EXHIBIT 4.1
EXECUTION COPY
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PG&E FUNDING LLC,
Note Issuer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
Note Trustee
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INDENTURE
Dated as of December 8, 1997
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Issuable in Series
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TABLE OF CONTENTS
ARTICLE I Definitions and Incorporation by Reference
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SECTION 1.01. Definitions.............................................. 2
SECTION 1.02. Incorporation by Referene of Trust Indenture Act.........15
SECTION 1.03. Rules of Construction....................................16
ARTICLE II The Notes
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SECTION 2.01. Form.....................................................16
SECTION 2.02. Denominations; Notes Issuable in Series..................17
SECTION 2.03. Execution, Authentication and Delivery...................18
SECTION 2.04. Temporary Notes..........................................19
SECTION 2.05. Registration; Registration of Transfer and
Exchange.................................................20
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Notes...............21
SECTION 2.07. Persons Deemed Owner.....................................23
SECTION 2.08. Payment of Principal, Premium, if any, and Interest;
Interest on Overdue Principal; Principal, Premium,
if any, and Interest Rights Preserved....................23
SECTION 2.09. Cancellation.............................................24
SECTION 2.10. Amount Unlimited; Authentication and
Delivery of Notes........................................25
SECTION 2.11. Release of Collateral....................................32
ARTICLE III Covenants
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SECTION 3.01. Payment of Principal, Premium, if any, and
Interest.................................................33
SECTION 3.02. Maintenance of Office or Agency..........................33
SECTION 3.03. Money for Payments To Be Held in Trust...................33
SECTION 3.04. Existence................................................35
SECTION 3.05. Protection of Collateral.................................36
SECTION 3.06. Opinions as to Collateral................................36
SECTION 3.07. Performance of Obligations; Servicing; SEC Filings.......38
SECTION 3.08. Negative Covenants.......................................40
SECTION 3.09. Annual Statement as to Compliance........................41
SECTION 3.10. Note Issuer May Consolidate, etc., Only on
Certain Terms............................................42
SECTION 3.11. Successor or Transferee..................................44
SECTION 3.12. No Other Business........................................44
SECTION 3.13. No Borrowing.............................................44
SECTION 3.14. Servicer's Obligations...................................44
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SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities........45
SECTION 3.16. Capital Expenditures.....................................45
SECTION 3.17. Non-Routine True-Up Adjustment...........................45
SECTION 3.18. Restricted Payments......................................45
SECTION 3.19. Notice of Events of Default..............................46
SECTION 3.20. Further Instruments and Acts.............................46
SECTION 3.21. Purchase of Subsequent Transition Property...............46
ARTICLE IV Satisfaction and Discharge; Defeasance
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SECTION 4.01. Satisfaction and Discharge of Indenture;
Defeasance...............................................48
SECTION 4.02. Conditions to Defeasance.................................50
SECTION 4.03. Application of Trust Money...............................51
SECTION 4.04. Repayment of Moneys Held by Paying Agent.................52
ARTICLE V Remedies
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SECTION 5.01. Events of Default........................................52
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.......54
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Note Trustee..............................55
SECTION 5.04. Remedies; Priorities.....................................58
SECTION 5.05. Optional Preservation of the Collateral..................59
SECTION 5.06. Limitation of Suits......................................60
SECTION 5.07. Unconditional Rights of Noteholders To Receive
Principal, Premium, if any, and Interest.................61
SECTION 5.08. Restoration of Rights and Remedies.......................61
SECTION 5.09. Rights and Remedies Cumulative...........................61
SECTION 5.10. Delay or Omission Not a Waiver...........................61
SECTION 5.11. Control by Noteholders...................................62
SECTION 5.12. Waiver of Past Defaults..................................62
SECTION 5.13. Undertaking for Costs....................................63
SECTION 5.14. Waiver of Stay or Extension Laws.........................64
SECTION 5.15. Action on Notes..........................................64
SECTION 5.16. Performance and Enforcement of Certain Obligations.......64
ARTICLE VI The Note Trustee
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SECTION 6.01. Duties of Note Trustee...................................65
SECTION 6.02. Rights of Note Trustee...................................67
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SECTION 6.03. Individual Rights of Note Trustee........................67
SECTION 6.04. Note Trustee's Disclaimer................................68
SECTION 6.05. Notice of Defaults.......................................68
SECTION 6.06. Reports by Note Trustee to Holders.......................68
SECTION 6.07. Compensation and Indemnity...............................69
SECTION 6.08. Replacement of Note Trustee..............................70
SECTION 6.09. Successor Note Trustee by Merger.........................71
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee............72
SECTION 6.11. Eligibility; Disqualification............................73
SECTION 6.12. Preferential Collection of Claims Against
Note Issuer..............................................74
SECTION 6.13 Representations and Warranties of Note Trustee...........74
ARTICLE VII Noteholders' Lists and Reports
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SECTION 7.01. Note Issuer To Furnish Note Trustee
Names and Addresses of Noteholders.......................74
SECTION 7.02. Preservation of Information;
Communications to Noteholders............................74
SECTION 7.03. Reports by Note Issuer...................................75
SECTION 7.04. Reports by Note Trustee..................................76
ARTICLE VIII Accounts, Disbursements and Releases
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SECTION 8.01. Collection of Money......................................76
SECTION 8.02. Collection Account.......................................76
SECTION 8.03. General Provisions Regarding the Collection Account......80
SECTION 8.04. Release of Collateral....................................82
SECTION 8.05. Opinion of Counsel.......................................82
SECTION 8.06. Reports by Independent Accountants.......................83
ARTICLE IX Supplemental Indentures
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SECTION 9.01. Supplemental Indentures Without
Consent of Noteholders...................................84
SECTION 9.02. Supplemental Indentures with Consent of Noteholders......85
SECTION 9.03. Execution of Supplemental Indentures.....................87
SECTION 9.04. Effect of Supplemental Indenture.........................88
SECTION 9.05. Conformity with Trust Indenture Act......................88
SECTION 9.06. Reference in Notes to Supplemental Indentures............88
ARTICLE X
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Redemption of Notes
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SECTION 10.01. Optional Redemption by Note Issuer.......................89
SECTION 10.02. Form of Optional Redemption Notice.......................89
SECTION 10.03. Notes Payable on Optional Redemption
Date or Payment Date.....................................90
SECTION 10.04. Mandatory Redemption by Note Issuer......................90
SECTION 10.05. Form of Mandatory Redemption Notice......................91
SECTION 10.06. Notes Payable on Mandatory Redemption
Date or Payment Date.....................................91
ARTICLE XI Miscellaneous
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SECTION 11.01. Compliance Certificates and Opinions, etc................91
SECTION 11.02. Form of Documents Delivered to Note Trustee..............94
SECTION 11.03. Acts of Noteholders......................................95
SECTION 11.04. Notices, etc., to Note Trustee, Note
Issuer, Infrastructure Bank and Rating Agencies..........96
SECTION 11.05. Notices to Noteholders; Waiver...........................97
SECTION 11.06. [Intentionally omitted]..................................97
SECTION 11.07. Conflict with Trust Indenture Act........................98
SECTION 11.08. Effect of Headings and Table of Contents.................98
SECTION 11.09. Successors and Assigns...................................98
SECTION 11.10. Separability.............................................98
SECTION 11.11. Benefits of Indenture....................................98
SECTION 11.12. Legal Holidays...........................................98
SECTION 11.13. Governing Law............................................99
SECTION 11.14. Counterparts.............................................99
SECTION 11.15. Recording of Indenture...................................99
SECTION 11.16. Trust Obligation.........................................99
SECTION 11.17. [Intentionally omitted]..................................99
SECTION 11.18. No Recourse to Note Issuer...............................99
SECTION 11.19. Inspection..............................................100
INDENTURE dated as of December 8, 1997, between PG&E FUNDING LLC, a
Delaware limited liability company (the "Note Issuer"), and Bankers Trust
Company of California, N.A., a national banking association, as trustee (the
"Note Trustee").
The Note Issuer has duly authorized the execution and delivery of this
Indenture to provide for one or more Series of Notes, issuable as provided in
this Indenture. Each such Series of Notes will be issued only under a separate
Series Supplement to this Indenture duly executed and delivered by the Note
Issuer and the Note Trustee. The Note Issuer is entering into this Indenture,
and the Note Trustee is accepting the trusts created hereby, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
GRANTING CLAUSE
The Note Issuer hereby Grants to the Note Trustee at the Closing Date,
as Note Trustee for the benefit of the Holders of the Notes from time to time
issued and outstanding, all of the Note Issuer's right, title and interest in
and to (a) the Transition Property transferred by the Seller to the Note Issuer
pursuant to the Sale Agreement and all proceeds thereof, (b) any Subsequent
Transition Property transferred by the Seller to the Note Issuer pursuant to
each Subsequent Sale Agreement and all proceeds thereof, (c) the Sale Agreement
and each Subsequent Sale Agreement, (d) the Servicing Agreement, (e) the
Collection Account (including all subaccounts thereof) and all amounts or
investment property on deposit therein or credited thereto from time to time,
(f) all other property of whatever kind owned from time to time by the Note
Issuer, (g) all present and future claims, demands, causes and choses in action
in respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
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accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind, and other forms of obligations and receivables, instruments and
other property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing and (h) all proceeds of the foregoing
(collectively, the "Collateral"; it being understood that the following do not
constitute Collateral: (i) the cash contributed to the Note Issuer by the Seller
which is not held in the Capital Subaccount, including cash that has been
released to the Note Issuer pursuant to Section 8.02(d) following retirement of
a Series of Notes, (ii) net investment earnings which have been released to the
Note Issuer pursuant to Section 8.02(d), (iii) the Overcollateralization Amount
with respect to a Series of Notes that has been released to the Note Issuer
pursuant to Section 8.02(d) following retirement of such Series of Notes) and
(iv) amounts deposited with the Note Issuer on the Closing Date for payment of
costs of issuance with respect to the Notes or the Certificates as set forth on
the flow of funds memorandum delivered on the Closing Date (together with any
interest earnings thereon), it being understood that such amounts described in
this clause (iv) shall not be subject to Section 3.15.
The foregoing Grant is made in trust to secure the payment of
principal of and premium, if any, interest on, and any other amounts owing in
respect of, the Notes equally and ratably without prejudice, priority or
distinction, except as expressly provided in this Indenture, and to secure
compliance with the provisions of this Indenture with respect to the Notes, all
as provided in this Indenture.
The Note Trustee, as trustee on behalf of the Holders of the Notes,
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
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SECTION 1.01. (a) Definitions. Except as otherwise specified
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herein or as the context may otherwise require, the following terms have the
respective meanings set forth below for all purposes of this Indenture.
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"Act" has the meaning specified in Section 11.03(a).
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"Actual FTA Collections" means, with respect to any Collection Period,
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FTA Collections actually received with respect to such Collection Period.
"Administrative Services Agreement" means the Administrative Services
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Agreement dated as of December 8, 1997, as the same may be amended and
supplemented from time to time, between the Administrator and the Note Issuer.
"Administrator" means Pacific Gas and Electric Company, or any
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successor Administrator under the Administrative Services Agreement.
"Affiliate" means, with respect to any specified Person, any other
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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 Officer" means, with respect to the Note Issuer, any
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officer of the Note Issuer who is authorized to act for the Note Issuer in
matters relating to the Note Issuer and who is identified on the list of
Authorized Officers delivered by the Note Issuer to the Note Trustee on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"Basic Documents" means this Indenture, the Trust Agreement, the Sale
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Agreement, the Servicing Agreement, the Administrative Services Agreement, the
Note Purchase Agreement, the DTC Agreement, the Fee and Indemnity Agreement, the
Underwriting Agreement and all other documents and certificates delivered in
connection therewith and, with respect to any subsequent Series of Notes and
Certificates, the comparable documents for each of the foregoing.
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"Business Day" means any day other than a Saturday, a Sunday or a day
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on which banking institutions or trust companies in New York, New York or San
Francisco, California are authorized or obligated by law, regulation or
executive order to remain closed.
"Capital Subaccount" has the meaning set forth in Section 8.02(a).
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"Certificate Trustee" means the Person acting as certificate trustee
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under the Trust Agreement.
"Certificates" has the meaning set forth in the Trust Agreement.
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"Class" means, with respect to any Series, any one of the classes of
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Notes of that Series.
"Closing Date" means December 8, 1997.
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"Code" means the Internal Revenue Code of 1986, as amended from time
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to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
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Indenture.
"Collection Account" has the meaning specified in Section 8.02(a).
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"Collection Period" means each calendar month immediately preceding
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the respective Remittance Date.
"Corporate Trust Office" means the principal office of the Note
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Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Indenture is
located at Four Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Structured
Finance Group, or at such other address as the Note Trustee may designate from
time to time by notice to the Noteholders and the Note Issuer, or the principal
corporate trust office of any successor Note Trustee (the address of which the
successor Note Trustee will notify the Noteholders and the Note Issuer).
"Covenant Defeasance Option" has the meaning specified in Section
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4.01(b).
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"Default" means any occurrence that is, or with notice or the lapse of
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time or both would become, an Event of Default.
"Delaware Trustee" means the Person acting as Delaware trustee under
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the Trust Agreement.
"DTC Agreement" has the meaning set forth in the Trust Agreement.
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"Eligible Deposit Account" means either (a) a segregated account with
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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 one of the states thereof or the District of
Columbia (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 Institution" means (a) the corporate trust department of the
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Note Trustee; provided that an account with the Note Trustee will only be an
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Eligible Deposit Account if it is a segregated trust account, or (b) a
depository institution organized under the laws of the United States of America
or any State (or any domestic branch of a foreign bank), which (i) has either
(A) a long-term unsecured debt rating of AAA by Standard & Poor's and A2 by
Moody's or (B) a certificate of deposit rating of A-1+ by Standard & Poor's and
P-1 by Moody's, or any other long-term, short-term or certificate of deposit
rating acceptable to the Rating Agencies and (ii) whose deposits are insured by
the FDIC. If so qualified under clause (b) above, the Note Trustee may be
considered an Eligible Institution for the purposes of clause (a) of this
definition.
"Eligible Investments" mean instruments or investment property which
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evidence:
(a) direct obligations of, and obligations fully and unconditionally
guaranteed as to timely payment by, the United States of America;
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(b) demand deposits, time deposits, certificates of deposit or
bankers' acceptances of depository institutions meeting the requirements of
clause (b) of the definition of Eligible Institutions;
(C) commercial paper (other than commercial paper of the Seller) having, at the
time of the investment or contractual commitment to invest therein, a rating
from each of the Rating Agencies in the highest investment category granted
thereby;
(d) investments in money market funds having a rating from each of the
Rating Agencies in the highest investment category granted thereby
(including funds for which the Note 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 depository institutions meeting the
requirements of clause (b) of the definition of Eligible Institutions; and
(f) any other investment permitted by each of the Rating Agencies.
"Estimated FTA Collections" means the amount of FTA Payments the
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Servicer is required to remit to the Collection Account on or before the
twentieth day of each calendar month (or, if such twentieth day is not a
Business Day, the Business Day immediately following such twentieth day)
pursuant to Section 7(e) of Annex I to the Servicing Agreement.
"Event of Default" has the meaning specified in Section 5.01.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"FDIC" means the Federal Deposit Insurance Corporation or any
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successor.
"Fee and Indemnity Agreement" has the meaning set forth in the Trust
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Agreement.
"Final Maturity Date" means, with respect to any Series or Class of
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Notes, the Final Maturity Date therefor, as specified in the related Series
Supplement.
"Fitch" means Fitch Investors Service, L.P. or its successor.
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"FTA Collections" means FTA Payments received by the Servicer which
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are remitted to the Collection Account.
"FTA Payments" means the payments made by Customers based on the FTA
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Charges.
"General Subaccount" has the meaning set forth in Section 8.02(a).
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"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
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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 con-
firm 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
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 Noteholder" means the Person in whose name a Note is
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registered on the Note Register.
"Indenture" or "this Indenture" means this instrument as originally
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executed and, as from time to time supplemented or amended by one or more
indentures supplemental
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hereto entered into pursuant to the applicable provisions hereof, as so
supplemented or amended, or both, and shall include the forms and terms of the
Notes established hereunder.
"Independent" means, when used with respect to any specified Person,
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that the Person (a) is in fact independent of the Note Issuer, any other obligor
upon the Notes, the Seller, the Servicer and any Affiliate of any of the fore-
going Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Note Issuer, any such other obligor, the
Seller, the Servicer or any Affiliate of any of the foregoing Persons and (c) is
not connected with the Note Issuer, any such other obligor, the Seller, the
Servicer or any Affiliate of any of the foregoing Persons as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
"Independent Certificate" means a certificate or opinion to be
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delivered to the Note Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01, made by
an Independent appraiser or other expert appointed by an Issuer Order and
consented to by the Note Trustee, and such opinion or certificate shall state
that the signer has read the definition of "Independent" in this Indenture and
that the signer is Independent within the meaning thereof.
"Infrastructure Bank" means the California Infrastructure and Economic
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Development Bank or any successor in interest.
"Issuer Order" and "Issuer Request" means a written order or request
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signed in the name of the Note Issuer by any one of its Authorized Officers and
delivered to the Note Trustee.
"Legal Defeasance Option" has the meaning specified in Section
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4.01(b).
"Mandatory Redemption Date" has the meaning specified in Section
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10.04.
"Mandatory Redemption Price" has the meaning specified in Section
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10.04.
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"Minimum Denomination" means, with respect to any Note, the minimum
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denomination therefor specified in the applicable Series Supplement, which
minimum denomination shall be not less than $1,000 and, except as otherwise
provided in such Series Supplement, integral multiples thereof.
"Moody's" means Xxxxx'x Investors Service Inc. or its successor.
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"Note Interest Rate" means, with respect to any Series or Class, the
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rate at which interest accrues on the Notes of such Series or Class, as
specified in the related Series Supplement.
"Note Issuer" means the party named as such in this Indenture until a
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successor replaces it and, there after, means the successor and, for purposes
of any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Note Purchase Agreement" has the meaning set forth in the Trust
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Agreement.
"Note Register" and "Note Registrar" have the respective meanings
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specified in Section 2.05.
"Note Trustee" means Bankers Trust Company of California, N.A., a
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national banking association, as Note Trustee under this Indenture, or any
successor Note Trustee under this Indenture.
"Notes" has the meaning specified in Section 2.02.
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"Officer's Certificate" means a certificate signed by any Authorized
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Officer of the Note Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Note Trustee. 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 Note Issuer.
"Operating Expenses" means all fees, costs and expenses of the Note
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Issuer, including all amounts owed by the Note Issuer to the Note Trustee, the
Certificate
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Trustee, the Delaware Trustee and the Infrastructure Bank, the Servicing Fee,
the Quarterly Administration Fee, any fees, costs and expenses payable or
reimbursable by the Note Issuer to the Administrator and legal and accounting
fees, costs and expenses of the Note Issuer and the Trust.
"Opinion of Counsel" means one or more written opinions of counsel who
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may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Note Issuer and who shall be satisfactory to the Note Trustee,
and which opinion or opinions shall be addressed to the Note Trustee as trustee,
shall comply with any applicable requirements of Section 11.01, and shall be in
form and substance satisfactory to the Note Trustee.
"Optional Redemption Date" means, with respect to any Series, the
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Payment Date specified by the Note Issuer for the redemption of the Notes of
such Series pursuant to Section 10.01.
"Optional Redemption Price" has the meaning specified in Section
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10.01.
"Outstanding" means, as of the date of determination, all Notes
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theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancelation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been thereto fore deposited with the Note Trustee or
any Paying Agent in trust for the Holders of such Notes (provided, however,
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that if such Notes are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor, satisfactory
to the Note Trustee, made); and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Note Trustee is presented that any such Notes are held
by a bona fide purchaser;
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provided that in determining whether the Holders of the requisite Outstanding
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Amount of the Notes or any Series or Class thereof have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or under
any Basic Document, Notes owned by the Note Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Note Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Notes that the
Note Trustee actually knows to be so owned shall be so disregarded. Notes so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Note Trustee the pledgee's right
so to act with respect to such Notes and that the pledgee is not the Note
Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any of
the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes
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or, if the context requires, all Notes of a Series or Class, Outstanding at the
date of determination.
"Overcollateralization Subaccount" has the meaning specified in
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Section 8.02(a).
"Paying Agent" means the Note Trustee or any other Person that meets
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the eligibility standards for the Note Trustee specified in Section 6.11 and is
authorized by the Note Issuer to make payment of principal of or premium, if
any, or interest on the Notes on behalf of the Note Issuer.
"Payment Date" means, with respect to any Series or Class, the March
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25, June 25, September 25 and December 26 of each year, provided that if any
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such date is not a Business Day, the Payment Date shall be the Business Day
immediately succeeding such date.
"Person" means any individual, corporation, limited liability company,
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estate, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Predecessor Note" means, with respect to any
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particular Note, every previous Note evidencing all or a portion of the same
debt as that evidenced by such particular Note; and, for the purpose of this
definition, any Note authenticated and delivered under Section 2.06 in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
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or administrative proceeding.
"Quarterly Administration Fee" shall mean $25,000 per calendar
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quarter.
"Quarterly Interest" means, with respect to any Payment Date and any
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Series of Notes, the quarterly interest for such Payment Date and Series as
specified in the related Series Supplement.
"Quarterly Principal" means, with respect to any Payment Date and any
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Series of Notes, the excess, if any, of the Outstanding Amount of such Series of
Notes over the outstanding principal balance specified for such Payment Date on
the applicable Expected Amortization Schedule.
"Rating Agency" means Moody's, Standard & Poor's and Fitch. If no
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such organization or successor is any longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization or other comparable
Person designated by the Note Issuer, notice of which designation shall be given
to the Note Trustee, the Certificate Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
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Rating Agency shall have been given ten days prior notice thereof and that each
of the Rating Agencies shall have notified the Servicer, the Note Issuer and the
Note Trustee in writing that such action will not result in a reduction or
withdrawal of the then current rating by such Rating Agency of either any Series
or Class of the Notes or any Series or Class of the Certificates.
"Record Date" means, with respect to a Payment Date, Optional
-----------
Redemption Date or Mandatory Redemption Date, the close of business on the last
day of the calendar month preceding the calendar month in which such Payment
Date, Optional Redemption Date or Mandatory Redemption Date
13
occurs.
"Registered Holder" means the Person in whose name a Note is
-----------------
registered on the Note Register on the applicable Record Date.
"Remittance Date" means the twentieth day of each calendar month or,
---------------
if such day is not a Business Day, the next succeeding Business Day.
"Repurchase Date" has the meaning specified in the Sale Agreement.
---------------
"Required Capital Level" means, as of any Payment Date, the sum of 0.50% of
----------------------
the initial principal amount of each then-outstanding Series of Notes issued
pursuant to this Indenture prior to that Payment Date, less $100,000 in the
aggregate for all Series of Notes.
"Required Overcollateralization Level" means, as of any Payment Date,
------------------------------------
the amount required to be on deposit in the Overcollateralization Subaccount as
specified in a Series Supplement.
"Reserve Subaccount" has the meaning specified in Section 8.02(a).
------------------
"Responsible Officer" means any officer within the Corporate Trust
-------------------
Office, including any Managing Director, Vice President, Assistant Vice
President, Secretary, Assistant Secretary or Assistant Treasurer or any other
officer of the Note 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 and familiarity with the particular subject.
"Sale Agreement" means the Transition Property Purchase and Sale
--------------
Agreement dated as of December 8, 1997, between the Note Issuer and the Seller,
in the form of Exhibit A-1, as amended and supplemented from time to time.
"Scheduled Maturity Date" means, with respect to any Series or Class
-----------------------
of Notes, the Scheduled Maturity Date
14
therefor, as specified in the related Series Supplement.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Series" means each series of Notes issued and authenticated pursuant
------
to this Indenture and a related Series Supplement.
"Series Issuance Date" means, with respect to any Series, the date on
--------------------
which the Notes of such Series are to be originally issued in accordance with
Section 2.10 and the related Series Supplement.
"Series Supplement" means an indenture supplemental to this Indenture
-----------------
that authorizes a particular Series of Notes.
"Servicing Agreement" means the Transition Property Servicing
-------------------
Agreement dated as of December 8, 1997, between the Note Issuer and the
Servicer, in the form of Exhibit A-2, as amended and supplemented from time to
time.
"Standard & Poor's" means Standard & Poor's, a division of The McGraw-
-----------------
Hill Companies, Inc. or its successor.
"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 3.07(e).
------------------
"Trust" has the meaning set forth in the Trust Agreement.
-----
"Trust Agreement" means the Amended and Restated Declaration and
---------------
Agreement of Trust dated as of December 8, 1997, among the Infrastructure Bank,
the Delaware Trustee and the Certificate Trustee, as the same may be further
amended and supplemented from time to time.
"Trust Indenture Act" or "TIA" means the Trust
------------------- ---
15
Indenture Act of 1939 as in force on the date hereof, unless otherwise
specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
---
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"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 Note Issuer's option.
(b) Except as otherwise specified herein or as the context may
otherwise require, the following terms have the respective meanings set forth in
the Servicing Agreement as in effect on the Closing Date 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:
Section of
Term Servicing Agreement
---- -------------------
Advice Letters.................. Section 1.01
Annual Adjustment Filing Date... Section 1.01
CPUC............................ Section 1.01
CPUC Regulations................ Section 1.01
Excess Remittance............... Section 1.01
Expected Amortization Schedule.. Section 1.01
Financing Order................. Section 1.01
FTA Charges..................... Section 1.01
Non-Routine True-Up Adjustment.. Section 1.01
Overcollateralization Amount.... Section 1.01
Principal Balance............... Section 1.01
Projected Principal Balance..... Section 1.01
PU Code......................... Section 1.01
Remittance Shortfall............ Section 1.01
Seller.......................... Section 1.01
Servicer........................ Section 1.01
Servicer Default................ Section 1.01
Servicing Fee................... Section 1.01
Subsequent Sale Agreement....... Section 1.01
Subsequent Sale Date............ Section 1.01
16
Subsequent Transition Property.. Section 1.01
Transition Property............. Section 1.01
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. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Note Trustee.
"obligor" on the indenture securities means the Note Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings 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
17
(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 Notes
---------
SECTION 2.01. Form. The Notes and the Note Trustee's certificate of
-----
authentication shall be in substantially the forms set forth in Exhibit B, 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 officers executing such Notes, as evidenced by their execution
of such Notes. Any portion of the text of any Note may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms
of the Notes set forth in Exhibit B are part of the terms of this Indenture.
SECTION 2.02. Denominations; Notes Issuable in Series. The Notes
----------------------------------------
shall be issuable as registered definitive Notes in the Minimum Denomination
specified in the applicable Series Supplement and, except as otherwise provided
in such Series Supplement, in integral multiples thereof.
The Notes may, at the election of and as authorized by an Authorized
Officer of the Note Issuer, be issued in one or more Series (each comprised of
one or more Classes), and shall be designated generally as the "Notes" of the
Note Issuer, with such further particular
18
designations added or incorporated in such title for the Notes of any particular
Series or Class as an Authorized Officer of the Note Issuer may determine. Each
Note shall bear upon its face the designation so selected for the Series or
Class to which it belongs. All Notes of the same Series shall be identical in
all respects except for the denominations thereof, unless such Series is
comprised of one or more Classes, in which case all Notes of the same Class
shall be identical in all respects except for the denominations thereof. All
Notes of a particular Series or, if such Series is comprised of one or more
Classes, all Notes of a particular Class thereof, in each case issued under this
Indenture, shall be in all respects equally and ratably entitled to the benefits
hereof without preference, priority, or distinction on account of the actual
time or times of authentication and delivery, all in accordance with the terms
and provisions of this Indenture.
Each Series of Notes shall be created by a Series Supplement
authorized by an Authorized Officer of the Note 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:
(1) designation of the Series and, if applicable, the Classes
thereof;
(2) the principal amount;
(3) the Note Interest Rate;
(4) the Payment Dates;
(5) the Scheduled Maturity Date;
(6) the Final Maturity Date;
(7) the Series Issuance Date;
(8) the place or places for the payment of interest, principal and
premium, if any;
(9) the Minimum Denominations;
(10) the provisions for optional redemption by the Note Issuer;
19
(11) the Expected Amortization Schedule;
(12) provisions with respect to the definitions set forth in Article
One hereof; and
(13) any other provisions expressing or referring to the terms and
conditions upon which the Notes of the applicable Series or Class are to be
issued under this Indenture that are not in conflict with the provisions of
this Indenture and as to which the Rating Agency Condition is satisfied.
SECTION 2.03. Execution, Authentication and Delivery. The Notes
---------------------------------------
shall be executed on behalf of the Note Issuer by any of its Authorized
Officers. The signature of any such Authorized Officer on the Notes may be
manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Note Issuer shall bind the Note
Issuer, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Note Issuer may deliver Notes executed by the Note Issuer to
the Note Trustee pursuant to an Issuer Order for authentication; and the Note
Trustee shall authenticate and deliver such Notes as in this Indenture provided
and not otherwise.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Note Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
20
SECTION 2.04. Temporary Notes. Pending the preparation of definitive
----------------
Notes, the Note Issuer may execute, and upon receipt of an Issuer Order the Note
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Note Issuer will cause definitive
Notes to be prepared without unreasonable delay. After the preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive Notes
upon surrender of the temporary Notes at the office or agency of the Note Issuer
to be maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancelation of any one or more temporary Notes, the Note Issuer
shall execute and the Note Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of Minimum Denominations.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as definitive Notes.
SECTION 2.05. Registration; Registration of Transfer and Exchange.
----------------------------------------------------
The Note Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Note
Issuer shall provide for the registration of Notes and the registration of
transfers of Notes. The Note Trustee shall be "Note Registrar" for the purpose
of registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Note Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties of
Note Registrar.
If a Person other than the Note Trustee is appointed by the Note
Issuer as Note Registrar, the Note Issuer will give the Note Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Note Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies
21
thereof, and the Note Trustee shall have the right to rely upon a certificate
executed on behalf of the Note Registrar by a Responsible Officer thereof as to
the names and addresses of the Holders of the Notes and the principal amounts
and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Note Issuer to be maintained as provided in Section 3.02, the
Note Issuer shall execute, and the Note Trustee shall authenticate and the
Noteholder shall obtain from the Note Trustee, in the name of the designated
transferee or transferees, one or more new Notes in any Minimum Denominations,
of a like Series (and, if applicable, Class) and aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any Minimum Denominations, of a like Series (and, if applicable, Class) and
aggregate principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, the Note
Issuer shall execute, and the Note Trustee shall authenticate and the Noteholder
shall obtain from the Note Trustee, the Notes which the Noteholder making the
exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Note Issuer, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by (a) a written
instrument of transfer in form satisfactory to the Note Trustee duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing,
with such signature guaranteed by an institution which is a member of one of the
following recognized Signature Guaranty Programs: (i) The Securities Transfer
Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion
Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in
such other guarantee program acceptable to the Note Trustee, and (b) such other
documents as the Note Trustee may require.
22
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Note Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.04 or 9.06 not involving any transfer.
The preceding provisions of this Section notwithstanding, the Note
Issuer shall not be required to make and the Note Registrar need not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to the
Note.
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
-------------------------------------------
mutilated Note is surrendered to the Note Trustee, or the Note Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note, and
(ii) there is delivered to the Note Trustee such security or indemnity as may be
required by it to hold the Note Issuer and the Note Trustee harmless, then, in
the absence of notice to the Note Issuer, the Note Registrar or the Note Trustee
that such Note has been acquired by a protected purchaser, the Note Issuer shall
execute and, upon its request, the Note Trustee shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Note, a replacement Note of like Series (and, if applicable, Class), tenor and
principal amount, bearing a number not contemporaneously outstanding; provided,
--------
however, that if any such destroyed, lost or stolen Note, but not a mutilated
-------
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the Note
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Optional Redemption Date or Mandatory Redemption Date, as applicable,
without surrender thereof. If, after the delivery of such replacement Note or
payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a protected purchaser of the original Note in lieu of which
such replacement Note was issued presents for payment such original Note, the
Note Issuer and the Note Trustee shall be entitled to recover such replacement
Note (or such payment) from the Person to whom it was delivered or any Person
taking such replacement Note from such Person to whom such
23
replacement Note was delivered or any assignee of such Person, except a
protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Note Issuer or the Note Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Note
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Note Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Note Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.07. Persons Deemed Owner. Prior to due presentment for
---------------------
registration of transfer of any Note, the Note Issuer, the Note Trustee and any
agent of the Note Issuer or the Note Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and premium, if any,
and interest on such Note and for all other purposes whatsoever, whether or not
such Note be overdue, and neither the Note Issuer, the Note Trustee nor any
agent of the Note Issuer or the Note Trustee shall be affected by notice to the
contrary.
SECTION 2.08. Payment of Principal, Premium, if any, and Interest;
----------------------------------------------------
Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights
------------------------------------------------------------------------------
Preserved. (a) The Notes shall accrue interest as provided in the related
----------
Series Supplement which shall be substantially in the form set forth in
Exhibit A hereto, at the applicable Note
24
Interest Rate specified therein, and such interest shall be payable on each
Payment Date as specified therein. Any installment of interest, principal or
premium, if any, payable on any Note which is punctually paid or duly provided
for by the Note Issuer on the applicable Payment Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
on the Record Date for such Payment Date, by check mailed first-class, postage
prepaid to such Person's address as it appears on the Note Register on such
Record Date or in such other manner as may be provided in the related Series
Supplement, except that with respect to Notes registered on the Record Date in
the name of the Certificate Trustee payments will be made by wire transfer in
immediately available funds to the account designated by the Certificate Trustee
and except for the final installment of principal and premium, if any, payable
with respect to such Note on a Payment Date which shall be payable as provided
below. The funds represented by any such checks returned undelivered shall be
held in accordance with Section 3.03 hereof.
(b) The principal of each Note of each Series (and, if applicable,
Class) shall be paid, to the extent funds are available therefor in the
Collection Account, in installments on each Payment Date specified in the
related Series Supplement. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes of a Series shall be due and payable, if not
previously paid, on the date on which an Event of Default shall have occurred
and be continuing with respect to such Series, if the Note Trustee or the
Holders of the Notes representing not less than a majority of the Outstanding
Amount of the Notes of all Series have declared the Notes to be immediately due
and payable in the manner provided in Section 5.02. All payments of principal
and premium, if any, on the Notes of any Series shall be made pro rata to the
Noteholders entitled thereto. The Note Trustee shall notify the Person in whose
name a Note is registered at the close of business on the Record Date preceding
the Payment Date on which the Note Issuer expects that the final installment of
principal of and premium, if any, and interest on such Note will be paid. Such
notice shall be mailed no later than five days prior to such final Payment Date
and shall specify that such final installment will be payable only upon
presentation and surrender of such Note and shall specify the place where such
Note may be presented and surrendered for payment of
25
such installment. Notices in connection with redemptions of Notes shall be
mailed to Noteholders as provided in Section 10.02.
(c) If the Note Issuer defaults in a payment of interest on the Notes
of any Series when due, the Note Issuer shall pay such defaulted interest (plus
interest on such defaulted interest at the applicable Note Interest Rate to the
extent lawful). The Note Issuer may pay such defaulted interest (plus interest
on such defaulted interest) to the Persons who are Noteholders on a subsequent
special record date, which date shall be at least five Business Days prior to
the payment date. The Note Issuer shall fix or cause to be fixed any such
special record date and payment date, and, at least 20 days before any such
special record date, the Note Issuer shall mail to each affected Noteholder a
notice that states the special record date, the payment date and the amount of
defaulted interest (plus interest on such defaulted interest) to be paid.
SECTION 2.09. Cancellation. All Notes surrendered for payment,
-------------
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Note Trustee, be delivered to the Note Trustee and shall
be promptly canceled by the Note Trustee. The Note Issuer may at any time
deliver to the Note Trustee for cancelation any Notes previously authenticated
and delivered hereunder which the Note Issuer may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly canceled by the Note
Trustee. No Notes shall be authenticated in lieu of or in exchange for any
Notes canceled as provided in this Section, except as expressly permitted by
this Indenture. All canceled Notes may be held or disposed of by the Note
Trustee in accordance with its standard retention or disposal policy as in
effect at the time.
SECTION 2.10. Amount Unlimited; Authentication and Delivery of Notes.
-------------------------------------------------------
The aggregate principal amount of Notes that may be authenticated and delivered
under this Indenture is unlimited.
Notes of a new Series may from time to time be executed by the Note
Issuer and delivered to the Note Trustee for authentication and thereupon the
same shall be authenticated and delivered by the Note Trustee upon Issuer
26
Request and upon delivery by the Note Issuer to the Note Trustee, and receipt by
the Note Trustee, or the causing to occur by the Note Issuer, of the following;
provided, however, that compliance with such conditions and delivery of such
-------- -------
documents shall only be required in connection with the original issuance of a
Note or Notes of such Series:
(1) Note Issuer Action. An Issuer Order authorizing and directing
-------------------
the execution, authentication and delivery of the Notes by the Note Trustee
and specifying the principal amount of Notes to be authenticated.
(2) Authorizations. An Opinion of Counsel that no authorization,
---------------
approval or consent of any governmental body or bodies at the time having
jurisdiction in the premises is required for the valid issuance,
authentication and delivery of such Notes, except for such registrations as
are required under the Blue Sky and securities laws of any State or such
authorizations, approvals or consents of governmental bodies that have been
obtained and copies of which have been delivered with such Opinion of
Counsel.
(b) An Opinion of Counsel that no authorization, approval or consent
of any governmental body or bodies at the time having jurisdiction in the
premises is required for the valid execution and delivery by the Note
Issuer of each of the Basic Documents to which the Note Issuer is a party,
except for such authorizations, approvals or consents of governmental
bodies that have been obtained and copies of which have been delivered with
such Opinion of Counsel.
(3) Authorizing Certificate. A certificate of an Authorized Officer
------------------------
of the Note Issuer certifying that (i) the Note Issuer has duly authorized
the execution and delivery of this Indenture and the related Series
Supplement and the execution, authentication and delivery of the Notes of
such Series and (ii) that the Series Supplement for such Series of Notes
shall be in the form attached thereto, which Series Supplement shall comply
with the requirements of Section 2.02 hereof.
(4) The Collateral. The Note Issuer shall have
--------------
27
caused all Collateral to have been Granted to the Note Trustee or, if
requested by the Note Trustee, its nominee and will have caused all related
filings with the CPUC pursuant to the PU Code and other filings in
connection with such Grant to have been duly made.
(5) Certificates of the Note Issuer and the Seller. (a) An Officer's
-----------------------------------------------
Certificate from the Note Issuer, dated as of the Series Issuance Date:
(i) to the effect that the Note Issuer is not in Default under
this Indenture and that the issuance of the Notes applied for will not
result in any Default or in any breach of any of the terms, conditions
or provisions of or constitute a default under any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Note Issuer is a party or by which it or its property is bound or any
order of any court or administrative agency entered in any Proceeding
to which the Note Issuer is a party or by which it or its property may
be bound or to which it or its property may be subject; and that all
conditions precedent provided in this Indenture relating to the
authentication and delivery of the Notes applied for have been
complied with;
(ii) to the effect that the Note Issuer has not assigned any
interest or participation in the Collateral except for the lien of
this Indenture; the Note Issuer has the power and right to Grant the
Collateral to the Note Trustee as security hereunder; and the Note
Issuer, subject to the terms of this Indenture, has Granted to the
Note Trustee all of its right, title and interest in and to such
Collateral free and clear of any lien, mortgage, pledge, charge,
security interest, adverse claim or other encumbrance arising as a
result of actions of the Note Issuer or through the Note Issuer,
except the lien of this Indenture;
(iii) to the effect that the Note Issuer has appointed the firm
of Independent certified public accountants as contemplated in
Section 8.06 hereof;
28
(iv) to the effect that attached thereto are duly executed, true
and complete copies of the Sale Agreement or Subsequent Sale
Agreement, as applicable, and the Servicing Agreement; and
(v) stating that all filings with the CPUC pursuant to the PU
Code and all UCC financing statements with respect to the Collateral
which are required to be filed by the terms of the Sale Agreement or
Subsequent Sale Agreement, as applicable, the Servicing Agreement or
this Indenture have been filed as required.
(b) An Officer's Certificate (as defined in the Sale Agreement) from
the Seller, dated as of the Series Issuance Date, to the effect that, in
the case of the Transition Property immediately prior to the conveyance
thereof to the Note Issuer pursuant to the Sale Agreement:
(i) the Seller was the owner of such Transition Property, free
and clear of any lien, mortgage, pledge, charge, security interest,
adverse claim or other encumbrance (subject to any statutory lien in
favor of the holders of the rate reduction bonds issued pursuant to
the Financing Order and the trustee or the representative for such
holders pursuant to Section 843(g) of the PU Code); the Seller had not
assigned any interest or participation in such Transition Property and
the proceeds thereof other than to the Note Issuer pursuant to the
Sale Agreement (or, if assigned, it has been released); the Seller has
the power and right to convey such Transition Property and the
proceeds thereof to the Note Issuer; and the Seller, subject to the
terms of the Sale Agreement, has validly conveyed to the Note Issuer
all of its right, title and interest in and to such Transition
Property and the proceeds thereof, free and clear of any lien,
mortgage, pledge, charge, security interest, adverse claim or other
encumbrance; and
(ii) the attached copies of the Financing Order and Issuance
Advice Letter creating such
29
Transition Property are true and correct.
(6) Opinion of Counsel. Unless otherwise specified in a Series
-------------------
Supplement, an Opinion of Counsel, portions of which may be delivered by
counsel for the Note Issuer, portions of which may be delivered by counsel
for the Seller and the Servicer, and portions of which may be delivered by
counsel for the Trust, dated the Series Issuance Date, in each case subject
to the customary exceptions, qualifications and assumptions contained
therein, to the collective effect that:
(a) the Indenture has been duly qualified under the Trust
Indenture Act and either the Series Supplement has been duly qualified
under the Trust Indenture Act or no such qualification of the Series
Supplement is necessary;
(b) all instruments furnished to the Note Trustee pursuant to
this Indenture conform to the requirements set forth in this Indenture
and constitute all of the documents required to be delivered hereunder
for the Note Trustee to authenticate and deliver the Notes applied
for, and all conditions precedent provided for in this Indenture
relating to the authentication and delivery of the Notes have been
complied with;
(c) the Note Issuer has the power and authority to execute and
deliver the Series Supplement and this Indenture and to issue the
Notes, and each of the Series Supplement and this Indenture, and the
Notes have been duly authorized and the Note Issuer is duly formed and
is validly existing in good standing under the laws of the
jurisdiction of its organization;
(d) the Series Supplement and the Indenture have been duly
authorized, executed and delivered by the Note Issuer;
(e) the Notes applied for have been duly authorized and executed
and, when authenticated in accordance with the provisions of the
Indenture and delivered against payment of the purchase
30
price therefor, will constitute valid and binding obligations of the
Note Issuer, entitled to the benefits of the Indenture and the related
Series Supplement;
(f) this Indenture, the Sale Agreement or the Subsequent Sale
Agreement, as applicable, the Servicing Agreement and the related
Series Supplement are valid and binding agreements of the Note 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);
(g) (I) to the extent that the provisions of Section 843 of the
PU Code apply to the grant of a security interest by the Note Issuer
in the Collateral pursuant to this Indenture, then upon the giving of
value by the Note Trustee to the Note Issuer with respect to the
Collateral, (A) this Indenture creates in favor of the Note Trustee a
security interest in the rights of the Note Issuer in the Collateral,
(B) such security interest is valid and enforceable against the Note
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 843 of the PU Code), and has attached, (C) such
security interest is perfected, and (D) such perfected security
interest is of first priority (subject to any statutory lien in favor
of the holders of the rate reduction bonds issued pursuant to the
Financing Order and the trustee or the representative for such holders
pursuant to Section 843(g) of the PU Code). (II) To the extent that
the provisions of Section 843 of the PU Code do not apply to the grant
of a security interest by the Note Issuer in the Collateral pursuant
to this Indenture, then upon the giving of value by the Note Trustee
to the Note Issuer with respect to the Collateral, (A) this Indenture
creates in favor of the Note Trustee a security
31
interest in the rights of the Note Issuer in the Collateral, and such
security interest is enforceable against the Note Issuer with respect
to such Collateral, (B) such security interest is perfected, and (C)
such perfected security interest is of first priority (subject to any
statutory lien in favor of the holders of the rate reduction bonds
issued pursuant to the Financing Order and the trustee or the
representative for such holders pursuant to Section 843(g) of the PU
Code);
(h) either (A) the Registration Statement covering the Notes and
the Certificates is effective under the Securities Act and, to the
best of such counsel's knowledge and information, no stop order
suspending the effectiveness of such Registration Statement has been
issued under the Securities Act and no proceedings for that purpose
have been initiated or are pending or threatened by the SEC or (B) the
Notes or the Certificates are exempt from the registration
requirements under the Securities Act;
(i) the Note Issuer is not now and, assuming that the Note
Issuer uses the proceeds of the sale of the Notes for the purpose of
acquiring Transition Property in accordance with the terms of the Sale
Agreement, following the sale of the Notes to the Trust and the
Certificates to the underwriter, underwriters, placement agent or
agents or similar Person, neither the Note Issuer nor the Trust will
be required to be registered under the Investment Company Act of 1940,
as amended;
(j) 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);
32
(k) 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);
(l) upon the delivery of the fully executed Sale Agreement to
the Note Issuer and the payment of the purchase price of the
Transition Property by the Note Issuer to the Seller pursuant to the
Sale Agreement, then (I) the transfer of the Transition Property by
the Seller to the Note Issuer pursuant to the Sale Agreement conveys
the Seller's right, title and interest in the Transition Property to
the Note Issuer and will be treated under state law as an absolute
transfer of all of the Seller's right, title, and interest in the
Transition Property, other than for federal and state income and
franchise tax purposes, (II) such transfer of the Transition Property
is perfected, (III) such transfer has priority over any other
assignment of the Transition Property and (IV) the Transition Property
is free and clear of all liens created prior to its transfer to the
Note Issuer pursuant to the Sale Agreement; and
(m) such other matters as the Note Trustee may reasonably
require.
(7) Accountant's Certificate or Opinion. Unless otherwise specified
------------------------------------
in a Series Supplement, a certificate or opinion, addressed to the Note
Issuer and the Note Trustee complying with the requirements of Section
11.01(a) 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 Note 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
33
calculating the initial FTA Charges or, if applicable, the most recent
revised FTA Charges, 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 FTA Charges are sufficient to pay (a) Operating
Expenses when incurred, plus (b) the Overcollateralization Amount, plus (c)
interest on each Series of Notes at their respective Note Interest Rates
when due, plus (d) principal of each Series of Notes in accordance with the
Expected Amortization Schedule.
(8) Rating Agency Condition. The Note Trustee shall receive evidence
------------------------
reasonably satisfactory to it that the Rating Agency Condition will be
satisfied with respect to the issuance of such new Series.
(9) Requirements of Series Supplement. Such other funds, accounts,
----------------------------------
documents certificates, agreements, instruments or opinions as may be
required by the terms of the Series Supplement creating such Series.
(10) Other Requirements. Such other documents, certificates,
-------------------
agreements, instruments or opinions as the Note Trustee may reasonably
require.
SECTION 2.11. Release of Collateral. Subject to Section 11.01, the
----------------------
Note Trustee shall release property from the lien of this Indenture only as
specified in Section 8.02(d) or upon receipt of an Issuer Request accompanied by
an Officer's Certificate, an Opinion of Counsel and Independent Certificates in
accordance with TIA (S)314(c) and 314(d)(l) or an Opinion of Counsel in lieu of
such Independent Certificates to the effect that the TIA does not require any
such Independent Certificates.
34
ARTICLE III
Covenants
---------
SECTION 3.01. Payment of Principal, Premium, if any, and Interest.
----------------------------------------------------
The Note Issuer will duly and punctually pay the principal of and premium, if
any, and interest on the Notes in accordance with the terms of the Notes and
this Indenture. Amounts properly withheld under the Code by any Person from a
payment to any Noteholder of interest or principal or premium, if any, shall be
considered as having been paid by the Note Issuer to such Noteholder for all
purposes of this Indenture.
SECTION 3.02. Maintenance of Office or Agency. The Note Issuer will
--------------------------------
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange. The
Note Issuer hereby initially appoints the Note Trustee to serve as its agent for
the foregoing purposes. The Note Issuer will give prompt written notice to the
Note Trustee of the location, and of any change in the location, of any such
office or agency. If at any time the Note Issuer shall fail to maintain any
such office or agency or shall fail to furnish the Note Trustee with the address
thereof, such surrenders may be made at the Corporate Trust Office, and the Note
Issuer hereby appoints the Note Trustee as its agent to receive all such
surrenders.
SECTION 3.03. Money for Payments To Be Held in Trust. As provided in
---------------------------------------
Section 8.02(a), all payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Collection Account
pursuant to Section 8.02(d) shall be made on behalf of the Note Issuer by the
Note Trustee or by another Paying Agent, and no amounts so withdrawn from the
Collection Account for payments of Notes shall be paid over to the Note Issuer
except as provided in this Section and Section 8.02.
The Note Issuer will cause each Paying Agent other than the Note
Trustee to execute and deliver to the Note Trustee an instrument in which such
Paying Agent shall agree with the Note Trustee (and if the Note Trustee acts as
Paying Agent, it hereby so agrees), subject to the provisions of this Section,
that such Paying Agent will:
35
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Note Trustee notice of any default by the Note Issuer of
which it has actual knowledge (or any other obligor upon the Notes) in the
making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the
written request of the Note Trustee, forthwith pay to the Note Trustee all
sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Note Trustee all sums held by it in trust for the payment of Notes if at
any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Note Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Note Trustee all sums held in trust
by such Paying Agent, such sums to be held by the Note Trustee upon the same
trusts as those upon which the sums were held by such Paying Agent; and upon
such payment by any Paying Agent to the Note Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Note Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years after
such amount has become due and payable shall be
36
discharged from such trust and be paid to the Note Issuer on Issuer Request;
and, subject to Section 11.18, the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Note Issuer for payment thereof
(but only to the extent of the amounts so paid to the Note Issuer), and all
liability of the Note Trustee or such Paying Agent with respect to such trust
money shall thereupon cease; provided, however, that the Note Trustee or such
-------- -------
Paying Agent, before being required to make any such repayment, may at the
expense of the Note Issuer cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Note Issuer. The Note Trustee may also
adopt and employ, at the expense of the Note Issuer, any other reasonable means
of notification of such repayment (including mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Note Trustee or of any Paying
Agent, at the last address of record for each such Holder).
SECTION 3.04. Existence. The Note Issuer will keep in full effect
----------
its existence, rights and franchises as a limited liability company under the
laws of the State of Delaware (unless it becomes, or any successor Note Issuer
hereunder is or becomes, organized under the laws of any other State or of the
United States of America, in which case the Note Issuer will keep in full effect
its existence, rights and franchises under the laws of such other jurisdiction)
and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Indenture, the Notes, the Collateral and
each other instrument or agreement included in the Collateral.
37
SECTION 3.05. Protection of Collateral. The Note Issuer will from
-------------------------
time to time execute and deliver all such supplements and amendments hereto and
all such filings with the CPUC pursuant to the PU Code, financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(i) maintain or 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
Note Trustee and the Noteholders in such Collateral against the claims of
all Persons and parties, including the challenge by any party to the
validity or enforceability of the Financing Order, any Advice Letter or the
Transition Property or any proceeding relating thereto and institute any
action or proceeding necessary to compel performance by the CPUC or the
State of California of any of its obligations or duties under the PU Code,
the Financing Order or any Advice Letter; or
(v) pay any and all taxes levied or assessed upon all or any part of
the Collateral.
The Note Issuer hereby designates the Note Trustee its agent and attorney-in-
fact to execute any filings with the CPUC, financing statement, continuation
statement or other instrument required by the Note Trustee pursuant to this
Section, it being understood that the Note Trustee shall have no such
obligation.
SECTION 3.06. Opinions as to Collateral. (a) On the Series Issuance
--------------------------
Date for each Series, the Note Issuer shall furnish to the Note Trustee an
Opinion of Counsel either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording and filing of this
Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect
38
to the execution and filing of any filings with the CPUC pursuant to the PU
Code, financing statements and continuation statements, as are necessary to
perfect and make effective the lien and security interest of this Indenture and
reciting the details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and security interest
effective.
(b) On or before September 30 in each calendar year, while any Series
is outstanding, beginning at least three months after the issuance of the first
Series of the Notes, the Note Issuer shall furnish to the Note 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 CPUC pursuant to the PU Code, financing statements and continuation
statements as is necessary to maintain the lien and security interest 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. 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 CPUC, 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 September 30 in the following calendar
year.
(c) Prior to the effectiveness of any Subsequent Sale Agreement or
any amendment to the Sale Agreement, the Note Issuer shall furnish to the Note
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all filings, including filings with the CPUC pursuant to the PU Code,
have been executed and filed that are necessary fully to preserve and protect
the interest of the Note Issuer and the Note Trustee in the Transition Property
and the proceeds thereof, and reciting the details of such filings or referring
to prior Opinions of Counsel in which such details are given, or (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest.
39
SECTION 3.07. Performance of Obligations; Servicing; SEC Filings.
----------------------------------------------------
(a) The Note Issuer (i) will diligently pursue any and all actions to enforce
its rights under each instrument or agreement included in the Collateral and
(ii) will not take any action and will use its 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, the Servicing Agreement or such other instrument or agreement.
(b) The Note Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Note Trustee in an Officer's Certificate of the
Note Issuer shall be deemed to be action taken by the Note Issuer. Initially,
the Note Issuer has contracted with the Servicer to assist the Note Issuer in
performing its duties under this Indenture.
(c) The Note Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Collateral, including filing
or causing to be filed all filings with the CPUC pursuant to the PU Code, UCC
financing statements and continuation statements required to be filed by it by
the terms of this Indenture, the Sale Agreement and the Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly permitted therein, the Note Issuer shall not
waive, amend, modify, supplement or terminate any Basic Document or any
provision thereof without the written consent of the Note Trustee (which consent
shall not be withheld if (i) the Note Trustee shall have received an Officer's
Certificate stating that such waiver, amendment, modification, supplement or
termination shall not adversely affect in any material respect the interests of
the Noteholders or the holders of Certificates and (ii) the Rating Agency
Condition shall have been satisfied with respect thereto) or the Holders of at
40
least a majority of the Outstanding Amount of Notes of all Series.
(d) If the Note Issuer shall have knowledge of the occurrence of a
Servicer Default under the Servicing Agreement, the Note Issuer shall promptly
give written notice thereof to the Note Trustee, the Infrastructure Bank and the
Rating Agencies, and shall specify in such notice the action, if any, the Note
Issuer is taking with respect of such default. If a Servicer Default shall
arise from the failure of the Servicer to perform any of its duties or
obligations under the Servicing Agreement with respect to the Transition
Property or the FTA Charges, the Note Issuer shall take all reasonable steps
available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of termination
to the Servicer and the Rating Agencies of the Servicer's rights and powers
pursuant to Section 7.01 of the Servicing Agreement, the Note Issuer shall
appoint a successor Servicer (the "Successor Servicer") with the Note Trustee's
prior written consent thereto (which consent shall not be unreasonably
withheld), and such Successor Servicer shall accept its appointment by a written
assumption in a form acceptable to the Note Issuer and the Note Trustee. A
Person shall qualify as a Successor Servicer only if such Person satisfies the
requirements of the Servicing Agreement. If within 30 days after the delivery
of the notice referred to above, the Note Issuer shall not have obtained such a
new Servicer, the Note Trustee may petition the CPUC or a court of competent
jurisdiction to appoint a Successor Servicer. In connection with any such
appointment, the Note Issuer may make such arrangements for the compensation of
such successor as it and such successor shall agree, subject to the limitations
set forth below and in the Servicing Agreement, and in accordance with Section
5.02 of the Servicing Agreement, the Note Issuer shall enter into an agreement
with such successor for the servicing of the Transition Property (such agreement
to be in form and substance satisfactory to the Note Trustee).
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Servicing Agreement, the Note Trustee shall promptly notify the Note
Issuer, the Noteholders, the Infrastructure Bank and the Rating
41
Agencies. As soon as a Successor Servicer is appointed, the Note Issuer shall
notify the Note Trustee, the Noteholders and the Rating Agencies of such
appointment, specifying in such notice the name and address of such Successor
Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Note Trustee under this Indenture or the rights of the Note
Trustee hereunder, the Note Issuer agrees that it will not, without the prior
written consent of the Note Trustee or the Holders of at least a majority in
Outstanding Amount of the Notes 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, or waive timely performance or observance by the Seller or the
Servicer under the Sale Agreement or the Servicing Agreement, respectively. If
any such amendment, modification, supplement or waiver shall be so consented to
by the Note Trustee or such Holders, the Note Issuer agrees to execute and
deliver, in its own name and at its own expense, such agreements, instruments,
consents and other documents as shall be necessary or appropriate in the
circumstances. The Note Issuer agrees that no such amendment, modification,
supplement or waiver shall adversely affect the rights of the Holders of the
Notes outstanding at the time of any such amendment, modification, supplement or
waiver.
(h) The Note Issuer shall file with the SEC such periodic reports, if
any, as are required from time to time under Section 13 of the Exchange Act.
(i) The Note Issuer shall make all filings required under the Statute
relating to the transfer of the ownership or security interest in the Transition
Property other than those required to be made by the Seller pursuant to the
Basic Documents.
SECTION 3.08. Negative Covenants. So long as any Notes are
-------------------
Outstanding, the Note Issuer shall not:
(i) except as expressly permitted by this Indenture, sell, transfer,
exchange or otherwise dispose of any of the properties or assets of the
Note Issuer, including those included in the Collateral, unless directed to
do so by the Note Trustee in accordance with Article V;
42
(ii) claim any credit on, or make any deduction from the principal or
premium, if any, or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert any
claim against any present or former Noteholder by reason of the payment of
the taxes levied or assessed upon any part of the Collateral;
(iii) terminate its existence or dissolve or liquidate in whole or in
part; or
(iv) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to the Notes 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 of this Indenture and any statutory lien
under Section 843(g) of the PU Code) 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) subject to any statutory
lien under Section 843(g) of the PU Code, permit the lien of this Indenture
not to constitute a valid first priority security interest in the
Collateral.
SECTION 3.09. Annual Statement as to Compliance. The Note Issuer will
----------------------------------
deliver to the Note Trustee, the Certificate Trustee and the Rating Agencies not
later than September 30 of each year (commencing with September 30, 1998), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that
(i) a review of the activities of the Note Issuer during the preceding
twelve months ended June 30 and of performance under this Indenture has
been made under such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on such
review, the Note Issuer has complied with all conditions and covenants
under this Indenture throughout such twelve month period, or, if
43
there has been a default in the compliance of any such condition or
covenant, specifying each such default known to such Authorized Officer and
the nature and status thereof.
SECTION 3.10. Note Issuer May Consolidate, etc., Only on Certain
--------------------------------------------------
Terms. (a) The Note Issuer shall not consolidate or merge with or into any
------
other Person, unless
(i) the Person (if other than the Note Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing under
the laws of the United States of America or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Note Trustee, in form and substance satisfactory to the Note Trustee, the
due and punctual payment of the principal of and premium, if any, and
interest on all Notes and the performance or observance of every agreement
and covenant of this Indenture on the part of the Note Issuer to be
performed or observed, all as provided herein and in the applicable Series
Supplement or Series Supplements;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Note Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Note Trustee) to the effect that
such transaction will not have any material adverse tax consequence to the
Note Issuer, the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Note Issuer shall have delivered to the Note Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this
44
Section 3.10 and that all conditions precedent herein provided for relating
to such transaction have been complied with (including any filing required
by the Exchange Act).
(b) Except as specifically provided herein, the Note Issuer shall not
convey or transfer any of its properties or assets, including those included in
the Collateral, to any Person, unless
(i) the Person that acquires by conveyance or transfer the properties
and assets of the Note Issuer the conveyance or transfer of which is hereby
restricted shall (A) be a United States citizen or a Person organized and
existing under the laws of the United States of America or any State, (B)
expressly assumes, by an indenture supplemental hereto, executed and
delivered to the Note Trustee, in form and substance satisfactory to the
Note Trustee, the due and punctual payment of the principal of and premium,
if any, and interest on all Notes and the performance or observance of
every agreement and covenant of this Indenture on the part of the Note
Issuer to be performed or observed, all as provided herein and in the
applicable Series Supplement or Series Supplements, (C) expressly agrees by
means of such supplemental indenture that all right, title and interest so
conveyed or transferred shall be subject and subordinate to the rights of
Holders of the Notes, (D) unless otherwise provided in the supplemental
indenture referred to in clause (B) above, expressly agrees to indemnify,
defend and hold harmless the Note Issuer against and from any loss,
liability or expense arising under or related to this Indenture and the
Notes and (E) expressly agrees by means of such supplemental indenture that
such Person (or if a group of Persons, then one specified Person) shall
make all filings with the SEC (and any other appropriate Person) required
by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been
45
satisfied with respect to such transaction;
(iv) the Note Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Note Trustee) to the effect that
such transaction will not have any material adverse tax consequence to the
Note Issuer, the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Note Issuer shall have delivered to the Note Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this
Section 3.10 and that all conditions precedent herein provided for relating
to such transaction have been complied with (including any filing required
by the Exchange Act).
SECTION 3.11. Successor or Transferee. (a) Upon any consolidation
------------------------
or merger of the Note Issuer in accordance with Section 3.10(a), the Person
formed by or surviving such consolidation or merger (if other than the Note
Issuer) shall succeed to, and be substituted for, and may exercise every right
and power of, the Note Issuer under this Indenture with the same effect as if
such Person had been named as the Note Issuer herein.
(b) Except as set forth in Section 6.07, upon a conveyance or
transfer of all the assets and properties of the Note Issuer pursuant to Section
3.10(b), PG&E Funding LLC will be released from every covenant and agreement of
this Indenture to be observed or performed on the part of the Note Issuer with
respect to the Notes immediately upon the delivery of written notice to the Note
Trustee stating that PG&E Funding LLC is to be so released.
SECTION 3.12. No Other Business. The Note Issuer shall not engage in
------------------
any business other than financing, purchasing, owning and managing the
Transition Property in the manner contemplated by this Indenture and the Basic
Documents and activities incidental thereto.
SECTION 3.13. No Borrowing. The Note Issuer
-------------
46
shall not issue, incur, assume, guarantee or otherwise become liable, directly
or indirectly, for any indebtedness except for the Notes.
SECTION 3.14. Servicer's Obligations. The Note Issuer shall enforce
-----------------------
the Servicer's compliance with all of the Servicer's material obligations under
the Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.
--------------------------------------------------
Except as otherwise contemplated by the Sale Agreement, the Servicing Agreement
or this Indenture, the Note Issuer shall not make any loan or advance or credit
to, or guarantee (directly or indirectly or by an instrument having the effect
of assuring another's payment or performance on any obligation or capability of
so doing or otherwise), endorse or otherwise become contingently liable,
directly or indirectly, in connection with the obligations, stocks or dividends
of, or own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations, assets or securities of, or any other interest in, or make
any capital contribution to, any other Person.
SECTION 3.16. Capital Expenditures. Other than expenditures in an
---------------------
aggregate amount not to exceed $25,000 in any calendar year, the Note Issuer
shall not make any expenditure (by long-term or operating lease or otherwise)
for capital assets (either realty or personalty).
SECTION 3.17. Non-Routine True-Up Adjustment. The Note Issuer agrees
-------------------------------
that it shall not consent to a Non-Routine True-Up Adjustment pursuant to
Section 4.01(c) of the Servicing Agreement unless the Rating Agency Condition
shall have been satisfied.
SECTION 3.18. Restricted Payments. The Note 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 Note Issuer or
otherwise with respect to any ownership or equity interest or security in or of
the Note 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
47
Default shall have occurred and be continuing, the Note Issuer may make, or
cause to be made, any such distributions to any owner of a beneficial interest
in the Note Issuer or otherwise with respect to any ownership or equity interest
or security in or of the Note Issuer using funds distributed to the Note Issuer
pursuant to Section 8.02(d) to the extent that such distributions would not
cause the book value of the remaining equity in the Note Issuer to decline below
0.5 percent of the original principal amount of all Series of Notes which remain
outstanding. The Note 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 3.19. Notice of Events of Default. The Note Issuer agrees to
----------------------------
give the Note Trustee and the Rating Agencies prompt written notice of each
Event of Default hereunder and each default on the part of the Seller or the
Servicer of its obligations under the Sale Agreement or the Servicing Agreement,
respectively.
SECTION 3.20. Further Instruments and Acts. Upon request of the Note
-----------------------------
Trustee, the Note Issuer will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 3.21. Purchase of Subsequent Transition Property. (a) The
-------------------------------------------
Note Issuer may from time to time purchase Subsequent Transition Property from
the Seller pursuant to a Subsequent Sale Agreement, subject to the conditions
specified in paragraph (b) below.
48
(b) The Note Issuer shall be permitted to purchase from the Seller
Subsequent Transition Property and the proceeds thereof only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Sale Date:
(i) the Seller shall have provided the Note Issuer, the Note Trustee
and the Rating Agencies with written notice, which shall be given not later
than 10 days prior to the related Subsequent Sale Date, specifying the
Subsequent Sale Date for such Subsequent Transition Property and the
aggregate amount of the FTA Charges related to such Subsequent Transition
Property, and shall have provided any information reasonably requested by
any of the foregoing Persons with respect to the Subsequent Transition
Property then being conveyed to the Note Issuer;
(ii) the Seller and the Note Issuer shall have delivered to the Note
Trustee a duly executed Subsequent Sale Agreement in substantially the form
of the Sale Agreement;
(iii) as of such Subsequent Sale Date, the Seller was not insolvent
and will not have been made insolvent by such transfer and the Seller is
not aware of any pending insolvency with respect to itself;
(iv) the Rating Agency Condition shall have been satisfied with
respect to such conveyance;
(v) such conveyance will not result in an adverse tax consequence to
the Note Issuer, the Trust, the Noteholders or the Certificateholders;
(vi) as of such Subsequent Sale Date, no breach by the Seller of its
representations, warranties or covenants in the Sale Agreement and no
Servicer Default shall exist;
(vii) as of such Subsequent Sale Date, the Note Issuer shall have
sufficient funds available to pay the purchase price for the Subsequent
Transition Property to be conveyed on such date and all conditions to the
issuance of one or more Series of Notes intended to
49
provide such funds set forth in Section 2.10 of this Indenture shall have
been satisfied;
(viii) the Note Issuer shall have delivered to the Note Trustee an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b);
(ix) (A) the Note Issuer shall have delivered to the Rating Agencies
any Opinions of Counsel requested by the Rating Agencies and (B) the Note
Issuer shall have delivered to the Note Trustee the Opinion of Counsel
required by Section 3.06(c) of this Indenture; and
(x) subject to any statutory lien under Section 843(g) of the PU Code,
the Seller and the Note Issuer shall have taken any action required to
maintain the first perfected ownership interest of the Note Issuer in the
Transition Property and the proceeds thereof, and the Note Issuer shall
have taken any action required to maintain first perfected security
interest of the Note Trustee in the Transition Property and the proceeds
thereof.
ARTICLE IV
Satisfaction and Discharge; Defeasance
--------------------------------------
SECTION 4.01. (a) Satisfaction and Discharge of Indenture;
----------------------------------------
Defeasance. This Indenture shall cease to be of further effect with respect to
-----------
the Notes of any Series and the Note Trustee, on reasonable demand of and at the
expense of the Note Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes of such
Series, when
(A) either
(1) all Notes of such Series theretofore authenticated and
delivered (other than (i) Notes that have been destroyed, lost or
stolen and that have been replaced or paid as provided in Section 2.06
and (ii) Notes for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Note Issuer
50
and thereafter repaid to the Note Issuer or discharged from such
trust, as provided in Section 3.03) have been delivered to the Note
Trustee for cancelation; or
(2) the Scheduled Maturity Date has occurred with respect to all
Notes of such Series not theretofore delivered to the Note Trustee for
cancelation, and the Note Issuer has irrevocably deposited or caused
to be irrevocably deposited with the Note Trustee cash, in trust for
such purpose, in an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Note
Trustee for cancelation on the Scheduled Maturity Date therefor;
(B) the Note Issuer has paid or caused to be paid all other sums
payable hereunder by the Note Issuer with respect to such Series; and
(C) the Note Issuer has delivered to the Note Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the Note
Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.01(a)
and each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture with respect to Notes
of such Series have been complied with.
(b) Subject to Sections 4.01(c) and 4.02, the Note Issuer at any time
may terminate (i) all its obligations under this Indenture with respect to the
Notes 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 and 3.18 and the operation of Section 5.01(iv) ("Covenant Defeasance
Option") with respect to any Series of Notes. The Note Issuer may exercise the
Legal Defeasance Option with respect to any Series of Notes notwithstanding its
prior exercise of the Covenant Defeasance Option with respect to such Series.
If the Note Issuer exercises the Legal Defeasance Option with respect
to any Series, the maturity of the Notes
51
of such Series may not be accelerated because of an Event of Default. If the
Note Issuer exercises the Covenant Defeasance Option with respect to any Series,
the maturity of the Notes 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 Notes the Note Trustee, on reasonable demand of and at the expense
of the Note Issuer, shall execute proper instruments acknowledging satisfaction
and discharge of the obligations that are terminated pursuant to such exercise.
(c) Notwithstanding Sections 4.01(a) and 4.01(b) above, (i) rights of
registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal, premium, if any, and interest, (iv) Sections 4.03 and 4.04, (v)
the rights, obligations and immunities of the Note Trustee hereunder (including
the rights of the Note Trustee under Section 6.07 and the obligations of the
Note Trustee under Section 4.03) and (vi) the rights of Noteholders as
beneficiaries hereof with respect to the property deposited with the Note
Trustee payable to all or any of them, shall survive until the Notes 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) 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 Note Issuer may exercise
-------------------------
the Legal Defeasance Option or the Covenant Defeasance Option with respect to
any Series of Notes only if:
(a) the Note Issuer irrevocably deposits or causes to be deposited in
trust with the Note Trustee cash or U.S. Government Obligations for the
payment of principal of and premium, if any, and interest on such Notes to
the Scheduled Maturity Dates, Optional Redemption Date or Mandatory
Redemption Date therefor, as applicable;
(b) the Note Issuer delivers to the Note Trustee a
52
certificate from a nationally recognized firm of Independent accountants
expressing its opinion that the payments of principal and interest when due
and without reinvestment on the deposited U.S. Government Obligations plus
any deposited cash without investment will provide cash at such times and
in such amounts (but, in the case of the Legal Defeasance Option only, not
more than such amounts) as will be sufficient to pay in respect of the
Notes 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 Optional Redemption Price or Mandatory Redemption Price,
as applicable, therefor on the Optional Redemption Date or Mandatory
Redemption Date, as applicable, therefor and (iii) interest when due;
(c) in the case of the Legal Defeasance Option, 91 days pass after the
deposit is made and during the 91-day period no Default specified in
Section 5.01(v) or (vi) occurs which is continuing at the end of the
period;
(d) no Default has occurred and is continuing on the day of such
deposit and after giving effect thereto;
(e) in the case of an exercise of the Legal Defeasance Option, the
Note Issuer shall have delivered to the Note Trustee an Opinion of Counsel
stating that (i) the Note Issuer has received from, or there has been
published by, the Internal Revenue Service a ruling, or (ii) since the date
of execution of this Indenture, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the Notes of such
Series will not recognize income, gain or loss for Federal income tax
purposes as a result of such legal defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such legal defeasance had not
occurred;
(f) in the case of an exercise of the Covenant
53
Defeasance Option, the Note Issuer shall have delivered to the Note Trustee
an Opinion of Counsel to the effect that the Holders of the Notes of such
Series will not recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(g) the Note Issuer delivers to the Note Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the satisfaction and discharge of the Notes of such Series to
the extent contemplated by this Article IV have been complied with.
Before or after a deposit pursuant to this Section 4.02 with respect
to any Series of Notes, the Note Issuer may make arrangements satisfactory to
the Note Trustee for the redemption of such Notes at a future date in accordance
with Article X.
SECTION 4.03. Application of Trust Money. All moneys or U.S.
---------------------------
Government Obligations deposited with the Note Trustee pursuant to Section 4.01
or 4.02 hereof shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Paying Agent, as the Note Trustee may determine, to the Holders of
the particular Notes for the payment or redemption of which such moneys have
been deposited with the Note Trustee, of all sums due and to become due thereon
for principal, premium, if any, and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the
Servicing Agreement or required by law.
SECTION 4.04. Repayment of Moneys Held by Paying Agent. In
-----------------------------------------
connection with the satisfaction and discharge of this Indenture or the Covenant
Defeasance Option or Legal Defeasance Option with respect to the Notes of any
Series, all moneys then held by any Paying Agent other than the Note Trustee
under the provisions of this Indenture with respect to such Notes shall, upon
demand of the Note Issuer, be paid to the Note Trustee to be held and applied
according to Sec-
54
tion 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" with respect to
------------------
any Series, 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 Note when the same
becomes due and payable, and such default shall continue for a period of
five days; or
(ii) default in the payment of the then unpaid principal of any Note
of any Series on the Final Maturity Date for such Series; or
(iii) default in the payment of the Optional Redemption Price for any
Note on the Optional Redemption Date therefor, or a default in the payment
of the Mandatory Redemption Price for the Notes on the Mandatory Redemption
Date;
(iv) default in the observance or performance of any covenant or
agreement of the Note Issuer made in this Indenture (other than a covenant
or agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any representation
or warranty of the Note Issuer made in this Indenture or in any certificate
or other writing delivered pursuant hereto or in connection herewith
proving to have been incorrect in any material respect as of the time when
the same shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of 30 days after there shall have been
given, by registered or certified mail, to the Note Issuer by the
55
Note Trustee or to the Note Issuer and the Note Trustee by the Holders of
at least 25 percent of the Outstanding Amount of the Notes of such 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; or
(v) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Note Issuer or any
substantial part of the Collateral in an involuntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Note Issuer or
for any substantial part of the Collateral, or ordering the winding-up or
liquidation of the Note Issuer's affairs, and such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or
(vi) the commencement by the Note Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Note Issuer to the entry of
an order for relief in an involuntary case under any such law, or the
consent by the Note Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Note Issuer or for any substantial part of the Collateral,
or the making by the Note Issuer of any general assignment for the benefit
of creditors, or the failure by the Note Issuer generally to pay its debts
as such debts become due, or the taking of action by the Note Issuer in
furtherance of any of the foregoing.
The Note Issuer shall deliver to a Responsible Officer of the Note
Trustee and the Rating Agencies, within five days after an Authorized Officer
has knowledge of the occurrence thereof, written notice in the form of an
Officer's Certificate of any event which with the giving of notice and the lapse
of time would become an Event of Default under clause (iv), its status and what
action the Note Issuer is taking or proposes to take with respect thereto.
56
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.
----------------------------------------------------
If an Event of Default should occur and be continuing with respect to any
Series, then and in every such case the Note Trustee or the Holders of Notes
representing not less than a majority of the Outstanding Amount of the Notes of
all Series may declare all the Notes to be immediately due and payable, by a
notice in writing to the Note Issuer (and to the Note Trustee if given by Note
holders), and upon any such declaration the unpaid principal amount of the Notes
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 Note Trustee as hereinafter in this Article V provided, the
Holders of Notes representing a majority of the Outstanding Amount of the Notes
of all Series, by written notice to the Note Issuer and the Note Trustee, may
rescind and annul such declaration and its consequences if:
(i) the Note Issuer has paid or deposited with the Note Trustee a sum
sufficient to pay
(A) all payments of principal of and premium, if any, and
interest on all Notes of all Series and all other amounts that would
then be due hereunder or upon such Notes if the Event of Default
giving rise to such acceleration had not occurred; and
(B) all sums paid or advanced by the Note Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of
the Note Trustee and its agents and counsel; and
(ii) all Events of Default with respect to all Series, other than the
nonpayment of the principal of the Notes 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.
57
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Note Trustee. (a) The Note Issuer covenants that if (i) default is made in the
-------------
payment of any interest on any Note of a Series when the same becomes due and
payable, and such default continues for a period of five days, (ii) default is
made in the payment of the then unpaid principal of any Note of any Series on
the Final Maturity Date for such Note or (iii) default is made in the payment of
the Optional Redemption Price or Mandatory Redemption Price, as applicable, for
any Note on the Optional Redemption Date or Mandatory Redemption Date, as
applicable, therefor, the Note Issuer will, upon demand of the Note Trustee, pay
to it, for the benefit of the Holders of the Notes of such Series, the whole
amount then due and payable on such Notes for principal, premium, if any, and
interest, with interest upon the overdue principal and premium, if any, and, to
the extent payment at such rate of interest shall be legally enforceable, upon
overdue installments of interest, at the respective rate borne by the Notes of
such Series or the applicable Class of such Series and in addition thereto such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Note Trustee and its agents and counsel.
(b) Subject to Section 11.18, in case the Note Issuer shall fail
forthwith to pay such amounts upon such demand, the Note Trustee, in its own
name and as trustee of an express trust, may institute a Proceeding for the
collection of the sums so due and unpaid, and may prosecute such Proceeding to
judgment or final decree, and may enforce the same against the Note Issuer or
other obligor upon such Notes and collect in the manner provided by law out of
the property of the Note Issuer or other obligor upon such Notes, wherever
situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing with respect to
any Series, the Note Trustee may, as more particularly provided in Section 5.04,
in its discretion, proceed to protect and enforce its rights and the rights of
the Noteholders of such Series, by such appropriate Proceedings as the Note
Trustee shall deem most effective to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power
58
granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Note Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Note Issuer or
any other obligor upon the Notes or any Person having or claiming an ownership
interest in the Collateral, Proceedings under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Note Issuer or its property or such other obligor or
Person, or in case of any other comparable judicial Proceedings relative to the
Note Issuer or other obligor upon the Notes of any Series, or to the creditors
or property of the Note Issuer or such other obligor, the Note Trustee,
irrespective of whether the principal of any Notes of any Series shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Note Trustee shall have made any demand pursuant to
the provisions of this Section, shall be entitled and empowered, by intervention
in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of the
Notes and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Note Trustee (including any
claim for reasonable compensation to the Note Trustee and each predecessor
Note Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances
made, by the Note Trustee and each predecessor Note Trustee, except as a
result of negligence or bad faith) and of the Noteholders allowed in such
Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
and
(iii) to collect and receive any moneys or other
59
property payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Noteholders and of the
Note Trustee on their behalf;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Note Trustee, and, in the event that the Note Trustee shall
consent to the making of payments directly to such Noteholders, to pay to the
Note Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Note Trustee, each predecessor Note Trustee and their
respective agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Note Trustee and each predecessor Note
Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Note
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Note Trustee to vote in respect of the claim of any Noteholder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes of any Series, may be enforced by the Note
Trustee without the possession of any of the Notes of such Series or the
production thereof in any trial or other Proceedings relative thereto, and any
such action or proceedings instituted by the Note Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment,
subject to the payment of the expenses, disbursements and compensation of the
Note Trustee, each predecessor Note Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Holders of the Notes of such
Series.
(g) In any Proceedings brought by the Note Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Note Trustee shall be a party), the Note Trustee shall
60
be held to represent all the Holders of the Notes, and it shall not be necessary
to make any Noteholder a party to any such Proceedings.
SECTION 5.04. Remedies; Priorities. (a) If an Event of Default shall
---------------------
have occurred and be continuing with respect to a Series, the Note Trustee may
do one or more of the following (subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on the Notes of such
Series or under this Indenture with respect thereto, whether by declaration
or otherwise, enforce any judgment obtained, and collect from the Note
Issuer and any other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC or the PU
Code and take any other appropriate action to protect and enforce the
rights and remedies of the Note Trustee and the Holders of the Notes of
such Series; and
(iv) sell the Collateral or any portion thereof or rights or interest
therein, at one or more public or private sales called and conducted in any
manner permitted by law;
provided, however, that the Note Trustee may not sell or otherwise liquidate any
-------- -------
portion of the Collateral following an Event of Default, other than an Event of
Default described in Section 5.01(i), (ii) or (iii), with respect to any Series
unless (A) the Holders of 100 percent of the Outstanding Amount of the Notes of
all Series consent thereto, (B) the proceeds of such sale or liquidation
distributable to the Noteholders of all Series are sufficient to discharge in
full all amounts then due and unpaid upon such Notes for principal, premium, if
any, and interest after taking into account payment of all amounts due prior
thereto pursuant to the priorities set forth in Section 8.02(d) or (C) the Note
Trustee determines that the Collateral will not continue to provide sufficient
funds for
61
all payments on the Notes of all Series as they would have become due if the
Notes had not been declared due and payable, and the Note Trustee obtains the
consent of Holders of 66-2/3 percent of the Outstanding Amount of the Notes of
all Series. In determining such sufficiency or insufficiency with respect to
clause (B) and (C), the Note Trustee may, but need not, obtain and conclusively
rely upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
(b) If the Note Trustee collects any money pursuant to this Article
V, it shall pay out such money in accordance with the priorities set forth in
Section 8.02(d).
SECTION 5.05. Optional Preservation of the Collateral. If the Notes
----------------------------------------
of all Series have been declared to be due and payable under Section 5.02
following an Event of Default and such declaration and its consequences have not
been rescinded and annulled, the Note Trustee may, but need not, elect to
maintain possession of the Collateral. It is the desire of the parties hereto
and the Noteholders that there be at all times sufficient funds for the payment
of principal of and premium, if any, and interest on the Notes, and the Note
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Collateral. In determining whether to maintain
possession of the Collateral, the Note Trustee may, but need not, obtain and
conclusively rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Collateral for such purpose.
SECTION 5.06. Limitation of Suits. No Holder of any Note of any
--------------------
Series shall have any right to institute any Proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless:
(i) such Holder previously has given written notice to the Note
Trustee of a continuing Event of Default with respect to such Series;
(ii) the Holders of not less than 25 percent of
62
the Outstanding Amount of the Notes of all Series have made written request
to the Note Trustee to institute such Proceeding in respect of such Event
of Default in its own name as Note Trustee hereunder;
(iii) such Holder or Holders have offered to the Note Trustee
indemnity satisfactory to it against the costs, expenses and liabilities to
be incurred in complying with such request;
(iv) the Note Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceedings;
and
(v) no direction inconsistent with such written request has been given
to the Note Trustee during such 60-day period by the Holders of a majority
of the Outstanding Amount of the Notes of all Series;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Note Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes of
all Series, the Note 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 Noteholders To Receive
----------------------------------------------
Principal, Premium, if any, and Interest. Notwithstanding any other provisions
-----------------------------------------
in this Indenture, the Holder of any Note shall have the right, which is
absolute and unconditional, (a) to receive payment of (i) the interest, if any,
on such Note on or after the due dates thereof expressed in such Note or in this
Indenture, (ii) the unpaid principal, if any, of such Notes on or after the
Final Maturity Date therefor or (iii) in the case of redemption, receive payment
of the unpaid principal and
63
premium, if any, and interest, if any, on such Note on or after the Optional
Redemption Date or Mandatory Redemption Date, as applicable, therefor and (b) to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.
SECTION 5.08. Restoration of Rights and Remedies. If the Note Trustee
-----------------------------------
or any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Note Trustee or to such
Noteholder, then and in every such case the Note Issuer, the Note Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Note Trustee and the Noteholders shall
continue as though no such Proceeding had been instituted.
SECTION 5.09. Rights and Remedies Cumulative. No right or remedy
-------------------------------
herein conferred upon or reserved to the Note Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10. Delay or Omission Not a Waiver. No delay or omission
-------------------------------
of the Note Trustee or any Noteholder to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the Note
Trustee or to the Noteholders may be exercised from time to time, and as often
as may be deemed expedient, by the Note Trustee or by the Noteholders, as the
case may be.
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SECTION 5.11. Control by Noteholders. The Holders of a majority of
-----------------------
the Outstanding Amount of the Notes 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 Note Trustee with respect to the Notes of such Series or
Class or Classes or exercising any trust or power conferred on the Note 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 Note Trustee to sell or liquidate the Collateral shall be by the
Holders of Notes representing not less than 100 percent of the
Outstanding Amount of the Notes of all Series;
(iii) if the conditions set forth in Section 5.05 have been satisfied
and the Note Trustee elects to retain the Collateral pursuant to such
Section, then any direction to the Note Trustee by Holders of Notes
representing less than 100 percent of the Outstanding Amount of the Notes
of all Series to sell or liquidate the Collateral shall be of no force and
effect; and
(iv) the Note Trustee may take any other action deemed proper by the
Note Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.01, the Note Trustee need not take
-------- -------
any action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.12. Waiver of Past Defaults. Prior to the declaration of
------------------------
the acceleration of the maturity of the Notes of all Series as provided in
Section 5.02, the Holders of Notes of not less than a majority of the
Outstanding Amount of the Notes of all Series may waive any past Default or
Event of Default and its consequences except a Default (a) in payment of
principal of or premium, if any, or interest on any of the Notes or (b) in
respect of a covenant or provision hereof which cannot be modified or amended
65
without the consent of the Holder of each Note of all Series or Classes
affected. In the case of any such waiver, the Note Issuer, the Note Trustee and
the Holders of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13. Undertaking for Costs. All parties to this Indenture
----------------------
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Note Trustee for any action taken, suffered or omitted by it as Note
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to (a) any suit instituted by the Note Trustee, (b) any
suit instituted by any Noteholder, or group of Noteholders, in each case holding
in the aggregate more than 10 percent of the Outstanding Amount of the Notes of
a Series or (c) any suit instituted by any Noteholder for the enforcement of the
payment of (i) interest on any Note on or after the due dates expressed in such
Note and in this Indenture, (ii) the unpaid principal, if any, of any Note on or
after the Final Maturity Date therefor or (iii) in the case of redemption, the
unpaid principal of and premium, if any, and interest on any Note on or after
the Optional Redemption Date or Mandatory Redemption Date, as applicable,
therefor.
SECTION 5.14. Waiver of Stay or Extension Laws. The Note Issuer
---------------------------------
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or
66
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 Note Issuer (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the Note
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 5.15. Action on Notes. The Note Trustee's right to seek and
----------------
recover judgment on the Notes or under this 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 Note Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Note Trustee against the Note Issuer or by the
levy of any execution under such judgment upon any portion of the Collateral or
upon any of the assets of the Note Issuer.
SECTION 5.16. Performance and Enforcement of Certain Obligations.
---------------------------------------------------
(a) Promptly following a request from the Note Trustee to do so and at the Note
Issuer's expense, the Note Issuer agrees to take all such lawful action as the
Note Trustee may request to compel or secure the performance and observance by
the Seller and the Servicer, as applicable, of each of their obligations to the
Note Issuer under or in connection with the Sale Agreement and the Servicing
Agreement, respectively, in accordance with the terms thereof, and to exercise
any and all rights, remedies, powers and privileges lawfully available to the
Note Issuer under or in connection with the Sale Agreement and the Servicing
Agreement, respectively, to the extent and in the manner directed by the Note
Trustee, including the transmission of notices of default on the part of the
Seller or the Servicer thereunder and the institution of legal or administrative
actions or proceedings to compel or secure performance by the Seller or the
Servicer of each of their obligations under the Sale Agreement and the Servicing
Agreement, respectively.
(b) If an Event of Default has occurred, the Note Trustee may, and,
at the direction (which direction shall be
67
in writing or by telephone (confirmed in writing promptly thereafter)) of the
Holders of 66-2/3 percent of the Outstanding Amount of the Notes of all Series
shall, subject to Article VI, exercise all rights, remedies, powers, privileges
and claims of the Note Issuer against the Seller or the Servicer under or in
connection with the Sale Agreement and the Servicing Agreement, respectively,
including the right or power to take any action to compel or secure performance
or observance by the Seller or the Servicer of each of their obligations to the
Note Issuer thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Sale Agreement or the Servicing
Agreement, respectively, and any right of the Note Issuer to take such action
shall be suspended.
ARTICLE VI
The Note Trustee
----------------
SECTION 6.01. Duties of Note Trustee. (a) If an Event of Default
-----------------------
has occurred and is continuing, the Note Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Note Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the Note
Trustee; and
(ii) in the absence of bad faith on its part, the Note Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Note Trustee and conforming to the requirements of this Indenture;
however, the Note Trustee shall examine the certificates and opinions to
determine whether or not they conform to the
68
requirements of this Indenture.
(c) The Note Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Note Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
Note Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Note Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Note Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Note Trustee shall not be liable for interest on any money
received by it except as the Note Trustee may agree in writing with the Note
Issuer.
(f) Money held in trust by the Note Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture, the Sale Agreement and the Servicing Agreement.
(g) No provision of this Indenture shall require the Note Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayments
of such funds or indemnity satisfactory to it against such risk or liability is
not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Note Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
69
(i) In the event that the Trustee is also acting as Paying Agent or
Note Registrar hereunder, this Article VI shall also be afforded to such Paying
Agent or Note Registrar.
SECTION 6.02. Rights of Note Trustee. (a) The Note Trustee may
-----------------------
conclusively rely and shall be fully protected in relying on any document
believed by it to be genuine and to have been signed or presented by the proper
person. The Note Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Note Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Note Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Note 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 Note 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 Note 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 Note Trustee's conduct does not
--------- -------
constitute wilful misconduct, negligence or bad faith.
(e) The Note Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes 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 Note Trustee. The Note Trustee in
----------------------------------
its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Note Issuer or its affiliates with the same
rights it would have if it were not Note Trustee. Any
70
Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same
with like rights. However, the Note Trustee must comply with Sections 6.11 and
6.12.
SECTION 6.04. Note Trustee's Disclaimer. The Note Trustee shall not
--------------------------
be responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Note Issuer's
use of the proceeds from the Notes, and it shall not be responsible for any
statement of the Note Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Note
Trustee's certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is
-------------------
continuing with respect to any Series and if it is actually known to a
Responsible Officer of the Note Trustee, the Note Trustee shall mail to each
Holder of Notes 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 and premium,
if any, or interest on any Note, the Note Trustee may 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 Noteholders.
SECTION 6.06. Reports by Note Trustee to Holders.
-----------------------------------
(a) So long as the Note Trustee is the Note Registrar and Paying
Agent, it shall deliver to each Noteholder such information in its possession as
may be required to enable such holder to prepare its Federal and state income
tax returns.
(b) With respect to each Series of Notes, on or prior to each Payment
Date therefor, the Note Trustee will deliver to each Holder of Notes on such
Payment Date a statement as provided and prepared by the Servicer which will
include (to the extent applicable) the following information (and any other
information so specified in the applicable Series Supplement) as to the Notes of
such Series with respect to such Payment Date or the period since the previous
Payment Date, as applicable:
(i) the amount of the distribution to Noteholders allocable to
principal;
71
(ii) the amount of the distribution to Noteholders allocable to
interest;
(iii) the aggregate outstanding Principal Balance of the Notes, after
giving effect to payments allocated to principal reported under (i) above;
and
(iv) the Principal Balance and the Projected Principal Balance as of
such Payment Date, after giving effect to distributions to be made on such
Payment Date.
(c) The Note Issuer shall send a copy of each of the Certificate of
Compliance delivered to it pursuant to Section 3.03 of the Servicing Agreement
and the Annual Accountant's Report delivered to it pursuant to Section 3.04 of
the Servicing Agreement to the Rating Agencies. A copy of such certificate and
report may be obtained by any Noteholder by a request in writing to the Note
Trustee.
SECTION 6.07. Compensation and Indemnity. The Note Issuer shall pay
---------------------------
to the Note Trustee from time to time reasonable compensation for its services.
The Note Trustee's compensation shall not be limited by any law on compensation
of a trustee of an express trust. The Note Issuer shall reimburse the Note
Trustee for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Note Trustee's agents, counsel, accountants
and experts. The Note Issuer shall indemnify the Note Trustee and its officers,
directors, employees and agents against any and all loss, liability or expense
(including attorneys' fees and expenses) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder. The
Note Trustee shall notify the Note Issuer as soon as is reasonably practicable
of any claim for which it may seek indemnity. Failure by the Note Trustee to so
notify the Note Issuer shall not relieve the Note Issuer of its obligations
hereunder. The Note Issuer shall defend the claim and the Note Trustee may have
separate counsel and the Note Issuer shall pay the fees and expenses of such
counsel. The Note Issuer need not reimburse any expense or
72
indemnify against any loss, liability or expense incurred by the Note Trustee
through the Note Trustee's own wilful misconduct, negligence or bad faith.
The Note Issuer's payment obligations to the Note Trustee pursuant to
this Section shall survive the discharge of this Indenture or the earlier
resignation or removal of the Note Trustee. When the Note Trustee incurs
expenses after the occurrence of a Default specified in Section 5.01(v) or (vi)
with respect to the Note Issuer, the expenses are intended to constitute
expenses of administration under Title 11 of the United States Code or any other
applicable Federal or state bankruptcy, insolvency or similar law.
SECTION 6.08. Replacement of Note Trustee. The Note Trustee may
----------------------------
resign at any time by so notifying the Note Issuer, provided that no such
resignation shall be effective until either (a) the Collateral has been
completely liquidated and the proceeds of the liquidation distributed to the
Noteholders or (b) a successor trustee having the qualifications set forth in
Section 6.11 has been designated and has accepted such trusteeship. The Holders
of a majority in Outstanding Amount of the Notes of all Series may remove the
Note Trustee by so notifying the Note Trustee and may appoint a successor Note
Trustee. The Note Issuer shall remove the Note Trustee if:
(i) the Note Trustee fails to comply with Section 6.11;
(ii) the Note Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Note
Trustee or its property; or
(iv) the Note Trustee otherwise becomes incapable of acting.
If the Note Trustee resigns or is removed or if a vacancy exists in
the office of Note Trustee for any reason (the Note Trustee in such event being
referred to herein as the retiring Note Trustee), the Note Issuer shall promptly
appoint a successor Note Trustee.
A successor Note Trustee shall deliver a written
73
acceptance of its appointment to the retiring Note Trustee and to the Note
Issuer. Thereupon the resignation or removal of the retiring Note Trustee shall
become effective, and the successor Note Trustee shall have all the rights,
powers and duties of the Note Trustee under this Indenture. The successor Note
Trustee shall mail a notice of its succession to Noteholders. The retiring Note
Trustee shall promptly transfer all property held by it as Note Trustee to the
successor Note Trustee.
If a successor Note Trustee does not take office within 60 days after
the retiring Note Trustee resigns or is removed, the retiring Note Trustee, the
Note Issuer or the Holders of a majority in Outstanding Amount of the Notes of
all Series may petition any court of competent jurisdiction for the appointment
of a successor Note Trustee.
If the Note Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the Note
Trustee and the appointment of a successor Note Trustee.
Notwithstanding the replacement of the Note Trustee pursuant to this
Section, the Note Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Note Trustee.
SECTION 6.09. Successor Note Trustee by Merger. If the Note Trustee
---------------------------------
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Note Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Note Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Note Trustee may adopt the certificate of authentication
of any predecessor trustee, and deliver such Notes so authenticated; and in case
at that time any of the Notes shall not have been authenticated, any successor
to the Note Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor to the Note Trustee; and
in all such
74
cases such certificates shall have the full force which it is anywhere in the
Notes or in this Indenture provided that the certificate of the Note 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 Trust may at the time be located, the Note Trustee shall have the power
and may execute and deliver all instruments to appoint one or more Persons to
act as a co-trustee or co-trustees, or separate trustee or separate trustees, of
all or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders, such title to the Trust, or any
part hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Note Trustee may consider
necessary or desirable. 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 Noteholders 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 Note Trustee shall be conferred or imposed upon and exercised or
performed by the Note Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is
not authorized to act separately without the Note Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed the Note Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to
the Collateral or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Note Trustee;
75
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Note Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Note Trustee
shall be deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Note Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Note Trustee. Every such instrument shall be filed with the
Note Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Note Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Note Trustee, to the extent permitted by law, without the appointment of
a new or successor trustee.
SECTION 6.11. Eligibility; Disqualification. The Note Trustee shall
------------------------------
at all times satisfy the requirements of TIA (S) 310(a) and Section 26(a)(i) of
the Investment Company Act of 1940. The Note Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition and it shall have a long term debt rating
of A (or the equivalent thereof) or better by all of the Rating Agencies from
which a rating is available. The Note Trustee shall comply with TIA (S) 310(b),
including the
76
optional provision permitted by the second sentence of TIA (S) 310(b)(9);
provided, however, that there shall be excluded from the operation of TIA (S)
-------- -------
310(b)(1) any indenture or indentures under which other securities of the Note
Issuer are outstanding if the requirements for such exclusion set forth in TIA
(S) 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Note Issuer.
------------------------------------------------------
The Note Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Note Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated.
SECTION 6.13 Representations and Warranties of Note Trustee. The
----------------------------------------------
Note Trustee hereby represents and warrants that:
(a) The Note Trustee is a national banking association, validly
existing and in good standing under the laws of the United States; and
(b) The Note Trustee has full power, authority and legal rights to
execute, deliver and perform this Indenture and the Basic Documents to which the
Note Trustee is a party and has taken all necessary action to authorize the
execution, delivery, and performance by it of this Indenture and such Basic
Documents.
ARTICLE VII
Noteholders' Lists and Reports
------------------------------
SECTION 7.01. Note Issuer To Furnish Note Trustee Names and Addresses
-------------------------------------------------------
of Noteholders. The Note Issuer will furnish or cause to be furnished to the
---------------
Note Trustee (a) not more than five days after the earlier of (i) each Record
Date 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 Note Trustee may
reasonably require, of the names and addresses of the Holders of Notes of such
Series as of such Record Date, (b) at such other times as the Note Trustee may
request in writing, within 30 days after receipt by the Note Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as the
-------- -------
Note Trustee is the Note Registrar, no such list
77
shall be required to be furnished.
SECTION 7.02. Preservation of Information; Communications to
----------------------------------------------
Noteholders. (a) The Note Trustee shall preserve, in as current a form as is
------------
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Note Trustee as provided in
Section 7.01 and the names and addresses of Holders of Notes received by the
Note Trustee in its capacity as Note Registrar. The Note Trustee may destroy
any list furnished to it as provided in such Section 7.01 upon receipt of a new
list so furnished.
(b) Noteholders may communicate pursuant to TIA (S) 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Note Issuer, the Note Trustee and the Note Registrar shall
have the protection of TIA (S) 312(c).
SECTION 7.03. Reports by Note Issuer. (a) The Note Issuer shall:
-----------------------
(i) so long as the Note Issuer is required to file such documents with
the SEC, file with the Note Trustee, within 15 days after the Note Issuer
is required to file the same with the SEC, 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 SEC may from time to time by rules and
regulations prescribe) which the Note Issuer may be required to file with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Note Trustee and the SEC in accordance with rules
and regulations prescribed from time to time by the SEC such additional
information, documents and reports with respect to compliance by the Note
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 Note Trustee (and the Note Trustee shall transmit
by mail to all Noteholders described in TIA (S) 313(c)) such summaries of
any information, documents and reports required to be filed
78
by the Note Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a)
as may be required by rules and regulations prescribed from time to time by
the SEC.
(b) Unless the Note Issuer otherwise determines, the fiscal year of
the Note Issuer shall end on December 31 of each year.
SECTION 7.04. Reports by Note Trustee. If required by TIA (S)
------------------------
313(a), within 60 days after September 30 of each year, commencing with the year
after the issuance of the Notes of any Series, the Note Trustee shall mail to
each Holder of Notes of such Series as required by TIA (S) 313(c) a brief report
dated as of such date that complies with TIA (S) 313(a). The Note Trustee also
shall comply with TIA (S) 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 Noteholders shall
be filed by the Note Trustee with the SEC and each stock exchange, if any, on
which the Notes are listed. The Note Issuer shall notify the Note Trustee if
and when the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
------------------------------------
SECTION 8.01. Collection of Money. Except as otherwise expressly
--------------------
provided herein, the Note Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Note Trustee pursuant to this Indenture. The Note 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 Note Trustee may take such action as may be
appropriate to enforce such payment or performance, subject to Article VI,
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default
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or Event of Default under this Indenture and any right to proceed thereafter as
provided in Article V.
SECTION 8.02. Collection Account. (a) Prior to the Series Issuance
-------------------
Date for the first Series issued hereunder, the Note Issuer shall open, at the
Note Trustee's Corporate Trust Office, or at another Eligible Institution, one
or more segregated trust accounts in the Note Trustee's name for the deposit of
Estimated FTA Collections (collectively, the "Collection Account"). The
Collection Account will consist of four subaccounts: a general subaccount (the
"General Subaccount"), a reserve subaccount (the "Reserve Subaccount"), a
subaccount for the Overcollateralization Amount (the "Overcollateralization
Subaccount") and a capital subaccount (the "Capital Subaccount"). All amounts
in the Collection Account not allocated to any other subaccount shall be
allocated to the General Subaccount. Prior to the initial Payment Date, all
amounts in the Collection Account (other than funds deposited into the Capital
Subaccount, up to the Required Capital Level) shall be allocated to the General
Subaccount. All references to the Collection Account shall be deemed to include
reference to all subaccounts contained therein. Withdrawals from and deposits to
each of the foregoing subaccounts of the Collection Account shall be made as set
forth in Section 8.02(d) and (e). The Collection Account shall at all times be
maintained in an Eligible Deposit Account and only the Note Trustee shall have
access to the Collection Account for the purpose of making deposits in and
withdrawals from the Collection Account in accordance with this 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 Note Trustee in the Collection Account as part
of the Collateral as herein provided.
(b) The Note Trustee shall have sole dominion and exclusive control
over all moneys in the Collection Account and shall apply such amounts therein
as provided in this Section 8.02. The Note Trustee shall also pay from the
Collection Account any amounts requested to be paid by the Servicer pursuant to
Section 6.11(d)(ii) of the Servicing Agreement.
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(c) FTA Collections shall be deposited in the General Subaccount as
provided in Section 6.11 of the Servicing Agreement. All deposits to and
withdrawals from the Collection Account and all allocations to the subaccounts
of the Collection Account shall be made by the Note Trustee in accordance with
the written instructions provided by the Servicer in the Monthly Servicer's
Certificate and the Quarterly Servicer's Certificate, as applicable.
(d) On each Payment Date for any Series of Notes, the Note Trustee
shall apply all amounts on deposit in the Collection Account, including all net
earnings thereon, to pay the following amounts, in accordance with the Quarterly
Servicer's Certificate, in the following priority:
(i) all amounts owed by the Note Issuer to the Note Trustee (including
legal fees and expenses) shall be paid to the Note Trustee (subject to
Section 6.07) and all amounts owed to the Certificate Trustee and the
Delaware Trustee under the Trust Agreement shall be paid to the Certificate
Trustee and Delaware Trustee, as appropriate;
(ii) the Servicing Fee for such Payment Date and all unpaid Servicing
Fees for prior Payment Dates shall be paid to the Servicer;
(iii) the Quarterly Administration Fee and all unpaid Quarterly
Administration Fees from prior Payment Dates shall be paid to the
Administrator;
(iv) so long as no Default or Event of Default shall have occurred and
be continuing or would result from such payment, all other Operating
Expenses shall be paid to the Persons entitled thereto or, if such have
been previously paid by the Note Issuer, to the Note Issuer in
reimbursement thereof; provided that the amount paid on each Payment Date
--------
pursuant to this clause (iv) shall not exceed $100,000;
(v) any overdue Quarterly Interest (together with, to the extent
lawful, interest on such overdue Quarterly Interest at the applicable Note
Interest Rate) and then Quarterly Interest for such Payment Date
81
with respect to each Series of Notes shall be paid to the Noteholders of
such Series of Notes;
(vi) principal due and payable on the Notes of any Series as a result
of an Event of Default or on the Final Maturity Date of the Notes of such
Series, shall be paid to the Noteholders of such Series of Notes;
(vii) Quarterly Principal for such Payment Date with respect to each
Series of Notes shall be paid to the Noteholders of such Series of Notes;
(viii) unpaid Operating Expenses shall be paid to the Persons entitled
thereto or, if such have been previously paid by the Note Issuer, to the
Note Issuer in reimbursement thereof;
(ix) the amount, if any, by which the Required Overcollateralization
Level exceeds the amount in the Overcollateralization Subaccount as of such
Payment Date shall be allocated to the Overcollateralization Subaccount;
(x) the amount, if any, by which the Required Capital Level with
respect to all Outstanding Series of Notes exceeds the amount in the
Capital Subaccount as of such Payment Date shall be allocated to the
Capital Subaccount;
(xi) funds up to the amount of net earnings on amounts in the
Collection Account for the prior quarter without cumulation shall be paid
to the Note Issuer, free from the lien of this Indenture;
(xii) if any Series of Notes has been paid in full as of such Payment
Date, the amount by which the amount in the Overcollateralization
Subaccount exceeds the aggregate Required Overcollateralization Level with
respect to all Series of Notes remaining outstanding shall be paid to the
Note Issuer, free from the lien of this Indenture;
(xiii) if any Series of Notes has been paid in full as of such Payment
Date, the amount by which the amount in the Capital Subaccount exceeds the
aggregate Required Capital Level with respect to all Series of
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Notes remaining outstanding shall be paid to the Note Issuer, free from the
lien of this Indenture;
(xiv) the balance, if any, shall be allocated to the Reserve
Subaccount for distribution on subsequent Payment Dates; and
(xv) after principal of and premium, if any, and interest on all Notes
of all Series, and all of the other foregoing amounts, have been paid in
full, the balance, if any, shall be paid to the Note Issuer, free from the
lien of this Indenture.
All payments to the Noteholders of a Series pursuant to clauses (v), (vi) and
(vii) above or, in the case of clause (vi), if there is more than one Series of
Notes outstanding all payments to the Noteholders of all Series, shall be made
to such holders pro rata based on the respective principal amounts of Notes 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.
Payments in respect of principal of and premium, if any, and interest on any
Class of Notes will be made on a pro rata basis among all the Noteholders of
such Class.
(e) If on any Payment Date funds on deposit in the General Subaccount
are insufficient to make the payments contemplated by clauses (i) through (vii)
of Section 8.02(d) above, the Note Trustee shall (i) first, draw from amounts on
-----
deposit in the Reserve Subaccount, (ii) second, draw from amounts on deposit in
------
the Overcollateralization Subaccount and (iii) third, draw from amounts on
-----
deposit in the Capital Subaccount, in each case, up to the amount of such
shortfall in order to make the payments contemplated by clauses (i) through
(vii) of Section 8.02(d). In addition, if on any Payment Date funds on deposit
in the General Subaccount are insufficient to make the allocations contemplated
by clauses (ix) and (x) above, the Note Trustee shall draw from amounts on
deposit in the Reserve Subaccount to make such allocations notwithstanding the
fact that on such Payment Date the allocation contemplated by clause (viii)
above may not have been fully satisfied.
(f) On any Mandatory Redemption Date, the Note Trustee shall pay to
the Noteholders the Mandatory
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Redemption Price.
SECTION 8.03. General Provisions Regarding the Collection Account.
----------------------------------------------------
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Collection Account shall be
invested in Eligible Investments and reinvested by the Note Trustee upon Issuer
Order; provided, however, that (i) such Eligible Investments shall not mature
-------- -------
later than the Business Day prior to the next Payment Date for the related
Series of Notes, (ii) such Eligible Investments shall not be sold, liquidated or
otherwise disposed of at a loss prior to the maturity thereof and (iii) if such
Eligible Investments have a maturity of one month or less, such Eligible
Investments (or the provider thereof) must have a long-term unsecured debt
rating of at least A2 by Moody's (or the equivalent thereof by the other Rating
Agencies) or a certificate of deposit rating of at least P-1 by Moody's (or the
equivalent thereof by the other Rating Agencies), and if such Eligible
Investments have a maturity of greater than one month, such Eligible Investments
(or the provider thereof) must have a long-term unsecured debt rating of at
least A1 by Moody's (or the equivalent thereof by the other Rating Agencies) and
a certificate of deposit rating of at least P-1 by Moody's (or the equivalent
thereof by the other Rating Agencies). All income or other gain from
investments of moneys deposited in the Collection Account shall be deposited by
the Note Trustee in the Collection Account, and any loss resulting from such
investments shall be charged to the Collection Account. The Note Issuer will
not direct the Note Trustee to make any investment of any funds or to sell any
investment held in the Collection Account unless the security interest Granted
and perfected in such account will continue to be perfected in such investment
or the proceeds of such sale, in either case without any further action by any
Person, and, in connection with any direction to the Note Trustee to make any
such investment or sale, if requested by the Note Trustee, the Note Issuer shall
deliver to the Note Trustee an Opinion of Counsel, acceptable to the Note
Trustee, to such effect. In no event shall the Note Trustee be liable for the
selection of Eligible Investments or for investment losses incurred thereon.
The Note Trustee shall have no liability in respect of losses incurred as a
result of the liquidation of any Eligible Investment prior to its stated
maturity or the failure of the Note Issuer to provide timely written investment
direction. The Note
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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.
(b) Subject to Section 6.01(c), the Note Trustee shall not in any way
be held liable by reason of any insufficiency in the Collection Account
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Note Trustee's failure to make payments on such
Eligible Investments issued by the Note Trustee, in its commercial capacity as
principal obligor and not as trustee, in accordance with their terms.
(c) If (i) the Note Issuer shall have failed to give written
investment directions for any funds on deposit in the Collection Account to the
Note Trustee by 11:00 a.m. Eastern Time (or such other time as may be agreed by
the Note Issuer and Note Trustee) on any Business Day; or (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the Notes
of any Series but the Notes of such Series shall not have been declared due and
payable pursuant to Section 5.02; then the Note Trustee shall, to the fullest
extent practicable, invest and reinvest funds in the Collection Account in one
or more investments which qualify as investments in money market funds described
under paragraph (d) of the definition of Eligible Investments.
SECTION 8.04. Release of Collateral. (a) The Note Trustee may, and
----------------------
when required by the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, or convey the Note Trustee's
interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Note Trustee as provided in this Article VIII shall
be bound to ascertain the Note Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Note Trustee shall, at such time as there are no Notes
Outstanding, release any remaining portion of the Collateral that secured the
Notes from the lien of this Indenture and release to the Note Issuer or any
other Person entitled thereto any funds then on deposit in the Collection
Account. The Note Trustee shall release property from the
85
lien of this Indenture pursuant to this Section 8.04(b) only upon receipt of an
Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel
and (if required by the TIA) Independent Certificates in accordance with TIA
(S) 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01.
SECTION 8.05. Opinion of Counsel. The Note Trustee shall receive at
-------------------
least seven days' notice when requested by the Note Issuer to take any action
pursuant to Section 8.04(a), accompanied by copies of any instruments involved,
and the Note Trustee shall also require, as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to the Note Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with and such action will not materially and
adversely impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
-------- -------
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Collateral. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Note Trustee in connection with any such
action.
SECTION 8.06. Reports by Independent Accountants. As of the Closing
-----------------------------------
Date, the Note Issuer shall appoint a firm of Independent certified public
accountants of recognized national reputation for purposes of preparing and
delivering the reports or certificates of such accountants required by this
Indenture and the related Series Supplements. In the event such firm requires
the Note Trustee to agree to the procedures performed by such firm, the Note
Issuer shall direct the Note Trustee in writing to so agree; it being understood
and agreed that the Note Trustee will deliver such letter of agreement in
conclusive reliance upon the direction of the Note Issuer, and the Note Trustee
makes no independent inquiry or investigation to, and shall have no obligation
or liability in respect of, the sufficiency, validity or correctness of such
procedures. Upon any resignation by such firm the Note Issuer shall provide
written notice thereof to the Note Trustee and shall promptly appoint a
successor thereto that shall also be a
86
firm of Independent certified public accountants of recognized national
reputation. If the Note Issuer shall fail to appoint a successor to a firm of
Independent certified public accountants that has resigned within 15 days after
such resignation, the Note Trustee shall promptly notify the Note Issuer of such
failure in writing. If the Note Issuer shall not have appointed a successor
within 10 days thereafter the Note Trustee shall promptly appoint a successor
firm of Independent certified public accountants of recognized national
reputation; provided that the Note Trustee shall have no liability with respect
--------
to such appointment if the Note Trustee acted with due care with respect
thereto. The fees of such Independent certified public accountants and its
successor shall be payable by the Note Issuer.
ARTICLE IX
Supplemental Indentures
-----------------------
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders.
-------------------------------------------------------
(a) Without the consent of the Holders of any Notes but with prior notice to
the Rating Agencies, the Note Issuer and the Note Trustee, when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Note Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Note Trustee any property subject or required to be
subjected to the lien of this Indenture, 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 Note Issuer, and the assumption
by any such successor of the covenants of the Note Issuer herein and in the
Notes contained;
(iii) to add to the covenants of the Note Issuer,
87
for the benefit of the Holders of the Notes, or to surrender any right or
power herein conferred upon the Note Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Note Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental 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 that such action shall
--------
not adversely affect the interests of the Holders of the Notes or holders
of the Certificates;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI;
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar Federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA; or
(viii) to set forth the terms of any Series that has not theretofore
been authorized by a Series Supplement.
The Note 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 Note Issuer and the Note Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Holders of the Notes,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating
88
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this 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 the Noteholders or the holders
of Certificates and (ii) the Rating Agency Condition shall have been satisfied
with respect thereto.
SECTION 9.02. Supplemental Indentures with Consent of Noteholders.
----------------------------------------------------
The Note Issuer and the Note Trustee, when authorized by an Issuer Order, also
may, with prior notice to the Rating Agencies and with the consent of the
Holders of not less than a majority of the Outstanding Amount of the Notes of
each Series or Class to be affected, by Act of such Holders delivered to the
Note Issuer and the Note Trustee, enter into an indenture or indentures supple-
mental 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 Notes under this Indenture;
provided, however, that no such supplemental indenture shall, without the
-------- -------
consent of the Holder of each Outstanding Note of each Series or Class affected
thereby:
(i) change the date of payment of any installment of principal of or
premium, if any, or interest on any Note, or reduce the principal amount
thereof, the interest rate thereon or premium, if any, with respect
thereto, change the provisions of this Indenture and the related applicable
Series Supplement relating to the application of collections on, or the
proceeds of the sale of, the Collateral to payment of principal of or
premium, if any, or interest on the Notes, or change any place of payment
where, or the coin or currency in which, any Note or the interest thereon
is payable, or impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any such
amount due on the Notes on or after the respective due dates thereof (or,
in the case of optional or mandatory redemption, on or after the Optional
Redemption Date or Mandatory Redemption Date, as applicable);
(ii) reduce the percentage of the Outstanding Amount of the Notes or
of a Series or Class thereof,
89
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;
(iii) 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 Notes
required to direct the Note Trustee to direct the Note 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 Note affected
thereby;
(vi) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest,
principal or premium, if any, due on any Note on any Payment Date
(including the calculation of any of the individual components of such
calculation) or to affect the rights of the Holders of Notes to the benefit
of any provisions for the mandatory redemption of the Notes contained
herein; or
(vii) 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 Note of the security provided by the lien of this
Indenture.
The Note Trustee may in its discretion determine whether or not any
Notes or Certificates of a Series or Class would be affected by any supplemental
indenture and any such determination shall be conclusive upon the Holders of all
Notes and holders of all Certificates of such Series or Class, whether
theretofore or thereafter authenticated
90
and delivered hereunder. The Note Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Note Issuer and the Note Trustee
of any supplemental indenture pursuant to this Section, the Note Issuer shall
mail to the Rating Agencies and the Holders of the Notes 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 Note Trustee to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
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 Note Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Note Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the Note
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 Notes affected thereby, and the respective
rights, limitations of rights, obligations, duties, liabilities and immunities
under this Indenture of the Note Trustee, the Note Issuer and the Holders of the
Notes shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be part
of the terms and conditions of this
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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 Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.06. Reference in Notes to Supplemental Indentures. Notes
----------------------------------------------
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Note Trustee shall, bear
a notation in form approved by the Note Trustee as to any matter provided for in
such supplemental indenture. If the Note Issuer or the Note Trustee shall so
determine, new Notes so modified as to conform, in the opinion of the Note
Trustee and the Note Issuer, to any such supplemental indenture may be prepared
and executed by the Note Issuer and authenticated and delivered by the Note
Trustee in exchange for Outstanding Notes.
ARTICLE X
Redemption of Notes
-------------------
SECTION 10.01. Optional Redemption by Note Issuer. The Note Issuer
-----------------------------------
may, at its option, redeem all, but not less than all, of the Notes of a Series
on any Payment Date if, after giving effect to payments that would otherwise be
made on such Payment Date, the Outstanding Amount of any such Series of Notes
has been reduced to less than five percent of the initial principal balance
thereof on any Redemption Date at a price equal to the outstanding principal
amount of the Notes to be redeemed plus accrued and unpaid interest thereon at
the Note Interest Rate to the Optional Redemption Date (such price being called
the "Optional Redemption Price"). If the Note Issuer shall elect to redeem the
Notes of a Series pursuant to this Section 10.01, it shall furnish written
notice (which notice shall state all items listed in Section 10.02) of such
election to the Note Trustee and the Rating Agencies not later than 25 days
prior to the Optional Redemption Date and shall deposit with the Note Trustee
not later than one Business Day prior to the Optional Redemption Date the
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Optional Redemption Price of the Notes to be redeemed whereupon all such Notes
shall be due and payable on the Optional Redemption Date upon the furnishing of
a notice complying with Section 10.02 hereof to each Holder of the Notes of such
Series pursuant to this Section 10.01.
SECTION 10.02. Form of Optional Redemption Notice. Unless otherwise
-----------------------------------
specified in the Series Supplement relating to a Series of Notes, notice of
redemption under Section 10.01 hereof shall be given by the Note Trustee by
first-class mail, postage prepaid, mailed not less than five days nor more than
25 days prior to the applicable Optional Redemption Date to each Holder of Notes
to be redeemed, as of the close of business on the Record Date preceding the
applicable Optional Redemption Date at such Holder's address appearing in the
Note Register.
All notices of redemption shall state:
(1) the Optional Redemption Date;
(2) the Optional Redemption Price; and
(3) the place where such Notes are to be surrendered for payment of
the Optional Redemption Price (which shall be the office or agency of the
Note Issuer to be maintained as provided in Section 3.02 hereof).
Notice of redemption of the Notes to be redeemed shall be given by the
Note Trustee in the name and at the expense of the Note Issuer. Failure to give
notice of redemption, or any defect therein, to any Holder of any Note selected
for redemption shall not impair or affect the validity of the redemption of any
other Note.
SECTION 10.03. Notes Payable on Optional Redemption Date or Payment
----------------------------------------------------
Date. Notice of redemption having been given as provided in Section 10.02
-----
hereof, the Notes to be redeemed shall on the Optional Redemption Date become
due and payable at the Optional Redemption Price and (unless the Note Issuer
shall default in the payment of the Optional Redemption Price) no interest shall
accrue on the Optional Redemption Price for any period after the date to which
accrued interest is calculated for purposes of calculating the Optional
Redemption Price.
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SECTION 10.04. Mandatory Redemption by Note Issuer. If the Seller is
------------------------------------
required to repurchase the Transition Property pursuant to Section 5.01(b) of
the Sale Agreement, the Note Issuer shall be required to redeem all outstanding
Series of Notes on or before the fifth Business Day following the Repurchase
Date (such date of mandatory redemption, the "Mandatory Redemption Date") for a
purchase price equal to the then outstanding principal amount of the Notes plus
accrued and unpaid interest thereon at the Note Interest Rate to the Mandatory
Redemption Date (such price being called the "Mandatory Redemption Price"). If
the Note Issuer is required to redeem the Notes pursuant to this Section 10.04,
it shall furnish written notice (which notice shall state all items listed in
Section 10.05) of such redemption to the Note Trustee and the Rating Agencies
not later than one Business Day before such Repurchase Date and shall deposit
with the Note Trustee, not later than one Business Day prior to the Mandatory
Redemption Date, the Mandatory Redemption Price of the Notes to be redeemed
whereupon all such Notes shall be due and payable on the Mandatory Redemption
Date upon the furnishing of a notice complying with Section 10.05 hereof to each
Holder of the Notes of all such Series pursuant to this Section 10.04.
SECTION 10.05. Form of Mandatory Redemption Notice. Notice of
------------------------------------
redemption under Section 10.04 hereof shall be given by the Note Trustee by
first-class mail, postage prepaid, mailed not less than five days prior to the
Mandatory Redemption Date to each Holder of Notes to be redeemed, as of the
close of business on the Record Date preceding the Mandatory Redemption Date at
such Holder's address appearing in the Note Register.
All notices of redemption shall state:
(1) the Mandatory Redemption Date;
(2) the Mandatory Redemption Price; and
(3) the place where such Notes are to be surrendered for payment of
the Mandatory Redemption Price (which shall be the office or agency of the Note
Issuer to be maintained as provided in Section 3.02 hereof).
Notice of redemption of the Notes to be redeemed shall be given by the
Note Trustee in the name and at the
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expense of the Note Issuer. Failure to give notice of redemption, or any defect
therein, to any Holder of any Note selected for redemption shall not impair or
affect the validity of the redemption of any other Note.
SECTION 10.06. Notes Payable on Mandatory Redemption Date or Payment
-----------------------------------------------------
Date. Notice of redemption having been given as provided in Section 10.05
-----
hereof, the Notes to be redeemed shall on the Mandatory Redemption Date become
due and payable at the Mandatory Redemption Price and (unless the Note Issuer
shall default in the payment of the Mandatory Redemption Price) no interest
shall accrue on the Mandatory Redemption price for any period after the date to
which accrued interest is calculated for purposes of calculating the Mandatory
Redemption Price.
ARTICLE XI
Miscellaneous
-------------
SECTION 11.01. Compliance Certificates and Opinions, etc. (a) Upon
------------------------------------------
any application or request by the Note Issuer to the Note Trustee to take any
action under any provision of this Indenture, the Note Issuer shall furnish to
the Note Trustee (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this 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:
(i) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
95
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Note Trustee that is to be made the basis for the release of
any property or securities subject to the lien of this Indenture, the Note
Issuer shall, in addition to any obligation imposed in Section 11.01(a) or
elsewhere in this Indenture, furnish to the Note Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Note
Issuer of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Note Issuer is required to furnish to the Note
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Note Issuer shall
also deliver to the Note Trustee an Independent Certificate as to the same
matters, if the fair value to the Note Issuer of the securities to be so
deposited and of all other such securities made the basis of any such withdrawal
or release since the commencement of the then-current fiscal year of the Note
Issuer, as set forth in the certificates delivered pursuant to clause (i) above
and this clause (ii), is ten percent or more of the Outstanding Amount of the
Notes of all Series, but such a certificate need not be furnished with respect
to any securities so deposited, if the fair value thereof to the Note Issuer as
set forth in the related Officer's Certificate is less than $25,000 or less than
one percent of the Outstanding Amount of the Notes of all Series.
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(iii) Whenever any property or securities are to be released from the
lien of this Indenture other than pursuant to Section 8.02(d), the Note Issuer
shall also furnish to the Note Trustee an Officer's Certificate certi fying or
stating the opinion of each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities proposed to be
released and stating that in the opinion of such person the proposed release
will not impair the security under this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Note Issuer is required to furnish to the Note
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Note Issuer shall
also furnish to the Note Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property with respect to such Series, or securities released from the lien of
this Indenture (other than pursuant to Section 8.02(d) hereof) since the
commencement of the then-current calendar year, as set forth in the certificates
required by clause (iii) above and this clause (iv), equals 10 percent or more
of the Outstanding Amount of the Notes of all Series, but such certificate need
not be furnished in the case of any release of property or securities if the
fair value thereof as set forth in the related Officer's Certificate is less
than $25,000 or less than one percent of the then Outstanding Amount of the
Notes of all Series.
(v) Notwithstanding Section 2.11 or any other provision of this
Section, the Note Issuer may (A) collect, liquidate, sell or otherwise dispose
of the Transition Property and the FTA Charges as and to the extent permitted or
required by the Basic Documents and (B) make cash payments out of the Collection
Account as and to the extent permitted or required by the Basic Documents.
SECTION 11.02. Form of Documents Delivered to Note 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
97
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 Note Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller, the Note Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Seller, the Note Issuer or the Administrator, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Whenever in this Indenture, in connection with any application or
certificate or report to the Note Trustee, it is provided that the Note Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Note Issuer's compliance with any term hereof, it is
intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Note Issuer to have such application
granted or to the sufficiency of such certificate or report. The foregoing
shall not, however, be construed to affect the Note Trustee's right to rely upon
the truth and accuracy of any statement or opinion contained in any such
document as provided in Article VI.
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 xxxxxxx dated and
form one instrument.
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SECTION 11.03. Acts of Noteholders. (a) Any request, demand,
--------------------
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and evi-
denced by one or more instruments of substantially similar tenor signed by such
Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise ex pressly provided such action shall become effective when
such instrument or instruments are delivered to the Note Trustee, and, where it
is hereby expressly required, to the Note Issuer. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Noteholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01) conclusive in favor of the Note Trustee and the
Note Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Note Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direc tion, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the Note
Trustee or the Note Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.04. Notices, etc., to Note Trustee, Note Issuer,
--------------------------------------------
Infrastructure Bank and Rating Agencies. (a) Any request, demand,
----------------------------------------
authorization, direction, notice, consent, waiver or Act of Noteholders or other
documents provided or permitted by this Indenture to be made upon, given or
furnished to or filed with:
(i) the Note Trustee by any Noteholder or by the
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Note Issuer shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing by facsimile transmission, first-class mail
or overnight delivery service to or with the Note Trustee at its Corporate
Trust Office, or
(ii) the Note Issuer by the Note Trustee or by any Noteholder shall
be sufficient for every purpose here under if in writing and mailed, first-
class, postage prepaid, to the Note Issuer addressed to: PG&E Funding LLC,
000 Xxxxxx Xxxxxx, Xxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention:
President, or at any other address previously furnished in writing to the
Note Trustee by the Note Issuer. The Note Issuer shall promptly transmit
any notice received by it from the Noteholders to the Note Trustee.
(b) Notices required to be given to the Rating Agencies or the
Infrastructure Bank by the Note Issuer or the Note Trustee shall be in writing,
personally delivered or mailed by certified mail, return receipt requested to
(i) in the case of Moody's, to: Xxxxx'x Investors Service, Inc., ABS Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, (ii) in the case of
Standard & Poor's, to: Standard & Poor's Corporation, 00 Xxxxxxxx (00xx Xxxxx),
Xxx Xxxx, Xxx Xxxx 00000, Attention of Asset Backed Surveillance Department and
(iii) in the case of Fitch, to Fitch Investors Service, L.P., Xxx Xxxxx Xxxxxx
Xxxxx, Xxx Xxxx, XX 00000, Attention of Commercial Asset-Backed Securities, and
(iv) in the case of the Infrastructure Bank, to California Infrastructure and
Economic Development Bank, c/o California Trade and Commerce Agency, 000 X
Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, XX 00000, Attention: Executive Director.
SECTION 11.05. Notices to Noteholders; Waiver. Where this Indenture
-------------------------------
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Noteholder's address as it appears on the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Noteholders is given
by mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder shall affect the sufficiency of such
100
notice with respect to other Noteholders, and any notice that is mailed in the
manner herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Note Trustee
but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event of Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Note Trustee shall be deemed to be a
sufficient giving of such notice.
Where this 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. [Intentionally omitted]
-----------------------
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 included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA (S)(S) 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
101
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 Notes by the Note Issuer shall bind its successors and
assigns, whether so expressed or not.
All agreements of the Note Trustee in this Indenture shall bind its
successors.
SECTION 11.10. Separability. In case any provision in this
-------------
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 11.11. Benefits of Indenture. Nothing in this Indenture or
----------------------
in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership interest
in any part of the Collateral, any benefit or any legal or equitable right,
remedy or claim under this 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 Notes 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 CONSTRUED IN
--------------
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, 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
102
instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject
-----------------------
to recording in any appropriate public recording offices, such recording is to
be effected by the Note Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Note Trustee or any other counsel
reasonably acceptable to the Note Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Note Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken, directly
-----------------
or indirectly, with respect to the obligations of the Note Issuer or the Note
Trustee on the Notes or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Note Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Note
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Note Trustee in its individual capacity, any holder of a
beneficial interest in the Note Issuer or the Note Trustee or of any successor
or assign of the Note Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Note Trustee has
no such obligations in its individual capacity).
SECTION 11.17. [Intentionally omitted].
SECTION 11.18. No Recourse to Note Issuer. Notwithstanding any
---------------------------
provision of this Indenture or any Series Supplement to the contrary,
Noteholders shall have no recourse against the Note Issuer, but shall look only
to the Collateral, with respect to any amounts due to the Noteholders hereunder.
SECTION 11.19. Inspection. The Note Issuer agrees that, on
-----------
reasonable prior notice, it will permit any representative of the Note Trustee,
during the Note Issuer's normal business hours, to examine all the books of
account, records, reports, and other papers of the Note Issuer, to make copies
and extracts therefrom, to cause such books to be audited by Independent
certified public accountants, and to discuss the Note Issuer's affairs, finances
and accounts
103
with the Note Issuer's officers, employees, and Independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Note Trustee shall and shall cause its representatives to hold in
confidence all such information except to the extent disclosure may be required
by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Note Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder.
Notwithstanding anything herein to the contrary, the foregoing shall not be
construed to prohibit (i) disclosure of any and all information that is or
becomes publicly known, or information obtained by the Note Trustee from sources
other than the Note Issuer, provided such parties are rightfully in possession
of such information, (ii) disclosure of any and all information (A) if required
to do so by any applicable statute, law, rule or regulation, (B) pursuant to any
subpoena, civil investigative demand or similar demand or request of any court
or regulatory authority exercising its proper jurisdiction, (C) in any
preliminary or final offering circular, registration statement or contract or
other document pertaining to the transactions contemplated by this Indenture or
the Basic Documents approved in advance by the Note Issuer or (D) to any
affiliate, independent or internal auditor, agent, employee or attorney of the
Note Trustee having a need to know the same, provided that such parties agree to
be bound by the confidentiality provisions contained in this Section 11.19, or
(iii) any other disclosure authorized by the Note Issuer.
104
IN WITNESS WHEREOF, the Note Issuer and the Note 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.
PG&E FUNDING LLC,
by
---------------------------------
Name:
Title:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., not in its
individual capacity but solely
as Note Trustee,
by
----------------------------------
Name:
Title:
000
XXXXX XX XXXXXXXXXX, )
) ss.:
COUNTY OF [ ], )
On the ____ day of ____, 1997, before me, __________ a Notary Public in and
for said county and state, personally appeared ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person and officer whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument PG&E Funding LLC, a Delaware limited
liability company and the entity upon which the person acted, executed this
instrument.
WITNESS my hand and official seal.
--------------------------------
Notary Public
My commission expires:
STATE OF CALIFORNIA, )
) ss.:
COUNTY OF [ ], )
On the ____ day of ____, 1997, before me, __________ a Notary Public in and
for said county and state, personally appeared ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person and officer whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument Bankers Trust Company of California,
N.A., a national banking association and the entity upon which the person acted,
executed this instrument.
WITNESS my hand and official seal.
----------------------------------
Notary Public
My commission expires:
