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EXHIBIT 4.3
CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC
Issuer
and
WILMINGTON TRUST COMPANY
Trustee
DEUTSCHE BANK TRUST COMPANY AMERICAS
Securities Intermediary
FIRST SUPPLEMENTAL INDENTURE
Dated as of December 16, 2005
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Senior Secured Transition Bonds, Series A
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This FIRST SUPPLEMENTAL INDENTURE dated as
of December 16, 2005 (this
"Supplement"), by and among CenterPoint
Energy Transition Bond Company II, LLC,
a Delaware limited liability company (the
"Issuer"), Wilmington Trust Company, a
Delaware banking corporation, in its
capacity as trustee (the "Trustee"), and
Deutsche Bank Trust Company Americas, a New
York banking corporation, in its
capacity as securities intermediary (the
"Securities Intermediary") is entered
into pursuant to the Indenture dated as of
even date herewith among the Issuer,
the Trustee and the Securities Intermediary
(the "Indenture").
PRELIMINARY STATEMENT; GRANTING CLAUSE
Section
9.01 of the Indenture provides, among other things, that the
Issuer and the Trustee may at any time and
from time to time enter into one or
more Supplemental Indentures for the
purpose of authorizing the issuance by the
Issuer of a Series of Transition Bonds and
specifying the terms thereof. The
Issuer has duly authorized the execution
and delivery of this Supplement and the
creation of a Series of Transition Bonds
with an initial aggregate principal
amount of $1,851,000,000 to be known as the
Issuer's Senior Secured Transition
Bonds, Series A (the "Senior Secured
Transition Bonds, Series A"). All acts and
all things necessary to make the Senior
Secured Transition Bonds, Series A, when
duly executed by the Issuer and
authenticated by or on behalf of the Trustee as
provided in the Indenture and this
Supplement and issued by the Issuer, the
valid, binding and legal obligations of the
Issuer and to make this Supplement a
valid and enforceable supplement to the
Indenture have been done, performed and
fulfilled and the execution and delivery
hereof have been in all respects duly
and lawfully authorized. The Issuer and the
Trustee are executing and delivering
this Supplement in order to provide for the
Senior Secured Transition Bonds,
Series A.
The "Series Trust Estate" shall consist of, and the Issuer
hereby
absolutely and irrevocably Grants to the
Trustee, as trustee for the benefit of
the Holders of the Senior Secured
Transition Bonds, Series A issued and
outstanding, all of the Issuer's right,
title and interest whether now owned or
hereafter acquired (and whether now
existing or hereafter arising), in, to and
under (a) the Transition Property relating
to the Senior Secured Transition
Bonds, Series A purchased by the Issuer
pursuant to the Sale Agreement relating
to the Senior Secured Transition Bonds,
Series A and all proceeds thereof, (b)
the Sale Agreement relating to the Senior
Secured Transition Bonds, Series A,
(c) the Bill of Sale delivered by the
Seller pursuant to the Sale Agreement
relating to the Senior Secured Transition
Bonds, Series A, (d) the Servicing
Agreement relating to the Senior Secured
Transition Bonds, Series A and the
Intercreditor Agreement executed in
connection therewith, (e) the Administration
Agreement, (f) the Collection Account
relating to the Senior Secured Transition
Bonds, Series A and all subaccounts thereof
(including, without limitation, the
General Subaccount, the
Overcollateralization Subaccount, the Capital Subaccount
and the Excess Funds Subaccount relating to
the Senior Secured Transition Bonds,
Series A) and all cash, securities,
instruments, investment property or other
assets credited to or deposited in that
Collection Account or any subaccount
thereof from time to time or purchased with
funds therefrom, and all financial
assets and securities entitlements carried
therein or credited thereto, (g) the
REP Deposit Account relating to the Senior
Secured Transition Bonds, Series A,
(h) all other property of whatever kind
owned from time to time by the Issuer
other than any cash released to the Issuer
by the Trustee pursuant to Section
8.02 of the Indenture, (i) all present and
future claims, demands, causes and
choses in action in respect of any or all
of the foregoing and (j) all payments
on or under and all
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proceeds of every kind and nature
whatsoever in respect of any or all of the
foregoing, including all proceeds of the
conversion, voluntary or involuntary,
into cash or other liquid property, all
cash proceeds, accounts, accounts
receivable, general intangibles, notes,
drafts, acceptances, chattel paper,
checks, deposit accounts, insurance
proceeds, condemnation awards, payment
intangibles, letter-of-credit rights,
investment property, commercial tort
claims, documents, rights to payment of any
and every kind, and other forms of
obligations and receivables, instruments
and other property which at any time
constitute all or part of or are included
in the proceeds of any of the
foregoing; provided, however, that, for the
avoidance of doubt, the Series
Trust Estate does not include any funds
received by the issuer representing
payments in respect of letters of credit
for which each of Deutsche Bank Trust
Company Americas and Wilmington Trust
Company is the beneficiary.
Such Grant is made to the Trustee to have and to hold in trust
to
secure the payment of principal of and
premium, if any, and interest on, and any
other amounts (including all fees,
expenses, counsel fees and other amounts due
and owing to the Trustee, and any credit
enhancement provider) owing in respect
of, the Senior Secured Transition Bonds,
Series A equally and ratably without
prejudice, preference, priority or
distinction, except as expressly provided in
the Indenture and this Supplement and to
secure performance by the Issuer of all
of the Issuer's obligations under the
Indenture and this Supplement with respect
to the Senior Secured Transition Bonds,
Series A, all as provided in the
Indenture and this Supplement; provided,
however, that in no event shall the
proceeds of the issuance of the Senior
Secured Transition Bonds, Series A
constitute a portion of the Series Trust
Estate.
The Trustee, as trustee on behalf of the Holders of the
Transition
Bonds, acknowledges such Grant, accepts the
trusts hereunder in accordance with
the provisions hereof and agrees to perform
its duties as set forth in the
Indenture and this Supplement.
ARTICLE I
DEFINITIONS
All terms used in this Supplement that are defined in the
Indenture,
either directly or by reference therein,
have the meanings assigned to such
terms in the Indenture, except to the
extent such terms are defined or modified
in this Supplement or the context clearly
requires otherwise.
ARTICLE II
OTHER DEFINITIONAL PROVISIONS
SECTION 2.01. "Authorized Denominations" means $1,000 and
integral multiples thereof, except for one
Transition Bond of each Tranche which
may be of a smaller denomination.
SECTION 2.02. "Calculation Period" means, with respect to a
Payment Date, the period from and including
the preceding Payment Date to but
excluding such Payment Date, or in the case
of the first Calculation Period,
from and including the Series Issuance Date
to but excluding the initial Payment
Date.
SECTION 2.03. "Expected Amortization Schedule" means Schedule
A to this Supplement.
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SECTION 2.04. "Expected Final Payment Date" means, with
respect to any Tranche of the Senior
Secured Transition Bonds, Series A, the
expected final payment date therefor, as
specified in Article IV of this
Supplement.
SECTION 2.05. "Final Maturity Date" means, with respect to any
Tranche of the Senior Secured Transition
Bonds, Series A, the final maturity
date thereof, as specified in Article IV of
this Supplement.
SECTION 2.06. "Interest Rate" has the meaning set forth in
Article IV of this Supplement.
SECTION 2.07. "Overcollateralization Amount" has the meaning
set forth in Section 5.04 of this
Supplement.
SECTION 2.08. "Payment Date" has the meaning set forth in
Section 5.01 of this Supplement.
SECTION 2.09. "Record Date" shall mean, with respect to any
Payment Date, the close of business on the
Business Day prior to such Payment
Date.
SECTION 2.10. "Required Capital Amount" has the meaning set
forth in Section 5.05 of this
Supplement.
SECTION 2.11. "Series Issuance Date" has the meaning set forth
in Section 3.02 of this Supplement.
ARTICLE III
DESIGNATION; SERIES ISSUANCE DATES
SECTION 3.01. DESIGNATION. The Senior Secured Transition
Bonds, Series A shall be designated
generally as the Issuer's Senior Secured
Transition Bonds, Series A and further
denominated as Tranches A-1, A-2, A-3,
A-4 and A-5.
SECTION 3.02. SERIES ISSUANCE DATE. The Senior Secured
Transition Bonds, Series A that are
authenticated and delivered by the Trustee
to or upon the written order of the Issuer
on December 16, 2005 (the "Series
Issuance Date") shall have as their date of
authentication December 16, 2005.
Each other Senior Secured Transition Bond,
Series A shall be dated the date of
its authentication.
SECTION 3.03. BOOK-ENTRY. Upon original issuance, the Senior
Secured Transition Bonds, Series A will be
issued in the form of a typewritten
Transition Bond or Transition Bonds
representing the Book-Entry Transition
Bonds, to be delivered to DTC, as the
initial Clearing Agency, by, or on behalf
of, the Issuer, pursuant to Section 2.11 of
the Indenture.
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ARTICLE IV
INITIAL PRINCIPAL BALANCE; INTEREST RATE; EXPECTED
FINAL PAYMENT DATE; FINAL MATURITY DATE
(a) The Transition Bonds of each Tranche of the Senior Secured
Transition
Bonds, Series A shall have the initial principal balance,
Expected Final Payment Date and
Final Maturity Date and bear interest at
the
interest rate (the "Interest Rate") as set forth below:
<TABLE>
<CAPTION>
Initial Principal Expected Final
Final
Series
Balance
Payment Date Maturity Date
Interest
Rate
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<S>
<C>
<C>
<C>
<C>
A-1
$250,000,000
2/1/09
2/1/11
4.84%
A-2
$368,000,000
8/1/12
8/1/14
4.97%
A-3
$252,000,000
2/1/14
8/1/15
5.09%
A-4
$519,000,000
8/1/17
8/1/19
5.17%
A-5
$462,000,000
8/1/19
8/1/20
5.302%
</TABLE>
(b) The Expected Final Payment Date for each Tranche of the
Senior
Secured
Transition Bonds, Series A will be the date when the
outstanding
principal
balance of that Tranche will be reduced to zero if payments are
made
according to the Expected Amortization Schedule for that Tranche.
The
Final
Maturity Date for each Tranche of the Senior Secured Transition
Bonds,
Series A will be the date when the Issuer is required to pay
the
entire
remaining unpaid principal balance, if any, of all outstanding
Senior
Secured Transition Bonds, Series A of that Tranche.
(c) Interest on the Senior Secured Transition Bonds, Series A
will
be paid
before Principal of the Senior Secured Transition Bonds, Series
A.
If there
is a shortfall in the amounts available in the Collection
Account
to make
interest payments, the Trustee will distribute Interest Pro
Rata
to each
Outstanding Tranche of Senior Secured Transition Bonds, Series
A
based on
the amount of Interest payable on each Outstanding Tranche.
Interest
on the Senior Secured Transition Bonds, Series A will be
calculated
on the basis of a 360-day year of twelve 30-day months.
ARTICLE V
PAYMENT DATES; EXPECTED AMORTIZATION SCHEDULE
FOR PRINCIPAL; INTEREST; OVERCOLLATERALIZATION
AMOUNT; REQUIRED CAPITAL AMOUNT; WATERFALL CAPS
SECTION 5.01. PAYMENT DATES. The "Payment Dates" for the
Senior Secured Transition Bonds, Series A
are February 1 and August 1 of each
year or, if any such date is not a Business
Day, the next succeeding Business
Day, commencing on August 1, 2006, and
continuing until the earlier of repayment
of such Tranche in full and the applicable
Final Maturity Date.
SECTION 5.02. EXPECTED AMORTIZATION SCHEDULE FOR PRINCIPAL.
Unless an Event of Default has occurred and
is continuing and the unpaid
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principal amount of all Tranches of Senior
Secured Transition Bonds, Series A
has been declared to be due and payable
together with accrued and unpaid
interest thereon, on each Payment Date the
Trustee shall distribute to the
Holders of record of the Senior Secured
Transition Bonds, Series A as of the
related Record Date amounts payable in
respect of the Senior Secured Transition
Bonds, Series A pursuant to Section 8.02(d)
of the Indenture as Principal, in
accordance with the Expected Amortization
Schedule. To the extent that more than
one Tranche of the Senior Secured
Transition Bonds, Series A is to receive
payments of Principal in accordance with
the Expected Amortization Schedule on
any Payment Date, such amounts will be
allocated Pro Rata between such Tranches
based on the Principal scheduled to be paid
to such Tranches in accordance with
the Expected Amortization Schedule on such
Payment Date; provided, however, that
if one or more Tranches did not receive
Principal on the prior Payment Date and
as a result the aggregate Outstanding
Amount of such Tranche or Tranches was not
reduced to the balance indicated in the
Expected Amortization Schedule on such
Payment Date, then such Tranches will
be:
(a) allocated funds from the applicable subaccount to make up
such
shortfalls
prior to any Tranches receiving funds in respect of Principal
scheduled
to be paid on the current Payment Date, and
(b) allocated funds from the applicable subaccount in respect
of
prior
shortfalls on a Pro Rata basis based on the amount each such
shortfall
bears to the aggregate shortfalls;
provided, however, that other than in the
event of an acceleration in no event
shall a Principal payment pursuant to this
Section 5.02 on any Tranche on a
Payment Date be greater than the amount
that reduces the Outstanding Amount of
such Tranche of Senior Secured Transition
Bonds, Series A to the amount
specified in the Expected Amortization
Schedule for such Tranche and Payment
Date.
SECTION 5.03. INTEREST.
(a) Interest will be payable on each Tranche of the Senior
Secured
Transition
Bonds, Series A on each Payment Date as follows:
1
if
there has been a payment default, any Interest payable but
unpaid
on any prior Payment Date, together with Interest on such
unpaid
Interest, if any, and
2
accrued Interest on the principal balance of each Tranche of
the
Senior Secured Transition Bonds, Series A as of the close of
business on the preceding Payment Date, or the date of the
original
issuance of the Tranche of the Senior Secured Transition Bonds,
Series A, as applicable, after giving effect to all payments of
Principal made on the preceding Payment Date;
provided,
however, that, with respect to the initial Payment Date or if
no
payment
has yet been made, interest on the outstanding principal
balance
shall
accrue from and including the Series Issuance Date to, but
excluding,
the following Payment Date, and thereafter from and including
the
previous Payment Date to, but excluding, the applicable
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Payment
Date until the Transition Bonds have been paid in full, at the
interest
rate indicated in Article IV.
SECTION 5.04. OVERCOLLATERALIZATION AMOUNT. The
"Overcollateralization Amount" for the
Senior Secured Transition Bonds, Series A
shall be zero dollars ($0).
SECTION 5.05. REQUIRED CAPITAL AMOUNT. The "Required Capital
Amount" for the Senior Secured Transition
Bonds, Series A shall be $9,255,000,
which is equal to 0.5% of the initial
outstanding principal balance of the
Senior Secured Transition Bonds, Series
A.
SECTION 5.06. PREMIUM. There will be no early redemption of
the Senior Secured Transition Bonds, Series
A, and therefore no Premium will be
payable in connection with the early
redemption of the Senior Secured Transition
Bonds, Series A.
SECTION 5.07. WATERFALL CAPS The Indemnity Amounts payable
with respect to the Senior Secured
Transition Bonds, Series A pursuant to
Section 8.02(d)(i) shall not exceed
$800,000 during any calendar year. The
amounts paid in respect of the Trustee's
fees and expenses in Section
8.02(d)(i), the Servicing Fee in Section
8.02(d)(ii), the administration and
independent managers' fees in Section
8.02(d)(iii), the ordinary periodic
Operating Expenses in Section 8.02(d)(iv)
and the remaining Operating Expenses
in
