================================================================================
PECO ENERGY TRANSITION TRUST,
Issuer
and
THE BANK OF NEW YORK,
Bond Trustee
------------------------------
INDENTURE
Dated as of March 1, 1999
------------------------------
Securing Transition Bonds
Issuable in Series
================================================================================
TABLE OF CONTENTS
ARTICLE I
Definitions and Incorporation by Reference
Page
----
SECTION 1.01. Definitions...............................................................................2
SECTION 1.02. Incorporation by Reference of Trust Indenture Act........................................13
SECTION 1.03. Rules of Construction....................................................................14
ARTICLE II
The Transition Bonds
SECTION 2.01. Form.....................................................................................14
SECTION 2.02. Execution, Authentication and Delivery...................................................15
SECTION 2.03. Denominations; Transition Bonds Issuable in Series.......................................15
SECTION 2.04. Temporary Transition Bonds...............................................................16
SECTION 2.05. Registration; Registration of Transfer and Exchange......................................17
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Transition Bonds....................................18
SECTION 2.07. Persons Deemed Owner.....................................................................19
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...................................................................19
SECTION 2.09. Cancelation..............................................................................20
SECTION 2.10. Authentication and Delivery of Transition Bonds..........................................20
SECTION 2.11. Book-Entry Transition Bonds..............................................................24
SECTION 2.12. Notices to Clearing Agency...............................................................25
SECTION 2.13. Definitive Transition Bonds..............................................................25
ARTICLE III
Covenants
SECTION 3.01. Payment of Principal, Premium, if any, and Interest......................................26
SECTION 3.02. Maintenance of Office or Agency..........................................................26
SECTION 3.03. Money for Payments To Be Held in Trust...................................................26
SECTION 3.04. Existence................................................................................27
SECTION 3.05. Protection of Collateral.................................................................28
SECTION 3.06. Opinions as to Collateral................................................................28
SECTION 3.07. Performance of Obligations...............................................................29
SECTION 3.08. Negative Covenants.......................................................................29
ii
Page
----
SECTION 3.09. Annual Statement as to Compliance........................................................30
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms......................................30
SECTION 3.11. Successor or Transferee..................................................................31
SECTION 3.12. No Other Business........................................................................31
SECTION 3.13. No Borrowing.............................................................................31
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities........................................31
SECTION 3.15. Capital Expenditures.....................................................................32
SECTION 3.16. Restricted Payments......................................................................32
SECTION 3.17. Notice of Events of Default..............................................................32
SECTION 3.18. Inspection...............................................................................32
SECTION 3.19. Adjusted Overcollateralization Schedules.................................................33
SECTION 3.20. Sale Agreement and Servicing Agreement Covenants.........................................33
SECTION 3.21. Taxes....................................................................................35
SECTION 3.22. Termination of Swap Agreements...........................................................35
ARTICLE IV
Satisfaction and Discharge; Defeasance
SECTION 4.01. Satisfaction and Discharge of Indenture; Defeasance......................................35
SECTION 4.02. Conditions to Defeasance.................................................................37
SECTION 4.03. Application of Trust Money...............................................................38
SECTION 4.04. Repayment of Moneys Held by Paying Agent.................................................38
ARTICLE V
Remedies
SECTION 5.01. Events of Default........................................................................39
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.......................................39
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Bond Trustee.....................40
SECTION 5.04. Remedies; Priorities.....................................................................42
SECTION 5.05. Optional Preservation of the Collateral..................................................43
SECTION 5.06. Limitation of Proceedings................................................................43
SECTION 5.07. Unconditional Rights of Transition Bondholders To Receive Principal,
Premium, if any, and Interest......................................................44
SECTION 5.08. Restoration of Rights and Remedies.......................................................44
SECTION 5.09. Rights and Remedies Cumulative...........................................................45
SECTION 5.10. Delay or Omission Not a Waiver...........................................................45
SECTION 5.11. Control by Transition Bondholders........................................................45
SECTION 5.12. Waiver of Past Defaults..................................................................45
SECTION 5.13. Undertaking for Costs....................................................................46
SECTION 5.14. Waiver of Stay or Extension Laws.........................................................46
SECTION 5.15. Action on Transition Bonds...............................................................46
iii
ARTICLE VI
The Bond Trustee
Page
----
SECTION 6.01. Duties and Liabilities of Bond Trustee...................................................47
SECTION 6.02. Rights of Bond Trustee...................................................................48
SECTION 6.03. Individual Rights of Bond Trustee........................................................48
SECTION 6.04. Bond Trustee's Disclaimer................................................................48
SECTION 6.05. Notice of Defaults.......................................................................49
SECTION 6.06. Reports by Bond Trustee to Holders.......................................................49
SECTION 6.07. Compensation and Indemnity...............................................................50
SECTION 6.08. Replacement of Bond Trustee..............................................................50
SECTION 6.09. Successor Bond Trustee by Merger.........................................................51
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee............................................51
SECTION 6.11. Eligibility; Disqualification............................................................52
SECTION 6.12. Preferential Collection of Claims Against Issuer.........................................53
ARTICLE VII
Transition Bondholders' Lists and Reports
SECTION 7.01. Issuer To Furnish Bond Trustee Names and Addresses of Transition
Bondholders........................................................................53
SECTION 7.02. Preservation of Information; Communications to Transition
Bondholders........................................................................53
SECTION 7.03. Reports by Issuer........................................................................53
SECTION 7.04. Reports by Bond Trustee..................................................................54
SECTION 7.05. Provision of Servicer Reports............................................................54
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.01. Collection of Money......................................................................54
SECTION 8.02. Collection Account.......................................................................55
SECTION 8.03. Release of Collateral....................................................................59
SECTION 8.04. Opinion of Counsel.......................................................................60
SECTION 8.05. Reports by Independent Accountants.......................................................60
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of Transition Bondholders........................61
SECTION 9.02. Supplemental Indentures with Consent of Transition Bondholders...........................62
SECTION 9.03. Execution of Supplemental Indentures.....................................................64
iv
Page
----
SECTION 9.04. Effect of Supplemental Indenture.........................................................64
SECTION 9.05. Conformity with Trust Indenture Act......................................................64
SECTION 9.06. Reference in Transition Bonds to Supplemental Indentures.................................64
ARTICLE X
Redemption of Transition Bonds
SECTION 10.01. Optional Redemption by Issuer...........................................................65
SECTION 10.02. Mandatory Redemption by Issuer..........................................................65
SECTION 10.03. Form of Redemption Notice...............................................................65
SECTION 10.04. Payment of Redemption Price.............................................................66
ARTICLE XI
Miscellaneous
SECTION 11.01. Compliance Certificates and Opinions, etc...............................................66
SECTION 11.02. Form of Documents Delivered to Bond Trustee.............................................67
SECTION 11.03. Acts of Transition Bondholders..........................................................67
SECTION 11.04. Notices, etc., to Bond Trustee, Issuer, Counterparties and Rating
Agencies..........................................................................68
SECTION 11.05. Notices to Transition Bondholders; Waiver...............................................69
SECTION 11.06. Alternate Payment and Notice Provisions.................................................69
SECTION 11.07. Conflict with Trust Indenture Act.......................................................69
SECTION 11.08. Effect of Headings and Table of Contents................................................70
SECTION 11.09. Successors and Assigns..................................................................70
SECTION 11.10. Separability............................................................................70
SECTION 11.11. Benefits of Indenture...................................................................70
SECTION 11.12. Legal Holidays..........................................................................70
SECTION 11.13. GOVERNING LAW...........................................................................70
SECTION 11.14. Counterparts............................................................................70
SECTION 11.15. Issuer Obligation.......................................................................70
SECTION 11.16. No Petition.............................................................................71
Schedule 1 Calculated Overcollateralization Level
INDENTURE dated as of March 1, 1999, between PECO
ENERGY TRANSITION TRUST, a Delaware statutory business trust
(the "Issuer"), and THE BANK OF NEW YORK, a New York banking
corporation, as trustee (the "Bond Trustee").
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 Bond Trustee. The Issuer is entering into this Indenture, and the
Bond 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 Grants to the Bond 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 in and to (a) the Intangible
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
except for Section 5.01 thereof solely to the extent such Section provides for
indemnification of the Issuer, (c) all Bills of Sale delivered by the Seller
pursuant to the Sale Agreement, (d) the Servicing Agreement except for Section
5.02(b) thereof solely to the extent such Section provides for indemnification
of the Issuer, (e) the Collection Account and all amounts on deposit therein
from time to time, (f) any Swap Agreements to which the Issuer is a party, (g)
all other property of whatever kind owned from time to time by the Issuer
including all accounts, accounts receivable and chattel paper, (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, rights to payment of any and every kind, and
other forms of obligations and receivables,
2
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing (collectively, the
"Collateral").
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 Bond Trustee)
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 Bond 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. (a) Except as otherwise specified herein or as
the context may otherwise require, each of the following terms has the
respective meaning set forth below for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.03(a).
"Adjustment Date" means, with respect to any Series of Transition Bonds,
the date or dates specified as such in the Series Supplement therefor.
"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.
"Authorized Initial Denominations" means, with respect to any Series of
Transition Bonds, $1,000 and
3
integral multiples thereof, or such other denominations as may be specified in
the Series Supplement therefor.
"Authorized Officer" means, with respect to the Issuer, any trustee of the
Issuer and, with respect to the Issuer Trustee or other corporate trustee of the
Issuer, any officer who is authorized to act for such trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by such trustee to the Bond Trustee as of the date hereof (as such
list may be modified or supplemented from time to time thereafter).
"Basic Documents" means the Certificate of Trust, the Trust Agreement, the
Sale Agreement, the Servicing Agreement and any Bills of Sale.
"Bond Rate" means, with respect to any Series or Class, 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.
"Bond Trustee" means The Bank of New York, a New York banking corporation
or any successor bond trustee under this Indenture, not in its individual
capacity but solely as bond trustee under this Indenture.
"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.
"Business Day" has the meaning specified in the Servicing Agreement.
"Calculated Overcollateralization Level" means, with respect to any Payment
Date, the amount set forth as such in Schedule 1 hereto, as such Schedule has
been adjusted in accordance with Section 3.19.
"Calculation Date" means, with respect to any Series of Transition Bonds,
such date or dates specified as such in the Series Supplement therefor.
"Capital Subaccount" has the meaning specified in Section 8.02(a).
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit 2 to the Trust Agreement.
4
"Class" means, with respect to any Series, any one of the classes of
Transition Bonds of that Series.
"Class Subaccount" has the meaning specified in Section 8.02(a).
"Class Termination Date" means, with respect to any Class, the termination
date therefor, as specified in the Series Supplement therefor.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the granting clause of this
Indenture.
"Collection Account" has the meaning specified in Section 8.02(a).
"Collection Period" has the meaning specified in the Servicing Agreement.
"Corporate Trust Office" means the principal office of the Bond 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 000
Xxxxxxx Xxxxxx, Xxxxx 00 Xxxx, Xxx Xxxx, XX 00000, Attention: Asset Backed
Finance Unit or at such other address as the Bond 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 Bond Trustee (the address of
which the successor Bond Trustee will notify the Transition Bondholders and the
Issuer).
"Covenant Defeasance Option" has the meaning specified in Section 4.01(b).
"Counterparty" means the counterparty with respect to any Swap Agreement.
5
"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).
"Definitive Transition Bonds" has the meaning specified in Section 2.11.
"DTC Agreement" means the agreement between the Issuer, the Bond Trustee
and The Depository Trust Company, as the initial Clearing Agency, dated as of
the Closing Date, relating to the Transition Bonds, substantially in the form of
Exhibit C hereto, as the same may be amended and supplemented from time to time.
"Duff" has the meaning specified in the Servicing Agreement.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any State (or any domestic branch of a foreign bank),
having corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution shall
have a credit rating from each Rating Agency in one of its generic rating
categories which signifies investment grade.
"Eligible Guarantor Institution" means a firm or other entity identified in
Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer,
municipal securities broker or dealer or government securities broker or dealer;
(iii) a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a securities transfer association.
"Eligible Institution" means (a) the corporate trust department of the Bond
Trustee or (b) a depository institution organized under the laws of the United
States of America or any State (or any domestic branch of a foreign bank), which
(i) has (A) a long-term unsecured debt rating of "AAA" by Standard & Poor's and
"Aa3" by Moody's and (B) a short-term rating of "A-1+" by Standard & Poor's and
"P-1" by Moody's, or any other long-term, short-term or
6
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, or obligations fully and unconditionally
guaranteed as to timely payment by, the United States of America;
(b) demand deposits, time deposits, certificates of deposit or
bankers' acceptances of any Eligible Institution; provided, however, that
at the time of the investment or contractual commitment to invest therein
such Eligible Institution shall have the credit ratings set forth in clause
(i) of the Definition of Eligible Institution.
(c) commercial paper (other than commercial paper of the Seller or the
Servicer or any of their affiliates) having, at the time of the investment
or contractual commitment to invest therein, a rating from each of the
Rating Agencies in the highest rating category granted thereby;
(d) investments in money market funds having a rating from each of the
Rating Agencies in the highest rating category granted thereby (including
funds for which the Bond Trustee or any of its Affiliates is investment
manager or advisor);
(e) 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 an Eligible Institution; and
(f) any other investment permitted by each of the Rating Agencies;
provided, however, that (i) any book-entry security, instrument or security
having a maturity of one month or less that would be an Eligible Investment but
for its failure (or the failure of the obligor thereon) to have the rating
specified above shall be an Eligible Investment if such book-entry security,
instrument or security (or the obligor thereon) has a long-term unsecured debt
rating of at least "A2" by Moody's (or the equivalent thereof by the
7
other Rating Agencies) or a short-term rating of at least "P-1" by Moody's (or
the equivalent thereof by the other Rating Agencies), and (ii) any book-entry
security, instrument or security having a maturity of greater than one month
that would be an Eligible Investment but for its failure (or the failure of the
obligor thereon) to have the rating specified above shall be an Eligible
Investment if such book-entry security, instrument or security (or the obligor
thereon) has a long-term unsecured debt rating of at least "A1" by Moody's (or
the equivalent thereof by the other Rating Agencies) and a short-term rating of
at least "P-1" by Moody's (or the equivalent thereof by the other Rating
Agencies).
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"Expected Amortization Schedule" means, with respect to any Series 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 any Series or Class of
Transition Bonds, the expected final payment date therefor, as specified in the
Series Supplement therefor.
"FDIC" means the Federal Deposit Insurance Corporation or any successor.
"Financing Issuance" means an issuance of a new Series of Transition Bonds
hereunder to provide funds to finance the purchase by the Issuer of Intangible
Transition Property.
"Fitch IBCA" has the meaning specified in the Servicing Agreement.
"General Subaccount" has the meaning specified in Section 8.02(a).
8
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and xxxxx x xxxx upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant of the Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal,
interest and other payments in respect of the Collateral and all other moneys
payable thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" or "Transition Bondholder" means the Person in whose name a
Transition Bond is registered on the Transition Bond Register.
"Indemnity Amounts" means any amounts paid by the Seller or the Servicer to
the Bond Trustee, for itself or on behalf of the Transition Bondholders,
pursuant to Section 5.01(b), 5.0l(c)(ii) and 5.01(e) of the Sale Agreement or
Section 5.02(b) of the Servicing Agreement or by the Issuer to the Bond Trustee
pursuant to Section 5.07 of this Indenture; provided, however, that Indemnity
Amounts shall exclude Liquidated Damages paid pursuant to Section 5.01(c)(ii) of
the Sale Agreement.
"Indenture" or "this Indenture" means this instrument as originally
executed and, as from time to time supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, as so supplemented or amended, or both, and shall include the
forms and terms of the Transition Bonds established hereunder.
"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, the Seller 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, the Seller or any
Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons as an officer, employee,
9
promoter, underwriter, trustee, partner, director or person performing similar
functions.
"Independent Certificate" means a certificate or opinion to be delivered to
the Bond Trustee under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.01, made by an Independent
appraiser or other expert appointed by an Issuer Order and approved by the Bond
Trustee in the exercise of reasonable care, and such opinion or certificate
shall state that the signer has read the definition of "Independent" in this
Indenture and that the signer is Independent within the meaning thereof.
"Intangible Transition Charges Adjustment Process" means the process by
which Intangible Transition Charges are adjusted pursuant to the Servicing
Agreement and the Statute.
"Interest" means, with respect to any Monthly Allocation Date for any
Series of Transition Bonds, the sum of, without duplication, (i) an amount that
if deposited to the Series Subaccount therefor would cause the amount on deposit
in such Series Subaccount, without regard to investment income, in respect of
interest to equal the Monthly Allocated Interest Balance for such Series and
such Monthly Allocation Date, (ii) if the maturities of the Transition Bonds
have been accelerated in accordance with Section 5.02, the accrued and unpaid
interest on such Series through the date of acceleration, (iii) with respect to
a Series to be redeemed prior to the next Monthly Allocation Date, the amount of
interest that will be payable as interest on such Series on the Redemption Date
therefor and (iv) any interest due on such Series on a Payment Date therefor or
other date for the payment of interest thereon and not paid and, to the extent
permitted by law, interest thereon.
"Interest Deposit Amounts" means any amounts remitted by the Seller to the
Bond Trustee in respect of interest payments (which shall mean in the case of
any Series or Class for which a Swap Agreement is in effect and any payments due
thereunder from the applicable Counterparty are being received by the Issuer,
the regular fixed payment to a Counterparty determined without regard to
netting, but not payments in respect of breakage or termination of a Swap
Agreement) pursuant to (i) a binding agreement with the Issuer entered into by
the Seller pursuant to Section 5.01(d)(i)(B)(i) of the Sale Agreement or (ii) an
escrow arrangement pursuant to Section 5.01(d)(i)(B)(ii) of the Sale Agreement .
"Interest Deposit Subaccount" has the meaning specified in Section 8.02(a).
10
"Issuer" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Transition Bonds.
"Issuer Order" and "Issuer Request" means a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Bond Trustee.
"Issuer Trustee" means First Union Trust Company, National Association, not
in its individual capacity but solely as Issuer Trustee under the Trust
Agreement, or any successor Issuer Trustee under the Trust Agreement.
"Legal Defeasance Option" has the meaning specified in Section 4.01(b).
"Lien" has the meaning specified in the Servicing Agreement.
"Liquidated Damages" means the Liquidated Damages Amount paid by the Seller
to the Bond Trustee, on behalf of the Transition Bondholders, pursuant to
Section 5.01(c)(ii) or 5.01(d)(i) of the Sale Agreement.
"Liquidated Damages Redemption Date" means the date, not more than 5 days
after receipt of Liquidated Damages by the Issuer, specified by the Issuer for
the redemption of the Transition Bonds as a result of receiving Liquidated
Damages.
"Loss Amounts" means any amounts remitted by the Seller to the Bond Trustee
pursuant to Section 5.01(c)(iii) of the Sale Agreement.
"Loss Subaccount" has the meaning specified in Section 8.02(a).
"Monthly Allocated Interest Balance" means, for any Monthly Allocation Date
for a Series, the balance set forth as such for such Monthly Allocation Date in
Schedule B to the Series Supplement for such Series.
"Monthly Allocated Overcollateralization Balance" means, for any Monthly
Allocation Date, the balance set forth as such in Schedule 1 hereto , as such
Schedule has been adjusted in accordance with Section 3.19.
"Monthly Allocated Principal Balance" means, for any Monthly Allocation
Date for a Series, the balance set forth as such for such Monthly Allocation
Date in Schedule B to the Series Supplement for such Series.
"Monthly Allocation Date" has the meaning specified in the Servicing
Agreement.
"Monthly Servicing Fee" means, with respect to any Series of Transition
Bonds, the fee payable to the Servicer on each Monthly Allocation Date for
services rendered, determined pursuant to Section 5.07 of the Servicing
Agreement.
"Moody's" has the meaning specified in the Servicing Agreement.
11
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Bond Trustee. Unless otherwise specified, any reference in this Indenture to
an Officer's Certificate shall be to an Officer's Certificate of any Authorized
Officer of the Issuer.
"Operating Expenses" means all fees, costs, expenses and indemnity payments
owed by the Issuer, including all amounts owed by the Issuer to the Bond
Trustee, the Monthly Servicing Fee, and legal and accounting fees, costs and
expenses of the Issuer and the Issuer Trustee.
"Opinion of Counsel" means one or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Issuer and who shall be reasonably satisfactory to the Bond
Trustee, and which opinion or opinions shall be addressed to the Bond Trustee,
as Bond Trustee, and shall comply with any applicable requirements of Section
11.01, and shall be in a form reasonably satisfactory to the Bond Trustee.
"Outstanding" means, as of the date of determination, all Transition Bonds
theretofore authenticated and delivered under this Indenture except:
(i) Transition Bonds theretofore canceled by the Transition Bond
Registrar or delivered to the Transition Bond Registrar for cancelation;
(ii) Transition Bonds or portions thereof the payment for which money
in the necessary amount has been theretofore deposited with the Bond
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 this
Indenture or provision therefor, satisfactory to the Bond Trustee, made);
and
(iii) Transition Bonds in exchange for or in lieu of other Transition
Bonds which have been authenticated and delivered pursuant to this
Indenture unless proof satisfactory to the Bond 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, the Seller or any Affiliate of any of the
foregoing Persons shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Bond Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Transition Bonds that the Bond 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
Bond 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 Seller or any Affiliate of any of the foregoing Persons.
12
"Outstanding Amount" means the aggregate principal amount of all Transition
Bonds or, if the context requires, all Transition Bonds of a Series or Class
Outstanding at the date of determination.
"Overcollateralization" means, with respect to any Monthly Allocation Date,
an amount that, if deposited to the Overcollateralization Subaccount, would
cause the balance in such subaccount to equal the Monthly Allocated
Overcollateralization Balance for such Monthly Allocation Date, without regard
to investment earnings.
"Overcollateralization Amount" means, with respect to any Series of
Transition Bonds, the amount specified as such in the Series Supplement
therefor.
"Overcollateralization Subaccount" has the meaning specified in Section
8.02(a).
"Paying Agent" means the Bond Trustee or any other Person that meets the
eligibility standards for the Bond Trustee specified in Section 6.11 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 any Series or Class, 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, 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 in lieu of a mutilated, lost, destroyed or stolen Transition
Bond shall be deemed to evidence the same debt as the mutilated, lost, destroyed
or stolen Transition Bond.
"Principal" means, with respect to any Monthly Allocation Date for any
Series of Transition Bonds, the sum of, without duplication, (i) an amount that,
if deposited to the Series Subaccount therefor, would cause the amount on
deposit in such Series Subaccount, without regard to investment income, in
respect of principal to equal the Monthly Allocated Principal Balance for such
Series and such Monthly Allocation Date, (ii) if the maturities of the
Transition Bonds have been accelerated in accordance with Section 5.02, the
aggregate outstanding principal amount of such Series of Transition Bonds, (iii)
with respect to a Series to be redeemed prior to the next Monthly Allocation
Date, the amount of principal that will be payable as principal on the
Redemption Date therefor and (iv) any principal due on a Series on a Payment
Date therefor or other date for the payment of principal thereof and not paid.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
13
"Projected Transition Bond Balance" means, as of any date, the sum of the
amounts provided for in the Expected Amortization Schedules for each outstanding
Series of Transition Bonds and such date.
"Pro Rata" has the meaning specified in Section 8.02(d).
"Rating Agency" means any rating agency rating the Transition Bonds of any
Class or Series at the time of issuance thereof at the request of the Issuer .
If no such organization or successor is any longer in existence, "Rating Agency"
shall be a nationally recognized statistical rating organization or other
comparable Person designated by the Issuer, notice of which designation shall be
given to the Bond Trustee, the Issuer Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, the
notification in writing by each Rating Agency to the Seller, the Servicer, the
Bond 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.
"Record Date" means, with respect to any Payment Date for a Series, the
date set forth as such in the Series Supplement therefor.
"Redemption Date" means, with respect to any Series or Class, the date for
the redemption of the Transition Bonds of such Series or Class pursuant to
Sections 10.01 or 10.02 or the Series Supplement for such Series or Class,
including the Liquidated Damages Redemption Date.
"Redemption Price" has the meaning specified in Section 10.01.
"Refunding Issuance" means issuance of a new Series of Transition Bonds
hereunder to pay the cost of refunding, through redemption or payment on the
Expected Final Payment Date for a Series or Class of Transition Bonds, all or
part of the Transition Bonds of such Series or Class to the extent permitted by
the terms thereof.
"Registered Holder" means, as of any date, the Person in whose name a
Transition Bond is registered on the Transition Bond Register on such date.
"Required Capital Amount" means the sum of, for each Outstanding Series of
Transition Bonds, 0.50% of the initial principal amount thereof.
"Reserve Subaccount" has the meaning specified in Section 8.02(a).
"Responsible Officer" means, with respect to the Bond Trustee, any officer
within the Corporate Trust Office of the Bond Trustee, including any Vice
President, Assistant Vice President, Secretary, Assistant Secretary, or any
other officer of the Bond 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 Bond Trustee" has the meaning specified in Section 6.08.
14
"Sale Agreement" means the Intangible Transition Property Sale Agreement
dated as of March 25, 1999, between the Issuer and the Seller, as amended and
supplemented from time to time.
"Schedule Revision Date" means (i) the date on which a new Series of
Transition Bonds is issued or any outstanding Series of Transition Bonds is
redeemed or defeased, (ii) any Adjustment Date on which the Intangible
Transition Charges are changed or revised and (iii) any Payment Date on which
payments are not made in accordance with the Expected Amortization Schedule.
"Series" means any series of Transition Bonds issued and authenticated
pursuant to this Indenture.
"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 and the Series Supplement for such Series.
"Series Subaccount" has the meaning specified in Section 8.02(a).
"Series Supplement" means an indenture supplemental to this Indenture that
authorizes a particular Series of Transition Bonds.
"Series Termination Date" means, with respect to any Series, the
termination date therefor, as specified in the Series Supplement for such
Series.
"Servicing Agreement" means the Master Servicing Agreement dated as of
March 25, 1999, between the Issuer, the Servicer and such other Persons as may
become parties thereto, as amended and supplemented from time to time.
"Standard & Poor's" has the meaning specified in the Servicing Agreement.
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.20(h).
"Swap Agreement" means any ISDA Master Agreement, interest rate swap
agreement or agreement with respect to any hedge or similar transaction entered
into by the Issuer.
"Transition Bond" means any of the transition bonds (as defined in the
Statute) issued and authenticated pursuant to this Indenture.
"Transition Bond Balance" means, as of any date, the aggregate outstanding
principal 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
15
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" and "Transition Bond Registrar" have the
respective meanings specified in Section 2.05.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"UCC" has the meaning specified in the Servicing Agreement.
"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.
(b) Except as otherwise specified herein or as the context may otherwise
require, each of the following terms has the meaning set forth in the Sale
Agreement for all purposes of this Indenture, and the definitions of such terms
are equally applicable both to the singular and plural forms of such terms:
Term Section of Sale Agreement
---- -------------------------
Xxxx of Sale......................................... Section 1.01(a)
Initial Intangible Transition Property............... Section 1.01(a)
Intangible Transition Charges........................ Section 1.01(a)
Intangible Transition Property....................... Section 1.01(a)
ITC Collections...................................... Section 1.01(a)
Liquidated Damages Amount ........................... Section 1.01(a)
PUC ................................................. Section 1.01(a)
Qualified Rate Order ................................ Section 1.01(a)
Seller .............................................. Section 1.01(a)
Servicer ............................................ Section 1.01(a)
Servicer Default .................................... Section 1.01(a)
Statute ............................................. Section 1.01(a)
Subsequent Intangible Transition Property............ Section 1.01(a)
Transferred Intangible Transition Property........... Section 1.01(a)
Trust Agreement...................................... Section 1.01(a)
SECTION 1.02. Incorporation by Reference of 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.
16
"indenture securities" means the Transition Bonds.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Bond 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. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) 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;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural
include the singular; and
(vi) 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 Bond Trustee's certificate
of authentication shall be in substantially the forms set forth in Exhibit A
hereto, 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 Authorized Officers of the Issuer
Trustee 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 Authorized Officers of the Issuer
Trustee
17
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 or Class 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.
All Definitive Transition Bonds shall bear the legend set forth in Exhibit
A hereto.
SECTION 2.02. Execution, Authentication and Delivery. The Transition Bonds
shall be executed on behalf of the Issuer by an Authorized Officer of the Issuer
Trustee. The signature of any such Authorized Officer on the Transition Bonds
may be manual or facsimile.
Transition Bonds bearing the manual or facsimile signature of individuals
who were at any time Authorized Officers of the Issuer Trustee 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
or did not hold such offices at the date 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 Bond Trustee pursuant to an Issuer Order for authentication; and
the Bond Trustee shall authenticate and deliver such Transition Bond 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 Bond 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.
SECTION 2.03. Denominations; Transition Bonds Issuable in Series. The
Transition Bonds of each Series shall be issuable as registered Transition Bonds
in the Authorized Initial Denominations specified in the Series Supplement
therefor.
The Transition Bonds may, at the election of and as authorized by an
Authorized Officer of the Issuer, and set forth in a Series Supplement, be
issued in one or more Series (each 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 an Authorized Officer of
the Issuer may determine and be set forth in the Series Supplement therefor.
Each Series of Transition Bonds shall be created by a Series Supplement
authorized by an Authorized Officer of the Issuer and establishing the terms and
provisions of such Series. The several Series and Classes thereof may differ as
between Series and Classes, in respect of any of the following matters:
18
(i) designation of the Series and, if applicable, the Classes thereof;
(ii) the aggregate 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;
(iv) the Payment Dates for the Series;
(v) the Monthly Allocated Interest Balances for the Series;
(vi) the Monthly Allocated Principal Balances for the Series;
(vii) the Expected Final Payment Date of the Series, and, if
applicable, each Class thereof;
(viii) the Series Termination Date for the Series and, if applicable,
the Class Termination Dates for each Class thereof;
(ix) the Series Issuance Date for the Series;
(x) the place or places for payments with respect to the Series;
(xi) the Authorized Initial Denominations for the Series;
(xii) the provisions, if any, for redemption of the Series by the
Issuer;
(xiii) the Expected Amortization Schedule for the Series;
(xiv) the Overcollateralization Amount with respect to the Series, the
Calculated Overcollateralization Level and the Monthly Allocated
Overcollateralization Balance for each Monthly Allocation Date;
(xv) the Calculation Dates and Adjustment Dates for the Series;
(xvi) the credit enhancement applicable to the Series; and
(xvii) 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, 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, the Issuer Trustee on behalf of the Issuer may execute, and
upon receipt of an Issuer Order the Bond 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 the Authorized Officers of
19
the Issuer Trustee executing such Transition Bonds may determine, as evidenced
by their 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
cancelation of any one or more temporary Transition Bonds, the Issuer Trustee on
behalf of the Issuer shall execute and the Bond Trustee shall authenticate and
deliver in exchange therefor a like initial principal amount of definitive
Transition Bonds in Authorized Initial 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.
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 Issuer
shall provide for the registration of Transition Bonds and the registration of
transfers of Transition Bonds. The Bond 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 Bond Trustee is appointed by the Issuer as
Transition Bond Registrar, the Issuer will give the Bond Trustee 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 Bond
Trustee shall have the right to inspect the Transition Bond Register at all
reasonable times and to obtain copies thereof, and the Bond Trustee shall have
the right to rely upon a certificate executed on behalf of the Transition Bond
Registrar by an 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, the
Issuer Trustee on behalf of the Issuer shall execute, and the Bond Trustee shall
authenticate and the Transition Bondholder shall obtain from the Bond Trustee,
in the name of the designated transferee or transferees, one or more new
Transition Bonds in any Authorized Initial Denominations, of a like Series (and,
if applicable, Class) and aggregate initial 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
initial principal amount in Authorized Initial Denominations, upon surrender of
the Transition Bonds to be exchanged at such office or agency. Whenever any
Transition Bonds are so surrendered for exchange, the Issuer Trustee on behalf
of the Issuer shall execute, and the Bond Trustee shall authenticate and the
Transition Bondholder shall obtain from the
20
Bond 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 Bond 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, but, other than in respect of
exchanges pursuant to Section 2.04 or 9.06 not involving any transfer, the
Issuer may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Transition Bonds.
The preceding provisions of this Section notwithstanding, 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 date
on which final payment of principal is to be made 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 Bond Trustee, or the Bond
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Transition Bond, and (ii) there is delivered to the Bond Trustee such
security or indemnity as may be required by it to hold the Issuer and the Bond
Trustee harmless, then, in the absence of notice to the Issuer, the Transition
Bond Registrar or the Bond Trustee that such Transition Bond has been acquired
by a bona fide purchaser, the Issuer Trustee on behalf of the Issuer shall
execute, and upon the Issuer Trustee's request the Bond 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 Initial 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 presents for payment such original Transition Bond, the Issuer and
the Bond 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
21
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 Bond 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 Bond Trustee) 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 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 Bond Trustee
and any agent of the Issuer or the Bond 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 Bond Trustee nor any agent of the Issuer or the Bond 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 instalment 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 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 instalment 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 hereof.
22
(b) The principal of each Transition Bond of each Series (and, if
applicable, Class) shall be payable in instalments 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. Failure to pay in accordance with such Expected Amortization
Schedule because moneys are not so 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 be due and payable, if not
previously paid (i) on the Series Termination Date (or, if applicable, Class
Termination 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 Bond Trustee
shall notify the Person in whose name a Transition Bond is registered at the
close of business on the Record Date second preceding the Payment Date on which
the Issuer expects that the final instalment 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 final Payment Date and shall
specify that such final instalment of principal and premium, if any, will be
payable to the Person in whose name a Transition Bond is registered at the close
of business on the Record Date immediately preceding such final Payment Date and
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 instalment. 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
15 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. Cancelation. All Transition Bonds surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Bond Trustee, be delivered to the Bond Trustee and shall
be promptly canceled by the Bond Trustee. The Issuer may at any time deliver to
the Bond Trustee for cancelation 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 Bond 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 Bond 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 Bond Trustee.
23
SECTION 2.10. Authentication and Delivery of Transition Bonds. The Issuer
may issue Transition Bonds of a new Series from time to time as a Financing
Issuance or a Refunding Issuance.
Transition Bonds of a new Series may from time to time be executed by the
Issuer Trustee on behalf of the Issuer and delivered to the Bond Trustee for
authentication and thereupon the same shall be authenticated and delivered by
the Bond Trustee upon Issuer Request and upon delivery by the Issuer, at the
Issuer's expense, to the Bond Trustee of the following:
(1) Trust Action. An Issuer Order authorizing and directing the
execution, authentication and delivery of the Transition Bonds by the Bond
Trustee and specifying the principal amount of Transition Bonds to be
authenticated.
(2) Authorizations. Either (i) a certificate of authentication or
other official document evidencing the due authorization, approval or
consent of any governmental body or bodies at the time having jurisdiction,
together with an Opinion of Counsel that the Bond Trustee is entitled to
rely on that the authorization, approval, or consent of no other
governmental body is required for the valid issuance, authentication and
delivery of such Transition Bonds, or (ii) an Opinion of Counsel that no
such authorization, approval, or consent of any governmental body is
required, except for, in the case of (i) and (ii), such registrations as
are required under the Blue Sky and securities laws of any State.
(3) Authorizing Certificate. A certified resolution of the Issuer
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.
(4) A Series Supplement for the Series of Transition Bonds applied
for, which shall set forth the provisions and form of the Transition Bonds
of such Series (and, if applicable, each Class thereof).
(5) Certificates of the Issuer. (a) An Officer's Certificate from the
Issuer, 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 applied for will not result in any Default; (ii)
that the Issuer has appointed the firm of independent certified public
accountants as contemplated in Section 8.05; (iii) that attached thereto
are duly executed, true and complete copies of the Sale Agreement and the
Servicing Agreement; (iv) that all filings with the PUC pursuant to the
Statute and all UCC financing statements with respect to the Collateral
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 (v)
that all conditions precedent provided in the Indenture 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, in the case of the Intangible 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:
24
(i) the Seller is the sole owner of such Intangible Transition
Property; such Intangible 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); the Seller has the
corporate power and authority to own, sell and assign such Intangible
Transition Property to the Issuer; and the Seller has duly authorized such
sale and assignment to the Issuer by all necessary corporate action; and
(ii) the attached copy of the Qualified Rate Order creating such
Intangible Transition Property is true and correct and is in full force and
effect.
(6) Opinion of Counsel. An 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 the Servicer, dated as of the Series Issuance Date,
to the collective effect that:
(a) the Issuer has the power and authority to execute and deliver the
Series Supplement and this Indenture and to issue the Transition Bonds
applied for, each of the Series Supplement and this Indenture, and the
Transition Bonds applied for have been duly authorized and executed, and
the Issuer is duly organized and in good standing under the laws of the
jurisdiction of its organization;
(b) the Transition Bonds applied for, when 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;
(c) the Indenture (including the related Series Supplement), the Sale
Agreement and the Servicing Agreement are valid and binding agreements of
the Issuer, enforceable 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);
(d) the Sale Agreement is a valid and binding agreement of the Seller,
enforceable against the Seller in accordance with its terms except as such
enforceability may be subject to bankruptcy, insolvency, reorganization and
other similar laws affecting the rights of creditors generally and general
principles of equity (regardless of whether such enforcement is considered
in a proceeding in equity or at law);
(e) the Servicing Agreement is a valid and binding agreement of the
Servicer, enforceable against the Servicer in accordance with its terms
except as such enforceability may be subject to bankruptcy, insolvency,
reorganization and other similar laws affecting the rights of creditors
generally and general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
25
(f) upon the delivery of a fully executed Xxxx of Sale delivered to
the Issuer pursuant to Section 2.03(i) of the Sale Agreement in connection
with the issuance of Transition Bonds applied for and the payment of the
purchase price of the related Intangible Transition Property by the Issuer
to the Seller pursuant to such Xxxx of Sale and the Sale Agreement, then
(I) the transfer of the Intangible 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 Intangible 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 Intangible Transition Property, other
than for federal and state income tax purposes, (II) such transfer of such
Intangible Transition Property is perfected, (III) such transfer has a
priority over any other assignment or transfer of such Intangible
Transition Property, and (IV) such Intangible 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;
(g)(I) to the extent that the provisions of Section 2812 of the
Statute apply to the grant of a security interest by the Issuer in the
Collateral pursuant to this Indenture, then upon the giving of value by the
Bond Trustee to the Issuer with respect to the Collateral, (A) this
Indenture creates in favor of the Bond Trustee a security interest in the
rights of the Issuer in the Collateral, (B) such security interest is valid
and enforceable against the Issuer and third parties (subject to the rights
of any third parties holding security interests in such Collateral
perfected in the manner described in Section 2812 of the Statute), and has
attached, (C) such security interest is perfected, and (D) such perfected
security interest is of first priority; and (II) to the extent that the
provisions of Section 2812 of the Statute do not apply to the grant of a
security interest by the Issuer in the Collateral pursuant to this
Indenture, then upon the giving of value by the Bond Trustee to the Issuer
with respect to the Collateral, (A) this Indenture creates in favor of the
Bond Trustee a security interest in the rights of the Issuer in the
Collateral, (B) such security interest is enforceable against the Issuer
and third parties with respect to such Collateral, (C) such security
interest is perfected, and (D) such perfected security interest is of first
priority;
(h) the Indenture has been duly qualified under the Trust Indenture
Act and either the Series Supplement for the Transition Bonds applied for
has been duly qualified under the Trust Indenture Act or no such
qualification of such Series Supplement is necessary;
(i) all instruments furnished to the Bond Trustee conform to the
requirements of this Indenture and constitute all the documents required to
be delivered hereunder for the Bond 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 the
Transition Bonds have been complied with;
26
(j) 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 or
threatened by the Commission or (B) the Transition Bonds are exempt from
the registration requirements under the Securities Act of 1933;
(k) the Indenture (including the related Series Supplement) has been
duly authorized, executed and delivered by the Issuer; and
(l) the Sale Agreement and the Servicing Agreement have been duly
authorized, executed and delivered by the Issuer, the Seller and the
Servicer as applicable.
(7) Accountant's Certificate or Opinion. A certificate or opinion,
addressed to the Issuer and the Bond Trustee complying with the requirements of
Section 11.01 hereof, of a firm of Independent certified public accountants of
recognized national reputation to the effect that (a) such accountants are
Independent with respect to the Issuer 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
Collateral, they have made such calculations as they deemed necessary for the
purpose and determined that, based on the assumptions used in calculating the
initial Intangible Transition Charges with respect to the Transferred Intangible
Transition Property or, if applicable, the most recent revised Intangible
Transition Charges with respect to the Transferred Intangible 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
Intangible Transition Charges are sufficient to (a) pay Operating Expenses when
incurred, (b) pay interest on each Series of Transition Bonds at their
respective Bond Rates when due, or, with respect to Classes or Series for which
a Swap Agreement is in effect and any payments due thereunder from the
applicable Counterparty are being received by the Issuer, regular fixed payments
due to the related Counterparties (not including any breakage or termination
payments), (c) pay principal of the Transition Bonds of all Series in accordance
with their respective Expected Amortization Schedules and (d) fund the
Calculated Overcollateralization Level as of each Payment Date.
(8) Rating Agency Condition. The Bond Trustee shall receive written notice
from each Rating Agency that the Rating Agency Condition will be satisfied with
respect to the issuance of such new Series.
(9) Xxxx of Sale. If the issuance of an additional Series of Transition
Bonds is a Financing Issuance, the Xxxx of Sale delivered to the Issuer under
the Sale Agreement with respect to the Intangible Transition Property being
purchased with the proceeds of such Financing Issuance.
(10) 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
27
refunded to either the Redemption Date for Transition Bonds being refunded
upon redemption, such money to be deposited into a separate account with
the Bond Trustee.
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 The Depository Trust Company, the initial Clearing Agency, by, or on behalf
of, the Issuer. Such Transition Bond shall initially be registered on the
Transition Bond Register 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 Bond Owners 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 Bond 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 Bond 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 Bond Trustee shall give all
such notices and
28
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
Bond 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 Bond Trustee in writing
that it elects to terminate the book-entry system through the Clearing Agency
with 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 Bond 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 Bond 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 Bond Trustee of the typewritten
Transition Bond or Transition Bonds representing the Book-Entry Transition Bonds
by the Clearing Agency, accompanied by registration instructions, the Issuer
Trustee on behalf of the Issuer shall execute and the Bond 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
Bond Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Transition Bonds, the Bond Trustee
shall recognize the Holders of the Definitive Transition Bonds as Transition
Bondholders.
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 Termination Date,
the Class Termination 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
Bond Trustee to serve as its agent for the foregoing purposes. The Issuer will
give prompt written notice to the
29
Bond 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 Bond 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 Bond Trustee as its
agent to receive all such surrenders, notices and demands.
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), (e) or (f) or Section 4.03 shall be made on
behalf of the Issuer by the Bond 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 will cause each Paying Agent other than the Bond Trustee to
execute and deliver to the Bond Trustee an instrument in which such Paying Agent
shall agree with the Bond Trustee (and if the Bond 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 Bond Trustee 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 Bond Trustee, forthwith pay to the Bond Trustee all
sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Bond Trustee all sums held by the Paying Agent in trust for the payment of
Transition Bonds if at any time the Paying Agent ceases to meet the
standards required to be met by a Paying Agent at the time of its
appointment; and
(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 Bond Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Bond 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 Bond Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
30
Subject to applicable laws with respect to escheat of funds, any money held
by the Bond Trustee or any Paying Agent in trust for the payment of any amount
of principal of, premium on, 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; 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 Bond Trustee or such Paying Agent
with respect to such trust money shall thereupon cease; provided, however, that
the Bond 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 Bond
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 Bond 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 will keep in
full effect its existence, rights and franchises as a statutory business trust
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 Collateral and each other instrument or agreement included therein.
SECTION 3.05. Protection of Collateral. The Issuer will from time to time
execute and deliver all such supplements and amendments hereto and all such
filings (including filings with the PUC pursuant to the Statute), financing
statements, continuation statements, instruments of further assurance and other
instruments, and will take such other action necessary or advisable to:
(i) maintain and preserve the 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 Collateral;
(iv) preserve and defend title to the Collateral and the rights of the
Bond Trustee and the Transition Bondholders in the Collateral against the
claims of all Persons and parties; or
31
(v) pay any and all taxes levied or assessed up on all or any part of
the Collateral.
The Issuer hereby designates the Bond Trustee its agent and attorney-in-fact to
execute any filing with the PUC, financing statement, continuation statement or
other instrument required by the Bond Trustee pursuant to this Section.
SECTION 3.06. Opinions as to Collateral. (a) On or before July 1st in each
calendar year, beginning at least 3 months after the issuance of the first
Series of the Transition Bonds while any Series is outstanding, the Issuer shall
furnish to the Bond Trustee an Opinion of Counsel either stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording, filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and, with respect to the
execution and filing of any filings with the PUC pursuant to the Statute,
financing statements and continuation statements as is 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 stating that in the opinion
of such counsel no such action is necessary to maintain such lien and security
interest, and the first priority thereof. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents, and the
execution and filing of any filings with the PUC, financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture until July 1 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 Bond Trustee an Opinion
of Counsel either (A) stating that, in the opinion of such counsel, all filings,
including filings with the PUC pursuant to the Statute, have been executed and
filed that are necessary fully to preserve and protect the interest of the
Issuer and the Bond Trustee in the Transferred Intangible 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 (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest.
SECTION 3.07. Performance of Obligations. (a) The Issuer (i) will
diligently pursue any and all actions to enforce its rights under each
instrument or agreement included in the Collateral and (ii) will not take any
action and will use its 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 instrument or agreement or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except, in
each case, as expressly provided in this Indenture, the Sale Agreement or the
Servicing Agreement 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 Bond Trustee in an Officer's Certificate of the Issuer shall
be deemed to be action taken by the Issuer. Initially, the Issuer has contracted
with the Servicer to assist the Issuer in performing its duties under this
Indenture.
32
(c) The Issuer will punctually perform and observe all of its obligations
and agreements contained in the Sale Agreement, the Servicing Agreement and in
all other instruments and agreements included in the Collateral.
(d) Without derogating from the absolute nature of the assignment granted
to the Bond Trustee under this Indenture or the rights of the Bond Trustee
hereunder, but subject to Section 3.20, the Issuer agrees that it will not,
without the prior written consent of the Bond Trustee or the Holders of at least
a majority in Outstanding Amount of the Transition Bonds of all Series, amend,
modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of any
Collateral or the Basic Documents. If any such amendment, modification,
supplement or waiver shall be so consented to by the Bond 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. The Issuer agrees that no such
amendment, modification, supplement or waiver shall adversely affect the rights
of the Holders of the Transition Bonds outstanding at the time of any such
amendment, modification, supplement or waiver.
SECTION 3.08. Negative Covenants. The Issuer shall not:
(i) except as expressly permitted by this Indenture or the Sale
Agreement or the Servicing Agreement, sell, transfer, exchange or otherwise
dispose of any of the Collateral, unless directed to do so by the Bond
Trustee in accordance with Article V;
(ii) 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 Collateral;
(iii)(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, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien and security interest created by
this Indenture) to be created on or extend to or otherwise arise upon or
burden the Collateral or any part thereof or any interest therein or the
proceeds thereof or (C) permit the lien of this Indenture not to constitute
a continuing valid first priority security interest in the Collateral.
SECTION 3.09. Annual Statement as to Compliance. The Issuer will deliver to
the Bond Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 1999), an Officer's Certificate stating,
as to the Authorized Officer signing such 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 Authorized Officer's supervision; and
33
(ii) to the best of such Authorized Officer'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 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 or merger or to whom substantially all of such assets are
sold shall be a Person organized and existing under the laws of the United
States of America or any State and shall expressly assume by an indenture
supplemental hereto, executed and delivered to the Bond Trustee, in form
satisfactory to the Bond 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 or merger or to whom substantially all of such assets are
sold shall expressly assume all obligations and succeed to all rights of
the Issuer under the Sale Agreement and the Servicing Agreement pursuant to
an assignment and assumption agreement executed and delivered to the Bond
Trustee, in form satisfactory to the Bond Trustee;
(iii) immediately after giving effect to such consolidation or merger
or sale, no Default or Event of Default shall have occurred and be
continuing;
(iv) the Rating Agency Condition shall have been satisfied with
respect to such consolidation or merger or sale by each Rating Agency
except Moody's (and the Issuer shall have furnished Moody's with prior
written notice of such consolidation, merger or sale);
(v) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Bond Trustee) to the effect that such
consolidation or merger 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 Bond Trustee maintaining a
continuing valid first priority security interest in the Collateral;
(vi) none of the Intangible Transition Property, the Qualified Rate
Order, the Seller's, the Servicer's or the Issuer's rights under the
Statute or the Qualified Rate Order are impaired thereby; and
34
(vii) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken.
SECTION 3.11. Successor or Transferee. (a) Upon any consolidation or merger
of the Issuer in accordance with Section 3.10, the Person formed by or surviving
such consolidation or merger (if other than the Issuer) shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Person had been named as the
Issuer herein.
(b) Upon any sale by the Issuer of substantially all of its assets in a
sale which complies with Section 3.10, PECO Energy Transition Trust 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 Sale Agreement and the Servicing
Agreement 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 Intangible Transition Property,
issuing Transition Bonds from time to time, pledging its interest in the
Collateral to the Bond Trustee under this Indenture in order to secure the
Transition Bonds 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.
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by the Sale Agreement, the Servicing Agreement, this Indenture or
the Trust Agreement, the Issuer shall not make any loan or advance or credit to,
or guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.15. 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 Intangible 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
35
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) or
(e) 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.
Notwithstanding the foregoing, from such time as all Transition Bonds have been
fully paid and discharged the Issuer shall not make any such distribution to any
owner of a beneficial interest in the Issuer or otherwise while amounts are owed
by the Issuer to any Counterparty. 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 Bond Trustee and the Rating Agencies written notice in the form of an
Officer's Certificate of any Default or Event of Default hereunder, its status
and what action the Issuer is taking or proposes to take with respect thereto
within five days after the occurrence thereof.
SECTION 3.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Bond 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 Bond
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Bond Trustee may reasonably determine that such disclosure
is consistent with its obligations hereunder.
SECTION 3.19. Adjusted Overcollateralization Schedules. Not later than each
Schedule Revision Date, the Issuer shall deliver to the Bond Trustee a
replacement Schedule 1 hereto, adjusted to reflect the event giving rise to such
Schedule Revision Date and setting forth the Calculated Overcollateralization
Level for each Payment Date and the Monthly Allocated Overcollateralization
Balance for each Monthly Allocation Date.
SECTION 3.20. Sale Agreement and Servicing Agreement Covenants. (a) The
Issuer agrees to take all such lawful actions to enforce its rights under the
Sale Agreement and the Servicing Agreement and to compel or secure the
performance and observance by the Seller and the Servicer, of each of their
obligations to the Issuer under or in connection with the Sale Agreement and the
Servicing Agreement, respectively, 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
and the Servicing Agreement.
(b) If an Event of Default occurs and is continuing, the Bond Trustee may,
and, at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of a majority of the
Outstanding Amount of the Transition Bonds of all Series shall, exercise all
right, remedies, powers, privileges
36
and claims of the Issuer against the Seller or the Servicer under or in
connection with the Sale Agreement and the Servicing Agreement, respectively,
including the right or power to take any action to compel or secure performance
or observance by the Seller 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 and the Servicing Agreement, and
any right of the Issuer to take such action shall be suspended.
(c) With the consent of the Bond Trustee, the Sale Agreement and the
Servicing Agreement may be amended, at any time and from time to time, without
the consent of the Transition Bondholders or any Counterparty, provided that
such amendment shall not, as evidenced by an Officer's Certificate, adversely
affect the interest of any Transition Bondholder or Counterparty (except, in the
case of a Counterparty with the consent of such Counterparty, which consent may
not be unreasonably withheld) or change the Intangible Transition Charges
Adjustment Process. The Bond Trustee shall not withhold its consent to such
amendment so long as the Rating Agency Condition is satisfied in connection
therewith by each Rating Agency other than Moody's (and the Issuer shall have
furnished Moody's with written notice of such amendment prior to the
effectiveness thereof) and the foregoing Officer's Certificate is provided.
(d) No amendment, modification, supplement, termination, waiver or
surrender of, the terms of the Sale Agreement or the Servicing Agreement, or
waiver of timely performance or observance by the Servicer or the Seller under
the Sale Agreement or the Servicing Agreement, respectively, in each case in
such a way as would adversely affect the interests of Transition Bondholders or
any Counterparty is permitted (except, in the case of a Counterparty, with the
consent of such Counterparty, which consent may not be unreasonably withheld)
nor shall the Bond Trustee consent thereto. If the Issuer, the Seller or the
Servicer shall otherwise propose to amend, modify, waive, supplement, terminate
or surrender, or agree to any amendment, modification, supplement, termination,
waiver or surrender of, the terms of the Sale Agreement or the Servicing
Agreement or waive timely performance or observance by the Seller or the
Servicer under the Sale Agreement or Servicing Agreement, respectively, the
Issuer shall notify the Bond Trustee and any applicable Counterparty and the
Bond Trustee shall notify the Transition Bondholders thereof. The Bond Trustee
shall consent to such proposed amendment, modification, supplement or waiver
only with the consent of the Holders of at least a majority of the Outstanding
Amount of the Transition Bonds of each Series or Class. If any such amendment,
modification, supplement or waiver shall be so consented to by the Bond 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.
(e) If the Issuer and the Seller or Servicer propose to amend, modify,
waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the Intangible
Transition Charges Adjustment Process, the Issuer shall notify the Bond Trustee
and each Counterparty and the Bond Trustee shall notify Transition Bondholders
of such proposal and the Bond Trustee shall consent thereto only with the
consent of the Holder of each Outstanding Transition Bond of each Series or
Class affected thereby.
37
(f) Promptly following a default by either the Seller or Servicer under the
Sale Agreement or the Servicing Agreement, respectively, and at the Issuer's
expense, the Issuer agrees to take all such lawful actions as the Bond Trustee
1may request to compel or secure the performance and observance by the Seller or
the Servicer, as applicable, of each of their obligations to the Issuer under or
in connection with the Sale Agreement or the Servicing Agreement 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 the Sale
Agreement or the Servicing Agreement to the extent and in the manner directed by
the Bond Trustee, including the transmission of notices of default on the part
of the Seller or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Servicer of each of their obligations under the Sale Agreement and
the Servicing Agreement.
(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 Bond Trustee and the Rating Agencies, and shall specify in
such notice the action, if any, the Issuer is taking with respect to such
default. If a Servicer Default shall arise from the failure of the Servicer to
perform any of its duties or obligations under the Servicing Agreement with
respect to the Intangible Transition Property or the Intangible Transition
Charges, the Issuer shall take all reasonable steps available to it to remedy
such failure. The Issuer shall not take any action to terminate the Servicer's
rights and powers under the Servicing Agreement following a Servicer Default
without the prior written consent of the Bond Trustee or of the Holders of
Transition Bonds evidencing not less than 25% of the Outstanding Amount of the
Transition Bonds of all Series and the consent, not to be unreasonably withheld,
of any Counterparties affected thereby.
(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 Bond Trustee shall,
together with such other Persons, if any, as are specified in Section 6.01 of
the Servicing Agreement, 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 Bond 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 Bond Trustee may
petition the PUC 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 Intangible Transition Property (such agreement to be in
form and substance satisfactory to the Bond Trustee).
(i) Upon termination of the Servicer's rights and powers pursuant to the
Servicing Agreement, the Bond Trustee shall promptly notify the Issuer, the
Transition Bondholders and the Rating Agencies. As soon as a Successor Servicer
is appointed, the Issuer shall notify the Bond Trustee, the Transition
Bondholders and the Rating Agencies of such appointment, specifying in such
notice the name and address of such Successor Servicer.
38
SECTION 3.21. Taxes. So long as any of the Transition Bonds are
outstanding, the Issuer shall pay all material taxes, including gross receipts
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
Collateral.
SECTION 3.22. Termination of Swap Agreements. (a) The Issuer shall duly and
punctually perform all of its obligations pursuant to any Swap Agreements.
(b) The Issuer shall not terminate or amend any Swap Agreement while any of
the floating rate Transition Bonds of a Class related thereto remain outstanding
except pursuant to the terms of such Swap Agreement and then only with the
consent of Holders of 66 2/3% of the Outstanding Amount of the Transition Bonds
of the related Class. Any termination or breakage fees owed by the Issuer
pursuant to any Swap Agreement shall be subordinated to amounts owed to Holders
of Transition Bonds except as otherwise provided herein.
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 Transition Bonds of such Series and the Bond Trustee, on
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 Bond Trustee for cancelation; or
(2) the Expected Final Payment Date or Redemption Date has
occurred with respect to all Transition Bonds of such Series not
theretofore delivered to the Bond Trustee for cancelation, and the
Issuer has irrevocably deposited or caused to be irrevocably deposited
with the Bond Trustee cash, in trust for such purpose, in an amount
sufficient to pay and discharge the entire indebtedness on such
Transition Bonds not theretofore delivered to the Bond Trustee on the
Expected Final Payment Date or Redemption Date, as applicable,
therefor;
39
(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 Bond Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the Bond
Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.01 and
each stating that all conditions 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, 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 Bonds, the Bond Trustee, on 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 4.01(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 Bond Trustee for such payments, (iv)
Sections 4.03 and 4.04, (v) the rights, obligations and immunities of the Bond
Trustee hereunder (including the rights of the Bond Trustee under Section 6.07
and the obligations of the Bond Trustee under Section 4.03) and (vi) the rights
of Transition Bondholders under this Indenture with respect to the property
deposited with the Bond 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 be 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:
40
(b) the Issuer irrevocably deposits or causes to be deposited in trust
with the Bond Trustee cash or U.S. Government Obligations for the payment
of principal of and premium, if any, and interest on such Transition Bonds
to the Expected Payment Date or Redemption Date therefor, as applicable,
such deposit to be made in the Defeasance Subaccount for such Series of
Transition Bonds;
(c) the Issuer delivers to the Bond 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, 95 days pass after the
deposit is made and during the 95-day period no Default specified in
Section 5.01(v) or (vi) occurs which is continuing at the end of the
period;
(e) no Default has occurred and is continuing on the day of such
deposit and after giving effect thereto;
(f) in the case of the Legal Defeasance Option, the Issuer delivers to
the Bond Trustee an 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 Bond Trustee an 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 Bond Trustee an Officer's Certificate
and an 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 Bond Trustee under
this Section shall terminate any obligations of the Issuer under this Indenture
with respect of
41
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 Bond Trustee, in form satisfactory to the Bond Trustee, irrevocable
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 Bond 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 Bond 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 Bond Trustee, of all sums due
and to become due thereon for principal, premium, if any, and interest. Such
moneys will be segregated and held apart solely for paying such Transition Bonds
and such Transition Bonds shall not 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
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 Bond Trustee
under the provisions of this Indenture with respect to such Transition Bonds
shall, upon demand of the Issuer, be paid to the Bond 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 such default shall continue for a
period of five days;
(ii) default in the payment of the then unpaid principal of any
Transition Bond of any Series on the Series Termination Date for such
Series or, if applicable, any Class on the Class Termination Date for such
Class;
42
(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), and such
default shall continue or not be cured, for a period of 30 days after there
shall have been given, by registered or certified mail, to the Issuer by
the Bond Trustee or to the Issuer and the Bond Trustee by the Holders of at
least 25% of the Outstanding Amount of the Transition Bonds of any Series,
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;
(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 Collateral in an involuntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial part
of the Collateral, or ordering the winding-up or liquidation of the
Issuer's affairs, and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or
(vi) the commencement by the Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the 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 Collateral, or the making
by the Issuer of any general 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.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default occurs and is continuing, then and in every such case either
the Bond Trustee or the Holders of Transition Bonds representing not less than a
majority of the Outstanding Amount of the Transition Bonds of all Series 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 Bond 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 Bond Trustee as hereinafter in this Article V provided, the
Holders of Transition Bonds representing a majority of the Outstanding Amount of
the Transition Bonds of all Series, by written notice to the Issuer and the Bond
Trustee, may rescind and annul such declaration and its consequences if:
43
(i) the Issuer has paid or deposited with the Bond 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 and all other amounts
that would then be due hereunder or upon such Transition Bonds if the
Event of Default giving rise to such acceleration had not occurred;
and
(B) all sums paid or advanced by the Bond Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of
the Bond Trustee and its agents and counsel; and
(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 Bond
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 a period of five days, (ii) Default is made in
the payment of the then unpaid principal of any Transition Bond on the Series
Termination Date or Class Termination Date, as applicable, therefor or (iii)
Default is made in the payment of the Redemption Price or for any Transition
Bond on the Redemption Date therefor, the Issuer will, upon demand of the Bond
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 Bond 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 instalments 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 Bond 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 Bond Trustee may,
as more particularly provided in Section 5.04, in its discretion, proceed to
protect and enforce its rights and the rights of the Transition Bondholders, by
such appropriate Proceedings as the Bond 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 Bond Trustee by this Indenture or
44
by law including foreclosing or otherwise enforcing the lien on the Intangible
Transition Property securing the Transition Bonds or applying to the PUC for
sequestration of revenues arising with respect to such Intangible 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 Collateral, Proceedings under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Transition Bonds, or to the creditors or property of
the Issuer or such other obligor, the Bond 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 Bond
Trustee shall have made any demand pursuant to the provisions of this Section,
shall be entitled and empowered, by intervention in such Proceedings or
otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal, 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 Bond
Trustee (including any claim for reasonable compensation to the Bond
Trustee and each predecessor Bond Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the Bond Trustee
and each predecessor Bond 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 Bond 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
Bond 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 Bond Trustee, and, in the event that the Bond Trustee
shall consent to the making of payments directly to such Transition Bondholders,
to pay to the Bond Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Bond Trustee, each predecessor Bond Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Bond Trustee and each
predecessor Bond Trustee except as a result of negligence or bad faith.
45
(e) Nothing herein contained shall be deemed to authorize the Bond 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 Bond 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.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Transition Bonds, may be enforced by the Bond 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 Bond 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 Bond Trustee, each predecessor
Bond 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 Bond Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Bond Trustee shall be a party), the Bond 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. If an Event of Default occurs and is
continuing, the Bond Trustee may do one or more of the following (subject to
Section 5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Transition Bonds or under this Indenture with respect thereto, whether
by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Transition
Bonds moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC or
the Statute or any other applicable law and take any other appropriate
action to protect and enforce the rights and remedies of the Bond
Trustee and the Holders of the Transition Bonds of such Series;
(iv) sell the Collateral or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; and
(v) exercise all rights, remedies, powers, privileges and claims
of the Issuer against the Seller or the Servicer under or in
connection with the Sale Agreement or the Servicing Agreement as
provided in Section 3.20(b);
provided, however, that the Bond Trustee may not sell or otherwise liquidate any
portion of the Collateral following an Event of Default, other than an Event of
Default described
46
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 Bond Trustee determines that the Collateral will
not continue to provide sufficient funds for all payments on the Transition
Bonds of all Series as they would have become due if the Transition Bonds had
not been declared due and payable, and the Bond Trustee obtains the consent of
Holders of 66-2/3% of the Outstanding Amount of the Transition Bonds of each
Series. In determining such sufficiency or insufficiency with respect to clause
(B) and (C), the Bond Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Collateral for such purpose.
SECTION 5.05. Optional Preservation of the Collateral. 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 Bond Trustee may, but need not, elect, as provided
in Section 5.11(iii), to maintain possession of the Collateral 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
Bond Trustee shall take such desire into account when determining whether or not
to maintain possession of the Collateral or sell or liquidate the same. In
determining whether to maintain possession of the Collateral or sell or
liquidate the same, the Bond Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
SECTION 5.06. Limitation of Proceedings. 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 2812(d)(3)(v)
of the Statute, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the Bond
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount
of the Transition Bonds of each Series have made written request to
the Bond Trustee to institute such Proceeding in respect of such Event
of Default in its own name as Bond Trustee hereunder;
(iii) such Holder or Holders have offered to the Bond Trustee
security or indemnity reasonably satisfactory to the Bond Trustee
against the costs, expenses and liabilities to be incurred in
complying with such request;
(iv) the Bond Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
47
(v) no direction inconsistent with such written request has been
given to the Bond Trustee during such 60-day period by the Holders of
a majority of the Outstanding Amount of the Transition Bonds of all
Series;
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 Bond 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 Bond Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
SECTION 5.07. Unconditional Rights of 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, (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 Termination Date or Class Termination
Date therefor or (iii) in the case of redemption, receive payment of 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 Bond 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 Bond Trustee or
to such Transition Bondholder, then and in every such case the Issuer, the Bond
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 Bond 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 Bond Trustee or to the Transition Bondholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10. Delay or Omission Not a Waiver. No delay or omission of the
Bond 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 Bond Trustee or to the Transition Bondholders may be exercised from time
to time, and as often as may be
48
deemed expedient, by the Bond Trustee or by the Transition Bondholders, as the
case may be.
SECTION 5.11. Control by Transition Bondholders. The Holders of a majority
of the Outstanding Amount of the Transition Bonds of all Series (or, if less
than all Series or Classes are affected, 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 Bond Trustee with respect to the
Transition Bonds of such Series or Class or Classes or exercising any trust or
power conferred on the Bond Trustee with respect to such 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 Bond Trustee to sell or liquidate the Collateral 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 Bond Trustee elects to retain the Collateral
pursuant to such Section and not sell or liquidate the same, then any
direction to the Bond 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 Collateral
shall be of no force and effect; and
(iv) the Bond Trustee may take any other action deemed proper by
the Bond Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.01, the Bond Trustee need not take
any action that it determines might involve it in liability or might materially
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 Holders of not less than a majority of the Outstanding
Amount of the Transition Bonds of all Series 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 Bond 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.
49
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 Bond Trustee for any action taken, suffered or omitted by it as
Bond 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 Bond 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 Termination Date or Class Termination
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 Bond 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 Bond 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 Bond Trustee or the Transition Bondholders shall be
impaired by the recovery of any judgment by the Bond Trustee against the Issuer
or by the levy of any execution under such judgment upon any portion of the
Collateral or upon any of the assets of the Issuer.
ARTICLE VI
The Bond Trustee
SECTION 6.01. Duties and Liabilities of Bond Trustee. (a) If an Event of
Default has occurred and is continuing, the Bond 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:
50
(i) the Bond 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 Bond
Trustee; and
(ii) in the absence of bad faith on its part, the Bond 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 Bond Trustee and conforming to the requirements of this Indenture.
(c) The Bond Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Bond Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
Bond Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Bond Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the Bond
Trustee is subject to paragraphs (a), (b) and (c) of this Section 6.01.
(e) The Bond Trustee shall not be liable for interest on any money received
by it except as the Bond Trustee may agree in writing with the Issuer.
(f) Money held in trust by the Bond Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Sale Agreement or the Servicing Agreement.
(g) No provision of this Indenture shall require the Bond Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayments of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Bond Trustee shall be subject to
the provisions of this Section and to the provisions of the TIA.
(i) Under no circumstances shall the Bond Trustee be liable for any
indebtedness evidenced by or arising under the Transition Bonds or any Basic
Document.
SECTION 6.02. Rights of Bond Trustee. (a) The Bond Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper Person. The Bond Trustee need not investigate any fact or matter
stated in the document.
51
(b) Before the Bond Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel. The Bond Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on an
Officer's Certificate or an Opinion of Counsel.
(c) The Bond 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 Bond Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Bond 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 Bond Trustee's conduct does not constitute
wilful misconduct, negligence or bad faith.
(e) The Bond 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.
SECTION 6.03. Individual Rights of Bond Trustee. The Bond 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 Bond Trustee. Any Paying Agent, Transition
Bond Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Bond Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.04. Bond Trustee's Disclaimer. The Bond Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Transition Bonds. The Bond Trustee shall not be
accountable for the Issuer's use of the proceeds from the Transition Bonds, and
the Bond 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 Bond Trustee's
certificate of authentication. The Bond Trustee shall not be responsible for the
form, character, genuineness, sufficiency, value or validity of any of the
Collateral, or for or in respect of the validity or sufficiency of the
Transition Bonds (other than the certificate of authentication for the
Transition Bonds) or the Basic Documents and the Bond Trustee shall in no event
assume or incur any liability, duty or obligation to any Holder of a Transition
Bond, other than is expressly provided for in this Indenture. The Bond Trustee
shall not be liable for the default or misconduct of the Issuer, the Seller, the
Servicer or the Issuer Trustee under any Basic Document or otherwise and the
Bond 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 Series and if it is known to a Responsible Officer of the
Bond Trustee, the Bond Trustee shall mail 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 Bond Trustee may
52
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Transition Bondholders.
SECTION 6.06. Reports by Bond Trustee to Holders. (a) The Bond 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 of Transition Bonds, on or prior to each
Payment Date therefor, the Bond Trustee will deliver a statement prepared by the
Bond Trustee 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 with respect to such Payment Date or the period since the
previous Payment Date, as applicable:
(i) the amount paid to Holders of such Transition Bonds in respect of
principal, such amount to be expressed as a dollar amount per thousand;
(ii) the amount paid to Holders of such Transition Bonds in respect of
interest, such amount to be expressed as a dollar amount per thousand;
(iii) the Transition Bond Balance and the Projected Transition Bond
Balance, in each case for such Series and as of the most recent Payment
Date;
(iv) the amount on deposit in the Overcollateralization Subaccount and
the Calculated Overcollateralization Level, in each case for all Series and
as of the most recent Payment Date;
(v) the amount on deposit in the Capital Subaccount as of the most
recent Payment Date; and
(vi) the amount, if any, on deposit in the Reserve Subaccount as of
the most recent Payment Date.
(c) The Bond 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.
SECTION 6.07. Compensation and Indemnity. The Issuer shall pay to the Bond
Trustee from time to time reasonable compensation for its services. The Bond
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall reimburse the Bond Trustee for all
reasonable out-of-pocket expenses, disbursements and advances incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Bond Trustee's agents, counsel, accountants
and experts. The Issuer shall indemnify and hold harmless the Bond Trustee from
and against any and all costs, damages, expenses, losses, liabilities or other
amounts whatsoever (including counsel fees) incurred by the Bond Trustee in
connection with the administration of this trust, the enforcement of this trust
and all of the Bond Trustee's rights, powers and duties under this Indenture and
the performance by the Bond Trustee of the duties and obligations of the Bond
Trustee under
53
or pursuant to this Indenture. The Bond Trustee shall notify the Issuer promptly
of any claim for which it may seek indemnity. Failure by the Bond Trustee to so
notify the Issuer shall not relieve the Issuer of its obligations hereunder. The
Issuer shall defend the claim and the Bond Trustee may have separate counsel and
the Issuer shall pay the fees and expenses of such counsel. The Issuer need not
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Bond Trustee (i) through the Bond Trustee's own wilful
misconduct, negligence or bad faith or (ii) to the extent the Bond Trustee was
reimbursed for or indemnified against any such loss, liability or expense by the
Seller pursuant to the Sale Agreement or by the Servicer pursuant to the
Servicing Agreement.
When the Bond 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 Bond Trustee. The Bond Trustee may resign at
any time by so notifying the Issuer. The Holders of a majority in Outstanding
Amount of the Transition Bonds of all Series may remove the Bond Trustee by so
notifying the Issuer and the Bond Trustee and may appoint a successor Bond
Trustee. The Issuer shall remove the Bond Trustee if:
(i) the Bond Trustee fails to comply with Section 6.11;
(ii) the Bond Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Bond
Trustee or its property; or
(iv) the Bond Trustee otherwise becomes incapable of acting.
If the Bond Trustee resigns or is removed or if a vacancy exists in the
office of Bond Trustee for any reason (the Bond Trustee in such event being
referred to herein as the "Retiring Bond Trustee"), the Issuer shall promptly
appoint a successor Bond Trustee.
A successor Bond Trustee shall deliver a written acceptance of its
appointment to the Retiring Bond Trustee and to the Issuer. Thereupon the
resignation or removal of the Retiring Bond Trustee shall become effective, and
the successor Bond Trustee shall have all the rights, powers and duties of the
Bond Trustee under this Indenture. The successor Bond Trustee shall mail a
notice of its succession to Transition Bondholders. The Retiring Bond Trustee
shall promptly transfer all property held by it as Bond Trustee to the successor
Bond Trustee.
If a successor Bond Trustee does not take office within 60 days after the
Retiring Bond Trustee resigns or is removed, the Retiring Bond Trustee, the
Issuer or the Holders of a majority in Outstanding Amount of the Transition
Bonds of all Series may petition any court of competent jurisdiction for the
appointment of a successor Bond Trustee.
54
If the Bond Trustee fails to comply with Section 6.11, any Transition
Bondholder may petition any court of competent jurisdiction for the removal of
the Bond Trustee and the appointment of a successor Bond Trustee.
The Issuer shall promptly furnish written notification of the appointment
of any successor Bond Trustee pursuant to this Section 6.08 to each of the
Rating Agencies.
Notwithstanding the replacement of the Bond Trustee pursuant to this
Section 6.08, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the Retiring Bond Trustee.
SECTION 6.09. Successor Bond Trustee by Merger. If the Bond 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 Bond Trustee. The
Issuer shall promptly furnish written notification of any such successor Bond
Trustee to each of the Rating Agencies.
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 Bond Trustee may adopt the certificate of authentication
of any Retiring Bond 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 Bond Trustee may authenticate such
Transition Bonds either in the name of any Retiring Bond Trustee hereunder or in
the name of the successor to the Bond Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Transition
Bonds or in this Indenture provided that the certificate of the Bond Trustee
shall have.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Collateral may at the time be located, the Bond Trustee shall have the
power and may execute and deliver all instruments to appoint one or more Persons
to act as a co-trustee or co-trustees, or separate trustee or separate trustees,
of all or any part of the Collateral, and to vest in such Person or Persons, in
such capacity and for the benefit of the Transition Bondholders, such title to
the Collateral, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Bond Trustee
may consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 6.11 and no notice to Transition Bondholders of the appointment of any
co-trustee or separate trustee shall be required under Section 6.08 hereof.
(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 Bond Trustee shall be conferred or imposed upon and exercised or
performed by the Bond Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is
not authorized to act
55
separately without the Bond 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 Bond Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Collateral or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Bond Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Bond 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 Bond 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 Bond 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 Bond
Trustee. Every such instrument shall be filed with the Bond Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the Bond
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
Bond Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
SECTION 6.11. Eligibility; Disqualification. The Bond Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Bond 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 Moody's and "BBB-" by Fitch IBCA (if currently
rated by Fitch IBCA). The Bond Trustee shall comply with TIA ss. 310(b),
including the optional provision permitted by the second sentence of TIA ss.
310(b)(9); provided, however, that there shall be excluded from the operation of
TIA ss. 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 ss. 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The Bond
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Bond Trustee who has resigned or been removed shall
be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VII
56
Transition Bondholders' Lists and Reports
SECTION 7.01. Issuer To Furnish Bond Trustee Names and Addresses of
Transition Bondholders. The Issuer will furnish or cause to be furnished to the
Bond 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 Bond 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 Bond
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 Bond Trustee is the Transition Bond Registrar, no such list shall be
required to be furnished.
SECTION 7.02. Preservation of Information; Communications to Transition
Bondholders. (a) The Bond 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 Bond Trustee as
provided in Section 7.01 and the names and addresses of Holders of Transition
Bonds received by the Bond Trustee in its capacity as Transition Bond Registrar.
The Bond Trustee may destroy any list furnished to it as provided in such
Section 7.01 upon receipt of a new list so furnished.
(b) Transition Bondholders may communicate pursuant to TIA ss. 312(b) with
other Transition Bondholders with respect to their rights under this Indenture
or under the Transition Bonds.
(c) The Issuer, the Bond Trustee and the Transition Bond Registrar shall
have the protection of TIA ss. 312(c).
SECTION 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Bond Trustee, 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 Bond Trustee and the Commission in accordance with
rules and regulations prescribed from time to time by the Commission such
additional information, documents and reports with respect to compliance by
the 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 Bond Trustee (and the Bond Trustee shall transmit
by mail to all Transition Bondholders described in TIA ss. 313(c)) such
summaries of any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) as may
be required by rules and regulations prescribed from time to time by the
Commission.
57
(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 Bond Trustee. If required by TIA ss. 313(a),
within 60 days after January 1st of each year, commencing with the year after
the issuance of the Transition Bonds of any Series, the Bond Trustee shall mail
to each Holder of Transition Bonds of such Series as required by TIA ss. 313(c)
a brief report dated as of such date that complies with TIA ss. 313(a). The Bond
Trustee also shall comply with TIA ss. 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.
A copy of each report at the time of its mailing to Transition Bondholders
shall be filed by the Bond Trustee with the Commission and each stock exchange,
if any, on which the Transition Bonds are listed. The Issuer shall notify the
Bond 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 Bond Trustee addressed to the Corporate Trust
Office, the Bond Trustee shall provide such Transition Bondholder with a copy of
the Officer's Certificate referred to in Section 3.05 of the Servicing Agreement
and the Annual Accountant's Report referred to in Section 3.06 of the Servicing
Agreement.
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.01. Collection of Money. Except as otherwise expressly provided
herein, the Bond 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 Bond Trustee pursuant to this Indenture. The Bond Trustee shall apply all
such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Collateral, the Bond 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) On or prior to the Series Issuance
Date for the first Series issued hereunder, the Issuer shall open, at the Bond
Trustee's Corporate Trust Office, or at another Eligible Institution, one or
more segregated trust accounts in the Bond Trustee's name (collectively, the
"Collection Account"). The Collection Account will initially be divided into
subaccounts, which need not be separate bank 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 issued on such date (each a
"Series Subaccount"), and a class subaccount for each Class of Transition Bonds
issued on such date that the supplemental indenture authorizing such Class
specifies a class
58
subaccount shall be established therefor (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 establish
a Series Subaccount therefor and any necessary Class Subaccounts as subaccounts
of the Collection Account. Prior to depositing funds or U.S. Government
Obligations in the Collection Account pursuant to Sections 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. Prior to any Loss Amounts or Interest Deposit Amounts being
deposited in the Collection Account, the Issuer shall establish a loss
subaccount (the "Loss Subaccount") or an interest deposit subaccount (the
"Interest Deposit Subaccount"), as applicable, as a subaccount of the Collection
Account. All amounts in the Collection Account not allocated to any other
subaccount shall be allocated to the General Subaccount. 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(c), (d), (e) and (f). The Collection Account shall at
all times be maintained in an Eligible Deposit Account and only the Bond 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 with any
other moneys. 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 Bond Trustee in the Collection Account as
part of the Collateral as herein provided.
(b) So long as no Default or Event of Default has occurred and is
continuing, all or a portion of the funds in the Collection Account shall be
invested in Eligible Investments and reinvested by the Bond Trustee upon Issuer
Order; provided, however, that (i) such Eligible Investments shall not mature
later than the Business Day prior to (x) with respect to funds in the General
Subaccount, the Overcollateralization Subaccount, the Capital Subaccount, the
Reserve Subaccount, the Loss Subaccount and the Interest Deposit Subaccount, the
next Monthly Allocation Date or (y) with respect to funds in the Series
Subaccount for any Series of Transition Bonds or the Class Subaccount for any
Class of Transition Bonds, the next Payment Date for such Series or Class, (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 Bond 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 Bond Trustee in the Collection
Account, and any loss resulting from such investments shall be charged to the
Collection Account. The Issuer will not direct the Bond 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 Bond Trustee to make any such investment or sale, if requested by the
Bond Trustee, the Issuer shall deliver to the Bond Trustee an Opinion of
Counsel, acceptable to the Bond Trustee, to such effect. Subject to Section
6.01(c), the Bond 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 Bond Trustee's failure to make payments on such
59
Eligible Investments issued by the Bond Trustee, in its commercial capacity as
principal obligor and not as Bond Trustee, in accordance with their terms. The
Bond Trustee shall have no liability in respect of losses incurred as a result
of the liquidation of any Eligible Investment prior to its stated maturity or
the failure of the Issuer to provide timely written investment direction. The
Bond 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, however, if (i) the Issuer shall have failed to give investment
directions for any funds on deposit in the Collection Account to the Bond
Trustee by 11:00 a.m. Eastern Time (or such other time as may be agreed by the
Issuer and Bond Trustee) on any Business Day; or (ii) a Default or Event of
Default shall have occurred and be continuing but the Transition Bonds shall not
have been declared due and payable pursuant to Section 5.02; then the Bond
Trustee shall, to the fullest extent practicable, invest and reinvest funds in
the Collection Account in one or more Eligible Investments.
(c) ITC Collections remitted by the Servicer to the Bond Trustee,
Liquidated Damages remitted by the Seller to the Bond Trustee and Indemnity
Amounts remitted to the Bond Trustee by the Seller or the Servicer or otherwise
received by the Bond Trustee or the Issuer shall be deposited in the General
Subaccount. Loss Amounts remitted by the Seller to the Bond Trustee shall be
deposited in the Loss Subaccount and Interest Deposit Amounts remitted by the
Seller to the Bond Trustee shall be deposited in the Interest Deposit
Subaccount. Amounts remitted by a Counterparty shall be deposited in the Class
Subaccount for the Class to which such amounts relate.
(d) On each Monthly Allocation Date, the Bond Trustee 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 thereon in the following
priority:
(i) all amounts owed to the Bond Trustee (including legal fees and
expenses, Indemnity Amounts and Loss Amounts) shall be paid to the Bond
Trustee;
(ii) all amounts owed to the Issuer Trustee (including legal fees and
expenses, Indemnity Amounts and Loss Amounts) shall be paid to the Issuer
Trustee;
(iii) the Monthly Servicing Fee and all unpaid Monthly Servicing Fees
from prior Monthly Allocation Dates shall be paid to the Servicer;
(iv) so long as no Event of Default has occurred and is continuing or
would be caused by such payment, all Operating Expenses other than (i),
(ii) and (iii) above shall be paid to the Persons entitled thereto,
provided that the amount paid on any Monthly Allocation Date pursuant to
this clause (iv) may not exceed $12,500 in the aggregate for all Series;
(v) an amount equal to Interest (which shall mean, in the case of any
Series or Class for which a Swap Agreement is in effect and any payments
due thereunder from the applicable Counterparty are being received by the
Issuer, the regular fixed payment to a Counterparty determined without
regard to netting, but not payment in respect of breakage or termination of
the related Swap Agreement)
60
with respect to each Series of Transition Bonds for such Monthly Allocation
Date shall be transferred on a Pro Rata basis to the Series Subaccount for
such Series;
(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 Termination Date or Class Termination Date, as applicable, that will
occur prior to the next Monthly Allocation Date and any Principal of and
premium on a Series or Class of Transition Bonds payable on a Redemption
Date that will occur prior to the next Monthly Allocation Date shall be
transferred on a Pro Rata basis to the Series Subaccount for such Series,
taking into account amounts on deposit therein in respect of Principal as
of such Monthly Allocation Date;
(vii) an amount equal to Principal with respect to each Series of
Transition Bonds for such Monthly Allocation Date not provided for pursuant
to clause (vi) above shall be transferred on a Pro Rata basis to the Series
Subaccount for such Series;
(viii) all unpaid Operating Expenses, Indemnity Amounts and Loss
Amounts shall be paid to the Persons entitled thereto;
(ix) Overcollateralization with respect to all Series of Transition
Bonds for such Monthly Allocation Date shall be transferred to the
Overcollateralization Subaccount;
(x) any termination or breakage amounts owed to any Counterparty
pursuant to a Swap Agreement shall be paid to such Counterparty;
(xi) provided no Event of Default has occurred and is continuing, an
amount up to the amount of net investment earnings on amounts in the
Collection Account since the previous Monthly Allocation Date will be
released to the Issuer, free from the lien of this Indenture;
(xii) the balance, if any, will be allocated to the Reserve
Subaccount; and
(xiii) following repayment of all outstanding Series of Transition
Bonds, the balance, if any, will be released to the Issuer, free from the
lien of this Indenture.
"Pro Rata" means with respect to any Series of Transition Bonds a ratio,
(i) in the case of clause (v) above, the numerator of which is the Monthly
Allocated Interest Balance with respect to such Series, for such Monthly
Allocation Date and the denominator of which is the sum of Monthly Allocated
Interest Balances with respect to all Series, for such Monthly Allocation Date,
(ii) in the case of clause (vi) above, the numerator of which is the amount
allocable under such clause with respect to such Series and the denominator of
which is the amount allocable to all Series under such clause and (iii) in the
case of clause (vii) above, the numerator of which is the Monthly Allocated
Principal Balance with respect to such Series, for such Monthly Allocation Date
and the denominator of which is the sum of Monthly Allocated Principal Balances
with respect to all Series, for such Monthly Allocation Date.
61
If, on any Monthly Allocation Date funds on deposit in the General
Subaccount are insufficient to make the payments or transfers contemplated by
clauses (i) through (ix) above, the Bond Trustee will draw from amounts on
deposit in the following subaccounts up to the amount of such shortfall, in
order to make such payments and transfers:
(i) from the Interest Deposit Subaccount, with respect to the payments
or transfers contemplated by clause (v) above only;
(ii) then from the Loss Subaccount, with respect to the payments or
transfers contemplated by clauses (i) through (viii) above only; and
(iii) thereafter, from the Reserve Subaccount, then from the
Overcollateralization Subaccount and finally from the Capital Subaccount.
(e) On each Payment Date for any Series, the amounts on deposit in the
applicable Series Subaccount for that Series remaining after the allocations, if
any, described in the next paragraph (other than net income or other gain
thereon, which, so long as no Event of Default has occurred and is continuing,
shall be released to the Issuer free of the lien of Indenture) will be applied
as follows (in the priority indicated): (i) interest due and payable on the
Transition Bonds of such Series, together with any overdue interest and, to the
extent permitted by law, interest thereon, will be paid to the Holders of
Transition Bonds of such Series provided that with respect to a Class of such
Series for which a Swap Agreement is in effect and any payments due thereunder
from the applicable Counterparty are being received by the Issuer, only amounts
on deposit in the Class Subaccount therefor shall be so applied, (ii) the
balance, if any, up to the principal amount of the Transition Bonds of such
Series that is scheduled to be paid by such Payment Date in accordance with the
Expected Amortization Schedule therefor or, with respect to any Series of
Transition Bonds payable as a result of acceleration pursuant to Section 5.02 or
to be redeemed pursuant to Article X, the outstanding principal amount of such
Series and premium, if any, will be paid to the Holders of Transition Bonds of
such Series in respect of principal of and premium, if any, on the Transition
Bonds of such Series, and (iii) the balance, if any, will be transferred to the
General Subaccount for allocation on the next Monthly Allocation Date.
On the Business Day preceding each Payment Date, the amounts on deposit in
any Series Subaccount with respect to Classes of such Series for which a Swap
Agreement is in effect and any payments due thereunder from the applicable
Counterparty are being received by the Issuer (other than net income or other
gain, which, so long as no Event of Default has occurred and is continuing,
shall be released to the Issuer free of the lien of the Indenture) will be
allocated to the applicable Class Subaccount up to the gross amount, if any,
owed to the applicable Counterparty pursuant to the related Swap Agreement in
respect of regular fixed payments but not breakage or termination of such Swap
Agreement. On such day net amounts in respect of regular fixed payments, but not
breakage or termination of such Swap Agreement, owed to such Counterparty will
be paid from, or net amounts paid by such Counterparty will be deposited into,
such Class Subaccount. On the related Payment Date, remaining amounts in each
Class Subaccount will be paid as interest to the Holders of Transition Bonds of
the applicable Class.
62
All payments to the Transition Bondholders of a Series pursuant to clauses
(i) and (ii) of the second preceding paragraph shall be made pro rata based on
the respective principal amounts of Transition Bonds of such Series held by such
Holders, unless, 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 second preceding
paragraph shall be made pro rata based on the respective principal amounts of
Transition Bonds of such Class held by such Holders. If on any Payment Date a
Counterparty has failed to fully pay amounts due to the Issuer under the
applicable Swap Agreement, then after all Series Subaccounts have accessed the
Reserve Subaccount pursuant to Section 8.01(d) the Bond Trustee shall transfer
amounts on deposit in the Reserve Subaccount up to the amount of such shortfall
attributable to the failure of the Swap Counterparty to the applicable Class
Subaccount, provided that the Bond Trustee shall have received from the Servicer
a certificate to the effect that based on the Servicer's best assumptions and
projections at the time, such amounts will not be needed to cover any other
shortfalls on any Monthly Allocation Date prior to the next Adjustment Date.
(f) On the Liquidated Damages Redemption Date, the Bond Trustee shall by
12:00 noon (New York City time) apply all amounts on deposit in the Collection
Account and any investment earnings thereon since the immediately preceding
Monthly Allocation Date to pay the following amounts in the following priority:
(i) all amounts owed by the Issuer to the Bond Trustee and the Issuer
Trustee (including legal fees and expenses) shall be paid to the Bond
Trustee and the Issuer Trustee, respectively;
(ii) the Monthly Servicing Fee or the portion thereof accrued from and
including the immediately preceding Monthly Allocation Date to but
excluding the Liquidated Damages Redemption Date and all unpaid Monthly
Servicing Fees from prior Monthly Allocation Dates shall be paid to the
Servicer;
(iii) all other Operating Expenses shall be paid to the Persons
entitled thereto, provided that as long as PECO Energy Company is Servicer
all amounts owed to the Servicer will be paid as per clause (v) below and
if PECO Energy Company is not the Servicer then any payments to the
Servicer pursuant to this clause (iii) shall not exceed $150,000;
(iv) the Redemption Price and accrued interest for each Series of
Transition Bonds shall be paid to Transition Bondholders of such Series and
any amounts due to any Counterparty pursuant to a Swap Agreement shall be
paid to such Counterparty;
(v) any other Operating Expenses owed to the Servicer not yet paid
shall be paid to the Servicer; and
(vi) the balance, if any, will be released to the Issuer, free from
the lien of this Indenture.
SECTION 8.03. Release of Collateral. (a) All money and other property
withdrawn from the Collection Account by the Bond Trustee for payment to the
Issuer as provided in this Indenture in accordance with Section 8.02 hereof
shall be deemed
63
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 Bond Trustee.
(b) So long as the Issuer is not in default hereunder, the Issuer, through
the Servicer, may collect, liquidate, sell or otherwise dispose of the
Transferred Intangible Transition Property, at any time and from time to time,
without any notice to, or release or consent by, the Bond Trustee, but only as
and to the extent permitted by the Basic Documents; provided, however, that any
and all proceeds of such dispositions shall become Collateral and be deposited
to the General Subaccount immediately upon receipt thereof by the Issuer or any
other Person, including the Servicer.
(c) Other than as provided for in clauses (a) and (b) above, the Bond
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA xx.xx. 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.01 or an Opinion of
Counsel in lieu of such Independent Certificates to the effect that the TIA does
not require any such Independent Certificate.
(d) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Bond 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 Bond 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 Bond Trustee as
provided in this Article VIII shall be bound to ascertain the Bond Trustee's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any moneys.
(e) Subject to Section 8.03(c), the Bond Trustee shall, at such time as
there are no Transition Bonds Outstanding and all sums due the Bond Trustee
pursuant to Section 6.07 have been paid, release any remaining portion of the
Collateral that secured the Transition Bonds from the lien of this Indenture and
release to the Issuer or any other Person entitled thereto any funds then on
deposit in the Collection Account.
SECTION 8.04. Opinion of Counsel. The Bond Trustee shall receive at least
five Business 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 Bond Trustee shall also require, as a condition to such action, an Opinion
of Counsel, in form and substance satisfactory to the Bond 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 Opinion of Counsel shall not be required to express an
opinion as to the fair value of the Collateral. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Bond 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
64
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 Bond 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 Bond 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.
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 or
any Counterparty but with prior notice to the Rating Agencies, the Issuer and
the Bond 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 Bond Trustee, for any of the
following purposes:
(i) to correct or amplify the description of the Collateral, or to
better assure, convey and confirm unto the Bond Trustee the Collateral, or
to subject to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the
Transition Bonds contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Transition Bonds, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Bond Trustee;
(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 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 by all Rating Agencies other than Moody's (and prior written notice
of such action shall be provided to Moody's);
65
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor bond 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 bond 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;
(viii) to set forth the terms of any Series that has not theretofore
been authorized by a Series Supplement; or
(ix) to provide for any hedge or swap transactions with respect to any
floating rate Series or Class of Transition Bonds or any Series or Class
specific credit enhancement; provided, however, that (i) such action shall
not, as evidenced by an 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 by
all Rating Agencies other than Moody's (and prior written notice of such
action shall be provided to Moody's).
The Bond 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 Bond Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Transition Bonds or
any Counterparty, 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) such action shall not, as evidenced by an Opinion of
Counsel, adversely affect the interests of any Transition Bondholder or any
Counterparty and (ii) the Rating Agency Condition shall have been satisfied with
respect thereto.
SECTION 9.02. Supplemental Indentures with Consent of Transition
Bondholders. The Issuer and the Bond Trustee, when authorized by an Issuer
Order, also may, with prior notice to the Rating Agencies and with 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 Bond 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 and each Counterparty, if any, affected
thereby:
(i) change the date of payment of any instalment of principal of or
premium, if any, or interest on any Transition Bond, or reduce the
principal amount thereof, the interest rate thereon or the redemption price
or the premium,
66
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 Collateral to payment
of principal of or premium, if any, or interest on the Transition Bonds, or
change any place of payment where, or the coin or currency in which, any
Transition Bond or the interest thereon is payable;
(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 certain provisions of this Indenture or certain 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 Bond Trustee to direct the Issuer to sell or
liquidate the Collateral pursuant to Section 5.04;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents 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 as
to affect the amount of any payment of interest, principal or premium, if
any, payable on any Transition Bond on any Payment Date or to affect the
rights of the Holders of Transition Bonds to the benefit of any provisions
for the mandatory redemption of the Transition Bonds contained herein or
change the Redemption Dates, Expected Amortization Schedules or Series
Termination Dates or Class Termination Dates of any Transition Bonds;
(vii) decrease the Overcollateralization Amount or Required Capital
Amount with respect to any Series or the Calculated 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, the Seller, 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 certain other related
agreements; or
67
(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 Collateral
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.
It shall not be necessary for any Act of Transition Bondholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Bond Trustee of any
supplemental indenture pursuant to this Section, the Bond Trustee shall mail to
the Holders of the Transition Bonds and any applicable Counterparty, in each
case 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 Bond 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.
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 Bond Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Bond Trustee may, but shall not be obligated
to, enter into any such supplemental indenture that affects the Bond 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 and 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 Bond 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
Bond Trustee shall, bear a notation in form approved by the Bond Trustee as to
any matter provided for in such supplemental indenture. If the Issuer or the
Bond Trustee shall so determine, new Transition Bonds so modified as to conform,
in the opinion of the Bond Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed
68
by the Issuer and authenticated and delivered by the Bond Trustee in exchange
for Outstanding Transition Bonds.
ARTICLE X
Redemption of Transition Bonds
SECTION 10.01. Optional Redemption by Issuer. The Issuer may, at its
option, redeem the Transition Bonds of a Series, in whole or from time to time
in part, as permitted by the related Series Supplement on any Redemption Date at
a price specified in such Series Supplement (such price being called the
"Redemption Price") plus interest accrued on the Transition Bonds to be redeemed
to such Redemption Date. If the Issuer shall elect to redeem the Transition
Bonds of a Series pursuant to this Section 10.01, it shall furnish notice of
such election to the Bond Trustee not later than 25 days prior to the Redemption
Date for such redemption and shall deposit with the Bond Trustee the Redemption
Price of the Transition Bonds to be redeemed plus interest accrued thereon to
such Redemption Date 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. (a) The Issuer shall redeem
(i) the Transition Bonds of a Series 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 plus accrued interest thereon to such
Redemption Date and (ii) the Transition Bonds of all Series, if the Issuer
receives Liquidated Damages, on the Liquidated Damages Redemption Date at a
Redemption Price that shall be equal to the then outstanding principal amount of
the Transition Bonds as of the Liquidated Damages Redemption Date plus accrued
interest to 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
notice of such requirement to the Bond Trustee not later than 25 days prior to
the Redemption Date for such redemption and shall deposit with the Bond Trustee
the Redemption Price of the Transition Bonds to be redeemed 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 Bond 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;
(2) the amount of such Transition Bonds to be redeemed;
69
(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 Bond Trustee in the name and at the expense of the Issuer. 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. Any notice of optional
redemption may be conditioned upon the deposit of sufficient moneys to pay the
Redemption Price and accrued interest with the Bond Trustee before the date
fixed for redemption and such notice shall be of no effect unless such moneys
are so deposited.
SECTION 10.04. Payment of Redemption Price. If (a) unconditional notice of
redemption has been duly mailed or duly waived by the Holders of all Transition
Bonds called for redemption or (b) conditional notice of redemption has been so
mailed or waived and the redemption moneys have been duly deposited with the
Bond Trustee, then in either case 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 and unpaid interest accrued
to the Redemption Date. Payment of the Redemption Price together with accrued
interest shall be made by the Bond 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 hereunder 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 Bond Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Bond
Trustee (i) an Officer's Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and (iii)
(if required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section, 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.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
70
(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;
(b) 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;
(c) 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
(d) a statement as to whether, in the opinion of each such signatory, such
condition or covenant has been complied with.
SECTION 11.02. Form of Documents Delivered to Bond 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 an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Servicer, the
Seller or the Issuer, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Seller or the Issuer, unless
such Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
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 Bond 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 Bond Trustee's right to rely upon the truth and accuracy
of any statement or opinion contained in any such document as provided in
Article VI.
71
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 herein otherwise expressly provided such action shall become
effective when such instrument or instruments are delivered to the Bond 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 Bond 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 Bond 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 Bond 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 Bond Trustee, Issuer, Counterparties 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 Bond 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
Bond Trustee at its Corporate Trust Office, or
(b) the Issuer by the Bond 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, postage prepaid, to the Issuer addressed to: c/o First
Union Trust Company, National Association, One Xxxxxx Square, 000 Xxxx
Xxxxxx, Xxxxxxxxxx, XX 00000, Attention: Corporate Trustee Administration
Department, or at any other address previously furnished in writing to the
Bond Trustee by the Issuer. The Issuer shall promptly transmit any notice
received by it from the Transition Bondholders to the Bond Trustee.
Notices required to be given to any Counterparty or the Rating Agencies by
the Issuer, the Bond Trustee or the Issuer Trustee shall be in writing,
delivered
72
personally, via facsimile transmission, by reputable overnight courier or by
first-class mail, postage prepaid, to (i) in the case of a Counterparty, to the
address provided in the applicable Swap Agreement, (ii) in the case of Duff, at
the following address: Duff & Xxxxxx Credit Rating Company, 00 X. Xxxxxx Xxxxxx,
00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, (iii) in the case of Fitch IBCA, at the
following address: Fitch IBCA, Inc., 0 Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
IBCA 10004, Attention: ABS Surveillance, (iv) in the case of Moody's, at the
following address: Xxxxx'x Investors Service, Inc., Attention: ABS Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (v) in the case of
Standard & Poor's, at the following address: Standard & Poor's Corporation, 00
Xxxxxxxx (00xx Xxxxx), Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed
Surveillance Department.
SECTION 11.05. Notices to Transition Bondholders; Waiver. Where this
Indenture provides for notice to Transition Bondholders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and delivered by first-class mail, postage prepaid, to each
Transition Bondholder affected by such event, at their address 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 Bond 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 11.05 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 Bond
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 Bond 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 Bond
Trustee a copy of each such agreement and the Bond Trustee will cause payments
to be made and notices to be given in accordance with such agreements.
SECTION 11.07. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be
73
included in this Indenture by any of the provisions of the TIA, such required
provision shall control.
The provisions of TIA xx.xx. 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 11.08. 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 11.09. 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 Bond Trustee in this Indenture shall bind its
successors.
SECTION 11.10. 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 11.11. 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 Collateral, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 11.12. 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 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA,
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
SECTION 11.14. 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 11.15. Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Bond Trustee on
the
74
Transition Bonds or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) any owner of a
beneficial interest in the Issuer or (ii) any partner, owner, beneficiary,
agent, officer, director, employee or agent of the Bond Trustee, any holder of a
beneficial interest in the Issuer or the Bond Trustee or of any successor or
assign of the Bond Trustee, except as any such Person may have expressly agreed
(it being understood that none of the Bond Trustee's obligations are in its
individual capacity).
SECTION 11.16. No Petition. The Bond 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 any institution against the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings 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.
75
IN WITNESS WHEREOF, the Issuer and the Bond Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
PECO ENERGY TRANSITION TRUST,
by First Union Trust Company,
National Association,
not in its individual capacity but
solely as Issuer Trustee, Delaware
Trustee and Independent Trustee
by /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
THE BANK OF NEW YORK,
by /s/ Xxxxxx X. Laser
---------------------------------
Name: Xxxxxx X. Laser
Title: Assistant Vice President
SCHEDULE 1
Calculated Overcollateralization Level
Payment Date Required Overcollateralization Level
------------ ------------------------------------
September 1, 1999 4,210,526
March 1, 2000 8,421,053
September 1, 2000 12,631,579
March 1, 2001 16,842,105
September 1, 2001 21,052,632
March 1, 2002 25,263,158
September 1, 2002 29,473,684
March 1, 2003 33,684,211
September 1, 2003 37,894,737
March 1, 2004 42,105,263
September 1, 2004 46,315,789
March 1, 2005 50,526,316
September 1, 2005 54,736,842
March 1, 2006 58,947,368
September 1, 2006 63,157,895
March 1, 2007 67,368,421
September 1, 2007 71,578,947
March 1, 2008 75,789,474
September 1, 2008 80,000,000
Monthly
Monthly Allocated
Allocation Date Overcollateralization Balance
----------------------- -----------------------------
April 1, 1999 0.00
May 1, 1999 236,715.80
June 1, 1999 944,952.06
July 1, 1999 1,885,868.18
August 1, 1999 2,978,348.10
September 1, 1999 4,210,526.32
October 1, 1999 5,166,912.03
November 1, 1999 5,928,603.39
December 1, 1999 6,556,455.60
January 1, 2000 7,133,295.37
February 1, 2000 7,753,819.46
March 1, 2000 8,421,052.63
April 1, 2000 9,127,508.85
May 1, 2000 9,814,294.02
June 1, 2000 10,466,865.26
July 1, 2000 11,120,398.85
August 1, 2000 11,834,292.07
September 1, 2000 12,631,578.95
October 1, 2000 13,375,258.64
November 1, 2000 14,109,402.75
December 1, 2000 14,768,502.95
January 1, 2001 15,388,824.02
February 1, 2001 16,076,033.96
March 1, 2001 16,842,105.26
April 1, 2001 17,548,526.84
May 1, 2001 18,235,913.21
June 1, 2001 18,888,614.77
July 1, 2001 19,541,185.78
August 1, 2001 20,254,225.57
September 1, 2001 21,052,631.58
October 1, 2001 21,809,339.98
November 1, 2001 22,564,553.96
December 1, 2001 23,242,799.88
Monthly
Monthly Allocated
Allocation Date Overcollateralization Balance
----------------------- -----------------------------
January 1, 2002 23,881,011.04
February 1, 2002 24,557,450.01
March 1, 2002 25,263,157.89
April 1, 2002 25,972,911.53
May 1, 2002 26,660,428.53
June 1, 2002 27,312,447.88
July 1, 2002 27,963,663.43
August 1, 2002 28,675,430.69
September 1, 2002 29,473,684.21
October 1, 2002 30,155,508.86
November 1, 2002 30,909,346.95
December 1, 2002 31,606,330.20
January 1, 2003 32,266,967.51
February 1, 2003 32,963,585.70
March 1, 2003 33,684,210.53
April 1, 2003 34,394,275.20
May 1, 2003 35,081,816.29
June 1, 2003 35,733,767.35
July 1, 2003 36,384,801.42
August 1, 2003 37,096,428.27
September 1, 2003 37,894,736.84
October 1, 2003 38,696,640.73
November 1, 2003 39,458,633.84
December 1, 2003 40,129,592.95
January 1, 2004 40,757,444.67
February 1, 2004 41,419,236.83
March 1, 2004 42,105,263.16
April 1, 2004 42,815,279.19
May 1, 2004 43,502,810.71
June 1, 2004 44,154,771.28
July 1, 2004 44,805,845.66
August 1, 2004 45,517,503.81
September 1, 2004 46,315,789.47
October 1, 2004 47,124,228.08
Monthly
Monthly Allocated
Allocation Date Overcollateralization Balance
----------------------- -----------------------------
November 1, 2004 47,886,347.36
December 1, 2004 48,555,621.75
January 1, 2005 49,181,446.35
February 1, 2005 49,841,427.03
March 1, 2005 50,526,315.79
April 1, 2005 51,236,290.13
May 1, 2005 51,923,825.60
June 1, 2005 52,575,793.44
July 1, 2005 53,226,866.00
August 1, 2005 53,938,531.49
September 1, 2005 54,736,842.11
October 1, 2005 55,520,778.56
November 1, 2005 56,274,801.98
December 1, 2005 56,943,030.98
January 1, 2006 57,569,661.53
February 1, 2006 58,238,909.05
March 1, 2006 58,947,368.42
April 1, 2006 59,657,181.37
May 1, 2006 60,345,000.80
June 1, 2006 60,997,043.22
July 1, 2006 61,647,639.63
August 1, 2006 62,358,945.52
September 1, 2006 63,157,894.74
October 1, 2006 63,959,599.62
November 1, 2006 64,722,390.54
December 1, 2006 65,395,667.45
January 1, 2007 66,026,407.74
February 1, 2007 66,687,684.16
March 1, 2007 67,368,421.05
April 1, 2007 68,080,588.14
May 1, 2007 68,768,850.35
June 1, 2007 69,420,456.72
July 1, 2007 70,069,417.84
August 1, 2007 70,779,312.49
Monthly
Monthly Allocated
Allocation Date Overcollateralization Balance
----------------------- -----------------------------
September 1, 2007 71,578,947.37
October 1, 2007 72,477,223.32
November 1, 2007 73,245,706.99
December 1, 2007 73,894,515.67
January 1, 2008 74,494,676.77
February 1, 2008 75,128,180.71
March 1, 2008 75,789,473.68
April 1, 2008 76,501,530.98
May 1, 2008 77,189,952.50
June 1, 2008 77,841,602.11
July 1, 2008 78,490,297.29
August 1, 2008 79,199,998.08
September 1, 2008 80,000,000.00
