EXHIBIT 10.1
FORM OF TRANSITION PROPERTY SALE AGREEMENT
between
CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC
Issuer
and
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
Seller
Dated as of ______________
TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................................... 1
Section 1.01 Definitions................................................................... 1
Section 1.02 Other Definitional Provisions................................................. 1
ARTICLE II CONVEYANCE OF THE TRANSITION PROPERTY.................................................... 2
Section 2.01 Conveyance of the Transition Property......................................... 2
Section 2.02 Conditions to Conveyance of the Transition Property........................... 3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER................................................ 4
Section 3.01 Organization and Good Standing................................................ 4
Section 3.02 Due Qualification............................................................. 4
Section 3.03 Power and Authority........................................................... 4
Section 3.04 Binding Obligation............................................................ 4
Section 3.05 No Violation.................................................................. 4
Section 3.06 No Proceedings................................................................ 5
Section 3.07 Approvals..................................................................... 5
Section 3.08 The Transition Property....................................................... 5
Section 3.09 Solvency...................................................................... 6
Section 3.10 The Financing Order........................................................... 7
Section 3.11 State Action.................................................................. 7
Section 3.12 No Court Order................................................................ 8
Section 3.13 Approvals Concerning the Transition Property.................................. 8
Section 3.14 Assumptions................................................................... 8
Section 3.15 Creation of the Transition Property........................................... 8
Section 3.16 Prospectus.................................................................... 9
Section 3.17 Nature of Representations and Warranties...................................... 9
ARTICLE IV COVENANTS OF THE SELLER.................................................................. 9
Section 4.01 Seller's Existence............................................................ 9
Section 4.02 No Liens or Conveyances....................................................... 9
Section 4.03 Delivery of Collections....................................................... 10
Section 4.04 Notice of Liens............................................................... 10
Section 4.05 Compliance With Law........................................................... 10
Section 4.06 Covenants Related to the Transition Property.................................. 10
Section 4.07 Protection of Title........................................................... 11
Section 4.08 Taxes......................................................................... 12
Section 4.09 Filings Pursuant to Financing Order........................................... 12
ARTICLE V ADDITIONAL UNDERTAKINGS OF SELLER......................................................... 12
Section 5.01 Liability of the Seller; Indemnities.......................................... 12
Section 5.02 Merger or Consolidation of, or Assumption of the Obligations of, the Seller... 14
Section 5.03 Limitation on Liability of the Seller And Others.............................. 16
ARTICLE VI MISCELLANEOUS PROVISIONS................................................................. 16
Section 6.01 Amendment..................................................................... 16
i
Section 6.02 Notices....................................................................... 17
Section 6.03 Assignment by the Seller...................................................... 18
Section 6.04 Assignment to the Indenture Trustee........................................... 18
Section 6.05 Limitations on Rights of Others............................................... 18
Section 6.06 Severability.................................................................. 18
Section 6.07 Separate Counterparts......................................................... 18
Section 6.08 Headings...................................................................... 19
Section 6.09 Governing Law................................................................. 19
Section 6.10 Nonpetition Covenants......................................................... 19
APPENDIX A DEFINITIONS
SCHEDULE 1
TRANSITION PROPERTY SALE AGREEMENT (this "Agreement") dated as of
__________, between CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC, a
Delaware limited liability company (the "Issuer"), and CENTERPOINT ENERGY
HOUSTON ELECTRIC, LLC, a Texas limited liability company, as seller (the
"Seller").
WHEREAS, the Issuer desires to purchase the Transition Property created
pursuant to the Texas Electric Choice Plan and the Financing Order;
WHEREAS, the Seller is willing to sell its rights and interests under the
Financing Order to the Issuer whereupon such rights and interests will become
the Transition Property;
WHEREAS, the Issuer, in order to finance the purchase of the Transferred
Transition Property, will issue the Transition Bonds under the Indenture; and
WHEREAS, the Issuer, to secure its obligations under the Transition Bonds
and the Indenture, will pledge its right, title and interest in the Transferred
Transition Property and this Agreement to the Indenture Trustee for the benefit
of the Transition Bondholders.
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. Capitalized terms used herein and not otherwise
defined herein have the meanings assigned to them in Appendix A to this
Agreement.
Section 1.02 Other Definitional Provisions.
(a) "Agreement" means this Transition Property Sale Agreement, as the
same may be amended and supplemented from time to time.
(b) Non-capitalized terms used herein which are defined in the Texas
Electric Choice Plan, as the context requires, have the meanings assigned
to such terms in the Texas Electric Choice Plan, but without giving effect
to amendments to the Texas Electric Choice Plan after the date hereof which
have a material adverse effect on the Issuer or the Transition Bondholders.
(c) All terms defined in this Agreement shall have such defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(d) 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
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this Agreement unless otherwise specified; and the term "including" shall
mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms.
ARTICLE II
CONVEYANCE OF THE TRANSITION PROPERTY
Section 2.01 Conveyance of the Transition Property.
(a) In consideration of the Issuer's payment to or upon the order of
the Seller of $[ ] (the "Purchase Price"), subject to the satisfaction or
waiver of the conditions specified in Section 2.02, the Seller does hereby
irrevocably sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (subject to the obligations of the Seller herein)
or warranty, except as set forth herein, all right, title and interest of
the Seller in, to and under the Financing Order as identified in the ▇▇▇▇
of Sale delivered pursuant to Section 2.02(i) on or prior to the Transfer
Date whereupon such rights and interests under the Financing Order shall
become the Transition Property (such sale, transfer, assignment, setting
over and conveyance of the Transition Property to include, to the fullest
extent permitted by the Texas Electric Choice Plan, the right to impose,
collect and receive the Transition Charges, as the same may be adjusted
from time to time). Such sale, transfer, assignment, setting over and
conveyance of the Transition Property is hereby expressly stated to be a
sale or other absolute transfer and, pursuant to Section 39.308 of the
Texas Electric Choice Plan and other applicable law, is a true sale and is
not a secured transaction and title, legal and equitable, has passed to the
Issuer. The preceding sentence is the statement referred to in Section
39.308 of the Texas Electric Choice Plan. The Seller agrees and confirms
that upon payment of the Purchase Price and the execution and delivery of
this Agreement and the ▇▇▇▇ of Sale, the sale, transfer and assignment
hereunder shall be effective and the Seller shall have no right, title or
interest in, to or under the Transition Property.
(b) Subject to the satisfaction or waiver of conditions specified in
Section 2.02, the Issuer does hereby purchase the Transition Property from
the Seller for the consideration set forth in paragraph (a) above.
(c) The Seller and the Issuer each acknowledge and agree that the
purchase price for the Transition Property sold pursuant to this Agreement
is equal to its fair market value at the time of sale.
(d) Notwithstanding the foregoing, in the event that the sale,
transfer, assignment, setting over and conveyance of the Transition
Property is determined by any court of competent jurisdiction not to be a
true sale as contemplated by the parties and as provided in Section 39.308
of the Texas Electric Choice Plan, then such sale, transfer, assignment,
setting over and conveyance shall be treated as a pledge of and grant of a
security interest in the Transition Property under Section 39.309 of the
Texas Electric
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Choice Plan and under Articles 8 and 9 of the Uniform Commercial Code as
enacted in the State of Texas and each other applicable jurisdiction (the
"UCC"), and the Seller shall be deemed to have granted, and does hereby
grant, as of the date hereof, a security interest to the Issuer on behalf
of itself and the Indenture Trustee in the Transition Property to secure a
payment obligation incurred by the Seller in the amount paid by the Issuer
for the Transition Property.
Section 2.02 Conditions to Conveyance of the Transition Property . The
obligation of the Seller to sell, and the obligation of the Issuer to purchase
the Transition Property on the Transfer Date shall be subject to and conditioned
upon the satisfaction or waiver of each of the following conditions:
(i) on or prior to the Transfer Date, the Seller shall deliver to the
Issuer a duly executed ▇▇▇▇ of Sale identifying the Transition Property,
substantially in the form of Exhibit A hereto;
(ii) as of the Transfer Date, the representations and warranties of
the Seller in this Agreement shall be true and correct in all material
respects and no material breach by the Seller of its covenants in this
Agreement shall exist and the Seller shall have delivered to the Issuer and
the Indenture Trustee an Officer's Certificate to such effect and no
Servicer Default shall have occurred and be continuing;
(iii) as of the Transfer Date:
(A) the Issuer shall have sufficient funds available to pay the
purchase price for the Transferred Transition Property to be purchased
on such date, and
(B) all conditions set forth in the Indenture to the issuance of
the Transition Bonds intended to provide such funds shall have been
satisfied or waived;
(iv) on or prior to the Transfer Date, the Seller shall have taken all
actions required under the Texas Electric Choice Plan, the Financing Order
and other applicable law for the Issuer to have ownership of the
Transferred Transition Property, 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 Indenture Trustee a first priority perfected
security interest in the Trust Estate and maintain such security interest
as of such date (including all actions required under the Texas Electric
Choice Plan, the Financing Order and the UCC);
(v) the Seller shall have delivered to each Rating Agency and to the
Issuer any Opinions of Counsel requested by the Rating Agencies;
(vi) the Seller shall have delivered to the Indenture Trustee and the
Issuer an Officer's Certificate confirming the satisfaction of each
relevant condition precedent specified in this Section 2.02; and
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(vii) the Seller shall have received the Purchase Price in funds
immediately available on the Transfer Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As of the Transfer Date, the Seller makes the following representations and
warranties on which the Issuer has relied and will rely in acquiring the
Transferred Transition Property. The following representations and warranties
are made under existing law as in effect as of the Transfer Date. The Seller
shall not be in breach of any representation or warranty herein as a result of a
change in law occurring after the Transfer Date, including by means of
legislative enactment, constitutional amendment or voter initiative. The
representations and warranties shall survive the sale of the Transferred
Transition Property to the Issuer and the pledge thereof on the Transfer Date to
the Indenture Trustee pursuant to the Indenture.
Section 3.01 Organization and Good Standing. The Seller is a limited
liability company duly organized and in good standing under the laws of the
State of Texas, with limited liability company power and authority to own its
properties and to conduct its business as currently owned or conducted.
Section 3.02 Due Qualification. The Seller is duly qualified to do business
as a foreign limited liability company 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 requires such qualifications,
licenses or approvals (except where the failure to so qualify or obtain such
licenses and approvals would not be reasonably likely to have a material adverse
effect on the Seller's business, operations, assets, revenues or properties).
Section 3.03 Power and Authority. The Seller has the limited liability
company power and authority to obtain the Financing Order and to execute and
deliver this Agreement and to carry out its terms; the Seller has the limited
liability company power and authority to own the rights and interests under the
Financing Order, and to sell and assign the rights and interests under the
Financing Order to the Issuer, whereupon (subject to the effectiveness of the
Issuance Advice Letter) such rights and interests will become the Transition
Property; and the execution, delivery and performance of this Agreement have
been duly authorized by the Seller by all necessary limited liability company
action.
Section 3.04 Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, subject to bankruptcy, receivership, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors' or
secured parties' rights generally from time to time in effect and to general
principles of equity (including concepts of materiality, reasonableness, good
faith and fair dealing), 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:
(i) conflict with or result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a
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default under, the articles of organization or limited liability company
regulations of the Seller, or any indenture, mortgage, credit agreement or other
agreement or instrument to which the Seller is a party or by which it or its
properties is bound; (ii) result in the creation or imposition of any Lien upon
any of the Seller's properties pursuant to the terms of any such indenture,
agreement or other instrument (except for any Lien created in favor of the
Transition Bondholders pursuant to Section 39.309 of the Texas Electric Choice
Plan or any Lien created by the Issuer under the Basic Documents); or (iii)
violate any existing law or any existing order, rule or regulation applicable to
the Seller of any Governmental Authority having jurisdiction over the Seller or
its properties.
Section 3.06 No Proceedings. Except as disclosed in the Issuer's prospectus
dated [ ] and the related prospectus supplement dated [ ] relating to the
Transition Bonds (together, the "Prospectus"), there are no proceedings pending
and, to the Seller's knowledge, (x) there are no proceedings threatened and (y)
there are no investigations pending or threatened before any Governmental
Authority having jurisdiction over the Seller or its properties involving or
relating to the Seller or the Issuer or, to the Seller's knowledge, any other
Person:
(i) asserting the invalidity of this Agreement, any of the other Basic
Documents, the Transition Bonds, the Texas Electric Choice Plan or the
Financing Order;
(ii) seeking to prevent the issuance of the Transition Bonds or the
consummation of any of the transactions contemplated by this Agreement or
any of the other Basic Documents;
(iii) seeking any determination or ruling that could reasonably be
expected to materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability of, this
Agreement, any of the other Basic Documents or the Transition Bonds; or
(iv) challenging the Seller's treatment of the Transition Bonds as
debt of CenterPoint Energy, Inc. for federal income tax purposes.
Section 3.07 Approvals. Except for filings under the UCC and the Texas
Electric Choice Plan, no approval, authorization, consent, order or other action
of, or filing with, any Governmental Authority is required under an applicable
law, rule or regulation in connection with the execution and delivery by the
Seller of this Agreement, the performance by the Seller of the transactions
contemplated hereby or the fulfillment by the Seller of the terms hereof, except
those that have been obtained or made and those that the Seller, in its capacity
as Servicer under the Servicing Agreement, is required to make in the future
pursuant to the Servicing Agreement.
Section 3.08 The Transition Property.
(a) Information. Subject to Section 3.14, all written information, as
amended or supplemented from time to time prior to the date this
representation is made, provided by the Seller to the Issuer with respect
to the Transferred Transition Property (including the Financing Order and
the Issuance Advice Letter) is correct in all material respects.
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(b) Effect of Transfer. It is the intention of the parties hereto that
(other than for United States federal income tax purposes and, to the
extent consistent with applicable state tax laws, state income and
franchise tax purposes) the sale, transfer, assignment, setting over and
conveyance herein contemplated constitutes a sale or other absolute
transfer of all right, title and interest of the Seller in, to and under
the Financing Order from the Seller to the Issuer whereupon (subject to the
effectiveness of the Issuance Advice Letter) such rights and interests
shall become the Transition Property; upon execution and delivery of this
Agreement and the ▇▇▇▇ of Sale and payment of the Purchase Price, the
Seller will have no right, title or interest in, to or under the
Transferred Transition Property; and that such Transferred Transition
Property would not be a part of the estate of the Seller as debtor in the
event of the filing of a bankruptcy petition by or against the Seller under
any bankruptcy law.
(c) Transfer Filings.
(i) The Seller is the sole owner of the rights and interests
under the Financing Order to be sold to the Issuer on the Transfer
Date.
(ii) On the Transfer Date, immediately upon the sale hereunder,
the Transferred Transition Property will have been validly sold,
assigned, transferred, set over and conveyed to the Issuer free and
clear of all Liens (except for any Lien created in favor of the
Transition Bondholders pursuant to Section 39.309 of the Texas
Electric Choice Plan or any Lien created by the Issuer under the Basic
Documents).
(iii) All actions or filings (including filings with the Texas
Secretary of State in accordance with the rules prescribed under the
Texas Electric Choice Plan and the UCC) necessary in any jurisdiction
to give the Issuer a perfected ownership interest (subject to any Lien
created in favor of the Transition Bondholders pursuant to Section
39.309 of the Texas Electric Choice Plan or any Lien created by the
Issuer under the Basic Documents) in the Transferred Transition
Property and to grant to the Indenture Trustee a first priority
perfected security interest in the Transferred Transition Property,
free and clear of all Liens of the Seller or anyone else (except for
any Lien created in favor of the Transition Bondholders pursuant to
Section 39.309 of the Texas Electric Choice Plan or any Lien created
by the Issuer under the Basic Documents), have been taken or made.
Section 3.09 Solvency. After giving effect to the sale of the Transferred
Transition Property hereunder, the Seller:
(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 and does not expect to engage in a business for
which its remaining property represents an unreasonably small portion of
its capital,
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(iv) reasonably believes that it will be able to pay its debts as they
come due, and
(v) is able to pay its debts as they come due and does not intend to
incur, or believe that it will incur, indebtedness that it will not be able
to repay at its maturity.
Section 3.10 The Financing Order.
(a) The Financing Order was issued by the Texas Commission on [ ] in
accordance with the Texas Electric Choice Plan; the Financing Order and the
process by which it was issued comply with all applicable laws, rules and
regulations of the State of Texas and the federal laws of the United
States, and the Financing Order is final, non-appealable and in full force
and effect.
(b) As of the date of issuance of the Transition Bonds, the Transition
Bonds will be entitled to the protections provided by the Texas Electric
Choice Plan and the Financing Order, and the Financing Order and the
Transition Charges authorized therein will have become irrevocable and not
subject to reduction, impairment or adjustment by further action of the
Texas Commission, except as permitted by Section 39.307 of the Texas
Electric Choice Plan, and the Issuance Advice Letter has been filed in
accordance with the Financing Order. The Texas Commission has not issued
any order prior to the third business day after submission of the Issuance
Advice Letter that the Transition Bonds do not comply with Ordering
Paragraph [ ] of the Financing Order and the initial Transition Charges and
the final terms of the Transition Bonds set forth in the Issuance Advice
Letter have become effective.
Section 3.11 State Action.
(a) Under the Texas Electric Choice Plan, the State of Texas has pledged
that it will not take or permit any action that would impair the value of the
Transition Property or, except as permitted in Section 39.307 of the Texas
Electric Choice Plan, reduce, alter or impair the Transition Charges until the
principal, interest and premium, if any, and any other charges incurred and
contracts to be performed in connection with the Transition Bonds, have been
paid and performed in full.
(b) Under the laws of the State of Texas and the federal laws of the United
States, the State of Texas could not constitutionally take any action of a
legislative character, including the repeal or amendment of the Texas Electric
Choice Plan, which would substantially limit, alter or impair the Transition
Property or other rights vested in the Transition Bondholders pursuant to the
Financing Order, or substantially limit, alter, impair or reduce the value or
amount of the Transition Property, unless such action is a reasonable exercise
of the State of Texas' sovereign powers and of a character reasonable and
appropriate to the important public purpose justifying such action, and, under
the takings clauses of the State of Texas and United States Constitutions, the
State of Texas could not repeal or amend the Texas Electric Choice Plan or take
any other action in contravention of its pledge quoted above without paying just
compensation to the Transition Bondholders, as determined by a court of
competent jurisdiction, if doing so
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would constitute a permanent appropriation of a substantial property
interest of the Transition Bondholders in the Transition Property and
deprive the Transition Bondholders of their reasonable expectations arising
from their investments in the Transition Bonds; however, there is no
assurance that, even if a court were to award just compensation, it would
be sufficient to pay the full amount of principal of and interest on the
Transition Bonds.
Section 3.12 No Court Order. There is no order by any court providing for
the revocation, alteration, limitation or other impairment of the Texas Electric
Choice Plan, the Financing Order, the Issuance Advice Letter, the Transferred
Transition Property or the Transition Charges or any rights arising under any of
them or that seeks to enjoin the performance of any obligations under the
Financing Order.
Section 3.13 Approvals Concerning the Transition Property. Under the laws
of the State of Texas and the federal laws of the United States, no other
approval, authorization, consent, order or other action of, or filing with any
Governmental Authority is required in connection with the creation or transfer
of the Seller's rights and interests under the Financing Order and the Issuer's
purchase of the Transferred Transition Property from the Seller, except those
that have been obtained or made.
Section 3.14 Assumptions. Based on information available to the Seller on
the date hereof, the assumptions used in calculating the Transition Charges in
the Issuance Advice Letter are reasonable and made in good faith; however,
notwithstanding the foregoing, THE SELLER MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, THAT AMOUNTS ACTUALLY COLLECTED ARISING FROM THE TRANSITION
CHARGES WILL IN FACT BE SUFFICIENT TO MEET THE PAYMENT OBLIGATIONS ON THE
TRANSITION BONDS OR THAT THE ASSUMPTIONS USED IN CALCULATING SUCH TRANSITION
CHARGES WILL IN FACT BE REALIZED.
Section 3.15 Creation of the Transition Property.
(a) Upon the effectiveness of the Issuance Advice Letter, the transfer
of the Seller's rights and interests under the Financing Order and the
Issuer's purchase of the Transition Property from the Seller pursuant to
this Agreement, the Transferred Transition Property constitutes a present
property right.
(b) Upon the effectiveness of the Issuance Advice Letter, the transfer
of the Seller's rights and interests under the Financing Order and the
Issuer's purchase of the Transferred Transition Property from the Seller
pursuant to this Agreement, the Transferred Transition Property includes:
(1) the right to impose, collect and receive the Transition
Charges authorized in the Financing Order, including the
right to receive Transition Charges in amounts and at times
sufficient to pay principal and interest on the Transition
Bonds,
(2) all rights and interest of the Seller under the Financing
Order,
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(3) the rights to file for periodic adjustments of the
Transition Charges as provided in the Financing Order, and
(4) all revenues and collections resulting from Transition
Charges.
(c) Upon the effectiveness of the Issuance Advice Letter, the transfer
of the Seller's rights and interests under the Financing Order and the
Issuer's purchase of the Transferred Transition Property from the Seller on
such Transfer Date pursuant to this Agreement, the Transferred Transition
Property is not subject to any Lien created by a previous indenture.
Section 3.16 Prospectus. As of the date hereof, the information describing
the Seller under the caption "The Servicer of the Transition Property" in the
Prospectus is true and correct in all material respects.
Section 3.17 Nature of Representations and Warranties. The representations
and warranties set forth in Section 3.08 and Section 3.10 through Section 3.16,
insofar as they involve conclusions of law, are made not on the basis that the
Seller purports to be a legal expert or to be rendering legal advice, but rather
to reflect the parties' good faith understanding of the legal basis on which the
parties are entering into this Agreement and the other Basic Documents and the
basis on which the Transition Bondholders are purchasing the Transition Bonds,
and to reflect the parties' agreement that, if such understanding turns out to
be incorrect or inaccurate, the Seller will be obligated to indemnify the Issuer
and its permitted assigns (to the extent required by and in accordance with
Section 5.01), and that the Issuer and its permitted assigns will be entitled to
enforce any rights and remedies under the Basic Documents on account of such
inaccuracy to the same extent as if the Seller had breached any other
representations or warranties hereunder.
ARTICLE IV
COVENANTS OF THE SELLER
Section 4.01 Seller's Existence. Subject to Section 5.02, so long as any of
the Transition Bonds are outstanding, the Seller (i) shall keep in full force
and effect its existence and remain in good standing under the laws of the state
of its organization, and shall obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or will be
necessary to protect the validity and enforceability of this Agreement and each
other instrument or agreement to which the Seller is a party necessary to the
proper administration of this Agreement and the transactions contemplated hereby
and (ii) hereby agrees to continue to operate its transmission and distribution
system in order to provide electric services to the Seller's retail electric
customers in its certificated service area, provided that this clause (ii) shall
not prohibit Seller from selling, assigning or otherwise divesting its
transmission and distribution system or any part thereof in accordance with this
Agreement and the Financing Order.
Section 4.02 No Liens or Conveyances. Except for the conveyances hereunder
or any Lien under Section 39.309 of the Texas Electric Choice Plan for the
benefit of the Issuer, the Indenture Trustee and the Transition Bondholders, the
Seller shall not sell, pledge, assign or
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transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on, any of the Transition Property, whether now existing or hereafter
created, or any interest therein. The Seller shall not at any time assert any
Lien against or with respect to the Transferred Transition Property, and shall
defend the right, title and interest of the Issuer and the Indenture Trustee, as
assignee of the Issuer, in, to and under the Transferred Transition Property
against all claims of third parties claiming through or under the Seller.
Section 4.03 Delivery of Collections. In the event that the Seller receives
collections under the terms and provisions of the Intercreditor Agreement in
respect of the Transition Charges or the proceeds thereof other than in its
capacity as the Servicer, the Seller shall pay the Servicer all payments
received by the Seller in respect thereof, in accordance with the Intercreditor
Agreement, as soon as practicable after receipt thereof by the Seller.
Section 4.04 Notice of Liens. The Seller shall notify the Issuer and the
Indenture Trustee promptly after becoming aware of any Lien on the Transferred
Transition Property other than the conveyance hereunder, any Lien created in
favor of the Transition Bondholders pursuant to Section 39.309 of the Texas
Electric Choice Plan or any Lien created by the Issuer under the Indenture.
Section 4.05 Compliance With Law. The Seller shall comply with its
organizational or governing documents and all laws, treaties, rules, regulations
and determinations of any Governmental Authority applicable to the Seller,
except to the extent that failure to so comply would not materially adversely
affect the Issuer's or the Indenture Trustee's interests in the Transferred
Transition Property or under any of the Basic Documents or the Seller's
performance of its obligations hereunder.
Section 4.06 Covenants Related to the Transition Property.
(a) So long as any of the Transition Bonds is outstanding, the Seller
shall:
(i) treat the Transition Bonds as debt of the Issuer and not of
the Seller, except for financial reporting or tax purposes or as
required in connection with the SEC's administration of the 1935 Act,
(ii) disclose in its financial statements that it is not the
owner of the Transferred Transition Property and that the assets of
the Issuer are not available to pay creditors of the Seller or any of
its Affiliates (other than the Issuer),
(iii) disclose the effects of all transactions between the Seller
and the Issuer in accordance with generally accepted accounting
principles, and
(iv) not own or purchase any Transition Bonds.
(b) So long as any of the Transition Bonds is outstanding,
(i) in all proceedings relating directly or indirectly to the
Transferred Transition Property, the Seller shall: (A) affirmatively
certify and confirm that it has sold all of its rights and interests
under the Financing Order to the Issuer
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(other than for financial reporting or tax purposes or as required in
connection with the SEC's administration of the 1935 Act), and (B) not
make any statement or reference in respect of the Transferred
Transition Property that is inconsistent with the ownership thereof by
the Issuer (other than for financial reporting or tax purposes or as
required in connection with the SEC's administration of the 1935 Act);
(ii) the Seller shall not take any action in respect of the
Transferred Transition Property except solely in its capacity as the
Servicer thereof pursuant to the Servicing Agreement or as
contemplated by the Basic Documents, including the Intercreditor
Agreement; and
(iii) the Issuer shall not sell transition bonds under a separate
financing order in connection with the issuance of additional
transition bonds unless the Rating Agency Condition shall have been
satisfied with respect to the Transition Bonds outstanding.
(c) The Seller agrees that upon the sale by the Seller of all of its
rights and interests under the Financing Order to the Issuer pursuant to
this Agreement, any payment to the Servicer by any Person responsible for
remitting Transition Charges to the Servicer under the terms of the
Financing Order or the Texas Electric Choice Plan or applicable tariff
shall discharge such Person's obligations in respect of the Transferred
Transition Property to the extent of such payment, notwithstanding any
objection or direction to the contrary by the Seller.
Section 4.07 Protection of Title. The Seller shall execute and file such
filings, and cause to be executed and filed such filings, in such manner and in
such places as may be required by law fully to preserve, maintain and protect
the interests of the Issuer and the Indenture Trustee in the Transferred
Transition Property, including all filings required under the Texas Electric
Choice Plan and the UCC relating to the transfer of the ownership of the rights
and interests under the Financing Order by the Seller to the Issuer and the
pledge of the Transferred Transition Property by the Issuer to the Indenture
Trustee. The Seller shall deliver (or cause to be delivered) to the Issuer and
the Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
The Seller shall institute any action or proceeding reasonably necessary to
compel performance by the Texas Commission or the State of Texas of any of their
obligations or duties under the Texas Electric Choice Plan, the Financing Order
or the Issuance Advice Letter relating to the transfer of the ownership of the
rights and interests under the Financing Order by the Seller to the Issuer, and
the Seller 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, in each case as may be reasonably
necessary:
(a) to protect 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 set
forth in Article III; or
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(b) so long as the Seller is also the Servicer, to block or overturn
any attempts to cause a repeal of, modification of or supplement to the
Texas Electric Choice Plan, the Financing Order, the Issuance Advice Letter
or the rights of Transition Bondholders by legislative enactment or
constitutional amendment that would be materially adverse to the Issuer,
the Indenture Trustee or the Transition Bondholders.
The costs of any such actions or proceedings shall be reimbursed by the Issuer
to the Seller from amounts on deposit in the collection account as an operating
expense in accordance with the terms of the Indenture. The Seller's obligations
pursuant to this Section 4.07 shall survive and continue notwithstanding that
the payment of operating expenses pursuant to the Indenture may be delayed (it
being understood that the Seller may be required to advance its own funds to
satisfy its obligation hereunder). The Seller designates the Issuer as its agent
and attorney-in-fact to execute any filings of financing statements,
continuation statements or other instruments required of the Seller pursuant to
this Section, it being understood that the Issuer shall have no obligation to
execute any such instruments.
Section 4.08 Taxes. So long as any of the Transition Bonds is outstanding,
the Seller shall pay all material taxes, assessments and governmental charges
imposed upon it or any of its properties or assets or with respect to any of its
franchises, businesses, 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 Transferred Transition Property; provided that no such
tax need be paid if the Seller or any of its Affiliates is contesting the same
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if the Seller or such Affiliate has established appropriate
reserves as shall be required in conformity with generally accepted accounting
principles.
Section 4.09 Filings Pursuant to Financing Order. The Seller shall comply
with all filing requirements imposed upon the Seller in its capacity as such by
the Financing Order, including making any such post-closing filings.
ARTICLE V
ADDITIONAL UNDERTAKINGS OF SELLER
The Seller hereby undertakes the obligations contained in this Article V
and acknowledges that the Issuer shall have the right to assign its rights with
respect to such obligations to the Indenture Trustee for the benefit of the
Transition Bondholders.
SECTION 5.01 LIABILITY OF THE SELLER; INDEMNITIES.
(a) THE SELLER SHALL BE LIABLE IN ACCORDANCE HEREWITH ONLY TO THE
EXTENT OF THE OBLIGATIONS SPECIFICALLY UNDERTAKEN BY THE SELLER UNDER THIS
AGREEMENT.
(b) THE SELLER SHALL INDEMNIFY THE ISSUER AND THE INDENTURE TRUSTEE,
FOR ITSELF AND ON BEHALF OF THE TRANSITION BONDHOLDERS, AND EACH OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES AND AGENTS
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FOR, AND DEFEND AND HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, 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 UNDER EXISTING LAW
AS OF THE TRANSFER DATE AS A RESULT OF THE SALE AND ASSIGNMENT OF THE
SELLER'S RIGHTS AND INTERESTS UNDER THE FINANCING ORDER BY THE SELLER TO
THE ISSUER, THE ACQUISITION OR HOLDING OF THE TRANSFERRED TRANSITION
PROPERTY BY THE ISSUER OR THE ISSUANCE AND SALE BY THE ISSUER OF THE
TRANSITION BONDS, INCLUDING ANY SALES, GROSS RECEIPTS, TANGIBLE PERSONAL
PROPERTY, PRIVILEGE, FRANCHISE OR LICENSE TAXES, BUT EXCLUDING ANY TAXES
IMPOSED AS A RESULT OF A FAILURE OF SUCH PERSON TO PROPERLY WITHHOLD OR
REMIT TAXES IMPOSED WITH RESPECT TO PAYMENTS ON ANY TRANSITION BOND, IN THE
EVENT AND TO THE EXTENT SUCH TAXES ARE NOT RECOVERABLE AS QUALIFIED COSTS,
IT BEING UNDERSTOOD THAT THE TRANSITION BONDHOLDERS SHALL BE ENTITLED TO
ENFORCE THEIR RIGHTS AGAINST THE SELLER UNDER THIS SECTION 5.01(B) SOLELY
THROUGH A CAUSE OF ACTION BROUGHT FOR THEIR BENEFIT BY THE INDENTURE
TRUSTEE IN ACCORDANCE WITH THE TERMS OF THE INDENTURE.
(c) THE SELLER SHALL INDEMNIFY THE ISSUER AND THE INDENTURE TRUSTEE,
FOR ITSELF AND ON BEHALF OF THE TRANSITION BONDHOLDERS, AND EACH OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES AND AGENTS FOR, AND
DEFEND AND HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, ANY AND ALL
AMOUNTS OF PRINCIPAL OF AND INTEREST ON THE TRANSITION BONDS NOT PAID WHEN
DUE OR WHEN SCHEDULED TO BE PAID IN ACCORDANCE WITH THEIR TERMS AND THE
AMOUNT OF ANY DEPOSITS TO THE ISSUER REQUIRED TO HAVE BEEN MADE IN
ACCORDANCE WITH THE TERMS OF THE BASIC DOCUMENTS WHICH ARE NOT MADE WHEN SO
REQUIRED, IN EACH CASE AS A RESULT OF THE SELLER'S BREACH OF ANY OF ITS
REPRESENTATIONS, WARRANTIES OR COVENANTS CONTAINED IN THIS AGREEMENT.
(d) THE SELLER SHALL INDEMNIFY THE ISSUER AND THE INDENTURE TRUSTEE,
FOR ITSELF AND ON BEHALF OF THE TRANSITION BONDHOLDERS, AND EACH OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES AND AGENTS FOR, AND
DEFEND AND HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, ANY AND ALL
LIABILITIES, OBLIGATIONS, CLAIMS, ACTIONS, SUITS OR PAYMENTS OF ANY KIND
WHATSOEVER THAT MAY BE IMPOSED ON OR ASSERTED AGAINST ANY SUCH PERSON
(OTHER THAN ANY LIABILITIES, OBLIGATIONS OR CLAIMS FOR OR PAYMENTS OF
PRINCIPAL OF OR INTEREST ON THE TRANSITION BONDS) TOGETHER WITH ANY
REASONABLE COSTS AND EXPENSES INCURRED BY SUCH PERSON, IN EACH CASE AS A
RESULT OF THE SELLER'S BREACH OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR
COVENANTS CONTAINED IN THIS AGREEMENT.
(e) THE INDEMNIFICATION OBLIGATIONS OF THE SELLER UNDER THIS SECTION
5.01 SHALL RANK PARI PASSU WITH ALL OTHER GENERAL UNSECURED OBLIGATIONS OF
THE SELLER.
(f) INDEMNIFICATION UNDER THIS SECTION 5.01 SHALL SURVIVE THE
RESIGNATION OR REMOVAL OF THE INDENTURE TRUSTEE AND THE TERMINATION OF
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THIS AGREEMENT AND SHALL INCLUDE REASONABLE FEES AND EXPENSES OF
INVESTIGATION AND LITIGATION (INCLUDING REASONABLE ATTORNEYS' FEES AND
EXPENSES). THE SELLER SHALL NOT INDEMNIFY ANY PARTY UNDER THIS SECTION 5.01
FOR ANY CHANGES IN LAW AFTER THE TRANSFER DATE, INCLUDING BY MEANS OF
LEGISLATURE ENACTMENT, CONSTITUTIONAL AMENDMENT OR VOTER INITIATIVE, OR FOR
ANY LIABILITY RESULTING SOLELY FROM A DOWNGRADE IN ANY RATING OF THE
TRANSITION BONDS BY ANY RATING AGENCY. THE SELLER SHALL NOT INDEMNIFY THE
INDENTURE TRUSTEE OR ITS OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES OR AGENTS
UNDER THIS SECTION 5.01 AGAINST ANY LIABILITY, OBLIGATION, CLAIM, ACTION,
SUIT OR PAYMENT OF ANY KIND ARISING OUT OF THE WILLFUL MISCONDUCT,
NEGLIGENCE OR BAD FAITH OF ANY SUCH PERSON.
NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL ANY SUCH FOREGOING INDEMNITY
EXTEND TO THE COLLECTIBILITY OF THE TRANSITION CHARGES FROM ANY PERSON
RESPONSIBLE FOR REMITTING TRANSITION CHARGES TO THE SERVICER UNDER THE TERMS OF
THE FINANCING ORDER, THE TEXAS ELECTRIC CHOICE PLAN OR AN APPLICABLE TARIFF, OR
THE CREDITWORTHINESS OF ANY SUCH PERSON. THE REMEDIES PROVIDED IN THIS AGREEMENT
ARE THE SOLE AND EXCLUSIVE REMEDIES AGAINST THE SELLER FOR BREACH OF ITS
REPRESENTATIONS, WARRANTIES OR COVENANTS IN THIS AGREEMENT.
Section 5.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller.
Any Person:
(a) into which the Seller may be merged, converted or consolidated and
which succeeds to all or substantially all of the electric transmission and
distribution business of the Seller (or, if the transmission and
distribution business is split, which provides distribution service
directly to a majority of the retail electric customers in the Seller's
certificated service area as it existed on May 1, 1999),
(b) which results from the division of the Seller into two or more
Persons and which succeeds to all or substantially all of the electric
transmission and distribution business of the Seller (or, if the
transmission and distribution business is split, which provides
distribution service directly to a majority of the retail electric
customers in the Seller's certificated service area as it existed on May 1,
1999),
(c) which may result from any merger, conversion or consolidation to
which the Seller shall be a party and which succeeds to all or
substantially all of the electric transmission and distribution business of
the Seller (or, if the transmission and distribution business is split,
which provides distribution service directly to a majority of the retail
electric customers in the Seller's certificated service area as it existed
on May 1, 1999),
(d) which may purchase or otherwise succeed to the properties and
assets of the Seller substantially as a whole and which purchases or
otherwise succeeds to all or substantially all of the electric transmission
and distribution business of the Seller (or, if
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the transmission and distribution business is split, which provides
distribution service directly to a majority of the retail electric
customers in the Seller's certificated service area as it existed on May 1,
1999), or
(e) which may otherwise purchase or succeed to all or substantially
all of the electric transmission and distribution business of the Seller
(or, if the transmission and distribution business is split, which provides
distribution service directly to a majority of the retail electric
customers in the Seller's certificated service area as it existed on May 1,
1999),
which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Seller under this Agreement, shall be the
successor to the Seller hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement; provided,
however, that
(i) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Article III shall have been
breached in any material respect 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 Rating Agencies shall have received prior written notice of
such transaction,
(iii) the Seller shall have delivered to the Issuer and the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation, conversion, merger, division or succession and
such agreement of assumption comply with this Section 5.02 and that all
conditions precedent, if any, provided for in this Agreement relating to
such transaction have been complied with,
(iv) the Seller shall have delivered to the Issuer and the Indenture
Trustee an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, all filings to
be made by the Seller, including filings with the Texas Commission
pursuant to the Texas Electric Choice Plan and the UCC, that are
necessary fully to preserve and protect the respective interests of
the Issuer and the Indenture Trustee in the Transferred Transition
Property have been executed and filed, and reciting the details of
such filings, or
(B) stating that, in the opinion of such counsel, no such action
is necessary to preserve and protect such interests, and
(v) the Seller shall have delivered to the Issuer, the Indenture
Trustee and the Rating Agencies an opinion of independent tax counsel (in
form and substance satisfactory to the Seller, and which may be based on a
ruling from the Internal Revenue Service) to the effect that, for federal
income tax purposes, such transaction will not result in a material adverse
federal income tax consequence to the Issuer, the Indenture Trustee or the
Transition Bondholders.
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The Seller shall not consummate any transaction referred to in clauses (a), (b),
(c), (d) or (e) above except upon execution of the above described agreement of
assumption and compliance with clauses (i), (ii), (iii), (iv) and (v) above.
When any Person acquires the properties and assets of the Seller substantially
as a whole and succeeds to all or substantially all of the electric transmission
and distribution business of the Seller (or, if the transmission and
distribution business is split, which provides distribution service directly to
a majority of the retail electric customers in the Seller's certificated service
area as it existed on May 1, 1999), or otherwise becomes the successor to the
Seller in accordance with the terms of this Section 5.02, then upon the
satisfaction of all of the other conditions of this Section 5.02, the Seller
shall automatically and without further notice be released from its obligations
hereunder.
Section 5.03 Limitation on Liability of the Seller And Others. The Seller
and any manager, officer, employee or agent of the Seller 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 4.07, the Seller 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.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01 Amendment.
(a) This Agreement may be amended in writing by the Seller and the
Issuer, provided that (i) the Rating Agency Condition has been satisfied in
connection therewith, (ii) the Indenture Trustee has consented thereto and
(iii) in the case of any amendment that increases ongoing qualified costs
as defined in the Financing Order, the Texas Commission has consented
thereto or shall be conclusively deemed to have consented thereto. Promptly
after the execution of any such amendment or consent, the Issuer shall
furnish written notification of the substance of such amendment or consent
to each of the Rating Agencies. With respect to the Texas Commission's
consent to any amendment to this Agreement,
(i) the Seller may request the consent of the Texas Commission by
delivering to the Texas Commission's executive director and general
counsel a written request for such consent, which request shall
contain:
(A) a reference to Docket No. [ ] and a statement as to the
possible effect of the amendment on ongoing qualified costs;
(B) an Officer's Certificate stating that the proposed
amendment has been approved by all relevant parties; and
(C) a statement identifying the person to whom the Texas
Commission or its staff is to address its consent to the proposed
amendment or request additional time;
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(ii) The Texas Commission shall, within 30 days of receiving the
request for consent complying with Section 6.01(a)(i) above, either
(A) provide notice of its consent or lack of consent to the
person specified in Section 6.01(a)(i)(C) above, or
(B) be conclusively deemed to have consented to the proposed
amendment,
unless, within 30 days of receiving the request for consent complying
with Section 6.01(a)(i) above, the Texas Commission or its staff
delivers to the office of the person specified in Section
6.01(a)(i)(C) above a written statement requesting an additional
amount of time not to exceed 30 days in which to consider whether to
consent to the proposed amendment. If the Texas Commission or its
staff requests an extension of time in the manner set forth in the
preceding sentence, then the Texas Commission shall either provide
notice of its consent or lack of consent to the person specified in
6.01(a)(i)(C) above no later than the last day of such extension of
time or be conclusively deemed to have consented to the proposed
amendment as of the last day of such extension of time.
Any amendment requiring the consent of the Texas Commission as provided in
this Section 6.01(a) shall become effective on the later of (i) the date
proposed by the parties to such amendment and (ii) the first day after the
expiration of the 30 day period provided for in Section 6.01(a)(ii), or, if
such period has been extended pursuant thereto, the first day after the
expiration of such period as so extended.
(b) Prior to the execution of any amendment to this Agreement, the
Issuer and the Indenture 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. The Issuer and the Indenture
Trustee may, but shall not be obligated to, enter into any such amendment
that affects their own rights, duties or immunities under this Agreement or
otherwise. Following delivery of a notice to the Texas Commission by the
Seller under Section 6.01(a) above, the Seller and Issuer may at any time
withdraw from the Texas Commission further consideration of any
notification of a proposed amendment.
Section 6.02 Notices. Unless otherwise specifically provided herein, all
demands, notices and communications upon or to the Seller, the Issuer, the
Indenture Trustee, the Texas Commission 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 Seller, to CenterPoint Energy Houston Electric,
LLC, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Treasurer,
(b) in the case of the Issuer, to CenterPoint Energy Transition Bond
Company II, LLC, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention: Manager,
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(c) in the case of Moody's, to ▇▇▇▇▇'▇ Investors Service, Inc., [ABS
Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇],
(d) in the case of Standard & Poor's, to Standard & ▇▇▇▇'▇, [▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed Surveillance
Department],
(e) in the case of Fitch, to Fitch Ratings, [1 ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS Surveillance],
(f) in the case the Indenture Trustee, at the address provided for
notices or communications to the Indenture Trustee in the Indenture, and
(g) in the case of the Texas Commission, to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Executive Director and General
Counsel;
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 by the Seller. Notwithstanding anything to the
contrary contained herein, except as provided in Section 5.02, this Agreement
may not be assigned by the Seller.
Section 6.04 Assignment to the Indenture Trustee. The Seller hereby
acknowledges and consents to any pledge, assignment and grant of a security
interest by the Issuer to the Indenture 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 Transition Property and the proceeds
thereof and the assignment of any or all of the Issuer's rights hereunder to the
Indenture Trustee. Notwithstanding such assignment, in no event shall the
Indenture Trustee have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
Section 6.05 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Issuer and the Indenture
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 Trust Estate or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
Section 6.06 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 6.07 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.
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Section 6.08 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.
Section 6.09 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, 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 6.10 Nonpetition Covenants. (a) Notwithstanding any prior
termination of this Agreement or the Indenture, the Seller 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 Issuer to invoke the process of any
Governmental Authority for the purpose of commencing or sustaining a case
against 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 Issuer or any substantial part of
the property of the Issuer, or ordering the winding-up or liquidation of the
affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement or the
Indenture, the Issuer 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 to invoke the process of any Governmental Authority for the purpose
of commencing or sustaining a case against the Seller 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 any substantial part of the property of the Seller, or ordering the
winding-up or liquidation of the affairs of the Seller.
[Rest of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers as of the day and year
first above written.
CENTERPOINT ENERGY TRANSITION BOND
COMPANY II, LLC,
as Issuer,
By: ___________________________
Name:
Title:
CENTERPOINT ENERGY HOUSTON ELECTRIC,
LLC,
as Seller,
By: ___________________________
Name:
Title:
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APPENDIX A - DEFINITIONS
The definitions contained in this Appendix A are applicable to the singular as
well as the plural forms of such terms.
"1935 Act" means the Public Utility Holding Company Act of 1935, as
amended.
"Administration Agreement" means the Administration Agreement, dated as of
[ ], between the Issuer and the Seller, as the same may be amended and
supplemented from time to time.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, control, when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms controlling and controlled
have meanings correlative to the foregoing.
"Agreement" or this "Sale Agreement" or the "Sale Agreement" means this
Transition Property Sale Agreement, as the same may be amended and supplemented
from time to time.
"Basic Documents" means the Certificate of Formation of the Issuer which
was filed with the Secretary of State of the State of Delaware on December 3,
2004, as amended and restated on [ ], the Amended and Restated Limited Liability
Company Agreement of the Issuer dated as of [ ], this Sale Agreement, the ▇▇▇▇
of Sale, the Servicing Agreement, the Intercreditor Agreement, the
Administration Agreement, the Indenture, the Series Supplement [and the Swap
Agreement].
"▇▇▇▇ of Sale" means any ▇▇▇▇ of sale issued by the Seller to the Issuer
pursuant to the Sale Agreement evidencing the sale of the Transition Property by
the Seller to the Issuer.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in the City of Houston, Texas, or in the City of New
York, New York, are required or authorized by law or executive order to remain
closed.
"CenterPoint Houston" means CenterPoint Energy Houston Electric, LLC, a
Texas limited liability company, or its successor.
"Financing Order" means the Financing Order issued by the Texas Commission
on [ ] in Docket No. [ ] pursuant to the Texas Electric Choice Plan.
"Fitch" means Fitch Ratings, or its successor.
"Governmental Authority" means any court or any federal or state regulatory
body, administrative agency or governmental instrumentality.
"Indenture" means the Indenture, dated as of [ ], between the Issuer and
the Indenture Trustee, the Series Supplement (including the forms and terms of
the Transition Bonds
A-1
established thereunder), as the same may be amended and supplemented with
respect to the Transition Bonds from time to time.
"Indenture Trustee" means ____________________________________, a _______
corporation, or its successor or any successor Indenture Trustee under the
Indenture.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of [
], among the Indenture Trustee, the Issuer, the Seller and CenterPoint Energy
Transition Bond Company, LLC, each in the capacities stated therein, as the same
may be amended and supplemented from time to time.
"Issuance Advice Letter" means the issuance advice letter submitted to the
Texas Commission by the Seller pursuant to the Financing Order in connection
with the issuance of the Transition Bonds.
"Issuer" means CenterPoint Energy Transition Bond Company II, LLC, a
Delaware limited liability company, or its successor under the Indenture.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor thereto.
"Officer's Certificate" means a certificate signed, in the case of the
Seller, by any manager, the chairman of the board, the chief executive officer,
the president, any vice chairman, any executive vice president, senior vice
president or vice president, the treasurer, assistant treasurer, the secretary
or any assistant secretary of the Seller.
"Opinion of Counsel" means one or more written opinions of counsel who may
be an employee of or counsel to the Issuer or the Seller, which counsel shall be
reasonably acceptable to the Indenture Trustee, the Issuer or the Rating
Agencies, as applicable, and which shall be in form reasonably satisfactory to
the Indenture Trustee, if applicable.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), business trust, limited liability company, unincorporated organization
or government or any agency or political subdivision thereof.
"proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Prospectus" has the meaning specified in Section 3.06 hereof.
"Purchase Price" has the meaning specified in Section 2.01(a) hereof.
"Qualified Costs" has the meaning assigned to that term in the Texas
Electric Choice Plan and the Financing Order.
A-2
"Rating Agency" means any rating agency rating the Transition Bonds at the
time of issuance thereof at the request of the Issuer, which initially shall be
▇▇▇▇▇'▇, Fitch and S&P. If no such organization or successor is any longer in
existence, "Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Issuer, written notice
of which designation shall be given to the Indenture Trustee, the Texas
Commission and the Servicer.
"Rating Agency Condition" means, with respect to any action, the
notification in writing to each Rating Agency of such action, and confirmation
from S&P and Fitch to the Indenture Trustee and the Issuer that such action will
not result in a reduction or withdrawal of the then current rating by such
Rating Agency of any outstanding class or tranche of Transition Bonds.
"SEC" means the Securities and Exchange Commission.
"Seller" means CenterPoint Houston, or its successor, in its capacity as
seller of the Transition Property to the Issuer pursuant to the Sale Agreement.
"Series Supplement" means the Supplemental Indenture dated [ ], which
authorizes the Transition Bonds.
"Servicer" means CenterPoint Houston, in its capacity as the servicer under
the Servicing Agreement, and each successor to or assignee of CenterPoint
Houston (in the same capacity) pursuant to the relevant sections of the
Servicing Agreement.
"Servicer Default" means an event specified in [Section 6.01] of the
Servicing Agreement.
"Servicing Agreement" means the Transition Property Servicing Agreement,
dated as of [ ], between the Issuer and the Servicer and acknowledged by the
Indenture Trustee, as the same may be amended and supplemented from time to
time.
"Standard & Poor's" or "S&P," means Standard & Poor's, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, or its successor.
"Supplemental Indenture" means a supplemental indenture entered into by the
Issuer and the Indenture Trustee pursuant to Article IX of the Indenture.
"Swap Agreement" means and includes the ISDA Master Agreement, together
with the related Schedule and Confirmation, each dated [ ] between the Issuer
and [Counterparty], as swap counterparty thereunder, as the same may be amended
and supplemented from time to time.
"Texas Commission" means the Public Utility Commission of Texas or any
successor.
"Texas Electric Choice Plan" means the Act of May 21, 1999, 76th Leg. R.S.
ch. 405, 1999 (codified at Texas Utilities Code Section 39.001 et seq.).
A-3
"Transfer Date" means the date on which the Transition Bonds are to be
originally issued in accordance with Section 2.10 of the Indenture.
"Transferred Transition Property" means the Transition Property that has
been purchased by the Issuer pursuant to the ▇▇▇▇ of Sale.
"Transition Bond" means any of the Series 2005-____ Transition Bonds issued
by the Issuer pursuant to the Indenture and one or more Supplemental Indentures
authorizing such series and also has the meaning given such term in the Texas
Electric Choice Plan, as applicable to such series.
"Transition Bondholder" means the Person in whose name a Transition Bond is
registered on the Transition Bond Register.
"Transition Bond Register" has the meaning specified in Section 2.05 of the
Indenture.
"Transition Charges" means the nonbypassable amounts to be charged for the
use or availability of electric services, approved by the Texas Commission in
the Financing Order to recover Qualified Costs that may be collected by the
Seller, its successors, assignees or other collection agents as provided for in
the Financing Order.
"Transition Property" means the rights and interests of the Seller or its
successor under the Financing Order, once those rights are first transferred to
the Issuer or pledged in connection with the issuance of the Transition Bonds,
including the right to impose, collect and receive through Transition Charges
payable by retail electric customers within Seller's certificated service area
as it existed on May 1, 1999, an amount sufficient to cover the Qualified Costs
of the Seller authorized in the Financing Order, the right to receive Transition
Charges in amounts and at times sufficient to pay principal and interest and
make other deposits in connection with the Transition Bonds and all revenues and
collections resulting from Transition Charges.
"Trust Estate" has the meaning specified in the Series Supplement.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
A-4
EXHIBIT A
▇▇▇▇ OF SALE
1. This ▇▇▇▇ of Sale is being delivered pursuant to the Transition Property
Sale Agreement, dated as of [ ] (the "Sale Agreement"), between CenterPoint
Energy Houston Electric, LLC (the "Seller") and CenterPoint Energy Transition
Bond Company II, LLC (the "Issuer"). All capitalized terms used but not defined
herein have the respective meanings ascribed thereto in the Sale Agreement.
2. In consideration of the Issuer's payment to the Seller of
$[______________], receipt of which is hereby acknowledged, the Seller does
hereby irrevocably sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse or warranty, except as set forth in the Sale Agreement,
all right, title and interest of the Seller in, to and under the Transition
Property identified on Schedule 1 hereto (such sale, transfer, assignment,
setting over and conveyance of the Transition Property includes, to the fullest
extent permitted by the Texas Electric Choice Plan, the right to impose, collect
and receive the Transition Charges related to the Transition Property, as the
same may be adjusted from time to time). Such sale, transfer, assignment,
setting over and conveyance is hereby expressly stated to be a sale or other
absolute transfer and, pursuant to Section 39.308 of the Texas Electric Choice
Plan and other applicable law, is a true sale and is not a secured transaction
and title, legal and equitable, has passed to the Issuer. The preceding sentence
is the statement referred to in Section 39.308 of the Texas Electric Choice
Plan. The Seller agrees and confirms that, after giving effect to the sale
evidenced by this ▇▇▇▇ of Sale, the Seller has no right, title or interest in,
to or under the Transition Property.
3. The Issuer does hereby purchase the Transition Property identified on
Schedule 1 hereto from the Seller for the consideration set forth in paragraph 2
above.
4. The Seller and the Issuer each acknowledge and agree that the purchase
price for the Transition Property sold pursuant to this ▇▇▇▇ of Sale and the
Sale Agreement is equal to its fair market value on the date hereof.
5. The Seller confirms that each of the representations and warranties on
the part of the Seller contained in the Sale Agreement are true and correct in
all respects on the date hereof as if made on the date hereof.
6. This ▇▇▇▇ of Sale 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.
7. THIS ▇▇▇▇ OF SALE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, 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.
Exhibit A-1
IN WITNESS WHEREOF, the Seller and the Issuer have duly executed this ▇▇▇▇
of Sale as of the ___ day of _________, ____.
CENTERPOINT ENERGY TRANSITION BOND
COMPANY II, LLC,
as Issuer,
By: ________________________
Name:
Title:
CENTERPOINT ENERGY HOUSTON
ELECTRIC, LLC,
as Seller,
By: ________________________
Name:
Title:
Exhibit A-2
SCHEDULE 1
to
▇▇▇▇ OF SALE
Transition Property