EXHIBIT 10.3
Form of Servicing Agreement
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INTANGIBLE TRANSITION PROPERTY SERVICING AGREEMENT
between
ILLINOIS POWER SECURITIZATION LIMITED LIABILITY COMPANY,
Grantee
and
ILLINOIS POWER COMPANY,
Servicer
Dated as of [ ], 1998
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TABLE OF CONTENTS
ARTICLE I - Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.02. Other Definitional Provisions. . . . . . . . . . . . . . .3
ARTICLE II - Appointment and Authorization . . . . . . . . . . . . . . . . . .4
SECTION 2.01. Appointment of Servicer; Acceptance of Appointment . . . .4
SECTION 2.02. Authorization. . . . . . . . . . . . . . . . . . . . . . .4
SECTION 2.03. Dominion and Control Over the Intangible Transition
Property . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE III - Billing Services . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 3.01. Duties of Servicer . . . . . . . . . . . . . . . . . . . .5
SECTION 3.02. Servicing and Maintenance Standards. . . . . . . . . . . .8
SECTION 3.03. Certificate of Compliance. . . . . . . . . . . . . . . . .9
SECTION 3.04. Annual Report by Independent Public Accountants. . . . . 10
ARTICLE IV - Services Related to Adjustments . . . . . . . . . . . . . . . . 11
SECTION 4.01. Adjustments. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.02. Limitation of Liability. . . . . . . . . . . . . . . . . 14
ARTICLE V - The Intangible Transition Property . . . . . . . . . . . . . . . 16
SECTION 5.01. Custody of Intangible Transition Property Records. . . . 16
SECTION 5.02. Duties of Servicer as Custodian. . . . . . . . . . . . . 16
SECTION 5.03. Instructions; Authority to Act . . . . . . . . . . . . . 18
SECTION 5.04. Custodian's Indemnification. . . . . . . . . . . . . . . 19
SECTION 5.05. Effective Period and Termination . . . . . . . . . . . . 19
SECTION 5.06. General Indemnification of Indenture Trustee and
Delaware Trustee . . . . . . . . . . . . . . . . . 20
ARTICLE VI - The Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.01. Representations and Warranties of Servicer . . . . . . . 20
SECTION 6.02. Indemnities of Servicer; Release of Claims . . . . . . . 23
SECTION 6.03. Merger or Consolidation of or Assumption of the
Obligations of Servicer . . . . . . . . . . . . . . 25
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SECTION 6.04. Limitation on Liability of Servicer and Others . . . . . 26
SECTION 6.05. Illinois Power Not to Resign as Servicer . . . . . . . . 27
SECTION 6.06. Servicing Compensation . . . . . . . . . . . . . . . . . 27
SECTION 6.07. Compliance with Applicable Law . . . . . . . . . . . . . 28
SECTION 6.08. Access to Certain Records and Information
Regarding Intangible Transition Property . . . . . 28
SECTION 6.09. Appointments . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.10. No Servicer Advances . . . . . . . . . . . . . . . . . . 30
SECTION 6.11. Remittances. . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.12. Compliance with Servicing Standard; Changes in
ICC Tariffs . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII - Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.01. Servicer Default . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.02. Appointment of Successor . . . . . . . . . . . . . . . . 34
SECTION 7.03. Waiver of Past Defaults. . . . . . . . . . . . . . . . . 35
SECTION 7.04. Notice of Servicer Default . . . . . . . . . . . . . . . 35
ARTICLE VIII - Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . 36
SECTION 8.01. Amendment. . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.02. Maintenance of Records . . . . . . . . . . . . . . . . . 38
SECTION 8.03. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.04. Assignment . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.05. Limitations on Rights of Others. . . . . . . . . . . . . 39
SECTION 8.06. Severability . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.07. Separate Counterparts. . . . . . . . . . . . . . . . . . 39
SECTION 8.08. Headings . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.09. Governing Law. . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.10. Assignments to Note Issuer and Indenture Trustee . . . . 40
SECTION 8.11. Nonpetition Covenants. . . . . . . . . . . . . . . . . . 40
SECTION 8.12. Limitation of Liability. . . . . . . . . . . . . . . . . 41
EXHIBITS AND SCHEDULES
Exhibit A Form of Monthly Servicer's Certificate
Exhibit B Form of Certificate of Compliance
[Exhibit C Form of Amendatory Tariff]
Exhibit D Form of Quarterly Servicer's Certificate
Schedule 4.01(a) Expected Amortization Schedule
Schedule 6.01(f) No Proceedings
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ANNEXES
Annex I - Servicing Procedures
Schedule 6 to Annex I - Calculation of Aggregate Remittance Amount
Annex II - Routine Quarterly True-Up Mechanism
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INTANGIBLE TRANSITION PROPERTY SERVICING AGREEMENT dated as of
[ ], 1998, between ILLINOIS POWER SECURITIZATION LIMITED
LIABILITY COMPANY, a Delaware limited liability company (the "Grantee"), and
ILLINOIS POWER COMPANY, an Illinois corporation, as Servicer (the "Servicer").
RECITALS
A. Pursuant to the Funding Law and the 1998 Transitional Funding Order,
the Grantee and the Note Issuer are concurrently entering into the Sale
Agreement, pursuant to which the Grantee is selling the 1998 Intangible
Transition Property to the Note Issuer, and the Grantee may sell Subsequent
Intangible Transition Property to the Note Issuer pursuant to Subsequent Sale
Agreements.
B. In connection with its ownership of the Intangible Transition Property
and in order to collect the IFCs, the Grantee desires to engage the Servicer to
carry out the functions described herein. The Servicer currently performs
similar functions for itself with respect to its own charges to its customers
and may in the future perform such functions for others. In addition, the
Grantee desires to engage the Servicer to act on its behalf in making
Adjustments. The Servicer desires to perform all of these activities on behalf
of the Grantee.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS.
(a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in that certain Indenture (including Appendix A
thereto) dated as of the date hereof between the Note Issuer and ▇▇▇▇▇▇ Trust
and Savings Bank, as the Indenture Trustee, as the same may be amended,
supplemented or otherwise modified from time to time (the "INDENTURE").
(b) Whenever used in this Agreement, the following words and phrases shall
have the following meanings:
"AGREEMENT" means this Intangible Transition Property Servicing Agreement,
together with all Exhibits, Schedules, Annexes and Attachments hereto, as the
same may be amended, supplemented and otherwise modified from time to time.
"ANNUAL ACCOUNTANT'S REPORT" has the meaning set forth in Section 3.04.
"CERTIFICATE OF COMPLIANCE" has the meaning set forth in Section 3.03.
"DAILY REMITTANCE" has the meaning set forth in Section 6.11(b).
"INTANGIBLE TRANSITION PROPERTY RECORDS" has the meaning assigned to that
term in Section 5.01.
"LOSSES" has the meaning assigned to that term in Section 5.04.
"OFFICER'S CERTIFICATE" means a certificate signed by a Responsible
Officer.
"QUARTER" means each calendar quarter, specifically:
January 1 to and including March 31;
April 1 to and including June 30;
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July 1 to and including September 30; and
October 1 to and including December 31.
"RETIREMENT OF THE NOTES" means the day on which the final distribution is
made to the Indenture Trustee in respect of the last Outstanding Notes.
"SERVICER DEFAULT" means an event specified in Section 7.01.
"SERVICING STANDARD" means the obligation of the Servicer to calculate,
collect, apply, remit and reconcile proceeds of the Intangible Transition
Property, including IFC Payments, and all other Note Collateral for the benefit
of the Note Issuer and the Noteholders (i) with the same degree of care and
diligence as the Servicer applies with respect to payments owed to it for its
own account, (ii) in accordance with procedures and requirements established by
the ICC for collection of electric utility tariffs and (iii) in accordance with
the other terms of this Agreement.
"TERMINATION NOTICE" has the meaning assigned to that term in Section 7.01.
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) Non-capitalized terms used herein which are defined in the Public
Utilities Act shall, as the context requires, have the meanings assigned to such
terms in the Public Utilities Act, but without giving effect to amendments to
the Public Utilities Act after the date hereof which have a material adverse
effect on the Note Issuer or the Holders.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) 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, Exhibit, Annex
and Attachment references contained in this
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Agreement are references to Sections, Schedules, Exhibits, Annexes and
Attachments in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(d) 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 forms of such terms.
ARTICLE II
APPOINTMENT AND AUTHORIZATION
SECTION 2.01. APPOINTMENT OF SERVICER; ACCEPTANCE OF APPOINTMENT. Subject
to Section 6.05 and Article 7, the Grantee appoints the Servicer, and the
Servicer accepts such appointment, to perform the Servicer's obligations
pursuant to this Agreement on behalf of and for the benefit of the Grantee or
any assignee thereof in accordance with the terms of this Agreement and
applicable law. This appointment and the Servicer's acceptance thereof may not
be revoked except in accordance with the express terms of this Agreement.
SECTION 2.02. AUTHORIZATION. With respect to all or any portion of the
Intangible Transition Property, the Servicer shall be and is authorized and
empowered by the Grantee to (a) execute and deliver, on behalf of itself and/or
the Grantee, as the case may be, any and all instruments, documents or notices,
and (b) on behalf of itself and/or the Grantee, as the case may be, make any
filing and participate in proceedings of any kind with any governmental
authorities, including with the ICC. The Grantee shall furnish the Servicer
with such documents as have been prepared by the Servicer for execution by the
Grantee, and with such other documents as may be in
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the Grantee's possession, as necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder. Upon the
Servicer's written request, the Grantee shall furnish the Servicer with any
powers of attorney or other documents necessary or appropriate to enable the
Servicer to carry out its duties hereunder.
SECTION 2.03 DOMINION AND CONTROL OVER THE INTANGIBLE TRANSITION
PROPERTY. Notwithstanding any other provision herein, the Grantee shall have
dominion and control over the Intangible Transition Property, and the Servicer,
in accordance with the terms hereof, is acting solely as the servicing agent and
custodian for the Grantee with respect to the Intangible Transition Property and
the Intangible Transition Property Records. The Servicer shall not take any
action that is not authorized by this Agreement, that is not consistent with its
customary procedures and practices, or that shall impair the rights of the
Grantee in the Intangible Transition Property, in each case unless such action
is required by law or court or regulatory order.
ARTICLE III
BILLING SERVICES
SECTION 3.01. DUTIES OF SERVICER. The Servicer, as agent for the Grantee,
shall have the following duties:
(a) DUTIES OF SERVICER GENERALLY. The Servicer's duties in general shall
include management, servicing and administration of the Intangible Transition
Property (including maintaining records of the cumulative total of IFC
Collections and verifying that such amount has
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not exceeded any cap established by the ICC pursuant to a Funding Order)(1);
obtaining meter reads, calculating usage, billing, collections and posting of
all payments in respect of the Intangible Transition Property; responding to
inquiries by Customers, the ICC or any federal, local or other state
governmental authorities with respect to the Intangible Transition Property;
delivering Bills to Customers and ARES, investigating and handling
delinquencies, processing and depositing collections and making periodic
remittances; furnishing periodic reports to the Grantee, the Note Issuer, the
Indenture Trustee and the Rating Agencies; and taking all necessary action in
connection with Adjustments as set forth herein. Certain of the duties set
forth above may be performed by ARES pursuant to ARES Service Agreements.
Anything to the contrary notwithstanding, the duties of the Servicer set forth
in this Agreement shall be qualified in their entirety by any ICC Regulations as
in effect at the time such duties are to be performed. Without limiting the
generality of this Section 3.01(a), in furtherance of the foregoing, the
Servicer shall also have, and shall comply with, the duties and responsibilities
relating to data acquisition, usage and ▇▇▇▇ calculation, billing, customer
service functions, collections, payment processing and remittance set forth in
Annex I hereto, including without limitation payment of all Allocable IFC
Revenue Amounts described therein.
(b) REPORTING FUNCTIONS.
(i) MONTHLY SERVICER'S CERTIFICATE. On or before each
Remittance Date, the Servicer shall prepare and deliver to the
Grantee, the Note Issuer, the Indenture Trustee and the Rating
Agencies a written report substantially in the form of EXHIBIT
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(1)[NEED TO CONFIRM ADEQUACY OF PROCEDURES TO MONITOR THIS NUMBER AND
WHETHER PROCEDURES NEED FURTHER DESCRIPTION IN THIS DOCUMENT.]
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A hereto (a "Monthly Servicer's Certificate") setting forth certain
information relating to IFC Payments received by the Servicer during
the Collection Period immediately preceding such Remittance Date.
(ii) NOTIFICATION OF LAWS AND REGULATIONS. The Servicer
shall immediately notify the Grantee, the Note Issuer, the Indenture
Trustee and the Rating Agencies in writing of any laws or ICC
Regulations hereafter promulgated that have a material adverse effect
on the Servicer's ability to perform its duties under this Agreement.
(iii) OTHER INFORMATION. Upon the reasonable request of the
Grantee, the Note Issuer, the Indenture Trustee or any Rating Agency,
the Servicer shall provide to the Grantee, the Note Issuer, Indenture
Trustee or the Rating Agencies, as the case may be, any public
financial information in respect of the Servicer, or any material
information regarding the Intangible Transition Property to the extent
it is reasonably available to the Servicer, as may be reasonably
necessary and permitted by law, to enable the Grantee, the Note
Issuer, the Indenture Trustee or the Rating Agencies to monitor the
Servicer's performance hereunder. In addition, so long as any of the
Notes of any Series are outstanding, the Servicer shall provide the
Grantee, the Note Issuer and the Indenture Trustee, within a
reasonable time after written request therefor, any information
available to the Servicer or reasonably obtainable by it that is
necessary to calculate the IFCs applicable to each class of Customer.
(iv) PREPARATION OF REPORTS TO BE FILED WITH THE SEC. The
Servicer shall prepare any reports required to be filed by the Grantee
or the Note Issuer under the
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securities laws, including a copy of each Quarterly Servicer's
Certificate described in Section 4.01(c)(ii), the annual Certificate
of Compliance described in Section 3.03, and the Annual Accountant's
Report described in Section 3.04.
SECTION 3.02. SERVICING AND MAINTENANCE STANDARDS. On behalf of the
Grantee, the Servicer shall (a) manage, service, administer and make collections
in respect of the Intangible Transition Property with reasonable care and in
accordance with the Servicing Standard and applicable law, including all
applicable ICC Regulations and guidelines, using the same degree of care and
diligence that the Servicer exercises with respect to similar assets for its own
account and, if applicable, for others; (b) follow customary standards, policies
and procedures for the industry in performing its duties as Servicer; (c) use
all reasonable efforts, consistent with its customary servicing procedures, to
enforce, and maintain rights in respect of, the Intangible Transition Property;
(d) comply with all laws and regulations applicable to and binding on it
relating to the Intangible Transition Property, and (e) make all required
submissions and provide all required notifications to the ICC with respect to
any Adjustments. The Servicer shall be responsible for the imposition,
collection and remittance of IFCs in accordance with Annex I hereto, the
inclusion of IFCs in all Bills, and the deduction of IFCs from tariffed charges
and all other charges from which the IFCs are to be deducted and stated
separately, including, without limitation, all charges under any contracts with
Customers who would, but for such contract, be paying Applicable Rates, where
such contract provides that the Customer will pay an amount each billing period
to the Grantee or its assignee, or to the Servicer, equal to the amount of IFCs
that would have been billed if the services provided under such contract were
subject to Applicable Rates. The Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable in its
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servicing of all or any portion of the Intangible Transition Property, which, in
the Servicer's judgment, may include the taking of legal action. Without
limiting the foregoing, if the Servicer determines at any time that the
aggregate dollar amount of IFC Charges to be imposed is reasonably likely to
exceed the maximum dollar amount of Intangible Transition Property authorized by
the 1998 Transitional Funding Order and any Subsequent Funding Orders to be
imposed and collected and any Notes remain outstanding, the Servicer shall make
a good faith effort to take any and all subsequent regulatory action with the
ICC to obtain an order permitting the creation of additional Intangible
Transition Property in an amount sufficient to pay such Notes in full.
SECTION 3.03. CERTIFICATE OF COMPLIANCE. The Servicer shall deliver to
the Grantee, the Note Issuer, the Indenture Trustee and the Rating Agencies on
or before September 30 of each year, commencing September 30, 1999 to and
including the September 30 succeeding the Retirement of the Notes, an Officer's
Certificate substantially in the form of EXHIBIT B hereto (a "Certificate of
Compliance"), stating that: (i) a review of the activities of the Servicer
during the twelve months ended the preceding June 30 (or, in the case of the
first Certificate of Compliance to be delivered on or before September 30, 1999,
the period of time from the date of this Agreement until June 30, 1999) and of
its performance under this Agreement has been made under such officer's
supervision, and (ii) to such officer's knowledge, based on such review, the
Servicer has fulfilled all of its obligations in all material respects under
this Agreement throughout such twelve months (or, in the case of the Certificate
of Compliance to be delivered on or before September 30, 1999, the period of
time from the date of this Agreement until June 30, 1999), or, if there has been
a default in the fulfillment of any such material obligation, specifying each
such material default known to such officer and the nature and status thereof.
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SECTION 3.04 ANNUAL REPORT BY INDEPENDENT PUBLIC ACCOUNTANTS.
(a) The Servicer, at its own expense in consideration of the Servicing Fee
paid to it, shall cause a firm of independent certified public accountants
(which may provide other services to the Servicer or Illinois Power) to prepare,
and the Servicer shall deliver to the Grantee, the Note Issuer, the Indenture
Trustee and the Rating Agencies a report addressed to the Servicer (the "Annual
Accountant's Report"), which may be included as part of the Servicer's customary
auditing activities, for the information and use of the Grantee, the Note
Issuer, the Indenture Trustee and the Rating Agencies, on or before September 30
of each year, beginning September 30, 1999 to and including the September 30
succeeding the Retirement of the Notes, to the effect that such firm has
performed certain procedures in connection with the Servicer's compliance with
its obligations under this Agreement during the preceding twelve months ended
June 30 (or, in the case of the first Annual Accountant's Report to be delivered
on or before September 30, 1999, the period of time from the date of this
Agreement until June 30, 1999), identifying the results of such procedures and
including any exceptions noted. If such accounting firm requires the Indenture
Trustee to agree or consent to the procedures performed by such firm, the
Grantee shall direct the Note Issuer to direct the Indenture Trustee in writing
to so agree; it being understood and agreed that the Indenture Trustee will
deliver such letter of agreement or consent in conclusive reliance upon the
direction of the Note Issuer, and the Indenture Trustee will not make any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of the sufficiency, validity or correctness of such
procedures.
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(b) The Annual Accountant's Report shall also indicate that the accounting
firm providing such report is independent of the Servicer within the meaning of
the Code of Professional Ethics of the American Institute of Certified Public
Accountants.
ARTICLE IV
SERVICES RELATED TO ADJUSTMENTS
SECTION 4.01. ADJUSTMENTS. From time to time, until the Retirement of the
Notes, the Servicer shall identify the need for Adjustments and shall take all
reasonable action to obtain and implement such Adjustments, all in accordance
with the following:
(a) EXPECTED AMORTIZATION SCHEDULE. The initial Expected Amortization
Schedule is attached hereto as SCHEDULE 4.01(a). In connection with the Note
Issuer's issuance of any additional Series of Notes after the Closing Date, the
Servicer, on or prior to the Series Issuance Date therefor, shall revise the
Expected Amortization Schedule to add the requisite information for each new
Series of Notes and set forth, as of each Payment Date through the scheduled
Retirement of the Notes, the aggregate principal amounts of the Notes of all
Series, including such additional Series, expected to be outstanding on such
Payment Date. The Servicer shall also revise the Expected Amortization Schedule
to reflect any required prepayments on account of the receipt of Allocable IFC
Revenue Amounts or any other required or permitted prepayments affecting such
schedule. If the Expected Amortization Schedule is revised as set forth above,
the Servicer shall send a copy of such revised Expected Amortization Schedule to
the Grantee, the Note Issuer, the Indenture Trustee and the Rating Agencies
promptly thereafter.
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(b) ADJUSTMENTS(2)
(i) ADJUSTMENTS AND FILINGS. Within the month following the
end of each Period, the Servicer shall: (A) update the data and
assumptions underlying the calculation of the IFCs, including revenue
from Applicable Rates for each class of Customers, projected
electricity usage during the next Applicable Period for each such
class and including interest and estimated expenses and fees of the
Grantee and the Note Issuer to be paid during such period, and the
rate of delinquencies and write-offs; (B) determine the Required Debt
Service and Debt Service Billing Requirement for the next Applicable
Period based on such updated data and assumptions; (C) determine the
IFCs to be allocated to each class of Customers during the next
Applicable Period based on such Debt Service Billing Requirement and
the terms of the applicable Funding Orders and the Tariffs filed
pursuant thereto; (D) make all required notice and other filings with
the ICC to reflect the revised IFCs, including any Amendatory Tariffs
required under Section 18-104(k) of the Funding Law if the resulting
IFCs for any class of Customer will exceed an amount per kilowatt-hour
greater than the amount per kilowatt-hour authorized for such class of
Customer in the applicable Funding Order; and (E) take all reasonable
actions and make all reasonable efforts to effect such Adjustment and
to enforce the provisions of the Funding Law which limit the ICC's
authority to review any such Amendatory Tariff.
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(2)[THESE PROVISIONS ASSURE SEMI-ANNUAL ADJUSTMENTS EFFECTIVE FEBRUARY 1
AND AUGUST 1. REVISIONS WILL BE NECESSARY IF IT IS DECIDED THAT ADJUSTMENTS
SHOULD BE IMPLEMENTED EITHER ANNUALLY OR QUARTERLY.]
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(ii) In the case of any Adjustment, the Servicer shall
implement the revised IFCs, if any, as of the next Adjustment Date.
(c) REPORTS.
(i) NOTIFICATION OF TARIFF FILINGS AND RECONCILIATION.
Whenever the Servicer files a Tariff with the ICC or implements
revised IFCs with notice to the ICC but without filing a Tariff or
revisions to a Tariff as contemplated by any applicable Funding Order,
the Servicer shall send a copy of such filing or notice (together with
a copy of all notices and documents which, in the Servicer's
reasonable judgment, are material to the adjustments effected by such
Tariff or notice) to the Grantee, the Note Issuer, the Indenture
Trustee and the Rating Agencies concurrently therewith.
(ii) QUARTERLY SERVICER'S CERTIFICATE. Not later than the
Remittance Date immediately prior to each Payment Date, the Servicer
shall deliver a written report substantially in the form of EXHIBIT D
hereto (the "Quarterly Servicer's Certificate") to the Grantee, the
Note Issuer, the Indenture Trustee and the Rating Agencies.
(iii) REPORTS TO CUSTOMERS.
(A) After each revised IFC has gone into effect
pursuant to a Adjustment, the Servicer shall, to the extent and
in the manner and time frame required by applicable ICC
Regulations, if any, cause to be prepared and delivered to
Customers any required notices announcing such revised IFCs.
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(B) In addition, at least once each year, the Servicer
shall cause to be prepared and delivered to Customers a notice
stating, in effect, that the IFCs are owned by the Grantee or any
assignee thereof and not Illinois Power. Such notice shall be
included either as an insert to or in the text of the Bills
delivered to such Customers or shall be delivered to Customers by
electronic means or such other means as the Servicer or the
Applicable ARES may from time to time use to communicate with
their respective customers.
(C) Except to the extent that applicable ICC
Regulations make the Applicable ARES responsible for such costs,
the Servicer shall pay from its own funds all costs of
preparation and delivery incurred in connection with clauses (A)
and (B) above, including but not limited to printing and postage
costs as the same may increase or decrease from time to time.
(iv) ARES REPORTS. The Servicer shall provide to the Rating
Agencies, upon request, any publicly available reports filed by the
Servicer with the ICC (or otherwise made publicly available by the
Servicer) relating to ARES and any other non-confidential and
non-proprietary information relating to ARES reasonably requested by
the Rating Agencies.
SECTION 4.02. LIMITATION OF LIABILITY.
(a) The Grantee and the Servicer expressly agree and acknowledge that:
(i) In connection with any Adjustment, the Servicer is acting
solely in its capacity as the servicing agent hereunder.
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(ii) Neither the Servicer nor the Grantee shall be responsible
in any manner for, and shall have no liability whatsoever as a result
of, any action, decision, ruling or other determination made or not
made, or any delay (other than any delay resulting from the Servicer's
failure to file the Amendatory Tariffs required by Section 4.01 in a
timely and correct manner or other breach by the Servicer of its
duties under this Agreement), by the ICC in any way related to the
Intangible Transition Property or in connection with any Adjustment,
the subject of any filings under Section 4.01, any proposed
Adjustment, or the approval of any revised IFCs.
(iii) The Servicer shall have no liability whatsoever relating
to the calculation of any revised IFCs, including as a result of any
inaccuracy of any of the assumptions made in such calculation
regarding expected energy usage volume and the rate of delinquencies
and write-offs, so long as the Servicer has acted in good faith and
has not acted in a grossly negligent manner in connection therewith,
nor shall the Servicer have any liability whatsoever as a result of
any Person, including the Holders, not receiving any payment, amount
or return anticipated or expected or in respect of any Note generally,
except only to the extent that the same is caused by the Servicer's
gross negligence, willful misconduct, bad faith, or reckless disregard
of its obligations and duties under this Agreement.
(b) Notwithstanding the foregoing, this Section 4.02 shall not relieve the
Servicer of liability for any misrepresentation by the Servicer under Section
6.01 or for any breach by the Servicer of its other obligations under this
Agreement.
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ARTICLE V
THE INTANGIBLE TRANSITION PROPERTY
SECTION 5.01. CUSTODY OF INTANGIBLE TRANSITION PROPERTY RECORDS. To
assure uniform quality in servicing the Intangible Transition Property and to
reduce administrative costs, the Grantee revocably appoints the Servicer, and
the Servicer accepts such appointment, to act as the agent of the Grantee, the
Note Issuer and the Indenture Trustee as custodian of any and all documents and
records that the Grantee shall keep on file, in accordance with its customary
procedures, relating to the Intangible Transition Property, including copies of
each Funding Order and all Tariffs relating thereto, and all documents filed
with the ICC in connection with any Adjustment (collectively, the "Intangible
Transition Property Records"), which are hereby constructively delivered to the
Note Issuer, as transferee of the Grantee (or, in the case of the Subsequent
Intangible Transition Property, will as of the applicable Subsequent Sale Date
be constructively delivered to the Note Issuer, as transferee of the Grantee)
with respect to all Intangible Transition Property.
SECTION 5.02. DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer shall hold the Intangible Transition
Property Records on behalf of the Grantee, the Note Issuer and the Indenture
Trustee, and maintain such accurate and complete accounts, records and computer
systems pertaining to the Intangible Transition Property Records as shall enable
the Grantee to comply with this Agreement and the Sale Agreement, and as shall
enable the Note Issuer to comply with the Sale Agreement and the Indenture. In
performing its duties as custodian the Servicer shall act with reasonable care,
using that degree of care and diligence that the Servicer exercises with respect
to comparable assets that the Servicer services for itself or, if applicable,
for others. The Servicer shall promptly report to the Grantee, the Note Issuer
16
and the Indenture Trustee any failure on its part to hold the Intangible
Transition Property Records and maintain its accounts, records and computer
systems as herein provided and promptly take appropriate action to remedy any
such failure. Nothing herein shall be deemed to require an initial review or
any periodic review by the Grantee, the Note Issuer or the Indenture Trustee of
the Intangible Transition Property Records. The Servicer's duties to hold the
Intangible Transition Property Records on behalf of the Grantee, the Note Issuer
and the Indenture Trustee set forth in this Section 5.02, to the extent such
Intangible Transition Property Records have not been previously transferred to a
successor Servicer pursuant to Article VII, shall terminate three years after
the earlier of the date on which (i) the Servicer is succeeded by a successor
Servicer in accordance with Article VII hereof and (ii) no Notes of any Series
are Outstanding.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain
the Intangible Transition Property Records at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other office as shall be specified to the Grantee,
the Note Issuer and the Indenture Trustee by written notice at least 30 days
prior to any change in location. The Servicer shall permit the Grantee, the
Note Issuer and the Indenture Trustee or their respective duly authorized
representatives, attorneys or auditors to inspect, audit and make copies of and
abstracts from the Servicer's records regarding the Intangible Transition
Property and the IFCs (including all the Intangible Transition Property
Records), at such times during normal business hours as the Grantee, the Note
Issuer or the Indenture Trustee shall reasonably request and which do not
unreasonably interfere with the Servicer's normal operations. Nothing in this
Section 5.02(b) shall affect the obligation of the Servicer to observe any
applicable law (including any ICC Regulations) prohibiting disclosure of
information regarding the
17
Customers, and the failure of the Servicer to provide access to such information
as a result of such obligation shall not constitute a breach of this Section
5.02(b).
(c) DEFENDING INTANGIBLE TRANSITION PROPERTY AGAINST CLAIMS. The Servicer
shall institute any action or proceeding necessary to compel performance by the
ICC or the State of Illinois of any of their obligations or duties under the
Funding Law, any Funding Order or any Tariff and the Servicer 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 to block or overturn any attempts to
cause a repeal of, modification of or supplement to the Funding Law or any
Funding Order or the rights of holders of Intangible Transition Property that
would be adverse to the Grantee, the Note Issuer or any Holders. Unless
expressly prohibited by law or by any court or regulatory order in effect at
such time, the Servicer shall continue to impose, collect and remit IFCs in
accordance with this Agreement during the pendency of any such action and
continuing for so long as the Notes remain Outstanding. The Servicer shall
advance its own funds in order to institute any actions or proceedings described
above, PROVIDED, HOWEVER, that the costs of any such action or proceeding shall
be payable from IFC Collections as an Operating Expense in accordance with the
priorities set forth in Section 8.02(d) of the Indenture. The Servicer's
obligations pursuant to this Section 5.02 shall survive and continue
notwithstanding the fact that the payment of Operating Expenses pursuant to
Section 8.02(d) of the Indenture may be delayed (it being understood that the
Servicer may be required to advance its own funds to satisfy its obligations
hereunder).
18
SECTION 5.03. INSTRUCTIONS; AUTHORITY TO ACT. For so long as any
Notes remain Outstanding, the Servicer shall be deemed to have received
proper instructions with respect to the Intangible Transition Property
Records upon its receipt of written instructions signed by a Trust Officer of
the Indenture Trustee.
SECTION 5.04. CUSTODIAN'S INDEMNIFICATION. The Servicer as custodian
shall indemnify the Grantee, the Note Issuer, the Delaware Trustee, the
Indenture Trustee and the Holders and each of their respective officers,
directors, employees and agents for, and defend and hold harmless each such
Person from and against, any and all liabilities, obligations, losses, damages,
payments and claims, and reasonable costs or expenses, of any kind whatsoever
(collectively, "Losses") that may be imposed on, incurred by or asserted against
any such Person as the result of any improper act or omission in any way
relating to the maintenance and custody by the Servicer, as custodian, of the
Intangible Transition Property Records; PROVIDED, HOWEVER, that the Servicer
shall not be liable for any portion of any such amount resulting from the
willful misconduct, bad faith or gross negligence of the Grantee, the Note
Issuer, the Delaware Trustee, the Indenture Trustee or any Holders.
Indemnification under this Section shall survive resignation or removal of
the Indenture Trustee or the Delaware Trustee and shall include reasonable
out-of-pocket fees and expenses of investigation and litigation.
SECTION 5.05. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Closing Date and shall
continue in full force and effect until terminated pursuant to this Section. If
any Servicer shall resign as Servicer in accordance with the provisions of this
Agreement or if all of the rights and obligations of any Servicer shall have
been
19
terminated under Section 7.01, the appointment of such Servicer as custodian
shall be terminated by the Indenture Trustee or by the Holders of Notes
evidencing not less than twenty-five percent (25%) of the Outstanding Amount
of the Notes of all Series in the same manner as the Indenture Trustee or
such Holders may terminate the rights and obligations of the Servicer under
Section 7.01.
SECTION 5.06. GENERAL INDEMNIFICATION OF INDENTURE TRUSTEE AND DELAWARE
TRUSTEE. The Servicer agrees to indemnify and hold harmless the Indenture
Trustee and the Delaware Trustee and their respective directors, officers,
employees and agents from and against any and all Losses incurred by or asserted
against any such Person as a result of or in connection with the transactions
contemplated by this Agreement or any other Basic Document, other than any Loss
incurred by reason or result of the gross negligence or willful misconduct of
the Indenture Trustee or the Delaware Trustee, respectively; PROVIDED, HOWEVER,
that the foregoing indemnity is extended to the Indenture Trustee and the
Delaware Trustee solely in their respective capacities as trustees and not for
the benefit of the Holders or any other Person. The obligations of the Servicer
set forth herein shall survive the termination of this Agreement or the earlier
resignation or removal of the Indenture Trustee under the Indenture or the
Delaware Trustee under the Trust Agreement.
ARTICLE VI
THE SERVICER
SECTION 6.01. REPRESENTATIONS AND WARRANTIES OF SERVICER. The Servicer
makes the following representations and warranties, as of the Closing Date, as
of each Subsequent Sale Date relating to the sale of Subsequent Intangible
Transition Property pursuant to a Subsequent Sale Agreement, and as of such
other dates as expressly provided in this Section 6.01, on which the
20
Grantee is deemed to have relied in entering into this Agreement. The
representations and warranties shall survive the execution and delivery of
this Agreement, the transfer of this Agreement to the Note Issuer pursuant to
the Sale Agreement and the pledge thereof to the Indenture Trustee pursuant
to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Servicer is duly organized and
validly existing as a corporation in good standing under the laws of the state
of its incorporation, with the power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and has, the requisite
power, authority and legal right to service the Intangible Transition Property
and to hold the Intangible Transition Property Records as custodian.
(b) DUE QUALIFICATION. The Servicer 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 (including the servicing of the Intangible
Transition Property as required by this Agreement) 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
Servicer's business, operations, assets, revenues or properties or adversely
affect the servicing of the Intangible Transition Property).
(c) POWER AND AUTHORITY. The Servicer has the requisite power and
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery and performance of this Agreement have been duly
authorized by the Servicer by all necessary corporate action.
21
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its terms,
subject to applicable insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws relating to or affecting creditors' rights
generally from time to time in effect and to general principles of equity
(including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a proceeding in
equity or at law.
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not (i) conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Servicer, or any indenture, agreement or other
instrument to which the Servicer is a party or by which it shall be bound; (ii)
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument; or
(iii) violate any law or any order, rule or regulation applicable to the
Servicer of any court or of any Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Servicer or its properties.
(f) NO PROCEEDINGS. Except as set forth on Schedule 6.01(f), there are no
proceedings or investigations pending or, to the Servicer's knowledge,
threatened before any court, Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Servicer or its properties involving or relating to the Servicer or the Grantee
or, to the Servicer's knowledge, any other Person: (i) asserting the invalidity
of this Agreement, or any of the other Basic Documents or the Notes, (ii)
seeking to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the other Basic
22
Documents, (iii) seeking any determination or ruling that could reasonably
be expected to materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability of this
Agreement, any of the other Basic Documents or the Notes, or (iv) relating to
the Servicer and which could reasonably be expected to adversely affect the
Federal or state income tax attributes of the Notes.
(g) APPROVALS. No 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
Servicer's execution and delivery of this Agreement, the Servicer's performance
of the transactions contemplated hereby or the Servicer's fulfillment of the
terms hereof, except those that have been obtained or made and those that the
Servicer is required to make in the future pursuant to Article IV hereof.
(h) REPORTS AND CERTIFICATES. Each report and certificate delivered in
connection with a Tariff will constitute a representation and warranty by the
Servicer that each such report or certificate, as the case may be, is true and
correct; PROVIDED, HOWEVER, that to the extent any such report or certificate is
based in part upon or contains assumptions, forecasts or other predictions of
future events, the representation and warranty of the Servicer with respect
thereto will be limited to the representation and warranty that such
assumptions, forecasts or other predictions of future events are reasonable
based upon historical performance and other pertinent information.
SECTION 6.02. INDEMNITIES OF SERVICER; RELEASE OF CLAIMS.
(a) The Servicer shall be liable in accordance herewith only to the extent
of the obligations specifically undertaken by the Servicer under this Agreement.
23
(b) The Servicer shall indemnify the Grantee, the Note Issuer, the
Indenture Trustee, the Delaware Trustee and the Holders and each of their
respective officers, directors, employees and agents for, 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
(i) the Servicer's willful misconduct, bad faith or gross negligence in the
performance of its duties or observance of its covenants under this Agreement
or its reckless disregard of its obligations and duties under this Agreement,
or (ii) the Servicer's breach of any of its representations or warranties in
this Agreement.
(c) For purposes of Section 6.02(b), in the event of the termination of
the rights and obligations of Illinois Power (or any successor thereto pursuant
to Section 6.03) as Servicer pursuant to Section 7.01, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 7.02.
(d) Indemnification under Sections 6.02(b) and 6.02(c) shall survive the
resignation or removal of the Indenture Trustee or the Delaware Trustee or the
termination of this Agreement and shall include reasonable out-of-pocket fees
and expenses of investigation and litigation (including reasonable attorneys'
fees and expenses).
(e) Except to the extent expressly provided in this Agreement or the other
Basic Documents (including, without limitation, the Servicer's claims with
respect to the Servicing Fee, reimbursement for any Excess Remittance,
reimbursement for costs incurred pursuant to Section 5.12(d) and the payment of
the consideration for any grant of Intangible Transition Property to the
Grantee), the Servicer releases and discharges the Grantee, the Note Issuer and
the Indenture Trustee and each of their respective officers, directors and
agents (collectively, the "Released Parties") from any and all actions, claims
and demands whatsoever, whenever arising, which the Servicer, in its
24
capacity as Servicer or otherwise, shall or may have against any such Person
relating to the Intangible Transition Property or the Servicer's activities
with respect thereto other than any actions, claims and demands arising out
of the willful misconduct, bad faith or gross negligence of the Released
Parties.
SECTION 6.03. MERGER OR CONSOLIDATION OF OR ASSUMPTION OF THE
OBLIGATIONS OF SERVICER. Any Person (a) into which the Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party or (c) which may succeed to the properties and
assets of the Servicer substantially as a whole, or, with respect to its
obligations as Servicer, which Person in any of the foregoing cases executes an
agreement of assumption to perform every obligation of the Servicer hereunder,
shall be the successor to the Servicer under this Agreement without further act
on the part of any of the parties to this Agreement; PROVIDED, HOWEVER, that (i)
immediately after giving effect to such transaction, no Servicer Default and no
event which, after notice or lapse of time, or both, would become a Servicer
Default shall have occurred and be continuing, (ii) the Servicer shall have
delivered to the Grantee, the Note Issuer, the Indenture Trustee and the Rating
Agencies an Officers' Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of assumption
complies with this Section and that all conditions precedent provided for in
this Agreement relating to such transaction have been complied with and (iii)
the Servicer shall have delivered to the Grantee, the Note Issuer, the Indenture
Trustee and the Rating Agencies an Opinion of Counsel either (A) stating that,
in the opinion of such counsel, all filings to be made by the Servicer,
including filings with the ICC pursuant to the Funding Law, have been executed
and filed that are necessary to preserve and protect fully the interests of the
Grantee in the Intangible
25
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 foregoing agreement of assumption and
compliance with clauses (i), (ii) and (iii) above shall be conditions to the
consummation of the transactions referred to in clauses (a), (b) or (c) above.
SECTION 6.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be liable to the Grantee, the Note Issuer, the Indenture Trustee,
the Delaware Trustee, the Holders or any other Person, except as provided under
this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement or for errors in judgment; PROVIDED, HOWEVER,
that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misconduct,
bad faith or gross negligence in the performance of the Servicer's duties or by
reason of reckless disregard of the Servicer's obligations and duties. The
Servicer and any director or officer or employee or agent of the Servicer may
rely in good faith on the advice of counsel reasonably acceptable to the
Indenture Trustee or on any document of any kind, PRIMA FACIE properly executed
and submitted by any Person, respecting any matters arising under this
Agreement.
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
related to or incidental to its duties to service the Intangible Transition
Property in accordance with this Agreement, and that in its opinion may involve
it in any expense or liability.
26
SECTION 6.05. ILLINOIS POWER NOT TO RESIGN AS SERVICER. Subject to
the provisions of Sections 6.03, Illinois Power shall not resign from the
obligations and duties hereby imposed on it as Servicer under this Agreement
unless either (a) the Servicer determines that the performance of its duties
under this Agreement shall no longer be permissible under applicable law
(disregarding any breach of the State Pledge that is being contested or
subsequent invalidation of the Funding Law, any Funding Order and/or any
tariff or tariffs filed in connection therewith), or (b) the Rating Agency
Condition shall have been satisfied and, to the extent required under any
Funding Order, and, in either case, the ICC shall have approved such
resignation. Notice of any such determination permitting Illinois Power's
resignation shall be given to the Grantee, the Note Issuer, the Indenture
Trustee and the Rating Agencies at the earliest practicable time (and, if
such communication is not in writing, shall be confirmed in writing at the
earliest practicable time) and any such determination shall be evidenced by
an Opinion of Counsel to such effect delivered to the Grantee, the Note
Issuer and the Indenture Trustee concurrently with or promptly after such
notice. No such resignation shall become effective until a successor
Servicer shall have assumed Illinois Power's responsibilities and obligations
in accordance with Section 7.02.
SECTION 6.06. SERVICING COMPENSATION.
(a) In consideration for its services hereunder, until the Retirement of
the Notes, the Servicer shall receive a fee (the "Servicing Fee") quarterly on
each Payment Date in an amount equal to one-fourth of (i) $__________ for so
long as IFCs are billed concurrently with charges or otherwise billed to
Customers or (ii) not to exceed $___________ if IFCs are not billed concurrently
with charges or otherwise billed to Customers but, instead, are billed
separately to Customers. The Servicer shall also be entitled to retain as
additional compensation (i) any interest earnings on IFC
27
Payments received by the Servicer and invested by the Servicer pursuant to
Section 6(d) of Annex I hereto during each Collection Period prior to
remittance to the Collection Account and (ii) all late payment charges, if
any, collected from Customers or ARES. So long as the Servicer is billing
Customers for charges for electric service or any Applicable Rates, the
Servicer will ▇▇▇▇ IFCs to such Customers concurrently with such other
charges and such applicable Rates.
(b) The Indenture Trustee shall pay the Servicer the Servicing Fee set
forth in Section 6.06(a) above on each Payment Date in accordance with the
priorities set forth in Section 8.02(d) of the Indenture, by wire transfer of
immediately-available funds from the Collection Account to an account designated
by the Servicer. Any portion of the Servicing Fee not paid on such date shall
be added to the Servicing Fee payable on the subsequent Payment Date.
(c) Except as provided in Section 5.02(c), the Servicer shall be required
to pay from its own account all expenses incurred by it in connection with its
activities hereunder (including any fees to and disbursements by accountants,
counsel, or any other Person, any taxes imposed on the Servicer and any expenses
incurred in connection with reports to Holders) out of the compensation retained
by or paid to it pursuant to this Section 6.06, and shall not be entitled to any
extra payment or reimbursement therefor.
SECTION 6.07. COMPLIANCE WITH APPLICABLE LAW. The Servicer covenants
and agrees, in servicing the Intangible Transition Property, to comply with all
laws applicable to, and binding upon, the Servicer and relating to such
Intangible Transition Property the noncompliance with which would have a
material adverse effect on the value of the Intangible Transition Property;
PROVIDED, HOWEVER, that the foregoing is not intended to, and shall not, impose
any liability on the Servicer for
28
noncompliance with any law that the Servicer is contesting in good faith in
accordance with its customary standards and procedures.
SECTION 6.08. ACCESS TO CERTAIN RECORDS AND INFORMATION REGARDING
INTANGIBLE TRANSITION PROPERTY. The Servicer shall provide to the Grantee,
the Note Issuer, the Indenture Trustee and the Holders access to the
Intangible Transition Property Records in such cases where the Grantee, the
Note Issuer, the Indenture Trustee and the Holders shall be required by
applicable law to be provided access to such records. Access shall be
afforded without charge, but only upon reasonable request and during normal
business hours at the offices of the Servicer. Nothing in this Section shall
affect the Servicer's obligation to observe any applicable law (including any
ICC Regulation) prohibiting disclosure of information regarding the
Customers, and the failure of the Servicer to provide access to such
information as a result of such obligation shall not constitute a breach of
this Section.
SECTION 6.09. APPOINTMENTS. The Servicer may at any time appoint any
Person to perform all or any portion of its obligations as Servicer hereunder;
PROVIDED, HOWEVER, that, unless such person is Illinova Corporation or a
wholly-owned subsidiary thereof, the Rating Agency Condition shall have been
satisfied in connection therewith; PROVIDED FURTHER that the Servicer shall
remain obligated and be liable to the Grantee, the Note Issuer, the Indenture
Trustee and the Holders for the servicing and administering of the Intangible
Transition Property in accordance with the provisions hereof without diminution
of such obligation and liability by virtue of the appointment of such Person and
to the same extent and under the same terms and conditions as if the Servicer
alone were servicing and administering the Intangible Transition Property; and
PROVIDED FURTHER, HOWEVER, that nothing herein (including, without limitation,
the Rating Agency Condition) shall
29
preclude the execution by the Servicer of an ARES Service Agreement with any
ARES pursuant to applicable ICC Regulations. The fees and expenses of such
Person shall be as agreed between the Servicer and such Person from time to
time and none of the Grantee, the Note Issuer, the Indenture Trustee, the
Holders or any other Person shall have any responsibility therefor or right
or claim thereto. No such appointment shall constitute a Servicer
resignation under Section 6.05.
SECTION 6.10. NO SERVICER ADVANCES. The Servicer shall not make any
advances of interest or principal on the Notes.
SECTION 6.11. REMITTANCES.
(a) Subject to clause (b) below, on each Remittance Date, the Servicer
shall cause to be made a wire transfer of immediately-available funds equal to
the Aggregate [check] Remittance Amount for the applicable Collection Period to
the General Subaccount of the Collection Account. Prior to each remittance to
the General Subaccount of the Collection Account pursuant to this Section, the
Servicer shall provide written notice to the Indenture Trustee of each such
remittance (including the exact dollar amount to be remitted).
(b) Notwithstanding the foregoing clause (a), during any period in which a
Servicer Default has occurred and is continuing, the failure to satisfy the
Rating Agency Condition or the failure of the Servicer to maintain a short-term
rating of [ ] or better by Standard & Poor's and [ ] or better by
Moody's, the Servicer shall remit to the General Subaccount of the Collection
Account the total IFC Payments [estimated to have been] received by the Servicer
from or on behalf of Customers on a given Servicer Business Day in respect of
all previously Billed IFCs within [two] Servicer Business Days of receipt
thereof by the Servicer (the "Daily Remittance").
30
(c) The Servicer agrees and acknowledges that it holds all IFC Payments
collected by it for the benefit of the Grantee and that all such amounts
shall be remitted by the Servicer in accordance with this Section without any
surcharge, fee, offset, charge or other deduction except (i) as set forth in
clause (b) above or clause (d) below and (ii) for late fees permitted by
Section 6.06. The Servicer shall not make any claim to reduce its obligation
to remit all IFC Payments collected by it in accordance with this Agreement
except (i) as set forth in clause (b) above or clause (d) below and (ii) for
late fees permitted by Section 6.06.
SECTION 6.12. COMPLIANCE WITH SERVICING STANDARD; CHANGES IN ICC
TARIFFS. The Servicer shall, with respect to its duties hereunder, comply at
all times with the Servicing Standard, and, so long as any of the Notes are
outstanding, shall not initiate any material changes with respect to its
policies and procedures pertaining to credit (including requirements for
deposits from Customers), billing, collections (including procedures for
disconnection of service for non-payment) and restoration of service after
disconnection, and shall not, except as required by applicable law, initiate any
changes in any ICC tariffs relating to the foregoing which are reasonably likely
to adversely affect the Servicer's ability to make timely recovery of amounts
billed to Customers. Notwithstanding the foregoing, the Servicer may, in its
own discretion, waive any late payment charge or any other fee or charge
relating to delinquent payments, if any, and may waive, vary or modify any terms
of payment of any amounts payable by a Customer, in each case, if such waiver or
action (a) would be in accordance with the Servicer's customary practices or
those of any successor Servicer with respect to comparable assets that it
services for itself, (b) would not materially adversely affect the Noteholders
and (c) would comply with applicable law. In addition,
31
the Servicer may write off any amounts that it deems uncollectible in
accordance with its customary practices.
ARTICLE VII
DEFAULT
SECTION 7.01. SERVICER DEFAULT. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deposit in the Collection Account on
behalf of the Grantee any required remittance that shall continue unremedied for
a period of three Business Days after written notice of such failure is received
by the Servicer from the Grantee, the Note Issuer or the Indenture Trustee or
after discovery of such failure by a Responsible Officer of the Servicer; or
(b) any failure on the part of the Servicer or Illinois Power, as the case
may be, duly to observe or to perform in any material respect any other
covenants or agreements of the Servicer or Illinois Power (as the case may be)
set forth in this Agreement (including Section 4.01) or any other Basic Document
to which it is a party, which failure shall (i) materially and adversely affect
the rights of the Holders and (ii) continue unremedied for a period of 30 days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Servicer or Illinois Power (as the
case may be) by the Grantee or the Note Issuer or (B) to the Servicer or
Illinois Power (as the case may be) by the Indenture Trustee or by the Holders
of Notes evidencing not less than twenty-five percent (25%) of the Outstanding
Amount of the Notes of all Series; or
32
(c) any representation or warranty made by the Servicer in this
Agreement shall prove to have been incorrect when made, which has a material
adverse effect on the Grantee, the Note Issuer or the Holders and which
material adverse effect continues unremedied for a period of 60 days after
the date on which written notice thereof requiring the same to be remedied,
shall have been delivered to the Servicer by the Grantee, the Note Issuer or
the Indenture Trustee; or
(d) an Insolvency Event occurs with respect to the Servicer or Illinois
Power; then, and in each and every case, so long as the Servicer Default shall
not have been remedied, either the Indenture Trustee, or the Holders of Notes
evidencing not less than twenty-five percent (25%) of the Outstanding Amount of
the Notes of all Series, by notice (a "Termination Notice") then given in
writing to the Servicer (and to the Indenture Trustee if given by the Holders)
may terminate all the rights and obligations (other than the obligations set
forth in Section 6.02 hereof) of the Servicer under this Agreement. In
addition, upon a Servicer Default described in Section 7.01(a), each of the
following shall be entitled to apply to the ICC for sequestration and payment of
revenues arising with respect to the Intangible Transition Property: (1) the
Holders and the Indenture Trustee as beneficiaries of the lien provided under
Section 18-107(c) of the Funding Law; (2) the Grantee or its assignees; (3) the
Note Issuer; or (4) pledgees or transferees of the Intangible Transition
Property. On or after the receipt by the Servicer of a Termination Notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Notes, the Intangible Transition Property, the IFCs or otherwise, shall,
without further action, pass to and be vested in such successor Servicer as may
be appointed under Section 7.02; and, without limitation, the Indenture Trustee
is authorized and empowered to execute and deliver, on behalf of the predecessor
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or
33
things necessary or appropriate to effect the purposes of such Termination
Notice, whether to complete the transfer of the Intangible Transition
Property Records and related documents, or otherwise. The predecessor
Servicer shall cooperate with the successor Servicer, the Grantee, the Note
Issuer and the Indenture Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer for administration by it of
(i) all cash amounts that shall at the time be held by the predecessor
Servicer for remittance, or shall thereafter be received by it with respect
to the Intangible Transition Property or the IFCs, and (ii) any and all
Intangible Transition Property Records. All reasonable out-of-pocket costs
and expenses (including attorneys' fees and expenses) incurred in connection
with transferring the Intangible Transition Property Records to the successor
Servicer and amending this Agreement to reflect such succession as Servicer
pursuant to this Section shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses.
SECTION 7.02. APPOINTMENT OF SUCCESSOR.
(a) Upon the Servicer's receipt of a Termination Notice pursuant to
Section 7.01 or the Servicer's resignation or removal in accordance with the
terms of this Agreement, the predecessor Servicer shall continue to perform its
functions as Servicer under this Agreement, and shall be entitled to receive the
requisite Servicing Fee, until a successor Servicer shall have assumed in
writing the obligations of the Servicer hereunder as described below. In the
event of the Servicer's termination hereunder, the Grantee shall appoint a
successor Servicer with the Note Issuer's prior written consent thereto (which
consent shall not be unreasonably withheld), and the successor Servicer shall
accept its appointment by a written assumption in form acceptable to the Grantee
and the Note Issuer. If within 30 days after the delivery of the Termination
Notice, the Grantee shall not
34
have obtained such a new Servicer, the Indenture Trustee may petition the
ICC or a court of competent jurisdiction to appoint a successor Servicer
under this Agreement. A Person shall qualify as a successor Servicer only if
(i) such Person is permitted under the Public Utilities Act and ICC
Regulations to perform the duties of the Servicer, (ii) the Rating Agency
Condition shall have been satisfied and (iii) such Person enters into a
servicing agreement with the Grantee having substantially the same provisions
as this Agreement.
(b) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Servicing Fee
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement.
SECTION 7.03. WAIVER OF PAST DEFAULTS. The Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes of all Series
may, on behalf of all Holders, waive in writing any default by the Servicer in
the performance of its obligations hereunder and its consequences, except a
default in making any required deposits to the Collection Account in accordance
with this Agreement, which waiver shall require the consent of all Holders.
Upon any such waiver of a past default, such default shall cease to exist, and
any Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto.
SECTION 7.04. NOTICE OF SERVICER DEFAULT. The Servicer shall deliver
to the Grantee, the Note Issuer, the Indenture Trustee and the Rating Agencies,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, written notice in an
35
Officer's Certificate of any event which with the giving of notice or lapse
of time, or both, would become a Servicer Default under Section 7.01(a) or
(b).
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.01. AMENDMENT.
(a) This Agreement may be amended in writing by the Servicer and the
Grantee with five Business Days' prior written notice given to the Rating
Agencies and the prior written consent of the Indenture Trustee, but without the
consent of any of the Holders or Holders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions in
this Agreement or of modifying in any manner the rights of the Holders;
PROVIDED, HOWEVER, that such action shall not, as evidenced by an Officer's
Certificate delivered to the Grantee, the Note Issuer, the Delaware Trustee and
the Indenture Trustee, adversely affect in any material respect the interests of
any Holder.
This Agreement may also be amended in writing from time to time by the
Servicer and the Grantee with prior written notice given to the Rating Agencies
and the prior written consent of the Indenture Trustee and the prior written
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes of all Series, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders;
PROVIDED, HOWEVER, that no such amendment shall (a) increase or reduce in any
manner the amount of or accelerate or delay the timing of IFC
36
Collections or (b) reduce the aforesaid percentage of the Outstanding Amount
of the Notes, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Notes.
Promptly after the execution of any such amendment and the requisite
consents, the Grantee shall furnish written notification of the substance of
such amendment to the Note Issuer, the Indenture Trustee and each of the Rating
Agencies.
It shall not be necessary for the consent of Holders pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof.
Prior to its consent to any amendment to this Agreement, the Indenture
Trustee shall be entitled to receive and conclusively rely upon an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Agreement. The Indenture Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Indenture Trustee's own rights, duties or
immunities under this Agreement or otherwise.
(b) Notwithstanding Section 8.01(a) or anything to the contrary in this
Agreement, the Servicer and the Grantee may amend Annex I to this Agreement in
writing with prior written notice given to the Indenture Trustee and the Rating
Agencies, but without the consent of the Indenture Trustee, any Rating Agency or
any Holder, solely to address changes to the Servicer's method of calculating
IFC Payments received as a result of changes to the Servicer's current
computerized customer information system, as contemplated by Section [
] of Annex I hereto; PROVIDED that any such amendment shall not have a
material adverse effect on the Holders.
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SECTION 8.02 MAINTENANCE OF RECORDS. The Servicer shall maintain
accounts and records as to the Intangible Transition Property accurately and in
accordance with its standard accounting procedures and in sufficient detail to
permit reconciliation between IFC Payments received by the Servicer and IFC
Collections from time to time deposited in the Collection Account.
SECTION 8.03. NOTICES. All demands, notices and communications upon or
to the Servicer, the Grantee, the Note Issuer, the Indenture Trustee or the
Rating Agencies under this Agreement shall be in writing and personally
delivered, sent by overnight mail or sent by telecopy or other similar form of
rapid transmission, and shall be deemed to have been duly given upon receipt (a)
in the case of the Servicer, to Illinois Power Company, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; (b) in the case of the Grantee, to Illinois Power
Securitization Limited Liability Company, c/o Illinois Power Company, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; (c) in the case of the Note Issuer, to
Illinois Power Special Purpose Trust, c/o First Union Trust Company, National
Association, One ▇▇▇▇▇▇ Square, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attn: Corporate Trust Administration; (d) in the case of the Indenture
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; (g) in the case of Fitch, to Fitch
Investors Service, L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention
of Commercial Asset-Backed Securities; or (h) in the case of Duff & ▇▇▇▇▇▇, to
▇▇▇▇ & ▇▇▇▇▇▇ Credit Rating Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: Asset-Backed Monitoring Group; or as to each of the foregoing,
at such other address as shall be designated by written notice to the other
parties.
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SECTION 8.04. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 6.03 and as provided in the
provisions of this Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by the Servicer.
SECTION 8.05. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Servicer and the Grantee and, to the
extent provided herein or in the Basic Documents, the Note Issuer, the Indenture
Trustee and the Holders, 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 Intangible Transition Property or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
SECTION 8.06. 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 8.07. 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 8.08. 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.
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SECTION 8.09. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois, 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 8.10. ASSIGNMENTS TO NOTE ISSUER AND INDENTURE TRUSTEE. The
Servicer acknowledges and consents to the assignment of any or all of the
Grantee's rights and obligations hereunder to the Note Issuer pursuant to the
Sale Agreement, and the collateral assignment of any or all of the Note
Issuer's rights and obligations hereunder to the Indenture Trustee pursuant
to the Indenture. After the Grantee transfers its rights and obligations
hereunder to the Note Issuer pursuant to the Sale Agreement, any duty the
Servicer owes to the Grantee and the Note Issuer hereunder shall be fully
performed if such duty is performed for the benefit of the Note Issuer alone.
SECTION 8.11. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the ICC's
right 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 any
applicable Funding Order or other applicable law, the Servicer shall not,
prior to the date which is one year and one day after the termination of the
Indenture, acquiesce, petition or otherwise invoke or cause the Grantee or
the Note Issuer to invoke or join with them in provoking the process of any
court or governmental authority for the purpose of commencing or sustaining a
case against the Grantee or the Note 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
Grantee or the Note Issuer or any
40
substantial part of the property of the Grantee or the Note Issuer, or
ordering the winding up or liquidation of the affairs of the Grantee or the
Note Issuer.
SECTION 8.12. LIMITATION OF LIABILITY. It is expressly understood
and agreed by the parties hereto that (a) this Agreement is acknowledged and
accepted by First Union Trust Company, National Association ("First Union"),
not individually or personally but solely as Delaware Trustee on behalf of
the Note Issuer, and by ▇▇▇▇▇▇ Trust and Savings Bank ("▇▇▇▇▇▇"), not
individually or personally but solely as Indenture Trustee on behalf of the
Holders, in each case in the exercise of the powers and authority conferred
and vested in it, (b) the representations, undertakings and agreements herein
made by the Delaware Trustee on behalf of the Note Issuer, and by the
Indenture Trustee on behalf of the Holders, are made and intended not as
personal representations, undertakings and agreements by First Union and
▇▇▇▇▇▇, respectively, but are made and intended for the purpose of binding
only the Note Issuer and the Holders, respectively, (c) nothing herein
contained shall be construed as creating any liability on First Union or
▇▇▇▇▇▇, individually or personally, to perform any covenant either expressed
or implied contained herein, except in their respective capacities as
Delaware Trustee and Indenture Trustee, all such liability, if any, being
expressly waived by the parties who are signatories to this Agreement and by
any Person claiming by, through or under such parties and (d) under no
circumstances shall First Union or ▇▇▇▇▇▇, be personally liable for the
payment of any indebtedness or expenses of the Note Issuer or the Holders,
respectively, or be personally liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the
Delaware Trustee or the Indenture Trustee, respectively, under this
Agreement; PROVIDED, HOWEVER, that this provision shall not protect First
Union or ▇▇▇▇▇▇ against any liability that would otherwise be imposed by
reason of willful
41
misconduct, bad faith or gross negligence in the performance of their
respective duties under this Agreement.
42
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.
ILLINOIS POWER SECURITIZATION
LIMITED LIABILITY COMPANY
By:
-----------------------------
Name:
----------------------------
Title:
--------------------------
ILLINOIS POWER COMPANY
By:
-----------------------------
Name:
----------------------------
Title:
--------------------------
Acknowledged and Accepted: FIRST UNION
TRUST COMPANY, NATIONAL ASSOCIATION, not
in its individual capacity but solely as
Delaware Trustee
By:
-------------------------------
Name
-----------------------------
Title:
----------------------------
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
not in its individual capacity but solely
as Indenture Trustee
By:
----------------------------
Name:
---------------------------
Title:
-------------------------
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