EXHIBIT 10.1
TRANSITION PROPERTY SALE AGREEMENT
between
RELIANT ENERGY TRANSITION BOND COMPANY LLC
Issuer
and
RELIANT ENERGY, INCORPORATED
Seller
Dated September , 2001
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 Initial Transition Property 2
Section 2.02 Conditions to Conveyance of the Transition
Property 3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER 5
Section 3.01 Organization and Good Standing 5
Section 3.02 Due Qualification 5
Section 3.03 Power and Authority 5
Section 3.04 Binding Obligation 5
Section 3.05 No Violation 6
Section 3.06 No Proceedings 6
Section 3.07 Approvals 6
Section 3.08 The Transition Property 6
Section 3.09 Solvency 7
Section 3.10 The Financing Order 8
Section 3.11 State Action 8
Section 3.12 No Court Order 9
Section 3.13 Approvals Concerning the Transition Property 9
Section 3.14 No Proceedings Concerning the Texas Electric
Choice Plan 9
Section 3.15 Assumptions 9
Section 3.16 Creation of the Transition Property 9
Section 3.17 Prospectus 10
Section 3.18 Conversion to a Limited Liability Company 10
Section 3.19 Nature of Representations and Warranties 10
ARTICLE IV COVENANTS OF THE SELLER 11
Section 4.01 Seller's Existence 11
Section 4.02 No Liens or Conveyances 11
Section 4.03 Delivery of Collections 11
Section 4.04 Notice of Liens 11
Section 4.05 Compliance With Law 12
Section 4.06 Covenants Related to the Transition Property 12
Section 4.07 Protection of Title 13
Section 4.08 Taxes 14
Section 4.09 Filings Pursuant to Financing Order 14
ARTICLE V ADDITIONAL UNDERTAKINGS OF SELLER 14
Section 5.01. Liability of the Seller; Indemnities 14
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller 16
Section 5.03. Conversion of the Seller to a Limited Liability
Company 18
Section 5.04. Limitation on Liability of the Seller And Others 18
ARTICLE VI MISCELLANEOUS PROVISIONS 18
Section 6.01 Amendment 18
Section 6.02 Notices 18
Section 6.03 Assignment by the Seller 19
Section 6.04 Assignment to the Indenture Trustee 19
Section 6.05 Limitations on Rights of Others 19
Section 6.06 Severability 19
Section 6.07 Separate Counterparts 20
Section 6.08 Headings 20
Section 6.09 Governing Law 20
Section 6.10 Nonpetition Covenants 20
APPENDIX A DEFINITIONS
TRANSITION PROPERTY SALE AGREEMENT (this "Agreement") dated September ,
2001, between RELIANT ENERGY TRANSITION BOND COMPANY LLC, a Delaware limited
liability company (the "Issuer"), and RELIANT ENERGY, INCORPORATED, a Texas
corporation, as seller (the "Seller").
WHEREAS, the Issuer desires to purchase from time to time 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 from time to time issue one or more series of
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 Sale 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, supplemented or otherwise modified 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
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provision of this Agreement; Section, Schedule and Exhibit references
contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(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 Initial Transition Property.
(a) In consideration of the Issuer's payment to or upon the order of
the Seller of $ (the "Initial Purchase
Price") by wire transfer of funds immediately available on the date hereof
to Seller's account no. at ,
routing transit ABA # , 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(a) on or prior to the Initial Transfer Date whereupon such rights and
interests under the Financing Order shall become the Initial Transition
Property (such sale, transfer, assignment, setting over and conveyance of
the Initial 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 related to the Initial Transition Property, as the
same may be adjusted from time to time). Such sale, transfer, assignment,
setting over and conveyance of the Initial 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 Initial Purchase
Price and the execution and delivery of this Agreement and the related ▇▇▇▇
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
Initial Transition Property.
(b) Subject to the satisfaction or waiver of conditions specified in
Section 2.02, the Issuer does hereby purchase the Initial 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 Initial Transition Property sold pursuant to this
Agreement is equal to its fair market value at the time of sale.
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(d) The Seller and the Issuer further agree that from time to time,
the Seller may offer to sell, and the Issuer may purchase, the Seller's
rights and interests under separate financing orders as of Subsequent
Transfer Dates whereupon such rights and interests under subsequent
financing orders shall become Subsequent Transition Property, subject to
the satisfaction or waiver of the conditions specified in Section 2.02, in
exchange for consideration to be agreed upon (the "Subsequent Purchase
Price"). The Seller and the Issuer hereby agree that each such sale,
transfer, assignment, setting over and conveyance of any Subsequent
Transition Property shall include, to the fullest extent permitted by the
Texas Electric Choice Plan, the right to impose, collect and receive the
Transition Charges related to such Subsequent Transition Property, as the
same may be adjusted from time to time. Such sale, transfer, assignment,
setting over and conveyance of the Subsequent Transition Property is hereby
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, will be
a true sale and is not a secured transaction and title, legal and
equitable, will pass 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 applicable
Subsequent Purchase Price and the execution and delivery of the related
▇▇▇▇ of Sale, the sale, transfer and assignment to the Issuer thereunder
shall be effective and the Seller shall have no right, title or interest
in, to or under the Subsequent Transition Property which is the subject of
such ▇▇▇▇ of Sale.
(e) Notwithstanding the foregoing, in the event that any sale,
transfer, assignment, setting over and conveyance of any 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 such Transition Property under Section 39.309 of the
Texas Electric 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 such 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
Transition Property upon the Initial Transfer Date or any Subsequent 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 applicable Transfer Date, the Seller shall
deliver to the Issuer a duly executed ▇▇▇▇ of Sale identifying the
Transition Property to be purchased as of that date, substantially in the
form of Exhibit A hereto;
(ii) as of the applicable Transfer Date, no breach by the Seller of
its representations, warranties or covenants in this Agreement shall exist
and the Seller shall have
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delivered to the Issuer and the Indenture Trustee an Officers' Certificate
to such effect and no Servicer Default shall have occurred and be
continuing;
(iii) as of the applicable 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
one or more Series of Transition Bonds intended to provide such funds
shall have been satisfied or waived;
(iv) on or prior to the applicable 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 to be purchased on such date, free
and clear of all Liens other than Liens created by the Issuer pursuant to
the Indenture; and the Issuer or the Servicer, on behalf of the Issuer,
shall have taken any action required for the Issuer to grant the 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) in the case of any sale of Subsequent Transition Property only,
the Seller shall have provided the Issuer and each Rating Agency with a
notice specifying the Subsequent Transfer Date for such Subsequent
Transition Property not later than ten (10) days prior to the Subsequent
Transfer Date;
(vi) the Seller shall have delivered to each Rating Agency and to the
Issuer any Opinions of Counsel requested by the Rating Agencies;
(vii) the Seller shall have delivered to the Indenture Trustee and
the Issuer an Officers' Certificate confirming the satisfaction of each
condition precedent specified in this Section 2.02;
(viii) in the case of any sale of Subsequent Transition Property, the
Seller shall have taken any action necessary to satisfy any Rating Agency
Condition; and
(ix) the Seller shall have received the Initial Purchase Price or the
Subsequent Purchase Price, as applicable, in funds immediately available on
the applicable Transfer Date.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As of each 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 applicable Transfer Date.
The Seller shall not be in breach of any representation or warranty herein as a
result of a change in law (which does not include a final, non-appealable
judicial holding by a court of competent jurisdiction that the provisions of the
Texas Electric Choice Plan relevant to securitization are unconstitutional)
occurring after the applicable Transfer Date. The representations and
warranties shall survive the sale of the Transferred Transition Property to the
Issuer and the pledge thereof on each Transfer Date to the Indenture Trustee
pursuant to the Indenture.
Section 3.01 Organization and Good Standing. The Seller is a corporation
duly organized and in good standing under the laws of the State of Texas, with
corporate 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 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 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 corporate 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 corporate 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, whereupon such
rights and interests will become the Transition Property, to the Issuer, and the
Seller has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and performance of this
Agreement have been duly authorized by the Seller by all necessary corporate
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 default under, the
articles of incorporation or by-laws of the Seller, or any indenture, mortgage,
credit
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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 or agreement or other instrument; 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 prospectus and
the related prospectus supplement, each dated September __, 2001, of the Issuer
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 the Seller for federal or state income, gross receipts or franchise
tax purposes.
Section 3.07 Approvals. Except for continuation filings under the UCC
and other filings under the Texas Electric Choice Plan and the UCC, 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. The Issuance Advice Letter has been filed in accordance
with the Financing Order.
Section 3.08 The Transition Property.
(a) Information. Subject to Section 3.15, all 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. Each 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 such rights and
interests shall become the Transition Property; upon execution and delivery
of this Agreement and the related ▇▇▇▇ of Sale and payment of the Initial
Purchase Price or Subsequent Purchase Price, as applicable, the Seller will
have no right, title or interest in, to or under the Transferred Transition
Property; and 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
applicable Transfer Date.
(ii) On the Transfer Date, immediately upon the sale hereunder,
such 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 first priority perfected
ownership interest in the Transferred Transition Property and to
grant to the Indenture Trustee a first priority perfected
security interest in such Transferred Transition Property, free
and clear of all Liens of the Seller or anyone else, have been
taken or made.
Section 3.09 Solvency. After giving effect to the sale of any
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,
(iv) reasonably believes that it will be able to pay its debts as they
come due, and
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(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 provisions of the Texas Electric Choice Plan relevant to
securitization are valid and constitutional under the Texas and United
States Constitutions; the Financing Order as issued on May 31, 2000 has
been issued by the Texas Commission 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 and the Financing
Order is final and non-appealable and in full force and effect.
(b) As of the date of issuance of any Series of the Transition Bonds,
the Transition Bonds of that Series (including those issued in respect of
Subsequent Transition Property) 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
relating to the Transferred Transition Property to be sold on such date 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 5 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 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 further a legitimate public
purpose, 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
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Transition Bondholders, as determined by a court of competent jurisdiction,
if doing so 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. 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 No Proceedings Concerning the Texas Electric Choice Plan.
Except as disclosed in the Prospectus, there are no proceedings pending, and to
the best of the Seller's knowledge, (i) there are no proceedings threatened and
(ii) there are no investigations pending or threatened, before any Governmental
Authority having jurisdiction over the Issuer or the Seller or their respective
properties challenging the Texas Electric Choice Plan or the Financing Order.
Section 3.15 Assumptions. 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 the assumptions used in
calculating such Transition Charge will in fact be realized.
Section 3.16 Creation of the Transition Property.
(a) Upon the effectiveness of the Issuance Advice Letter and 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 and 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, without limitation:
(1) the right to impose, collect and receive the Transition
Charges authorized in the Financing Order, including, without limitation,
the
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right to receive Transition Charges in amounts and at times sufficient
to pay principal and interest on the Transition Bonds and make deposits to
the overcollateralization subaccount,
(2) all rights and interest of the Seller under the Financing
Order,
(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 and 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 3.17 Prospectus. As of the date hereof, the information
describing the Seller under the caption "Reliant Energy" and the caption "The
Servicer of the Transition Property" in the prospectus dated September [___],
2001 is true and correct in all material respects.
Section 3.18 Conversion to a Limited Liability Company. The conversion
of the Seller into a Texas limited liability company will not:
(a) interrupt the Seller's existence,
(b) affect the Seller's rights, title and interests in its real estate
and other property or its power and authority to perform its obligations
under this Agreement, the Servicing Agreement or the other Basic Documents,
or
(c) impair or diminish the liabilities and obligations of the Seller,
including, without limitation, its obligations under this Agreement or any
other Basic Document.
Section 3.19 Nature of Representations and Warranties. The
representations and warranties set forth in Section 3.08 and Section 3.10
through Section 3.17, 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
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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 is outstanding, the Seller 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.
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 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 any 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, whether now
existing or hereafter created, against all claims of third parties claiming
through or under the Seller.
Section 4.03 Delivery of Collections. It is anticipated that the Seller
will receive 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, but in no event later than two Business Days after receipt.
Section 4.04 Notice of Liens. The Seller shall notify the Issuer and the
Indenture Trustee promptly after becoming aware of any Lien on any Transferred
Transition Property other than the conveyances hereunder, any Lien under the
Basic Documents or any Lien under Section 39.309 of the Texas Electric Choice
Plan or the UCC for the benefit of the Issuer or the Transition Bondholders.
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.
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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,
(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 (other than for financial
reporting or tax purposes), 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 accounting or tax reporting purposes);
(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 without limitation, 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.
(c) The Seller agrees that upon the sale by the Seller of the
Transferred Transition Property to the Issuer pursuant to this Agreement:
(i) to the fullest extent permitted by law, including the Texas
Electric Choice Plan and applicable Texas Commission Regulations, the
Issuer shall have all of the rights originally held by the Seller with
respect to the Transferred Transition Property, including the right to
collect any amounts payable 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 in
respect of such Transferred Transition Property as provided in the
Financing Order and the Texas
12
Commission Regulations, notwithstanding any objection or direction to
the contrary by the Seller, and
(ii) any payment to the Issuer 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 such
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, and take all such
actions, all 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 Issuer's ownership of the Transferred Transition Property 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 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, any Financing Order
or any Issuance Advice Letter with respect to the Transferred Transition
Property, 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
(b) to block or overturn any attempts to cause a repeal of,
modification of or supplement to the Texas Electric Choice Plan, the
Financing Order, any Issuance Advice Letter or the rights of Transition
Bondholders by legislative enactment or constitutional amendment that would
be 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
13
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 one 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, including making any post-closing filings,
in accordance with the Financing Order.
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 any subsequent
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 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 any 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,
general corporation, 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
14
rights against the Seller under this Section 5.01(b) solely through a cause
of action brought for their benefit by the Indenture Trustee.
(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 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 (which does not include a final, non-appealable judicial
holding by a court of competent jurisdiction that the provisions of the
Texas Electric Choice Plan relevant to securitization are unconstitutional)
after the Transfer Date.
(g) The Seller shall pay any and all taxes levied or assessed upon all
or any part of the Issuer's property or assets based on existing law as of
the Transfer Date.
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.
15
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 or consolidated and which
succeeds to all or substantially all of the electric transmission and
distribution business of the Seller (or, if transmission and distribution
are split, which provides wire service directly to customers),
(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 transmission
and distribution are split, which provides wire service directly to
customers),
(c) which may result from any merger 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
transmission and distribution are split, which provides wire service
directly to customers),
(d) which may succeed to the properties and assets of the Seller
substantially as a whole and which succeeds to all or substantially all of
the electric transmission and distribution business of the Seller (or, if
transmission and distribution are split, which provides wire service
directly to customers), or
(e) which may otherwise succeed to all or substantially all of the
electric transmission and distribution business of the Seller (or, if
transmission and distribution are split, which provides wire service
directly to customers),
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 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 Officers' Certificate and an Opinion of Counsel each stating
that such consolidation, merger 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,
16
(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 Seller, the Issuer, the Indenture
Trustee or the Transition Bondholders.
Subject to Section 5.03, 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 transmission and distribution are split, which provides wire
services directly to customers), 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. Conversion of the Seller to a Limited Liability Company.
Notwithstanding anything in this Agreement to the contrary, the Seller shall be
able to convert to a Texas limited liability company without the execution of an
agreement of assumption and without compliance with clauses (i), (ii), (iii),
(iv) and (v) of Section 5.02.
Section 5.04. Limitation on Liability of the Seller And Others. The Seller
and any director, 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.
17
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01 Amendment.
(a) This Agreement may be amended in writing by the Seller and the
Issuer, with the consent of the Indenture Trustee and the Texas Commission
and the satisfaction of the Rating Agency Condition. 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.
(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.
Section 6.02 Notices. Unless otherwise specifically provided herein, all
demands, notices and communications upon or to the Seller, the Issuer, the
Indenture Trustee or the Rating Agencies under this Agreement shall be in
writing, delivered personally, via facsimile, reputable overnight courier or by
certified mail, return-receipt requested, and shall be deemed to have been duly
given upon receipt
(a) in the case of the Seller, to Reliant Energy, Incorporated, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Treasurer,
(b) in the case of the Issuer, to Reliant Energy Transition Bond
Company LLC, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ , Attention:
Manager,
(c) in the case of Moody's, to ▇▇▇▇▇'▇ Investors Service, Inc., ABS
Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
(d) in the case of Standard & Poor's, to Standard & Poor's Ratings
Group, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed
Surveillance Department,
(e) in the case of Fitch, to Fitch, Inc., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS Surveillance, and
(f) in the case the Indenture Trustee, at the address provided for
notices or communications to the Indenture Trustee in the Indenture;
18
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.
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
19
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]
20
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.
RELIANT ENERGY TRANSITION BOND COMPANY LLC,
as Issuer,
By:
---------------------------------------
Name:
Title:
RELIANT ENERGY, INCORPORATED,
as Seller,
By:
---------------------------------------
Name:
Title:
21
APPENDIX A - DEFINITIONS
The definitions contained in this Appendix A are applicable to the singular as
well as the plural forms of such terms.
"Administration Agreement" means the Administration Agreement, dated as of
September __, 2001, between the Issuer and the Seller, as the same may be
amended, supplemented or otherwise modified 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, supplemented or
otherwise modified 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 November 10,
1999, as amended on ______________ the Amended and Restated Limited Liability
Company Agreement of the Issuer dated September __, 2001, this Sale Agreement,
each ▇▇▇▇ of Sale, the Servicing Agreement, the Intercreditor Agreement, the
Administration Agreement and the Indenture.
"▇▇▇▇ 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.
"Class" means, with respect to any Series of Transition Bonds, any one of
the classes of Transition Bonds of that Series, as specified in the applicable
Series Supplement.
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Event of Default" has the meaning specified in Section 5.01 of the
Indenture.
"Financing Order" means the Financing Order issued by the Texas Commission
on May 31, 2000, pursuant to the Texas Electric Choice Plan, as such order may
hereafter be supplemented by an order of the Texas Commission.
A-1
"Fitch" means Fitch, Inc., or its successor.
"Governmental Authority" means any court or any federal or state regulatory
body, administrative agency or governmental instrumentality.
"Holder" or "Transition Bondholder" means the Person in whose name a
Transition Bond of any Series or Class is registered on the Transition Bond
Register.
"Indenture" means the Indenture, dated as of September __, 2001, between
the Issuer and the Indenture Trustee, as the same may be amended and
supplemented from time to time by one or more indentures supplemental thereto,
and shall include the forms and terms of the Transition Bonds established
thereunder.
"Indenture Trustee" means Bankers Trust Company, a New York banking
corporation, or its successor or any successor Indenture Trustee under the
Indenture.
"Initial Purchase Price" has the meaning specified in Section 2.01(a)
hereof.
"Initial Transfer Date" means the Series Issuance Date for the first Series
of Transition Bonds.
"Initial Transition Property" means the Transition Property identified in
the ▇▇▇▇ of Sale delivered pursuant to Section 2.01(a) on or prior to the
Initial Transfer Date and purchased by the Issuer from the Seller as of the
Initial Transfer Date pursuant to the Sale Agreement.
"Intercreditor Agreement" means the Intercreditor Agreement, dated as of
September __, 2001, among the Issuer, the Seller and __________________________,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Issuance Advice Letter" shall mean each issuance advice letter submitted
to the Texas Commission by the Seller pursuant to the Financing Order in
connection with the issuance of a Series of Transition Bonds.
"Issuer" means Reliant Energy Transition Bond Company 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 its successor.
"Officers' Certificate" means a certificate signed, in the case of the
Seller, by
(a) the chairman of the board, the president, the vice chairman of the
board, any executive vice president or any vice president; and
A-2
(b) the treasurer, any assistant treasurer, the secretary or any
assistant secretary.
"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.
"Qualified Costs" has the meaning assigned to that term in the Texas
Electric Choice Plan and the Financing Order.
"Rating Agency" means any rating agency rating the Transition Bonds of any
Class or Series 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 and the Issuer.
"Rating Agency Condition" means, with respect to any action, the
notification to each Rating Agency of such action and the notification in
writing by 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 Series or Class of Transition Bonds.
"Reliant Energy" means Reliant Energy, Incorporated, a Texas corporation,
or its successor.
"Retail Electric Provider" means any Person certified by the Texas
Commission pursuant to the relevant provisions of the Texas Electric Choice Plan
and any Texas Commission order to be a "retail electric provider" under the
Utilities Code of the State of Texas.
"Seller" means Reliant Energy, or its successor, in its capacity as seller
of the rights and interests under the Financing Order to the Issuer pursuant to
the Sale Agreement.
"Series" means any series of Transition Bonds issued and authenticated by
the Issuer pursuant to the Indenture, as specified in the Series Supplement
therefor.
"Series Issuance Date" means, with respect to any Series, the date on which
the Transition Bonds of such Series are to be originally issued in accordance
with Section 2.10 of the Indenture and the Series Supplement for such Series.
A-3
"Series Supplement" means an indenture supplemental to the Indenture that
authorizes a particular Series of Transition Bonds.
"Servicer" means Reliant Energy, in its capacity as the servicer of the
Transition Property, and each successor to Reliant Energy (in the same capacity)
pursuant to the Servicing Agreement.
"Servicer Default" means an event specified in Section 6.01 of the
Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement, dated as of September
__, 2001, 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 Ratings Group, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, or its successor.
"Subsequent Purchase Price" has the meaning specified in Section 2.01(d)
hereof.
"Subsequent Sale" means the sale of additional rights and interests under a
separate financing order by the Seller to the Issuer after the Initial Transfer
Date, subject to the satisfaction of the conditions specified in the Sale
Agreement and the Indenture.
"Subsequent Transfer Date" means the date that a Subsequent Sale will be
effective, specified in a written notice provided by the Seller to the Issuer
pursuant to the Sale Agreement.
"Subsequent Transition Property" means Transition Property identified in a
▇▇▇▇ of Sale delivered pursuant to Section 2.02(d) with respect to the
Subsequent Transfer Date for such Transition Property and purchased by the
Issuer from the Seller as of such Subsequent Transfer Date pursuant to the Sale
Agreement.
"Texas Commission" means the Public Utility Commission of Texas or any
successor.
"Texas Commission Regulations" means, at any time, any regulations, orders
or directives promulgated, issued or adopted by the Texas Commission and in
effect at such time.
"Texas Electric Choice Plan" means the Act of May 21, 1999, 76th Leg. R.S.
ch. 405, 1999.
"Transfer Date" means the Initial Transfer Date or any Subsequent Transfer
Date, as applicable.
"Transferred Transition Property" means the Transition Property that has
been purchased by the Issuer pursuant to a particular ▇▇▇▇ of Sale.
A-4
"Transition Bond" means any of the transition bonds (as defined in the
Texas Electric Choice Plan) issued by the Issuer pursuant to the Indenture.
"Transition Bond Register" means a register, kept by the Transition Bond
Registrar on behalf of the Issuer, in which, subject to such reasonable
regulations as it may prescribe, the Transition Bond Registrar shall provide for
the registration of Transition Bonds and the registration of transfers of
Transition Bonds.
"Transition Bond Registrar" means the Indenture Trustee, in its capacity as
keeper of the Transition Bond Register, or any successor to the Indenture
Trustee in such capacity.
"Transition Charges" means the nonbypassable amounts to be charged for the
use or availability of electric services, approved by the Texas Commission under
the Financing Order to recover Qualified Costs, that may be collected by the
Seller, its successors, an assignee or other collection agents as provided in
the Financing Order.
"Transition Property" means the rights and interests of 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 irrevocable 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 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 Granting Clause of the
Indenture.
"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-5
EXHIBIT A
▇▇▇▇ OF SALE
1. This ▇▇▇▇ of Sale is being delivered pursuant to the Transition
Property Sale Agreement, dated as of September __, 2001 (the "Sale Agreement"),
between Reliant Energy, Incorporated (the "Seller") and Reliant Energy
Transition Bond Company 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 [Initial]
[Subsequent] Transition Property identified on Schedule 1 hereto (such sale,
transfer, assignment, setting over and conveyance of the [Initial] [Subsequent]
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 [Initial] [Subsequent] 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 [Initial] [Subsequent] Transition Property.
3. The Issuer does hereby purchase the [Initial] [Subsequent] 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 [Initial] [Subsequent] 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.
IN WITNESS WHEREOF, the Seller and the Issuer have duly executed this ▇▇▇▇
of Sale as of the ___ day of ______, ____.
RELIANT ENERGY TRANSITION BOND COMPANY LLC,
as Issuer,
By:
----------------------------------------
Name:
Title:
RELIANT ENERGY, INCORPORATED,
as Seller,
By:
----------------------------------------
Name:
Title:
SCHEDULE 1
to
▇▇▇▇ OF SALE
[Initial] [Subsequent] Transition Property