EXHIBIT 10.2
Form of Grant Agreement
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AGREEMENT RELATING TO GRANT OF INTANGIBLE TRANSITION PROPERTY
between
ILLINOIS POWER COMPANY
and
ILLINOIS POWER SECURITIZATION LIMITED LIABILITY COMPANY
Dated as of [_____________], 1998
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TABLE OF CONTENTS
ARTICLE I - Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.02. Other Definitional Provisions. . . . . . . . . . . . . . . . . .2
ARTICLE II - Grant of Transition Property. . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.01. Grant of Transition Property . . . . . . . . . . . . . . . . . .3
ARTICLE III - Representations and Warranties of Illinois Power . . . . . . . . . . .4
SECTION 3.01. Organization and Good Standing . . . . . . . . . . . . . . . . .5
SECTION 3.02. Due Qualification. . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 3.03. Power and Authority. . . . . . . . . . . . . . . . . . . . . . .5
SECTION 3.04. Binding Obligation . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 3.05. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 3.06. No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 3.07. Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 3.08. The 1998 Transition Property . . . . . . . . . . . . . . . . . .7
ARTICLE IV - Covenants of Illinois Power . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.01. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.02. No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.03. Delivery of Collections. . . . . . . . . . . . . . . . . . . . 13
SECTION 4.04. Notice of Liens. . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.05. Compliance with Law. . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.06. Covenants Related to the 1998 Transition Property
and the Notes. . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.07. Protection of Title. . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.08. Nonpetition Covenants. . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.09. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.10. Contracts for Non-Tariffed Services. . . . . . . . . . . . . . 18
ARTICLE V - Illinois Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.01. Liability of Illinois Power; Indemnities . . . . . . . . . . . 18
SECTION 5.02. Merger or Consolidation of or Assumption of the
Obligations of Illinois Power. . . . . . . . . . . . . . 19
SECTION 5.03. Limitation on Liability of Illinois Power and Others . . . . . 21
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ARTICLE VI - Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.01. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.03. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.04. Limitations on Rights of Others. . . . . . . . . . . . . . . . 24
SECTION 6.05. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.06. Separate Counterparts. . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.07. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.08. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.09. Assignments to Note Issuer and Indenture Trustee . . . . . . . 25
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AGREEMENT RELATING TO GRANT OF INTANGIBLE TRANSITION PROPERTY (as the same
may be hereafter amended, supplemented or otherwise modified from time to time,
this "Agreement") dated as of __________ 1998, between ILLINOIS POWER COMPANY,
an Illinois corporation ("Illinois Power"), and ILLINOIS POWER SECURITIZATION
LIMITED LIABILITY COMPANY, a Delaware limited liability company (the "Grantee").
WHEREAS, Illinois Power filed the Application with the ICC pursuant to
Section 18-103 of the Funding Law requesting the issuance of a transitional
funding order;
WHEREAS, Illinois Power requested in the Application that the transitional
funding order (i) establish, create and grant rights, in favor of the Grantee,
in and to "intangible transition property" (as defined in Section 18-102 of the
Funding Law) in the aggregate amount of $1,634,000,000; and (ii) establish and
create "instrument funding charges" as defined in Section 18-102 of the Funding
Law, granting the right to impose and receive certain non-bypassable charges
expressed in cents per kilowatt hour from and after the effective date of the
associated tariff;
WHEREAS, the ICC issued the 1998 Funding Order on ___________, 1998, which
created and established the intangible transition property requested by Illinois
Power in the Application;
WHEREAS, the 1998 Funding Order granted to and vested in the Grantee, as
current and original property rights, and not by assignment from Illinois Power,
all right, title and interest to impose and receive the IFCs authorized by and
under the 1998 Funding Order and all related revenues, collections, claims,
payments, money or proceeds thereof, including all right, title and interest of
the Grantee in, to and under the 1998 Funding Order; and
WHEREAS, the Grantee has agreed (i) to transfer the 1998 Transition
Property to the Note Issuer pursuant to the Sale Agreement, and (ii) to pay
Illinois Power the net proceeds received by the Grantee from the Note Issuer in
connection with such transfer;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in that certain
Indenture (including Appendix A thereto) dated as of the date hereof, between
Illinois Power Special Purpose Trust, as the Note Issuer, and Xxxxxx Trust and
Savings Bank, as the Indenture Trustee, as the same may be amended, supplemented
or otherwise modified from time to time.
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) "AGREEMENT" shall have the meaning set forth in the preamble hereto.
(b) Non-capitalized terms used herein which are defined in the Public
Utilities Act shall, as the context requires, have the meanings assigned to such
terms in the Public Utilities Act, but without giving effect to amendments to
the Public Utilities Act after the date hereof which have a material adverse
effect on the Note Issuer or the Holders.
(c) All terms defined in this Agreement shall have the defined meaning
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(d) The words "hereof" "herein," "hereunder" and words of similar import,
when used in this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to
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Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter forms of such terms.
ARTICLE II
GRANT OF TRANSITION PROPERTY
SECTION 2.01. GRANT OF TRANSITION PROPERTY. In consideration of Illinois
Power's actions in requesting that the 1998 Transition Property be created and
vested in the Grantee, the Grantee agrees to remit to Illinois Power the net
proceeds remitted to it by the Note Issuer from the sale of the Notes. To the
extent that, notwithstanding the Funding Law, the Application and the 1998
Funding Order, applicable law provides that Illinois Power has any interest in
the 1998 Transition Property or any part thereof, Illinois Power sells,
transfers, assigns, sets over and otherwise conveys to the Grantee without
recourse (subject to the obligations herein) all of Illinois Power's right,
title and interest, if any, in, to and under the 1998 Transition Property (such
grant of the 1998 Transition Property, and such sale, transfer, assignment, set
over and conveyance, include, to the fullest extent permitted by the Funding
Law, the assignment of all revenues, collections, claims, rights, payments,
money or proceeds of or arising from the IFCs pursuant to the 1998 Funding Order
and the 1998 Initial Tariff, including, without limitation, any Allocable IFC
Revenue Amounts). Such sale, transfer, assignment, set over and conveyance by
Illinois Power is expressly stated to be an absolute transfer, and pursuant to
Section 18-108 of the Funding Law, shall be treated
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as an absolute transfer (as in a true sale), and not as a pledge or other
financing, of the 1998 Transition Property. The previous sentence is the
express statement referred to in Section 18-108 of the Funding Law. To the
extent that, notwithstanding the Funding Law, the Application and the 0000
Xxxxxxx Xxxxx, Xxxxxxxx Power is deemed to have any interest in the 1998
Transition Property or any part thereof under applicable law, and if the
foregoing sale, transfer, assignment, set over and conveyance is held not to be
an absolute transfer (as in a true sale) as contemplated under Section 18-108 of
the Funding Law, then such sale, transfer, assignment, set over and conveyance
shall be treated as a pledge of the 1998 Transition Property and Illinois Power
shall be deemed to have granted a security interest to the Grantee in the 1998
Transition Property. Illinois Power takes the position that it has no rights in
the 1998 Transition Property to which such a security interest could attach.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ILLINOIS POWER
Illinois Power makes the following representations and warranties, as of
the Closing Date, on which the Grantee has relied in assigning the 1998
Transition Property to the Note Issuer. These representations and warranties
shall survive (i) the grant of the 1998 Transition Property to the Grantee
pursuant to the 1998 Funding Order and the 1998 Initial Tariff, (ii) to the
extent that Illinois Power has any interest in the 1998 Transition Property or
any part thereof, the sale, transfer, assignment, set over and conveyance by
Illinois Power contemplated hereby, (iii) the sale, transfer, assignment, set
over and conveyance of the 1998 Transition Property and Related Assets to the
Note Issuer and (iv) the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
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SECTION 3.01. ORGANIZATION AND GOOD STANDING. Illinois Power is duly
organized and validly existing as a corporation in good standing under the laws
of the State of Illinois, with the power and authority to own its properties and
to conduct its business as such properties are currently owned and such business
is presently conducted, and had at all relevant times, and has the requisite
power, authority and legal right to request that the ICC issue the 1998 Funding
Order. Illinois Power is engaged in the generation, transmission, distribution
and sale of electricity to the public in Illinois, is a public utility within
the meaning of Section 3-105 of the Public Utilities Act and is an electric
utility within the meaning of the Funding Law and Article XVI of the Public
Utilities Act.
SECTION 3.02. DUE QUALIFICATION. Illinois Power is duly qualified to do
business as a corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such qualifications,
licenses or approvals (except where the failure to so qualify would not be
reasonably likely to have a material adverse effect on Illinois Power's
business, operations, assets, revenues or properties).
SECTION 3.03. POWER AND AUTHORITY. Illinois Power has the requisite power
and authority to execute and deliver this Agreement and to carry out its terms;
and the execution, delivery and performance of this Agreement have been duly
authorized by Illinois Power by all necessary corporate action.
SECTION 3.04. BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of Illinois Power enforceable against Illinois
Power in accordance with its terms, subject to applicable insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws relating
to or affecting creditors' rights generally from time to time in effect and to
general
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principles of equity (including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing), regardless of whether considered
in a proceeding in equity or at law.
SECTION 3.05. NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
(i) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under, the
Articles of Incorporation or by-laws of Illinois Power, or any indenture,
agreement or other instrument to which Illinois Power is a party or by which it
shall be bound; (ii) result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument; or (iii) violate any law or any order, rule or regulation
applicable to Illinois Power of any court or of any Federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over Illinois Power or its properties.
SECTION 3.06. NO PROCEEDINGS. [Except as set forth on Schedule 3.06,]
there are no proceedings or investigations pending or, to Illinois Power's
knowledge, threatened, before any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over Illinois Power or its properties involving or relating to Illinois Power or
the Grantee or to Illinois Power's knowledge, any other Person: (i) asserting
the invalidity of the Funding Law, this Agreement, any of the other Basic
Documents or the Notes, (ii) seeking to prevent the grant of the 1998 Transition
Property to the Grantee or the consummation of any of the transactions
contemplated by this Agreement or any of the other Basic Documents, (iii)
seeking any determination or ruling that could reasonably be expected to
materially and adversely affect Illinois Power's performance of its obligations
under, or the validity or enforceability of, this Agreement,
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any of the other Basic Documents or the Notes, or (iv) which could reasonably be
expected to adversely affect the Federal or state income tax attributes of the
Notes.
SECTION 3.07. APPROVALS. No approval, authorization, consent, order or
other action of, or filing with, any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with Illinois Power's execution and delivery of this Agreement,
Illinois Power's performance of the transactions contemplated hereby or Illinois
Power's fulfillment of the terms hereof, except (i) those that have been
obtained or made and (ii) filings to be made by Illinois Power with the ICC
pursuant to the 1998 Funding Order and the Funding Law relating to Illinois
Power's use of proceeds from the transactions contemplated hereby and the final
terms of each Series of Notes issued pursuant to the Indenture.
SECTION 3.08. THE 1998 TRANSITION PROPERTY.
(a) INFORMATION. All information provided by Illinois Power to the
Grantee with respect to the 1998 Transition Property (including the 1998 Funding
Order and the 1998 Initial Tariff) is correct in all material respects.
(b) TITLE. It is the intention of the parties hereto that the vesting of
the 1998 Transition Property in the Grantee as contemplated by the 1998 Funding
Order shall be irrevocable and enforceable against Illinois Power and its
successors and that no interest in or title to the 1998 Transition Property
shall be part of Illinois Power's estate in the event of the filing of a
bankruptcy petition by or against Illinois Power under any bankruptcy law.
Accordingly, Illinois Power reaffirms that it has no right, title or interest in
and to the 1998 Transition Property and any sale, transfer, assignment, set over
and conveyance which may nonetheless be contemplated by Section 2.01 hereof
shall constitute an absolute transfer to the Grantee, within the meaning of
Section 18-108
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of the Funding Law, of any right, title and interest Illinois Power may
otherwise have had in the 1998 Transition Property (or any part thereof) created
by, under and pursuant to the 1998 Funding Order, such transfer is irrevocable
and enforceable against Illinois Power and its successors, and no interest in or
title to the 1998 Transition Property shall be part of Illinois Power's estate
in the event of the filing of a bankruptcy petition by or against Illinois Power
under any bankruptcy law. No portion of the 1998 Transition Property has been
sold, transferred, assigned, pledged or otherwise conveyed by Illinois Power to
any Person other than the Grantee. Immediately prior to the sale, transfer,
assignment, set over and conveyance contemplated hereunder, Illinois Power's
right, title and interest in and to the 1998 Transition Property, if any, is
free and clear of all Liens and rights of any other Person, and no offsets,
defenses or counterclaims exist or have been asserted with respect thereto.
Illinois Power, in its capacity as Servicer or otherwise, will not at any time
assert any Lien against or with respect to any of the 1998 Transition Property.
(c) TRANSFER FILINGS. The 1998 Transition Property has been validly
granted and transferred to the Grantee pursuant to the 1998 Funding Order and,
to the extent applicable, this Agreement, the Grantee owns all right, title and
interest to the 1998 Transition Property, free and clear of all Liens and rights
of any other Person (other than Liens created pursuant to the Sale Agreement and
the Indenture), and all filings to be made by Illinois Power (including filings
with the ICC under the Funding Law) necessary in any jurisdiction to give the
Grantee a perfected ownership interest in the 1998 Transition Property, free and
clear of all Liens, have been made. No further action is required under
Illinois law to maintain such ownership interest in the 1998 Transition
Property. No further action, other than any filings or other steps required to
be taken with respect to proceeds or on account of events occurring after the
date hereof by Sections 9-103, 9-304,
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9-306, 9-402(7) or 9-403(2)-(3) of the UCC, is required to maintain such first
priority perfected ownership interest in the Related Assets.
(d) STATE PLEDGE. Under the laws of the State of Illinois and the United
States in effect on the Closing Date, the State of Illinois has agreed with the
Holders, pursuant to Section 18-105(b) of the Funding Law, as follows:
"(b) The State pledges to and agrees with the holders of any
transitional funding instruments who may enter into contracts with an
electric utility, grantee, assignee or issuer pursuant to this Article
XVIII that the State will not in any way limit, alter, impair or reduce the
value of intangible transition property created by, or instrument funding
charges approved by, a transitional funding order so as to impair the terms
of any contract made by such electric utility, grantee, assignee or issuer
with such holders or in any way impair the rights and remedies of such
holders until the pertinent grantee instruments or, if the related
transitional funding order does not provide for the issuance of grantee
instruments, the pertinent transitional funding instruments and interest,
premium and other fees, costs and charges related thereto, as the case may
be, are fully paid and discharged. Electric utilities, grantees and
issuers are authorized to include these pledges and agreements of the State
in any contract with the holders of transitional funding instruments or
with any assignees pursuant to this Article XVIII and any assignees are
similarly authorized to include these pledges and agreements of the State
in any contract with any issuer, holder or any other assignee. Nothing in
this Article XVIII shall preclude the State of Illinois from requiring
adjustments as may otherwise be allowed by law to the electric utility's
base rates, transition charges, delivery services charges, or other charges
for tariffed services, so long as any such adjustment does not directly
affect or impair any instrument funding charges previously authorized by a
transitional funding order issued by the [ICC]."
As a result of the foregoing pledge, the State of Illinois may not, except as
provided in the succeeding sentence, in any way limit, alter, impair or reduce
the value of the 1998 Transition Property or the IFCs in a manner substantially
impairing the Indenture or the rights and remedies of the Holders, until the
Notes, together with interest thereon, are fully paid and discharged.
Notwithstanding the immediately preceding sentence, the State would be allowed
to effect a temporary impairment of the Holders' rights if it could be shown
that such impairment was necessary to advance a significant and legitimate
public purpose.
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(e) 1998 FUNDING ORDER AND TARIFFS; OTHER APPROVALS. Under the laws of
the State of Illinois and the United States in effect on and at all relevant
times before the Closing Date, (i) Illinois Power was authorized to file the
Application, (ii) Illinois Power filed the Application with the ICC on June 24,
1998, in proper form, requesting the issuance of a transitional funding order;
(iii) the 1998 Funding Order and 1998 Initial Tariff established, created and
granted rights in and to intangible transition property in an aggregate amount
of $1.634 billion, and the 1998 Transition Property and the right to impose and
collect IFCs constitute current and original property rights vested in the
Grantee to the fullest extent permitted by law; (iv) the 1998 Funding Order has
been duly entered by the ICC and is in full force and effect; (v) the 1998
Initial Tariff is in full force and effect and is not subject to modification by
the ICC except as provided under the Funding Law; (vi) as of the issuance of the
Notes, the Notes are entitled to the protections provided in Section 18-104(c)
of the Funding Law and, accordingly, the 1998 Funding Order is not revocable by
the ICC; (vii) the State of Illinois may not limit, alter, impair or reduce the
1998 Transition Property so as to substantially impair the terms of any contract
made by Illinois Power, the Grantee or the Trust with the Holders or impair the
rights and remedies of such Holders unless the State could demonstrate that such
impairment was necessary to advance a significant and legitimate State purpose,
and neither the 1998 Funding Order nor the 1998 Transitional Property or the
related IFCs are subject to reduction, postponement, impairment or termination
by subsequent action of the ICC; (viii) the process by which the 1998 Funding
Order was adopted and approved and the 1998 Initial Tariff was filed, and the
1998 Funding Order and the 1998 Initial Tariff themselves, comply with all
applicable laws, rules and regulations; and (ix) no other approval,
authorization, consent, order or other action of, or filing with, any court,
Federal or state regulatory body, administrative agency or other
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governmental instrumentality is required in connection with the creation and
grant of the 1998 Transition Property, except those that have been obtained or
made and those filings described in Section 3.07.
(f) ASSUMPTIONS. The assumptions used in calculating the IFCs are
reasonable and made in good faith.
(g) CREATION OF 1998 TRANSITION PROPERTY. Upon the effectiveness of the
1998 Initial Tariff: (i) all of the 1998 Transition Property constitutes a
current property right vested in the Grantee; (ii) the 1998 Transition Property
includes, without limitation, (A) the right, title and interest in and to the
IFCs authorized under the 1998 Funding Order, as adjusted from time to time, (B)
the right, title and interest in and to all revenues, collections, claims,
payments, money or proceeds of or arising from the IFCs set forth in the 1998
Initial Tariff, and (C) all rights to compel Illinois Power, as Servicer (or any
successor), to file for and obtain adjustments to the IFCs pursuant to the 1998
Funding Order; and (iii) the Grantee is entitled to impose and collect the IFCs
described in the 1998 Funding Order and the 1998 Initial Tariff in an aggregate
amount equal to the principal amount of the Notes, all interest thereon, all
amounts required to be deposited in the Overcollateralization Subaccount and the
Capital Subaccount, and all related fees, costs and expenses in respect of the
Notes until they have been paid in full, subject only to the $1.634 billion
limitation set forth in the 1998 Funding Order as to the maximum dollar amount
of 1998 Transition Property created thereunder.
(h) PROPERTY OF GRANTEE. To the fullest extent permitted by the Funding
Law and all other applicable law, the 1998 Transition Property and the right to
impose and collect IFCs contemplated thereunder constitute current property
rights of the Grantee and its assigns, including the Note Issuer
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and its assigns (including the Indenture Trustee on behalf of the Holders),
which property has been placed beyond the reach of Illinois Power and its
creditors, as in a true sale, and which property rights may not be limited,
altered, impaired, reduced or otherwise terminated by any subsequent actions of
Illinois Power or any third party and which shall, to the full extent permitted
by law, be enforceable against Illinois Power, its successors and assigns, and
all other third parties (including judicial lien creditors) claiming an interest
therein by or through Illinois Power or its successors and assigns.
ARTICLE IV
COVENANTS OF ILLINOIS POWER
SECTION 4.01. CORPORATE EXISTENCE. So long as any of the Notes are
outstanding, Illinois Power (a) will keep in full force and effect its
existence, rights and franchises as a corporation under the laws of the State of
Illinois (unless it becomes, or any successor to Illinois Power hereunder is or
becomes, organized under the laws of any other State or of the United States of
America, in which case Illinois Power will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction), (b) will
obtain and preserve its qualification to do business, in each case to the extent
that in each such jurisdiction such existence or qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, and any
of the other Basic Documents to which Illinois Power is a party and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby and (c) at all times
hereafter, neither Illinois Power nor any successor will
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cause or permit the Grantee or the Note Issuer to elect to be classified as an
association taxable as a corporation for federal income tax purposes.
SECTION 4.02. NO LIENS. Except for the conveyances hereunder, Illinois
Power (i) will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on, any of the 1998
Transition Property or any interest therein, (ii) will not at any time assert
any Lien against or with respect to any of the 1998 Transition Property in its
capacity as Servicer or otherwise, (iii) will not seek to limit, alter, impair,
reduce or otherwise terminate the property rights of the Grantee or any assignee
of the Grantee, and (iv) shall defend the right, title and interest of the
Grantee in, to and under the 1998 Transition Property against all claims of
third parties claiming through or under Illinois Power.
SECTION 4.03. DELIVERY OF COLLECTIONS. If Illinois Power receives
collections in respect of the IFCs or the proceeds thereof, or in replacement
therefor, including, without limitation, any Allocable IFC Revenue Amounts,
Illinois Power agrees to hold such payments in trust for the Servicer and to pay
the Servicer all payments received by Illinois Power in respect thereof as soon
as practicable after receipt thereof by Illinois Power, but in no event later
than [ ] Business Days after such receipt.
SECTION 4.04. NOTICE OF LIENS. Illinois Power shall notify the Grantee,
the Note Issuer and the Indenture Trustee promptly after becoming aware of any
Lien on any of the 1998 Transition Property other than the conveyances
hereunder, under the Sale Agreement and under the Indenture.
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SECTION 4.05. COMPLIANCE WITH LAW. Illinois Power shall comply with
its organizational or governing documents and all laws, treaties, rules,
regulations and determinations of any governmental instrumentality applicable
to it, except to the extent that failure to so comply would not materially
adversely affect the Grantee's, the Note Issuer's or the Indenture Trustee's
interests in the 1998 Transition Property or under any of the Basic
Documents, or Illinois Power's performance of its obligations hereunder or
under any of the other Basic Documents to which it is party.
SECTION 4.06. COVENANTS RELATED TO THE 1998 TRANSITION PROPERTY AND THE
NOTES.
(a) So long as any of the Notes are outstanding, Illinois Power shall
indicate in its financial statements that it is not the owner of the 1998
Transition Property.
(b) So long as any of the Notes are outstanding, Illinois Power shall not
own or purchase any Notes.
(c) Illinois Power agrees that upon the creation and grant of the 1998
Transition Property to the Grantee pursuant to the 1998 Funding Order and, to
the extent applicable, this Agreement, (i) to the fullest extent permitted by
law, including applicable ICC Regulations, the Grantee shall have all of the
rights of the owner of the 1998 Transition Property (including all of the rights
originally held by Illinois Power, if any, with respect to the 1998 Transition
Property), including the right (subject to the terms of the Servicing Agreement)
to exercise any and all rights and remedies to collect any amounts payable by
any Customer or third party collection agent, including any ARES, in respect of
the 1998 Transition Property, notwithstanding any objection or direction to the
contrary by Illinois Power and (ii) any payment by any Customer or third party
collection agent, including any ARES, to the Grantee (or to the Servicer for the
benefit of the Grantee) shall discharge such
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Customer's or third party's obligations in respect of the 1998 Transition
Property to the extent of such payment, notwithstanding any objection or
direction to the contrary by Illinois Power.
(d) So long as any of the Notes are outstanding, (i) except with respect
to federal and other applicable taxes, Illinois Power shall not make any
statement or reference in respect of the 1998 Transition Property that is
inconsistent with the ownership interest of the Grantee, and (ii) Illinois Power
shall not take any action in respect of the 1998 Transition Property except
solely in its capacity as the Servicer under the Servicing Agreement or as
otherwise contemplated by the Basic Documents.
(e) So long as any of the Notes are outstanding, Illinois Power shall not
initiate any material changes with respect to its policies and procedures
pertaining to credit (including requirements for deposits from Customers),
billing, collections (including procedures for disconnection of service for
non-payment) and restoration of service after disconnection, and shall not
initiate any changes in any ICC tariffs relating to the foregoing matters which
are likely to adversely affect Illinois Power's ability to make timely recovery
of amounts billed to Customers, except for any such changes required by
applicable law.
(f) If Illinois Power determines that the aggregate dollar amount of IFC
Charges to be imposed and collected is reasonably likely to exceed the maximum
dollar amount of Intangible Transition Property authorized by the 1998 Funding
Order and any Subsequent Funding Orders and any Notes remain outstanding,
Illinois Power shall make a good faith effort to take any and all subsequent
regulatory action with the ICC to obtain an order permitting the creation of
additional Intangible Transition Property in an amount sufficient to pay such
Notes in full.
15
SECTION 4.07. PROTECTION OF TITLE. Illinois Power shall execute and
file such filings, including filings with the ICC pursuant to the Funding
Law, and cause to be executed and filed such filings, all in such manner and
in such places as may be required by law fully to preserve, maintain, and
protect the interests of the Grantee in the 1998 Transition Property,
including all filings required under the Funding Law relating to the grant of
the 1998 Transition Property to the Grantee. Illinois Power shall deliver
(or cause to be delivered) to the Grantee file-stamped copies of, or filing
receipts for, any document filed as provided above, promptly following such
filing. Illinois Power shall institute any action or proceeding necessary to
compel performance by the ICC or the State of Illinois of any of their
obligations or duties under the Funding Law, the 1998 Funding Order, the 1998
Initial Tariff or any amendatory tariff filed pursuant to Section 18-104(k)
of the Funding Law, and Illinois Power agrees to take such legal or
administrative actions, including defending against or instituting and
pursuing legal actions and appearing or testifying at hearings or similar
proceedings, as may be reasonably necessary to protect the Grantee from
claims, state actions or other actions or proceedings of third parties which,
if successfully pursued, would result in a breach of any representation set
forth in Article III hereof. The costs of any such actions or proceedings
will be payable by Illinois Power. Illinois Power designates the Grantee as
its agent and attorney-in-fact to execute any filings with the ICC or other
instruments required by the Grantee pursuant to this Section, it being
understood that the Grantee shall have no obligation to execute any such
instruments.
SECTION 4.08. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the ICC's right
to order the sequestration and payment of revenues arising with respect to the
1998 Transition Property notwithstanding any bankruptcy,
16
reorganization or other insolvency proceedings with respect to Illinois
Power, the Grantee or any other grantee or assignee of the 1998 Transition
Property pursuant to Section 18-107(c)(4) of the Funding Law, Illinois Power
shall not, prior to the date which is one year and one day after the
termination of the Indenture, acquiesce, petition or otherwise invoke or
cause or join with any other Person to invoke the process of any court or
governmental authority for the purpose of commencing or sustaining a case
against the Grantee or the Note Issuer under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of or for the
Grantee or the Note Issuer or any substantial part of the property of the
Grantee or the Note Issuer, or ordering the winding up or liquidation of the
affairs of the Grantee or the Note Issuer.
SECTION 4.09. TAXES. So long as any of the Notes are outstanding,
Illinois Power shall, and shall cause each of its subsidiaries to, pay all
material taxes, assessments and governmental charges imposed upon it or any of
its properties or assets or with respect to any of its franchises, business,
income or property before any penalty accrues thereon if the failure to pay any
such taxes, assessments and governmental charges would, after any applicable
grace periods, notices or other similar requirements, result in a lien on the
1998 Transition Property; PROVIDED that no such tax need be paid if Illinois
Power or one of its subsidiaries is contesting the same in good faith by
appropriate proceedings promptly instituted and diligently conducted and if
Illinois Power or such subsidiary has established appropriate reserves as shall
be required in conformity with generally accepted accounting principles.
17
SECTION 4.10. CONTRACTS FOR NON-TARIFFED SERVICES. Neither Illinois
Power nor any successor thereto shall enter into any contract with any
Customer obligated (or who would, but for such contract, be obligated) to pay
IFCs if, as a result thereof, such Customer would not receive tariffed
services, unless the contract provides that the Customer will pay an amount
to the Grantee or its assigns or to Illinois Power, as Servicer, as
applicable, equal to the amount such Customer would pay in IFCs if the
services provided under such contract were tariffed services. Any revenues
received by Illinois Power or such successor from any such contract services
shall, to the extent of the authorized amount of the IFCs included therein
(or deemed included therein pursuant to the 1998 Funding Order and this
Section), be deemed to be proceeds of, and included in, the 1998 Transition
Property.
ARTICLE V
ILLINOIS POWER
SECTION 5.01. LIABILITY OF ILLINOIS POWER; INDEMNITIES.
(a) Illinois Power shall indemnify the Grantee, the Note Issuer, the
Indenture Trustee, the Delaware Trustee and the Holders, and each of their
respective officers, directors, employees and agents for, and defend and hold
harmless each such Person from and against, any and all taxes (other than any
taxes imposed on the Holders) (i) that may at any time be imposed on or asserted
against any such Person as a result of the grant of the 1998 Transition Property
to the Grantee, or (ii) that may be imposed on or asserted against any such
Person under existing law as of the Closing Date as a result of the Grantee's
ownership and assignment of the 1998 Transition Property, the Note Issuer's
issuance and sale of the Notes, or the other transactions contemplated herein,
including, in
18
each case, any sales, gross receipt, general corporation, tangible personal
property, privilege or license taxes, but excluding any taxes imposed as a
result of a failure of such person to properly withhold or remit taxes
imposed with respect to payments on any Notes.
(b) Illinois Power shall indemnity the Grantee, the Note Issuer, the
Indenture Trustee, the Delaware Trustee and the Holders and each of their
respective officers, directors, employees and agents for, and defend and hold
harmless each such Person from and against, any and all liabilities,
obligations, losses, claims, actions, suits, damages, payments, and
reasonable costs or expenses, of any kind whatsoever (collectively, "Losses")
that may be imposed on, incurred by or asserted against any such Person as a
result of (i) Illinois Power's willful misconduct, bad faith or gross
negligence in the performance of its duties or observance of its covenants
under this Agreement, or Illinois Power's reckless disregard of its
obligations and duties under this Agreement; and (ii) Illinois Power's breach
of any of its representations or warranties contained in this Agreement
(including without limitation the representations and warranties specified in
Sections 3.01, 3.03, 3.04, 3.05, 3.08(b), 3.08(c), 3.08(d), 3.08(e) or
3.08(g).
(c) Illinois Power shall pay any and all taxes levied or assessed upon all
or any part of the Grantee's property or assets based on existing law as of the
Closing Date.
(d) Indemnification under Sections 5.01(b) through 5.01(d) shall survive
the termination of this Agreement and shall include reasonable fees and expenses
of investigation and litigation (including reasonable attorneys' fees and
expenses).
SECTION 5.02. MERGER OR CONSOLIDATION OF OR ASSUMPTION OF THE OBLIGATIONS
OF ILLINOIS POWER. Any Person (a) into which Illinois Power may be merged or
consolidated, (b) which may result from any merger or consolidation to which
Illinois Power shall be a party or (c) which
19
may succeed to the properties and assets of Illinois Power substantially as a
whole, which Person in any of the foregoing cases executes an agreement of
assumption to perform every obligation of Illinois Power hereunder, shall be
the successor to Illinois Power under this Agreement without further act on
the part of any of the parties to this Agreement; PROVIDED, HOWEVER, that (i)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Article III shall have been breached and (if
Illinois Power is the Servicer) no Servicer Default, and no event which,
after notice or lapse of time, or both, would become a Servicer Default shall
have occurred and be continuing, (ii) Illinois Power shall have delivered to
the Grantee, the Note Issuer, the Delaware Trustee and the Indenture Trustee
an Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply
with this Section and that all conditions precedent, if any, provided for in
this Agreement relating to such transaction have been complied with, (iii)
Illinois Power shall have delivered to the Grantee, the Note Issuer and the
Indenture Trustee an Opinion of Counsel either (x) stating that, in the
opinion of such counsel, all filings to be made by Illinois Power, including
filings with the ICC pursuant to the Funding Law, have been executed and
filed that are necessary to fully preserve and protect the interest of the
Grantee in the 1998 Transition Property and reciting the details of such
filings, or (y) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interests, (iv) the Rating
Agencies shall have received prior written notice of such transaction and (v)
Illinois Power shall have delivered to the Grantee, the Note Issuer, the
Delaware Trustee and the Indenture Trustee an opinion of independent tax
counsel and/or a ruling from the Internal Revenue Service (as selected by,
and in form and substance reasonably satisfactory to, Illinois Power) to the
effect that such consolidation or merger will not result in a material
adverse federal
20
income tax consequence to Illinois Power, the Grantee, the Note Issuer, the
Delaware Trustee, the Indenture Trustee or the then existing Holders.
Notwithstanding anything herein to the contrary, the execution of the
foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii) and (iv) above shall be conditions to the consummation of any
transaction referred to in clauses (a), (b) or (c) above. When any Person
acquires the properties and assets of Illinois Power substantially as a whole
and becomes the successor to Illinois Power in accordance with the terms of
this Section 5.02, then upon the satisfaction of all of the other conditions
of this Section 5.02, Illinois Power shall automatically and without further
notice be released from its obligations hereunder.
SECTION 5.03. LIMITATION ON LIABILITY OF ILLINOIS POWER AND OTHERS.
Illinois Power and any director or officer or employee or agent of Illinois
Power may rely in good faith on the advice of counsel or on any document of any
kind, PRIMA FACIE properly executed and submitted by any Person, respecting any
matters arising hereunder. Subject to Section 4.07, Illinois Power shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its obligations under this Agreement, and that in its
opinion may involve it in any expense or liability.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. AMENDMENT. The Agreement may be amended by Illinois Power
and the Grantee, with prior written notice given to the Rating Agencies and the
prior written consent of the Note Issuer, but without the consent of any of the
Holders, to cure any ambiguity, to correct or supplement any provisions in this
Agreement or for the purpose of adding any provisions to or
21
changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Holders; PROVIDED, HOWEVER,
that such action shall not, as evidenced by a Illinois Power Officer's
Certificate delivered to the Note Issuer, adversely affect in any material
respect the interests of any Holder.
This Agreement may also be amended from time to time by Illinois Power and
the Grantee, with prior written notice given to the Rating Agencies and the
prior written consent of the Note Issuer, the Indenture Trustee and Holders
holding not less than a majority of the Outstanding Amount of the Notes of all
Series affected thereby, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders; PROVIDED, HOWEVER, that no
such amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, IFC Collections or (b) reduce the aforesaid
percentage of the Outstanding Amount of the Notes, the Holders of which are
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes.
Promptly after the execution of any such amendment or consent, the Grantee
shall furnish a copy of such amendment or consent to the Note Issuer, the
Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Holders pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof.
22
SECTION 6.02. NOTICES. All demands, notices and communications upon or
to the Grantee, the Note Issuer, the Indenture Trustee or the Rating Agencies
under this Agreement shall be in writing, personally delivered, mailed or
sent by telecopy or other similar form of rapid transmission, and shall be
deemed to have been duly given upon receipt (a) in the case of Illinois
Power, to Illinois Power Company, 000 Xxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000; (b) in the case of the Grantee, to Illinois Power Securitization
Limited Liability Company, c/o Illinois Power Company, 000 Xxxxx 00xx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000; (c) in the case of the Note Issuer, to Transitional
Funding Trust, c/o First Union Trust Company, National Association, One
Xxxxxx Square, 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attn:
Corporate Trust Administration; (d) in the case of the Indenture Trustee, at
the Corporate Trust Office; (e) in the case of Moody's, to Xxxxx'x Investors
Service, Inc., ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000; (f) in the case of Standard & Poor's, to Standard & Poor's
Corporation, 00 Xxxxxxxx (00xx Xxxxx), Xxx Xxxx, Xxx Xxxx 00000, Attention of
Asset Backed Surveillance Department; (g) in the case of Fitch, to Fitch
Investors Service, L.P., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention of Commercial Asset-Backed Securities; or (h) in the case of Duff &
Xxxxxx, to Xxxx & Xxxxxx Credit Rating Co., 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention of Asset Based Monitoring Group; or as to
each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 6.03. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 5.02, this Agreement may not be
assigned by Illinois Power.
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SECTION 6.04. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of Illinois Power, the Grantee, the Note
Issuer, the Indenture Trustee, the Delaware Trustee and the Holders, and nothing
in this Agreement, whether express or implied, shall be construed to give to any
other Person any legal or equitable right, remedy or claim in the 1998
Transition Property or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 6.05. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 6.06. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 6.07. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 6.08. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois, 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.
24
SECTION 6.09. ASSIGNMENTS TO NOTE ISSUER AND INDENTURE TRUSTEE.
Illinois Power acknowledges and consents to any transfer, pledge, assignment
or grant of a security interest by the Grantee to the Note Issuer pursuant to
the Sale Agreement, and by the Note Issuer to the Indenture Trustee for the
benefit of the Holders pursuant to the Indenture, of all right, title and
interest of the Grantee in, to and under the 1998 Transition Property and the
proceeds thereof, and the assignment of any or all of the Grantee's rights
and obligations hereunder to the Note Issuer and the Indenture Trustee.
Illinois Power agrees that the Note Issuer and the Indenture Trustee, as
assignees, shall, subject to the terms of the Basic Documents, have the right
to enforce this Agreement and to exercise directly all of the Grantee's
rights and remedies under this Agreement (including without limitation, the
right to give or withhold any consents or approvals of the Grantee to be
given or withheld hereunder), and acknowledges that with respect to the sale,
transfer, assignment, set over and conveyance of the 1998 Transition Property
and Related Assets to the Note Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture, the Note Issuer and the Indenture Trustee
have relied on the representations and warranties made by Illinois Power
herein.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
ILLINOIS POWER COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
---------------------------
ILLINOIS POWER SECURITIZATION
LIMITED LIABILITY COMPANY,
Grantee
By:
----------------------------
Name:
--------------------------
Title:
--------------------------
26
SCHEDULE 3.06
PROCEEDINGS
None, except:
[insert any applicable proceedings]
