EXHIBIT B-1
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INTANGIBLE TRANSITION PROPERTY
TRANSFER AGREEMENT
between
WEST PENN FUNDING CORPORATION
Seller
and
WEST PENN POWER COMPANY
Transferor
Dated as of [ ], 1999
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions..............................................2
SECTION 1.02. Other Definitional Provisions............................8
ARTICLE II
Conveyance of Intangible Transition Property
SECTION 2.01. Conveyance of Initial Intangible
Transition Property....................................9
SECTION 2.02. Conveyance of Subsequent Intangible
Transition Property...................................10
SECTION 2.03. Conditions to Conveyance of Intangible
Transition Property...................................11
ARTICLE III
Representations and Warranties of Transferor
SECTION 3.01. Organization and Good Standing..........................14
SECTION 3.02. Due Qualification.......................................14
SECTION 3.03. Power and Authority.....................................14
SECTION 3.04. Binding Obligation......................................15
SECTION 3.05. No Violation............................................15
SECTION 3.06. No Proceedings..........................................16
SECTION 3.07. Approvals...............................................16
SECTION 3.08. The Intangible Transition Property......................17
ARTICLE IV
Covenants of the Transferor
SECTION 4.01. Corporate Existence.....................................22
SECTION 4.02. No Liens or Conveyances.................................23
SECTION 4.03. Delivery of Collections.................................23
SECTION 4.04. Notice of Liens.........................................24
SECTION 4.05. Compliance with Law.....................................24
SECTION 4.06. Covenants Related to Intangible
Transition Property...................................24
SECTION 4.07. Notice of Indemnification Events and
Mandatory Repurchase Events...........................26
SECTION 4.08. Protection of Title.....................................26
Contents, p. ii
SECTION 4.09. Taxes...................................................27
ARTICLE V
The Transferor
SECTION 5.01. Liability of Transferor; Indemnities
and Mandatory Repurchase..............................28
SECTION 5.02. Merger or Consolidation of, or
Assumption of the Obligations of,
Transferor............................................35
SECTION 5.03. Limitation on Liability of Transferor
and Others............................................37
SECTION 5.04. Opinions of Counsel.....................................37
ARTICLE VI
Miscellaneous Provisions
SECTION 6.01. Amendment...............................................38
SECTION 6.02. Notices.................................................39
SECTION 6.03. Assignment..............................................40
SECTION 6.04. Limitations on Rights of Others.........................40
SECTION 6.05. Severability............................................41
SECTION 6.06. Separate Counterparts...................................41
SECTION 6.07. Headings................................................41
SECTION 6.08. Governing Law...........................................41
SECTION 6.09. Assignment to Issuer and to Bond
Trustee...............................................41
SECTION 6.10. Nonpetition Covenant....................................42
SECTION 6.11. Perfection..............................................43
INTANGIBLE TRANSITION PROPERTY TRANSFER AGREEMENT
dated as of [ ], 1999, between WEST PENN FUNDING
CORPORATION, a [Delaware] corporation (the "Seller"),
and WEST PENN POWER COMPANY, a Pennsylvania
corporation, and its successors in interest to the
extent permitted hereunder, as Transferor (the
"Transferor").
WHEREAS the Transferor desires to contribute from time to time
Intangible Transition Property created pursuant to the Statute and the
Qualified Rate Order in exchange for all of the outstanding capital stock
of the Seller;
WHEREAS the Seller is willing to purchase the Intangible
Transition Property;
WHEREAS the Seller intends to sell the Transferred Intangible
Transition Property to the Issuer and the Issuer intends to purchase the
Transferred Intangible Transition Property from the Seller pursuant to the
Sale Agreement;
WHEREAS the Issuer, in order to finance the purchase of the
Transferred Intangible Transition Property, will from time to time issue
Transition Bonds under the Indenture;
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WHEREAS the Issuer, to secure its obligations under all
Transition Bonds and the Indenture, will pledge its right, title and
interest in the Transferred Intangible Transition Property to the Bond
Trustee for the benefit of the Transition Bondholders; and
WHEREAS the Seller has determined that the transactions
contemplated by the Basic Documents are in the best interest of the Seller
and its creditors and represent a prudent and advisable course of action
that does not impair the rights and interests of the Seller's creditors.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. (a) Whenever used in this Agreement,
each of the following words and phrases shall have the following meaning:
"Addition Notice" means, with respect to the transfer of
Subsequent Intangible Transition Property to the Seller pursuant to Section
2.02, notice, which shall be given by the Transferor to the Seller and the
Rating Agencies not later than 10 days prior to the related Subsequent
Contribution Date, specifying the Subsequent
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Contribution Date for such Subsequent Intangible Transition
Property.
"Agreement" means this Intangible Transition Property Transfer
Agreement, as the same may be amended and supplemented from time to time.
"▇▇▇▇ of Sale" means a ▇▇▇▇ of sale substantially in the form of
Exhibit A hereto.
"Business Day" has the meaning specified in the Servicing
Agreement.
"Competitive Transition Charges" has the meaning specified in the
Servicing Agreement.
"Corporate Trust Office" means, [Address of Bond Trustee]
Attention: [ ], or the principal corporate trust office of any successor
Bond Trustee (the address of which the successor Bond Trustee will notify
the Transition Bondholders and the Issuer).
"Customers" has the meaning specified in the Servicing Agreement.
"Deferred Repurchase Price" has the meaning specified in Section
5.01(d)(i).
"De Minimis Loss Amount" has the meaning specified in Section
5.01(d)(iii).
"Fitch IBCA" has the meaning specified in the Servicing
Agreement.
"Indemnification Event" has the meaning specified in Section
5.01(c)(i).
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"Indenture" means the Indenture dated as of[ ], 1999, between the
Issuer and [ ], as the same may be amended and supplemented from time to
time.
"Initial Contribution Date" means [ ], 1999.
"Initial Intangible Transition Property" means the Intangible
Transition Property, as identified in the related ▇▇▇▇ of Sale, contributed
to the Seller on the Initial Contribution Date pursuant to such ▇▇▇▇ of
Sale in connection with the issuance of the Series 1999-A Transition Bonds.
"Initial Loss Calculation Date" has the meaning specified in
Section 5.01(c)(ii).
"Intangible Transition Charges" has the meaning specified in the
Servicing Agreement.
"Intangible Transition Property" has the meaning specified in the
Servicing Agreement.
"ITC Collections" has the meaning specified in the Servicing
Agreement.
"Lien" has the meaning specified in the Servicing Agreement.
"Losses" has the meaning specified in the Servicing Agreement.
"Mandatory Repurchase Event" has the meaning specified in Section
5.01(d)(i).
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"Moody's" has the meaning specified in the Servicing Agreement.
"Officers' Certificate" means a certificate signed by (a) the
chairman of the board, the president, the vice chairman of the board, the
executive vice president or any vice president and (b) a treasurer,
assistant treasurer, secretary or assistant secretary, in each case of the
Transferor or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of
counsel who may be an employee of or counsel to the Transferor or the
Servicer, which counsel shall be reasonably acceptable to the Bond Trustee,
the Seller, the Issuer or the Rating Agencies, as applicable, and which
shall be in form reasonably satisfactory to the Bond Trustee, the Seller,
if applicable.
"PUC" has the meaning specified in the Servicing Agreement.
"PUC Regulations" has the meaning specified in the Servicing
Agreement.
"Qualified Rate Order" has the meaning specified in the Servicing
Agreement.
"Qualified Transition Expenses" has the meaning specified in the
Servicing Agreement.
"Rate Schedule" has the meaning specified in the Servicing
Agreement.
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"Retained Intangible Transition Property" means Intangible
Transition Property other than the Transferred Intangible Transition
Property.
"Seller" has the meaning specified in the heading of this
Agreement.
"Serviced Intangible Transition Property" has the meaning
specified in the Servicing Agreement.
"Servicer" means West Penn, as the servicer of the Intangible
Transition Property, and each successor to West Penn (in the same capacity)
pursuant to Section 5.03 or 6.04 of the Servicing Agreement.
"Servicer Default" means an event specified in Section 6.01 of
the Servicing Agreement.
Servicing Agreement" means the Servicing Agreement dated as of [
], 1999, between the Issuer and the Servicer, as the same may be amended
and supplemented from time to time.
"Standard & Poor's" has the meaning specified in the Servicing
Agreement.
"Statute" has the meaning specified in the Servicing Agreement.
"Subsequent Contribution Date" means any date on which Subsequent
Intangible Transition Property is to be transferred to the Seller pursuant
to Section 2.02.
"Subsequent Intangible Transition Property" means Intangible
Transition Property, as identified in the related
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▇▇▇▇ of Sale, contributed to the Seller on any Subsequent Contribution Date
in connection with the issuance of a Series of Transition Bonds.
"Third Party" has the meaning specified in the Servicing
Agreement.
"Transferor" has the meaning specified in the heading of this
Agreement.
"Transferred Intangible Transition Property" means, collectively,
the Initial Intangible Transition Property and any Subsequent Intangible
Transition Property.
"UCC" has the meaning specified in the Servicing Agreement.
"West Penn" has the meaning specified in the Servicing Agreement.
(b) Except as otherwise specified herein or as the context may
otherwise require, each of the following terms has the meaning set forth in
the Indenture for all purposes of this Agreement, and the definitions of
such terms are equally applicable both to the singular and plural forms of
such terms:
Term Section of the Indenture
Adjustment Date.................... 1.01(a)
Affiliate.......................... 1.01(a)
Basic Documents.................... 1.01(a)
Bond Trustee....................... 1.01(a)
Capital Subaccount................. 1.01(a)
Collateral......................... 1.01(a)
Collection Account................. 1.01(a)
General Subaccount................. 1.01(a)
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Term Section of the Indenture
Holders or Transition
Bondholders ..................... 1.01(a)
Loss Subaccount.................... 1.01(a)
Operating Expenses................. 1.01(a)
Overcollateralization Amount....... 1.01(a)
Payment Date....................... 1.01(a)
Person............................. 1.01(a)
Rating Agency...................... 1.01(a)
Rating Agency Condition............ 1.01(a)
Reserve Subaccount................. 1.01(a)
Series............................. 1.01(a)
Servicing Fee...................... 1.01(a)
Transition Bonds................... 1.01(a)
SECTION 1.02. Other Definitional Provisions. (a) The words
"hereof", "herein", "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified;
and the term "including" shall mean "including without limitation".
(b) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
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ARTICLE II
Conveyance of Intangible Transition Property
SECTION 2.01. Conveyance of Initial Intangible Transition
Property. (a) In consideration of the Seller's delivery to the Transferor
of certificates evidencing [ ] shares of common stock, par value $.01 per
share, of the Seller (which constitutes 100% of the outstanding capital
stock of the Seller), subject to the conditions specified in Section 2.03,
the Transferor, pursuant to a ▇▇▇▇ of Sale, will irrevocably contribute,
sell, transfer, assign, set over and otherwise convey to the Seller,
without recourse (subject to the obligations herein), all right, title and
interest of the Transferor in and to the Initial Intangible Transition
Property (such contribution, sale, transfer, assignment, set over and
conveyance of the Initial Intangible Transition Property will include, to
the fullest extent permitted by the Statute, the assignment of all
revenues, collections, claims, rights, payments, money or proceeds of or
arising from the Intangible Transition Charges related to the Initial
Intangible Transition Property, as the same may be adjusted from time to
time). Such contribution, sale, transfer, assignment, set over and
conveyance will be expressly stated to be a sale and, pursuant to Section
2812(e) of the Statute, shall be treated as an absolute transfer of all of
the Transferor's right, title and interest (as in a true sale), and not as
a pledge
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or other financing, of the Initial Intangible Transition Property. The
preceding sentence is the statement referred to in Section 2812(e) of the
Statute. The Transferor agrees and confirms that after giving effect to the
sale contemplated by such ▇▇▇▇ of Sale it has no rights in the Initial
Intangible Transition Property to which a security interest of creditors of
the Transferor could attach because it has sold all rights in the Initial
Intangible Transition Property to the Seller pursuant to Section 2812(e) of
the Statute.
(b) Subject to the conditions specified in Section 2.03, the
Seller, pursuant to a ▇▇▇▇ of Sale, will purchase the Initial Intangible
Transition Property from the Transferor for the consideration set forth in
paragraph (a) above.
(c) The Transferor and the Seller each acknowledge and agree that
the consideration for the Initial Intangible Transition Property sold
pursuant to the ▇▇▇▇ of Sale is equal to its fair market value at the time
of sale.
SECTION 2.02. Conveyance of Subsequent Intangible Transition
Property. The Transferor may from time to time offer to sell additional
Intangible Transition Property to the Seller, subject to the conditions
specified in Section 2.03. If any such offer is accepted by the Seller,
such Subsequent Intangible Transition Property shall be sold to the Seller
effective on the Subsequent Contribution Date
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specified in the related Addition Notice, subject to the satisfaction or
waiver of the conditions specified in Section 2.03.
SECTION 2.03. Conditions to Conveyance of Intangible Transition
Property. The Transferor shall be permitted to sell Intangible Transition
Property to the Seller only upon the satisfaction or waiver of each of the
following conditions:
(i) on or prior to the Initial Contribution Date or Subsequent
Contribution Date, as applicable, the Transferor shall have delivered
to the Seller a duly executed ▇▇▇▇ of Sale identifying the Intangible
Transition Property to be conveyed on that date;
(ii) as of the Initial Contribution Date or the Subsequent
Contribution Date, as applicable, the Transferor was not insolvent and
will not have been made insolvent by such sale and the Transferor is
not aware of any pending insolvency with respect to itself;
(iii) as of the Initial Contribution Date or the Subsequent
Contribution Date, as applicable, no breach by the Transferor of its
representations, warranties or covenants in this Agreement shall
exist; and no Servicer Default shall have occurred and be continuing;
(iv) as of the Initial Contribution Date or the Subsequent
Contribution Date, as applicable, (A) the Issuer shall have sufficient
funds available to pay the
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purchase price for the Transferred Intangible Transition Property to
be conveyed on such date and (B) all conditions to the issuance of one
or more Series of Transition Bonds intended to provide such funds set
forth in the Indenture shall have been satisfied or waived;
(v) on or prior to the Initial Contribution Date or Subsequent
Contribution Date, as applicable, the Transferor shall have taken all
action required to transfer to the Seller ownership of the Transferred
Intangible Transition Property to be conveyed on such date, free and
clear of all Liens other than Liens created by the Issuer pursuant to
the Indenture; the Seller shall have taken any action required for the
Seller to transfer to the Issuer ownership of the Transferred
Intangible Transition Property to be conveyed on such date, free and
clear of all Liens other than Liens created by the Issuer pursuant to
the Indenture; and the Issuer or the Servicer, on behalf of the
Issuer, shall have taken any action required for the Issuer to grant
the Bond Trustee a first priority perfected security interest in the
Collateral and maintain such security interest as of such date;
(vi) in the case of a sale of Subsequent Intangible Transition
Property only, on or prior to such Subsequent Contribution Date, the
Transferor shall have
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provided the Seller, the Issuer and the Rating Agencies with a timely
Addition Notice;
(vii) the Transferor shall have delivered to the Rating Agencies,
the Seller and the Issuer (A) an Opinion of Counsel with respect to
the transfer of the Transferred Intangible Transition Property then
being conveyed to the Seller substantially in the form of Exhibit B
hereto and (B) the Opinion of Counsel required by Section 5.04(a); and
(viii) the Transferor shall have delivered to the Bond Trustee,
the Seller and the Issuer an Officers' Certificate confirming the
satisfaction of each condition precedent specified in this Section
2.03.
ARTICLE III
Representations and Warranties of Transferor
As of the Initial Contribution Date and as of any Subsequent
Contribution Date, as applicable, the Transferor makes the following
representations and warranties on which the Seller has relied and will rely
in acquiring Transferred Intangible Transition Property. The Transferor
agrees and acknowledges that the following representations and warranties
are also for the benefit of the Issuer, as assignee of the Seller pursuant
to the Sale Agreement, and the Bond Trustee, as collateral assignee of the
Issuer pursuant to the Indenture. The representations and
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warranties shall survive the sale of Transferred Intangible Transition
Property to the Seller, the sale of the Transferred Intangible Transition
Property from the Seller to the Issuer pursuant to the Sale Agreement and
the pledge thereof to the Bond Trustee pursuant to the Indenture.
SECTION 3.01. Organization and Good Standing. The Transferor is a
corporation duly organized and in good standing under the laws of the
Commonwealth of Pennsylvania, with corporate power and authority to own its
properties and conduct its business as currently owned or conducted.
SECTION 3.02. Due Qualification. The Transferor is duly qualified
to do business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require
such qualifications, licenses or approvals (except where the failure to so
qualify would not be reasonably likely to have a material adverse effect on
the Transferor's business, operations, assets, revenues, properties or
prospects).
SECTION 3.03. Power and Authority. The Transferor has the
corporate power and authority to execute and deliver this Agreement and to
carry out its terms; the Transferor has full corporate power and authority
to own the Intangible Transition Property and contribute, sell and assign
the Initial Intangible Transition Property, in the
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case of the Initial Contribution Date, and the Subsequent Intangible
Transition Property, in the case of each Subsequent Contribution Date, as
applicable, and the Transferor has duly authorized such contribution, sale
and assignment to the Seller by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Transferor by all necessary corporate action.
SECTION 3.04. Binding Obligation. This Agreement constitutes a
legal, valid and binding obligation of the Transferor enforceable against
the Transferor in accordance with its terms subject to bankruptcy,
receivership, insolvency, fraudulent transfer, reorganization, moratorium
or other laws affecting creditors' rights generally from time to time in
effect and to general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
SECTION 3.05. No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do
not conflict with, result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or by-laws of the Transferor, or any
indenture, agreement or other instrument to which the Transferor is a party
or by which it shall be bound; nor result in the creation or imposition of
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any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument; nor violate any law or any order,
rule or regulation applicable to the Transferor of any court or of any
Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Transferor or its
properties.
SECTION 3.06. No Proceedings. There are no proceedings or
investigations pending or, to the Transferor's best knowledge, threatened,
before any court, Federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the
Transferor or its properties (i) asserting the invalidity of the Basic
Documents or the Transition Bonds, (ii) seeking to prevent the issuance of
the Transition Bonds or the consummation of any of the transactions
contemplated by the Basic Documents or the Transition Bonds or (iii) except
as disclosed by the Transferor to the Seller, seeking any determination or
ruling that could reasonably be expected to materially and adversely affect
the performance by the Transferor of its obligations under, or the validity
or enforceability of, the Basic Documents or the Transition Bonds.
SECTION 3.07. Approvals. Except for UCC continuation filings, no
approval, authorization, consent, order or other action of, or filing with,
any court, Federal
17
or state regulatory body, administrative agency or other governmental
instrumentality is required in connection with the execution and delivery
by the Transferor of this Agreement, the performance by the Transferor of
the transactions contemplated hereby or the fulfillment by the Transferor
of the terms hereof, except those that have been obtained or made.
SECTION 3.08. The Intangible Transition Property. (a)
Information. All information provided by the Transferor to the Seller with
respect to the Transferred Intangible Transition Property is correct in all
material respects.
(b) Effect of Transfer. The transfers and assignments herein
contemplated constitute sales of the Initial Intangible Transition Property
or the Subsequent Intangible Transition Property, as the case may be, from
the Transferor to the Seller and the beneficial interest in and title to
the Transferred Intangible Transition Property would not be part of the
debtor's estate in the event of the filing of a bankruptcy petition by or
against the Transferor under any bankruptcy law.
(c) Transfer Filings. The Transferor is the sole owner of the
Intangible Transition Property being sold to the Seller on the Initial
Contribution Date or Subsequent Contribution Date, as applicable; the
Transferred Intangible Transition Property has been validly transferred and
sold to
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the Seller free and clear of all Liens other than Liens contemplated
hereby. All filings, including filings with the PUC under the Statute,
necessary in any jurisdiction to give the Seller a valid ownership interest
in the Transferred Intangible Transition Property, free and clear of all
Liens of the Transferor or anyone claiming through the Transferor, and to
give the Seller a first priority perfected security interest in the
Transferred Intangible Transition Property have been made, other than any
such filings (except for filings with the PUC under the Statute and UCC
filings with the Secretary of State of the State of Delaware) the absence
of which would not have an adverse impact on (i) the ability of the
Servicer to collect Intangible Transition Charges with respect to the
Serviced Intangible Transition Property or (ii) the rights of the Seller
with respect to the Transferred Intangible Transition Property.
(d) Irrevocable; Process Valid; No Litigation; Etc. (i) The
Qualified Rate Order has been issued by the PUC in accordance with the
Statute, such order and the process by which it was issued comply with all
applicable laws, rules and regulations, and such order is in full force and
effect. (ii) As of the date of issuance of any Series of Transition Bonds,
such Transition Bonds are entitled to the protections provided by the
Statute and, accordingly, the provisions of the Qualified Rate Order
relating to
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Intangible Transition Property and Intangible Transition Charges are not
revocable by the PUC. (iii) (a) Under the Statute, neither the Commonwealth
of Pennsylvania nor the PUC may limit, alter or in any way impair or reduce
the value of Intangible Transition Property or Intangible Transition
Charges approved by the Qualified Rate Order or any rights thereunder,
except such a limitation or alteration may be made by the Commonwealth of
Pennsylvania or the PUC if adequate compensation is made by law for the
full protection of the Intangible Transition Charges and of Transition
Bondholders; and (b) under the Contract Clauses of the Constitutions of the
Commonwealth of Pennsylvania and the United States, the Commonwealth of
Pennsylvania and the PUC cannot take any action that substantially impairs
the rights of the Transition Bondholders unless such action is a reasonable
exercise of the Commonwealth of Pennsylvania's sovereign powers and
appropriate to further a legitimate public purpose, and, under the Takings
Clauses of the Pennsylvania and United States Constitutions, in the event
such action constitutes a permanent appropriation of the property interest
of Transition Bondholders in the Intangible Transition Property and
deprives the Transition Bondholders of their reasonable expectations
arising from their investments in Transition Bonds, unless just
compensation, as determined by a court of competent jurisdiction, is
provided to Transition Bondholders.
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(iv) There is no order by any court providing for the revocation,
alteration, limitation or other impairment of the Statute, Qualified Rate
Order, Intangible Transition Property or the Intangible Transition Charges
or any rights arising under any of them or which seeks to enjoin the
performance of any obligations under the Qualified Rate Order. (v) No other
approval, authorization, consent, order or other action of, or filing with,
any court, Federal or state regulatory body, administrative agency or other
governmental instrumentality is required in connection with the creation of
the Intangible Transition Property, except those that have been obtained or
made. (vi) Except as disclosed by the Transferor to the Seller, there are
no proceedings or investigations pending, or to the Transferor's best
knowledge, threatened before any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Transferor or its properties challenging the
Qualified Rate Order or the Statute. (vii) No failure on the Initial
Contribution Date or any Subsequent Contribution Date or any time
thereafter to satisfy any condition imposed by the Statute with respect to
the recovery of stranded costs will adversely affect the creation or sale
hereunder of Intangible Transition Property or the right to collect
Intangible Transition Charges.
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(e) Assumptions. The assumptions used in calculating Intangible
Transition Charges are reasonable and made in good faith.
(f) Creation of Intangible Transition Property. (i) The
Intangible Transition Property other than the Retained Intangible
Transition Property constitutes a current property right, (ii) the
Intangible Transition Property includes, without limitation, (A) the
irrevocable right of the Seller and the Issuer, as assignee of the Seller,
to receive through Intangible Transition Charges an amount sufficient to
recover all of the Transferor's Qualified Transition Expenses described in
the Qualified Rate Order in an amount equal to the aggregate principal
amount of Transition Bonds plus an amount sufficient to provide for any
credit enhancement (including the Overcollateralization Amount relating to
each Series of Transition Bonds), to fund any reserves, and to pay
interest, premium, if any, servicing fees and other expenses relating to
the Transition Bonds, and (B) all right, title and interest of the
Transferor or its assignee applicable to the Transition Bonds in the
Qualified Rate Order and in all revenues, collections, claims, payments,
money or proceeds of or arising from the Intangible Transition Charges
applicable to the Transition Bonds set forth in the Qualified Rate Order to
the extent that in accordance with the Statute, the Qualified Rate Order
and the rates and
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charges authorized under the Qualified Rate Order are declared to be
irrevocable and (iii) the Qualified Rate Order, including the right to
collect Intangible Transition Charges, have been declared to be irrevocable
by the PUC.
(g) Solvency. After giving effect to the sale of any Transferred
Intangible Transition Property hereunder, the Transferor (i) is solvent and
expects to remain solvent, (ii) is adequately capitalized to conduct its
business and affairs considering its size and the nature of its business
and intended purposes, (iii) is not engaged in nor does it expect to engage
in a business for which its remaining property represents an unreasonably
small capital, (iv) believes that it will be able to pay its debts as they
come due and that such belief is reasonable and (v) is able to pay its
debts as they mature and does not intend to incur, or believe that it will
incur, indebtedness that it will not be able to repay at its maturity.
ARTICLE IV
Covenants of the Transferor
SECTION 4.01. Corporate Existence. Subject to Section 5.02, so
long as any of the Transition Bonds are outstanding, the Transferor will
keep in full force and effect its corporate existence and remain in good
standing, in each case under the laws of the jurisdiction of its
incorporation, and will obtain and preserve its
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qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and each other instrument or agreement to
which the Transferor is a party necessary to the proper administration of
this Agreement and the transactions contemplated hereby.
SECTION 4.02. No Liens or Conveyances. Except for the conveyances
hereunder, the Transferor will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien
on, any of the Intangible Transition Property, whether now existing or
hereafter created, or any interest therein. The Transferor shall not at any
time assert any Lien against or with respect to any Serviced Intangible
Transition Property, and shall defend the right, title and interest of the
Seller, the Issuer, as assignee of the Seller, and the Bond Trustee, as
collateral assignee of the Issuer, in, to and under the Intangible
Transition Property, whether now existing or hereafter created, against all
claims of third parties claiming through or under the Transferor.
SECTION 4.03. Delivery of Collections. If the Transferor receives
collections in respect of the Intangible Transition Charges, other than
Intangible Transition Charges relating to Retained Intangible Transition
Property, or the proceeds thereof, the Transferor agrees to pay the
Servicer all payments received by the Transferor in respect thereof
24
as soon as practicable after receipt thereof by the Transferor, but in no
event later than two Business Days after such receipt.
SECTION 4.04. Notice of Liens. The Transferor shall notify the
Issuer and the Bond Trustee promptly after becoming aware of any Lien on
any Intangible Transition Property other than the conveyances hereunder,
under the Sale Agreement or under the Indenture.
SECTION 4.05. Compliance with Law. The Transferor hereby agrees
to comply with its organizational or governing documents and all laws,
treaties, rules, regulations and determinations of any governmental
instrumentality applicable to the Transferor, except to the extent that
failure to so comply would not adversely affect the Seller's, the Issuer's
or the Bond Trustee's interests in the Intangible Transition Property or
under any of the Basic Documents or the Transferor's performance of its
obligations hereunder or under any of the other Basic Documents to which it
is a party.
SECTION 4.06. Covenants Related to Intangible Transition
Property. (a) So long as any of the Transition Bonds are outstanding, the
Transferor shall treat the Transition Bonds as debt of the Seller for
Federal income tax purposes.
(b) So long as any of the Transition Bonds are outstanding, the
Transferor shall (i) clearly disclose in
25
its financial statements that it is not the owner of the Serviced
Intangible Transition Property and that the assets of the Issuer are not
available to pay creditors of the Transferor or any of its Affiliates and
(ii) clearly disclose the effects of all transactions among the Transferor,
the Seller and the Issuer in accordance with generally accepted accounting
principles.
(c) The Transferor agrees that upon the sale by the Transferor of
the Transferred Intangible Transition Property to the Seller pursuant to a
▇▇▇▇ of Sale, (i) to the fullest extent permitted by law, including
applicable PUC Regulations, the Seller shall have all of the rights
originally held by the Transferor with respect to the Transferred
Intangible Transition Property (other than the rights of an electric
distribution company set forth in Section 2807 of the Statute), including
the right to collect any amounts payable by any Customer or Third Party in
respect of such Transferred Intangible Transition Property, notwithstanding
any objection or direction to the contrary by the Transferor and (ii) any
payment by any Customer or Third Party to the Seller shall discharge such
Customer's or such Third Party's obligations in respect of such Transferred
Intangible Transition Property to the extent of such payment,
notwithstanding any objection or direction to the contrary by the
Transferor.
26
(d) So long as any of the Transition Bonds are outstanding, (i)
the Transferor shall not make any statement or reference in respect of the
Transferred Intangible Transition Property that is inconsistent with the
ownership thereof by the Seller or, after the sale of the Transferred
Intangible Transition Property by the Seller to the Issuer, the Issuer and
(ii) the Transferor shall not take any action in respect of the Serviced
Intangible Transition Property except solely in its capacity as the
Servicer thereof pursuant to the Servicing Agreement or as otherwise
contemplated by the Basic Documents.
SECTION 4.07. Notice of Indemnification Events and Mandatory
Repurchase Events. The Transferor shall deliver to the Seller, the Issuer
and the Bond Trustee promptly after having obtained knowledge thereof,
written notice in an Officers' Certificate of any Indemnification Event or
Mandatory Repurchase Event or any event which, with the giving of notice or
the passage of time, would become an Indemnification Event or Mandatory
Repurchase Event.
SECTION 4.08. Protection of Title. The Transferor shall execute
and file such filings, including filings with the PUC pursuant to the
Statute, and cause to be executed and filed such filings, all in such
manner and in such places as may be required by law fully to preserve,
maintain, and protect the interests of the Seller in the Transferred
Intangible Transition Property, including all
27
filings required under the Statute relating to the transfer of the
ownership or security interest in the Transferred Intangible Transition
Property by the Transferor to the Seller. The Transferor shall deliver (or
cause to be delivered) to the Seller file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing. The Transferor agrees to take such legal or
administrative actions, including defending against or instituting and
pursuing legal actions and appearing or testifying at hearings or similar
proceedings, as may be reasonably necessary (i) to protect the Seller, the
Issuer and the Transition Bondholders from claims, state actions or other
actions or proceedings of third parties which, if successfully pursued,
would result in a breach of any representation or warranty set forth in
Article III or (ii) to block or overturn any attempts to cause a repeal of,
modification of or supplement to the Statute or the Qualified Rate Order or
the rights of holders of Intangible Transition Property by legislative
enactment or constitutional amendment that would be adverse to the holders
of Intangible Transition Property.
SECTION 4.09. Taxes. So long as any of the Transition Bonds are
outstanding, the Transferor shall, and shall cause each of its subsidiaries
to, pay all material taxes, including gross receipts taxes, assessments and
governmental charges imposed upon it or any of its
28
properties or assets or with respect to any of its franchises, business,
income or property before any penalty accrues thereon if the failure to pay
any such taxes, assessments and governmental charges would, after any
applicable grace periods, notices or other similar requirements, result in
a lien on the Intangible Transition Property; provided that no such tax
need be paid if the Transferor or one of its subsidiaries is contesting the
same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if the Transferor or such subsidiary has
established appropriate reserves as shall be required in conformity with
generally accepted accounting principles.
ARTICLE V
The Transferor
SECTION 5.01. Liability of Transferor; Indemnities and Mandatory
Repurchase. (a) The Transferor shall be liable in accordance herewith only
to the extent of the obligations specifically undertaken by the Transferor
under this Agreement.
(b) The Transferor shall indemnify the Seller, the Issuer and the
Bond Trustee, for itself and on behalf of the Transition Bondholders, and
each of their respective members, managers, officers, directors and agents
for, and defend and hold harmless each such Person from and against,
29
any and all taxes (other than any taxes imposed on Transition Bondholders
solely as a result of their ownership of Transition Bonds) that may at any
time be imposed on or asserted against any such Person as a result of the
acquisition or holding of the Transferred Intangible Transition Property by
the Seller or the Issuer or the issuance and sale by the Issuer of the
Transition Bonds, including any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes.
(c)(i) The Transferor shall indemnify the Seller, the Issuer and
the Bond Trustee, on behalf of the Transition Bondholders, each of their
respective members, managers, officers, directors, and agents, and defend
and hold harmless each such Person from and against, any and all Losses
that may be imposed on, incurred by or asserted against any such Person as
a result of (x) the Transferor's wilful misconduct, bad faith or gross
negligence in the performance of its duties or observance of its covenants
under this Agreement, (y) the Transferor's reckless disre gard of its
obligations and duties under this Agreement or (z) the Transferor's breach
of any of its representations or warranties contained in this Agreement
other than those contained in Sections 3.08(b), 3.08(c), 3.08(d)(i), (ii)
and (iv) and 3.08(f) (any event described in any of the foregoing clauses
(x), (y) or (z), an "Indemnification Event"); provided, however, that the
amount of such Losses
30
(other than those payable pursuant to Section 5.01(e)) for which the
Transferor shall be obligated to provide indemnification shall not exceed
the amount of the Deferred Repurchase Price. Amounts on deposit in the
Reserve Subaccount and the Capital Subaccount shall not be available to
satisfy any Losses for which indemnification is provided in this Agreement.
(ii) If an Indemnification Event shall occur, upon receipt of
written notice thereof by the Transferor from the Seller, the Issuer or the
Bond Trustee, the Transferor shall notify the Servicer of the occurrence of
such event so that the Servicer may, pursuant to Section 7 of Annex 1 to
the Servicing Agreement, calculate (x) on the day which is 90 days after
receipt of such notice by the Transferor (the "Initial Loss Calculation
Date") the amount of Losses expected to be incurred as a result of such
Indemnification Event from and including the time of its occurrence through
and including the next Payment Date after the Initial Loss Calculation Date
and (y) to the extent that Losses may be incurred as a result of such
Indemnification Event in an amount exceeding the amount of Losses
calculated pursuant to clause (x) above and unless the Transferor has paid
the Deferred Repurchase Price with respect to such Indemnification Event
pursuant to Section 5.01(d)(i)(B), not later than each Payment Date
succeeding the Initial Loss Calculation Date, the amount of Losses expected
to be
31
incurred as a result of such Indemnification Event from but excluding such
Payment Date through and including the next Payment Date. All such
calculations shall be subject to the approval of the Bond Trustee. If such
Indemnification Event shall continue unremedied beyond the Initial Loss
Calculation Date, the Transferor shall pay to the Bond Trustee, as
collateral assignee of the Issuer (as assignee of the Seller), for deposit
into the General Subaccount of the Collection Account, (x) on the Payment
Date immediately following the Initial Loss Calculation Date, the amount of
Losses calculated pursuant to clause (x) and clause (y) of the preceding
sentence with respect to such Payment Date and (y) on each subsequent
Payment Date, the amount of Losses calculated as of such date pursuant to
clause (y) of the preceding sentence. Upon payment pursuant to this Section
5.01(c)(ii), the Transferor shall have no further obligations with respect
to such Losses to the extent of such payments.
(d)(i) In the event of a breach by the Transferor of any
representation and warranty specified in (A) Section 3.08(b), 3.08(c),
3.08(d)(i), (ii) or (iv) or 3.08(f) of this Agreement that has a material
adverse effect on the Transition Bondholders or (B) Sections 3.01, 3.03,
3.04, 3.05 and 3.08(d)(iii), (v) or (vi) of this Agreement for which the
full amount of Losses attributable thereto are reasonably expected to be
incurred beyond a 90-day period
32
immediately following the occurrence of such Indemnification Event (any
event described in clause (A) or (B), a "Mandatory Repurchase Event"), the
Transferor will be required to repurchase the Transferred Intangible
Transition Property and, on each Payment Date following such repurchase,
the Transferor will be required to pay (any such payment by the Transferor
is referred to as the "Deferred Repurchase Price") to the Bond Trustee, as
collateral assignee of the Issuer (as assignee of the Seller), for deposit
in the General Subaccount of the Collection Account, an amount sufficient
to make the payments contemplated by clauses (i) through (viii) of Section
8.02(d) of the Indenture.
(ii) The Transferor shall not be obligated to pay the Deferred
Repurchase Price pursuant to Section 5.01(d)(i) (A) if within 90 days after
the date of the occurrence thereof such breach is cured or the Transferor
takes remedial action such that there is not and will not be a material
adverse effect on the Transition Bondholders as a result of such breach. In
the event that within such 90-day period (i) such breach is cured or (ii)
the Transferor takes the remedial action specified by this Section
5.01(d)(ii), any amounts paid by the Transferor to the Bond Trustee, as
collateral assignee of the Issuer (as assignee of the Seller) pursuant to
Section 5.01(d)(i) which have not been
33
distributed pursuant to the Indenture shall be returned to the Transferor
at the end of such 90-day period.
(iii) With respect to any Losses described in Section 5.01(c)(ii)
or Section 5.01(d)(i)(B) above, the full amount of which is reasonably
expected not to exceed [ ]% of the annual outstanding balance of Transition
Bonds per Payment Date (the "De Minimis Loss Amount"), the Transferor, on
the Payment Date immediately following the Initial Loss Calculation Date,
shall pay to the Bond Trustee, as collateral assignee of the Issuer (as
assignee of the Seller), for deposit in the Loss Subaccount of the
Collection Account, the aggregate expected amount of such Losses for all
Payment Dates on which such Losses are expected to be incurred, following
which the Transferor's obligation to pay indemnification or the Deferred
Repurchase Price, as applicable, as a result of such Losses shall be waived
so long as the actual Losses incurred on any Payment Date do not exceed the
De Minimis Loss Amount. If the aggregate amount of such Losses incurred as
of any Payment Date exceeds the amounts paid by the Transferor to the Bond
Trustee, as collateral assignee of the Issuer (as assignee of the Seller),
with respect thereto, the Transferor shall pay to the Bond Trustee, as
collateral assignee of the Issuer (as assignee of the Seller), on the next
Payment Date, the amount of such excess for such Payment Date and the
expected amount of excess for all subsequent Payment
34
Dates. If the amount of such Losses on any Payment Date exceeds the De
Minimis Loss Amount, the full indemnification amount or Deferred Repurchase
Price, as applicable, is payable on the next Payment Date.
(iv) Upon the payment in full by the Transferor of the aggregate
amount of the Deferred Repurchase Price pursuant to Section 5.01(d)(i),
neither the Issuer, the Seller nor any other Person shall have any other
claims, rights or remedies against the Transferor for a breach of the
representations and warranties specified in Section 3.08(b), (c), (d)(i),
(d)(ii), (d)(iv) or (f).
(e) The Transferor shall indemnify the Bond Trustee and its
officers, directors and agents for, and defend and hold harmless each such
Person from and against, any and all Losses that may be imposed upon,
incurred by or asserted against any such Person as a result of the
acceptance or performance of the trusts and duties contained herein and in
the Indenture, except to the extent that any such Loss shall be due to the
wilful misfeasance, bad faith or gross negligence of the Bond Trustee. Such
amounts shall be deposited into the Collection Account and distributed in
accordance with the Indenture.
(f) The Transferor's indemnification obligations under Section
5.01(b),(c), (d) and (e) for events occurring prior to the removal or
resignation of the Bond Trustee or the termination of this Agreement shall
survive the
35
resignation or removal of the Bond Trustee or the termination of this
Agreement and shall include reasonable fees and expenses of investigation
and litigation (including the Bond Trustee's reasonable attorney's fees and
expenses).
SECTION 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, Transferor. Any Person (a) into which the Transferor may be
merged or consolidated and which succeeds to the major part of the electric
distribution business of the Transferor, (b) which results from the
division of the Transferor into two or more Persons and which succeeds to
the major part of the electric distribution business of the Transferor, (c)
which may result from any merger or consolidation to which the Transferor
shall be a party and which succeeds to the major part of the electric
distribution business of the Transferor, (d) which may succeed to the
properties and assets of the Transferor substantially as a whole and which
succeeds to the major part of the electric distribution business of the
Transferor or (e) which may otherwise succeed to the major part of the
electric distribution business of the Transferor, which Person in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Transferor under this Agreement, shall be the successor
to the Transferor hereunder without the execution or filing of any document
or any further act by any of the parties to this Agreement;
36
provided, however, that (i) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Article III
shall have been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default, shall
have occurred and be continuing, (ii) the Transferor shall have delivered
to the Seller, the Issuer and the Bond Trustee an Officers' Certificate and
an Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section and
that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, (iii) the Rating
Agencies shall have received prior written notice of such transaction and
(iv) the Transferor shall have delivered to the Seller, the Issuer and the
Bond Trustee an Opinion of Counsel either (A) stating that, in the opinion
of such counsel, all filings, including filings with the PUC pursuant to
the Statute, have been executed and filed that are necessary fully to
preserve and protect the interest of the Seller in the Transferred
Intangible Transition Property and reciting the details of such filings or
(B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interests. Notwithstanding anything
herein to the contrary, the execution of the above described agreement of
assumption and compliance with clauses (i), (ii), (iii)
37
and (iv) above shall be conditions precedent to the consummation of any
transaction referred to in clauses (a), (b), (c), (d) or (e) above.
SECTION 5.03. Limitation on Liability of Transferor and Others.
The Transferor and any director or officer or employee or agent of the
Transferor may rely in good faith on the advice of counsel or on any
document of any kind, prima facie properly executed and submitted by any
Person, respecting any matters arising hereunder. Subject to Section 4.08,
the Transferor shall not be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
SECTION 5.04. Opinions of Counsel. The Transferor shall deliver
to the Seller, the Issuer and the Bond Trustee: (a) promptly after the
execution and delivery of this Agreement and of each amendment hereto or to
the Servicing Agreement and on each Subsequent Contribution Date, an
Opinion of Counsel either (i) to the effect that, in the opinion of such
counsel, all filings, including filings with the PUC pursuant to the
Statute, that are necessary to fully preserve and protect the interests of
the Seller in the Intangible Transition Property have been executed and
filed, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such
38
details are given, or (ii) to the effect that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interest; and (b) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Initial Contribution Date, an Opinion of Counsel, dated as of a
date during such 90-day period, either (i) to the effect that, in the
opinion of such counsel, all filings with the PUC pursuant to the Statute,
have been executed and filed that are necessary to preserve fully and
protect fully the interest of the Seller in the Intangible Transition
Property, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (ii) to the effect
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest. Each Opinion of Counsel referred to in
clause (a) or (b) above shall specify any action necessary (as of the date
of such opinion) to be taken in the following year to preserve and protect
such interest.
ARTICLE VI
Miscellaneous Provisions
SECTION 6.01. Amendment. This Agreement may be amended by the
Seller and the Transferor, with the consent of the Issuer and the Bond
Trustee. The Seller shall
39
furnish to each of the Rating Agencies (i) prior to the execution of any
such amendment or consent, written notification of the substance thereof
and (ii) promptly after the execution of any such amendment or consent, a
copy thereof.
Prior to the execution of any amendment to this Agreement, the
Seller, the Issuer and the Bond Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and the Opinion of
Counsel referred to in Section 5.04(a). The Seller, the Issuer and the Bond
Trustee may, but shall not be obligated to, enter into any such amendment
which affects their own rights, duties or immunities under this Agreement
or otherwise.
SECTION 6.02. Notices. All demands, notices and communications
upon or to the Transferor, the Seller, the Issuer, the Bond Trustee or the
Rating Agencies under this Agreement shall be in writing, delivered
personally, via facsimile, reputable overnight courier or by certified
mail, return-receipt requested, and shall be deemed to have been duly given
upon receipt (a) in the case of the Transferor, to West Penn Power Company,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention of [ ], (b) in the
case of the Seller, to West Penn Funding Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention of [ ], (c) in the case of the Issuer, to
West Penn
40
Funding LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, Attention of [ ],
(d) in the case of the Bond Trustee, at the Corporate Trust Office, (e) in
the case of Moody's, to ▇▇▇▇▇'▇ Investors Service, Inc., ABS Monitoring
Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (f) in the case of
Standard & Poor's, to Standard & Poor's Corporation, ▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇
▇▇▇▇▇), ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of Asset Backed Surveillance
Department, and (g) in the case of Fitch IBCA, to Fitch IBCA, Inc., ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ABS
Surveillance; or, as to each of the foregoing, at such other address as
shall be designated by written notice to the other parties.
SECTION 6.03. Assignment. Notwithstanding anything to the
contrary contained herein, except as pro vided in Section 5.02, this
Agreement may not be assigned by the Transferor.
SECTION 6.04. Limitations on Rights of Others. The provisions of
this Agreement are solely for the benefit of the Transferor, the Seller,
the Issuer and the Bond Trustee, on behalf of itself and the Transition
Bondholders, and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Collateral or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
41
SECTION 6.05. Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 6.06. Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 6.07. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 6.08. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 6.09. Assignment to Issuer and to Bond Trustee. (a) The
Transferor hereby acknowledges and consent to the sale, transfer,
assignment and conveyance of
42
all right, title and interest of the Seller in, to and under the
Transferred Intangible Transition Property and the proceeds thereof and the
assignment of any or all of the Seller's rights hereunder to the Issuer
pursuant to the Sale
Agreement.
(b) The Transferor hereby acknowledges and consents to the
mortgage, pledge, assignment and grant of a security interest by the Issuer
(as assignee of the Seller) to the Bond Trustee pursuant to the Indenture
for the benefit of the Transition Bondholders of all right, title and
interest of the Issuer in, to and under the Transferred Intangible
Transition Property and the proceeds thereof and the assignment of any or
all of the Issuer's rights under the Sale Agreement to the Bond Trustee.
SECTION 6.10. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the PUC's
rights to order the sequestration and payment of revenues arising with
respect to the Intangible Transition Property notwithstanding any
bankruptcy, reorganization or other insolvency proceedings with respect to
the debtor, pledgor or transferor of the Intangible Transition Property
pursuant to Section 2812(d)(3)(v) of the Statute, the Transferor shall not,
prior to the date which is one year and one day after the termination of
the Indenture, petition or otherwise invoke or cause the Seller or the
Issuer to invoke the
43
process of any court or government authority for the purpose of commencing
or sustaining a case against the Seller or the Issuer under any Federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Seller or the Issuer or any substantial part of the
property of the Seller or the Issuer, or ordering the winding up or
liquidation of the affairs of the Seller or the Issuer.
SECTION 6.11. Perfection. In accordance with Section 2812(e) of
the Statute, upon the execution and delivery of this Agreement and the
related ▇▇▇▇ of Sale, the transfer of the Initial Intangible Transition
Property will be perfected as against all third persons, including any
judicial lien creditors, and upon the execution and delivery of a ▇▇▇▇ of
Sale and, if applicable, a supplement to this Agreement, a transfer of
Subsequent Intangible Transition Property will be perfected against all
third persons, including any judicial lien creditors.
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective officers as of the day and year
first above written.
WEST PENN FUNDING CORPORATION,
Seller,
by
----------------------------
Title:
WEST PENN POWER COMPANY,
Transferor,
by
-----------------------------
Title:
Acknowledged and Accepted:
WEST PENN FUNDING LLC,
as Issuer of the Transition
Bonds,
by [ ], as Manager,
by:
----------------------
Title:
[ ], not
in its individual capacity
but solely as Bond Trustee
on behalf of the Transition
Bondholders,
by:
------------------------
Title: