to the Trustee conform to the
requirements of this Indenture and constitute all the documents required to
be delivered hereunder for the Trustee to authenticate and deliver the
Transition Bonds applied for and all conditions precedent provided for in
this Indenture relating to the authentication and delivery of such
Transition Bonds (unless waived in writing by the Trustee) have been
complied with;
(i) either (A) the registration statement covering the Transition
Bonds is effective under the Securities Act of 1933 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 of 1933 nor have proceedings therefor been instituted by the
Commission or (B) the Transition Bonds are exempt from the registration
requirements under the Securities Act of 1933;
(j) the Sale Agreement, the Servicing Agreement, and the
Administration Agreement have been duly authorized, executed and delivered
by the Seller, the Servicer, the Issuer and the Administrator, respectively
(as to which any such Person is a party);
13
(k) the Intercreditor Agreement has been duly authorized, executed
and delivered by Reliant Energy, the Servicer, and the Issuer, and
(l) the Issuer is not now and, following the issuance of the
Transition Bonds will not be, required to be registered under the
Investment Company Act of 1940, as amended.
(6) Accountant's Certificate or Opinion. A certificate or opinion
-----------------------------------
complying with the requirements of Section 11.01, addressed to the Issuer and
the Trustee of a firm of Independent certified public accountants of recognized
national reputation to the effect that (a) such accountants are Independent
within the meaning of the Indenture, and are independent public accountants
within the meaning of the standards of The American Institute of Certified
Public Accountants, and (b) with respect to the Trust Estate, they have reviewed
calculations made by the Issuer and determined that, based on the assumptions
used by the Issuer in calculating the initial Transition Charges with respect to
the transferred Transition Property or, if applicable, the most recent revised
Transition Charges with respect to the transferred Transition Property, and
taking into account amounts on deposit in the Reserve Subaccount, as of the
Series Issuance Date for such Series (after giving effect to the issuance of
such Series and the application of the proceeds therefrom) such Transition
Charges are sufficient to (i) pay Operating Expenses when incurred plus any
amounts due under any interest rate protection agreement, (ii) pay interest on
each Series of Transition Bonds at their respective Bond Rates when due, (iii)
pay principal of the Transition Bonds of all Series in accordance with their
respective Expected Amortization Schedules and (iv) fund the Scheduled
Overcollateralization Level and replenish any shortfalls in the Capital
Subaccount as of each Payment Date.
(7) Rating Agency Condition. The Trustee shall receive written notice from
-----------------------
each Rating Agency that the issuance of any additional Series of Transition
Bonds being issued will not result in a reduction or withdrawal of the then-
current rating by such Rating Agency of any outstanding Series or Class of
Transition Bonds.
(8) Xxxx of Sale. If the issuance of a Series of Transition Bonds is a
------------
Financing Issuance, the Xxxx of Sale delivered to the Issuer under the Sale
Agreement with respect to the Transition Property being purchased with the
proceeds of such Financing Issuance.
(9) Moneys for Refunding. If the issuance of a Series of Transition Bonds
--------------------
is a Refunding Issuance, the amount of money necessary to pay the outstanding
principal balance of, and premium and interest on, the Transition Bonds being
refunded to the Redemption Date for the Transition Bonds, is to be deposited
into a separate account with the Trustee.
(10) Required Capital Amount. Evidence satisfactory to the Trustee that the
-----------------------
Required Capital Amount for such Series has been credited to the Capital
Subaccount.
SECTION 2.11. BOOK-ENTRY TRANSITION BONDS. Unless otherwise specified in
the related Series Supplement, each Series of Transition Bonds, upon original
issuance, will be issued in the form of a typewritten Transition Bond or
Transition Bonds representing the Book-Entry Transition Bonds, to be delivered
to DTC, as the initial Clearing Agency, by, or on behalf of, the Issuer. Such
Transition Bond shall initially be registered on the Transition Bond Register
14
in the name of Cede & Co., the nominee of the initial Clearing Agency, and no
Transition Bond Owner will receive a definitive Transition Bond representing
such Transition Bond Owner's interest in such Transition Bond, except as
provided in Section 2.13. Unless and until definitive, fully registered
Transition Bonds (the "Definitive Transition Bonds") have been issued to
---------------------------
Transition Bondholders pursuant to Section 2.13:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Transition Bond Registrar and the Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and premium, if any, and interest on
the Transition Bonds and the giving of instructions or directions
hereunder) as the sole Holder of the Transition Bonds, and shall have no
obligation to the Transition Bond Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Transition Bond Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such Transition Bond Owners and the Clearing
Agency or the Clearing Agency Participants. Pursuant to the DTC Agreement,
unless and until Definitive Transition Bonds are issued pursuant to Section
2.13, the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments of principal
of and premium, if any, and interest on the Transition Bonds to such
Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Transition Bonds
evidencing a specified percentage of the Outstanding Amount of the
Transition Bonds or a Series or Class thereof, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has received
instructions to such effect from Transition Bond Owners or Clearing Agency
Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Transition Bonds or such Series or Class
and has delivered such instructions to the Trustee.
SECTION 2.12. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Transition Bondholders is required under this Indenture,
unless and until Definitive Transition Bonds shall have been issued to
Transition Bond Owners pursuant to Section 2.13, the Trustee shall give all such
notices and communications specified herein to be given to Transition
Bondholders to the Clearing Agency, and shall have no obligation to the
Transition Bond Owners.
SECTION 2.13. DEFINITIVE TRANSITION BONDS. If (i) the Issuer advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities as depository with respect to any Series
or Class of Transition Bonds and the Issuer is unable to locate a qualified
successor, (ii) the Issuer, at its option, advises the Trustee in writing that
it elects to terminate the book-entry system through the Clearing Agency with
15
respect to any Series or Class of Transition Bonds or (iii) after the occurrence
of an Event of Default, Transition Bond Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the Transition
Bonds of all Series advise the Trustee through the Clearing Agency in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Transition Bond Owners, then the Clearing
Agency shall notify all affected Transition Bond Owners and the Trustee of the
occurrence of any such event and of the availability of Definitive Transition
Bonds to affected Transition Bond Owners requesting the same. Upon surrender to
the Trustee of the typewritten Transition Bond or Transition Bonds representing
the Book-Entry Transition Bonds by the Clearing Agency, accompanied by
registration instructions, a Manager on behalf of the Issuer shall execute and
the Trustee shall authenticate the Definitive Transition Bonds in accordance
with the instructions of the Clearing Agency. None of the Issuer, the Transition
Bond Registrar or the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Any Definitive Transition Bonds listed on the Luxembourg
Stock Exchange shall be made available to the Transition Bondholders through the
office of the transfer agent appointed pursuant to Section 3.02. Upon the
issuance of Definitive Transition Bonds, the Trustee shall recognize the Holders
of the Definitive Transition Bonds as Transition Bondholders.
Definitive Transition Bonds will be transferable and exchangeable at the
offices of the Transition Bond Registrar or, with respect to any Transition
Bonds listed on the Luxembourg Stock Exchange, at the offices of the transfer
agent appointed pursuant to Section 3.02. With respect to any transfer of such
listed Transition Bonds, the new Definitive Transition Bonds registered in the
names specified by the transferee and the original transferor shall be available
at the offices of such transfer agent.
ARTICLE III
COVENANTS
SECTION 3.01. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST. The
Issuer will duly and punctually pay the Principal of and premium, if any, and
Interest on the Transition Bonds in accordance with the terms of the Transition
Bonds and this Indenture; provided that except on the Series Final Maturity
--------
Date, the Class Final Maturity Date or the Redemption Date for a Series or Class
of Transition Bonds or upon the acceleration of the Transition Bonds following
the occurrence of an Event of Default, the Issuer shall only be obligated to pay
the Principal of such Transition Bonds on each Payment Date therefor to the
extent moneys are available for such payment pursuant to Section 8.02. Amounts
properly withheld under the Code by any Person from a payment to any Transition
Bondholder of Interest or Principal or premium, if any, shall be considered as
having been paid by the Issuer to such Transition Bondholder for all purposes of
this Indenture.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain in
the Borough of Manhattan, the City of New York, an office or agency where
Transition Bonds may be surrendered for registration of transfer or exchange,
and where notices and demands to or upon the Issuer in respect of the Transition
Bonds and this Indenture may be served. The Issuer hereby initially appoints the
Corporate Trust Office of the Trustee to serve
16
for the foregoing purposes. The Issuer will give prompt written notice to the
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Issuer hereby appoints the Trustee as its agent to receive all
such surrenders, notices and demands.
To the extent any of the Transition Bonds are listed on the Luxembourg
Stock Exchange and the rules of such exchange so require, (i) the Issuer will
maintain in Luxembourg (A) an office and a transfer agent where Transition Bonds
may be surrendered for registration of transfer or exchange, (B) an office and a
listing agent where notices and demands to or upon the Issuer in respect of the
Transition Bonds and this Indenture may be served, and (C) an office and a
paying agent where payments in respect of the Transition Bonds may be made and
(ii) any reference in this Indenture to the office or agency of the Issuer
referred to in Section 3.02 shall also refer to such offices, and the transfer,
listing and paying agents, of the Issuer in Luxembourg, as applicable. The
Issuer shall give the Trustee and any other agent appointed under this Section
3.02 written notice of the location and identity, and of any change in the
location or identity, of any such office or agency.
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Section 8.02(a), all payments of Principal of, or premium and Interest on, the
Transition Bonds that are to be made from amounts withdrawn from the Collection
Account pursuant to Section 8.02(d) or (e) or Section 4.03 shall be made on
behalf of the Issuer by the Trustee or by another Paying Agent, and no amounts
so withdrawn from the Collection Account for payments of Transition Bonds shall
be paid over to the Issuer except as provided in this Section and in Section
8.02.
The Issuer shall cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee (and during such time as the Trustee acts as Paying Agent, it
hereby so agrees), subject to the provisions of this Section, that such Paying
Agent will:
(i) hold all sums held by it for the payment of Principal of, or
premium or Interest on, the Transition Bonds in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee written notice of any Default by the Issuer (or
any other obligor upon the Transition Bonds) of which the Paying Agent has
actual knowledge in the making of any payment required to be made with
respect to the Transition Bonds;
(iii) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Trustee all sums held by the Paying Agent in trust for the payment of
Transition Bonds if at any time
17
the Paying Agent ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Transition Bonds of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which the sums were held by such Paying Agent; and upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money held
by the Trustee or any Paying Agent in trust for the payment of any amount of
Principal of, premium, if any, or Interest on any Transition Bond and remaining
unclaimed for two years after such amount has become due and payable shall be
discharged from such trust and be paid to the Issuer upon delivery by the Issuer
of an Issuer Order; and the Holder of such Transition Bond shall thereafter, as
an unsecured general creditor, look only to the Issuer for payment thereof (but
only to the extent of the amounts so paid to the Issuer), and all liability of
the Trustee or such Paying Agent with respect to such trust money shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
-------- -------
before being required to make any such repayment, may at the expense of the
Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including mailing notice of such repayment to Holders whose
Transition Bonds 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 Trustee or of any Paying Agent, at the last
address of record for each such Holder).
SECTION 3.04. EXISTENCE. Subject to Section 3.10, the Issuer shall keep in
full effect its existence, rights and franchises as a statutory limited
liability company under the laws of the State of Delaware (unless it becomes, or
any successor Issuer hereunder is or becomes, organized under the laws of any
other State or of the United States of America, in which case the 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 Indenture, the
Transition Bonds, the Trust Estate and each other instrument or agreement
included therein.
SECTION 3.05. PROTECTION OF TRUST ESTATE. The Issuer shall from time to
time execute and deliver, and file if required, all such supplements and
amendments hereto and
18
all such filings (including filings with the PUCT pursuant to the Texas Electric
Choice Plan), financing statements, continuation statements, instruments of
further assurance and other instruments, and shall take such other action
necessary or advisable to:
(i) maintain and preserve the Grant, Lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iii) enforce any of the Trust Estate and any other collateral;
(iv) preserve and defend title to the Trust Estate and any other
collateral and the rights of the Trustee and the Transition Bondholders in
the Trust Estate and any other collateral against the claims of all Persons
and parties; or
(v) pay any and all taxes levied or assessed upon all or any part of
the Trust Estate.
The Issuer hereby authorizes the Trustee to execute upon written direction any
filing with the PUCT, financing statement, continuation statement or other
instrument required to be filed pursuant to this Section.
SECTION 3.06. OPINIONS AS TO TRUST ESTATE. (a) On or before March 31 in
each calendar year, while any Series is outstanding, the Issuer shall furnish to
the Trustee an Issuer Opinion of Counsel stating that, in the opinion of such
counsel, either (i) all necessary action has been taken with respect to the
recording, filing, re-recording and re-filing of this Indenture, any
Supplemental Indentures and any other requisite documents and, with respect to
the execution and filing of any filings pursuant to the Texas Electric Choice
Plan, the Financing Order or the UCC, financing statements and continuation
statements as are necessary to maintain the lien and security interest, and the
first priority thereof, created by this Indenture and reciting the details of
such action or (ii) no such action is necessary to maintain such lien and
security interest, and the first priority thereof. Such Issuer Opinion of
Counsel shall also describe the recording, filing, re-recording and re-filing of
this Indenture, any indentures supplemental hereto and any other requisite
documents, and the execution and filing of any filings pursuant to the Texas
Electric Choice Plan, the Financing Order or the UCC, financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the Grant, Lien and security interest of this Indenture until March
31 in the following calendar year.
(b) Prior to the effectiveness of any amendment to the Sale Agreement or
the Servicing Agreement, the Issuer shall furnish to the Trustee an Issuer
Opinion of Counsel either (i) stating that, in the opinion of such counsel, all
filings, including filings pursuant to the Texas UCC, have been executed and
filed that are necessary fully to preserve and protect the interest of the
Issuer and the 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.
19
SECTION 3.07. PERFORMANCE OF OBLIGATIONS.
(a) The Issuer (i) shall diligently pursue any and all actions to enforce
its rights under the Basic Documents and each other instrument or agreement
included in the Trust Estate and (ii) shall not take any action and will use its
best efforts not to permit any action to be taken by others that would release
any Person from any of such Person's covenants or obligations under any such
Basic Document, 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 Basic Document, instrument or agreement,
except, in each case, as expressly provided in such Basic Document or such other
instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to the Trustee in an Issuer Officer's Certificate shall be deemed to
be action taken by the Issuer. Initially, the Issuer has contracted with the
Administrator to assist the Issuer in performing its duties under this
Indenture.
(c) The Issuer shall punctually perform and observe all of its obligations
and agreements contained in the Basic Documents and in all other instruments and
agreements included in the Trust Estate.
SECTION 3.08. NEGATIVE COVENANTS. The Issuer shall not:
(i) except as expressly permitted by this Indenture, any
Supplemental Indenture, the Sale Agreement or the Servicing Agreement,
sell, transfer, exchange or otherwise dispose of any of the assets of the
Issuer, unless directed to do so by the Trustee in accordance with Article
V;
(ii) terminate its existence, dissolve or liquidate in whole or in
part;
(iii) claim any credit on, or make any deduction from the Principal or
premium, if any, or Interest payable in respect of, the Transition Bonds
(other than amounts properly withheld from such payments under the Code) or
assert any claim against any present or former Transition Bondholder by
reason of the payment of taxes levied or assessed upon the Issuer or any
part of the Trust Estate;
(iv) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Transition Bonds
under this Indenture except as may be expressly permitted hereby, (B)
permit any Lien (other than the Lien created by this Indenture) to be
created on or extend to or otherwise arise upon or burden the Trust Estate
or any part thereof or any interest therein or the proceeds thereof or (C)
permit the Lien of this Indenture not to constitute a continuing valid
first priority security interest in the Trust Estate;
20
(v) except as contemplated by this Indenture, any Series
Supplement, the Sale Agreement, or the Servicing Agreement, enter into any
swap, hedge, or other similar financial arrangement; or
(vi) take any action that is the subject of a Rating Agency
Condition if such action would result in a reduction or withdrawal of the
then-current rating on any Outstanding Series or Class of Transition Bonds.
SECTION 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will deliver
to the Trustee, within 120 days after the end of each fiscal year of the Issuer
(commencing with the fiscal year 2001), an Issuer Officer's Certificate stating,
as to the Manager signing such Issuer Officer's Certificate, that
(i) a review of the activities of the Issuer during such year (or
relevant portion thereof) and of performance under this Indenture has been
made under such Manager's supervision; and
(ii) to the best of such Manager's knowledge, based on such review,
the Issuer has complied with all conditions and covenants under this
Indenture throughout such calendar year (or relevant portion thereof), or,
if there has been a default in complying with any such condition or
covenant, describing each such default and the nature and status thereof.
SECTION 3.10. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The
Issuer shall not consolidate or merge with or into or convert into any other
Person or sell substantially all of its assets to any other Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation, merger or conversion or to whom substantially all of
such assets are sold shall be a Person organized and existing under the
laws of the United States of America or any State and shall expressly
assume by a Supplemental Indenture, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual payment of the
Principal of and premium, if any, and Interest on all Transition Bonds and
the performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein and in the applicable Series Supplement or Series
Supplements;
(ii) the Person (if other than the Issuer) formed by or surviving
such consolidation, merger or conversion or to whom substantially all of
such assets are sold shall expressly assume all obligations and succeed to
all rights of the Issuer under the Basic Documents to which the Issuer is a
party (or under which the Issuer has rights) pursuant to an assignment and
assumption agreement executed and delivered to the Trustee, in form
satisfactory to the Trustee;
(iii) immediately after giving effect to such consolidation, merger,
conversion or sale, no Default or Event of Default shall have occurred and
be continuing;
21
(iv) prior notice to the Rating Agencies shall have been provided
and the Rating Agency Condition shall have been satisfied with respect to
such consolidation, merger, conversion or sale;
(v) the Issuer shall have received an Issuer Opinion of Counsel
(and shall have delivered copies thereof to the Trustee) to the effect that
such consolidation, merger, conversion or sale (a) will not have any
material adverse tax consequence to the Issuer or any Transition
Bondholder, (b) complies with this Indenture and all of the conditions
precedent herein relating to such transaction and (c) will result in the
Trustee maintaining a continuing valid first priority perfected security
interest in the Trust Estate;
(vi) none of the Transition Property, the Financing Order or the
Issuer's rights under the Texas Electric Choice Plan or the Financing Order
shall be impaired thereby; and
(vii) any action as is necessary to maintain the Lien created by this
Indenture shall have been taken.
SECTION 3.11. SUCCESSOR OR TRANSFEREE.
(a) Upon any consolidation, merger or conversion of the Issuer in
accordance with Section 3.10, the Person formed by or surviving such
consolidation, merger or conversion (if other than the Issuer) shall succeed to,
and be substituted for, and may exercise every right and power of, the Issuer
under this Indenture with the same effect as if such Person had been named as
the Issuer herein.
(b) Upon any sale by the Issuer of substantially all of its assets in a
sale which complies with Section 3.10, Reliant Energy Transition Bond Company
LLC will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Transition
Bonds and from every covenant and agreement of the Basic Documents to be
observed or performed on the part of the Issuer.
SECTION 3.12. NO OTHER BUSINESS. The Issuer shall not engage in any
business other than purchasing and owning Transition Property, issuing
Transition Bonds from time to time, pledging its interest in the Trust Estate to
the Trustee under this Indenture in order to secure the Transition Bonds,
entering into the Basic Documents relating to the Transition Bonds and any
interest rate protection agreement or hedge agreement executed in connection
therewith, and performing activities that are necessary, suitable or convenient
to accomplish these purposes or are incidental thereto.
SECTION 3.13. NO BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Transition Bonds and except as contemplated by the
Basic Documents.
SECTION 3.14. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except as
contemplated by the Basic Documents, 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),
22
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 other than any Eligible Investments.
SECTION 3.15. CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty) other than Transition Property purchased from the
Seller pursuant to, and in accordance with, the Sale Agreement.
SECTION 3.16. RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest in, or ownership security of, the
Issuer, (ii) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or security or (iii) 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 Issuer may make, or cause
to be made, any such distributions to any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer using funds distributed to the Issuer pursuant to Section
8.02(d) to the extent that such distributions would not cause the book value of
the remaining equity in the Issuer to decline below 0.5% of the original
principal amount of all Series of Transition Bonds which remain outstanding. The
Issuer will not, directly or indirectly, make payments to or distributions from
the Collection Account except in accordance with this Indenture and the Basic
Documents.
SECTION 3.17. NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to deliver to
the Trustee, the PUCT, the Rating Agencies and, to the extent the rules and
regulations of the Luxembourg Stock Exchange so require, any agent in Luxembourg
appointed pursuant to Section 3.02 written notice in the form of an Issuer
Officer's Certificate of any Default or Event of Default hereunder or under any
of the Basic Documents, its status and what action the Issuer is taking or
proposes to take with respect thereto within five Business Days after the
occurrence thereof.
SECTION 3.18. INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports,
and other papers of the Issuer, to make copies and extracts therefrom, to cause
such books to be audited annually by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Trustee shall
hold and shall cause its representatives to hold, in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Trustee may reasonably determine that such disclosure is
consistent with its obligations hereunder.
23
SECTION 3.19. ADJUSTED OVERCOLLATERALIZATION BALANCE SCHEDULES. Not later
than the date on which a new Series of Transition Bonds is issued or any
Outstanding Series of Transition Bonds is redeemed or defeased, the Issuer shall
deliver to the Trustee a replacement Schedule 1 hereto, adjusted to reflect such
issuance, redemption, or defeasance and setting forth the Scheduled
Overcollateralization Level for each Payment Date with respect to each Series.
SECTION 3.20. SALE AGREEMENT, INTERCREDITOR AGREEMENT, ADMINISTRATION
AGREEMENT AND SERVICING AGREEMENT COVENANTS.
(a) The Issuer agrees to take all such lawful actions to enforce its
rights under the Sale Agreement, the Intercreditor Agreement, the Administration
Agreement and the Servicing Agreement and to compel or secure the performance
and observance by the Seller, the Administrator, the Servicer and Reliant Energy
of each of their respective obligations to the Issuer under or in connection
with the Sale Agreement, the Intercreditor Agreement, the Administration
Agreement and the Servicing Agreement in accordance with the terms thereof. So
long as no Event of Default occurs and is continuing, but subject to Section
3.20(f), the Issuer may exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the Sale
Agreement, the Intercreditor Agreement, the Administration Agreement and the
Servicing Agreement; provided that such action shall not adversely affect the
--------
interests of the Holders in any material respect.
(b) If an Event of Default occurs and is continuing, the Trustee may, and
at the direction (which direction shall be in writing) of the Majority Holders
shall, exercise all rights, remedies, powers, privileges and claims of the
Issuer against the Seller, Reliant Energy, the Administrator and the Servicer,
as the case may be, under or in connection with the Sale Agreement, the
Intercreditor Agreement, the Administration Agreement and the Servicing
Agreement, including the right or power to take any action to compel or secure
performance or observance by the Seller, Reliant Energy, the Administrator or
the Servicer of each of their obligations to the Issuer thereunder and to give
any consent, request, notice, direction, approval, extension or waiver under the
Sale Agreement, the Intercreditor Agreement, the Administration Agreement and
the Servicing Agreement, and any right of the Issuer to take such action shall
be suspended.
(c) Except as set forth in Section 3.20(e) of this Indenture, with the
prior written consent of the Trustee and the PUCT, the Administration Agreement,
the Sale Agreement, the Intercreditor Agreement, and the Servicing Agreement may
be amended in accordance with the provisions thereof, so long as the Rating
Agency Condition is satisfied in connection therewith, at any time and from time
to time, without the consent of the Transition Bondholders; provided that such
--------
amendment shall not adversely affect the interest of any Transition Bondholder
in any material respect.
(d) Except as set forth in Section 3.20(e) of this Indenture, if the
Issuer, the Seller, Reliant Energy, the Administrator, the Servicer or any other
party to the respective agreement proposes to amend, modify, waive, supplement,
terminate or surrender, or agree to any amendment, modification, waiver,
supplement, termination or surrender of, the terms of the Sale Agreement, the
Intercreditor Agreement, the Administration Agreement, or the Servicing
24
Agreement, or waive timely performance or observance by the Seller, Reliant
Energy, the Administrator or the Servicer under the Sale Agreement, the
Intercreditor Agreement, the Administration Agreement or the Servicing
Agreement, in each case in such a way as would materially and adversely affect
the interests of Transition Bondholders, the Issuer shall first notify the
Rating Agencies of the proposed amendment, modification, waiver, supplement,
termination or surrender and shall notify the Trustee in writing and the Trustee
shall notify the Transition Bondholders of the proposed amendment, modification,
waiver, supplement, termination or surrender and whether the Rating Agency
Condition has been satisfied with respect thereto. The Trustee shall consent to
such proposed amendment, modification, waiver, supplement, termination or
surrender only with the prior written consent of the Majority Holders materially
and adversely affected thereby and the prior written consent of the PUCT. If any
such amendment, modification, waiver, supplement, termination or surrender shall
be so consented to by the Trustee or such Holders, the 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. For so long as any of the Transition Bonds are listed on
the Luxembourg Stock Exchange and the rules of that exchange so require, notice
of such proposed action will be published by an agent to be appointed by the
Issuer in accordance with such rules promptly following its effectiveness.
(e) If the Issuer or the Servicer proposes to amend, modify, waive,
supplement, terminate or surrender, or to agree to any amendment, modification,
supplement, termination, waiver or surrender of, the Transition Charge
Adjustment Process, the Issuer shall notify the PUCT and the Trustee in writing
and the Trustee shall notify the Transition Bondholders of such proposal and the
Trustee shall consent thereto only with the prior written consent of the PUCT
and the holders of a majority of the Outstanding Amount of the Transition Bonds
of each Series or Class affected thereby and only if the Rating Agency Condition
has been satisfied with respect thereto.
(f) Promptly following a default by the Seller under the Sale Agreement,
by the Administrator under the Administration Agreement, by Reliant Energy or
any successor to Reliant Energy under the Intercreditor Agreement, or the
occurrence of a Servicer Default under the Servicing Agreement, and at the
Issuer's expense, the Issuer agrees to take all such lawful actions as the
Trustee may request to compel or secure the performance and observance by each
of the Seller, Reliant Energy, the Administrator or the Servicer of their
obligations under and in accordance with the Sale Agreement, the Administration
Agreement, the Intercreditor Agreement or the Servicing Agreement, as the case
may be, in accordance with the terms thereof, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with such agreements to the extent and in the manner directed
by the Trustee, including the transmission of notices of any default by the
Seller, Reliant Energy, the Administrator or the Servicer, respectively,
thereunder and the institution of legal or administrative actions or Proceedings
to compel or secure performance of their obligations under the Sale Agreement,
the Administration Agreement, the Intercreditor Agreement or the Servicing
Agreement, as applicable.
(g) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Servicing Agreement, the Issuer shall promptly give written
notice thereof to the Trustee and the Rating Agencies, and shall specify in such
notice the action, if any, the Issuer is taking with
25
respect to such default. If a Servicer Default shall arise under the Servicing
Agreement, the Issuer shall take such reasonable steps as are available to it to
remedy such defaults or shall take such actions as shall have been directed by
the Trustee, as the case may be, provided that, notwithstanding the foregoing,
--------
the Issuer shall not take any action to terminate the Servicer's rights and
powers under the Servicing Agreement unless a Servicer Default shall have
occurred and be continuing, and the Trustee shall not direct the Issuer to take
such action unless a Servicer Default shall have occurred and be continuing.
(h) As promptly as possible after the giving of notice of termination to
the Servicer and the Rating Agencies of the Servicer's rights and powers
pursuant to Section 6.01 of the Servicing Agreement, the Trustee with the
written direction of the Majority Holders shall appoint a successor Servicer
(the "Successor Servicer"), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Issuer and the
Trustee. A person shall qualify as a Successor Servicer only if such Person
satisfies the requirements of Section 6.04 of the Servicing Agreement. If within
30 days after the delivery of the notice referred to above, a Successor Servicer
shall not have been appointed and accepted its appointment as such, the Trustee
may petition the PUCT or a court of competent jurisdiction to appoint a
Successor Servicer. In connection with any such appointment, the Issuer may make
such arrangements for the compensation of such Successor Servicer as it and such
Successor Servicer shall agree, subject to the limitations set forth below and
in the Servicing Agreement, and in accordance with Section 6.04 of the Servicing
Agreement, the Issuer shall enter into an agreement with such Successor Servicer
for the servicing of the Transition Property (such agreement to be in form and
substance satisfactory to the Trustee).
(i) Upon termination of the Servicer's rights and powers pursuant to the
Servicing Agreement, the Trustee shall promptly notify the Issuer, the
Transition Bondholders and the Rating Agencies in writing of such termination.
As soon as a Successor Servicer is appointed, the Issuer shall notify the
Trustee, the Transition Bondholders and the Rating Agencies of such appointment,
specifying in such notice the name and address of such Successor Servicer.
SECTION 3.21. TAXES. So long as any of the Transition Bonds are
outstanding, the Issuer shall pay all taxes, assessments and governmental
charges imposed upon it or any of its properties or assets or with respect to
any of its franchises, business, income or property before any penalty accrues
thereon if the failure to pay any such taxes, assessments and governmental
charges would, after any applicable grace periods, notices or other similar
requirements, result in a Lien on the Trust Estate.
ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE.
(a) The Transition Bonds of any Series, all moneys payable with respect
thereto and this Indenture as it applies to such Series shall cease to be of
further effect and the Lien hereunder shall be released with respect to such
Series, interest shall cease to accrue on the
26
Transition Bonds of such Series and the Trustee, on written demand of and at the
expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Transition
Bonds of such Series, when
(A) either
(1) all Transition Bonds of such Series theretofore
authenticated and delivered (other than (i) Transition Bonds that
have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.06 and (ii) Transition Bonds for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid
to the Issuer or discharged from such trust, as provided in
Section 3.03) have been delivered to the Trustee for
cancellation; or
(2) the Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Trustee cash, in trust for such
purpose, in an amount sufficient to make payments of Principal of
and Interest on the Transition Bonds of such Series and to pay
and discharge the entire indebtedness on such Transition Bonds
not theretofore delivered to the Trustee;
(B) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer with respect to such Series; and
(C) the Issuer has delivered to the Trustee an Issuer Officer's
Certificate, an Issuer Opinion of Counsel and (if required by the TIA or
the Trustee) an Independent Certificate from a firm of Independent
certified public accountants, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture with respect to Transition Bonds of such Series have been
complied with.
(b) Subject to Sections 4.01(c) and 4.02, the Issuer at any time may
terminate (i) all its obligations under this Indenture with respect to the
Transition Bonds of any Series ("Legal Defeasance Option") or (ii) its
obligations under Sections 3.04, 3.05, 3.06 (other than with respect to amounts
in the Defeasance Subaccount), 3.07, 3.08, 3.09, 3.10, 3.12, 3.13, 3.14, 3.15,
3.16, 3.17, 3.18, 3.19 and 3.20 and the operation of Section 5.01(iv) ("Covenant
Defeasance Option") with respect to any Series of Transition Bonds. The Issuer
may exercise the Legal Defeasance Option with respect to any Series of
Transition Bonds notwithstanding its prior exercise of the Covenant Defeasance
Option with respect to such Series.
If the Issuer exercises the Legal Defeasance Option with respect to any
Series, the maturity of the Transition Bonds of such Series may not be (a)
accelerated because of an Event of Default or (b) except as provided in Section
4.02, redeemed. If the Issuer exercises the Covenant Defeasance Option with
respect to any Series, the maturity of the Transition Bonds of such Series may
not be accelerated because of an Event of Default specified in Section 5.01(iv).
Upon satisfaction of the conditions set forth herein to the exercise of the
Legal Defeasance Option or the Covenant Defeasance Option with respect to any
Series of Transition
27
Bonds, the Trustee, on written demand of and at the expense of the 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 (b) above, (i) rights of
registration of transfer and exchange, (ii) rights of substitution of mutilated,
destroyed, lost or stolen Transition Bonds, (iii) rights of Transition
Bondholders to receive payments of Principal, premium, if any, and Interest, but
only from the amounts deposited with the Trustee for such payments, (iv)
Sections 4.03 and 4.04, (v) the rights, obligations and immunities of the
Trustee hereunder (including the rights of the Trustee under Section 6.07 and
the obligations of the Trustee under Section 4.03) and (vi) the rights of
Transition Bondholders under this Indenture with respect to the property
deposited with the Trustee payable to all or any of them, shall survive until
the Transition Bonds of the Series as to which this Indenture or certain
obligations hereunder have been satisfied and discharged pursuant to Section
4.01(a) or 4.01(b) and have been paid in full. Thereafter, the obligations in
Sections 6.07 and 4.04 with respect to such Series shall survive.
SECTION 4.02. CONDITIONS TO DEFEASANCE. The Issuer may exercise the Legal
Defeasance Option or the Covenant Defeasance Option with respect to any Series
of Transition Bonds only if:
(a) the Issuer irrevocably deposits or causes to be deposited in trust
with the Trustee cash or U.S. Government Obligations for the payment of
principal of and premium, if any, and interest on such Series of Transition
Bonds to the Expected Payment Date or Redemption Date therefor, as applicable,
and all other amounts due and payable hereunder, such deposit to be made in the
Defeasance Subaccount for such Series of Transition Bonds;
(b) the deposit in the Defeasance Subaccount pursuant to subsection (a) of
this Section 4.02 constitutes proceeds from a refunding of the Transition Bonds;
(c) the Issuer delivers to the Trustee a certificate from a nationally
recognized firm of Independent accountants expressing its opinion that the
payments of principal and interest when due and without reinvestment on the
deposited U.S. Government Obligations plus any deposited cash without investment
will provide cash at such times and in such amounts (but, in the case of the
Legal Defeasance Option only, not more than such amounts) as will be sufficient
to pay in respect of the Transition Bonds of such Series (i) subject to clause
(ii), principal in accordance with the Expected Amortization Schedule therefor,
(ii) if such Series is to be redeemed, the Redemption Price therefor on the
Redemption Date therefor and (iii) interest when due;
(d) in the case of the Legal Defeasance Option, the expiration of 95 days
after the deposit is made and during such 95-day period no Default specified in
Section 5.01(v) or (vi) shall have occurred and be continuing at the end of the
period; provided, however, that in determining whether a default under Section
-------- -------
5.01(v) has occurred, the requirement that the decree or order shall remain
unstayed and in effect for 90 days shall be disregarded;
(e) no Default has occurred and is continuing on the day of such deposit
and after giving effect thereto;
28
(f) in the case of the Legal Defeasance Option, the Issuer delivers to the
Trustee an Issuer Opinion of Counsel stating that (i) the 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 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 Transition
Bonds of such Series will not recognize income, gain or loss for federal income
tax purposes as a result of the exercise of such Legal Defeasance Option and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal Defeasance had
not occurred;
(g) in the case of the Covenant Defeasance Option, the Issuer delivers to
the Trustee an Issuer Opinion of Counsel to the effect that the Holders of the
Transition Bonds of such Series will not recognize income, gain or loss for
federal income tax purposes as a result of the exercise of such Covenant
Defeasance Option and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred; and
(h) the Issuer delivers to the Trustee an Issuer Officer's Certificate and
an Issuer Opinion of Counsel, each stating that all conditions precedent to the
satisfaction and discharge of the Transition Bonds of such Series to the extent
contemplated by this Article IV have been complied with.
Notwithstanding any other provision of this Section 4.02 to the contrary,
no delivery of cash or U.S. Government Obligations to the Trustee under this
Section shall terminate any obligations of the Issuer under this Indenture with
respect to any Transition Bonds which are to be redeemed prior to the Expected
Final Payment Date therefor until such Transition Bonds shall have been
irrevocably called or designated for redemption on a date thereafter on which
such Transition Bonds may be redeemed in accordance with the provisions of this
Indenture and proper notice of such redemption shall have been given in
accordance with the provisions of this Indenture or the Issuer shall have given
the Trustee, in form satisfactory to the Trustee, irrevocable written
instructions to give, in the manner and at the times prescribed herein, notice
of redemption of such Series.
SECTION 4.03. APPLICATION OF TRUST MONEY. All moneys or U.S. Government
Obligations deposited with the Trustee pursuant to Section 4.01 or 4.02 hereof
with respect to any Series of Transition Bonds shall be held in trust in the
Defeasance Subaccount for such Series and applied by it, in accordance with the
provisions of the Transition Bonds and this Indenture, to the payment, either
directly or through any Paying Agent, as the Trustee may determine, to the
Holders of the particular Transition Bonds for the payment or redemption of
which such moneys have been deposited with the Trustee, of all sums due and to
become due thereon for Principal, premium, if any, and Interest. Such moneys
shall be segregated and held apart solely for paying such Transition Bonds and
such Transition Bonds shall not be entitled to any amounts on deposit in the
Collection Account other than amounts on deposit in the Defeasance Subaccount
for such Transition Bonds.
SECTION 4.04. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection with
the satisfaction and discharge of this Indenture or the Covenant Defeasance
29
Option or Legal Defeasance Option with respect to the Transition Bonds of any
Series, all moneys then held by any Paying Agent other than the Trustee under
the provisions of this Indenture or the Intercreditor Agreement with respect to
such Transition Bonds shall, upon written demand of the Issuer, be paid to the
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):
(i) default in the payment of any Interest on any Transition Bond
when the same becomes due and payable and the continuation of such default
for five Business Days;
(ii) default in the payment of the then unpaid Principal of any
Transition Bond of any Series on the Series Final Maturity Date for such
Series or, if applicable, any Class on the Class Final Maturity Date for
such Class;
(iii) default in the payment of the Redemption Price for any
Transition Bond on the Redemption Date therefor;
(iv) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
specifically dealt with in clause (i), (ii) or (iii) above), any covenant
or agreement of the Issuer made in any interest rate protection agreement,
hedge agreement or credit enhancement agreement permitted under Section
3.13 hereof and any Series Supplement, or any representation or warranty of
the Issuer made herein or therein or in any certificate or other writing
delivered pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when made, and any such
default shall continue or not be cured, for a period of 30 days after the
earlier of (A) there shall have been given, by registered or certified
mail, to the Issuer by the Trustee or to the Issuer and the Trustee by the
Holders of at least 25% of the Outstanding Amount of the Transition Bonds
of any affected Series or Class, 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 (B) the date
the Issuer has knowledge of the default;
(v) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Trust Estate in an involuntary case or Proceeding under any
applicable federal or state bankruptcy,
30
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for the Issuer or its property or for any substantial part of the
Trust Estate, or ordering the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days;
(vi) the commencement by the Issuer of a voluntary case or
Proceeding under any applicable federal or State bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by the Issuer
to the entry of an order for relief in an involuntary case under any such
law, or the consent by the Issuer to the appointment or taking possession
by a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Trust
Estate, or the making by the Issuer of any assignment for the benefit of
creditors, or the failure by the Issuer generally to pay its debts as such
debts become due, or the taking of action by the Issuer in furtherance of
any of the foregoing; or
(vii) any act or failure to act by the State of Texas or any of its
agencies (including the PUCT), officers or employees that violates or is
not in accordance with the pledge of the State of Texas in Section 39.310
of the Texas Electric Choice Plan.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default other than an Event of Default under Section 5.01(vii) occurs
and is continuing, then and in every such case either the Trustee or the
Majority Holders may, but need not, declare all the Transition Bonds to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Trustee if given by Transition Bondholders), and upon any such declaration the
unpaid principal amount of the Transition Bonds of all Series, 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 Trustee as hereinafter in this Article V provided, the Majority
Holders, by written notice to the Issuer and the Trustee, may rescind and annul
such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Trustee, for deposit
in the General Subaccount of the Collection Account, a sum sufficient to
pay
(A) all payments of Principal of and premium, if any, and Interest
on all Transition Bonds of all Series due and owing at such time as if such
Event of Default had not occurred and was not continuing and all other
amounts that would then be due hereunder or upon such Transition Bonds as
if the Event of Default giving rise to such acceleration had not occurred
and was not continuing; and
(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel; and
31
(ii) all Events of Default other than the nonpayment of the principal
of the Transition Bonds of all Series 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
TRUSTEE.
(a) The Issuer covenants that if (i) Default is made in the payment of any
interest on any Transition Bond when such Interest becomes due and payable and
such Default continues for five Business Days, (ii) Default is made in the
payment of the then unpaid Principal of any Transition Bond on the Series Final
Maturity Date or Class Final Maturity Date, as applicable, therefor, or (iii)
Default is made in the payment of the Redemption Price for any Transition Bond
on the Redemption Date therefor, the Issuer shall, upon demand of the Trustee,
pay to it, for the benefit of the Holders of the Transition Bonds of such
Series, such amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee and its agents and counsel and the whole amount then due
and payable on such Transition Bonds for Principal, premium, if any, and
Interest, with interest upon the overdue Principal and premium, if any, and, to
the extent payment at such rate of interest shall be legally enforceable, upon
overdue installments of Interest, at the respective Bond Rate of such Series or
the applicable Class of such Series.
(b) In case the Issuer shall fail forthwith to pay the amounts specified
in clause (a) above upon such demand, the Trustee, in its own name and as
trustee of an express trust, may institute a Proceeding for the collection of
the sums so due and unpaid, and may prosecute such Proceeding to judgment or
final decree, and may enforce the same against the Issuer or other obligor upon
such Transition Bonds and collect in the manner provided by law out of the
property of the Issuer or other obligor upon such Transition Bonds, wherever
situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Trustee may, as
more particularly provided in Section 5.04, proceed to protect and enforce its
rights and the rights of the Transition Bondholders by such appropriate
Proceedings as the Trustee shall deem most effective to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the
Trustee by this Indenture or by law including foreclosing or otherwise enforcing
the Lien on the Transition Property securing the Transition Bonds or applying to
the PUCT or a court of competent jurisdiction for sequestration of revenues
arising with respect to such Transition Property.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Transition Bonds or any Person having or claiming an ownership
interest in the Trust Estate, 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
32
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Transition Bonds, or to the
creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of any Transition Bonds shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered to the extent permitted by
applicable law, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of the
Transition Bonds and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and each
predecessor Trustee, and their respective agents, attorneys and counsel,
and for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee, except as a
result of negligence or bad faith) and of the Transition Bondholders
allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Transition Bonds in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Transition Bondholders and of the Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee or
the Holders of Transition Bonds allowed in any judicial Proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Transition Bondholders
to make payments to the Trustee, and, in the event that the Trustee shall
consent to the making of payments directly to such Transition Bondholders, to
pay to the Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Trustee, each predecessor Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Transition Bondholder any plan of reorganization, arrangement, adjustment or
composition affecting the Transition Bonds or the rights of any Holder thereof
or to authorize the Trustee to vote in respect of the claim of any Transition
Bondholder in any such Proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
33
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Transition Bonds, may be enforced by the Trustee without the
possession of any of the Transition Bonds or the production thereof in any trial
or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Trustee, each predecessor
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Transition Bonds.
(g) In any Proceedings brought by the Trustee (and also any Proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Transition Bonds, and it shall not be necessary to make any
Transition Bondholder a party to any such Proceedings.
SECTION 5.04. REMEDIES; PRIORITIES. (a) If an Event of Default other than
the Event of Default described in Section 5.01(vii) occurs and is continuing,
the Trustee shall do one or more of the following either at the written
direction of the Majority Holders or in reliance upon Sections 6.01 and 6.02 of
this Indenture (subject, in either event, 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
Transition Bonds or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect from
the Issuer or the Servicer moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC or
Section 39.309(f) of the Texas Electric Choice Plan or any other applicable
law and take any other appropriate action to protect and enforce the rights
and remedies of the Trustee and the Holders of the Transition Bonds of such
Series;
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; and
(v) exercise all rights, remedies, powers, privileges and claims of
the Issuer against the Seller, the Administrator, Reliant Energy and the
Servicer under or in connection with the Sale Agreement, the Administration
Agreement, the Intercreditor Agreement or the Servicing Agreement as
provided in Section 3.20(b);
provided, however, that the Trustee may not sell or otherwise liquidate any
-------- -------
portion of the Trust Estate following an Event of Default, other than an Event
of Default described in Section 5.01(i), (ii) or (iii), with respect to any
Series unless (A) the Holders of 100% of the Outstanding Amount of the
Transition Bonds of all Series consent thereto, (B) the proceeds of such sale or
liquidation distributable to the Transition Bondholders of all Series are
sufficient to discharge in full all amounts then due and unpaid upon such
Transition Bonds for principal, premium, if any, and interest or (C) the Trustee
determines that the Trust Estate will not continue to provide sufficient funds
for all payments on the Transition Bonds of all Series as they would have become
due if
34
the Transition Bonds had not been declared due and payable, and the Trustee
obtains the written consent of Holders of 66-2/3% of the Outstanding Amount of
the Transition Bonds of all Series. In determining such sufficiency or
insufficiency with respect to clause (B) and (C), the Trustee may, but need not,
obtain and conclusively rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
If an Event of Default other than the Event of Default described in Section
5.01(vii) occurs and is continuing, the amounts on deposit in the Collection
Account shall continue to be distributed in accordance with Sections 8.02(d) and
(e) (including the last paragraph of section 8.02(e), upon acceleration in
accordance with Section 5.02).
(b) If an Event of Default under Section 5.01(vii) occurs and is
continuing, the Trustee, for the benefit of the Transition Bondholders, shall be
entitled and empowered to the extent permitted by applicable law to institute or
participate in Proceedings reasonably necessary to compel performance of or to
enforce the pledge of the State of Texas in Section 39.310 of the Texas Electric
Choice Plan and to collect any monetary damages incurred by the Transition
Bondholders or the Trustee as a result of any such Event of Default, and may
prosecute any such Proceeding to final judgment or decree. Such remedy shall be
the only remedy that the Trustee may exercise if the only Event of Default that
has occurred and is continuing is an Event of Default under Section 5.01(vii).
SECTION 5.05. OPTIONAL PRESERVATION OF THE TRUST ESTATE. If the Transition
Bonds have been declared to be due and payable under Section 5.02 following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Trustee may, but need not, elect, as provided in
Section 5.11(iii), to maintain possession of the Trust Estate and not sell or
liquidate the same. It is the desire of the parties hereto and the Transition
Bondholders that there be at all times sufficient funds for the payment of
principal of and premium, if any, and interest on the Transition Bonds, and the
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Trust Estate or sell or liquidate the same. In
determining whether to maintain possession of the Trust Estate or sell or
liquidate the same, the Trustee may, but need not, obtain and conclusively rely
upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
SECTION 5.06. LIMITATION OF PROCEEDINGS. No Holder of any Transition Bond
of any Series shall have any right to institute any Proceeding, judicial or
otherwise, or to avail itself of the remedies provided in Section 39.309(f) of
the Texas Electric Choice Plan, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
35
(ii) the Holders of not less than 25% of the Outstanding Amount of
the Transition Bonds of all Series have made written request to the Trustee
to institute such Proceeding in respect of such Event of Default in its own
name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee security or
indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceedings;
and
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Majority Holders,
it being understood and intended that no one or more Holders of Transition Bonds
shall have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Transition Bonds or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
except in the manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent requests
and indemnity from two or more groups of Holders of Transition Bonds, each
representing less than a majority of the Outstanding Amount of the Transition
Bonds of all Series, the Trustee may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.07. UNCONDITIONAL RIGHTS OF TRANSITION BONDHOLDERS TO RECEIVE
PRINCIPAL, PREMIUM, IF ANY, AND INTEREST. Notwithstanding any other provisions
in this Indenture, the Holder of any Transition Bond shall have the right, which
is absolute and unconditional, and shall not be impaired without the consent of
each such Holder, (a) to receive payment of (i) the Interest, if any, on such
Transition Bond on or after the due dates thereof expressed in such Transition
Bond or in this Indenture, (ii) the unpaid Principal, if any, of such Transition
Bonds on or after the Series Final Maturity Date or Class Final Maturity Date
therefor or (iii) in the case of redemption, the unpaid Principal, if any, of
and premium, if any, and Interest, if any, on such Transition Bond on or after
the Redemption Date 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 Trustee or any
Transition Bondholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or to
such Transition Bondholder, then and in every such case the Issuer, the Trustee
and the Transition Bondholders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the
Transition Bondholders shall continue as though no such Proceeding had been
instituted.
SECTION 5.09. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Trustee or to the Transition Bondholders is
intended to
36
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 by the
Trustee or any Transition Bondholder to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the Trustee
or to the Transition Bondholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Transition
Bondholders, as the case may be.
SECTION 5.11. CONTROL BY TRANSITION BONDHOLDERS. The Majority Holders (or,
if less than all Series or Classes are affected, the Holders of a majority of
the Outstanding Amount of the Transition Bonds of the affected Series or Class
or Classes) shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Trustee with respect
to the Transition Bonds (or the Transition Bonds of such affected Series or
Class or Classes) or exercising any trust or power conferred on the Trustee with
respect to the Transition Bonds (or the Transition Bonds of such affected Series
or Class or Classes); provided that
--------
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction to
the Trustee to sell or liquidate the Trust Estate shall be by the Holders
of Transition Bonds representing not less than 100% of the Outstanding
Amount of the Transition Bonds of all Series;
(iii) if the conditions set forth in Section 5.05 have been satisfied
and the Trustee elects to retain the Trust Estate pursuant to such Section
and elects not to sell or liquidate the same, then any direction to the
Trustee by Holders of Transition Bonds representing less than 100% of the
Outstanding Amount of the Transition Bonds of all Series to sell or
liquidate the Trust Estate shall be of no force and effect; and
(iv) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.01, the Trustee need not take any
-------- -------
action that it determines might involve it in liability for which it reasonably
believes it will not be indemnified to its reasonable satisfaction against the
costs, expenses and liabilities which might be incurred by it in complying with
this request. The Trustee also need not take any action that it determines
might materially and adversely affect the rights of any Transition Bondholders
not consenting to such action.
SECTION 5.12. WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Transition Bonds of all Series as provided
in Section 5.02, the
37
Majority Holders, by written notice to the Trustee, may waive any past Default
or Event of Default and its consequences except a Default (i) in payment of
principal of or premium, if any, or interest on any of the Transition Bonds or
(ii) in respect of a covenant or provision hereof which cannot be modified or
amended without the consent of the Holder of each Transition Bond of all Series
or Classes affected. In the case of any such waiver, the Issuer, the Trustee and
the Holders of the Transition Bonds 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 Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13. UNDERTAKING FOR COSTS. All parties to this Indenture agree,
and each Holder of any Transition Bond 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 Indenture, or in any
suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to (a) any suit instituted by the Trustee, (b) any suit
instituted by any Transition Bondholder, or group of Transition Bondholders, in
each case holding in the aggregate more than 10% of the Outstanding Amount of
the Transition Bonds of a Series or (c) any suit instituted by any Transition
Bondholder for the enforcement of the payment of (i) Interest on any Transition
Bond on or after the due dates expressed in such Transition Bond and in this
Indenture, (ii) the unpaid Principal, if any, of any Transition Bond on or after
the Series Final Maturity Date or Class Final Maturity Date, if applicable,
therefor or (iii) in the case of redemption, the unpaid Principal of and
premium, if any, and Interest on any Transition Bond on or after the Redemption
Date therefor.
SECTION 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 5.15. ACTION ON TRANSITION BONDS. The Trustee's right to seek and
recover judgment on the Transition Bonds or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the Lien of this Indenture nor any
rights or remedies of the Trustee or the Transition Bondholders shall be
impaired by the recovery of any judgment by the Trustee against the Issuer
38
or by the levy of any execution under such judgment upon any portion of the
Trust Estate or upon any of the assets of the Issuer.
ARTICLE VI
THE TRUSTEE
SECTION 6.01. DUTIES AND LIABILITIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) this paragraph (c) does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it hereunder.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 6.01.
(e) The Trustee shall not be liable for interest on any money received by
it except as provided in this Indenture.
(f) Money held in trust by the Trustee need not be segregated from other
funds held by the Trustee except to the extent required by law or the terms of
this Indenture, the Sale Agreement, the Administration Agreement, the
Intercreditor Agreement, the Servicing Agreement or any interest rate protection
agreement.
39
(g) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any liability, financial or otherwise, in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds to believe that repayments
of such funds or indemnity reasonably satisfactory to it against such risk or
liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section 6.01 and to the provisions of the TIA.
(i) Under no circumstances shall the Trustee be liable for any
indebtedness of the Issuer, the Seller, the Administrator, or the Servicer
evidenced by or arising under the Transition Bonds or any Basic Document.
SECTION 6.02. RIGHTS OF TRUSTEE.
(a) The Trustee may rely conclusively and shall be fully protected in
acting or refraining from acting in accordance with any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Issuer Officer's Certificate or an Issuer Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on an Issuer Officer's Certificate or an Issuer Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent, attorney, custodian, or nominee appointed with due care by it
thereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
-------- -------
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Transition Bonds shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by or pursuant to this Indenture at the request, order or
direction of any of the Holders unless such Holders shall have offered to the
Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities that might be incurred by it in compliance with such request, order
or direction.
40
(g) In the event that the Trustee is also acting in the capacity of Paying
Agent, Securities Intermediary or Transition Bond Registrar hereunder, the
rights, protections, immunities and indemnities afforded to the Trustee pursuant
to this Article VI shall also be afforded to the Trustee in its capacity as
Paying Agent, Securities Intermediary or Transition Bond Registrar.
SECTION 6.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual
or any other capacity may become the owner or pledgee of Transition Bonds and
may otherwise deal with the Issuer or its affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Transition Bond Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this Indenture
or the Transition Bonds. The Trustee shall not be accountable for the Issuer's
use of the proceeds from the Transition Bonds, and the Trustee shall not be
responsible for any statement of the Issuer in the Indenture or in any document
issued in connection with the sale of the Transition Bonds or in the Transition
Bonds other than the Trustee's certificate of authentication. The Trustee shall
not be responsible for the form, character, genuineness, sufficiency, value or
validity of any of the Trust Estate, or for or in respect of the validity or
sufficiency of the Transition Bonds (other than the certificate of
authentication for the Transition Bonds) or the Basic Documents and the Trustee
shall in no event assume or incur any liability, duty or obligation to any
Holder of a Transition Bond, other than as expressly provided for in this
Indenture. The Trustee shall not be liable for the default or misconduct of the
Issuer, the Seller, the Administrator, the Servicer or a Manager or any Manager
of the Issuer under any Basic Document or otherwise and the Trustee shall have
no obligation or liability to perform the obligations of the Issuer.
SECTION 6.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing
with respect to any Class or Series and if it is actually known to a Responsible
Officer of the Trustee, the Trustee shall mail to each Rating Agency and to each
Holder of Transition Bonds of all Series notice of the Default within 90 days
after it occurs. Except in the case of a Default in payment of principal of or
premium, if any, or interest on any Transition Bond, the Trustee may withhold
the notice if and so long as a Responsible Officer of the Trustee in good faith
determines that withholding the notice is in the interests of Transition
Bondholders.
SECTION 6.06. REPORTS BY TRUSTEE TO HOLDERS
(a) The Trustee shall deliver to each Holder of Transition Bonds such
information as may be required to enable such Holder to prepare its federal and
State income tax returns.
(b) With respect to each Series and Class of Transition Bonds, on or prior
to each Payment Date therefor, upon receipt by the Trustee from the Servicer of
the "Semiannual Servicer's Certificate," the form of which is attached hereto as
Schedule 2, the Trustee shall deliver such Semiannual Servicer's Certificate to
each Holder of Transition Bonds which will include (to the extent applicable)
the following information (and any other information so specified in the Series
Supplement for such Series) as to the Transition Bonds of such Series and
41
Class with respect to such Payment Date or the period since the previous Payment
Date, as applicable:
(i) the amount paid to Holders of the Transition Bonds of such
Series and Class in respect of principal, such amount to be expressed as a
dollar amount per thousand;
(ii) the amount paid to Holders of the Transition Bonds of such
Series and Class in respect of interest, such amount to be expressed as a
dollar amount per thousand;
(iii) the Transition Bond Balance, after giving effect to the
payments to be made on such Payment Date, and the Projected Transition Bond
Balance, in each case for such Series and Class and as of such Payment
Date;
(iv) the amount on deposit in the Overcollateralization Subaccount
for such Series and the Scheduled Overcollateralization Level for such
Series as of such Payment Date;
(v) the amount on deposit in the Capital Subaccount for such
Series as of such Payment Date;
(vi) the amount, if any, on deposit in the Reserve Subaccount as of
such Payment Date;
(vii) the amount to be paid to any counterparty under any interest
rate protection agreement;
(viii) the amount to be paid to the Trustee since the preceding
Payment Date;
(ix) the amount paid to the Servicer since the preceding Payment
Date; and
(x) any other transfers and payments made pursuant to this
Indenture.
(c) If any Transition Bonds are listed on the Luxembourg Stock Exchange and
rules of such exchange so require, the Trustee shall arrange for publication in
accordance with such rules a notice that such statement shall be available with
the Issuer's listing agent in Luxembourg appointed pursuant to Section 3.02.
(d) The Trustee's responsibility for disbursing the information described
in subsection (b) above to Holders of Transition Bonds is limited to the
availability, timeliness and accuracy of the information provided by the
Servicer pursuant to Section 3.04 and Annex 1 of the Servicing Agreement and
pursuant to the Intercreditor Agreement.
SECTION 6.07. COMPENSATION AND INDEMNITY. The Issuer shall pay to the
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall reimburse the Trustee for all
reasonable out-of-pocket expenses, disbursements and advances incurred or made
by it, including costs of collection, in addition to the compensation for its
42
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Issuer shall indemnify and hold harmless the Trustee and its
officers, directors, employees and agents from and against any and all Losses or
other amounts whatsoever (including counsel fees and expenses) up to $______
directly or indirectly incurred by the Trustee in connection with the
administration of this trust, the enforcement of this trust and all of the
Trustee's rights, powers and duties under this Indenture and the performance by
the Trustee of the duties and obligations of the Trustee under or pursuant to
this Indenture, the Sale Agreement, the Administration Agreement, the Servicing
Agreement and the Intercreditor Agreement. The Trustee shall notify the Issuer
promptly of any claim for which it may seek indemnity. Failure by the Trustee so
to notify the Issuer shall not relieve the Issuer of its obligations hereunder.
The Issuer shall defend the claim and the Trustee may have separate counsel and
the Issuer shall pay the fees and expenses of such counsel. Notwithstanding the
foregoing, the Issuer need not reimburse any expense or indemnify against any
Loss incurred by the Trustee (i) through the Trustee's own willful misconduct,
negligence or bad faith or (ii) to the extent the Trustee was reimbursed for or
indemnified against any such Loss by the Seller or the Servicer pursuant to the
Sale Agreement, the Administration Agreement, the Intercreditor Agreement or the
Servicing Agreement. The obligations of the Issuer under this Section shall
survive the termination of this Agreement and the earlier resignation or removal
of the Trustee.
When the Trustee incurs expenses after the occurrence of a Default
specified in Section 5.01(v) or (vi) with respect to the Issuer, the expenses
are intended to constitute expenses of administration under Title 11 of the
United States Code or any other applicable federal or State bankruptcy,
insolvency or similar law.
SECTION 6.08. REPLACEMENT OF TRUSTEE. The Trustee may resign at any time
upon 30 days' written notice to the Issuer. The Issuer shall remove the Trustee
by written notice if:
(i) the Trustee fails to comply with Section 6.11;
(ii) the Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Trustee
or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason (the Trustee in such event being referred to herein as
the "Retiring Trustee"), the Issuer shall promptly appoint a successor Trustee.
----------------
In addition, the Majority Holders may remove the Trustee by so notifying
the Issuer and the Trustee in writing and such Holders may appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the Retiring Trustee and to the Issuer. Thereupon the resignation or removal
of the Retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the
43
Trustee under this Indenture and the Intercreditor Agreement. No resignation or
removal of the Trustee will become effective until the acceptance of the
appointment by a successor Trustee. The successor Trustee shall mail a notice of
its succession to the Transition Bondholders. The Retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 60 days after the
Retiring Trustee resigns or is removed, the Retiring Trustee at the expense of
the Issuer, the Issuer or the Majority Holders may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.11, any Transition Bondholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section
6.08, the Issuer's obligations under Section 6.07 shall continue for the benefit
of the Retiring Trustee.
SECTION 6.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association shall, without any further act, be the successor Trustee. Notice of
any such event shall be promptly given to each Rating Agency by the successor
Trustee and any agent in Luxembourg appointed pursuant to Section 3.02.
In case at the time such successor or successors by merger, conversion,
consolidation or transfer shall succeed to the trusts created by this Indenture
any of the Transition Bonds shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
Retiring Trustee, and deliver such Transition Bonds so authenticated; and in
case at that time any of the Transition Bonds shall not have been authenticated,
any successor to the Trustee may authenticate such Transition Bonds either in
the name of any Retiring Trustee hereunder or in the name of the successor to
the Trustee; and in all such cases such certificates shall have the full force
and effect granted by the Transition Bonds or by this Indenture and this force
and effect shall be equal to any certificate issued by the Trustee.
SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust Estate may at the time be located, the Trustee shall have
the power and may execute and deliver all instruments to appoint one or more
Persons to act as a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust Estate, and to vest in such Person or
Persons, in such capacity and for the benefit of the Transition Bondholders,
such title to the Trust Estate, or any part hereof, and, subject to the other
provisions of this Section 6.10, such powers, duties, obligations, rights and
trusts as the Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a
44
successor trustee under Section 6.11 and no notice to Transition Bondholders
of the appointment of any co-trustee or separate trustee shall be required under
Section 6.08 hereof. Notice of any such appointment shall be promptly given to
each Rating Agency by the Trustee.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to
the Trust Estate or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Indenture and the conditions
of this Article VI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co- trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 6.11. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a) and Section 26(a)(1) of the
Investment Company Act of 1940, as amended. In addition, the Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and it shall have a long term debt
rating of "Baa3" or better by Xxxxx'x and "BBB-" or better by S&P. The Trustee
shall comply with TIA Section 310(b), including the optional provision permitted
by
45
the second sentence of TIA Section 310(b)(9); provided, however, that there
-------- -------
shall be excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities of the Issuer are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated
SECTION 6.13. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The Trustee
hereby represents and warrants that:
(a) the Trustee is a banking corporation validly existing in good standing
under the laws of the State of New York; and
(b) the Trustee has full power, authority and legal right to execute,
deliver and perform this Indenture and all the Basic Documents to which the
Trustee is a party and has taken all necessary action to authorize the
execution, delivery and performance by it of this Indenture and such Basic
Documents.
ARTICLE VII
TRANSITION BONDHOLDERS' LISTS AND REPORTS
SECTION 7.01. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF TRANSITION
BONDHOLDERS. The Issuer shall furnish or cause to be furnished to the Trustee
(a) not more than five days after the earlier of (i) each Record Date with
respect to each Series and (ii) three months after the last Record Date with
respect to each Series, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Transition Bonds of such
Series as of such Record Date, (b) at such other times as the Trustee may
request in writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as the
-------- -------
Trustee is the Transition Bond Registrar, no such list shall be required to be
furnished. In addition, the Issuer shall furnish such list to any listing,
transfer or paying agent appointed under Section 3.02 to the extent such
information is required by the rules and regulations of the Luxembourg Stock
Exchange.
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO TRANSITION
BONDHOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Transition Bonds
contained in the most recent list furnished to the Trustee as provided in
Section 7.01 and the names and addresses of Holders of Transition Bonds received
by the Trustee in its capacity as Transition Bond Registrar. The Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
46
(b) Transition Bondholders may communicate with other Transition
Bondholders pursuant to Section 312(b) of the TIA, with respect to their rights
under this Indenture or under the Transition Bonds.
(c) The Issuer, the Trustee and the Transition Bond Registrar shall have
the protection of Section 312(c) of the TIA.
SECTION 7.03. REPORTS BY ISSUER.
(a) The Issuer shall:
(i) file with the Trustee and, so long as any Transition Bonds are
listed on the Luxembourg Stock Exchange and its rules so require, with the
listing agent of the Issuer in Luxembourg appointed pursuant to Section
3.02, within 15 days after the 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 Issuer may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee, the Commission and, so long as any
Transition Bonds are listed on the Luxembourg Stock Exchange and its rules
so require, the listing agent of the Issuer in Luxembourg appointed
pursuant to Section 3.02, in accordance with rules and regulations
prescribed from time to time by the Commission or the Luxembourg Stock
Exchange, respectively, such additional information, documents and reports
with respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by mail to
all Transition Bondholders described in TIA Section 313(c)) and, so long as
any Transition Bonds are listed on the Luxembourg Stock Exchange and its
rules so require, to the listing agent of the Issuer in Luxembourg
appointed pursuant to Section 3.02, such summaries of any information,
documents and reports required to be filed by the Issuer pursuant to
clauses (i) and (ii) of this Section 7.03(a) as may be required by rules
and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
SECTION 7.04. REPORTS BY TRUSTEE. If required by TIA Section 313(a), within
60 days after the end of each fiscal year of the Issuer, commencing with the
year after the issuance of the Transition Bonds of any Series, the Trustee shall
mail to each Holder of Transition Bonds of such Series as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Trustee also shall comply with TIA Section 313(b); provided,
--------
however, that the initial report so issued shall be delivered not more than 12
-------
months after the initial issuance of each Series.
47
A copy of each report at the time of its mailing to Transition Bondholders
shall be filed by the Trustee with the Commission and each stock exchange, if
any, on which the Transition Bonds are listed (to the extent required by the
rules of such exchange). The Issuer shall notify the Trustee if and when the
Transition Bonds are listed on any stock exchange.
SECTION 7.05. PROVISION OF SERVICER REPORTS. Upon the written request of
any Transition Bondholder to the Trustee addressed to the Corporate Trust
Office, the Trustee shall provide such Transition Bondholder with a copy of any
Semiannual Servicer's Certificate, the Annual Accountant's Report and any other
report of the Servicer referred to in the Servicing Agreement. If any Transition
Bonds are listed on the Luxembourg Stock Exchange and its rules so require, the
Trustee at the written direction of the Issuer shall also arrange for
publication in accordance with such rules of a notice that a copy of such
Servicer's certificate, Annual Accountant's Report or other report shall be
available with the Issuer's listing agent in Luxembourg appointed pursuant to
Section 3.02.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. COLLECTION OF MONEY. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Trustee pursuant to this Indenture. The Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Trust
Estate, the Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V.
SECTION 8.02. COLLECTION ACCOUNT.
(a) (i) On or prior to the Series Issuance Date for the first Series
issued hereunder, the Issuer shall open, at the Trustee's Corporate Trust
Office, or at another Eligible Institution, one or more segregated
non-interest- bearing trust accounts in the Trustee's name for the benefit
of the Holders (collectively, the "Collection Account"). The Collection
------------------
Account shall initially be divided into subaccounts, which need not be
separate accounts: a general subaccount (the "General Subaccount"), an
------------------
overcollateralization subaccount (the "Overcollateralization Subaccount"),
--------------------------------
a capital subaccount (the "Capital Subaccount"), a reserve subaccount (the
------------------
"Reserve Subaccount"), a series subaccount for each Series of Transition
------------------
Bonds (each, a "Series Subaccount") and a class subaccount for any Class of
-----------------
any Series of Transition Bonds that has a floating rate of interest as
specified in any Series Supplement (each, a "Class Subaccount"). On or
prior to the Series Issuance Date for each Series issued after the Series
Issuance Date for the first Series issued hereunder, the Issuer shall
48
establish an additional Series Subaccount therefor and a Class Subaccount
for any Class of such Series that has a floating rate of interest and in
respect of which the Issuer has entered into an interest rate protection
agreement, as subaccounts of the Collection Account. Prior to depositing
funds or U.S. Government Obligations in the Collection Account pursuant to
Section 4.01 or 4.02, the Issuer shall establish defeasance subaccounts
(each a "Defeasance Subaccount") for each Series for which funds shall be
---------------------
deposited, as subaccounts of the Collection Account. All amounts in the
Collection Account not allocated to any other subaccount shall be allocated
to the General Subaccount. Prior to the initial Payment Date, all amounts
in the Collection Account (other than funds deposited into the Capital
Subaccount, up to the Required Capital Amount) shall be allocated to the
General Subaccount. All payments received by the Trustee from any
counterparty to any interest rate protection agreement shall be deposited
in the related Class Subaccount. All references to the Collection Account
shall be deemed to include reference to all subaccounts contained therein.
Withdrawals from and deposits to each of the foregoing subaccounts of the
Collection Account shall be made as set forth in Sections 4.01, 4.02, 4.03
and 8.02(d) and (e). The Collection Account shall at all times be
maintained in an Eligible Securities Account and only the Trustee shall
have access to the Collection Account for the purpose of making deposits in
and withdrawals from the Collection Account in accordance with this
Indenture. Funds in the Collection Account shall not be commingled by the
Issuer with any other moneys, and shall not be commingled by the Trustee.
All moneys deposited from time to time in the Collection Account, all
deposits therein pursuant to this Indenture, and all investments made in
Eligible Investments with such moneys, including all income or other gain
from such investments, shall be held by the Trustee in the Collection
Account as part of the Trust Estate as herein provided.
(ii) The Securities Intermediary hereby agrees that (A) each of the
Accounts is and shall at all times be maintained by the Securities
Intermediary as, a "securities account" (within the meaning of Xxxxxxx
0-000 xx xxx Xxx Xxxx XXX), (X) the "securities intermediary's
jurisdiction" (within the meaning of Article 8 of the New York UCC of the
Securities Intermediary is the State of New York, (C) all cash and other
property in each of the Accounts shall be treated by the Securities
Intermediary as a "financial asset" (as defined in Section 8-102(a)(9) of
the New York UCC), (D) the "entitlement holder" (as such term is defined in
Section 8-102(a)(7) of the New York UCC or, with respect to Book-Entry
Securities, in the applicable Federal Book- Entry Regulations) shall be the
Trustee for the benefit of the Transition Bondholders, (E) any financial
asset in registered form or payable to, or to the order of, a Person, and
credited to any of the Accounts shall be registered in the name of, payable
to the order of, or specially indorsed to, the Securities Intermediary or
in blank, or credited to another securities account maintained in the name
of the Securities Intermediary, and in no case will any financial assets
credited to any of the Accounts be registered in the name of, payable to or
to the order of, or specially indorsed to the Issuer or the Trustee, except
to the extent the foregoing have been specially indorsed by the Issuer or
the Trustee, as applicable, to the Securities Intermediary
49
or in blank, (F) the Securities Intermediary shall not change the names or
account numbers of any of the Accounts without the prior written consent of
the Trustee and shall not change the entitlement holder, and (G) the
Securities Intermediary shall at all times act as a "securities
intermediary" (within the meaning of Section 8- 102(a)(14) of the New York
UCC or, with respect to Book-entry Securities, in the applicable Federal
Book-Entry Regulations) and shall credit to each of the Accounts each
financial asset to be held in or credited to each of the Accounts pursuant
to this Indenture.
(iii) Each of the Accounts shall remain at all times with a securities
intermediary (within the meaning of Section 8-102(a)(14) of the New York
UCC or, with respect to Book-Entry Securities, in the applicable Federal
Book-Entry Regulations) having a combined capital and surplus of at least
$50,000,000 and having a long-term debt rating of at least "A2" by Xxxxx'x
and at least "AA-" by S&P. The Securities Intermediary shall give notice to
the Issuer and the Transition Bondholders of the location of the Accounts
and of any change thereof (provided that no such change shall be made
--------
without the prior approval of the Majority Holders), prior to the
use thereof.
(iv) Anything herein to the contrary notwithstanding, the Issuer
irrevocably agrees that the Securities Intermediary may, and the Securities
Intermediary agrees that it shall, comply with "entitlement orders" (as
defined in Section 8-102(8) of the New York UCC) originated by the Trustee
and relating to each of the Accounts (and all securities entitlements
within the meaning of Section 8-102(a)(17) of the New York UCC or, with
respect to Book-Entry Securities, within the meaning of applicable Federal
Book-Entry Regulations carried in such Account) without further consent by
the Issuer or any other Person so long as this Indenture is in effect. The
Securities Intermediary agrees that it shall at all times comply with the
"entitlement orders" (as defined in Section 8-102(8) of the New York UCC)
originated by the Trustee and shall not comply with "entitlement orders" of
any other Person. The Trustee and the Securities Intermediary hereby
represent that they have not, and hereby agree that they will not, enter
into any agreement or take any action which gives any Person other than the
Trustee, "control" (as defined in Section 8-106 of the New York UCC) over
any of the Accounts.
(v) There are not other agreements entered into between the
Securities Intermediary, the Trustee and the Issuer with respect to the
Accounts, other than this Indenture. In the event of any conflict between
this Section 8.02 (or any portion thereof), any other provision of this
Indenture or any other agreement now existing or hereafter entered into,
the terms of this Section 8.02 shall prevail.
(b) So long as no Default or Event of Default has occurred and is
continuing, the Trustee upon Issuer Order will, as entitlement holder, cause the
Securities Intermediary to invest and reinvest all or a portion of the funds in
the Collection Account in Eligible Investments; provided, however, that (i) such
Eligible Investments shall not mature later than the next Payment Date (except
as otherwise provided in any Series Supplement with respect to funds in
50
any series subaccount for any Series of Transition Bonds), (ii) such Eligible
Investments shall not be sold, liquidated or otherwise disposed of at a loss
prior to the maturity thereof, and (iii) no funds in the Defeasance Subaccount
for any Series of Transition Bonds shall be invested in Eligible Investments or
otherwise, except that U.S. Government Obligations deposited by the Issuer with
the Trustee pursuant to Sections 4.01 or 4.02 shall remain as such. All income
or other gain from investments of moneys deposited in the Collection Account
shall be deposited by the Trustee in the Collection Account, and any loss
resulting from such investments shall be charged to the Collection Account. The
Issuer shall not direct the Trustee to make any investment of any funds or to
sell any investment held in the Collection Account unless the security interest
granted and perfected in such account will continue to be perfected in such
investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Trustee to
make any such investment or sale, if requested by the Trustee, the Issuer shall
deliver to the Trustee an Issuer Opinion of Counsel, acceptable to the Trustee,
to such effect. Subject to Section 6.01(c), the Trustee shall not in any way be
held liable for the selection of Eligible Investments or for investment Losses
incurred thereon except for Losses attributable to the Trustee's failure to make
payments on such Eligible Investments issued by the Trustee, in its commercial
capacity as principal obligor and not as Trustee, in accordance with their
terms. The Trustee shall have no liability in respect of Losses incurred as a
result of the liquidation of any Eligible Investment prior to its stated
maturity or the failure of the Issuer to provide timely and specific written
investment direction. The Trustee shall have no obligation to invest or reinvest
any amounts held hereunder in the absence of written investment direction
pursuant to an Issuer Order.
(c) Any Collections remitted by the Servicer to the Trustee, any Indemnity
Amounts remitted to the Trustee by the Seller, the Issuer, or the Servicer or
otherwise received by the Trustee or the Issuer, and any other proceeds of Trust
Estate received by the Servicer, the Issuer or the Trustee shall be deposited in
the General Subaccount, except that the Trustee shall deposit in the Capital
Subaccount the Required Capital Amount.
(d) On the Business Day preceding each Payment Date, the Trustee pursuant
to the written direction provided in the Semiannual Servicer's Certificate shall
by 12:00 noon (New York City time) apply all amounts on deposit in the General
Subaccount of the Collection Account and any investment earnings on the
subaccounts in the Collection Account in the following priority:
(i) fees and expenses (including legal fees and expenses) and
Indemnity Amounts owed to the Trustee for such Payment Date; provided that
--------
the Indemnity Amounts paid during any calendar year pursuant to this clause
(i) may not exceed $331,000 in the aggregate for all Series;
(ii) the Servicing Fee, all unpaid Servicing Fees from prior Payment
Dates, and reimbursement of Excess Curve Payments demanded by the Servicer
as set forth in Section 3.03 of the Servicing Agreement shall be paid to
the Servicer;
(iii) the administration fee payable under the Administration
Agreement between the Issuer and the Administrator, for such Payment Date,
shall be paid to the Administrator and fees of the Issuer's independent
managers, as specified in an
51
agreement dated _________, 2001 between the Issuer and its independent
managers, shall be paid to such independent managers;
(iv) all Operating Expenses other than those referred to in clauses
(i), (ii) and (iii) above shall be paid to the Persons entitled thereto;
(v) an amount equal to the sum of (x) Interest payable on each
Series of Transition Bonds on such Payment Date and (y) the net amount
required to be paid to any counterparty under any interest rate protection
agreement entered into with respect to a Series shall be allocated to the
corresponding Series and counterparty under any interest rate protection
agreement and if there are insufficient funds to make that allocation in
full, shall be allocated on a Pro Rata basis;
(vi) an amount equal to any Principal of any Series or Class of
Transition Bonds payable as a result of acceleration pursuant to Section
5.02, any Principal of any Series or Class of Transition Bonds payable on a
Series Final Maturity Date or Class Final Maturity Date for that Series or
Class and any Principal of and premium, if any, on a Series or Class of
Transition Bonds payable on a Redemption Date shall be allocated to the
corresponding Series and if there are insufficient funds to make that
allocation in full, on a Pro Rata basis;
(vii) an amount equal to Principal scheduled to be paid on each
Series of Transition Bonds on the next Payment Date according to the
Expected Amortization Schedule, excluding any amounts provided for pursuant
to clause (vi) above, shall be allocated to the corresponding Series and if
there are insufficient funds to make that allocation in full, on a Pro Rata
basis;
(viii) any amounts payable to credit enhancement providers, if any;
(ix) all remaining unpaid Operating Expenses, Indemnity Amounts and
any other amounts due and owing pursuant to the Basic Documents shall be
paid to the Persons entitled thereto;
(x) any amount necessary to replenish any shortfalls in the Capital
Subaccount shall be allocated to the Capital Subaccount;
(xi) an amount shall be allocated to the Overcollateralization
Subaccount sufficient to cause the amount in the Overcollateralization
Subaccount to equal the Scheduled Overcollateralization Level;
(xii) so long as no Event of Default has occurred and is continuing,
an amount equal to investment earnings on amounts in the Capital Subaccount
shall be released to the Issuer;
(xiii) the balance, if any, shall be allocated to the Reserve
Subaccount.
52
Notwithstanding anything to the contrary in this Section 8.02(d), the
amounts paid during any calendar year pursuant to clauses (i), (ii), (iii),
(iv), and (ix) above may not exceed $511,000 in the aggregate for all Series.
Following repayment of all outstanding Series of Transition Bonds, the
balance, if any, shall be released to the Issuer free from the Lien of the
Indenture.
"Pro Rata" means with respect to any Series or Class of Transition Bonds a
--------
ratio, (A) in the case of clause (d)(v) above, the numerator of which is the
aggregate amount of Interest payable or net amount payable to a counterparty
under an interest rate protection agreement, as applicable, with respect to such
Series or Class on such Payment Date and the denominator of which is the sum of
the aggregate amounts of Interest payable, and aggregate of the net amounts
payable under interest rate protection agreements, with respect to all
Outstanding Series or Classes on such Payment Date; and (B) in the case of
clauses (d)(vi) and (vii) above, the numerator of which is the aggregate amount
of Principal to be paid or payable pursuant to each such clause with respect to
such Series or Class on such Payment Date and the denominator of which is the
sum of the aggregate amounts of Principal to be paid or payable pursuant to each
such clause with respect to all Outstanding Series or Classes on such Payment
Date, unless and to the extent, with respect to either clause (A) or (B) of this
paragraph, in the case of a Series comprised of two or more Classes, the Series
Supplement for such Series provides otherwise.
If, on any Payment Date, funds on deposit in the General Subaccount are
insufficient to make the payments or transfers contemplated by clauses (i)
through (xii) above, the Trustee shall draw from amounts on deposit in the
following subaccounts in the following order up to the amount of such shortfall,
in order to make such payments and transfers:
(i) from the Reserve Subaccount for allocations and payments
contemplated by clauses (i) through (xii);
(ii) from the Overcollateralization Subaccount for allocations and
payments contemplated by clauses (i) through (ix); and
(iii) from the Capital Subaccount for allocations and payments
contemplated by clauses (i) through (ix).
(e) On each Payment Date for any Series, the amounts on deposit in the
Series Subaccount for that Series shall be applied or transferred as follows (in
the priority indicated): (i) to pay Interest due and payable on the Transition
Bonds of such Series on such Payment Date to the Holders of Transition Bonds of
such Series, (ii) the balance, if any, up to the amount of Principal required or
scheduled to be paid on the Transition Bonds of such Series on such Payment
Date, to pay such Principal to the Holders of Transition Bonds of such Series
and (iii) the balance, if any, to the General Subaccount for allocation on the
next Payment Date.
All payments to the Transition Bondholders of a Series pursuant to (A)
clause (i) of the preceding paragraph shall be made pro rata based on the
respective aggregate amounts of Interest
53
due and payable with respect to Outstanding Transition Bonds of such Series held
by such Holders, and (B) clause (ii) of the preceding paragraph shall be made
pro rata based on the respective aggregate amounts of Principal required or
scheduled to be paid with respect to Outstanding Transition Bonds of such Series
held by such Holders, unless and to the extent, with respect to either clause
(i) or (ii) above, in the case of a Series comprised of two or more Classes, the
Series Supplement for such Series provides otherwise. All payments to Transition
Bondholders of a Class pursuant to clause (i) or (ii) of the preceding paragraph
shall be made pro rata based on the respective principal amounts of Transition
Bonds of such Class held by such Holders.
Upon an acceleration of the maturity of the Transition Bonds pursuant to
Section 5.02, the aggregate amount of principal of and interest accrued on each
Transition Bond shall be payable, without priority of interest over principal or
of principal over interest and without regard to Series or Class, in the
proportion that the aggregate amount of principal of and interest accrued on
such Transition Bond bears to the aggregate amount of principal of and interest
accrued on all Transition Bonds.
SECTION 8.03. RELEASE OF TRUST ESTATE.
(a) All money and other property withdrawn from the Collection Account by
the Trustee for payment to the Issuer as provided in this Indenture in
accordance with Section 8.02 hereof shall be deemed released from the Indenture
when so withdrawn and applied in accordance with the provisions of Article VIII,
without further notice to, or release or consent by, the Trustee.
(b) Other than as provided for in clause (a) above, the Trustee shall
release property from the Lien of this Indenture only as and to the extent
permitted by the Basic Documents and only upon receipt of an Issuer Request
accompanied by an Issuer Officer's Certificate, an Issuer Opinion of Counsel and
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) or
an Issuer Opinion of Counsel in lieu of such Independent Certificates to the
effect that the TIA does not require any such Independent Certificate.
(c) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Trustee may, and when required by the provisions of this Indenture
shall, execute instruments to release property from the Lien of this Indenture,
or convey the Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Trustee as provided in this
Article VIII shall be bound to ascertain the Trustee's authority, inquire into
the satisfaction of any conditions precedent or see to the application of any
moneys.
(d) Subject to Section 8.03(b), the Trustee shall, at such time as there
are no Transition Bonds Outstanding and all sums due the Trustee pursuant to
Section 6.07 have been paid, release any remaining portion of the Trust Estate
that secured the Transition Bonds from the Lien of this Indenture and release to
the Issuer or any other Person entitled thereto any funds or investments then on
deposit in or credited to the Collection Account.
54
SECTION 8.04. ISSUER OPINION OF COUNSEL. The Trustee shall receive at
least five days' notice when requested by the Issuer to take any action pursuant
to Section 8.03, accompanied by copies of any instruments involved, and the
Trustee may also require, as a condition to such action, an Issuer Opinion of
Counsel, in form and substance satisfactory to the Trustee, stating the legal
effect of any such action, outlining the steps required to complete the same,
and concluding that all conditions precedent to the taking of such action have
been complied with and such action will not materially and adversely impair the
security for the Transition Bonds or the rights of the Transition Bondholders in
contravention of the provisions of this Indenture; provided, however, that such
-------- -------
Issuer Opinion of Counsel shall not be required to express an opinion as to the
fair value of the Trust Estate. Counsel rendering any such opinion may rely,
without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Trustee in connection with any
such action.
SECTION 8.05. REPORTS BY INDEPENDENT ACCOUNTANTS. The Issuer shall
appoint a firm of Independent certified public accountants of recognized
national reputation for purposes of preparing and delivering the reports or
certificates of such accountants required by this Indenture and the related
Series Supplements. Upon any resignation by such firm, the Issuer shall promptly
appoint a successor thereto that shall also be a firm of Independent certified
public accountants of recognized national reputation. If the Issuer shall fail
to appoint a successor to a firm of Independent certified public accountants
that has resigned within 15 days after such resignation, the Trustee shall
promptly notify the Issuer of such failure in writing. If the Issuer shall not
have appointed a successor within 10 days thereafter, the Trustee shall promptly
appoint a successor firm of Independent certified public accountants of
recognized national reputation. The fees of such firm of Independent certified
public accountants and its successor shall be payable by the Issuer.
SECTION 8.06. REP DEPOSIT ACCOUNT. Pursuant to the written direction of
the Servicer, the Issuer shall open, at the Trustee's Corporate Trust Office, or
at another Eligible Institution, one or more segregated non-interest-bearing
trust accounts in the Trustee's name (each a "REP Deposit Account"), each such
account for the benefit of one Depositing REP. Pursuant to and in accordance
with Finding of Fact No. 50 of the Financing Order, amounts received from any
REP as a security deposit shall be deposited into the applicable REP Deposit
Account. The REP Deposit Accounts shall at all times be maintained in an
Eligible Securities Account and only the Trustee shall have access to the REP
Deposit Accounts for the purpose of making deposits in and withdrawals from the
REP Deposit Accounts in accordance with this Indenture, the Servicing Agreement
and the Financing Order. Funds in the REP Deposit Accounts shall not be
commingled by the Issuer with any other moneys, and shall not be commingled by
the Trustee. All or a portion of the funds in the REP Deposit Accounts shall be
invested in Eligible Investments and reinvested by the Trustee pursuant to the
written direction of the Servicer. All income or other gain from investments of
moneys deposited in any REP Deposit Account shall be deposited by the Trustee
into such REP Deposit Account, and any loss resulting from such investments
shall be charged to such REP Deposit Account. The Trustee shall not in any way
be held liable for the selection of Eligible Investments for the REP Deposit
Accounts or for investment losses incurred thereon. The Trustee shall have no
obligation to invest or reinvest any amounts held hereunder in the absence of
timely and specific written investment direction from the Servicer. The Trustee
shall release property from any REP
55
Deposit Account only as and to the extent directed by the Servicer pursuant to
the Financing Order and Servicing Agreement.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF TRANSITION
BONDHOLDERS.
(a) Without the consent of the Holders of any Transition Bonds but with
prior notice to the Rating Agencies, the Issuer and the Trustee, when authorized
by an Issuer Order, at any time and from time to time, may enter into one or
more indentures supplemental hereto (which shall conform to the provisions of
the Trust Indenture Act as in force at the date of the execution thereof), in
form satisfactory to the Trustee, for any of the following purposes:
(i) to correct or amplify the description of the Trust Estate, or
to better assure, convey and confirm unto the Trustee the Trust Estate, or
to subject to the Lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another Person to the Issuer, and the assumption by
any applicable successor of the covenants of the Issuer contained herein
and in the Transition Bonds;
(iii) to add to the covenants of the Issuer, for the benefit of the
Transition Bondholders, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
the Trustee for the benefit of the Holders, the Trustee and any
counterparty under an interest rate protection agreement;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any Supplemental Indenture which may be inconsistent with any
other provision herein or in any Supplemental Indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any Supplemental Indenture; provided, however, that (i)
-------- -------
such action shall not, as evidenced by an Issuers' Opinion of Counsel,
adversely affect in any material respect the interests of any Transition
Bondholder and (ii) the Rating Agency Condition shall have been satisfied
with respect thereto;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor Trustee with respect to the Transition Bonds and
to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Article VI;
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA;
56
(viii) to set forth the terms of any Series that has not theretofore
been authorized by a Supplemental Indenture, provided that the Rating
Agency Condition has been satisfied;
(ix) to qualify the Transition Bonds for registration with a
Clearing Agency; or
(x) to satisfy any Rating Agency requirements.
The Trustee is hereby authorized to join in the execution of any such
Supplemental Indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order, may,
also without the consent of any of the Holders of the Transition Bonds, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Transition Bonds under this Indenture; provided, however, that
-------- -------
(i) as evidenced by an Issuer's Opinion of Counsel, such action shall not
adversely affect in any material respect the interests of any Transition
Bondholder and (ii) the Rating Agency Condition shall have been satisfied with
respect thereto;
(c) The Trustee may, but shall not be required to, enter into any
indenture supplemental hereto or to consent to or enter into any amendment of
the Basic Documents unless it shall have received an Opinion of Counsel,
addressed to the Trustee, satisfactory to it, that such supplement or amendment
is authorized or permitted by this Article IX.
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF TRANSITION
BONDHOLDERS. The Issuer and the Trustee, when authorized by an Issuer Order,
also may, with the written consent of the PUCT, prior notice to the Rating
Agencies and the consent of the Holders of not less than a majority of the
Outstanding Amount of the Transition Bonds of each Series or Class to be
affected, by Act of such Holders delivered to the Issuer and the Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Transition Bonds under this Indenture; provided, however, that no
-------- -------
such Supplemental Indenture shall, without the consent of the Holder of each
Outstanding Transition Bond of each Series or Class affected thereby:
(i) change the date of payment of any installment of Principal of
or premium, if any, or Interest on any Transition Bond, or reduce the
principal amount thereof, the Bond Rate thereon or the Redemption Price or
the premium, if any, with respect thereto, change the provisions of this
Indenture and the related applicable Series Supplement relating to the
application of collections on, or the proceeds of the sale of, the Trust
Estate to payment of Principal of or premium, if any, or Interest on the
Transition Bonds, or change the currency in which any Transition Bond or
the Interest thereon is payable;
57
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due
on the Transition Bonds on or after the respective due dates thereof (or,
in the case of redemption, on or after the Redemption Date);
(iii) reduce the percentage of the Outstanding Amount of the
Transition Bonds or of a Series or Class thereof, the consent of the
Holders of which is required for any such Supplemental Indenture, or the
consent of the Holders of which is required for any waiver of compliance
with provisions of this Indenture or defaults hereunder and their
consequences provided for in this Indenture or modify or alter the
provisions of the proviso to the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Transition Bonds required to direct the Trustee to direct the Issuer to
sell or liquidate the Trust Estate pursuant to Section 5.04 or to preserve
the Trust Estate pursuant to Section 5.05;
(v) modify any provision of this Section 9.02 except to increase
any percentage specified herein or to provide that those provisions of this
Indenture or the Basic Documents referenced in this Section cannot be
modified or waived without the consent of the Holder of each Outstanding
Transition Bond affected thereby;
(vi) modify any of the provisions of this Indenture in such manner
so as to affect the amount of any payment of Interest, Principal or premium
payable on any Transition Bond on any Payment Date or change the Redemption
Dates, Expected Amortization Schedules or Series Final Maturity Dates or
Class Final Maturity Dates of any Transition Bonds;
(vii) decrease the Overcollateralization Amount or the Required
Capital Amount with respect to any Series or the Scheduled
Overcollateralization Level with respect to any Payment Date;
(viii) modify or alter the provisions of this Indenture regarding the
voting of Transition Bonds held by the Issuer, Reliant Energy, an Affiliate
of either of them or any obligor on the Transition Bonds;
(ix) decrease the percentage of the aggregate principal amount of
Transition Bonds required to amend the sections of this Indenture which
specify the applicable percentage of the aggregate principal amount of the
Transition Bonds necessary to amend this Indenture or any other Basic
Documents; or
(x) permit the creation of any Lien ranking prior to or on a parity
with the Lien of this Indenture with respect to any part of the Trust
Estate or, except as otherwise permitted or contemplated herein, terminate
the Lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Transition Bond of the security provided by the
Lien of this Indenture.
58
It shall not be necessary for the PUCT or any Act of Transition Bondholders
under this Section 9.02 to approve the particular form of any proposed
Supplemental Indenture, but it shall be sufficient if the PUCT or such Act of
Transition Bondholders shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
Supplemental Indenture pursuant to this Section, the Trustee shall mail to the
PUCT and the Holders of the Transition Bonds to which such amendment or
Supplemental Indenture relates a notice setting forth in general terms the
substance of such Supplemental Indenture. Any failure of the Trustee to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such Supplemental Indenture. If any Transition Bonds
are listed on the Luxembourg Stock Exchange and the rules of such exchange so
require, the Trustee shall arrange for publication in accordance with such rules
of a notice that the notice regarding the Supplemental Indenture shall be
available with the Issuer's listing agent in Luxembourg appointed pursuant to
Section 3.02.
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by any Supplemental Indenture permitted
by this Article IX or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and subject to Sections
6.01 and 6.02, shall be fully protected in relying upon, an Issuer Opinion of
Counsel stating that the execution of such Supplemental Indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such Supplemental Indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any
Supplemental Indenture pursuant to the provisions hereof, this Indenture shall
be deemed to be modified and amended in accordance therewith with respect to
each Series or Class of Transition Bonds affected thereby, and the respective
rights, limitations of rights, obligations, duties, liabilities and immunities
under this Indenture of the Trustee, the Issuer and the Holders of the
Transition Bonds 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 Indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of
this Indenture and every Supplemental Indenture executed pursuant to this
Article IX shall conform to the requirements of the TIA as then in effect so
long as this Indenture shall then be qualified under the TIA.
SECTION 9.06. REFERENCE IN TRANSITION BONDS TO SUPPLEMENTAL INDENTURES.
Transition Bonds authenticated and delivered after the execution of any
Supplemental Indenture pursuant to this Article IX may, and if required by the
Trustee shall, bear a notation in form approved by the Trustee as to any matter
provided for in such Supplemental Indenture. If the Issuer or the Trustee shall
so determine, new Transition Bonds so modified as to conform, in the opinion of
the Trustee and the Issuer, to any such Supplemental Indenture may be prepared
and executed by the Issuer and authenticated and delivered by the Trustee in
exchange for Outstanding Transition Bonds.
59
ARTICLE X
REDEMPTION OF TRANSITION BONDS
SECTION 10.01. OPTIONAL REDEMPTION BY ISSUER. If so provided in the
related Series Supplement, the Issuer may, at its option, redeem all, but not
less than all, of all Transition Bonds of a Series on any Payment Date if, after
giving effect to payments that would otherwise be made on such Payment Date, the
Outstanding Amount of any such Series of Transition Bonds has been reduced to
less than five percent of the initial principal balance of such Series. The
redemption price in any case shall be equal to the outstanding principal amount
of the Bonds to be redeemed plus accrued and unpaid interest thereon at the Bond
Rate to, but excluding, the Redemption Date (the "Redemption Price"). If the
----------------
Issuer elects to redeem the Transition Bonds of a Series pursuant to this
Section 10.01, it shall furnish written notice of such election to the Trustee
not later than 25 days prior to the Redemption Date for such redemption and
shall deposit with the Trustee the Redemption Price of the Transition Bonds to
be redeemed plus interest accrued thereon to such Redemption Date plus all other
amounts due and payable hereunder on or prior to such Redemption Date whereupon
all such Transition Bonds shall be due and payable on such Redemption Date upon
the furnishing of a notice complying with Section 10.03 hereof to each Holder of
the Transition Bonds of such Series pursuant to this Section 10.01.
SECTION 10.02. MANDATORY REDEMPTION BY ISSUER. The Issuer shall redeem all
Transition Bonds of a Series that have been called for redemption pursuant to
Section 10.01 on the Redemption Date or Dates, if any, in the amounts required,
if any, and at the redemption price specified in the Series Supplement for such
Series, which in any case shall be not less than the outstanding principal
amount of the Bonds to be redeemed, plus accrued interest thereon to, but
excluding, such Redemption Date. If the Issuer is required to redeem the
Transition Bonds of a Series pursuant to this Section 10.02, it shall furnish
written notice of such requirement to the Trustee not later than 25 days prior
to the Redemption Date for such redemption and shall deposit with the Trustee
the redemption price of the Transition Bonds to be redeemed plus all other
amounts due and payable hereunder whereupon all such Transition Bonds shall be
due and payable on the Redemption Date upon the furnishing of a notice complying
with Section 10.03 hereof to each Holder of the Transition Bonds of such Series
pursuant to this Section 10.02.
SECTION 10.03. FORM OF REDEMPTION NOTICE. Unless otherwise specified in
the Series Supplement relating to a Series of Transition Bonds, notice of
redemption under Section 10.01 or 10.02 hereof shall be given by the Trustee by
first-class mail, postage prepaid, mailed not less than five days nor more than
45 days prior to the applicable Redemption Date to each Holder of Transition
Bonds to be redeemed, as of the close of business on the Record Date preceding
the applicable Redemption Date at such Holder's address appearing in the
Transition Bond Register.
All notices of redemption shall state:
(1) the Redemption Date;
60
(2) the amount of such Transition Bonds to be redeemed;
(3) the Redemption Price; and
(4) the place where such Transition Bonds are to be surrendered for
payment of the Redemption Price and accrued interest (which shall be the office
or agency of the Issuer to be maintained as provided in Section 3.02 hereof).
Notice of redemption of the Transition Bonds to be redeemed shall be given
by the Trustee in the name and at the expense of the Issuer. For so long as any
Transition Bonds are listed on the Luxembourg Stock Exchange and the rules of
such exchange so require, the Trustee shall arrange that such notice will also
be given by publication pursuant to such rules at least ten (10) days prior to
the Redemption Date. Failure to give notice of redemption, or any defect
therein, to any Holder of any Transition Bond selected for redemption shall not
impair or affect the validity of the redemption of any other Transition Bond.
Notice of optional redemption shall be irrevocable once given.
SECTION 10.04. PAYMENT OF REDEMPTION PRICE. If notice of redemption has
been duly mailed, or duly waived by the Holders of all Transition Bonds called
for redemption, and the redemption moneys have been duly deposited with the
Trustee, then the Transition Bonds called for redemption shall be payable on the
applicable Redemption Date at the applicable Redemption Price. No further
Interest will accrue on the principal amount of any Transition Bonds called for
redemption after the Redemption Date for such redemption if payment of the
Redemption Price thereof has been duly provided for, and the Holder of such
Transition Bonds will have no rights with respect thereto, except to receive
payment of the Redemption Price thereof. Payment of the Redemption Price
together with accrued Interest shall be made by the Trustee to or upon the order
of the Holders of the Transition Bonds called for redemption upon surrender of
such Transition Bonds, and the Transition Bonds so redeemed shall cease to be of
further effect and the Lien of this Indenture shall be released with respect to
such Transition Bonds.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC. Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the Trustee (i) an
Issuer Officer's Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Issuer Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with and
(iii) (if required by the TIA) an Independent Certificate from a firm of
certified public accountants meeting the applicable requirements of this Section
11.01, except that, in the case of any such application or request as to which
the furnishing of such documents is specifically required by any provision of
this Indenture, no additional certificate or opinion need be furnished.
61
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(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 compiled with.
SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. 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. Any certificate or opinion of the Issuer
may be based, insofar as it relates to legal matters, upon, in the absence of
bad faith, an Opinion of Counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely conclusively upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.03. ACTS OF TRANSITION BONDHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Transition
Bondholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Transition Bondholders in person or
by agents duly appointed in writing; and except as
62
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Transition Bondholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01) conclusive in favor of the Trustee and the Issuer,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Transition Bonds shall be proved by the Transition
Bond Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Transition Bonds shall bind the Holder of
every Transition Bond issued upon the registration thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Transition Bond.
SECTION 11.04. NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING AGENCIES. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Transition Bondholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to or filed with:
(a) the Trustee by any Transition Bondholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing, delivered personally, via facsimile transmission, by reputable
overnight courier or by first-class mail, postage prepaid, to the Trustee at its
Corporate Trust Office, or
(b) the Issuer by the Trustee or by any Transition Bondholder shall be
sufficient for every purpose hereunder if in writing, delivered personally, via
facsimile transmission, by reputable overnight courier or by first-class mail,
posta ge prepaid, to the Issuer addressed to: ________________________, or at
any other address previously furnished in writing to the Trustee by the Issuer.
The Issuer shall promptly transmit any notice received by it from the Transition
Bondholders to the Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Trustee or a Manager shall be in writing, delivered personally, via facsimile
transmission, by reputable overnight courier or by first-class mail, postage
prepaid, to: (i) in the case of Moody's: Xxxxx'x Investors Service, Inc.,
Attention: ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000; (ii) in the case of Standard & Poor's: Standard & Poor's Corporation, 00
Xxxxx Xxxxxx Xxx Xxxx, XX 00000, Attention: Asset Backed Surveillance
Department; and (iii) in the case of Fitch: Fitch, Inc., 0 Xxxxx Xxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: ABS Surveillance.
SECTION 11.05. NOTICES TO TRANSITION BONDHOLDERS; WAIVER. Where this
Indenture provides for notice to Transition Bondholders of any event, such
notice shall be
63
sufficiently given (unless otherwise herein expressly provided) if in writing
and delivered by first-class mail, postage prepaid, to each Transition
Bondholder affected by such event, at the address of such Transition Bondholder
as it appears on the Transition Bond Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Transition Bondholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Transition Bondholder shall affect the sufficiency of such
notice with respect to other Transition Bondholders, and any notice that is
mailed in the manner herein provided shall conclusively be presumed to have been
duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Transition Bondholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case it shall be impractical to deliver notice in accordance with the
first paragraph of this Section 11.04 to the Holders of Transition Bonds when
such notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be satisfactory to the Trustee
shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
SECTION 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS. Notwithstanding any
provision of this Indenture or any of the Transition Bonds to the contrary, the
Issuer may enter into any agreement with any Holder of a Transition Bond
providing for a method of payment, or notice by the Trustee or any Paying Agent
to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices. The Issuer will furnish to the Trustee a
copy of each such agreement and the Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
SECTION 11.07. NOTICES TO LUXEMBOURG STOCK EXCHANGE.
(a) For so long as any Transition Bonds are listed on the Luxembourg Stock
Exchange and to the extent the rules of such exchange so require, the Issuer
shall notify the Luxembourg Stock Exchange and any agent appointed pursuant to
Section 3.02 if any rating assigned to such Transition Bonds is reduced or
withdrawn and shall arrange for such notice to be published pursuant to the
rules of such exchange.
(b) For so long as any Transition Bonds are listed on the Luxembourg Stock
Exchange and the rules of such exchange so require, the Trustee shall make
available to the Holders of such Transition Bonds and shall deposit upon written
request on file with the Issuer's listing agent in Luxembourg appointed pursuant
to Section 3.02 copies of the Basic Documents, all reports provided to
Transition Bondholders pursuant to this Indenture, the prospectus related to
such Transition Bonds, the reports of independent certified public accountants
obtained with
64
respect to the Issuer pursuant to this Indenture, the financial information
regarding Reliant Energy in its annual report on Form 10-K for the fiscal year
ended most recently prior to the date of this Indenture and copies of each
annual report of Reliant Energy on Form 10-K for subsequent fiscal years. The
Trustee shall deposit with the Chief Registrar of the District Court of
Luxembourg prior to listing on the Luxembourg Stock Exchange a copy of the
Issuer Certificate of Formation, the Issuer LLC Agreement and any legal notices
relating to the issuance of such Transition Bonds.
SECTION 11.08. 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 Indenture by any of the provisions of the TIA, such required
provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.09. 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 11.10. SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Indenture and the Transition Bonds by the Issuer shall bind its successors and
permitted assigns, whether so expressed or not.
All agreements of the Trustee in this Indenture shall bind its successors.
The Trustee shall provide written notice to the Rating Agencies of any
assignment of its obligations under this Agreement.
SECTION 11.11. SEPARABILITY. In case any provision in this Indenture or in
the Transition Bonds shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.12. BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Transition Bonds, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Transition Bondholders,
and any other party secured hereunder, and any other Person with an ownership
interest in any part of the Trust Estate, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 11.13. 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 Transition Bonds or this 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 11.14. GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
65
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. NOTWITHSTANDING THE FOREGOING, FOR PURPOSES OF SECTION 8.110(E) OF
THE UNIFORM COMMERCIAL CODE AS ENACTED IN THE STATE OF TEXAS, THE JURISDICTION
OF THE SECURITIES INTERMEDIARY SHALL BE THE STATE OF NEW YORK.
SECTION 11.15. COUNTERPARTS. This 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 11.16. ISSUER OBLIGATION. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Trustee on the
Transition Bonds or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Member or any
Manager, employee or agent of the Issuer or (ii) any stockholder, officer,
director, employee or agent of the Trustee (it being understood that none of the
Trustee's obligations are in its individual capacity).
SECTION 11.17. NO PETITION. The Trustee, by entering into this Indenture,
and each Transition Bondholder, by accepting a Transition Bond, hereby covenant
and agree that they will not at any time institute against the Issuer, or join
in the institution against the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation Proceeding, or other Proceeding under any
United States federal or State bankruptcy or similar law in connection with any
obligations relating to the Transition Bonds, this Indenture or any of the Basic
Documents.
66
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Indenture
to be duly executed by their respective Manager and officer, respectively,
thereunto duly authorized, all as of the day and year first above written.
RELIANT ENERGY TRANSITION BOND
COMPANY LLC
By: __________________________________
Name: __________________________________
Title: __________________________________
BANKERS TRUST COMPANY, as Trustee
By: __________________________________
Name: __________________________________
Title: __________________________________
67
SCHEDULE 1
SCHEDULED OVERCOLLATERALIZATION LEVELS
Payment Date Scheduled Overcollateralization Level
1
SCHEDULE 2
SEMIANNUAL SERVICER'S CERTIFICATE
1
APPENDIX A
MASTER DEFINITIONS
The definitions contained in this Appendix A are applicable to the singular
as well as the plural forms of such terms.
"Accounts" means, collectively, the Collection Account (and each sub-
--------
account thereof, including, without limitation, the General Subaccount, the
overcollateralization Subaccount, the Capital Subaccount, the Reserve
Subaccount, and the Defeasance Subaccount) and each REP Deposit Account.
"Act" has the meaning specified in Section 11.03 of the Indenture.
---
"Adjustment Date" means _________ of each year in respect of which the
---------------
Servicer requests the PUCT to approve a Transition Charge Adjustment.
"Administration Agreement" means the Administration Agreement dated
------------------------
_________, between the Administrator and the Issuer, as the same may be amended
and supplemented from time to time.
"Administrator" means Reliant Energy as administrator under the
-------------
Administration Agreement or its successor in such capacity.
"Affiliate" means, with respect to any specified Person, any other Person
---------
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, control, when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms controlling and controlled
have meanings correlative to the foregoing.
"Annual Accountant's Report" has the meaning assigned to that term in
--------------------------
Section 3.07 of the Servicing Agreement.
"Authorized Denominations" means, with respect to any Series or Class of
------------------------
Transition Bonds, $1,000 and integral multiples thereof, or such other
denominations as may be specified in the Series Supplement therefor.
"Authorized Officer" means (i) with respect to any Person that is a
------------------
corporation or a limited liability company, the Chairman, President, any Vice
President or Secretary of such Person, (ii) with respect to any Person that is a
partnership, the President, any Vice President or Secretary (or Assistant
Secretary) of a general partner or managing partner of such Person; provided
--------
that in respect of the Issuer, Authorized Officer means any Manager or the
Member and, with respect to the Member, any officer who is authorized to act for
the Member in matters relating to the Issuer and who is identified on the list
of Authorized Officers delivered by the Member to the Trustee as of the date
hereof (as such list may be modified or supplemented from time to time
thereafter).
1
"Basic Documents" means the Issuer LLC Agreement, the Issuer Certificate of
---------------
Formation, the Sale Agreement, the Servicing Agreement, the Intercreditor
Agreement, the Administration Agreement, the Indenture, any Supplemental
Indentures and any Bills of Sale.
"Xxxx of Sale" means any xxxx of sale issued by the Seller to the Issuer
------------
pursuant to the Sale Agreement evidencing the sale of Transition Property by the
Seller to the Issuer.
"Bond Rate" means, with respect to each Series or, if applicable, each
---------
Class of Transition Bonds, the rate at which interest accrues on the principal
balance of Transition Bonds of such Series or Class, as specified in the Series
Supplement therefor.
"Book-Entry Security" means a security maintained in the form of entries
-------------------
(including, without limitation, the security entitlements in, and the financial
assets based on, such security) in the commercial book-entry system of the
Federal Reserve System.
"Book-Entry Transition Bonds" means beneficial interests in the Transition
---------------------------
Bonds, ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.11 of the Indenture.
"Business Day" means any day other than a Saturday or Sunday or a day on
------------
which banking institutions in the City of Houston, Texas, or in the City of New
York, New York, are required or authorized by law or executive order to remain
closed.
"Calculation Date" means, with respect to each Series of Transition Bonds,
----------------
the date on which the calculations and filings set forth in Annex 1 to the
Servicing Agreement will be made each year.
"Capital Subaccount" has the meaning specified in Section 8.02(a) of the
------------------
Indenture.
"Class" means, with respect to any Series, any one of the classes of
-----
Transition Bonds of that Series, as specified in the Series Supplement for that
Series.
"Class Final Maturity Date" means the Final Maturity Date of a Class, as
-------------------------
specified in the Series Supplement for the related Series.
"Clearing Agency" means an organization registered as a "clearing agency"
---------------
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
---------------------------
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time, and Treasury Regulations promulgated thereunder.
"Collection Account" has the meaning specified in Section 8.02(a) of the
------------------
Indenture.
"Collections" means amounts collected in respect of Transition Charges.
-----------
2
"Commission" means the U.S. Securities and Exchange Commission, and any
----------
successor thereof.
"Corporate Trust Office" means the principal office of the Trustee at which
----------------------
at any particular time its corporate trust business shall be administered, which
office at date of the execution of this Indenture is located at Four Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Corporate Trust and Agency Services -
Structured Finance Team, or at such other address as the Trustee may designate
from time to time by notice to the Transition Bondholders and the Issuer, or the
principal corporate trust office of any successor Trustee (the address of which
the successor Trustee will notify the Transition Bondholders and the Issuer).
"Covenant Defeasance Option" has the meaning specified in Section 4.01(b)
--------------------------
of the Indenture.
"Customers" means each person that
---------
(a) was a retail customer of electric service of Reliant Energy
located within Reliant Energy's service territory on May 1, 1999, or that
became a retail customer of electric service of Reliant Energy located
within Reliant Energy's service territory after May 1, 1999,
(b) is still located within Reliant Energy's service territory, and
(c) is receiving electric transmission and/or distribution service
from Reliant Energy or the successor to Reliant Energy's wires business.
"Default" means any occurrence that is, or with notice or the lapse of time
-------
or both would become, an Event of Default.
"Defeasance Subaccount" has the meaning specified in Section 8.02(a) of the
---------------------
Indenture.
"Definitive Transition Bonds" has the meaning specified in Section 2.11 of
---------------------------
the Indenture.
"Depositing REP" means a retail electric provider, as that term is defined
--------------
in the Texas Electric Choice Plan, who provides the Trustee with a cash deposit
pursuant to the Financing Order.
"DTC" means The Depository Trust Company.
---
"DTC Agreement" means the Letter of Representations between the Issuer, the
-------------
Trustee and DTC, as the initial Clearing Agency, dated as of ________________,
relating to the Transition Bonds, as the same may be amended and supplemented
from time to time.
"Eligible Guarantor Institution" means a firm or other entity identified in
------------------------------
Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein):
(a) a bank;
3
(b) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;
(c) a credit union;
(d) a national securities exchange, registered securities association
or clearing agency; or
(e) a savings association that is a participant in a securities
transfer association.
"Eligible Institution" means:
--------------------
(a) the corporate trust department of the Trustee, so long as any of
the securities of the Trustee have a credit rating from each Rating Agency
in one of its generic rating categories which signifies investment grade,
or
(b) the 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), which
(i) has either
(A) with respect to any Eligible Investment having a
maturity of greater than one month, a long-term unsecured debt
rating of "AA-" by Standard & Poor's and "A2" by Moody's or
(B) with respect to any Eligible Investment having a
maturity of one month or less, a certificate of deposit rating of
"A-1+" by Standard & Poor's and "P-1" by Moody's, or any other
long-term, short-term or certificate of deposit rating acceptable
to the Rating Agencies, and
(ii) whose deposits are insured by the FDIC.
"Eligible Investments" mean book-entry securities, negotiable instruments
--------------------
or securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully and unconditionally
guaranteed as to timely payment by, the United States of America;
(b) certificates of deposit of any depository institution or trust
company incorporated under the laws of the United States of America or any
State thereof (or any domestic branch of a foreign bank) and subject to
supervision and examination by federal or State banking or depository
institution authorities; provided, however, that at the time of the
-------- -------
investment or contractual commitment to invest therein, the commercial
paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other
than such depository institution or trust company) thereof shall have
either (i) a long-term unsecured debt rating from Moody's
4
and Standard & Poor's of at least "Aa3" and "AA," respectively, or (ii) a
certificate of deposit rating from Moody's and Standard & Poor's of at
least "P-1" and "A-1+," respectively;
(c) commercial paper or other short term obligations of any
corporation organized under the laws of any State (other than Reliant
Energy) whose ratings, at the time of the investment or contractual
commitment to invest therein, from Moody's and Standard & Poor's shall be
at least "P-1" and "A-1+," respectively;
(d) investments in money market funds having a rating from Moody's
and Standard & Poor's of "Aaa" and "AAA," respectively (including funds for
which the Trustee or any of its Affiliates act as investment manager or
advisor);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (b) above;
(g) repurchase obligations with respect to any security or whole loan
entered into with
(i) a depository institution or trust company (acting as
principal) described in clause (b) above (any depository institution
or trust company being referred to in this definition as a "financial
institution"),
(ii) a broker/dealer (acting as principal) registered as a
broker or dealer under Section 15 of the Exchange Act (any
broker/dealer being referred to in this definition as a
"broker/dealer"), the unsecured short-term debt obligations of which
are rated at least "P-1" by Moody's and "A-1+" by Standard & Poor's at
the time of entering into this repurchase obligation, or
(iii) an unrated broker/dealer, acting as principal, that is a
wholly-owned subsidiary of a non-bank or bank holding company the
unsecured short-term debt obligations of which are rated at least "P-
1" by Moody's and "A-1+" by Standard & Poor's at the time of purchase;
or
(h) any other investment permitted by each of the Rating Agencies;
provided, that (a) any book-entry security, instrument or security having a
maturity of one month or less that would be an Eligible Investment but for its
failure, or the failure of the obligor thereon, to have the rating specified
above shall be an eligible investment if such book-entry security, instrument or
security, or the obligor thereon, has a short-term unsecured debt rating of at
least "P-1" by Moody's and "A-1+" by S&P, and (b) any book-entry security,
instrument or security having a maturity of greater than one month that would be
an eligible investment but for
5
its failure, or the failure of the obligor thereon, to have the rating specified
above shall be an eligible investment if such book-entry security, instrument or
security, or the obligor thereon, has a long-term unsecured debt rating of at
least "AA-" by S&P or the equivalent thereof by Moody's and a short-term
unsecured debt rating of at least "P-1" by Moody's or the equivalent thereof by
S&P.
"Eligible Securities Account" means either:
---------------------------
(a) a segregated non-interest-bearing trust account with an Eligible
Institution or
(b) a segregated non-interest-bearing trust account with the
corporate trust department of a depository institution organized under the
laws of the United States of America or any State (or any domestic branch
of a foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from each Rating Agency
in one of its generic rating categories which signifies investment grade.
"Event of Default" has the meaning specified in Section 5.01 of the
----------------
Indenture.
"Excess Curve Payments" has the meaning specified in the Servicing
---------------------
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Expected Amortization Schedule" means, with respect to each Series or, if
------------------------------
applicable, each Class of Transition Bonds, the expected amortization schedule
for principal thereof, as specified in the Series Supplement therefor.
"Expected Final Payment Date" means, with respect to each Series or, if
---------------------------
applicable, each Class of Transition Bonds, the date when all interest and
principal is scheduled to be paid for that Series or Class in accordance with
the Expected Amortization Schedule, as specified in the Series Supplement
therefor.
"FDIC" means the Federal Deposit Insurance Corporation or any successor.
----
"Federal Book-Entry Regulations" means (a) the federal regulations
------------------------------
contained in Subpart B ("Treasury/Reserve Automated Debt Entry System (TRADES)")
governing Book-Entry Securities consisting of U.S. Treasury bonds, notes and
bills, and Subpart D ("Additional Provisions") of 31 C.F.R. part 357, Section
357.10 through Section 357.14 and Section 357.41 through Section 357.44
(including related defined terms in 31 C.F.R. Section 357.2); and (b) to the
extent substantially identical to the federal regulations referred to in clause
(a) above (as in effect from time to time), the federal regulations governing
other Book-Entry Securities.
"Final Maturity Date" means, for each Series or, if applicable, each Class
-------------------
of Transition Bonds, the date by which all principal and interest on the
Transition Bonds is required to be paid, as specified in the Series Supplement
therefor.
6
"Financing Issuance" means an issuance of a new Series of Transition Bonds
------------------
under the Indenture to provide funds to finance the purchase by the Issuer of
Transition Property.
"Financing Order" means the Financing Order issued by the PUCT on June 1,
---------------
2000, pursuant to the Texas Electric Choice Plan, as such order may hereafter be
supplemented by an order of the PUCT in accordance with the Financing Order.
"Fitch" means Fitch, Inc., or any successor thereto.
-----
"General Subaccount" has the meaning specified in Section 8.02(a) of the
------------------
Indenture.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
-----
release, convey, assign, transfer, deliver, create, and xxxxx x xxxx upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Trust Estate or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal, interest and other payments in respect of the Trust Estate 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.
"Holder or Transition Bondholder" means the Person in whose name a
-------------------------------
Transition Bond of any Series or Class is registered on the Transition Bond
Register.
"Indemnity Amounts" means any indemnification obligations payable by the
-----------------
Servicer pursuant to Section 5.02 of the Servicing Agreement, the Seller
pursuant to the Sale Agreement or the Issuer pursuant to Section 6.07 of the
Indenture.
"Indenture" means this Indenture dated _________, between the Issuer and
---------
the Trustee, as the same may be amended and supplemented from time to time by
one or more indentures supplemental hereto, and shall include the forms and
terms of the Transition Bonds established thereunder.
"Independent" means, when used with respect to any specified Person, that
-----------
the Person
(a) is in fact independent of the Issuer, any other obligor upon the
Transition Bonds, Reliant Energy and any Affiliate of any of the foregoing
Persons,
(b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, Reliant
Energy or any Affiliate of any of the foregoing Persons and
(c) is not connected with the Issuer, any such other obligor, Reliant
Energy or any Affiliate of any of the foregoing Persons as an officer,
employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
7
"Independent Certificate" means a certificate or opinion to be delivered to
-----------------------
the Trustee made by an Independent appraiser from a nationally reputable
appraisal firm or other expert appointed by an Issuer Order in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read the definition of "Independent" in this Appendix A and that the signer is
Independent within the meaning thereof.
"Initial Transfer Date" means the Series Issuance Date for the first Series
---------------------
of Transition Bonds.
"Intercreditor Agreement" means the Intercreditor Agreement dated
-----------------------
___________ among the Issuer, Reliant Energy, in its individual capacity and as
the Servicer, the Trustee, and certain other parties, as the same may be amended
and supplemented from time to time.
"Interest" means, for any Payment Date for any Series or Class of
--------
Transition Bonds, the sum, without duplication, of:
(a) an amount equal to the amount of interest accrued at the
applicable interest rates from the prior Payment Date or, with respect to
the first Payment Date, the amount of interest accrued since the Initial
Transfer Date, with respect to that Series or Class;
(b) any unpaid interest plus, to the extent permitted by law, any
interest accrued on this unpaid interest at the applicable interest rate;
(c) if the Transition Bonds have been declared due and payable, all
accrued and unpaid interest thereon; and
(d) with respect to a Series or Class to be redeemed prior to the
next Payment Date, the amount of interest that will be payable as interest
on such Series or Class upon such redemption.
"Issuer" means Reliant Energy Transition Bond Company LLC, a Delaware
------
limited liability company, or any successor thereto pursuant to Section 3.11 of
the Indenture.
"Issuer Certificate of Formation" means the Certificate of Formation of the
-------------------------------
Issuer which was filed with the Delaware Secretary of State on November 10,
1999, as the same may be amended and restated from time to time.
"Issuer LLC Agreement" means the Amended and Restated Limited Liability
--------------------
Company Agreement between the Issuer and Reliant Energy, as sole Member, dated
as of ________________, as the same may be amended and supplemented from time to
time.
"Issuer Opinion of Counsel" means one or more written opinions of counsel
-------------------------
who may, except as otherwise expressly provided in the Indenture, be employees
of or counsel to the Issuer and who shall be satisfactory to the Trustee, and
which opinion or opinions shall be addressed to the Trustee, as Trustee, and
shall be in a form reasonably satisfactory to the Trustee.
"Issuer Officer's Certificate" means a certificate on behalf of the Issuer
----------------------------
signed by any Authorized Officer of the Issuer and delivered to the Trustee.
8
"Issuer Order" or "Issuer Request" means a written order or request signed
------------ --------------
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Trustee.
"Legal Defeasance Option" has the meaning specified in Section 4.01(b) of
-----------------------
the Indenture.
"Lien" means a security interest, lien, charge, pledge, equity or
----
encumbrance of any kind.
"Losses" means collectively, any and all liabilities, obligations, losses,
------
damages, payments, costs or expenses of any kind whatsoever.
"Majority Holders" means the Holders of a majority of the Outstanding
----------------
Amount of the Transition Bonds of all Series or the Holders of a majority of a
specified portion of the Outstanding Amount of the Transition Bonds, as
applicable.
"Manager" means any manager of the Issuer.
-------
"Member" means Reliant Energy, as the sole member of the Issuer.
------
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor thereto.
-------
"Officer's Certificate" means, in respect of any Person, an officer's
---------------------
certificate signed by an Authorized Officer of such Person; provided that unless
--------
otherwise specified, any reference in the Indenture to an Officer's Certificate
shall be to an Officer's Certificate of any Authorized Officer of the Issuer.
"Operating Expenses" means, with respect to the Issuer, all fees, costs,
------------------
expenses and indemnity payments owed by the Issuer, including all amounts owed
by the Issuer to the Trustee, the Servicing Fee, the fee payable by the Issuer
to the Administrator under the Administration Agreement, the fees and expenses
payable by the Issuer to the Independent Managers of the Issuer, legal fees and
expenses of the Servicer pursuant to Section 3.10 of the Servicing Agreement,
and legal and accounting fees, costs and expenses of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who may
------------------
be an employee of or counsel to Reliant Energy, which counsel shall be
acceptable to the Trustee, the Issuer and the Rating Agencies, as applicable,
and which shall be in form reasonably satisfactory to the Trustee, if
applicable.
"Outstanding" with respect to Transition Bonds means, as of the date of
-----------
determination, all Transition Bonds theretofore authenticated and delivered
under the Indenture except:
(a) Transition Bonds theretofore canceled by the Transition Bond
Registrar or delivered to the Transition Bond Registrar for cancellation;
(b) Transition Bonds or portions thereof the payment for which money
in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent in trust for the Holders of such Transition Bonds;
provided, however, that if such Transition Bonds are to be redeemed, notice
-------- -------
of such redemption has been duly given pursuant to the Indenture or
provision therefor, satisfactory to the Trustee; and
9
(c) Transition Bonds in exchange for or in lieu of other Transition
Bonds which have been authenticated and delivered pursuant to the Indenture
unless proof satisfactory to the Trustee is presented that any such
Transition Bonds are held by a bona fide purchaser; provided that in
--------
determining whether the Holders of the requisite Outstanding Amount of the
Transition Bonds or any Series or Class thereof have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or
under any Basic Document, Transition Bonds owned by the Issuer, any other
obligor upon the Transition Bonds, Reliant Energy or any Affiliate of any
of the foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be fully
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Transition Bonds that a
Responsible Officer of the Trustee knows to be so owned shall be so
disregarded. Transition Bonds so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to
such Transition Bonds and that the pledgee is not the Issuer, any other
obligor upon the Transition Bonds, the Servicer or any Affiliate of any of
the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all
------------------
Outstanding Transition Bonds or, if the context requires, all Outstanding
Transition Bonds of a Series or Class Outstanding at the date of determination.
"Overcollateralization Amount" means, with respect to any Series of
----------------------------
Transition Bonds, the amount specified as such in the Series Supplement
therefor.
"Overcollateralization Subaccount" has the meaning specified in Section
--------------------------------
8.02(a) of the Indenture.
"Paying Agent" means the Trustee or any other Person that meets the
------------
eligibility standards for the Trustee specified in Section 6.11 of the Indenture
and is authorized by the Issuer to make the payments of Principal of or premium,
if any, or Interest on the Transition Bonds on behalf of the Issuer.
"Payment Date" means, with respect to each Series or, if applicable, each
------------
Class of Transition Bonds, each date or dates specified as Payment Dates for
such Series or Class in the Series Supplement therefor.
"Person" means any individual, corporation, estate, partnership, joint
------
venture, association, joint stock company, trust (including any beneficiary
thereof), business trust, limited liability company, unincorporated organization
or government or any agency or political subdivision thereof.
"Predecessor Transition Bond" means, with respect to any particular
---------------------------
Transition Bond, every previous Transition Bond evidencing all or a portion of
the same debt as that evidenced by such particular Transition Bond; and, for the
purpose of this definition, any Transition Bond authenticated and delivered
under Section 2.06 of the Indenture in lieu of a mutilated, lost,
10
destroyed or stolen Transition Bond shall be deemed to evidence the same debt as
the mutilated, lost, destroyed or stolen Transition Bond.
"Principal" means, with respect to any Payment Date and each Series or, if
---------
applicable, each Class of Transition Bonds the sum, without duplication, of:
(a) the amount of principal scheduled to be paid on such Payment Date
in accordance with the Expected Amortization Schedule;
(b) the amount of principal due on the Final Maturity Date of any
Series or Class if such Payment Date is the final Maturity Date;
(c) the amount of principal due as a result of the occurrence and
continuance of an Event of Default and acceleration of the Transition
Bonds;
(d) the amount of principal and premium, if any, due as a result of a
redemption of Transition Bonds prior to such Payment Date; and
(e) any unpaid and previously scheduled payments of principal and
overdue payments of principal.
"Pro Rata" has the meaning specified for such term in Section 8.02(d) of
--------
the Indenture.
"Proceeding" means any suit in equity, action at law or other judicial or
----------
administrative proceeding.
"Projected Transition Bond Balance" means, as of any date, the anticipated
---------------------------------
Outstanding Amount of Transition Bonds after giving effect to payment of the sum
of the amounts provided for in the Expected Amortization Schedules for each
outstanding Series of Transition Bonds and such date.
"PUCT" means the Public Utility Commission of Texas or any successor entity
----
thereto.
"Qualified Costs" has the meaning assigned to that term in the Texas
---------------
Electric Choice Plan and the Financing Order.
"Rating Agency" means any rating agency rating the Transition Bonds of any
-------------
Class or Series at the time of issuance thereof at the request of the Issuer,
which initially shall be Xxxxx'x, Fitch and S&P. If no such organization or
successor is any longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person designated
by the Issuer, written notice of which designation shall be given to the Trustee
and the Servicer.
"Rating Agency Condition" means, with respect to any action, the
-----------------------
notification in writing to each Rating Agency of such action, and confirmation
from S&P and Fitch to the Trustee and the Issuer that such action will not
result in a reduction or withdrawal of the then current rating by such Rating
Agency of any outstanding Series or Class of Transition Bonds.
11
"Record Date" means, with respect to any Payment Date for a Series or
-----------
Class, the date set forth as such in the Series Supplement therefor.
"Redemption Date" means, with respect to each Series or, if applicable,
---------------
each Class of Transition Bonds, the date for the redemption of the Transition
Bonds of such Series or Class pursuant to Section 10.01 or 10.02 of the
Indenture or the Series Supplement for such Series or Class, which in each case
shall be a Payment Date.
"Redemption Price" has the meaning set forth in Section 10.01 of the
----------------
Indenture.
"Refunding Issuance" means issuance of a new Series of Transition Bonds
------------------
hereunder to pay the cost of refunding, through redemption or payment on the
Expected Final Payment Date for a Series or Class of Transition Bonds, all or
part of the Transition Bonds of such Series or Class to the extent permitted by
the terms thereof.
"Reliant Energy" means Reliant Energy, Incorporated, a Texas corporation,
--------------
or its successor.
"REP" means a retail electric provider under the Financing Order.
---
"REP Deposit Account" has the meaning specified in Section 8.06 of the
-------------------
Indenture.
"Required Capital Amount" means a capital contribution in an amount equal
-----------------------
to the amount specified in the related Series Supplement, representing a capital
contribution from Reliant Energy.
"Reserve Subaccount" has the meaning specified in Section 8.02(a) of the
------------------
Indenture.
"Responsible Officer" means, with respect to the Trustee, any officer
-------------------
within the Corporate Trust Office of the Trustee, including any Vice President,
Director, Managing Officer, associate, Assistant Vice President, Secretary,
Assistant Secretary, or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"Retiring Trustee" means a Trustee that resigns or vacates the office of
----------------
Trustee for any reason.
"Sale Agreement" means the Transition Property Sale Agreement dated
--------------
____________, between the Seller and the Issuer, as the same may be amended and
supplemented from time to time.
"Scheduled Overcollateralization Level" means, with respect to any Payment
-------------------------------------
Date, the amount set forth as such in Schedule 1 of the Indenture, as such
Schedule has been adjusted in accordance with Section 3.19 of the Indenture to
reflect redemptions or defeasances of Transition Bonds and issuances of
additional Series of Transition Bonds.
12
"Securities Intermediary" means Bankers Trust Company, as securities
-----------------------
intermediary, or its successor or any successor securities intermediary under
the Indenture.
"Seller" means Reliant Energy, or its successor, in its capacity as seller
------
of the Transition Property to the Issuer pursuant to the Sale Agreement.
"Semiannual Servicer's Certificate" means the statement prepared by the
---------------------------------
Servicer and delivered to the Trustee with respect to each Series of Transition
Bonds on or prior to each Payment Date therefor, the form of which is attached
hereto as Schedule 2.
"Series" means any series of Transition Bonds issued and authenticated by
------
the Issuer pursuant to the Indenture, as specified in the Series Supplement
therefor.
"Series Final Maturity Date" means the Final Maturity Date for a Series.
--------------------------
"Series Issuance Date" means, with respect to any Series, the date on which
--------------------
the Transition Bonds of such Series are to be originally issued in accordance
with Section 2.10 of the Indenture and the Series Supplement for such Series.
"Series Supplement" means a Supplemental Indenture that authorizes a
-----------------
particular Series of Transition Bonds.
"Servicer" means Reliant Energy, in its capacity as the servicer under the
--------
Servicing Agreement, and each successor to Reliant Energy (in the same capacity)
pursuant to Section 5.03, 5.04 or 6.04 of the Servicing Agreement.
"Servicer Default" means an event specified in Section 6.01 of the
----------------
Servicing Agreement.
"Servicing Agreement" means the Transition Property Servicing Agreement
-------------------
dated ___________, between the Issuer and the Servicer and acknowledged by the
Trustee, as the same may be amended and supplemented from time to time.
"Servicing Fee" means the fee payable by the Issuer to the Servicer on each
-------------
Payment Date with respect to each Series of Transition Bonds in the amount to be
specified in the Section 5.07 of the Servicing Agreement.
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings Group, a
--------------------------
division of The XxXxxx-Xxxx Companies, or any successor thereto.
"State" means any one of the 50 states of the United States of America or
-----
the District of Columbia.
"Successor Servicer" means a successor Servicer appointed by the Trustee
------------------
pursuant to Section 6.04 of the Servicing Agreement.
"Supplemental Indenture" means a supplemental indenture entered into by the
----------------------
Issuer and the Trustee pursuant to Article IX of the Indenture.
13
"Texas Electric Choice Plan" means Chapter 39 of Title 2, Subtitle B of the
--------------------------
Texas Utilities Code.
"Transition Bond" means any of the transition bonds (as defined in the
---------------
Texas Electric Choice Plan) issued by the Issuer pursuant to the Indenture.
"Transition Bond Balance" means, as of any date, the aggregate Outstanding
-----------------------
Amount of all Series of Transition Bonds on such date.
"Transition Bond Owner" means, with respect to a Book-Entry Transition
---------------------
Bond, the Person who is the beneficial owner of such Book-Entry Transition Bond,
as reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Transition Bond Register" has the meaning specified in Section 2.05 of the
------------------------
Indenture.
"Transition Bond Registrar" means the Trustee, in its capacity as keeper of
-------------------------
the Transition Bond Register, or any other Person appointed to act in such
capacity by the Issuer pursuant to Section 2.05 of the Indenture.
"Transition Charge Adjustment Process" means the process by which
------------------------------------
Transition Charges are adjusted pursuant to the Servicing Agreement and the
Texas Electric Choice Plan.
"Transition Charges" means nonbypassable amounts to be charged for the use
------------------
or availability of electric services, approved by the PUCT in the Financing
Order to recover Qualified Costs, that may be collected by Reliant Energy, its
successors, assignees or other collection agents as provided for in the
Financing Order.
"Transition Property" means the rights and interests of the Seller or its
-------------------
successor under the Financing Order, once those rights are first transferred to
the Issuer or pledged in connection with the issuance of the Transition Bonds,
including the irrevocable right to impose, collect and receive through
Transition Charges payable by retail electric customers within the Seller's
certificated service area as it existed on May 1, 1999, an amount sufficient to
cover the qualified costs of the Seller authorized in the Financing Order, the
right to receive Transition Charges in amounts and at times sufficient to pay
principal and interest and make other deposits in connection with the Transition
Bonds and all revenues and collections resulting from Transition Charges.
"Trust Estate" has the meaning specified in the Granting Clause of this
------------
Indenture.
"Trust Indenture Act or TIA" means the Trust Indenture Act of 1939 as in
--------------------------
force on the date hereof, unless otherwise specifically provided.
"Trustee" means Bankers Trust Company, as trustee, or its successor or any
-------
successor Trustee under the Indenture.
14
"UCC" means, unless the context otherwise requires, the Uniform Commercial
---
Code, as in effect in the relevant jurisdiction, as amended from time to time.
"U.S. Government Obligations" means direct obligations (or certificates
---------------------------
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
15
