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EXHIBIT 4.1
CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC
Issuer
and
WILMINGTON TRUST COMPANY
Trustee
and
DEUTSCHE BANK TRUST COMPANY AMERICAS
Securities Intermediary
INDENTURE
Dated as of December 16, 2005
----------
Securing Transition Bonds
Issuable in Series
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND INCORPORATION BY
REFERENCE....................... 2
SECTION 1.01.
DEFINITIONS..............................................
2
SECTION 1.02. INCORPORATION BY REFERENCE OF THE
TRUST INDENTURE ACT.... 2
SECTION 1.03. RULES OF
CONSTRUCTION.................................... 2
ARTICLE II THE TRANSITION
BONDS............................................ 3
SECTION 2.01.
FORM.....................................................
3
SECTION 2.02. EXECUTION, AUTHENTICATION AND
DELIVERY................... 3
SECTION 2.03. DENOMINATIONS; TRANSITION BONDS
ISSUABLE IN SERIES....... 4
SECTION 2.04. TEMPORARY TRANSITION
BONDS............................... 5
SECTION 2.05. REGISTRATION; REGISTRATION OF
TRANSFER AND EXCHANGE...... 6
SECTION 2.06. MUTILATED, DESTROYED, LOST OR
STOLEN TRANSITION BONDS.... 7
SECTION 2.07. PERSONS DEEMED
OWNER..................................... 8
SECTION 2.08. PAYMENT OF PRINCIPAL, PREMIUM, IF
ANY, AND INTEREST;
INTEREST ON OVERDUE PRINCIPAL AND PREMIUM, IF ANY;
PRINCIPAL, PREMIUM AND INTEREST RIGHTS PRESERVED...... 8
SECTION 2.09.
CANCELLATION.............................................
9
SECTION 2.10. AMOUNT; AUTHENTICATION AND
DELIVERY OF TRANSITION BONDS.. 10
SECTION 2.11. BOOK-ENTRY TRANSITION
BONDS.............................. 14
SECTION 2.12. NOTICES TO CLEARING
AGENCY............................... 15
SECTION 2.13. DEFINITIVE TRANSITION
BONDS.............................. 15
ARTICLE III
COVENANTS......................................................
16
SECTION 3.01. PAYMENT OF PRINCIPAL, PREMIUM, IF
ANY, AND INTEREST...... 16
SECTION 3.02. MAINTENANCE OF OFFICE OR
AGENCY.......................... 16
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN
TRUST................... 16
SECTION 3.04.
EXISTENCE................................................
18
SECTION 3.05. PROTECTION OF TRUST
ESTATE............................... 18
SECTION 3.06. OPINIONS AS TO TRUST
ESTATE.............................. 18
SECTION 3.07. PERFORMANCE OF OBLIGATIONS;
COMMISSION FILINGS........... 19
SECTION 3.08. NEGATIVE
COVENANTS....................................... 21
SECTION 3.09. ANNUAL STATEMENT AS TO
COMPLIANCE........................ 22
SECTION 3.10. ISSUER MAY CONSOLIDATE,
ETC.............................. 22
SECTION 3.11. SUCCESSOR OR
TRANSFEREE.................................. 23
SECTION 3.12. NO OTHER
BUSINESS........................................ 23
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SECTION 3.13. NO
BORROWING............................................. 23
SECTION 3.14. GUARANTEES, LOANS, ADVANCES AND
OTHER LIABILITIES........ 23
SECTION 3.15. CAPITAL
EXPENDITURES..................................... 24
SECTION 3.16. RESTRICTED
PAYMENTS...................................... 24
SECTION 3.17. NOTICE OF EVENTS OF
DEFAULT.............................. 24
SECTION 3.18. PURCHASE OF SUBSEQUENT TRANSITION
PROPERTY............... 24
SECTION 3.19.
INSPECTION...............................................
26
SECTION 3.20. SALE AGREEMENT, INTERCREDITOR
AGREEMENT, ADMINISTRATION
AGREEMENT AND SERVICING AGREEMENT COVENANTS........... 26
SECTION 3.21.
TAXES....................................................
29
ARTICLE IV SATISFACTION AND DISCHARGE;
DEFEASANCE.......................... 29
SECTION 4.01. SATISFACTION AND DISCHARGE OF
INDENTURE; DEFEASANCE...... 29
SECTION 4.02. CONDITIONS TO
DEFEASANCE................................. 31
SECTION 4.03. APPLICATION OF TRUST
MONEY............................... 32
SECTION 4.04. REPAYMENT OF MONEYS HELD BY PAYING
AGENT................. 33
ARTICLE V
REMEDIES.........................................................
33
SECTION 5.01. EVENTS OF
DEFAULT........................................ 33
SECTION 5.02. ACCELERATION OF MATURITY;
RESCISSION AND ANNULMENT....... 34
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND
SUITS FOR ENFORCEMENT
BY TRUSTEE............................................ 35
SECTION 5.04. REMEDIES;
PRIORITIES..................................... 37
SECTION 5.05. OPTIONAL PRESERVATION OF THE TRUST
ESTATE................ 39
SECTION 5.06. LIMITATION OF
PROCEEDINGS................................ 39
SECTION 5.07. UNCONDITIONAL RIGHTS OF TRANSITION
BONDHOLDERS TO RECEIVE
PRINCIPAL, PREMIUM, IF ANY, AND INTEREST.............. 40
SECTION 5.08. RESTORATION OF RIGHTS AND
REMEDIES....................... 40
SECTION 5.09. RIGHTS AND REMEDIES
CUMULATIVE........................... 40
SECTION 5.10. DELAY OR OMISSION NOT A
WAIVER........................... 40
SECTION 5.11. CONTROL BY TRANSITION
BONDHOLDERS........................ 40
SECTION 5.12. WAIVER OF PAST
DEFAULTS.................................. 41
SECTION 5.13. UNDERTAKING FOR
COSTS.................................... 41
SECTION 5.14. WAIVER OF STAY OR EXTENSION
LAWS......................... 42
SECTION 5.15. ACTION ON TRANSITION
BONDS............................... 42
ARTICLE VI THE
TRUSTEE.....................................................
42
SECTION 6.01. DUTIES AND LIABILITIES OF
TRUSTEE........................ 42
SECTION 6.02. RIGHTS OF
TRUSTEE........................................ 44
SECTION 6.03. INDIVIDUAL RIGHTS OF
TRUSTEE............................. 44
SECTION 6.04. TRUSTEE'S
DISCLAIMER..................................... 45
SECTION 6.05. NOTICE OF
DEFAULTS....................................... 45
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SECTION 6.06. REPORTS BY TRUSTEE TO
HOLDERS............................ 45
SECTION 6.07. COMPENSATION AND
INDEMNITY............................... 46
SECTION 6.08. REPLACEMENT OF
TRUSTEE................................... 47
SECTION 6.09. SUCCESSOR TRUSTEE BY
MERGER.............................. 48
SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR
SEPARATE TRUSTEE............ 48
SECTION 6.11. ELIGIBILITY;
DISQUALIFICATION............................ 50
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS
AGAINST ISSUER......... 50
SECTION 6.13. REPRESENTATIONS AND WARRANTIES OF
THE TRUSTEE............ 50
SECTION 6.14. RIGHTS OF THE AUTHENTICATING
AGENT, TRANSITION BOND
REGISTRAR, PAYING AGENT, AND SECURITIES INTERMEDIARY.. 50
ARTICLE VII TRANSITION BONDHOLDERS' LISTS
AND REPORTS...................... 52
SECTION 7.01. ISSUER TO FURNISH TRUSTEE NAMES
AND ADDRESSES OF
TRANSITION BONDHOLDERS................................ 52
SECTION 7.02. PRESERVATION OF INFORMATION;
COMMUNICATIONS TO
TRANSITION BONDHOLDERS................................ 53
SECTION 7.03. REPORTS BY
ISSUER........................................ 53
SECTION 7.04. REPORTS BY
TRUSTEE....................................... 54
SECTION 7.05. PROVISION OF SERVICER
REPORTS............................ 54
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND
RELEASES.......................... 54
SECTION 8.01. COLLECTION OF
MONEY...................................... 54
SECTION 8.02. COLLECTION
ACCOUNT....................................... 55
SECTION 8.03. RELEASE OF TRUST
ESTATE.................................. 60
SECTION 8.04. ISSUER OPINION OF
COUNSEL................................ 61
SECTION 8.05. REPORTS BY INDEPENDENT
ACCOUNTANTS....................... 61
SECTION 8.06. REP DEPOSIT
ACCOUNT...................................... 62
ARTICLE IX SUPPLEMENTAL
INDENTURES......................................... 62
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT
CONSENT OF TRANSITION
BONDHOLDERS........................................... 62
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH
CONSENT OF TRANSITION
BONDHOLDERS........................................... 64
SECTION 9.03. EXECUTION OF SUPPLEMENTAL
INDENTURES..................... 66
SECTION 9.04. EFFECT OF SUPPLEMENTAL
INDENTURE......................... 66
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE
ACT...................... 66
SECTION 9.06. REFERENCE IN TRANSITION BONDS TO
SUPPLEMENTAL
INDENTURES............................................ 66
SECTION 9.07. PUCT
CONSENT............................................. 66
ARTICLE X REDEMPTION OF TRANSITION
BONDS................................... 67
SECTION 10.01. MANDATORY
REDEMPTION BY ISSUER........................... 67
SECTION 10.02. FORM OF
REDEMPTION NOTICE................................ 68
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SECTION 10.03. PAYMENT OF
REDEMPTION PRICE.............................. 68
ARTICLE XI
MISCELLANEOUS...................................................
69
SECTION 11.01. COMPLIANCE
CERTIFICATES AND OPINIONS, ETC................ 69
SECTION 11.02. FORM OF DOCUMENTS
DELIVERED TO TRUSTEE................... 69
SECTION 11.03. ACTS OF
TRANSITION BONDHOLDERS........................... 70
SECTION 11.04. NOTICES,
ETC............................................. 70
SECTION 11.05. NOTICES TO
TRANSITION BONDHOLDERS; WAIVER................ 71
SECTION 11.06. ALTERNATE
PAYMENT AND NOTICE PROVISIONS.................. 72
SECTION 11.07. NOTICES TO
LUXEMBOURG STOCK EXCHANGE..................... 72
SECTION 11.08. CONFLICT WITH
TRUST INDENTURE ACT........................ 72
SECTION 11.09. EFFECT OF
HEADINGS AND TABLE OF CONTENTS................. 72
SECTION 11.10. SUCCESSORS
AND ASSIGNS................................... 73
SECTION 11.11.
SEPARABILITY.............................................
73
SECTION 11.12. BENEFITS OF
INDENTURE.................................... 73
SECTION 11.13. LEGAL
HOLIDAYS........................................... 73
SECTION 11.14. GOVERNING
LAW............................................ 73
SECTION 11.15.
COUNTERPARTS.............................................
73
SECTION 11.16. ISSUER
OBLIGATION........................................ 73
SECTION 11.17. NO
PETITION.............................................. 73
SECTION 11.18. INTERCREDITOR
AGREEMENT.................................. 74
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SCHEDULE 1. FORM OF SEMIANNUAL SERVICER'S
CERTIFICATE
SCHEDULE 2a. STATUTORY TRUE-SALE
OPINION
SCHEDULE 2b. STATE LAW SECURITY INTEREST
OPINION
SCHEDULE 2c. UCC OPINION
APPENDIX A. MASTER DEFINITIONS
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CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310
THROUGH
318, INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:
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TRUST INDENTURE ACT SECTION
INDENTURE SECTION(S)
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Section
310(a)(1)........................................ 6.11
Section
310(a)(2)........................................ 6.11
Section
310(a)(3)........................................ 6.10(b)
Section
310(a)(4)........................................ Not Applicable
Section
310(a)(5)........................................ 6.11
Section
310(b)........................................... 6.08, 6.11
Section
311(a)........................................... 6.12
Section
311(b)........................................... 6.12
Section
311(c)........................................... Not Applicable
Section
312(a)........................................... 7.01, 7.02
Section
312(b)........................................... 7.02
Section
312(c)........................................... 7.02
Section
313(a)........................................... 7.04
Section
313(b)........................................... 7.04
Section
313(c)........................................... 7.04
Section
313(d)........................................... 7.04
Section
314(a)........................................... 3.09, 7.03
Section
314(b)........................................... 3.07
Section
314(b)(1)........................................ Not Addressed
Section
314(b)(2)........................................ 3.06
Section
314(c)(1)........................................ 11.01
Section
314(c)(2)........................................ 11.01
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TRUST INDENTURE ACT SECTION
INDENTURE SECTION(S)
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Section
314(c)(3)........................................ 11.02
Section
314(d)........................................... 8.03, 8.04, 9.02
Section
314(e)........................................... 11.01
Section
315(a)........................................... 6.01. 6.02
Section
315(b)........................................... 6.05
Section
315(c)........................................... 6.01
Section
315(d)........................................... 6.01
Section
315(e)........................................... 5.13
Section
316(a)........................................... 5.11, 5.12
Section
316(a)(1)(A)..................................... 5.11
Section
316(a)(1)(B)..................................... 5.12
Section
316(a)(2)........................................ Not Applicable
Section
316(b)........................................... 5.07
Section
316(c)........................................... Not Addressed
Section
317(a)(1)........................................ 5.03
Section
317(a)(2)........................................ 5.03
Section
317(b)........................................... 3.03
Section
318(a)........................................... 11.08
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NOTE: This reconciliation and tie sheet
shall not, for any purpose, be deemed to
be a part of the Indenture.
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INDENTURE dated
as of December 16, 2005, 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 the Securities Intermediary
hereunder, (the "Securities
Intermediary").
The Issuer has
duly authorized the execution and delivery of this Indenture
to provide for one or more Series of
Transition Bonds, issuable as provided in
this Indenture. Each Series of Transition
Bonds will be issued only under a
separate Series Supplement to this
Indenture, duly executed and delivered by the
Issuer and the Trustee. The Issuer is
entering into this Indenture, and the
Trustee is accepting the trusts created
hereby, each for good and valuable
consideration, the receipt and sufficiency
of which are hereby acknowledged and
each intending to be legally bound
hereby.
The Transition
Bonds of each Series shall be non-recourse obligations and
shall be secured by and payable solely out
of the Transition Property and the
other Trust Estate securing such Series of
Transition Bonds. If and to the
extent such Transition Property and the
other Trust Estate are insufficient to
pay all amounts owing with respect to the
Transition Bonds secured thereby,
then, except as otherwise expressly
provided herein, the Holders shall have no
claim in respect of such insufficiency
against the Issuer or any other Person,
and the Holders, by their acceptance of
such Transition Bonds, waive any such
claim.
All things
necessary to (a) make the Transition Bonds, when executed and
duly issued by the Issuer and authenticated
and delivered by the Trustee
hereunder, valid obligations, and (b) make
this Indenture a valid agreement of
the Issuer, in each case, in accordance
with their respective terms, have been
done.
In consideration
of the foregoing, the Issuer, the Trustee and the
Securities Intermediary agree as
follows:
That under one
or more Series Supplements, the Issuer will Grant to the
Trustee a Lien on and trust interest in the
property described therein (such
property with respect to a particular
Series being the "Series Trust Estate" and
all such property, collectively, the "Trust
Estate"). Each Series Trust Estate
shall secure the obligations of the Issuer
as more particularly described in the
applicable Series Supplement.
AND IT IS HEREBY
COVENANTED, DECLARED AND AGREED between the parties hereto
that all Transition Bonds are to be issued,
countersigned, registered and
delivered and the Trust Estate is to be
held and applied, subject to the further
covenants, conditions, releases, uses and
trusts hereinafter set forth, and the
Issuer, for itself and any successor, does
hereby covenant and agree to and with
the Trustee and its successors in said
trust, for the benefit of the Holders, as
follows:
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01.
DEFINITIONS. Capitalized terms used but not otherwise defined
in this Indenture have the respective
meanings set forth in Appendix A hereto
unless the context otherwise requires.
SECTION 1.02.
INCORPORATION BY REFERENCE OF THE TRUST INDENTURE ACT.
Whenever this Indenture refers to a
provision of the TIA, the provision is
incorporated by reference in and made a
part of this Indenture. Each of the
following TIA terms used in this Indenture
has the following meaning:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Transition Bonds.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the 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 Commission rule have the
meaning assigned to them by such
definitions.
SECTION 1.03.
RULES OF CONSTRUCTION.
(i) An accounting term not otherwise defined has the meaning
assigned
to it in
accordance with generally accepted accounting principles as in
effect from time
to time;
(ii) "including" means including without limitation;
(iii) with respect to terms defined in Appendix A hereto, the
meanings
shall be equally
applicable to both the singular and plural forms of such
terms and shall
refer to either gender as may be appropriate;
(iv) unless otherwise specified, references herein to Sections
or
Articles are to
Sections or Articles of this Indenture; and
(v) the words "herein," "hereof," "hereunder" and other words
of
similar import
refer to this Indenture as a whole and not to any particular
Article, Section
or other subdivision.
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ARTICLE II
THE TRANSITION BONDS
SECTION 2.01.
FORM. The Transition Bonds and the Trustee's certificate of
authentication shall be in substantially
the forms set forth in the related
Series Supplement, with such appropriate
insertions, omissions, substitutions
and other variations as are required or
permitted by this Indenture or by the
related Series Supplement and may have such
letters, numbers or other marks of
identification and such legends or
endorsements placed thereon as may,
consistently herewith, be determined by the
Managers of the Issuer executing
such Transition Bonds, as evidenced by
their execution of such Transition Bonds.
Any portion of the text of any Transition
Bond may be set forth on the reverse
thereof, with an appropriate reference
thereto on the face of the Transition
Bond. Each Transition Bond shall be dated
the date of its authentication.
The Transition
Bonds shall be typewritten, printed, lithographed or
engraved or produced by any combination of
these methods (with or without steel
engraved borders), all as determined by the
Managers of the Issuer executing
such Transition Bonds, as evidenced by
their execution of such Transition Bonds.
Each Transition
Bond shall bear upon its face the designation so selected
for the Series and Tranche, if any, to
which it belongs. The terms of all
Transition Bonds of the same Series shall
be the same, unless such Series is
comprised of one or more Tranches, in which
case the terms of all Transition
Bonds of the same Tranche shall be the
same.
Each Transition
Bond shall state that the Texas Electric Choice Plan
provides that the State of Texas pledges
"for the benefit and protection of
financing parties and the electric utility,
that it will not take or permit any
action that would impair the value of the
transition property, or except as
permitted . . . [through the Transition
Charge Adjustment Process] . . . reduce,
alter, or impair the transition charges to
be imposed, collected, and remitted
to financing parties, until the principal,
interest, and premium, and any other
charges incurred and contracts to be
performed in connection with the related
transition bonds have been paid and
performed in full."
SECTION 2.02.
EXECUTION, AUTHENTICATION AND DELIVERY. The Transition Bonds
shall be executed on behalf of the Issuer
by a Manager. The signature of any
such Manager on the Transition Bonds may be
manual or facsimile.
Transition Bonds
bearing the manual or facsimile signature of individuals
who were at any time Managers shall bind
the Issuer, notwithstanding that such
individuals or any of them have ceased to
hold such offices prior to the
authentication and delivery of such
Transition Bonds.
The Trustee
hereby appoints Deutsche Bank Trust Company Americas as
authenticating agent to authenticate the
Transition Bonds whenever the Trustee
may do so. Each reference in this Indenture
to authentication by the Trustee
includes authentication by such agent. The
Trustee shall not be liable for any
act or any failure of the authenticating
agent to perform any duty either
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required herein or authorized herein to be
performed by such person in
accordance with this Indenture.
At any time and
from time to time after the execution and delivery of this
Indenture, the Issuer may deliver
Transition Bonds executed on behalf of the
Issuer to the Trustee pursuant to an Issuer
Order for authentication; and the
Trustee shall authenticate and deliver such
Transition Bonds as in this
Indenture provided and not otherwise.
No Transition
Bond shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose,
unless there appears on such Transition
Bond a certificate of authentication
substantially in the form provided for
herein executed by the Trustee by the
manual signature of one of its authorized
signatories, and such certificate upon any
Transition Bond shall be conclusive
evidence, and the only evidence, that such
Transition Bond has been duly
authenticated and delivered hereunder.
If and for so long as
any Series of Transition Bonds is listed on the
Luxembourg Stock Exchange and the rules and
regulations of such exchange so
require, a transfer or other agent
appointed pursuant to Section 3.02 shall be
authorized on behalf of the Trustee to
execute and deliver such certificate of
authentication.
SECTION 2.03.
DENOMINATIONS; TRANSITION BONDS ISSUABLE IN SERIES. The
Transition Bonds of each Series shall be
issuable as registered Transition Bonds
in Authorized Denominations.
The Transition Bonds
may, at the election of and as authorized by a Manager
and set forth in a Series Supplement, be
issued in one or more Series (each of
which may be comprised of one or more
Tranches), and shall be designated
generally as the "Transition Bonds" of the
Issuer, with such further particular
designations added or incorporated in such
title for the Transition Bonds of any
particular Series or Tranche as a Manager
of the Issuer may determine and as set
forth in the Series Supplement
therefor.
Each Series of
Transition Bonds shall be created by a Series Supplement
authorized by a Manager and establishing
the terms and provisions of such Series
and, if applicable, any Tranches thereof.
The several Series and Tranches
thereof may differ as between Series and
Tranches, in respect of any of the
following matters:
(a) designation
of the Series and, if applicable, the Tranches thereof;
(b) the
aggregate initial principal amount of the Transition Bonds of
the
Series and, if applicable, each Tranche
thereof;
(c) the Bond
Rate of the Series and, if applicable, each Tranche thereof or
the formula, if any, used to calculate the
applicable Bond Rate or Bond Rates
for the Series and each Tranche
thereof;
(d) the Payment
Dates for the Series and, if applicable, each Tranche
thereof;
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(e) the Expected
Final Payment Date of the Series, and, if applicable, each
Tranche thereof;
(f) the Series
Final Maturity Date for the Series and, if applicable, the
Tranche Final Maturity Date for each
Tranche thereof;
(g) the Series
Issuance Date for the Series;
(h) the Series
Trust Estate;
(i) the place or
places for payments with respect to the Series and, if
applicable, each Tranche thereof;
(j) the
Authorized Denominations for the Series and, if applicable,
each
Tranche thereof;
(k) the
provisions, if any, for redemption of the Series by the Issuer
and,
if applicable, each Tranche thereof;
(l) whether the
Transition Bonds of the Series are to be Book-Entry
Transition Bonds and the extent to which
Section 2.11 will apply;
(m) the Expected
Amortization Schedule for the Series and, if applicable,
each Tranche thereof;
(n) the Required
Capital Amount with respect to the Series;
(o) the
Calculation Dates and Adjustment Dates for the Series;
(p) the credit
enhancement, if any, applicable to the Series and each
Tranche thereof and, with respect to
Floating Rate Bonds, the terms of the
applicable swap agreement and the identity
of the swap counterparty; and
(q) any other
terms of the Series or Tranche that are not inconsistent with
the provisions of this Indenture and that
will not result in any Rating Agency
reducing or withdrawing its rating of any
Outstanding Series or Tranche of
Transition Bonds.
SECTION 2.04.
TEMPORARY TRANSITION BONDS. Pending the preparation of
definitive Transition Bonds pursuant to
Section 2.13, or by agreement of the
purchasers of all Transition Bonds or, in
the case of Transition Bonds held in a
book-entry only system by a Clearing
Agency, a Manager on behalf of the Issuer
may execute, and upon receipt of an Issuer
Order, the Trustee shall authenticate
and deliver temporary Transition Bonds
which are printed, lithographed,
typewritten, mimeographed or otherwise
produced of the tenor of the definitive
Transition Bonds in lieu of which they are
issued and with such variations not
inconsistent with the terms of this
Indenture as a Manager executing such
Transition Bonds may determine, as
evidenced by its execution of such Transition
Bonds.
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If temporary
Transition Bonds are issued, the Issuer will cause definitive
Transition Bonds to be prepared without
unreasonable delay except where
temporary Transition Bonds are held by a
Clearing Agency. After the preparation
of definitive Transition Bonds, the
temporary Transition Bonds shall be
exchangeable for definitive Transition
Bonds upon surrender of the temporary
Transition Bonds at the office or agency of
the Issuer to be maintained as
provided in Section 3.02, without charge to
the Holder. Upon surrender for
cancellation of any one or more temporary
Transition Bonds, a Manager on behalf
of the Issuer shall execute and the Trustee
shall authenticate and deliver in
exchange therefor a like Series (and, if
applicable, Tranche) and initial
principal amount of definitive Transition
Bonds in Authorized Denominations.
Until so exchanged, the temporary
Transition Bonds shall in all respects be
entitled to the same benefits under this
Indenture as definitive Transition
Bonds.
SECTION 2.05.
REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The
Issuer shall cause to be kept a register
(the "Transition Bond Register") in
which, subject to such reasonable
regulations as it may prescribe, the
Transition Bond Registrar shall provide for
the registration of Transition Bonds
and the registration of transfers of
Transition Bonds. Deutsche Bank Trust
Company Americas shall be Transition Bond
Registrar for the purpose of
registering Transition Bonds and transfers
of Transition Bonds as herein
provided. Upon any resignation of any
Transition Bond Registrar, the Issuer
shall promptly appoint a successor or, if
it elects not to make such an
appointment, assume the duties of
Transition Bond Registrar.
If a Person
other than the Trustee is appointed by the Issuer as Transition
Bond Registrar, the Issuer shall give the
Trustee and any transfer, paying, or
listing agent of the Issuer prompt written
notice of the appointment of such
Transition Bond Registrar and of the
location, and any change in the location,
of the Transition Bond Register, and the
Trustee and any such agent shall have
the right to inspect the Transition Bond
Register at all reasonable times and to
obtain copies thereof, and the Trustee
shall have the right to rely conclusively
upon a certificate executed on behalf of
the Transition Bond Registrar by a duly
authorized officer thereof as to the names
and addresses of the Holders of the
Transition Bonds and the principal amounts
and number of such Transition Bonds.
Upon surrender
for registration of transfer of any Transition Bond at the
office or agency of the Issuer to be
maintained as provided in Section 3.02, a
Manager on behalf of the Issuer shall
execute, and the Trustee shall
authenticate and the Transition Bondholder
shall obtain from the Trustee, in the
name of the designated transferee or
transferees, one or more new Transition
Bonds in any Authorized Denominations of a
like Series (and, if applicable,
Tranche) and aggregate outstanding
principal amount.
At the option of
the Holder, Transition Bonds may be exchanged for other
Transition Bonds of a like Series (and, if
applicable, Tranche) and aggregate
outstanding principal amount in Authorized
Denominations upon surrender of the
Transition Bonds to be exchanged at such
office or agency. Whenever any
Transition Bonds are so surrendered for
exchange, a Manager on behalf of the
Issuer shall execute, and the Trustee shall
authenticate, and the Transition
Bondholder shall obtain from the Trustee
the Transition Bonds which the
Transition Bondholder making the exchange
is entitled to receive.
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All Transition
Bonds issued upon any registration of transfer or exchange
of Transition Bonds shall be the valid
obligations of the Issuer, evidencing the
same debt, and entitled to the same
benefits under this Indenture, as the
Transition Bonds surrendered upon such
registration of transfer or exchange.
Every Transition
Bond presented or surrendered for registration of transfer
or exchange shall be duly endorsed by, or
be accompanied by a written instrument
of transfer in the form set forth in the
applicable Series Supplement or such
other form as is satisfactory to the
Trustee duly executed by, the Holder
thereof or such Holder's attorney duly
authorized in writing, with such
signature guaranteed by an Eligible
Guarantor Institution in the form set forth
in such Transition Bond.
No service
charge shall be made to a Holder for any registration of
transfer or exchange of Transition Bonds
(except as may be required by the rules
and regulations of the Luxembourg Stock
Exchange with respect to any Transition
Bonds listed thereon), but, other than in
respect of exchanges pursuant to
Section 2.04 or 9.05 not involving any
transfer, the Issuer or the Trustee may
require payment of a sum sufficient to
cover any tax or other governmental
charge that may be imposed in connection
with any registration of transfer or
exchange of Transition Bonds.
The preceding
provisions of this Section notwithstanding, except to the
extent otherwise required by the rules and
regulations of the Luxembourg Stock
Exchange with respect to any Transition
Bonds listed thereon, the Issuer shall
not be required to make, and the Transition
Bond Registrar need not register,
transfers or exchanges of Transition Bonds
selected for redemption or transfers
or exchanges of any Transition Bond for a
period of 15 days preceding the Final
Maturity Date with respect to such
Transition Bond.
SECTION 2.06.
MUTILATED, DESTROYED, LOST OR STOLEN TRANSITION BONDS. If (i)
any mutilated Transition Bond is
surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of
the destruction, loss or theft of any
Transition Bond, and (ii) there is
delivered to the Trustee such security or
indemnity as may be required by it to hold
the Issuer and the Trustee harmless,
then, in the absence of written notice to
the Issuer, the Transition Bond
Registrar or the Trustee that such
Transition Bond has been acquired by a bona
fide purchaser, a Manager on behalf of the
Issuer shall execute, and upon a
Manager's written request the Trustee shall
authenticate and deliver, in
exchange for or in lieu of any such
mutilated, destroyed, lost or stolen
Transition Bond, a replacement Transition
Bond of like Series (and, if
applicable, Tranche), tenor and initial
principal amount in Authorized
Denominations, bearing a number not
contemporaneously outstanding; provided,
however, that if any such destroyed, lost
or stolen Transition Bond, but not a
mutilated Transition Bond, shall have
become or within seven days shall be due
and payable, or shall have been called for
redemption, instead of issuing a
replacement Transition Bond, the Issuer may
pay such destroyed, lost or stolen
Transition Bond when so due or payable or
upon the Redemption Date without
surrender thereof. If, after the delivery
of such replacement Transition Bond or
payment of a destroyed, lost or stolen
Transition Bond pursuant to the proviso
to the preceding sentence, a bona fide
purchaser of the original Transition Bond
in lieu of which such replacement
Transition Bond was issued, or in respect of
which such payment was made, presents for
payment such original Transition Bond,
the Issuer and the Trustee shall be
entitled to recover such replacement
Transition Bond (or such payment) from the
Person to whom it was delivered or
any Person
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taking such replacement Transition Bond
from such Person to whom such
replacement Transition Bond was delivered
or any assignee of such Person, except
a bona fide purchaser, and shall be
entitled to recover upon the security or
indemnity provided therefor to the extent
of any loss, damage, cost or expense
incurred by the Issuer or the Trustee in
connection therewith.
Upon the
issuance of any replacement Transition Bond under this Section,
the Issuer or the Trustee may require the
payment by the Holder of such
Transition Bond of a sum sufficient to
cover any tax or other governmental
charge that may be imposed in relation
thereto and any other reasonable expenses
(including the fees and expenses of the
Trustee and its counsel) connected
therewith.
Every
replacement Transition Bond issued pursuant to this Section in
replacement of any mutilated, destroyed,
lost or stolen Transition Bond shall
constitute an original additional
contractual obligation of the Issuer, whether
or not the mutilated, destroyed, lost or
stolen Transition Bond shall be at any
time enforceable by anyone, and shall be
entitled to all the benefits of this
Indenture equally and proportionately with
any and all other Transition Bonds
duly issued hereunder.
The provisions
of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and
remedies with respect to the replacement or
payment of mutilated, destroyed, lost or
stolen Transition Bonds.
SECTION 2.07. PERSONS
DEEMED OWNER. Prior to due presentment for
registration of transfer of any Transition
Bond, the Issuer, the Trustee, the
Transition Bond Registrar and any agent of
the Issuer, the Transition Bond
Registrar or the Trustee may treat the
Person in whose name any Transition Bond
is registered (as of the day of
determination) as the owner of such Transition
Bond for the purpose of receiving payments
of Principal of and premium, if any,
and Interest on such Transition Bond and
for all other purposes whatsoever,
whether or not such Transition Bond be
overdue, and neither the Issuer, the
Trustee, the Transition Bond Registrar nor
any agent of the Issuer, the
Transition Bond Registrar or the Trustee
shall be affected by notice to the
contrary.
SECTION 2.08.
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST; INTEREST
ON OVERDUE PRINCIPAL AND PREMIUM, IF ANY;
PRINCIPAL, PREMIUM AND INTEREST RIGHTS
PRESERVED.
(a) The
Transition Bonds of each Series shall accrue Interest as
provided
in the related Series Supplement, at the
applicable Bond Rate specified therein,
and such Interest shall be payable on each
Payment Date as specified therein.
Any installment of Interest, principal or
premium, if any, payable on any
Transition Bond which is punctually paid or
duly provided for by the Issuer on
the applicable Payment Date shall be paid
to the Person in whose name such
Transition Bond (or one or more Predecessor
Transition Bonds) is registered on
the Record Date for such Payment Date, by
check mailed first-class, postage
prepaid, to such Person's address as it
appears on the Transition Bond Register
on such Record Date, or in such other
manner as may be provided in the related
Series Supplement, except that (i) upon
application to the Trustee by any Holder
owning Transition Bonds of any Series or
Tranche in the principal amount of
$10,000,000 or more not later than the
applicable Record Date payment will be
made by wire
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transfer to an account maintained and
specified by such Holder and (ii) with
respect to Book-Entry Transition Bonds,
payments will be made by wire transfer
in immediately available funds to the
account designated by the Holder of the
applicable global Transition Bond unless
and until such global Transition Bond
is exchanged for definitive Transition
Bonds (in which event payments shall be
made as provided above) and except for the
final installment of principal and
premium, if any, payable with respect to
such Transition Bond on a Payment Date
which shall be payable as provided in
clause (b) below. The funds represented by
any such checks returned undelivered shall
be held in accordance with Section
3.03.
(b) The
principal of each Transition Bond of each Series (and, if
applicable, Tranche) shall be payable in
installments on each Payment Date
specified in the Expected Amortization
Schedule included in the form of
Transition Bond attached to the Series
Supplement for such Transition Bonds, but
only to the extent that moneys are
available for such payment pursuant to
Section 8.02; provided that installments of
principal not paid when scheduled to
be paid shall be paid upon receipt of
moneys available for such purpose, in the
manner set forth in the applicable Expected
Amortization Schedule. Failure to
pay principal of each Transition Bond of a
Series in accordance with such
Expected Amortization Schedule because
moneys are not available pursuant to
Section 8.02 to make such payments shall
not constitute a Default or Event of
Default under this Indenture with respect
to that Series. Notwithstanding the
foregoing, the entire unpaid principal
amount of the Transition Bonds of any
Series or Tranche shall be due and payable,
if not previously paid (i) on the
Series Final Maturity Date (or, if
applicable, Tranche Final Maturity Date)
therefor, (ii) on the date on which the
Transition Bonds of all Series have been
declared immediately due and payable in
accordance with Section 5.02 or (iii) on
the Redemption Date, if any, therefor. The
Trustee shall notify the Person in
whose name a Transition Bond is registered
at the close of business on the
Record Date preceding the Payment Date on
which the Issuer expects that the
final installment of principal of and
premium, if any, and Interest on such
Transition Bond will be paid. Such notice
shall be mailed no later than five
days prior to such Expected Final Payment
Date and shall specify that such final
installment of principal and premium, if
any, will be payable only upon
presentation and surrender of such
Transition Bond and shall specify the place
where such Transition Bond may be presented
and surrendered for payment of such
installment, which, so long as any
Transition Bonds are listed on the Luxembourg
Stock Exchange, shall include the office of
the paying agent in Luxembourg
appointed pursuant to Section 3.02. Notices
in connection with redemptions of
Transition Bonds shall be mailed to
Transition Bondholders as provided in
Section 10.03.
(c) If the
Issuer defaults in a payment of Interest on the Transition
Bonds
of any Series, the Issuer shall pay
defaulted Interest (plus Interest on such
defaulted Interest at the applicable Bond
Rate to the extent lawful) in any
lawful manner. The Issuer may pay such
defaulted Interest to the Persons who are
Transition Bondholders on a subsequent
special record date, which date shall be
at least fifteen Business Days prior to the
special payment date. The Issuer
shall fix or cause to be fixed any such
special record date and payment date,
and, at least 10 days before any such
special record date, the Issuer shall mail
to each affected Transition Bondholder a
notice that states the special record
date, the payment date and the amount of
defaulted Interest to be paid.
SECTION 2.09.
CANCELLATION. All Transition Bonds surrendered for payment,
registration of transfer, exchange or
redemption shall, if surrendered to any
Person other than the
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Trustee, be delivered to the Trustee and
shall be promptly canceled by the
Trustee. The Issuer may at any time deliver
to the Trustee for cancellation any
Transition Bonds previously authenticated
and delivered hereunder which the
Issuer may have acquired in any manner
whatsoever, and all Transition Bonds so
delivered shall be promptly canceled by the
Trustee. No Transition Bonds shall
be authenticated in lieu of or in exchange
for any Transition Bonds canceled as
provided in this Section, except as
expressly permitted by this Indenture. All
canceled Transition Bonds may be held or
disposed of by the Trustee in
accordance with its standard retention or
disposal policy as in effect at the
time unless the Issuer shall direct by an
Issuer Order that they be destroyed or
returned to it; provided that such Issuer
Order is timely and the Transition
Bonds have not been previously disposed of
by the Trustee.
SECTION 2.10.
AMOUNT; AUTHENTICATION AND DELIVERY OF TRANSITION BONDS. The
aggregate principal amount of Transition
Bonds that may be authenticated and
delivered under this Indenture shall not
exceed $1,851,000.00.
Transition Bonds
of each Series created and established by a Series
Supplement may from time to time be
executed by a Manager on behalf of the
Issuer and delivered to the Trustee for
authentication and thereupon the same
shall be authenticated and delivered by the
Trustee upon Issuer Request and upon
delivery to the Trustee at the Issuer's
expense of the following; provided,
however, that except with respect to items
(1), (4)(a)(i) and (4)(a)(vi) below,
compliance with the following conditions
and delivery of the following documents
shall be required only in connection with
the original issuance of a Transition
Bond or Bonds of such Series:
(1) Issuer
Action. An Issuer Order authorizing and directing the
execution,
authentication and delivery of the
Transition Bonds by the Trustee or the
authenticating agent and specifying the
principal amount of Transition Bonds to
be authenticated.
(2) Authorizing
Certificate. A certified resolution of the Managers
authorizing the execution and delivery of
the Series Supplement for the
Transition Bonds applied for and the
execution, authentication and delivery of
such Transition Bonds.
(3) Series
Supplement. A Series Supplement in form satisfactory to the
Trustee for the Series of Transition Bonds
being issued, which shall set forth
the provisions and form of the Transition
Bonds of such Series (and, if
applicable, each Tranche thereof).
(4) Certificates
of the Issuer and the Seller.
(a) An Issuer
Officer's Certificate dated as of the Series Issuance
Date,
stating:
(i) that no Default has occurred and is continuing under this
Indenture and that the issuance of the Transition Bonds being
issued
will not result in any
Default;
(ii) that the Issuer has not assigned any interest or
participation in the Series Trust Estate, except for the Grant
contained in the applicable Series Supplement; that the Issuer has
the
power and authority to Grant the Series Trust Estate, and to Grant
a
security interest in and a Lien upon the Series Trust Estate,
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<PAGE>
to the Trustee, free and clear of any other security interest,
Liens,
adverse claims and options; and that such security interest is
a
perfected security interest in all right, title and interest in and
to
the Series Trust Estate free and clear of any Lien, except the Lien
of
this Indenture;
(iii) that the Issuer has appointed an Independent registered
public accounting firm contemplated in Section 8.05 and
identifying
such firm;
(iv) that attached thereto are duly executed, true and complete
copies of the applicable Sale Agreement, Servicing Agreement,
Administration Agreement, and Intercreditor Agreement;
(v) that all filings with the PUCT pursuant to the Texas
Electric
Choice Plan and the Financing Order and all filings required under
the
Texas Electric Choice Plan and all UCC financing statements
with
respect to the Series Trust Estate for that Series of Transition
Bonds
that are required to be filed by the terms of the Financing Order,
the
Texas Electric Choice Plan, the applicable Sale Agreement, the
applicable Servicing Agreement or this Indenture have been filed
as
required; and
(vi) that all conditions precedent provided in the Basic
Documents relating to the authentication and delivery of the
Transition Bonds have been complied with.
(b) An Officer's Certificate from the Seller, dated as of the
Series
Issuance Date,
to the effect that:
(i) in the case of the Transition Property to be transferred to
the Issuer on such date, immediately prior to the conveyance
thereof
to the Issuer pursuant to the applicable Sale Agreement, the
Seller
was the sole owner of the rights and interests under the
Financing
Order that will comprise the Transition Property upon transfer to
the
Issuer and such ownership interest was perfected; such
Transition
Property has been validly transferred and sold to the Issuer free
and
clear of all Liens (other than Liens created by the Issuer pursuant
to
this Indenture) and such transfer is absolute, irrevocable and
has
been perfected; the Seller has the power and authority to own,
sell
and assign the rights and interests under the Financing Order
that
will comprise the Transition Property upon transfer to the Issuer;
and
the Seller has duly authorized such sale and assignment to the
Issuer;
and
(ii) the Financing Order creating such Transition Property
attached to such certificate is in full force and effect and the
copy
of the Financing Order attached thereto is true and complete.
(5) Issuer
Opinion of Counsel. An Issuer Opinion of Counsel, portions of
which may be delivered by counsel for the
Issuer and portions of which may be
delivered by counsel for the Seller and/or
the Servicer, dated as of the Series
Issuance Date subject to customary
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<PAGE>
qualifications, acceptable to the Trustee,
to the collective effect that (or, in
the case of subsections (d), (e) and (f)
below, in the form of):
(a) regarding the Financing Order, that (i) such Financing Order
is
final and
non-appealable and in full force and effect and (ii) the
Transition Bonds
being issued are authorized to be issued under the
Financing
Order;
(b) regarding the Issuer:
(i) the Issuer has the power and authority to execute and
deliver
the Series Supplement and this Indenture and to issue the
Transition
Bonds being issued, each of the Series Supplement and this
Indenture
and such Transition Bonds have been duly authorized, executed
and
delivered, and the Issuer is duly organized and is validly existing
in
good standing under the laws of the jurisdiction of its
organization;
(ii) no authorization, approval or consent of any governmental
body is required for the valid issuance, authentication or delivery
of
such Transition Bonds, except for any such authorization, approval
or
consent as already has been obtained and such registrations as
are
required under the Blue Sky and securities laws of any State;
(iii) the Transition Bonds being issued, when executed and
authenticated in accordance with the provisions of the Indenture
and
delivered, will constitute valid and binding obligations of the
Issuer
except as such enforceability may be subject to bankruptcy,
insolvency, reorganization or other laws relating to or
affecting
creditors' rights generally and to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) entitled to the benefits of the
Indenture and the related Series Supplement;
(iv) this Indenture (including the related Series Supplement),
the applicable Sale Agreement, the applicable Administration
Agreement, the applicable Servicing Agreement and any
applicable
Intercreditor Agreement are valid and binding agreements of the
Issuer, enforceable against the Issuer in accordance with their
respective terms, except as such enforceability may be subject
to
bankruptcy, insolvency, reorganization or other laws relating to
or
affecting creditors' rights generally and to general principles
of
equity (regardless of whether such enforceability is considered in
a
proceeding in equity or at law);
(c) regarding the Seller, the Servicer, CenterPoint Houston and
the
Administrator:
the applicable Sale Agreement, the applicable Servicing
Agreement, any
applicable Intercreditor Agreement, and the applicable
Administration
Agreement are valid and binding agreements of the Seller,
the Servicer,
CenterPoint Houston and the Administrator, respectively (as
to which any
such Person is a party), enforceable against the Seller, the
Servicer,
CenterPoint Houston and the Administrator in accordance with
their terms
except as such enforceability may be subject to bankruptcy,
insolvency,
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<PAGE>
reorganization
or other laws relating to or affecting creditors' rights
generally and to
general principles of equity (regardless of whether such
enforcement is
considered in a proceeding in equity or at law);
(d) Schedule 2a attached hereto with respect to the sale and
transfer
of the
Transition Property from the Seller to the Issuer;
(e)
Schedule 2b attached hereto with respect to the Grant of a
security
interest under the Texas Electric Choice Plan in such Series
Trust
Estate to the
Trustee for the benefit of the Transition Bondholders;
(f) Schedule 2c attached hereto with respect to the Grant of a
security
interest under the UCC in such Series Trust Estate to the
Trustee
for the benefit
of the Transition Bondholders;
(g) the Indenture has been duly qualified under the Trust
Indenture
Act and either (i) the Series
Supplement for the Transition Bonds applied
for has been
duly qualified under the Trust Indenture Act or (ii) no such
qualification of
such Series Supplement is necessary;
(h) all instruments furnished to the Trustee conform to the
requirements of
this Indenture and constitute all the documents required to
be delivered
hereunder for the Trustee to authenticate and deliver the
Transition Bonds
applied for and all conditions precedent provided for in
this Indenture
relating to the authentication and delivery of such
Transition Bonds
(unless waived in writing by the Trustee) have been
complied
with;
(i) either (A) the registration statement covering the
Transition
Bonds is
effective under the Securities Act of 1933 and, to the best of
such counsel's
knowledge and information, no stop order suspending the
effectiveness of
such registration statement has been issued under the
Securities Act
of 1933 nor have proceedings therefor been instituted by the
Commission or
(B) the Transition Bonds are exempt from the registration
requirements
under the Securities Act of 1933;
(j) the applicable Sale Agreement, the applicable Servicing
Agreement,
and the
applicable Administration Agreement have been duly authorized,
executed and
delivered by the Seller, the Servicer, the Issuer and the
Administrator,
respectively (as to which any such Person is a party);
(k) any applicable Intercreditor Agreement has been duly
authorized,
executed and
delivered by CenterPoint Houston, the Servicer and the Issuer;
and
(l) the Issuer is not now and, following the issuance of the
Transition Bonds
will not be, required to be registered under the
Investment
Company Act of 1940, as amended.
(6)
Reserved.
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<PAGE>
(7) Rating
Agency Condition. The Trustee shall receive written
confirmation
from each Rating Agency that such Series of
Transition Bonds will be rated as
set forth in the applicable Series
Supplement.
(8) Bill of
Sale. If the issuance of a Series of Transition Bonds is a
Financing Issuance, the Bill of Sale
delivered to the Issuer under the
applicable Sale Agreement with respect to
the Transition Property being
purchased with the proceeds of such
Financing Issuance.
(9) Moneys for
Refunding. If the issuance of a Series of Transition Bonds
is a Refunding Issuance, the amount of
money necessary to pay the outstanding
Principal balance of, and premium and
Interest on, the Transition Bonds being
refunded to the Redemption Date for the
Transition Bonds, is to be deposited
into a separate account with the
Trustee.
(10) Required
Capital Amount. Evidence satisfactory to the Trustee that the
Required Capital Amount for such Series has
been credited to the Capital
Subaccount.
SECTION 2.11.
BOOK-ENTRY TRANSITION BONDS. Unless otherwise specified in
the related Series Supplement, each Series
of Transition Bonds, upon original
issuance, will be issued in the form of a
typewritten Transition Bond or
Transition Bonds representing the
Book-Entry Transition Bonds, to be delivered
to DTC, as the initial Clearing Agency, by,
or on behalf of, the Issuer. Such
Transition Bond shall initially be
registered on the Transition Bond Register in
the name of Cede & Co., the nominee of
the initial Clearing Agency, and no
Transition Bond Owner will receive a
definitive Transition Bond representing
such Transition Bond Owner's interest in
such Transition Bond, except as
provided in Section 2.13. Unless and until
definitive, fully registered
Transition Bonds of any Series (the
"Definitive Transition Bonds") replacing the
Book-Entry Transition Bonds have been
issued to Transition Bondholders of that
Series pursuant to Section 2.13 or pursuant
to any applicable Series Supplement
relating thereto:
(a) the
provisions of this Section shall be in full force and effect;
(b) the
Transition Bond Registrar and the Trustee shall be entitled to
deal
with the Clearing Agency for all purposes
of this Indenture (including the
payment of Principal of and premium, if
any, and Interest on the Transition
Bonds and the giving of instructions or
directions hereunder) as the sole Holder
of the Transition Bonds, and shall have no
obligation to the Transition Bond
Owners;
(c) to the
extent that the provisions of this Section conflict with any
other provisions of this Indenture, the
provisions of this Section shall
control;
(d) the rights
of Transition Bond Owners shall be exercised only through
the Clearing Agency and shall be limited to
those established by law and
agreements between such Transition Bond
Owners and the Clearing Agency or the
Clearing Agency Participants. Pursuant to
the DTC Agreement, unless and until
Definitive Transition Bonds are issued
pursuant to Section 2.13, the initial
Clearing Agency will make book-entry
transfers among the Clearing Agency
Participants and receive and transmit
payments of Principal of and premium, if
any, and Interest on the Transition Bonds
to such Clearing Agency Participants;
and
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<PAGE>
(e) whenever
this Indenture requires or permits actions to be taken based
upon instructions or directions of Holders
of Transition Bonds evidencing a
specified percentage of the Outstanding
Amount of the Transition Bonds or a
Series or Tranche thereof, the Clearing
Agency shall be deemed to represent such
percentage only to the extent that it has
received instructions to such effect
from Transition Bond Owners or Clearing
Agency Participants owning or
representing, respectively, such required
percentage of the beneficial interest
in the Transition Bonds or such Series or
Tranche and has delivered such
instructions to the Trustee.
SECTION 2.12.
NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Transition Bondholders
is required under this Indenture,
unless and until Definitive Transition
Bonds shall have been issued to
Transition Bond Owners pursuant to Section
2.13 and the applicable Series
Supplement, the Trustee, the Servicer and
the Paying Agent shall give all such
notices and communications specified herein
to be given to Transition
Bondholders to the Clearing Agency, and
shall have no obligation to the
Transition Bond Owners.
SECTION 2.13.
DEFINITIVE TRANSITION BONDS. If (i) the Clearing Agency or
the Issuer advises the Trustee in writing
that the Clearing Agency is no longer
willing or able to properly discharge its
responsibilities as nominee and
depository with respect to any Book-Entry
Series or Tranche of Transition Bonds
and the Issuer is unable to locate a
qualified successor, (ii) the Issuer
advises the Trustee in writing that it
elects to discontinue use of the
book-entry-only transfers through the
Clearing Agency with respect to any Series
or Tranche of Transition Bonds and to
deliver certificated Transition Bonds to
the Clearing Agency or (iii) after the
occurrence of an Event of Default,
Transition Bond Owners representing
beneficial interests aggregating at least a
majority of the Outstanding Amount of the
Transition Bonds of all Series
maintained as Book-Entry Transition Bonds
advise the Issuer and, through the
Clearing Agency, the Trustee in writing
that the continuation of a book-entry
system through the Clearing Agency is no
longer in the best interests of the
Transition Bond Owners of such Series, then
the Trustee shall notify all
affected Transition Bond Owners and the
Issuer of the occurrence of any such
event and of the availability of Definitive
Transition Bonds to affected
Transition Bond Owners requesting the same.
Upon surrender by the Clearing
Agency to the Trustee of the typewritten
Transition Bond or Transition Bonds
representing the Book-Entry Transition
Bonds of that Series, accompanied by
registration instructions, a Manager on
behalf of the Issuer shall execute and
the Trustee shall authenticate the
Definitive Transition Bonds in accordance
with the instructions of the Clearing
Agency. None of the Issuer, the Transition
Bond Registrar or the Trustee shall be
liable for any delay in delivery of such
instructions and may conclusively rely on,
and shall be protected in relying on,
such instructions. Upon the issuance of
Definitive Transition Bonds, the Trustee
shall recognize the Holders of the
Definitive Transition Bonds as Transition
Bondholders.
Definitive
Transition Bonds will be transferable and exchangeable at the
offices of the Transition Bond Registrar
or, with respect to any Transition
Bonds listed on the Luxembourg Stock
Exchange, at the offices of the transfer
agent appointed pursuant to the second
paragraph of Section 3.02. With respect
to any transfer of such listed Transition
Bonds, the new Definitive Transition
Bonds registered in the names specified by
the transferee and the original
transferor shall be available at the
offices of such transfer agent.
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ARTICLE III
COVENANTS
SECTION 3.01.
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST. The
Issuer will duly and punctually pay the
Principal of and premium, if any, and
Interest on the Transition Bonds in
accordance with the terms of the Transition
Bonds, this Indenture and the applicable
Series Supplement; provided that except
on the Series Final Maturity Date, the
Tranche Final Maturity Date or the
Redemption Date for a Series or Tranche of
Transition Bonds or upon the
acceleration of the Transition Bonds
following the occurrence of an Event of
Default, the Issuer shall only be obligated
to pay the Principal of such
Transition Bonds on each Payment Date
therefor to the extent moneys are
available for such payment pursuant to
Section 8.02. Amounts properly withheld
under the Code or other applicable tax laws
by any Person from a payment to any
Transition Bondholder of Interest or
Principal or premium, if any, shall be
considered as having been paid by the
Issuer to such Transition Bondholder for
all purposes of this Indenture.
SECTION 3.02.
MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain in
the Borough of Manhattan, the City of New
York or in Wilmington, Delaware, an
office or agency where Transition Bonds may
be surrendered for registration of
transfer or exchange, and where notices and
demands to or upon the Issuer in
respect of the Transition Bonds and this
Indenture may be served. The Issuer
hereby initially appoints the Corporate
Trust Office of Deutsche Bank Trust
Company Americas in the Borough of
Manhattan, the City of New York to serve as
its agent for the foregoing purposes. The
Issuer will give prompt written notice
to the Holders and the Trustee of the
location, and of any change in the
location, of any such office or agency. If
at any time the Issuer shall fail to
maintain any such office or agency or shall
fail to furnish such agent with the
address thereof, such surrenders, notices
and demands may be made or served at
the Corporate Trust Office, and the Issuer
hereby appoints Deutsche Bank Trust
Company Americas as its agent to receive
all such surrenders, notices and
demands.
To the extent
any of the Transition Bonds are listed on the Luxembourg
Stock Exchange and the rules of such
exchange so require, (i) the Issuer will
maintain in Luxembourg (A) an office and a
transfer agent where Transition Bonds
may be surrendered for registration of
transfer or exchange, (B) an office and a
listing agent where notices and demands to
or upon the Issuer in respect of the
Transition Bonds and this Indenture may be
served, and (C) an office and a
paying agent where payments in respect of
the Transition Bonds may be made and
(ii) any reference in this Indenture to the
office or agency of the Issuer
referred to in this Section 3.02 shall also
refer to such offices, and the
transfer, listing and paying agents, of the
Issuer in Luxembourg, as applicable.
The Issuer shall give the Trustee and any
other agent appointed under this
Section 3.02 written notice of the location
and identity, and of any change in
the location or identity, of any such
office or agency.
SECTION 3.03.
MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Section 8.02(a), all payments of Principal
of, or premium and Interest on, the
Transition Bonds that are to be made from
amounts withdrawn from the Collection
Account pursuant to Section 8.02(d) or (e)
or Section 4.03 shall be made on
behalf of the Issuer by the Trustee or by
another Paying Agent, and no amounts
so withdrawn from the Collection Account
for payments
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of Transition Bonds shall be paid over to
the Issuer except as provided in this
Section and in Section 8.02.
The Issuer
hereby appoints Deutsche Bank Trust Company Americas as the
Paying Agent hereunder and, in connection
therewith the Paying Agent agrees that
it will (and the Issuer shall cause any
other Paying Agent other than the
Trustee to execute and deliver to the
Trustee an instrument in which such Paying
Agent shall agree with the Trustee (and
during such time as the Trustee acts as
Paying Agent, it hereby so agrees that it
will)), subject to the provisions of
this Section:
(a) hold all
sums held by it for the payment of Principal of, or premium or
Interest on, the Transition Bonds in trust
for the benefit of the Persons
entitled thereto until such sums shall be
paid to such Persons or otherwise
disposed of as herein provided and pay such
sums to such Persons as herein
provided;
(b) give the
Trustee written notice of any Default by the Issuer (or any
other obligor upon the Transition Bonds) of
which the Paying Agent has actual
knowledge in the making of any payment
required to be made with respect to the
Transition Bonds;
(c) at any time
during the continuance of any such Default, upon the
written request of the Trustee, forthwith
pay to the Trustee all sums so held in
trust by such Paying Agent;
(d) immediately
resign as a Paying Agent and forthwith pay to the Trustee
all sums held by the Paying Agent in trust
for the payment of Transition Bonds
if at any time the Paying Agent ceases to
meet the standards required of Paying
Agents at the time of its appointment;
and
(e) comply with
all requirements of the Code and other applicable tax laws
with respect to the withholding from any
payments made by it on any Transition
Bonds of any applicable withholding taxes
imposed thereon and with respect to
any applicable reporting requirements in
connection therewith.
The Issuer may
at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any
other purpose, by Issuer Order direct
any Paying Agent to pay to the Trustee all
sums held in trust by such Paying
Agent, such sums to be held by the Trustee
upon the same trusts as those upon
which the sums were held by such Paying
Agent; and upon such payment by any
Paying Agent to the Trustee, such Paying
Agent shall be released from all
further liability with respect to such
money.
Subject to
applicable laws with respect to escheat of funds, any money
held
by the Trustee or any Paying Agent in trust
for the payment of any amount of
Principal of, premium, if any, or Interest
on any Transition Bond and remaining
unclaimed for two years after such amount
has become due and payable shall be
discharged from such trust and be paid to
the Issuer upon delivery by the Issuer
of an Issuer Order; and the Holder of such
Transition Bond shall thereafter, as
an unsecured general creditor, look only to
the Issuer for payment thereof (but
only to the extent of the amounts so paid
to the Issuer), and all liability of
the Trustee or such Paying Agent with
respect to such trust money shall
thereupon cease; provided, however, that
the Trustee or such Paying Agent,
before being required to make any such
repayment, may at the expense of the
Issuer cause to be published once, in a
newspaper published in the English
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language, customarily published on each
Business Day and of general circulation
in the City of New York, notice that such
money remains unclaimed and that,
after a date specified therein, which shall
not be less than 30 days from the
date of such publication, any unclaimed
balance of such money then remaining
will be repaid to the Issuer. The Trustee
may also adopt and employ, at the
expense of the Issuer, any other reasonable
means of notification of such
repayment (including mailing notice of such
repayment to Holders whose
Transition Bonds have been called but have
not been surrendered for redemption
or whose right to or interest in moneys due
and payable but not claimed is
determinable from the records of the
Trustee or of any Paying Agent, at the last
address of record for each such
Holder).
SECTION 3.04.
EXISTENCE. Subject to Section 3.10, the Issuer shall keep in
full effect its existence, rights and
franchises as a statutory limited
liability company under the laws of the
State of Delaware (unless it becomes, or
any successor Issuer hereunder is or
becomes, organized under the laws of any
other State or of the United States of
America, in which case the Issuer will
keep in full effect its existence, rights
and franchises under the laws of such
other jurisdiction) and will obtain and
preserve its qualification to do
business in each jurisdiction in which such
qualification is or shall be
necessary to protect the validity and
enforceability of this Indenture, the
Transition Bonds, the Trust Estate and each
other instrument or agreement
included in the Trust Estate.
SECTION 3.05. PROTECTION OF
TRUST ESTATE. The Issuer shall from time to
time execute and deliver, and file if
required, all such supplements and
amendments hereto and all such filings
(including filings with the PUCT pursuant
to the Texas Electric Choice Plan),
financing statements, continuation
statements, instruments of further
assurance and other instruments, and shall
take such other action reasonably necessary
to:
(a) maintain and
preserve the Grant, Lien and security interest (and the
priority thereof) of this Indenture or
carry out more effectively the purposes
hereof;
(b) perfect,
publish notice of or protect the validity of any Grant made or
to be made by this Indenture, including all
Series Supplements;
(c) enforce any
of the Trust Estate, including its rights under any swap
agreement;
(d) preserve and
defend title to the Trust Estate and the rights of the
Trustee and the Transition Bondholders in
the Trust Estate against the claims of
all Persons and parties; or
(e) pay any and
all taxes levied or assessed upon all or any part of the
Trust Estate.
The Issuer hereby authorizes the Trustee to
execute upon written direction any
filing with the PUCT, financing statement,
continuation statement or other
instrument required to be filed pursuant to
this Section.
SECTION 3.06.
OPINIONS AS TO TRUST ESTATE. (a) On or before March 31 in
each calendar year, while any Series is
outstanding, beginning on March 31,
2006, the Issuer shall furnish to the
Trustee an Issuer Opinion of Counsel
stating that, in the opinion of such
counsel, either (i) all necessary action
has been taken with respect to the
recording, filing, re-recording and re-filing
of this Indenture, any Supplemental
Indentures and any other requisite
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<PAGE>
documents and, with respect to the
execution and filing of any filings pursuant
to the Texas Electric Choice Plan, the
Financing Order or the UCC, financing
statements and continuation statements as
are necessary to maintain the Lien and
security interest, and the first priority
thereof, created by this Indenture and
reciting the details of such action or (ii)
no such action is necessary to
maintain such Lien and security interest,
and the first priority thereof. Such
Issuer Opinion of Counsel shall also
describe the recording, filing,
re-recording and re-filing of this
Indenture, any Supplemental Indentures and
any other requisite documents, and the
execution and filing of any filings
pursuant to the Texas Electric Choice Plan,
the Financing Order or the UCC,
financing statements and continuation
statements that will, in the opinion of
such counsel, be required to maintain the
Grant, Lien and security interest of
this Indenture until March 31 in the
following calendar year.
(b) Prior to the
effectiveness of any amendment to any Sale Agreement or
Servicing Agreement, the Issuer shall
furnish to the Trustee an Issuer Opinion
of Counsel either (i) stating that, in the
opinion of such counsel, all filings,
including filings pursuant to the UCC, have
been executed and filed that are
necessary fully to preserve and protect the
interest of the Issuer and the
Trustee in the Transition Property and the
proceeds thereof, and reciting the
details of such filings or referring to
prior Opinions of Counsel in which such
details are given, or (ii) stating that, in
the opinion of such counsel, no such
action shall be necessary to preserve and
protect such interest.
SECTION 3.07.
PERFORMANCE OF OBLIGATIONS; COMMISSION FILINGS.
(a) The Issuer
(i) shall diligently pursue any and all actions to enforce
its rights under the Basic Documents and
each other instrument or agreement
included in the Trust Estate and (ii) shall
not take any action and will use its
best efforts not to permit any action to be
taken by others that would release
any Person from any of such Person's
covenants or obligations under any such
Basic Document, instrument or agreement or
that would result in the amendment,
hypothecation, subordination, termination
or discharge of, or impair the
validity or effectiveness of, any such
Basic Document, instrument or agreement,
except, in each case, as expressly provided
in such Basic Document or such other
instrument or agreement.
(b) The Issuer
may contract with other Persons to assist it in performing
its duties under this Indenture, and any
performance of such duties by a Person
identified to the Trustee in an Issuer
Officer's Certificate shall be deemed to
be action taken by the Issuer. Initially,
the Issuer has contracted with the
Administrator to assist the Issuer in
performing its duties under this
Indenture.
(c) The Issuer
shall punctually perform and observe all of its obligations
and agreements contained in the Basic
Documents and in all other instruments and
agreements included in the Trust
Estate.
(d) The Issuer
shall file with the Commission such periodic reports, if
any, as are required (without regard to the
number of Holders of Bonds to the
extent permitted by and consistent with the
Issuer's obligations under
applicable law) from time to time under
Section 13 or Section 15(d) of the
Exchange Act so long as any Transition
Bonds remain Outstanding, and the Issuer
shall not voluntarily suspend or terminate
its filing obligations with the
Commission.
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<PAGE>
The Issuer shall also, to the extent
permitted by and consistent with the
Issuer's obligations under applicable law,
post on its website or furnish or
file in the periodic reports and other
reports to be filed with the Commission
pursuant to the Exchange Act, as described
below, the following information in
respect of each series of Outstanding
Transition Bonds to the extent such
information is reasonably available to the
Issuer:
(i) a statement of Transition Charge remittances to the Trustee (to
be
included in the
Form 10-Q or Form 10-K filed subsequent to the respective
report);
(ii) a statement reporting the balance in the Collection Account
and
the balance in
each subaccount of the Collection Account as of the end of
each quarter or
the most recent date available (to be included in the Form
10-Q or Form
10-K);
(iii) a statement showing the balance of Outstanding Transition
Bonds
that reflects the actual periodic
payments made on the Transition Bonds (to
be included in
the Form 10-Q or Form 10-K);
(iv) the Semiannual Servicer's Certificate which is required to
be
submitted
pursuant to the applicable Servicing Agreement (to be filed
with
a Form 10-Q,
Form 10-K or Form 8-K);
(v) the text (or a link to the website where a reader can find
the
text) of each
true-up filing in respect of the Outstanding Series of
Transition Bonds
and the results of each true-up filing (to be included in
either a Form
10-Q, Form 10-K or Form 8-K);
(vi) any change in the long-term or short-term credit ratings of
the
Servicer
assigned by the Rating Agencies (to be filed or furnished in a
Form 8-K);
(vii) material legislative or regulatory developments directly
relevant to the
Outstanding Transition Bonds (to be filed or furnished in a
Form 8-K);
and
(viii) a quarterly statement (to be included in each Form 10-Q
and
Form 10-K)
affirming that, to the Issuer's knowledge, in all material
respects, for
each materially significant REP, (A) each REP has been billed
in compliance
with the requirements outlined in the Financing Order; (B)
each REP has
made payments in compliance with the requirements outlined in
the Financing
Order; and (C) each REP satisfies the creditworthiness
requirements of
the Financing Order or describing the Servicer's actions if
(A), (B) or (C)
has not occurred.
In addition, the
Issuer shall, to the extent permitted by and consistent
with the Issuer's obligations under
applicable law, cause to be posted on the
website associated with the Issuer's
parent's website:
A. the Final Prospectus for each series of Outstanding
Transition
Bonds;
B. the Semiannual Servicer's Certificate delivered for each Series
of
Transition Bonds
pursuant to each Servicing Agreement;
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C. the periodic reports described above in this subsection (d);
and
D. a current organization chart for the Issuer and the Servicer
(unless the
Servicer is not related to the Issuer, in which case the
Servicer shall
post two separate organization charts), in each case
disclosing the
parents and material subsidiaries of the Issuer and the
Servicer.
(e) The Issuer
shall make all filings required under the Texas Electric
Choice Plan relating to the transfer of the
ownership or security interest in
the Transition Property other than those
required to be made by the Seller or
any Servicer pursuant to the Basic
Documents.
SECTION 3.08.
NEGATIVE COVENANTS. So long as any Transition Bonds are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture, any
Supplemental
Indenture, any
Sale Agreement or any Servicing Agreement, sell, transfer,
exchange or
otherwise dispose of any of the assets of the Issuer or the
Trust Estate,
unless directed to do so by the Trustee in accordance with
Article V;
(ii) terminate its existence, dissolve or liquidate in whole or
in
part, except as
Section 3.10 permits;
(iii) claim any credit on, or make any deduction from the Principal
or
premium, if any,
or Interest payable in respect of, the Transition Bonds
(other than
amounts properly withheld from such payments under the Code) or
assert any claim
against any present or former Transition Bondholder by
reason of the
payment of taxes levied or assessed upon the Issuer or any
part of the
Trust Estate;
(iv) (A) permit the validity or effectiveness of this Indenture to
be
impaired, or
permit the Lien of this Indenture to be amended, hypothecated,
subordinated,
terminated or discharged, or permit any Person to be released
from any
covenants or obligations with respect to the Transition Bonds
under this
Indenture except as may be expressly permitted hereby, (B)
permit any Lien (other than the
Lien created by this Indenture) to be
created on or
extend to or otherwise arise upon or burden the Trust Estate
or any part
thereof or any interest therein or the proceeds thereof or (C)
permit the Lien
of this Indenture not to constitute a continuing valid
first priority
security interest in the Trust Estate;
(v) except as contemplated by this Indenture, any Supplemental
Indenture, any
Sale Agreement, or any Servicing Agreement, enter into any
swap, hedge or
other similar financial arrangement;
(vi) elect to be classified as an association taxable as a
corporation
for federal
income tax purposes or otherwise take any action, file any tax
return or make
any election inconsistent with the treatment of the Issuer,
for purposes of
federal taxes and, to the extent consistent with applicable
state tax law,
state income and franchise tax purposes, as a disregarded
entity that is
not separate from the sole owner of the Issuer; or
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(vii) take any action that is the subject of a Rating Agency
Condition
if such action
would result in a reduction or withdrawal of the
then-current
rating on any Outstanding Series or Tranche of Transition
Bonds.
SECTION 3.09.
ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will deliver to
the Trustee, within 120 days after the end
of each fiscal year of the Issuer
(which, as of the date hereof, is the
calendar year) commencing with the fiscal
year 2005, an Issuer Officer's Certificate
(a copy of which the Issuer will
deliver to each Rating Agency and the PUCT)
stating, as to the Manager signing
such Issuer Officer's Certificate, that
(i) a review of the activities of the Issuer during such year
(or
relevant portion
thereof) and of performance under this Indenture has been
made under such
Manager's supervision; and
(ii) to the best of such Manager's knowledge, based on such
review,
the Issuer has
complied with all conditions and covenants under this
Indenture
throughout such fiscal year (or relevant portion thereof), or,
if
there has been a
default in compliance with any such condition or covenant,
describing each
such default known to the Manager and the nature and status
thereof.
SECTION 3.10.
ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The
Issuer shall not consolidate or merge with
or into or convert into any other
Person or sell substantially all of its
assets to any other Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such
consolidation,
merger or conversion or to whom substantially all of such
assets are sold
shall be a Person organized and existing under the laws of
the United
States of America or any State and shall expressly assume by a
Supplemental
Indenture, executed and delivered to the Trustee, in form
satisfactory to
the Trustee, the due and punctual payment of the Principal
of and premium,
if any, and Interest on all Outstanding Transition Bonds
and the
performance or observance of every agreement and covenant of
this
Indenture on the
part of the Issuer to be performed or observed, all as
provided herein and in
the applicable Series Supplement or Series
Supplements;
(ii) the Person (if other than the Issuer) formed by or surviving
such
consolidation,
merger or conversion or to whom substantially all of such
assets are sold
shall expressly assume all obligations and succeed to all
rights of the
Issuer under the Basic Documents to which the Issuer is a
party (or under
which the Issuer has rights) pursuant to an assignment and
assumption
agreement executed and delivered to the Trustee, in form
satisfactory to
the Trustee;
(iii) immediately after giving effect to such consolidation,
merger,
conversion or
sale, no Default or Event of Default shall have occurred and
be
continuing;
(iv) prior notice to the Rating Agencies shall have been provided
and
the Rating
Agency Condition shall have been satisfied with respect to such
consolidation,
merger, conversion or sale;
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(v) the Issuer shall have received an opinion of Independent
counsel
(and shall have
delivered copies thereof to the Trustee) to the effect that
such
consolidation, merger, conversion or sale (a) will not have any
material adverse
tax consequence to the Issuer or any Transition
Bondholder, (b)
complies with this Indenture and all of the conditions
precedent herein
relating to such transaction and (c) will result in the
Trustee
maintaining a continuing valid first priority perfected
security
interest in the
Trust Estate;
(vi) none of the Transition Property, any Financing Order or
the
Issuer's rights
under the Texas Electric Choice Plan or the Financing Order
shall be
impaired thereby; and
(vii) any action as is necessary to maintain the Lien created by
this
Indenture shall
have been taken.
SECTION 3.11.
SUCCESSOR OR TRANSFEREE.
(a) Upon any
consolidation, merger or conversion of the Issuer in
accordance with Section 3.10, the Person
formed by or surviving such
consolidation, merger or conversion (if
other than the Issuer) shall succeed to,
and be substituted for, and may exercise
every right and power of, the Issuer
under this Indenture with the same effect
as if such Person had been named as
the Issuer herein.
(b) Except for
such obligations set forth in Section 6.07, upon any sale by
the Issuer of substantially all of its
assets in a sale which complies with
Section 3.10, immediately upon the delivery
of written notice to the Trustee
from the Person acquiring such assets
stating that the Issuer is to be so
released, the Issuer will be released from
every covenant and agreement of this
Indenture to be observed or performed on
the part of the Issuer with respect to
the Transition Bonds and from every
covenant and agreement of the Basic
Documents to be observed or performed on
the part of the Issuer.
SECTION 3.12. NO
OTHER BUSINESS. The Issuer shall not engage in any
business other than purchasing and owning
the Transition Property provided for
in Financing Orders issued by the PUCT from
time to time, issuing Transition
Bonds from time to time, pledging its
interest in the Trust Estate to the
Trustee under this Indenture in order to
secure the Issuer's obligations as set
forth in the Series Supplements, entering
into and performing under the Basic
Documents relating to the Transition Bonds
and any swap agreement executed in
connection therewith, and performing
activities that are necessary, suitable or
convenient to accomplish these purposes or
are incidental thereto.
SECTION 3.13. NO
BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable,
directly or indirectly, for any
indebtedness except for the Transition
Bonds and any obligations under any
credit enhancement or swap agreement for
any Series of Transition Bonds and
except as contemplated by the Basic
Documents.
SECTION 3.14.
GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except as
contemplated by the Basic Documents, the
Issuer shall not make any loan or
advance or credit to, or guarantee
(directly or indirectly or by an instrument
having the effect of assuring another's
payment or performance on any obligation
or capability of so doing or
otherwise),
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endorse or otherwise become contingently
liable, directly or indirectly, in
connection with the obligations, stocks or
dividends of, or own, purchase,
repurchase or acquire (or agree
contingently to do so) any stock, obligations,
assets or securities of, or any other
interest in, or make any capital
contribution to, any other Person other
than any Eligible Investments.
SECTION 3.15.
CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long-term or operating
lease or otherwise) for capital assets
(either realty or personalty) other than
Transition Property purchased from the
Seller pursuant to, and in accordance with,
any Sale Agreement.
SECTION 3.16.
RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make
any distribution (by reduction of
capital or otherwise), whether in cash,
property, securities or a combination
thereof, to any owner of a beneficial
interest in the Issuer or otherwise with
respect to any ownership or equity interest
in, or ownership security of, the
Issuer, (ii) redeem, purchase, retire or
otherwise acquire for value any such
ownership or equity interest or security or
(iii) set aside or otherwise
segregate any amounts for any such purpose;
provided, however, that if no Event
of Default shall have occurred and be
continuing, the Issuer may make, or cause
to be made, any such distributions to any
owner of a beneficial interest in the
Issuer or otherwise with respect to any
ownership or equity interest or security
in or of the Issuer using funds distributed
to the Issuer pursuant to Section
8.02(d) or which are not otherwise subject
to the Lien of this Indenture to the
extent that such distributions would not
cause the book value of the remaining
equity in the Issuer to decline below 0.5%
of the original principal amount of
all Series of Transition Bonds which remain
outstanding. The Issuer will not,
directly or indirectly, make payments to or
distributions from the Collection
Account except in accordance with the Basic
Documents.
SECTION 3.17.
NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to deliver to
the Trustee, the PUCT, the Rating Agencies
and, to the extent the rules and
regulations of the Luxembourg Stock
Exchange so require, any agent in Luxembourg
appointed pursuant to the second paragraph
of Section 3.02 written notice in the
form of an Issuer Officer's Certificate of
any Default or Event of Default
hereunder or under any of the Basic
Documents, its status and what action the
Issuer is taking or proposes to take with
respect thereto within five Business
Days after the occurrence thereof.
SECTION 3.18.
PURCHASE OF SUBSEQUENT TRANSITION PROPERTY. (a) The Issuer
may from time to time purchase or acquire
Subsequent Transition Property from
the Seller pursuant to a Sale Agreement,
subject to the conditions specified in
paragraph (b) below.
(b) The Issuer
shall be permitted to purchase or acquire 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 Transfer Date:
(i) The Seller shall have provided the Issuer, the PUCT, the
Trustee
and the Rating
Agencies with an Addition Notice, which shall be given not
later than 10
days prior to the related Subsequent Transfer Date,
specifying the
Subsequent Transfer Date for such Subsequent Transition
Property and the
aggregate amount of the Transition Charges related to such
Subsequent
Transition Property, and shall have provided any
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information
reasonably requested by any of the foregoing Persons with
respect to the
Subsequent Transition Property then being conveyed to the
Issuer;
(ii) The Texas Electric Choice Plan, such Sale Agreement and
the
related
Financing Order shall be in full force and effect and a filing
shall have been
made pursuant to Section 39.309(d) of the Texas Electric
Choice Plan;
(iii) As of such Subsequent Transfer Date, the Seller will not
be
insolvent and
will not have been made insolvent (within the meaning of the
Bankruptcy Code
or the Delaware Uniform Fraudulent Transfer Act) by such
sale and
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
sale and transfer;
(v) As of such Subsequent Transfer Date, no material breach by
the
Seller of its
representations, warranties or covenants in such Sale
Agreement and no
Servicer Default shall exist;
(vi) As of such Subsequent Transfer Date, the Issuer shall have
sufficient funds
available to pay the purchase price for the Subsequent
Transition
Property to be sold to it on such date and all conditions to
the
subsequent
issuance of one or more Series of new Transition Bonds intended
to provide such
funds set forth in Section 2.10 shall have been satisfied
or waived;
(vii) The Issuer shall have delivered to the Trustee an
Officer's
Certificate
confirming the satisfaction of each condition precedent
specified in
this paragraph (b);
(viii) (A) The Issuer shall have delivered to the Rating
Agencies
(with a copy to
the PUCT) any Opinions of Counsel required by the Rating
Agencies and (B)
the Issuer shall have delivered to the Trustee the Opinion
of Counsel
required by Section 3.06(b);
(ix) the Seller shall have received and delivered to the Issuer
and
the Trustee: (i)
an opinion of outside tax counsel (as selected by the
Seller, and in
form and substance reasonably satisfactory to the Issuer and
the Trustee) to
the effect that the Issuer will not be subject to United
States federal
income tax as an entity separate from its sole owner and
that the
Transition Bonds issued in connection with the purchase of such
Subsequent
Transition Property will be treated as debt of the Issuer's
sole
owner for United
States federal income tax purposes, (ii) an opinion of
outside tax
counsel (as selected by the Seller, and in form and substance
reasonably
satisfactory to the Issuer and the Trustee) or, if the Seller
so
chooses, a
ruling from the Internal Revenue Service, in either case to the
effect that, for
United States federal income tax purposes, the issuance of
such Transition
Bonds will not result in gross income to the Seller, and
(iii) an opinion
of outside tax counsel (as selected by the Seller, and in
form and
substance reasonably satisfactory to the issuer and the
Trustee)
to the effect
that such subsequent issuance will not adversely affect the
characterization
of any such Transition Bonds then Outstanding as
obligations of
the Issuer's sole owner. The opinion of outside tax counsel
described above
may, if the Seller so chooses, be conditioned on the
receipt by the
Seller of one or more letter
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rulings from the
Internal Revenue Service and in rendering such opinion
outside tax
counsel shall be entitled to rely on the rulings contained in
such ruling
letters and to rely on the representations made, and
information
supplied, to the Internal Revenue Service in connection with
such letter
rulings; and
(x) The Seller and the Issuer shall have taken any action required
to
maintain the
first perfected ownership interest of the Issuer in the
Subsequent
Transition Property and the proceeds thereof, and the Issuer
shall have taken
any action required to maintain the first priority
perfected
security interest of the Trustee in the Subsequent Transition
Property and the
proceeds thereof.
SECTION 3.19.
INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative
of the Trustee, during the Issuer's
normal business hours, to examine all the
books of account, records, reports,
and other papers of the Issuer, to make
copies and extracts therefrom, to cause
such books to be audited annually by an
Independent registered public accounting
firm, and to discuss the Issuer's affairs,
finances and accounts with the
Issuer's officers, employees and an
Independent registered public accounting
firm, all at such reasonable times and as
often as may be reasonably requested.
The Trustee shall hold and shall cause its
representatives to hold, in
confidence all such information except to
the extent disclosure may be required
by law (and all reasonable applications for
confidential treatment are
unavailing) and except to the extent that
the Trustee may reasonably determine
that such disclosure is consistent with its
obligations hereunder.
SECTION 3.20.
SALE AGREEMENT, INTERCREDITOR AGREEMENT, ADMINISTRATION
AGREEMENT AND SERVICING AGREEMENT
COVENANTS.
(a) The Issuer
agrees to take all such lawful actions to enforce its rights
under any Sale Agreement, any Intercreditor
Agreement, the Administration
Agreement and any Servicing Agreement and
to compel or secure the performance
and observance by the Seller, the
Administrator, the Servicer and CenterPoint
Houston of each of their respective
obligations to the Issuer under or in
connection with any Sale Agreement, any
Intercreditor Agreement, the
Administration Agreement and any Servicing
Agreement in accordance with the
terms thereof. So long as no Event of
Default occurs and is continuing, but
subject to Section 3.20(f), the Issuer may
exercise any and all rights,
remedies, powers and privileges lawfully
available to the Issuer under or in
connection with any Sale Agreement, any
Intercreditor Agreement, the
Administration Agreement and any Servicing
Agreement; provided that such action
shall not adversely affect the interests of
the Holders in any material respect.
(b) If an Event
of Default occurs and is continuing, the Trustee may, and
at the direction (which direction shall be
in writing) of the holders of a
majority of the Outstanding Amount of
Transition Bonds of all Series or Tranches
affected thereby shall, exercise all
rights, remedies, powers, privileges and
claims of the Issuer against the Seller,
CenterPoint Houston, the Administrator
and the Servicer, as the case may be, under
or in connection with the
Administration Agreement and the applicable
Sale Agreement, Intercreditor
Agreement and Servicing Agreement,
including the right or power to take any
action to compel or secure performance or
observance by the Seller, CenterPoint
Houston, the Administrator or the Servicer
of each of their obligations to the
Issuer thereunder and to give any consent,
request, notice,
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direction, approval, extension or waiver
under the Administration Agreement and
the applicable Sale Agreement,
Intercreditor Agreement and Servicing Agreement,
and any right of the Issuer to take such
action shall be suspended.
(c) Except as
set forth in Section 3.20(e) of this Indenture, with the
prior written consent of the Trustee and
the consent of the PUCT pursuant to
Section 9.07 if the amendment increases
ongoing qualified costs as defined in
the Financing Order, the Administration
Agreement, any Sale Agreement,
Intercreditor Agreement (except that any
amendment to an Intercreditor Agreement
shall not require the consent of the PUCT)
and Servicing Agreement may be
amended in accordance with the provisions
thereof, so long as the Rating Agency
Condition is satisfied in connection
therewith, at any time and from time to
time, without the consent of the Transition
Bondholders of the related Series;
provided that such amendment shall not
adversely affect the interest of any
Transition Bondholder of that Series in any
material respect.
(d) Except as
set forth in Section 3.20(e) of this Indenture, if the
Issuer, the Seller, CenterPoint Houston,
the Administrator, the Servicer or any
other party to the respective agreement
proposes to amend, modify, waive,
supplement, terminate or surrender, or
agree to any amendment, modification,
waiver, supplement, termination or
surrender of, the terms of any Sale
Agreement, Intercreditor Agreement,
Administration Agreement, or Servicing
Agreement, or waive timely performance or
observance by the Seller, CenterPoint
Houston, the Administrator or the Servicer
under any Sale Agreement,
Intercreditor Agreement, Administration
Agreement or Servicing Agreement, in
each case in such a way as would materially
and adversely affect the interests
of Transition Bondholders of any Series,
the Issuer shall first notify the
Rating Agencies of the proposed amendment,
modification, waiver, supplement,
termination or surrender and, upon receipt
of notification regarding whether the
Rating Agency Condition has been satisfied,
shall notify the Trustee, the Paying
Agent, the Securities Intermediary, the
Transition Bond Registrar and the PUCT
in writing and the Trustee shall notify the
Transition Bondholders of such
Series of the proposed amendment,
modification, waiver, supplement, termination
or surrender and whether the Rating Agency
Condition has been satisfied with
respect thereto. The Trustee shall consent
to such proposed amendment,
modification, waiver, supplement,
termination or surrender only with the prior
written consent of the holders of a
majority of the Outstanding Amount of
Transition Bonds of the Series or Tranches
materially and adversely affected
thereby and, if the proposed amendment,
modification, waiver, supplement,
termination or surrender would increase
ongoing qualified costs as defined in
the Financing Order, the consent of the
PUCT pursuant to Section 9.07 other than
with respect to any Intercreditor
Agreement. If any such amendment,
modification, waiver, supplement,
termination or surrender shall be so consented
to by the Trustee or such Holders, the
Issuer agrees to execute and deliver, in
its own name and at its own expense, such
agreements, instruments, consents and
other documents as shall be necessary or
appropriate in the circumstances. For
so long as any of the Transition Bonds are
listed on the Luxembourg Stock
Exchange and the rules of that exchange so
require, notice of such proposed
action will be published by an agent to be
appointed by the Issuer in accordance
with such rules promptly following its
effectiveness.
(e) If the
Issuer or the Servicer proposes to amend, modify, waive,
supplement, terminate or surrender, or to
agree to any amendment, modification,
supplement, termination,
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waiver or surrender of, the Transition
Charge Adjustment Process, the Issuer
shall notify the PUCT, the Trustee, the
Paying Agent, the Securities
Intermediary and the Transition Bond
Registrar in writing and the Trustee shall
notify the Transition Bondholders of such
proposal and the Trustee shall consent
thereto only with the consent of the PUCT
pursuant to Section 9.07 and the prior
written consent of the holders of a
majority of the Outstanding Amount of
Transition Bonds of the Series or Tranches
materially and adversely affected
thereby and only if the Rating Agency
Condition has been satisfied with respect
thereto.
(f) Promptly
following a default by the Seller under any Sale Agreement, by
the Administrator under the Administration
Agreement, by CenterPoint Houston or
any successor to CenterPoint Houston under
any Intercreditor Agreement, or the
occurrence of a Servicer Default under any
Servicing Agreement, and at the
Issuer's expense, the Issuer agrees to take
all such lawful actions as the
Trustee may request to compel or secure the
performance and observance by each
of the Seller, CenterPoint Houston, the
Administrator or the Servicer of their
obligations under and in accordance with
that Sale Agreement, Administration
Agreement, Intercreditor Agreement or
Servicing Agreement, as the case may be,
in accordance with the terms thereof, and
to exercise any and all rights,
remedies, powers and privileges lawfully
available to the Issuer under or in
connection with such agreements to the
extent and in the manner directed by the
Trustee, including the transmission of
notices of any default by the Seller,
CenterPoint Houston, the Administrator or
the Servicer, respectively, thereunder
and the institution of legal or
administrative actions or Proceedings to compel
or secure performance of their obligations
under that Sale Agreement,
Administration Agreement, Intercreditor
Agreement or Servicing Agreement, as
applicable.
(g) If the
Issuer shall have knowledge of the occurrence of a Servicer
Default under any Servicing Agreement, the
Issuer shall (i) promptly give
written notice thereof to the Trustee, the
PUCT, the Paying Agent, the
Securities Intermediary, the Transition
Bond Registrar and the Rating Agencies,
(ii) specify in such notice the action, if
any, the Issuer is taking with
respect to such default and (iii) take such
reasonable steps as are available to
it to remedy such defaults or shall take
such actions as shall have been
directed by the Trustee, as the case may
be, provided that, notwithstanding the
foregoing, the Issuer shall not take any
action to terminate the Servicer's
rights and powers under that Servicing
Agreement unless a Servicer Default shall
have occurred and be continuing, and the
Trustee shall not direct the Issuer to
take such action unless a Servicer Default
shall have occurred and be
continuing.
(h) As promptly
as possible after the giving of notice of termination to
the Servicer, the PUCT and the Rating
Agencies of the Servicer's rights and
powers pursuant to that Servicing
Agreement, the Trustee upon the written
direction of the majority of the
Outstanding Amount of Transition Bonds of the
related Series and subject to the
provisions of the related Intercreditor
Agreement shall appoint a successor
Servicer (the "Successor Servicer"), and
such Successor Servicer shall accept its
appointment by a written assumption in
a form acceptable to the Issuer and the
Trustee. A person shall qualify as a
Successor Servicer only if such Person
satisfies the requirements set forth in
that Servicing Agreement. If within 30 days
after the delivery of the notice
referred to above, a Successor Servicer
shall not have been appointed and
accepted its appointment as such, the
Trustee may petition the PUCT or a court
of competent jurisdiction to appoint a
Successor Servicer. In connection with
any such appointment, the Issuer may make
such arrangements for the compensation
of such Successor Servicer as it and such
Successor
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<PAGE>
Servicer shall agree, subject to the
limitations set forth below and in that
Servicing Agreement, and in accordance with
that Servicing Agreement, the Issuer
shall enter into an agreement with such
Successor Servicer for the servicing of
the Transition Property related to that
Series (such agreement to be in form and
substance satisfactory to the Trustee).
(i) Upon
termination of the Servicer's rights and powers pursuant to any
Servicing Agreement, the Trustee shall
promptly notify the Issuer, the PUCT, the
Transition Bondholders of the related
Series and the Rating Agencies in writing
of such termination. As soon as a Successor
Servicer is appointed, the Issuer
shall notify the Trustee, the PUCT, the
Transition Bondholders of the related
Series, the Paying Agent, the Securities
Intermediary, the Transition Bond
Registrar and the Rating Agencies of such
appointment, specifying in such notice
the name and address of such Successor
Servicer.
SECTION 3.21.
TAXES. So long as any of the Transition Bonds are
outstanding, the Issuer shall pay all
taxes, assessments and governmental
charges imposed upon it or any of its
properties or assets or with respect to
any of its franchises, business, income or
property before any penalty accrues
thereon if the failure to pay any such
taxes, assessments and governmental
charges would, after any applicable grace
periods, notices or other similar
requirements, result in a Lien on the Trust
Estate.
ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 4.01.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE.
(a) The
Transition Bonds of any Series, all moneys payable with respect
thereto and this Indenture as it applies to
such Series shall cease to be of
further effect and the Lien hereunder shall
be released with respect to such
Series, Interest shall cease to accrue on
the Transition Bonds of such Series
and the Trustee, on written demand of and
at the expense of the Issuer, shall
execute proper instruments acknowledging
satisfaction and discharge of this
Indenture with respect to the Transition
Bonds of such Series, when
(A) either
(1) all Transition Bonds of such Series theretofore
authenticated and delivered (other than (i) Transition Bonds
that
have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.06 and (ii) Transition Bonds
for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter
repaid
to the Issuer or discharged from such trust, as provided in
Section 3.03) have been delivered to the Trustee for
cancellation; or
(2) the Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Trustee cash, in trust for such
purpose, in an amount sufficient to make payments of Principal
of
and, premium, if
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any, and Interest on the Transition Bonds of such Series and to
pay and discharge the entire indebtedness on such Transition
Bonds not theretofore delivered to the Trustee;
(B) the Issuer has paid or caused to be paid all other sums
payable
hereunder by the
Issuer with respect to such Series; and
(C) the Issuer has delivered to the Trustee an Issuer Officer's
Certificate, an
Issuer Opinion of Counsel and (if required by the TIA or
the Trustee) an
Independent Certificate from an Independent registered
public
accounting firm, each stating that all conditions precedent
herein
provided for
relating to the satisfaction and discharge of this Indenture
with respect to
Transition Bonds of such Series have been complied with.
(b) Subject to
Sections 4.01(c) and 4.02, the Issuer at any time may
terminate (i) all its obligations under
this Indenture with respect to the
Transition Bonds of any Series ("Legal
Defeasance Option") or (ii) its
obligations under Sections 3.05, 3.06
(other than with respect to the Defeasance
Subaccounts and all funds and U.S.
Government Obligations therein), 3.07(a), (b)
and (c), 3.08, 3.10, 3.16 and 3.19 and the
operation of Section 5.01(iv) (other
than with respect to the Defeasance
Subaccount and U.S. Government Obligations
therein) ("Covenant Defeasance Option")
with respect to any Series of Transition
Bonds. The Issuer may exercise the Legal
Defeasance Option with respect to any
Series of Transition Bonds notwithstanding
its prior exercise of the Covenant
Defeasance Option with respect to such
Series.
If the Issuer
exercises the Legal Defeasance Option with respect to any
Series, the maturity of the Transition
Bonds of such Series may not be (a)
accelerated because of an Event of Default
or (b) except as provided in Section
4.02, redeemed. If the Issuer exercises the
Covenant Defeasance Option with
respect to any Series, the maturity of the
Transition Bonds of such Series may
not be accelerated because of an Event of
Default specified in Section 5.01(iv).
Upon
satisfaction of the conditions set forth herein to the exercise of
the
Legal Defeasance Option or the Covenant
Defeasance Option with respect to any
Series of Transition Bonds, the Trustee, on
written demand of and at the expense
of the Issuer, shall execute proper
instruments acknowledging satisfaction and
discharge of the obligations that are
terminated pursuant to such exercise.
(c)
Notwithstanding Sections 4.01(a) and (b) above, (i) rights of
registration of transfer and exchange, (ii)
rights of substitution of mutilated,
destroyed, lost or stolen Transition Bonds,
(iii) rights of Transition
Bondholders to receive payments of
Principal, premium, if any, and Interest, but
only from the amounts deposited with the
Trustee for such payments, (iv)
Sections 4.03 and 4.04, (v) the rights,
obligations and immunities of the
Trustee hereunder (including the rights of
the Trustee under Section 6.07 and
the obligations of the Trustee under
Section 4.03) and (vi) the rights of
Transition Bondholders under this Indenture
with respect to the property
deposited with the Trustee payable to all
or any of them, shall survive until
the Transition Bonds of the Series as to
which this Indenture or certain
obligations hereunder have been satisfied
and discharged pursuant to Section
4.01(a) or 4.01(b) and have been paid in
full. Thereafter, the obligations in
Sections 6.07 and 4.04 with respect to such
Series shall survive.
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SECTION 4.02.
CONDITIONS TO DEFEASANCE. The Issuer may exercise the Legal
Defeasance Option or the Covenant
Defeasance Option with respect to any Series
of Transition Bonds only if:
(a) the Issuer
irrevocably deposits or causes to be deposited in trust with
the Trustee cash or U.S. Government
Obligations for the payment of Principal of
and premium, if any, and Interest on such
Series of Transition Bonds to the
Expected Payment Date or Redemption Date
therefor, as applicable, and all other
amounts due and payable hereunder, such
deposit to be made in the Defeasance
Subaccount for such Series of Transition
Bonds;
(b) the deposit
in the Defeasance Subaccount pursuant to subsection (a) of
this Section 4.02 constitutes proceeds from
a refunding of the Transition Bonds;
(c) the Issuer
delivers to the Trustee a certificate from a nationally
recognized Independent registered public
accounting firm expressing its opinion
that the payments of Principal and Interest
when due and without reinvestment on
the deposited U.S. Government Obligations
plus any deposited cash without
investment will provide cash at such times
and in such amounts (but, in the case
of the Legal Defeasance Option only, not
more than such amounts) as will be
sufficient to pay in respect of the
Transition Bonds of such Series (i) subject
to clause (ii), Principal in accordance
with the Expected Amortization Schedule
therefor, (ii) if such Series is to be
redeemed, the redemption price therefor
on the Redemption Date therefor and (iii)
Interest when due;
(d) in the case
of the Legal Defeasance Option, the expiration of 95 days
after the deposit is made and during such
95-day period no Default specified in
Section 5.01(v) or (vi) shall have occurred
and be continuing at the end of the
period; provided, however, that in
determining whether a default under Section
5.01(v) has occurred, the requirement that
the decree or order shall remain
unstayed and in effect for 90 days shall be
disregarded;
(e) no Default
has occurred and is continuing on the day of such deposit
and after giving effect thereto;
(f) in the case
of the Legal Defeasance Option, the Issuer delivers to the
Trustee an Issuer Opinion of Counsel
stating that (i) the Issuer has received
from, or there has been published by, the
Internal Revenue Service a ruling, or
(ii) since the date of execution of this
Indenture, there has been a change in
the applicable federal income tax law, in
either case to the effect that, and
based thereon such opinion shall confirm
that, the Holders of the Transition
Bonds of such Series will not recognize
income, gain or loss for federal income
tax purposes as a result of the exercise of
such Legal Defeasance Option and
will be subject to federal income tax on
the same amounts, in the same manner
and at the same times as would have been
the case if such Legal Defeasance had
not occurred;
(g) in the case of the Covenant
Defeasance Option, the Issuer delivers to
the Trustee an Issuer Opinion of Counsel to
the effect that the Holders of the
Transition Bonds of such Series will not
recognize income, gain or loss for
federal income tax purposes as a result of
the exercise of such Covenant
Defeasance Option and will be subject to
federal income tax on the same
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amounts, in the same manner and at the same
times as would have been the case if
such Covenant Defeasance had not
occurred;
(h) the Issuer
delivers to the Trustee an Issuer Officer's Certificate and
an Issuer Opinion of Counsel, each stating
that all conditions precedent to the
satisfaction and discharge of the
Transition Bonds of such Series to the extent
contemplated by this Article IV have been
complied with;
(i) the Issuer
delivers to the Trustee an Opinion of Counsel to the effect
that (i) in a case under the Bankruptcy
Code in which CenterPoint Houston (or
any of its Affiliates, other than the
Issuer) is the debtor, the court would
hold that the deposited cash or U.S.
government obligations would not be in the
bankruptcy estate of CenterPoint Houston
(or any of its Affiliates, other than
the Issuer, that deposited the cash or U.S.
government obligations); and (ii) in
the event CenterPoint Houston (or any of
its Affiliates, other than the Issuer,
that deposited the cash or U.S. government
obligations), were to be a debtor in
a case under the Bankruptcy Code, the court
would not disregard the separate
legal existence of CenterPoint Houston (or
any of its Affiliates, other than the
Issuer, that deposited the cash or U.S.
government obligations) and the Issuer
so as to order substantive consolidation
under the Bankruptcy Code of the
Issuer's assets and liabilities with the
assets and liabilities of CenterPoint
Houston (or any of its Affiliates, other
than the Issuer, that deposited the
cash or U.S. government obligations),
and
(j) the Rating
Agency Condition shall have been satisfied with respect to
the exercise of any Legal Defeasance Option
or Covenant Defeasance Option.
Notwithstanding
any other provision of this Section 4.02 to the contrary,
no delivery of cash or U.S. Government
Obligations to the Trustee under this
Section shall terminate any obligations of
the Issuer under this Indenture with
respect to any Transition Bonds which are
to be redeemed prior to the Expected
Final Payment Date therefor until such
Transition Bonds shall have been
irrevocably called or designated for
redemption on a date thereafter on which
such Transition Bonds may be redeemed in
accordance with the provisions of this
Indenture and proper notice of such
redemption shall have been given in
accordance with the provisions of this
Indenture or the Issuer shall have given
the Trustee, in form satisfactory to the
Trustee, irrevocable written
instructions to give, in the manner and at
the times prescribed herein, notice
of redemption of such Series.
SECTION 4.03.
APPLICATION OF TRUST MONEY. All moneys or U.S. Government
Obligations deposited with the Trustee
pursuant to Section 4.01 or 4.02 hereof
with respect to any Series of Transition
Bonds shall be held in trust in the
Defeasance Subaccount for such Series and
applied by it, in accordance with the
provisions of the Transition Bonds and this
Indenture, to the payment, either
directly or through any Paying Agent, as
the Trustee may determine, to the
Holders of the particular Transition Bonds
for the payment or redemption of
which such moneys have been deposited with
the Trustee, of all sums due and to
become due thereon for Principal, premium,
if any, and Interest. Such moneys
shall be segregated and held apart solely
for paying such Transition Bonds and
such Transition Bonds shall not be entitled
to any amounts on deposit in the
Collection Account other than amounts on
deposit in the Defeasance Subaccount
for such Transition Bonds.
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SECTION 4.04.
REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection with
the satisfaction and discharge of this
Indenture or the Covenant Defeasance
Option or Legal Defeasance Option with
respect to the Transition Bonds of any
Series, all moneys then held by any Paying
Agent other than the Trustee under
the provisions of this Indenture or any
Intercreditor Agreement with respect to
such Transition Bonds shall, upon written
demand of the Issuer, be paid to the
Trustee to be held and applied according to
Section 3.03 and thereupon such
Paying Agent shall be released from all
further liability with respect to such
moneys.
ARTICLE V
REMEDIES
SECTION 5.01.
EVENTS OF DEFAULT. "Event of Default" 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 Transition Bond
of
such Series when
the same becomes due and payable and the continuation of
such default for
five Business Days;
(ii) default in the payment of the then unpaid Principal of any
Transition Bond
of such Series on the Series Final Maturity Date for such
Series or, if
applicable, any Tranche of such Series on the Tranche Final
Maturity Date
for such Tranche;
(iii) default in the payment of the redemption price for any
Transition Bond
on the Redemption Date therefor;
(iv) default in the observance or performance of any covenant
or
agreement of the
Issuer made in this Indenture (other than a covenant or
agreement, a
default in the observance or performance of which is
specifically
dealt with in clause (i), (ii) or (iii) above), any covenant
or agreement of
the Issuer made in any interest rate swap agreement, hedge
agreement or
credit enhancement agreement permitted under Section 3.13
hereof and any
Series Supplement, or any representation or warranty of the
Issuer made
herein or therein or in any certificate or other writing
delivered
pursuant hereto or in connection herewith proving to have been
incorrect in any
material respect as of the time when made (other than a
covenant,
agreement or representation or warranty expressly included
herein
or in a Series
Supplement solely for the benefit of a different Series of
Transition
Bonds), and any such default shall continue or not be cured,
for
a period of 30
days after the earlier of (A) there shall have been given,
by registered or
certified mail, to the Issuer by the Trustee or to the
Issuer and the
Trustee by the Holders of at least 25% of the Outstanding
Amount of
Transition Bonds 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
(B) the date the
Issuer has knowledge of the default;
-33-
<PAGE>
(v) the filing of a decree or order for relief by a court
having
jurisdiction in
respect of the Issuer or any substantial part of the Trust
Estate securing
such Series in an involuntary case or Proceeding 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 for the Issuer or its
property or for
any substantial part of the Series Trust Estate securing
such Series, or
ordering the winding-up or liquidation of the Issuer's
affairs, and
such decree or order shall remain unstayed and in effect for a
period of 90
consecutive days;
(vi) the commencement by the Issuer of a voluntary case or
Proceeding
under any
applicable federal or state bankruptcy, insolvency or other
similar law now
or hereafter in effect, or the consent by the Issuer to the
entry of an
order for relief in an involuntary case under any such law, or
the consent by
the Issuer to the appointment or taking possession by a
receiver,
liquidator, assignee, custodian, trustee, sequestrator or
similar
official of the
Issuer or for any substantial part of the Series Trust
Estate securing
such Series, or the making by the Issuer of any general
assignment for
the benefit of creditors, or the failure by the Issuer
gene
