Transition Property Purchase and Sale Agreement
between
CPL TRANSITION FUNDING LLC
Note Issuer
and
CENTRAL POWER AND LIGHT COMPANY
Seller
Dated as of _______________, 2000
TABLE OF CONTENTS
page
ARTICLE I.........................................DEFINITIONS 1
SECTION 1.01. Definitions......................................1
SECTION 1.02. Other Definitional Provisions.....................2
ARTICLE II...................CONVEYANCE OF TRANSITION PROPERTY 2
SECTION 2.01. Conveyance of Transition Property................2
SECTION 2.02. Conveyance of Subsequent Transition Property.....3
SECTION 2.03. Conditions to Conveyance of 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.....................................5
SECTION 3.06. No Proceedings...................................6
SECTION 3.07. Approvals. .....................................6
SECTION 3.08. The Transition Property..........................6
SECTION 3.09. Limitations on Representations and Warranties....9
ARTICLE IV.............................COVENANTS OF THE SELLER 9
SECTION 4.01. Corporate Existence..............................9
SECTION 4.02. No Liens.........................................9
SECTION 4.03. Delivery of Collections..........................9
SECTION 4.04. Notice of Liens..................................9
SECTION 4.05. Compliance with Law..............................10
SECTION 4.06. Covenants Related to Notes and Transition
Property.........................................10
SECTION 4.07. Protection of Title..............................11
SECTION 4.08. Nonpetition Covenants............................11
SECTION 4.09. Taxes............................................11
SECTION 4.10. Issuance Advice Letter...........................11
SECTION 4.11. Tariff...........................................11
SECTION 4.12. Maintenance of Operations. ......................12
SECTION 4.13. Notice of Breach to Rating Agencies. ............12
ARTICLE V..........................................THE SELLER 12
SECTION 5.01. Liability of Seller; Indemnities.................12
SECTION 5.02. Merger or Consolidation of, or Assumption of
the Obligations of,
Seller...........................................14
SECTION 5.03. Limitation on Liability of Seller and Others.....15
ARTICLE VI............................MISCELLANEOUS PROVISIONS 15
SECTION 6.01. Amendment........................................15
SECTION 6.02. Notices..........................................16
SECTION 6.03. Assignment.......................................16
SECTION 6.04. Limitations on Rights of Third Parties...........17
SECTION 6.05. Severability.....................................17
SECTION 6.06. Separate Counterparts............................17
SECTION 6.07. Headings.........................................17
SECTION 6.08. Governing Law....................................17
SECTION 6.09. Assignment to Indenture Trustee..................17
SECTION 6.10. Limitation of Liability..........................17
SECTION 6.11. Waivers..........................................17
This TRANSITION PROPERTY PURCHASE AND SALE AGREEMENT, dated as of
____________, 2000, is between CPL Transition Funding LLC, a Delaware limited
liability company (the "Note Issuer"), and Central Power and Light Company, a
Texas corporation (together with its successors in interest to the extent
permitted hereunder, the "Seller").
RECITALS
WHEREAS, the Note Issuer desires to purchase from time to time the
Transition Property created pursuant to the Securitization Law;
WHEREAS, the Seller is willing to sell from time to time the
Transition Property to the Note Issuer;
WHEREAS, the Note Issuer, in order to finance the purchase of the
Transferred Transition Property, will from time to time issue one or more Series
of Notes under the Indenture; and
WHEREAS, the Note Issuer, to secure its obligations under the Notes of
each Series and the Indenture, will pledge, among other things, all right, title
and interest of the Note Issuer in and to the Transferred Transition Property
and this Agreement to the Indenture Trustee for the benefit of the Holders of
the Notes of such Series.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. (a) Unless otherwise defined herein,
capitalized terms used herein shall have the meanings assigned to them in that
certain Indenture (including Appendix A thereto) dated as of the date hereof
between the Note Issuer, and [___________], as the Indenture Trustee, as the
same may be amended, supplemented or modified from time to time.
(b)......Whenever used in this Agreement, the following words and
phrases shall have the following meanings:
"Agreement" means this Transition Property Purchase and Sale Agreement,
as amended and supplemented from time to time.
"▇▇▇▇ of Sale" means a ▇▇▇▇ of sale substantially in the form of
Exhibit A hereto delivered pursuant to Section 2.03(i).
"Indemnified Person" has the meaning specified in Section 5.01(g).
"Original Transition Property" means the Initial Transition Property
sold, transferred, assigned, set over and conveyed by the Seller to the Note
Issuer as of the Closing Date pursuant to this Agreement.
"Losses" has the meaning specified in Section 5.01(d).
"Note Issuer" has the meaning set forth in the preamble of this
Agreement.
"Repurchase Price" has the meaning specified in Section 5.01(d).
"Seller" has the meaning set forth in the preamble of this Agreement.
"Transfer Date" means, with respect to the Original Transition
Property, the Closing Date and, with respect to any Subsequent Transition
Property, the Subsequent Transfer Date related thereto.
"Transferred Transition Property" means, collectively, the Original
Transition Property and any Subsequent Transition Property.
SECTION 1.02. Other Definitional Provisions.
(a)......All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b)......The words "hereof," "herein," "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section, Schedule and
Exhibit references contained in this Agreement are references to Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified; and
the term "including" shall mean "including without limitation".
(c)......The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms.
ARTICLE II
CONVEYANCE OF TRANSITION PROPERTY
SECTION 2.01. Conveyance of Transition Property. (a) In consideration
of the Note Issuer's delivery to or upon the order of the Seller of $[_____],
subject to the conditions specified in Section 2.03, the Seller does hereby
irrevocably sell, transfer, assign, set over and otherwise convey to the Note
Issuer, without recourse or warranty, except as set forth herein, all right,
title and interest of the Seller in and to the Original Transition Property
(such sale, transfer, assignment, setting over and conveyance of the Original
Transition Property includes, to the fullest extent permitted by the
Securitization Law, the assignment of all revenues, collections, claims, rights,
payments, money or proceeds of or arising from the Transition Charges related to
the Original 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 and, pursuant to Section 39.308 of the
Securitization Law, shall be treated as an absolute transfer of all of the
Seller's right, title and interest in and to (as in a true sale), and not as a
pledge or other financing of, the Original Transition Property. The Seller and
the Note Issuer agree that after giving effect to the sale, transfer,
assignment, setting over and conveyance contemplated hereby the Seller has no
right, title or interest in or to the Original Transition Property to which such
a security interest could attach because (i) it has sold, transferred, assigned,
set over and conveyed all right, title and interest in and to the Original
Transition Property to the Note Issuer, (ii) as provided in Section 39.304 of
the Securitization Law, such rights are only contract rights until the time of
such sale, transfer, assignment, setting over and conveyance and (iii) as
provided in Section 39.309(c) of the Securitization Law, appropriate notice has
been filed and such transfer is perfected against all third parties, including
subsequent judicial or other lien creditors. If such sale, transfer, assignment,
setting over and conveyance is held by any court of competent jurisdiction not
to be a true sale as provided in Section 39.308 of the Securitization Law, then
such sale, transfer, assignment, setting over and conveyance shall be treated as
the creation of a security interest in the Original Transition Property and,
without prejudice to its position that it has absolutely transferred all of its
rights in the Original Transition Property to the Note Issuer, the Seller hereby
grants a security interest in the Original Transition Property to the Note
Issuer.
(b) Subject to Section 2.03, the Note Issuer does hereby
purchase the Original Transition Property from the Seller for the consideration
set forth in Section 2.01(a).
SECTION 2.02. Conveyance of Subsequent Transition Property. The Seller
may from time to time offer to sell, transfer, assign, set over and convey
additional Transition Property to the Note Issuer, subject to the conditions
specified in Section 2.03. If any such offer is accepted by the Note Issuer,
such Subsequent Transition Property shall be sold, transferred, assigned, set
over and conveyed to the Note Issuer effective on the Subsequent Transfer Date
specified in the related Addition Notice, subject to the satisfaction or waiver
of the conditions specified in Section 2.03.
SECTION 2.03. Conditions to Conveyance of Transition Property. The
obligation of the Note Issuer to purchase Transition Property on any Transfer
Date shall be subject to the satisfaction or waiver by the Note Issuer of each
of the following conditions:
(i)......on or prior to such Transfer Date, the Seller shall have
delivered to the Note Issuer a duly executed ▇▇▇▇ of Sale identifying the
Transition Property to be conveyed on that Transfer Date;
(ii).....as of such Transfer Date, the Seller is not insolvent and will
not have been made insolvent by such sale and the Seller is not aware of any
pending insolvency with respect to itself;
(iii)....as of such Transfer Date, the representations and warranties
of the Seller set forth in this Agreement shall be true and correct with the
same force and effect as if made on such Transfer Date (except to the extent
that they relate to an earlier date); on and as of such Transfer Date no breach
of any covenant or agreement of Seller contained in this Agreement has occurred
and is continuing; and no Servicer Default shall have occurred and be
continuing;
(iv).....as of such Transfer Date, (A) the Note Issuer shall have
sufficient funds available to pay the purchase price for the Transferred
Transition Property to be conveyed on such date and (B) all conditions to the
issuance of one or more Series of Notes intended to provide such funds set forth
in the Indenture shall have been satisfied or waived;
(v)......on or prior to such Transfer Date, the Seller shall have taken
all action required to transfer to the Note Issuer ownership of the Transition
Property to be conveyed on such date, free and clear of all Liens other than
Liens created by the Note Issuer pursuant to the Indenture; and the Note Issuer
or the Servicer, on behalf of the Note Issuer, shall have taken any action
required for the Note Issuer to grant the Indenture Trustee a first priority
perfected security interest in the Note Collateral and maintain such security
interest as of such date;
(vi).....in the case of a sale of Subsequent Transition Property only,
on or prior to the Subsequent Transfer Date, the Seller shall have provided the
Note Issuer and the Rating Agencies with a timely Addition Notice;
(vii)....the Seller shall have delivered to the Rating Agencies and the
Note Issuer any Opinions of Counsel requested by the Rating Agencies;
(viii)...the Seller shall have delivered to the Note Issuer and the
Indenture Trustee an opinion of outside tax counsel and/or a ruling from the IRS
(as selected by, and in form and substance reasonably satisfactory to, the
Seller) to the effect that, for federal income tax purposes, (i) the PUCT's
issuance of the Financing Order authorizing the collection of the Transition
Charges will not result in gross income to the Seller and (ii) in the case of a
sale of Subsequent Transition Property only, such conveyance will not adversely
affect the characterization of the then outstanding Notes of any Series as
obligations of the Seller;
(ix).....on and as of such Transfer Date, each of the LLC Agreement,
the Servicing Agreement, this Agreement, the Indenture, any issued Financing
Order and the Securitization Law shall be in full force and effect; and
(x)......the Seller shall have delivered to the Indenture Trustee and
the Note Issuer an Officers' Certificate confirming the satisfaction of each
condition precedent specified in this Section 2.03.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to Sections 3.08(f) and 3.09, the Seller makes the following
representations and warranties, as of each Transfer Date, and the Seller
acknowledges that the Note Issuer has relied thereon in acquiring the
Transferred Transition Property. The representations and warranties shall
survive the sale and transfer of Transferred Transition Property to the Note
Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
SECTION 3.01. Organization and Good Standing. The Seller is duly
organized and validly existing as a corporation in good standing under the laws
of the State of Texas, with the requisite corporate power and authority to own
its properties as such properties are currently owned and to conduct its
business as such business is now conducted by it, and has the requisite
corporate power and authority to obtain Financing Orders and own, sell and
transfer the Transition Property.
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 shall require 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 requisite
corporate power and authority to execute and deliver this Agreement and to carry
out its terms; and the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of the
Seller.
SECTION 3.04. Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Seller enforceable against it in accordance
with its terms, subject to applicable insolvency, reorganization, moratorium,
fraudulent transfer 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,
nor constitute (with or without notice or lapse of time) a default under, the
restated articles of incorporation or by-laws of the Seller, or any material
indenture or agreement or other material instrument to which the Seller is a
party or by which it or any of its property 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 (other than
any Lien that may be granted under the Basic Documents or any Lien created
pursuant to Section 39.309 of the Securitization Law); 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, so as to adversely affect the Seller, the Note Issuer or the
Noteholders.
SECTION 3.06. No Proceedings. [Except as set forth on Schedule 3.06,]
there are no proceedings pending and, to the Seller's knowledge, there are no
proceedings threatened and, to the Seller's knowledge, 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 Note Issuer or, to the Seller's knowledge, any other Person: (i)
asserting the invalidity of this Agreement, any of the other Basic Documents or
the Notes of any Series, (ii) seeking to prevent the issuance of the Notes of
such Series 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 might 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 Notes of any Series or (iv)
seeking to adversely affect the federal income tax or state income or franchise
tax classification of the Notes of any Series as debt.
SECTION 3.07. Approvals. Except for UCC filings, no approval,
authorization, consent, order or other action of, or filing with, any
Governmental Authority is required 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.1
(a)......Information. At each Transfer Date, all written information,
as amended or supplemented from time to time, provided by the Seller to the Note
Issuer with respect to the Transferred Transition Property (including the
Expected Amortization Schedule, the Financing Order and the Issuance Advice
Letter) is true and correct in all material respects.
(b)......Title. It is the intention of the parties hereto that the
transfers and assignments herein contemplated each constitute a sale and
absolute transfer of the Transferred Transition Property from the Seller to the
Note Issuer and that no interest in, or right or title to, the Transferred
Transition Property shall be part of the Seller's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any bankruptcy
law. No portion of the Transferred Transition Property has been sold,
transferred, assigned or pledged or otherwise conveyed by the Seller to any
Person other than the Note Issuer.
(c)......Transfer Filings. The Seller is the sole owner of the
Transition Property being sold to the Note Issuer on such Transfer Date. On such
Transfer Date, immediately upon the sale hereunder, the Transferred Transition
Property shall be validly transferred and sold to the Note Issuer, the Note
Issuer shall own all such Transferred Transition Property free and clear of all
Liens (except for any Lien created in favor of the Holders pursuant to Section
39.309 of the Securitization Law or any Lien that may be granted under the Basic
Documents) and all filings to be made by the Seller (including filings with the
Secretary of State of the State of Texas under the Securitization Law) necessary
in any jurisdiction to give the Note Issuer a perfected ownership interest in
the Transferred Transition Property as against all creditors of the Seller have
been made. No further action is required to maintain such ownership interest
(subject to any Lien created in favor of the Holders pursuant to Section 39.309
of the Securitization Law and any Lien that may be granted under the Basic
Documents) and to give the Indenture Trustee a first priority perfected security
interest in the Transferred Transition Property. Filings have also been made to
perfect the security interest in the Original Transition Property granted by the
Seller to the Note Issuer (subject to any Lien created in favor of the Holders
pursuant to Section 39.309 of the Securitization Law and any Lien that may be
granted under the Basic Documents) pursuant to Section 2.01.
(d) .....Financing Order, Issuance Advice Letter and Tariff; Other
Approvals. On each Transfer Date, under the laws of the State of Texas and the
United States in effect on such Transfer Date, (i) the Financing Order pursuant
to which the rights and interests of the Seller, including the right to impose,
collect and receive the Transition Charge, in and to the Transition Property
transferred on such date have been created has become Final is in full force and
effect; (ii) [as of the issuance of the Notes, the Notes are entitled to the
protection provided in Sections _______ of the Securitization Law and,
accordingly, the Financing Order, the Transition Property and the Issuance
Advice Letter are not revocable by the PUCT]; (iii) the Tariff is in full force
and effect and is not subject to modification by the PUCT except as provided
under Section 39.307 of the Securitization Law; neither the State of Texas nor
the PUCT may take or permit any action that would impair the value of the
Transition Property transferred on such date, or, except as permitted by Section
39.307 of the Securitization Law, reduce, alter or impair the Transition Charges
relating to such Transition Property until the principal, interest and premium
and any other charges incurred and contracts to be performed in connection with
the Notes of such Series relating to such Transition Property have been paid or
performed in full; (iv) the process by which the Financing Order creating the
Transition Property transferred on such date was adopted and approved, and the
Financing Order, Issuance Advice Letter and Tariff themselves, comply with all
applicable laws, rules and regulations; (v) the Issuance Advice Letter and the
Tariff relating to the Transition Property transferred on such date have been
filed in accordance with the Financing Order creating the Transition Property
transferred on such date; and (vi) no other approval, authorization, consent,
order or other action of, or filing with any Governmental Authority is required
in connection with the creation of the Transition Property transferred on such
date, except those that have been obtained or made. Notwithstanding clause (ii)
of the immediately preceding sentence, the State of Texas would be allowed to
effect a temporary impairment of the Holders' rights if it could be shown that
such an impairment was necessary to advance a significant and legitimate public
purpose.
(e)......Assumptions. On each Transfer Date, based upon the information
available to the Seller on such date, the assumptions used in calculating the
Transition Charge are reasonable and are made in good faith. 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.
(f)......Creation of Transition Property. [Upon the effectiveness of
the Financing Order, the Issuance Advice Letter and the Tariff and the transfer
of Transition Property pursuant to this Agreement: (i) the rights and interests
of the Seller under the Financing Order, including the right to impose, collect
and receive the Transition Charges authorized in the Financing Order, become
Transition Property; (ii) the Transferred Transition Property constitutes a
present property right; (iii) the Transferred Transition Property includes the
right, title and interest of the Seller in the Financing Order and the
Transition Charge, the rights to impose and obtain periodic adjustments of such
Transition Charge, and the rates and other charges authorized by the Financing
Order and all revenues, collections, claims, payments, money or proceeds of or
arising from the Transition Charge; and (iv) the owner of the Transferred
Transition Property is legally entitled to collect payments in respect of the
Transition Charge in the aggregate sufficient to pay the interest on and
principal of the Notes of such Series, to pay the fees and expenses of servicing
the Notes of such Series, to replenish the Capital Subaccount to the Required
Capital Level and to fund the Overcollateralization Subaccount to the Required
Overcollateralization Level until the Notes of such Series are paid in full or
until the last date permitted for the collection of payments in respect of the
Transition Charge under the Financing Order, whichever is earlier.
(g)......Nature of Representations and Warranties. The representations
and warranties set forth in this Section 3.08, 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
Holders are purchasing the Notes, 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 Note Issuer and its permitted assigns (to the extent
required by and in accordance with Section 5.01), and that the Note 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.
SECTION 3.09. Limitations on Representations and Warranties. Without
prejudice to any of the other rights of the parties, the Seller will not be in
breach of any representation or warranty, as a result of a change in law by
means of any legislative enactment, constitutional amendment or voter
initiative. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, THE
SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, THAT ANY AMOUNTS
ACTUALLY COLLECTED IN RESPECT OF THE TRANSITION CHARGE WILL IN FACT BE
SUFFICIENT TO MEET PAYMENT OBLIGATIONS WITH RESPECT TO THE NOTES OF ANY SERIES
OR THAT THE ASSUMPTIONS USED IN CALCULATING THE TRANSITION CHARGE WILL IN FACT
BE REALIZED.
ARTICLE IV
COVENANTS OF THE SELLER
SECTION 4.01. Corporate Existence. Subject to Section 5.02, so long as
any of the Notes of any Series are Outstanding, the Seller (a) will keep in full
force and effect its corporate existence under the laws of the jurisdiction of
its organization, (b) will obtain and preserve its qualification to do business,
in each case to the extent that in each such jurisdiction such existence or
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the other Basic Documents to which the Seller
is a party and each other instrument or agreement necessary or appropriate to
the proper administration of this Agreement and the transactions contemplated
hereby and (c) agrees to continue to operate its wires system.
SECTION 4.02. No Liens. Except for the conveyances hereunder or any
Lien under Section 39.309 of the Securitization Law for the benefit of the Note
Issuer, the Indenture Trustee or the Holders, the Seller will not sell, pledge,
assign or transfer, or grant, create, or incur any Lien on, any of the
Transferred Transition Property, or any interest therein, and the Seller shall
make all reasonable efforts to defend the right, title and interest of the Note
Issuer and the Indenture Trustee in, to and under the Transferred Transition
Property against all claims of third parties claiming through or under the
Seller. CPL, in its capacity as Seller, will not at any time assert any Lien
against, or with respect to, any of the Transferred Transition Property.
SECTION 4.03. Delivery of Collections. If the Seller receives any
payments in respect of the Transition Charge or the proceeds thereof when it is
not acting as the Servicer, the Seller agrees to pay to the Servicer all
payments received by it in respect thereof as soon as practicable after receipt
thereof by it.
SECTION 4.04. Notice of Liens. The Seller shall notify the Note Issuer
and the Indenture Trustee promptly after becoming aware of any Lien on any of
the Transferred Transition Property, other than the conveyances hereunder, any
Lien under the Basic Documents or any Lien under Section 39.309 of the
Securitization Law for the benefit of the Note Issuer or the Holders.
SECTION 4.05. Compliance with Law. The Seller hereby agrees to comply
with its organizational or governing documents and all laws, treaties, rules,
regulations and determinations of any Governmental Authority applicable to it,
except to the extent that failure to so comply would not materially adversely
affect the Note Issuer's or the Indenture Trustee's interests in the Transferred
Transition Property or under any of the other Basic Documents to which the
Seller is party or the Seller's performance of its obligations hereunder or
under any of the other Basic Documents to which it is party.
SECTION 4.06. Covenants Related to Notes and Transition Property.
(a)......So long as any of the Notes are outstanding, the Seller shall
treat the Notes as debt of the Note Issuer, other than for financial accounting
or tax purposes [or as required under the Public Utility Holding Company Act of
1935, as amended].
(b)......So long as any of the Notes are outstanding, the Seller shall
indicate in its financial statements that it is not the owner of the Transferred
Transition Property.
(c)......So long as any of the Notes are outstanding, the Seller shall
not own or purchase any Notes.
(d)......The Seller agrees that, upon the sale by the Seller of the
Transferred Transition Property to the Note Issuer pursuant to this Agreement,
(i) to the fullest extent permitted by law, including applicable PUCT
Regulations, the Note Issuer shall have all of the rights originally held by the
Seller with respect to the Transferred Transition Property, including the right
(subject to the terms of the Servicing Agreement) to exercise any and all rights
and remedies to collect any amounts payable by any Customer or REP in respect of
the Transferred Transition Property, notwithstanding any objection or direction
to the contrary by the Seller and (ii) any payment by any Customer or REP
directly to the Note Issuer shall discharge such Customer's or REP's
obligations, if any, to the Seller in respect of the Transferred Transition
Property to the extent of such payment, notwithstanding any objection or
direction to the contrary by the Seller.
(e)......So long as any of the Notes are outstanding, (i) the Seller
shall not make any statement or reference in respect of the Transferred
Transition Property that is inconsistent with the ownership interest of the Note
Issuer (other than for financial accounting or tax reporting purposes [or as
required under the Public Utility Holding Company Act of 1935, as amended]), and
(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 otherwise contemplated by the Basic
Documents.
SECTION 4.07. Protection of Title. The Seller shall execute and file
such filings, including filings with the Secretary of State of the State of
Texas pursuant to the Securitization Law, and cause to be executed and filed
such filings, all in such manner and in such places as may be required by law to
fully preserve, maintain and protect the ownership interest of the Note Issuer
in the Transferred Transition Property, including all filings required under the
Securitization Law relating to the transfer of the ownership interest or
security interest in the Transferred Transition Property by the Seller to the
Note Issuer. The Seller shall deliver or cause to be delivered to the Note
Issuer 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 PUCT
or the State of Texas of any of their obligations or duties under the
Securitization Law, any Financing Order or any Issuance Advice Letter, 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, as may be reasonably necessary to protect the
Note Issuer 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. The costs of any such actions or
proceedings will be payable by the Note Issuer.
SECTION 4.08. Nonpetition Covenants. 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 Note Issuer to invoke the process of
any Government Authority for the purpose of commencing or sustaining a case
against the Note Issuer under any federal or state bankruptcy, insolvency or
similar law, appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Note Issuer or any substantial
part of the property of the Note Issuer, or ordering the winding up or
liquidation of the affairs of the Note Issuer.
SECTION 4.09. Taxes. So long as any of the Notes are outstanding, the
Seller shall, and shall cause each of its subsidiaries to, 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, business, income
or property before any penalty accrues thereon if the failure to pay any such
taxes, assessments and governmental charges would, after any applicable grace
periods, notices or other similar requirements, result in a Lien on the
Transferred Transition Property; provided that no such tax need be paid if the
Seller or one of its subsidiaries is contesting the same in good faith by
appropriate proceedings promptly instituted and diligently conducted and if the
Seller or such subsidiary has established appropriate reserves as shall be
required in conformity with generally accepted accounting principles.
SECTION 4.10. Issuance Advice Letter. The Seller hereby agrees not
to withdraw the filing of any Issuance Advice Letter with the PUCT.
SECTION 4.11. Tariff. The Seller hereby agrees to make all
reasonable efforts to keep each Tariff in full force and effect at all times.
SECTION 4.12. Maintenance of Operations. The Seller hereby agrees that,
so long as any of the Notes are outstanding, the Seller shall continue to
provide wires service directly to customers.
SECTION 4.13. Notice of Breach to Rating Agencies. Promptly after
obtaining knowledge thereof, in the event of a breach in any material respect of
any of the Seller's representations and warranties contained herein, the Seller
shall promptly notify the Note Issuer and the Rating Agencies of such breach.
ARTICLE V
THE SELLER
SECTION 5.01. Liability of 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 Note Issuer and the Indenture
Trustee (for itself and for the benefit of the Noteholders) for, and defend and
hold harmless each such Person from and against, any and all taxes (other than
taxes imposed on Noteholders as a result of their ownership of a Note and the
receipt of amounts thereunder) that may at any time be imposed on or asserted
against any such Person under existing law as of the Closing Date or the
Subsequent Transfer Date, as applicable, as a result of the sale of the
Transferred Transition Property to the Note Issuer, including any sales, gross
receipts, general corporation, tangible personal property, privilege or license
taxes, in the event and to the extent such taxes are not recoverable as
Qualified Costs.
(c)......The Seller shall indemnify the Note Issuer and the Indenture
Trustee (for itself and for the benefit of the Noteholders) for, and defend and
hold harmless each such Person from and against, any and all taxes (other than
taxes imposed on Noteholders as a result of their ownership of a Note and the
receipt of amounts thereunder) that may be imposed on or asserted against any
such Person under existing law as of the Closing Date or Subsequent Transfer
Date, as applicable, as a result of the issuance and sale by the Note Issuer of
the Notes or the other transactions contemplated herein, including any sales,
gross receipts, general corporation, tangible personal property, privilege or
license taxes but excluding any taxes imposed as a result of a failure of such
Person to withhold or remit taxes imposed with respect to payments on any Note,
in the event and to the extent such taxes are not recoverable as Qualified
Costs.
(d)......The Seller shall indemnify the Note Issuer, the Indenture
Trustee (for the benefit of the Noteholders) and any Swap Counterparty for, and
defend and hold harmless each such Person from and against, any and all
liabilities, obligations, losses, claims, damages, payments, costs or expenses
of any kind whatsoever (collectively, "Losses") that may be imposed on, incurred
by or asserted against each such Person as a result of (i) the Seller's willful
misconduct or gross negligence in the performance of its duties or observance of
its covenants under this Agreement, or (ii) the Seller's breach in any material
respect of any of its representations and warranties contained in this
Agreement.
(e)......Indemnification under Sections 5.01(b), 5.01(c), 5.01(d) and
5.01(g) shall include reasonable out-of-pocket fees and expenses of
investigation and litigation (including reasonable attorney's fees and
expenses), except as otherwise provided in this Agreement.
(f)......Without prejudice to any of the other rights of the parties,
the Seller will not be in breach of any representation or warranty as a result
of a change in law by means of any legislative enactment, constitutional
amendment or voter initiative.
(g)......The Seller shall indemnify the Indenture Trustee (for itself)
and the Independent Managers, and any of their respective affiliates, officers,
directors, employees and agents (each an "Indemnified Person") for, and defend
and hold harmless each such Person from and against, any and all Losses incurred
by any of such Indemnified Persons as a result of (i) the Seller's willful
misconduct or gross negligence in the performance of its duties or observance of
its covenants under this Agreement or (ii) the Seller's breach in any material
respect of any of its representations and warranties contained in this
Agreement, except to the extent of Losses either resulting from the willful
misconduct, bad faith or gross negligence of any Indemnified Person or resulting
from a breach of a representation or warranty made by any Indemnified Person in
any of the Basic Documents that gives rise to the Seller's breach. The Seller
shall not be required to indemnify an Indemnified Person for any amount paid or
payable by such Indemnified Person in the settlement of any action, proceeding
or investigation without the prior written consent of the Seller which consent
shall not be unreasonably withheld. Promptly after receipt by an Indemnified
Person of notice of the commencement of any action, proceeding or investigation,
such Indemnified Person shall, if a claim in respect thereof is to be made
against the Seller under this Section 5.01(g), notify the Seller in writing of
the commencement thereof. Failure by an Indemnified Person to so notify the
Seller shall relieve the Seller from the obligation to indemnify and hold
harmless such Indemnified Person under this Section 5.01(g) only to the extent
that the Seller suffers actual prejudice as a result of such failure. With
respect to any action, proceeding or investigation brought by a third party for
which indemnification may be sought under this Section 5.01(g), the Seller shall
be entitled to conduct and control, at its expense and with counsel of its
choosing that is reasonably satisfactory to such Indemnified Person, the defense
of any such action, proceeding or investigation (in which case the Seller shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person except as set forth below); provided that the
Indemnified Person shall have the right to participate in such action,
proceeding or investigation through counsel chosen by it and at its own expense.
Notwithstanding the Seller's election to assume the defense of any action,
proceeding or investigation, the Indemnified Person shall have the right to
employ separate counsel (including local counsel), and the Seller shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the
defendants in any such action include both the Indemnified Person and the Seller
and the Indemnified Person shall have reasonably concluded that there may be
legal defenses available to it that are different from or additional to those
available to the Seller, (ii) the Seller shall not have employed counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person within a reasonable time after notice of the institution of such action
or (iii) the Seller shall authorize the Indemnified Person to employ separate
counsel at the expense of the Seller. Notwithstanding the foregoing, the Seller
shall not be obligated to pay for the fees, costs and expenses of more than one
separate counsel for the Indemnified Persons other than one local counsel, if
appropriate.
(h)......The remedies of the Note Issuer and each Indemnified Person
provided in this Agreement are each such Person's sole and exclusive remedies
against the Seller for breach of its representations and warranties in this
Agreement.
(i)......Indemnification under this Section 5.01 shall survive any
repeal of, modification of, or supplement to, or judicial invalidation of, the
Securitization Law or any Financing Order and shall survive the resignation or
removal of the Indenture Trustee or the termination of this Agreement and shall
include reasonable out-of-pocket fees and expenses of investigation and
litigation (including reasonable attorney's fees and expenses).
SECTION 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
consolidated and which succeeds to the major part 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) that may
result from any merger or consolidation to which the Seller shall be a party and
which succeeds to the major part 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) that may succeed to the
properties and assets of the Seller substantially as a whole and which succeeds
to the major part 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 is a successor entity resulting from
the division of the Seller into two or more Persons and which succeeds to the
major part 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 otherwise succeeds to the major part of the
electric transmission and distribution business of the Seller (or, if
transmission and distribution are split, which provides wire service directly to
customers) and which Person in any of the foregoing cases executes an agreement
of assumption to perform the obligations of the Seller hereunder, shall be the
successor to the Seller under this Agreement without further act on the part of
any of the parties to this Agreement; provided, however, that (i) immediately
after giving effect to such transaction, no Servicer Default, and no event
which, after notice or lapse of time, or both, would become a Servicer Default
shall have occurred and be continuing, (ii) the Seller shall have delivered to
the Note Issuer and the Indenture Trustee an Officer's Certificate and an
Opinion of Counsel stating that such consolidation, merger, division or
succession and such agreement of assumption comply with this Section and that
all conditions precedent, if any, provided for in this Agreement relating to
such transaction have been complied with, (iii) the Seller shall have delivered
to the Note 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 PUCT pursuant to the Securitization Law, have
been executed and filed that are necessary to fully preserve and protect the
interest of the Note Issuer in the Transferred Transition Property and reciting
the details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interests and (iv) the Seller shall have given the Rating Agencies prior written
notice of such transaction. When any Person acquires the properties and assets
of the Seller substantially as a whole and succeeds to the major part 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 otherwise becomes the successor, whether by sale, transfer, lease
or otherwise, to the major part of the electric transmission and distribution
business of the Seller (or, if transmission and distribution are split, provides
wire service directly to customers) in accordance with the terms of this Section
5.02, then upon satisfaction of all of the other conditions of this Section
5.02, the Seller shall automatically and without further notice be released from
all of its obligations hereunder.
SECTION 5.03. Limitation on Liability of 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. 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. This Agreement may be amended in writing by
the Seller and the Note Issuer with five Business Days' prior written notice
given to the Rating Agencies and the prior written consent of the Indenture
Trustee (which consent shall not be unreasonably withheld), but without the
consent of any of the Holders, to cure any ambiguity, to correct or supplement
any provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Holders; provided, however, that
such action shall not, as evidenced by an Officer's Certificate delivered to the
Note Issuer and the Indenture Trustee, adversely affect in any material respect
the interests of any Holder of then Outstanding Notes.
This Agreement may also be amended from time to time by the Seller and
the Note Issuer with five Business Days' prior written notice given to the
Rating Agencies and the prior written consent of the Indenture Trustee (which
consent shall not be unreasonably withheld) and the prior written consent of the
Holders evidencing not less than a majority of the Outstanding Amount of the
Notes affected thereby, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders. Promptly after the execution
of any such amendment or consent, the Note Issuer shall furnish a copy of such
amendment or consent to the Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Holders pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof.
Prior to its consent to any amendment to this Agreement, the Indenture
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Indenture Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Indenture Trustee's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 6.02. Notices. All demands, notices and communications upon or
to the Seller, the Note Issuer, the Indenture Trustee, or the Rating Agencies
under this Agreement shall be sufficiently given for all purposes hereunder if
in writing, and delivered personally, sent by documented delivery service or, to
the extent receipt is confirmed telephonically, sent by telecopy or other form
of electronic transmission, (a) in the case of the Seller, to Central Power and
Light Company ▇/▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Corporation, at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention of the Treasurer, telephone:
____________, facsimile: ________________, (b) in the case of the Note Issuer to
CPL Transition Funding LLC ▇/▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Corporation, at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention of ___________,
telephone: ____________, facsimile: ________________, (c) in the case of the
Indenture Trustee, to it at the Corporate Trust Office, telephone: ____________,
facsimile: ________________, (d) in the case of Moody's, to ▇▇▇▇▇'▇ Investors
Service, Inc., ABS Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, telephone: (▇▇▇) ▇▇▇-▇▇▇▇, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, (e) in the case of
S&P, to Standard & Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention of Asset Backed Surveillance Department, telephone: (212)
▇▇▇-▇▇▇▇, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, (f) in the case of Fitch, to Fitch IBCA,
Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention of ABS Surveillance,
telephone: (▇▇▇) ▇▇▇-▇▇▇▇, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, (g) in the case of Duff &
▇▇▇▇▇▇, to ▇▇▇▇ & ▇▇▇▇▇▇ Credit Rating Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention of Asset-Backed Monitoring Group, telephone:
_________, facsimile: __________ or (h) as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
SECTION 6.03. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 5.02, this Agreement may not
be assigned by the Seller.
SECTION 6.04. Limitations on Rights of Third Parties. The provisions of
this Agreement are solely for the benefit of the Seller, the Note Issuer, the
Indenture Trustee and the other Persons expressly referred to herein, and such
Persons shall have the right to enforce the relevant provisions of this
Agreement. 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 Transition Property or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 6.05. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remainder of such provision (if any) or the remaining
provisions hereof (unless such construction shall be unreasonable), and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 6.06. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 6.07. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 6.08. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF 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 6.09. Assignment to Indenture Trustee. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Note Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Holders of all right, title and interest of the
Note Issuer in, to and under the Transferred Transition Property and the
proceeds thereof and the assignment of any or all of the Note Issuer's rights
and obligations hereunder.
SECTION 6.10. Limitation of Liability. It is expressly understood and
agreed by the parties hereto that this Agreement is executed and delivered by
the Indenture Trustee, not individually or personally but solely as Indenture
Trustee on behalf of the Holders, in the exercise of the powers and authority
conferred and vested in it.
SECTION 6.11. Waivers. Any term of provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
CPL TRANSITION FUNDING LLC,
Note Issuer
By: __________________________
Name:
Title: Manager
CENTRAL POWER AND LIGHT COMPANY,
Seller
By: __________________________
Name:
Title
Acknowledged and Accepted:
-------------------------,
as Indenture Trustee
By: __________________________
Name:
Title:
EXHIBIT A
▇▇▇▇ OF SALE
1........This ▇▇▇▇ of Sale is being delivered pursuant to the
Transition Property Purchase and Sale Agreement, dated as of ______________,
2000 (the "Sale Agreement"), between Central Power and Light Company (the
"Seller") and CPL Transition Funding LLC (the "Note Issuer") and is subject to
all of the terms, conditions and limitations contained in the Sale Agreement.
All capitalized terms used but not defined herein have the respective meanings
ascribed thereto in the Sale Agreement.
2........In consideration of the Note Issuer's delivery to or upon the
order of the Seller of $[_____], subject to the conditions specified in Section
2.03 of the Sale Agreement, the Seller does hereby irrevocably sell, transfer,
assign, set over and otherwise convey to the Note Issuer, without recourse or
warranty, except as set forth in the Sale Agreement, all right, title and
interest of the Seller in and to the [Original][Subsequent] Transition Property
identified on Schedule 1 hereto (such sale, transfer, assignment, setting over
and conveyance of the [Original][Subsequent] Transition Property includes, to
the fullest extent permitted by the Securitization Law, the assignment of all
revenues, collections, claims, rights, payments, money or proceeds of or arising
from the Transition Charges related to the [Original][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
and, pursuant to Section 39.308 of the Securitization Law, shall be treated as
an absolute transfer of all of the Seller's right, title and interest in and to
(as in a true sale), and not as a pledge or other financing of, the
[Original][Subsequent] Transition Property. The Seller and the Note Issuer agree
that after giving effect to the sale, transfer, assignment, setting over and
conveyance contemplated hereby the Seller has no right, title or interest in or
to the [Original][Subsequent] Transition Property to which such a security
interest could attach because (i) it has sold, transferred, assigned, set over
and conveyed all right in and to the [Original][Subsequent] Transition Property
to the Note Issuer, (ii) as provided in Section 39.304 of the Securitization
Law, such rights are only contract rights until the time of such sale, transfer,
assignment, setting over and conveyance and (iii) as provided in Section
39.309(c) of the Securitization Law, appropriate notice has been filed and such
transfer is perfected against all third parties, including subsequent judicial
or other lien creditors. If such sale, transfer, assignment, setting over and
conveyance is held by any court of competent jurisdiction not to be a true sale
as provided in Section 39.308 of the Securitization Law, then such sale,
transfer, assignment, setting over and conveyance shall be treated as the
creation of a security interest in the [Original][Subsequent] Transition
Property and, without prejudice to its position that it has absolutely
transferred all of its rights in the [Original][Subsequent] Transition Property
to the Note Issuer, the Seller hereby grants a security interest in the
[Original][Subsequent] Transition Property to the Note Issuer.
3........The Note Issuer does hereby purchase the [Original]
[Subsequent] Transition Property from the Seller for the consideration set forth
in paragraph 2 above.
4........The Seller and the Note Issuer each acknowledge and agree that
the purchase price for the [Original] [Subsequent] Transition Property sold
pursuant to this ▇▇▇▇ of Sale and the Sale Agreement is equal to its fair market
value at the time of sale.
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.2
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 Note Issuer have duly executed
this ▇▇▇▇ of Sale as of the ___ day of ___________, ____.
CENTRAL POWER AND LIGHT COMPANY
By:
Name:
Title:
CPL TRANSITION FUNDING LLC
By: __________________________,
as Manager
Name:
SCHEDULE 1
SCHEDULE 1
to
▇▇▇▇ OF SALE
[Original] [Subsequent] Transition Property
--------
1 To be revised to reflect financing order as issued.
2If any representations or warranties require modification with respect
to Subsequent Transition Property as a result of provisions in the Financing
Order, then such modifications should be set forth in this ▇▇▇▇ of Sale (it
being understood that any such modifications must be agreed to by the parties
and approved by the Rating Agencies prior to the time additional Notes are
issued).