NOTE INDENTURE

Exhibit 4.1.2.

EXECUTION COPY

 

 

CEC FUNDING, LLC,

 

as Note Issuer

 

and

 

THE BANK OF NEW YORK,

 

as Note Trustee

 

 

NOTE INDENTURE

 

Dated as of March 1, 2005

 

 

$409,000,000

CEC FUNDING, LLC NOTES

 

TABLE OF CONTENTS

 

 

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NOTE INDENTURE dated as of March 1, 2005, between CEC FUNDING, LLC, a Delaware limited liability company (the “Note Issuer”), and THE BANK OF NEW YORK, a New York banking corporation, as trustee (the “Note Trustee”).

 

RECITALS

 

The Note Issuer has duly authorized the execution and delivery of this Note Indenture to provide for the issuance of its Notes with an aggregate principal amount of $409,000,000 and the Note Issuer and the Note Trustee are executing and delivering this Note Indenture in order to provide for the issuance of the Notes.

 

GRANTING CLAUSE

 

The Note Issuer hereby Grants to the Note Trustee at the Issuance Date, as Note Trustee for the benefit of the Holders of the Notes and the Note Trustee, all of the Note Issuer’s right, title and interest in and to (a) the Transition Property transferred by the Seller to the Note Issuer pursuant to the Sale Agreement and all proceeds thereof, (b) the Statutory Lien, (c) the Sale Agreement, (d) the Servicing Agreement, (e) the Administration Agreement, (f) the Collection Account (including all subaccounts thereof) and all amounts or investment property on deposit therein or credited thereto from time to time, (g) all other property of whatever kind owned from time to time by the Note Issuer, including accounts, general intangibles, equipment and inventory, (h) the security interest with respect to the Transition Property granted by the Seller to the Note Issuer in the Sale Agreement, (i) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion thereof, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights to payment of any and every kind, and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing and (j) all proceeds of the foregoing (collectively, the “Collateral”); it being understood that the following do not constitute Collateral: (i) amounts required to be released pursuant to or contemplated in the terms hereof, including net investment earnings on the Capital Subaccount that are required to be released to the Note Issuer pursuant to Article VIII and (ii) proceeds from the sale of the Notes required to pay the purchase price of the Transition Property paid pursuant to the Sale Agreement and the costs of issuance with respect to the Notes or an allocable portion of the Certificates as set forth on the flow of funds memorandum delivered on the Issuance Date (together with any interest earnings thereon), it being understood that such amounts described in clauses (i) and (ii) above shall not be subject to Section 3.19.

 

The foregoing Grants are made to the Note Trustee in trust to secure the payment of principal of, interest on, and all other amounts (which shall include all amounts payable to the Note Trustee under this Note Indenture, the Certificate Indenture, the Fee and Indemnity Agreement and the other Basic Documents) owing in respect of, the Notes, including all amounts payable to the Note Trustee, the Certificate Trustee and the Delaware Trustee under this Note Indenture, the Certificate Indenture, the Fee and Indemnity Agreement and the other Basic

 

Documents (collectively, the “Secured Obligations”), equally and ratably without prejudice, priority or distinction, except as expressly provided in this Note Indenture, and to secure compliance with the provisions of this Note Indenture with respect to the Notes, all as provided in this Note Indenture. This Note Indenture constitutes a security agreement within the meaning of the UCC or the Statute to the extent that, under Massachusetts law, the provisions of the UCC or the Statute are applicable hereto.

 

The Note Trustee, as trustee on behalf of the Holders of the Notes and as agent for itself, acknowledges such Grants, accepts the trusts hereunder in accordance with the provisions hereof and agrees to perform its duties herein required.

 

AND IT IS HEREBY COVENANTED, DECLARED AND AGREED between the parties hereto that all Notes are to be issued, countersigned and delivered and that all of the Collateral is to be held and applied, subject to the further covenants, conditions, releases, uses and trusts hereinafter set forth, and the Note Issuer, for itself and any successor, does hereby covenant and agree to and with the Note Trustee and its successors in said trust, for the benefit of the Holders and the Note Trustee, as follows:

 

ARTICLE I

 

Definitions and Incorporation by Reference

 

Section 1.01. Definitions . Except as otherwise specified herein or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Note Indenture.

 

“ Act ” has the meaning specified in Section 11.03(a).

 

“ Administration Agreement ” means the Administration Agreement dated as of March 1, 2005, between Commonwealth Electric Company, as Administrator, and the Note Issuer, as the same may be amended and supplemented from time to time.

 

“ Administrator ” means Commonwealth Electric Company, a Massachusetts corporation, or any successor Administrator under the Administration Agreement.

 

“ Administration Fee ” means the fee payable to the Administrator pursuant to the Administration Agreement.

 

“ Affiliate ” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

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“ Agencies ” means collectively the Massachusetts Development Finance Agency, doing business as MassDevelopment, and the Massachusetts Health and Educational Facilities Authority.

 

“ Authorized Officer ” means, with respect to the Note Issuer, any officer of the Note Issuer who is authorized to act for the Note Issuer in matters relating to the Note Issuer and who is identified on the list of Authorized Officers delivered by the Note Issuer to the Note Trustee on the Issuance Date (as such list may be modified or supplemented by the Note Issuer from time to time thereafter).

 

“ Basic Documents ” means, collectively, this Note Indenture, the Certificate Indenture, the Declaration of Trust, the Sale Agreement, the Servicing Agreement, the Administration Agreement, the Note Purchase Agreement, the Fee and Indemnity Agreement, the Cross-Indemnity Agreement and the Underwriting Agreement.

 

“ Boston Edison ” means Boston Edison Company, a Massachusetts corporation.

 

“ Business Day ” means any day other than a Saturday, a Sunday or a day on which banking institutions or trust companies in New York, New York, Boston, Massachusetts or Wilmington, Delaware are authorized or obligated by law, regulation or executive order to remain closed.

 

“ Capital Subaccount ” has the meaning set forth in Section 8.02(a).

 

“ Certificate Issuer ” has the meaning set forth in the Certificate Indenture.

 

“ Certificate Indenture ” means the Certificate Indenture dated as of March 1, 2005, between the Certificate Issuer, the Delaware Trustee and the Certificate Trustee, as the same may be further amended and supplemented from time to time.

 

“ Certificate Trustee ” means the Person acting as certificate trustee under the Certificate Indenture.

 

“ Certificates ” has the meaning set forth in the Certificate Indenture.

 

“ Class ” means any one of the classes of Notes.

 

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder.

 

“ Collateral ” has the meaning specified in the Granting Clause of this Note Indenture.

 

“ Collection Account ” has the meaning specified in Section 8.02(a).

 

“ Corporate Trust Office ” means the principal office of the Note Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of the execution of this Note Indenture is located at 101 Barclay Street, Floor 8 West, New York, New

 

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York 10286, Attention: Asset Backed Finance Unit, or at such other address as the Note Trustee may designate from time to time by notice to the Noteholders and the Note Issuer, or the principal corporate trust office of any successor Note Trustee (the address of which the successor Note Trustee will notify the Noteholders and the Note Issuer).

 

“ Covenant Defeasance Option ” has the meaning specified in Section 4.01(b).

 

“ Cross Indemnity Agreement ” means the Cross Indemnity Agreement dated as of March 1, 2005 between the Note Issuer and BEC Funding II, LLC, as the same may be amended and supplemented from time to time.

 

“ Declaration of Trust ” has the meaning set forth in the Certificate Indenture.

 

“ Default ” means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.

 

“ Delaware Trustee ” means the Person acting as Delaware trustee under the Declaration of Trust and the Certificate Indenture.

 

“ Delaware UCC ” means the Delaware Uniform Commercial Code.

 

“ DTC Agreement ” has the meaning set forth in the Certificate Indenture.

 

“ DTE ” means the Massachusetts Department of Telecommunications and Energy and any successor thereto.

 

“ Eligible Deposit Account ” means either (a) a segregated trust account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution shall have a credit rating from each Rating Agency in one of its generic rating categories which signifies investment grade.

 

“ Eligible Institution ” means (a) the corporate trust department of the Note Trustee or (b) a depository institution organized under the laws of the United States of America, any State or the District of Columbia (or any domestic branch of a foreign bank), (i) which has either (A) a long-term unsecured debt rating of AAA by Standard & Poor’s and Aaa by Moody’s or (B) a certificate of deposit rating of A-1+ by Standard & Poor’s and P-1 by Moody’s, or any other long-term, short-term or certificate of deposit rating acceptable to the Rating Agencies and (ii) whose deposits are insured by the FDIC. If so qualified under clause (b) above, the Note Trustee may be considered an Eligible Institution for the purposes of clause (a) of the definition of Eligible Deposit Account.

 

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“ Eligible Investments ” mean instruments or investment property denominated in United States currency which evidence:

 

(a) direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United States of America;

 

(b) demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the laws of the United States of America or any state thereof (or any domestic branch of a foreign bank) and subject to supervision and examination by federal or state banking or depository institution authorities; provided , however , that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depository institution or trust company) thereof shall have a credit rating from each of the Rating Agencies in the highest short-term rating category granted thereby;

 

(c) commercial paper or other short-term obligations of any corporation organized under the laws of the United States (other than commercial paper of the Seller, NSTAR or Boston Edison) having, at the time of the investment or contractual commitment to invest therein, a rating from each of the Rating Agencies from which a rating is available in the highest short-term rating category granted thereby;

 

(d) investments in money market funds (including funds for which the Note Trustee, the Certificate Trustee or any of their Affiliates is investment manager or advisor) having a rating from each of the Rating Agencies from which a rating is available in the highest investment category granted thereby (for Standard & Poor’s such rating being “AAAm” or “AAAm-G”);

 

(e) bankers’ acceptances by any depository institution or trust company referred to in (b) above;

 

(f) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with depository institutions or trust company (acting as principal described in clause (b) above);

 

(g) repurchase obligations with respect to any security or whole loan entered into with:

 

(i) a financial institution (acting as principal) as described in clause (b) above, or

 

(ii) a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Exchange Act, the unsecured short term

 

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debt obligations of which are rated “P-1” by Moody’s and “A-1+” by S&P at the time of entering into the repurchase obligation; and

 

(h) any other investment permitted by each of the Rating Agencies;

 

provided , however , that (1) the obligor related to clauses (b), (c), (d), (f), and (g) above must have a long-term rating of at least “Aa3” or a short-term rating of at least “P-1” with respect to Moody’s only, and a short-term rating of at least “A-1+” or a long-term rating of at least “AA-” with respect to Standard & Poor’s only, (2) with respect to clause (a) above, the instruments must have a predetermined fixed dollar amount of principal at maturity that cannot vary, and if rated, the instruments must not have an “r” suffix attached to its Standard & Poor’s rating, (3) unless otherwise permitted by each Rating Agency, upon the failure of any Eligible Institution to maintain any applicable rating set forth in this definition or the definition of Eligible Institution, the related investments at such institution shall be reinvested in Eligible Investments at a successor Eligible Institution within 10 days, and (4) that all Eligible Investments must not:

 

(x)

be sold, liquidated or otherwise disposed of at a loss, prior to the maturity thereof,

 

(y)

mature later than (i) the date on which the proceeds of such Eligible Investment will be required to be on deposit in the Collection Account in order for the Note Trustee to make all required and scheduled payments and deposits into subaccounts under the Note Indenture, if such Eligible Investment is held by an Affiliate of the Note Trustee, or (ii) the Business Day prior to the date on which the proceeds of such Eligible Investment will be required to be on deposit in the Collection Account in order for the Note Trustee to make all required and scheduled payments and deposits into subaccounts under the Indenture, if such Eligible Investment is not held by an Affiliate of the Note Trustee, or

 

(z)

have maturities in excess of one year.

 

“ Event of Default ” has the meaning specified in Section 5.01.

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

“ Expected Amortization Schedule ” means, with respect to each Class of Notes, the schedule attached as Schedule A hereto.

 

“ FDIC ” means the Federal Deposit Insurance Corporation or any successor.

 

“ Fee and Indemnity Agreement ” means the fee and indemnity agreement dated as of March 1, 2005, among the Note Issuer, BEC Funding II, LLC, the Delaware Trustee, the Certificate Trustee, the Certificate Issuer and the Agencies.

 

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“ Final Maturity Date ” means, with respect to any Class of Notes, the Final Maturity Date therefor, as specified in Section 2.01(b).

 

“ Financial Asset ” means a “financial asset” as defined in Section 8-102(a)(9) of the Mass. UCC.

 

“ General Subaccount ” has the meaning set forth in Section 8.02(a).

 

“ Grant ” means mortgage, pledge, collaterally assign and grant a lien upon and a security interest pursuant to this Note Indenture. A Grant of the Collateral or of any other agreement or instrument shall include all rights, powers and options (but none of the obligations) of the Granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for payments in respect of the Collateral and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the Granting party or otherwise and generally to do and receive anything that the Granting party is or may be entitled to do or receive thereunder or with respect thereto.

 

“ Independent ” means, when used with respect to any specified Person, that the Person (a) is in fact independent of the Note Issuer, any other obligor upon the Notes, the Seller, the Servicer and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Note Issuer, any such other obligor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons and (c) is not connected with the Note Issuer, any such other obligor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions (other than service as an Independent director of BEC Funding II, LLC).

 

“ Independent Certificate ” means a certificate or opinion to be delivered to the Note Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01, made by an Independent appraiser or other expert appointed by an Issuer Order and consented to by the Note Trustee, and such opinion or certificate shall state that the signer has read the definition of “Independent” in this Note Indenture and that the signer is Independent within the meaning thereof.

 

“ Issuance Date ” has the meaning set forth in Section 2.01(c)(i).

 

“ Issuer Order ” and “ Issuer Request ” means a written order or request signed in the name of the Note Issuer by any one of its Authorized Officers and delivered to the Note Trustee.

 

“ Legal Defeasance Option ” has the meaning specified in Section 4.01(b).

 

“ Mandatory Redemption Date ” has the meaning specified in Section 10.04.

 

“ Mandatory Redemption Price ” has the meaning specified in Section 10.04.

 

“ Massachusetts UCC ” means the Massachusetts Uniform Commercial Code.

 

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“ Minimum Denomination ” means $1,000.00 or any integral multiple of $1.00 in excess thereof.

 

“ Moody’s ” means Moody’s Investors Service Inc. or its successor.

 

“ Noteholder ” or “ Holder ” means the Person in whose name a Note is registered on the Note Register.

 

“ Note Indenture ” or “ this Note Indenture ” means this instrument as originally executed and, as from time to time supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, as so supplemented or amended, or both, and shall include the forms and terms of the Notes established hereunder.

 

“ Note Interest Rate ” has the meaning specified in Section 2.01(b).

 

“ Note Issuer ” means the party named as such in this Note Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the Trust Indenture Act, each other obligor on the Notes.

 

“ Note Purchase Agreement ” has the meaning set forth in the Certificate Indenture.

 

“ Note Register ” and “ Note Registrar ” have the respective meanings specified in Section 2.05.

 

“ Notes ” has the meaning specified in Section 2.01(a).

 

“ Note Trustee ” means The Bank of New York, a New York banking corporation, as Note Trustee under this Note Indenture, or any successor Note Trustee under this Note Indenture.

 

“ NSTAR ” means NSTAR, a Massachusetts voluntary association.

 

“ Officer’s Certificate ” means a certificate signed by any Authorized Officer of the Note Issuer, under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01, and delivered to the Note Trustee.

 

“ Operating Expenses ” means all fees, costs and expenses of, and indemnities owed by, the Note Issuer, including all amounts owed by the Note Issuer to the Note Trustee, the Certificate Issuer, the Certificate Trustee, the Delaware Trustee, the Agencies, BEC Funding II, LLC and the Rating Agencies, the Servicing Fee, the Administration Fee, any fees, costs and expenses payable or reimbursable by the Note Issuer to the Administrator, Seller or Servicer and legal and accounting fees, costs and expenses of the Note Issuer and the Certificate Issuer that are allocable to the Note Issuer.

 

“ Opinion of Counsel ” means one or more written opinions of counsel who may, except as otherwise expressly provided in this Note Indenture, be an employee of or counsel to the Note Issuer and who shall be reasonably satisfactory to the Note Trustee, and which opinion or opinions shall be addressed to the Note Trustee, as trustee, shall comply with any applicable

 

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requirements of Section 11.01, and shall be in form and substance reasonably satisfactory to the Note Trustee.

 

“ Optional Redemption Date ” means the Payment Date specified by the Note Issuer for the redemption of the Notes pursuant to Section 10.01.

 

“ Optional Redemption Price ” has the meaning specified in Section 10.01.

 

“ Outstanding ” means, as of the date of determination, all Notes theretofore authenticated and delivered under this Note Indenture except:

 

(ii) Notes theretofore cancelled by the Note Registrar or delivered to the Note Registrar for cancellation;

 

(iii) Notes or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Note Trustee or any Paying Agent in trust for the Holders of such Notes ( provided , however , that if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Note Indenture or provision made therefor, reasonably satisfactory to the Note Trustee); and

 

(iv) Notes in exchange for or in lieu of other Notes which have been authenticated and delivered pursuant to this Note Indenture unless proof satisfactory to the Note Trustee is presented that any such Notes are held by a bona fide purchaser;

 

provided , however , that in determining whether the Holders of the requisite Outstanding Amount of the Notes or any Class thereof have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any Basic Document, Notes owned by the Note Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Note Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes that the Note Trustee actually knows to be so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Note Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Note Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any of the foregoing Persons.

 

“ Outstanding Amount ” means the aggregate principal amount of all Notes or, if the context requires, all Notes of a Class, Outstanding at the date of determination.

 

“ Overcollateralization Subaccount ” has the meaning specified in Section 8.02(a).

 

“ Paying Agent ” means the Note Trustee or any other Person that meets the eligibility standards for the Note Trustee specified in Section 6.11 and is authorized by the Note Issuer to make payment of principal of or interest on the Notes on behalf of the Note Issuer.

 

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“ Payment Date ” has the meaning specified in Section 2.01(c)(ii).

 

“ Person ” means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.

 

“ Predecessor Note ” means, with respect to any particular Note, every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 2.06 in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note.

 

“ Proceeding ” means any suit in equity, action at law or other judicial or administrative proceeding.

 

“ Projected Principal Balance ” means, as of any Payment Date on any Class of Notes, the projected outstanding principal amount of such Class of Notes for such Payment Date set forth in the Expected Amortization Schedule.

 

“ Rating Agency ” means, collectively, Moody’s and Standard & Poor’s. If no such organization or successor is any longer in existence, “Rating Agency” shall be a nationally recognized statistical rating organization or other comparable Person designated by the Note Issuer, notice of which designation shall be given to the Note Trustee, the Certificate Trustee and the Servicer.

 

“ Rating Agency Condition ” means, with respect to any action, that each Rating Agency shall have been given ten days prior written notice thereof and that each of the Rating Agencies shall have notified the Servicer, the Note Issuer, the Note Trustee, the Agencies and the Certificate Trustee in writing that such action will not result in a suspension, reduction or withdrawal of the then current rating by such Rating Agency of any Class of the Notes or any Class of the Certificates.

 

“ Record Date ” means, with respect to a Payment Date, Optional Redemption Date or Mandatory Redemption Date, the close of business on the last day of the calendar month preceding the calendar month in which such Payment Date, Optional Redemption Date or Mandatory Redemption Date occurs.

 

“ Registered Holder ” means the Person in whose name a Note is registered on the Note Register on the applicable Record Date.

 

“ Repurchase Date ” has the meaning specified in the Sale Agreement.

 

“ Required Capital Level ” means, as of any Payment Date, .50 percent of the initial principal amount of the Notes.

 

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“ Required Overcollateralization Level ” means, as of any Payment Date, the amount required to be on deposit in the Overcollateralization Subaccount as specified in Schedule B hereto.

 

“ Reserve Subaccount ” has the meaning specified in Section 8.02(a).

 

“ Responsible Officer ” means, with respect to the Note Trustee, any officer assigned to the Corporate Trust Division (or any successor thereto), including any Vice President, Assistant Vice President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer or any other officer of the Note Trustee customarily performing functions similar to those performed by any of the above designated officers, in each case having direct responsibility for the administration of this Note Indenture.

 

“ Sale Agreement ” means the Transition Property Purchase and Sale Agreement dated as of March 1, 2005, between the Note Issuer and the Seller, in the form of Exhibit A-1, as amended and supplemented from time to time.

 

“ Scheduled Maturity Date ” means, with respect to any Class of Notes, the Scheduled Maturity Date therefor, as specified in Section 2.01(b).

 

“ Secured Obligations ” has the meaning specified in the Granting Clause of this Note Indenture.

 

“ Securities Account ” means the Collection Account which shall be a “securities account,” as defined in Section 8-501 of the Delaware UCC.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Securities Intermediary ” means the Note Trustee, acting as a “securities intermediary,” as defined in Section 8-102(a)(14) of the Delaware UCC.

 

“ Security Entitlement ” means a “security entitlement” as defined in Section 8-102(a)(17) of the Delaware UCC.

 

“ Semiannual Interest ” has the meaning specified in Section 2.01(c)(iv).

 

“ Semiannual Principal ” means, with respect to any Payment Date on any Class of Notes, the excess, if any, of the Outstanding Amount of such Class of Notes over the outstanding principal balance of such Class of Notes specified for such Payment Date in the Expected Amortization Schedule.

 

“ Servicing Agreement ” means the Transition Property Servicing Agreement dated as of March 1, 2005, between the Note Issuer and the Servicer, in the form of Exhibit A-2, as amended and supplemented from time to time.

 

“ Standard & Poor’s ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or its successor.

 

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“ State ” means any one of the 50 states of the United States of America or the District of Columbia.

 

“ Statute ” means Chapter 164 of the Massachusetts Acts of 1997.

 

“ Statutory Lien ” means the lien on the Transition Property created by Section 1H(e) of Chapter 164 of the Massachusetts General Laws.

 

“ Successor Servicer ” has the meaning specified in Section 3.07(e).

 

“ Trust Indenture Act ” means the Trust Indenture Act of 1939 as in force on the date hereof, unless otherwise specifically provided.

 

“ UCC ” means, unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time.

 

“ Underwriting Agreement ” means the Underwriting Agreement dated as of February 15, 2005, among the Seller, the Note Issuer, Boston Edison, BEC Funding II, LLC, Lehman Brothers Inc. and Goldman, Sachs & Co.

 

“ U.S. Government Obligations ” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged.

 

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(aa) Except as otherwise specified herein or as the context may otherwise require, the following terms have the respective meanings set forth in the Servicing Agreement as in effect on the Issuance Date for all purposes of this Note Indenture, and the definitions of such terms are equally applicable both to the singular and plural forms of such terms:

 

 

Section 1.02. Incorporation by Reference of Trust Indenture Act . Whenever this Note Indenture refers to a provision of the Trust Indenture Act, the provision is incorporated by reference in and made a part of this Note Indenture. The following Trust Indenture Act terms used in this Note Indenture have the following meanings:

 

“Commission” means the Securities and Exchange Commission.

 

“indenture securities” means the Notes.

 

“indenture security holder” means a Noteholder.

 

“indenture to be qualified” means this Note Indenture.

 

“indenture trustee” or “institutional trustee” means the Note Trustee.

 

“obligor” on the indenture securities means the Note Issuer and any other obligor on the indenture securities.

 

All other Trust Indenture Act terms used in this Note Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined by Commission rule have the meanings assigned to them by such definitions.

 

Section 1.03. Rules of Construction . Unless the context otherwise requires:

 

(i) a term has the meaning assigned to it;

 

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(ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect from time to time;

 

(iii) “or” is not exclusive;

 

(iv) “including” means including without limitation;

 

(v) words in the singular include the plural and words in the plural include the singular;

 

(vi) the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Note Indenture as a whole and not to any particular Article, Section or other subdivision; and

 

(vii) all references in this Note Indenture to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Note Indenture;

 

ARTICLE II

 

The Notes

 

Section 2.01. Terms of the Notes .

 

(a) Authorization; Designation . The issuance of the Notes in an aggregate initial principal amount of $409,000,000 is hereby authorized and the Notes shall be designated as the CEC Funding, LLC Notes (the “Notes”), and further denominated as Classes A-1 through A-4.

 

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(b) Initial Principal Amount; Note Interest Rate; Scheduled Maturity Date; Final Maturity Date . The Notes of each Class shall have the aggregate initial principal amount, bear interest at the rates per annum and shall have Scheduled Maturity Dates and Final Maturity Dates as set forth below:

 

 

The Note Interest Rate shall be computed on the basis of a 360-day year of twelve 30-day months.

 

The Notes shall be issuable in not less than Minimum Denominations.

 

(c) Authentication Date; Payment Dates; Expected Amortization Schedule for Principal; Semiannual Interest .

 

(i) Authentication Date . The Notes that are authenticated and delivered by the Note Trustee to or upon the order of the Note Issuer on March 1, 2005 (the “Issuance Date”) shall have as their date of authentication March 1, 2005.

 

(ii) Payment Dates . The Payment Dates for the Notes shall be September 15 and March 15 of each year or, if any such date is not a Business Day, the next succeeding Business Day, commencing on September 15, 2005 and continuing until the earlier of repayment of the Notes in full or the Final Maturity Date for Class A-4 of the Notes.

 

(iii) Expected Amortization Schedule for Principal . Unless an Event of Default shall have occurred and be continuing and the unpaid principal amount of all Notes and accrued interest thereon has been declared to be due and payable, on each Payment Date, the Note Trustee shall pay to the Noteholders of record as of the related Record Date amounts payable pursuant to Section 8.02(d) as principal, in the following order and priority: (1) to the holders of the Class A-1 Notes, until the Outstanding Amount of such Class of Notes thereof has been reduced to zero; (2) to the holders of the Class A-2 Notes, until the Outstanding Amount of such Class of Notes thereof has been reduced to zero; (3) to the holders of the Class A-3 Notes, until the Outstanding Amount of such Class of Notes thereof has been reduced to zero and (4) to the holders of the Class A-4 Notes until the Outstanding Amount of such Class of Notes thereof has been reduced to zero; provided , however , that in no event shall a principal payment pursuant to this Section 2.01(c)(iii) on any Class on a Payment Date be greater than the amount that reduces the Outstanding Amount of such Class of Notes to the amount specified in the Expected Amortization Schedule. Partial payments of any scheduled amortization payment shall be allocated within any Class of Notes pro rata.

 

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(iv) Semiannual Interest . Semiannual Interest will be payable on each Class of Notes on each Payment Date in an amount equal to one-half of the product of (i) the applicable Note Interest Rate and (ii) the Outstanding Amount of the related Class of Notes as of the close of business on the preceding Payment Date after giving effect to all payments of principal made to the Holders of the related Class of Notes on such preceding Payment Date; provided , however , that with respect to the initial Payment Date or, if no payment has yet been made, interest on the outstanding principal balance will accrue from and including the Issuance Date to, but excluding, that Payment Date.

 

Section 2.02. Form . The Notes and the Note Trustee’s certificate of authentication shall be in substantially the forms set forth in Exhibit B, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Note Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of such Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note.

 

The Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing such Notes, as evidenced by their execution of such Notes.

 

The terms of the Notes set forth in Exhibit B are part of the terms of this Note Indenture.

 

Section 2.03. Execution, Authentication and Delivery . The Notes shall be executed on behalf of the Note Issuer by any of its Authorized Officers. The signature of any such Authorized Officer on the Notes may be manual or facsimile.

 

Notes bearing the manual or facsimile signature of individuals who were at any time Authorized Officers of the Note Issuer shall bind the Note Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes.

 

At any time and from time to time after the execution and delivery of this Note Indenture, the Note Issuer may deliver Notes executed by the Note Issuer to the Note Trustee pursuant to an Issuer Order for authentication; and the Note Trustee shall authenticate and deliver such Notes as provided in this Note Indenture and not otherwise.

 

No Note shall be entitled to any benefit under this Note Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Note Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.

 

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Section 2.04. Temporary Notes . Pending the preparation of definitive Notes, the Note Issuer may execute, and upon receipt of an Issuer Order the Note Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the definitive Notes in lieu of which they are issued and with such variations not inconsistent with the terms of this Note Indenture as the officers executing such Notes may determine, as evidenced by their execution of such Notes.

 

If temporary Notes are issued, the Note Issuer will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Note Issuer to be maintained as provided in Section 3.02, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Note Issuer shall execute and the Note Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of Minimum Denominations. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Note Indenture as definitive Notes.

 

Section 2.05. Registration; Registration of Transfer and Exchange . The Note Issuer shall cause to be kept a register (the “Note Register”) in which, subject to such reasonable regulations as it may prescribe, the Note Issuer shall provide for the registration of Notes and the registration of transfers of Notes. The Note Trustee shall be “Note Registrar” for the purpose of registering Notes and transfers of Notes as herein provided. Upon any resignation of any Note Registrar, the Note Issuer shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Note Registrar.

 

If a Person other than the Note Trustee is appointed by the Note Issuer as Note Registrar, the Note Issuer will give the Note Trustee prompt written notice of the appointment of such Note Registrar and of the location, and any change in the location, of the Note Register, and the Note Trustee shall have the right to inspect the Note Register at all reasonable times and to obtain copies thereof, and the Note Trustee shall have the right to rely upon a certificate executed on behalf of the Note Registrar by a Responsible Officer thereof as to the names and addresses of the Holders of the Notes and the principal amounts and number of such Notes.

 

Upon surrender for registration of transfer of any Note at the office or agency of the Note Issuer to be maintained as provided in Section 3.02, the Note Issuer shall execute, and the Note Trustee shall authenticate and the Noteholder shall obtain from the Note Trustee, in the name of the designated transferee or transferees, one or more new Notes in any Minimum Denominations, of a like Class and aggregate principal amount.

 

At the option of the Holder, Notes may be exchanged for other Notes in any Minimum Denominations, of a like Class and aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, the Note Issuer shall execute, and the Note Trustee shall authenticate and the Noteholder shall obtain from the Note Trustee, the Notes which the Noteholder making the exchange is entitled to receive.

 

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All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Note Issuer, evidencing the same debt, and entitled to the same benefits under this Note Indenture, as the Notes surrendered upon such registration of transfer or exchange.

 

Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by (a) a written instrument of transfer in form satisfactory to the Note Trustee duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee program acceptable to the Note Trustee, and (b) such other documents as the Note Trustee may require.

 

No service charge shall be made to a Holder for any registration of transfer or exchange of Notes, but the Note Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 2.04 not involving any transfer.

 

The preceding provisions of this Section notwithstanding, the Note Issuer shall not be required to make and the Note Registrar need not register transfers or exchanges of Notes selected for redemption or of any Note for a period of 15 days preceding the date for any payment with respect to the Note.

 

Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes . If (i) any mutilated Note is surrendered to the Note Trustee, or the Note Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Note Trustee such security or indemnity as may be required by it to hold the Note Issuer and the Note Trustee harmless, then, in the absence of notice to the Note Issuer, the Note Registrar or the Note Trustee that such Note has been acquired by a protected purchaser, the Note Issuer shall execute and, upon its request, the Note Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note of like Class, tenor and principal amount, bearing a number not contemporaneously outstanding; provided , however , that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become or within seven days shall be due and payable, or shall have been called for redemption, instead of issuing a replacement Note, the Note Issuer may pay such destroyed, lost or stolen Note when so due or payable or upon the Optional Redemption Date or Mandatory Redemption Date, as applicable, without surrender thereof. If, after the delivery of such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence, a protected purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the Note Issuer and the Note Trustee shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person, except a protected purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Note Issuer or the Note Trustee in connection therewith.

 

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Upon the issuance of any replacement Note under this Section, the Note Issuer may require the payment by the Holder of such Note of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Note Trustee) connected therewith.

 

Every replacement Note issued pursuant to this Section in replacement of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Note Issuer, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Note Indenture equally and proportionately with any and all other Notes duly issued hereunder.

 

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

 

Section 2.07. Persons Deemed Owner . Prior to due presentment for registration of transfer of any Note, the Note Issuer, the Note Trustee and any agent of the Note Issuer or the Note Trustee may treat the Person in whose name any Note is registered (as of the day of determination) as the owner of such Note for the purpose of receiving payments of principal of and interest on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Note Issuer, the Note Trustee nor any agent of the Note Issuer or the Note Trustee shall be affected by notice to the contrary.

 

Section 2.08. Payment of Principal and Interest; Interest on Overdue Principal; Principal and Interest Rights Preserved .

 

(a) Any installment of interest or principal payable on any Note which is punctually paid or duly provided for by the Note Issuer on the applicable Payment Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the Record Date for such Payment Date, by check mailed first-class, postage prepaid to such Person’s address as it appears on the Note Register on such Record Date, except that with respect to Notes registered on the Record Date in the name of the Certificate Trustee payments will be made by wire transfer in immediately available funds to the account designated by the Certificate Trustee and except for the final installment of principal payable with respect to such Note on a Payment Date which shall be payable as provided below. The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.03 hereof.

 

(b) The principal of each Note of each Class shall be paid, to the extent funds are available therefor in the Collection Account, in installments on each Payment Date specified in Section 2.01. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes shall be due and payable, if not previously paid, on the date on which an Event of Default shall have occurred and be continuing, if the Note Trustee or the Holders of the Notes representing not less than a majority of the Outstanding Amount of the Notes have declared the Notes to be immediately due and payable in the manner provided in Section 5.02. In such event, all payments of principal on the Notes shall be

 

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made pro rata. The Note Trustee shall notify the Person in whose name a Note is registered at the close of business on the Record Date preceding the Payment Date on which the Note Issuer expects that the final installment of principal of and interest on such Note will be paid. Such notice shall be mailed no later than five days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of such Note and shall specify the place where such Note may be presented and surrendered for payment of such installment. Notices in connection with redemptions of Notes shall be mailed to Noteholders as provided in Section 10.02 or Section 10.05, as applicable.

 

(c) If the Note Issuer defaults in a payment of interest on the Notes when due, the Note Issuer shall be required to pay such defaulted interest (plus interest on such defaulted interest at the applicable Note Interest Rate to the extent lawful) to the Persons who are Noteholders on a subsequent special record date, which date shall be at least five Business Days prior to the payment date. The Note Issuer shall fix or cause to be fixed any such special record date and payment date, and, at least 20 days before any such special record date, the Note Issuer shall mail to each affected Noteholder a notice that states the special record date, the payment date and the amount of defaulted interest (plus interest on such defaulted interest) to be paid.

 

Section 2.09. Cancellation . All Notes surrendered for payment, registration of transfer, exchange or redemption shall, if surrendered to any Person other than the Note Trustee, be delivered to the Note Trustee and shall be promptly cancelled by the Note Trustee. The Note Issuer may at any time deliver to the Note Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Note Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Note Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Note Indenture. All cancelled Notes may be held or disposed of by the Note Trustee in accordance with its standard retention or disposal policy as in effect at the time.

 

Section 2.10. Authentication and Delivery of Notes . On the Issuance Date, the Notes shall be executed by the Note Issuer and delivered to the Note Trustee for authentication and thereupon the same shall be authenticated and delivered by the Note Trustee upon Issuer Request and upon delivery by the Note Issuer to the Note Trustee, and receipt by the Note Trustee, or the causing to occur by the Note Issuer, of the following:

 

(1) Note Issuer Action . An Issuer Order authorizing and directing the authentication and delivery of the Notes by the Note Trustee and specifying the principal amount of Notes to be authenticated.

 

(2) Authorizations .

 

(a) An Opinion of Counsel that no authorization, approval or consent of any Massachusetts, Delaware or federal governmental body or bodies at the time having jurisdiction in the premises is required to be obtained by the Note Issuer for

 

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the valid issuance, authentication and delivery of such Notes, except for such registrations as are required under the blue sky and securities laws of any State or such authorizations, approvals or consents of governmental bodies that have been obtained.

 

(b) An Opinion of Counsel that no authorization, approval or consent of any governmental body or bodies at the time having jurisdiction in the premises is required for the valid execution and delivery by the Note Issuer of each of the Basic Documents to which the Note Issuer is a party, except for such authorizations, approvals or consents of governmental bodies that have been obtained.

 

(3) Authorizing Certificate . A certificate of an Authorized Officer of the Note Issuer certifying that the Note Issuer has duly authorized the execution and delivery of this Note Indenture and the execution, authentication and delivery of the Notes.

 

(4) The Collateral . The Note Issuer shall have caused all Collateral to have been Granted to the Note Trustee or, if requested by the Note Trustee, its nominee and will have caused all filings pursuant to the Statute, the Massachusetts UCC, the Delaware UCC and any other applicable law as are necessary to cause the Note Trustee to have a first priority perfected security interest in the Collateral to have been duly made.

 

(5) Certificates of the Note Issuer and the Seller .

 

(a) An Officer’s Certificate from the Note Issuer, dated as of the Issuance Date:

 

(i) to the effect that the Note Issuer is not in Default under this Note Indenture and that the issuance of the Notes applied for will not result in any Default or in any material breach of any of the terms, conditions or provisions of or constitute a default under any material indenture, mortgage, deed of trust or other agreement or instrument to which the Note Issuer is a party or by which it or its property is bound or any order of any court or administrative agency entered in any Proceeding to which the Note Issuer is a party or by which it or its property may be bound or to which it or its property may be subject; and that all conditions precedent provided in this Note Indenture relating to the authentication and delivery of the Notes applied for have been complied with;

 

(ii) to the effect that all instruments furnished to the Note Trustee pursuant to this Note Indenture conform to the requirements set forth in this Note Indenture and constitute all of the documents required to be delivered hereunder for the Note Trustee to authenticate and deliver the Notes applied for, and all conditions precedent provided for in this Note Indenture relating to the authentication and delivery of the Notes have been complied with;

 

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(iii) to the effect that the Note Issuer has not assigned any interest or participation in the Collateral except for the lien of this Note Indenture and of the Statute; the Note Issuer has the power and right to Grant the Collateral to the Note Trustee as security hereunder; and the Note Issuer, subject to the terms of this Note Indenture, has Granted to the Note Trustee all of its right, title and interest in and to such Collateral free and clear of any lien, mortgage, pledge, charge, security interest, adverse claim or other encumbrance, except the lien of this Note Indenture and of the Statute;

 

(iv) to the effect that the Note Issuer has appointed a firm of Independent certified public accountants as contemplated in Section 8.06 hereof;

 

(v) to the effect that attached thereto are duly executed, true and complete copies of the Sale Agreement and the Servicing Agreement; and

 

(vi) stating that all filings with the DTE pursuant to the Statute and all UCC financing statements with respect to the Collateral which are required to be filed to cause the Note Trustee to have a first priority perfected security interest in the Collateral have been filed.

 

(b) An Officer’s Certificate (as defined in the Sale Agreement) from the Seller, dated as of the Issuance Date, to the effect that (i) the representations and warranties set forth in Article III of the Sale Agreement are true and correct and (ii) the attached copies of the Financing Order and Issuance Advice Letter creating the Transition Property are true and correct.

 

(6) Opinion of Counsel . An Opinion of Counsel, portions of which may be delivered by counsel for the Note Issuer, portions of which may be delivered by counsel for the Seller and the Servicer, and portions of which may be delivered by counsel to the Certificate Issuer, dated the Issuance Date, in each case subject to the customary exceptions, qualifications and assumptions contained therein, to the collective effect that:

 

(a) the Note Indenture has been duly qualified under the Trust Indenture Act;

 

(b) the Note Issuer has the limited liability company power and authority to execute and deliver this Note Indenture and to issue the Notes, and this Note Indenture and the Notes have been duly authorized and the Note Issuer is duly formed and is validly existing in good standing under the laws of the jurisdiction of its organization;

 

(c) the Note Indenture has been duly authorized, executed and delivered by the Note Issuer;

 

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(d) the Notes applied for have been duly authorized and executed and, when authenticated in accordance with the provisions of the Note Indenture and delivered against payment of the purchase price therefor, will constitute valid and binding obligations of the Note Issuer, entitled to the benefits of the Note Indenture subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law);

 

(e) this Note Indenture, the Sale Agreement, the Servicing Agreement, the Fee and Indemnity Agreement and the Cross-Indemnity Agreement are valid and binding agreements of the Note Issuer, enforceable in accordance with their respective terms, except as such enforceability against the Note Issuer may be subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law);

 

(f) (i) the provisions of the Note Indenture create a valid security interest securing the Secured Obligations in favor of the Note Trustee in all right, title and interest of the Note Issuer in the Transition Property, the Sale Agreement, the Servicing Agreement, the Administration Agreement and all accounts, general intangibles, equipment and inventory of the Note Issuer, (ii) the financing statements to be filed with the Delaware Secretary of State and the Massachusetts Secretary of State include all of the information required by Section 9-502(a) of Delaware Article 9 and Section 1H(d)(1) of the Statute, (iii) the financing statements have been presented for filing and all filing fees required in connection therewith have been paid, (iv) the security interests granted by the Note Issuer under this Note Indenture which can be perfected by the filing of financing statements under the Massachusetts Uniform Commercial Code and Delaware Article 9 are perfected, (v) the provisions of the Note Indenture are effective to create in favor of the Note Trustee a perfected security interest in the Collection Account or each portion thereof that is a securities account under the Massachusetts Uniform Commercial Code, (vi) to the extent that the Collection Account, or some portion thereof, is a deposit account, the provisions of the Note Indenture are effective to create in the Note Trustee a perfected security interest in the rights of the Note Issuer in the Collection Account or the portion thereof that is a deposit account, (vii) search reports set forth the proper filing offices and proper debtor necessary to identify the persons who under the Massachusetts Uniform Commercial Code and Delaware Uniform Commercial Code have on file financing statements covering the Collateral, or a portion thereof, (viii) by operation of Section 1H(e) thereof, the Statute creates, upon the effective date of the Financing Order, a first priority statutory lien on the Transition Property securing the Secured Obligations, (ix) the statutory lien is valid, perfected and enforceable against the Note Issuer and all third parties without any further public notice, (x) although the Statute and the Financing Order provide that conflicting

 

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statutory liens on Transition Property arising under Section 1H(e) of the Statute rank in order of time of perfection, the Financing Order does not provide for any such conflicting statutory liens;

 

(g) either (A) the Registration Statement covering the Notes and the Certificates is effective under the Securities Act and, to the best of such counsel’s knowledge and information, no stop order suspending the effectiveness of such Registration Statement has been issued under the Securities Act and no proceedings for that purpose have been initiated or are pending or threatened by the Commission or (B) the Notes and the Certificates are exempt from the registration requirements under the Securities Act;

 

(h) the Note Issuer is not an “investment company” or under the “control” of an “investment company” as such terms are defined under the Investment Company Act of 1940, as amended;

 

(i) the Sale Agreement is a valid and binding agreement of the Seller enforceable against the Seller in accordance with its terms except as such enforceability may be subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting the rights of creditors generally and general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law);

 

(j) the Servicing Agreement is a valid and binding agreement of the Servicer enforceable against the Servicer in accordance with its terms except as such enforceability may be subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting the rights of creditors generally and general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law);

 

(k) upon the delivery of the fully executed Sale Agreement to the Note Issuer and the payment of the purchase price of the Transition Property by the Note Issuer to the Seller pursuant to the Sale Agreement, then (I) the transfer of the Transition Property by the Seller to the Note Issuer pursuant to the Sale Agreement conveys all of the Seller’s right, title and interest in the Transition Property to the Note Issuer and such transfer will be treated under the laws of The Commonwealth of Massachusetts as an absolute transfer of all of the Seller’s right, title, and interest in the Transition Property, other than for federal and state income and franchise tax purposes, and (II) such transfer of the Transition Property is perfected;

 

(l) (i) the Financing Order has been duly issued and authorized by the DTE and the Financing Order, giving effect to the Issuance Advice Letter, is effective; (ii) in reliance on the opinion of Palmer & Dodge LLP that the Certificates are “electric rate reduction bonds” under Section 1H(a) of the Statute, as of the issuance of the Certificates, the Certificates are entitled to the protections

 

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provided in Sections 1H(b)(3) and 1H(c)(4) of the Statute; (iii) the Financing Order is no longer subject to appeal by any person in state courts of The Commonwealth of Massachusetts; and (iv) the Servicer is authorized to file Periodic Adjustments to the RTC Charge to the extent necessary to ensure the timely recovery of revenues sufficient to provide for the payment of an amount equal to the sum of the periodic RRB payment requirements for the upcoming year, which includes indemnity obligations under the Basic Documents;

 

(m) any state action (whether by legislative, DTE, citizen initiative or otherwise) to revoke or limit the Financing Order, the Issuance Advice Letter, the Transition Property or the RTC Charge in a manner which would substantially impair the rights of Certificateholders would be subject to a successful constitutional contracts clause defense; and

 

(n) such other matters as the Note Trustee may reasonably require.

 

(7) Accountant’s Letter . A letter in a form reasonably acceptable to the Note Issuer and the Note Trustee applying agreed upon procedures with respect to the Collateral addressed to the Note Issuer and the Note Trustee complying with the requirements of Section 11.01(a) hereof, from a firm of independent certified public accountants of recognized national reputation within the meaning of the standards of The American Institute of Certified Public Accountants.

 

(8) Rating Agency Condition . The Note Trustee shall receive evidence reasonably satisfactory to it that the Rating Agency Condition will be satisfied.

 

(9) Other Requirements . Such other documents, certificates, agreements, instruments or opinions as the Note Trustee may reasonably require.

 

Section 2.11. Release of Collateral . Subject to Section 11.01, the Note Trustee shall release property from the lien of this Note Indenture only as specified in Section 8.02 or upon receipt of an Issuer Request accompanied by an Officer’s Certificate, an Opinion of Counsel and Independent Certificates in accordance with Trust Indenture Act Sections 314(c) and 314(d)(l) or an Opinion of Counsel in lieu of such Independent Certificates to the effect that the Trust Indenture Act does not require any such Independent Certificates.

 

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ARTICLE III

 

Covenants

 

Section 3.01. Payment of Principal and Interest . The Note Issuer will duly and punctually pay the principal of and interest on the Notes in accordance with the terms of the Notes and this Note Indenture. Amounts properly withheld under the Code by any Person from a payment to any Noteholder of interest or principal shall be considered as having been paid by the Note Issuer to such Noteholder for all purposes of this Note Indenture.

 

Section 3.02. Maintenance of Office or Agency . The Note Issuer will maintain in the Borough of Manhattan, The City of New York, an office or agency where Notes may be surrendered for registration of transfer or exchange. The Note Issuer hereby initially appoints the Note Trustee to serve as its agent for the foregoing purposes. The Note Issuer will give prompt written notice to the Note Trustee of the location, and of any change in the location, of any such office or agency. If at any time the Note Issuer shall fail to maintain any such office or agency or shall fail to furnish the Note Trustee with the address thereof, such surrenders may be made at the Corporate Trust Office, and the Note Issuer hereby appoints the Note Trustee as its agent to receive all such surrenders.

 

Section 3.03. Money for Payments To Be Held in Trust . As provided in Section 8.02(a), all payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Collection Account pursuant to Section 8.02(d) shall be made on behalf of the Note Issuer by the Note Trustee or by another Paying Agent, and no amounts so withdrawn from the Collection Account for payments of Notes shall be paid over to the Note Issuer except as provided in this Section and Section 8.02.

 

The Note Issuer will cause each Paying Agent other than the Note Trustee to execute and deliver to the Note Trustee an instrument in which such Paying Agent shall agree with the Note Trustee (and if the Note Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section, that such Paying Agent will:

 

(i) hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided;

 

(ii) give the Note Trustee and the Certificate Trustee notice of any Default by the Note Issuer (or any other obligor upon the Notes) of which it has actual knowledge in the making of any payment required to be made with respect to the Notes;

 

(iii) at any time during the continuance of any such Default, upon the written request of the Note Trustee, forthwith pay to the Note Trustee all sums so held in trust by such Paying Agent;

 

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(iv) immediately resign as a Paying Agent and forthwith pay to the Note Trustee all sums held by it in trust for the payment of Notes if at any time it ceases to meet the standards required to be met by a Paying Agent at the time of its appointment; and

 

(v) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith.

 

The Note Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Note Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Note Trustee all sums held in trust by such Paying Agent, such sums to be held by the Note Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and upon such payment by any Paying Agent to the Note Trustee, such Paying Agent shall be released from all further liability with respect to such money.

 

Subject to applicable laws with respect to escheat of funds, any money held by the Note Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Note and remaining unclaimed for two years after such amount has become due and payable shall be discharged from such trust and be paid to the Note Issuer on Issuer Request; and, subject to Section 11.16, the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Note Issuer for payment thereof (but only to the extent of the amounts so paid to the Note Issuer), and all liability of the Note Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided , however , that the Note Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Note Issuer cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Note Issuer. The Note Trustee may also adopt and employ, at the expense of the Note Issuer, any other reasonable means of notification of such repayment (including mailing notice of such repayment to Holders whose Notes have been called but have not been surrendered for redemption or whose right to or interest in moneys due and payable but not claimed is determinable from the records of the Note Trustee or of any Paying Agent, at the last address of record for each such Holder).

 

Section 3.04. Existence . The Note Issuer will keep in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware (unless, subject to the provisions of Section 3.10 hereof, it becomes, or any successor Note Issuer hereunder is or becomes, organized under the laws of any other State or of the United States of America, in which case the Note Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Note Indenture, the Notes, the Collateral and each other instrument or agreement included in the Collateral.

 

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Section 3.05. Protection of Collateral . The Note Issuer will from time to time execute and deliver all such supplements and amendments hereto and make all such filings with the DTE pursuant to the Statute, UCC financing statements, UCC continuation statements, instruments of further assurance and other instruments, and will take such other action necessary or advisable to:

 

(i) maintain or preserve the lien and security interest (and the priority thereof) of this Note Indenture or carry out more effectively the purposes hereof;

 

(ii) perfect, publish notice of or protect the validity of any Grant made or to be made by this Note Indenture;

 

(iii) enforce any of the Collateral;

 

(iv) preserve and defend title to the Collateral and the rights of the Note Trustee and the Noteholders in such Collateral against the claims of all Persons and parties, including the challenge by any party to the validity or enforceability of the Financing Order, any Advice Letter or the Transition Property or any proceeding relating thereto and institute any action or proceeding necessary to compel performance by the DTE or the Commonwealth of Massachusetts of any of its obligations or duties under the Statute, the Financing Order or any Advice Letter; or

 

(v) pay any and all taxes levied or assessed upon all or any part of the Collateral.

 

The Note Issuer hereby designates the Note Trustee its agent and attorney-in-fact to execute and/or file on behalf of the Note Issuer any filings with the DTE pursuant to the Statute, UCC financing statement, UCC continuation statement or other instrument required by the Note Trustee pursuant to this Section, it being understood that the Note Trustee shall have no such obligation.

 

Section 3.06. Opinions as to Collateral .

 

(a) On the Issuance Date, the Note Issuer shall furnish to the Note Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, (A) such action has been taken (and reciting the details of such action) with respect to the recording and filing of this Note Indenture and any other requisite documents, and with respect to the execution and filing of any filings with the DTE pursuant to the Statute, UCC financing statements and UCC continuation statements, as are necessary to perfect the lien and security interest of this Note Indenture, or (B) no such action is necessary to make such lien and security interest effective.

 

(b) Prior to the effectiveness of any amendment to the Sale Agreement, the Note Issuer shall furnish to the Note Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, all filings, including filings with the DTE pursuant to the Statute and any UCC financing statements, have been executed and filed that are

 

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necessary fully to preserve and protect the interest of the Note Issuer and the Note Trustee in the Transition Property and the proceeds thereof, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest.

 

Section 3.07. Performance of Obligations; Servicing; Commission Filings .

 

(a) The Note Issuer (i) will diligently pursue any and all actions to enforce its rights under each instrument or agreement included in the Collateral and (ii) will not take any action and will use its reasonable efforts not to permit any action to be taken by others that would release any Person from any of such Person’s covenants or obligations under any such instrument or agreement or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except, in each case, as expressly permitted in this Note Indenture, the Sale Agreement, the Servicing Agreement or such other instrument or agreement.

 

(b) The Note Issuer may contract with other Persons to assist it in performing its duties under this Note Indenture, and any performance of such duties by a Person identified to the Note Trustee in an Officer’s Certificate of the Note Issuer shall be deemed to be action taken by the Note Issuer. Initially, the Note Issuer has contracted with the Administrator and the Servicer to assist the Note Issuer in performing its duties under this Note Indenture.

 

(c) The Note Issuer will punctually perform and observe all of its obligations and agreements contained in this Note Indenture, the Basic Documents and in the instruments and agreements included in the Collateral, including filing or causing to be filed all filings with the DTE pursuant to the Statute, UCC financing statements and continuation statements required to be filed by it by the terms of this Note Indenture, the Sale Agreement and the Servicing Agreement in accordance with and within the time periods provided for herein and therein. Except as otherwise expressly permitted therein, the Note Issuer shall not waive, amend, modify, supplement or terminate any Basic Document or any provision thereof without the written consent of the Note Trustee (which consent shall not be withheld if (i) the Note Trustee shall have received an Officer’s Certificate stating that such waiver, amendment, modification, supplement or termination shall not adversely affect in any material respect the interests of the Noteholders or the holders of Certificates and (ii) the Rating Agency Condition shall have been satisfied with respect thereto) or the Holders of at least a majority of the Outstanding Amount of Notes.

 

(d) If the Note Issuer shall have knowledge of the occurrence of a Servicer Default under the Servicing Agreement, the Note Issuer shall promptly give written notice thereof to the Note Trustee, the Certificate Trustee, the Agencies and the Rating Agencies, and shall specify in such notice the action, if any, the Note Issuer is taking with respect of such default. If a Servicer Default shall arise from the failure of the Servicer to

 

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perform any of its duties or obligations under the Servicing Agreement with respect to the Transition Property, including the RTC Charge, the Note Issuer shall take all reasonable steps available to it to remedy such failure.

 

(e) As promptly as possible after the giving of notice to the Servicer, the Note Trustee, the Certificate Trustee, the Agencies and the Rating Agencies of termination of the Servicer’s rights and powers pursuant to Section 7.01 of the Servicing Agreement, the Note Issuer, subject to the approval of the DTE pursuant to the Financing Order, shall appoint a successor Servicer (the “Successor Servicer”) with the Note Trustee’s prior written consent thereto (which consent shall not be unreasonably withheld), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Note Issuer and the Note Trustee. A Person shall qualify as a Successor Servicer only if such Person satisfies the requirements of the Servicing Agreement. If within 30 days after the delivery of the notice referred to above, the Note Issuer shall not have obtained such a new Servicer, the Note Trustee may petition the DTE or a court of competent jurisdiction to appoint a Successor Servicer. In connection with any such appointment, the Note Issuer may make such arrangements for the compensation of such successor as it and such successor shall agree, subject to the limitations set forth below and in the Servicing Agreement, and in accordance and in compliance with Section 7.02 of the Servicing Agreement, the Note Issuer shall enter into an agreement with such successor for the servicing of the Transition Property (such agreement to be in form and substance satisfactory to the Note Trustee).

 

(f) Upon any termination of the Servicer’s rights and powers pursuant to the Servicing Agreement, the Note Trustee shall promptly notify the Note Issuer, the Noteholders, the Certificate Trustee, the Agencies and the Rating Agencies. As soon as a Successor Servicer is appointed, the Note Issuer shall notify the Note Trustee, the Noteholders, the Certificate Trustee, the Agencies and the Rating Agencies of such appointment, specifying in such notice the name and address of such Successor Servicer.

 

(g) Without derogating from the absolute nature of the assignment granted to the Note Trustee under this Note Indenture or the rights of the Note Trustee hereunder, the Note Issuer agrees that it will not, without the prior written consent of the Note Trustee or the Holders of at least a majority in Outstanding Amount of the Notes, amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, supplement, termination, waiver or surrender of, the terms of any Collateral or the Basic Documents, or waive timely performance or observance of any material term by the Seller or the Servicer under the Sale Agreement or the Servicing Agreement, respectively. If any such amendment, modification, supplement or waiver shall be so consented to by the Note Trustee or such Holders, the Note Issuer agrees to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as shall be necessary or appropriate in the circumstances. The Note Issuer agrees that no such amendment, modification, supplement or waiver shall adversely affect the rights of the Holders of the Notes or Certificates Outstanding at the time of any such amendment, modification, supplement or waiver, except as otherwise agreed to by the Holders in accordance with the Basic Documents.

 

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(h) The Note Issuer shall file with the Commission such periodic reports, if any, as are required from time to time under Section 13 or 15(d) of the Exchange Act.

 

(i) The Note Issuer shall make all filings required under the Statute relating to the transfer of the ownership or security interest in the Transition Property other than those required to be made by the Seller pursuant to the Basic Documents.

 

Section 3.08. Negative Covenants . So long as any Notes are Outstanding, the Note Issuer shall not:

 

(i) except as expressly permitted by this Note Indenture, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Note Issuer, including those included in the Collateral, unless directed to do so by the Note Trustee in accordance with Article V;

 

(ii) claim any credit on, or make any deduction from the principal or interest payable in respect of, the Notes (other than amounts properly withheld from such payments under the Code) or assert any claim against any present or former Noteholder by reason of the payment of the taxes levied or assessed upon any part of the Collateral;

 

(iii) terminate its existence or dissolve or liquidate in whole or in part; or

 

(iv) (A) permit the validity or effectiveness of this Note Indenture to be impaired, or permit the lien of this Note Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Notes under this Note Indenture except as may be expressly permitted hereby, (B) permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the lien of this Note Indenture and the Statutory Lien) to be created by the Note Issuer on or extend to or otherwise arise upon or burden the Collateral or any part thereof or any interest therein or the proceeds thereof or (C) subject to the Statutory Lien, permit the lien of this Note Indenture not to constitute a valid first priority security interest in the Collateral.

 

Section 3.09. Annual Statement as to Compliance . The Note Issuer will deliver to the Note Trustee, the Certificate Trustee and the Rating Agencies not later than March 31 of each year (commencing with March 31, 2006), an Officer’s Certificate stating, as to the Authorized Officer signing such Officer’s Certificate, that

 

(i) a review of the activities of the Note Issuer during the preceding twelve months ended December 31 (or, in the case of the Officer’s Certificate to be delivered on or before March 31, 2006, the period of time from the date of this Note Indenture until December 31, 2005), and of performance under this Note Indenture has been made under such Authorized Officer’s supervision; and

 

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(ii) to such Authorized Officer’s knowledge, based on such review, the Note Issuer has complied with all conditions and covenants under this Note Indenture throughout such twelve month period, or, if there has been a default in so complying with any such condition or covenant, specifying each such default known to such Authorized Officer and the nature and status thereof.

 

Section 3.10. Note Issuer May Consolidate, etc., Only on Certain Terms .

 

(a) The Note Issuer shall not consolidate or merge with or into any other Person, unless

 

(i) the Person (if other than the Note Issuer) formed by or surviving such consolidation or merger shall be a Person organized and existing under the laws of the United States of America, any State or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Note Trustee, in form and substance reasonably satisfactory to the Note Trustee, the due and punctual payment of the principal of and interest on all Notes and the performance or observance of every agreement and covenant of this Note Indenture on the part of the Note Issuer to be performed or observed, all as provided herein;

 

(ii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

 

(iii) the Rating Agency Condition shall have been satisfied with respect to such transaction;

 

(iv) the Note Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Note Trustee) to the effect that such transaction will not have any material adverse tax consequence to the Note Issuer, the Certificate Issuer, any Noteholder or any Certificateholder;

 

(v) any action as is necessary to maintain the lien and security interest created by this Note Indenture shall have been taken; and

 

(vi) the Note Issuer shall have delivered to the Note Trustee an Officer’s Certificate and an Opinion of Counsel each stating that such consolidation or merger and such supplemental note indenture comply with this Section 3.10 and that all conditions precedent herein provided for relating to such transaction have been complied with (including any filing required by the Exchange Act).

 

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(b) Except as specifically provided herein, the Note Issuer shall not convey or transfer any of its properties or assets, including those included in the Collateral, to any Person, unless

 

(i) the Person that acquires by conveyance or transfer the properties and assets of the Note Issuer the conveyance or transfer of which is hereby restricted shall (A) be a United States citizen or a Person organized and existing under the laws of the United States of America, any State or the District of Columbia, (B) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Note Trustee, in form and substance reasonably satisfactory to the Note Trustee, the due and punctual payment of the principal of and interest on all Notes and the performance or observance of every agreement and covenant of this Note Indenture on the part of the Note Issuer to be performed or observed, all as provided herein, (C) expressly agrees by means of such supplemental note indenture that all right, title and interest so conveyed or transferred shall be subject and subordinate to the rights of Holders of the Notes, (D) unless otherwise provided in the supplemental note indenture referred to in clause (B) above, expressly agrees to indemnify, defend and hold harmless the Note Trustee against and from any loss, liability or expense arising under or related to this Note Indenture and the Notes and (E) expressly agrees by means of such supplemental note indenture that such Person (or if a group of Persons, then one specified Person) shall make all filings with the Commission (and any other appropriate Person) required by the Exchange Act in connection with the Notes;

 

(ii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

 

(iii) the Rating Agency Condition shall have been satisfied with respect to such transaction;

 

(iv) the Note Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Note Trustee) to the effect that such transaction will not have any material adverse tax consequence to the Note Issuer, the Certificate Issuer, any Noteholder or any Certificateholder;

 

(v) any action as is necessary to maintain the lien and security interest created by this Note Indenture shall have been taken; and

 

(vi) the Note Issuer shall have delivered to the Note Trustee an Officer’s Certificate and an Opinion of Counsel each stating that such conveyance or transfer and such supplemental note indenture comply with this Section 3.10 and that all conditions precedent herein provided for relating to such