TRANSITION PROPERTY PURCHASE AND SALE AGREEMENT by and between ENTERGY TEXAS RESTORATION FUNDING, LLC, Issuer and ENTERGY TEXAS, INC., Seller Dated as of November 6, 2009
Exhibit
99.2
by
and between
Issuer
and
ENTERGY
TEXAS, INC.,
Seller
Dated
as of November 6, 2009
TABLE OF
CONTENTS
Page
ARTICLE
I
DEFINITIONS
|
SECTION
1.01.
|
Definitions
|
|
|
SECTION
1.02.
|
Other
Definitional Provisions.
|
|
ARTICLE
II
CONVEYANCE
OF TRANSITION PROPERTY
|
SECTION
2.01.
|
Conveyance
of Transition Property
|
|
|
SECTION
2.02.
|
Conveyance
of Subsequent Transition Property
|
|
|
SECTION
2.03.
|
Conditions
to Conveyance of Transition Property
|
|
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLER
|
SECTION
3.01.
|
Organization
and Good Standing
|
|
|
SECTION
3.02.
|
Due
Qualification
|
|
|
SECTION
3.03.
|
Power
and Authority
|
|
|
SECTION
3.04.
|
Binding
Obligation
|
|
|
SECTION
3.05.
|
No
Violation
|
|
|
SECTION
3.06.
|
No
Proceedings
|
|
|
SECTION
3.07.
|
Approvals
|
|
|
SECTION
3.08.
|
The
Transition Property.
|
|
|
SECTION
3.09.
|
Limitations
on Representations and Warranties
|
|
ARTICLE
IV
COVENANTS
OF THE SELLER
|
SECTION
4.01.
|
Existence
|
|
|
SECTION
4.02.
|
No
Liens
|
|
|
SECTION
4.03.
|
Delivery
of Collections
|
|
|
SECTION
4.04.
|
Notice
of Liens
|
|
|
SECTION
4.05.
|
Compliance
with Law
|
|
|
SECTION
4.06.
|
Covenants
Related to Transition Bonds and Transition Property.
|
|
|
SECTION
4.07.
|
Protection
of Title
|
|
|
SECTION
4.08.
|
Nonpetition
Covenants
|
|
|
SECTION
4.09.
|
Taxes
|
|
|
SECTION
4.10.
|
Issuance
Advice Letter
|
|
|
SECTION
4.11.
|
Tariff
|
|
|
SECTION
4.12.
|
Notice
of Breach to Rating Agencies, Etc
|
|
|
SECTION
4.13.
|
Use
of Proceeds
|
|
|
SECTION
4.14.
|
Further
Assurances
|
|
ARTICLE
V
THE
SELLER
|
SECTION
5.01.
|
Liability
of Seller; Indemnities.
|
|
|
SECTION
5.02.
|
Merger,
Conversion or Consolidation of, or Assumption of the Obligations of,
Seller
|
|
|
SECTION
5.03.
|
Limitation
on Liability of Seller and Others
|
|
ARTICLE
VI
MISCELLANEOUS
PROVISIONS
|
SECTION
6.01.
|
Amendment
|
|
|
SECTION
6.02.
|
PUCT
Condition
|
|
|
SECTION
6.03.
|
Notices
|
|
|
SECTION
6.04.
|
Assignment
|
|
|
SECTION
6.05.
|
Limitations
on Rights of Third Parties
|
|
|
SECTION
6.06.
|
Severability
|
|
|
SECTION
6.07.
|
Separate
Counterparts
|
|
|
SECTION
6.08.
|
Headings
|
|
|
SECTION
6.09.
|
Governing
Law
|
|
|
SECTION
6.10.
|
Assignment
to Indenture Trustee
|
|
|
SECTION
6.11.
|
Limitation
of Liability
|
|
|
SECTION
6.12.
|
Waivers
|
|
EXHIBITS
Exhibit A Form
of ▇▇▇▇ of Sale
This
TRANSITION PROPERTY PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as
of November 6, 2009, is between Entergy Texas Restoration Funding, LLC, a
Delaware limited liability company (the “Issuer”), and Entergy
Texas, Inc., a Texas corporation (together with its successors in interest
to the extent permitted hereunder, the “Seller”).
RECITALS
WHEREAS,
the Issuer desires to purchase the Transition Property created pursuant to the
Securitization Law;
WHEREAS,
the Seller is willing to sell the Transition Property to the
Issuer;
WHEREAS,
the Issuer, in order to finance the purchase of the Transition Property, will
issue the Transition Bonds under the Indenture; and
WHEREAS,
the Issuer, to secure its obligations under the Transition Bonds and the
Indenture, will pledge, among other things, all right, title and interest of the
Issuer in and to the Transition Property and this Agreement to the Indenture
Trustee for the benefit of the Secured Parties.
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 Issuer and The Bank of New York
Mellon, a New York banking corporation, in its capacity as indenture trustee
(the “Indenture
Trustee”) and in its separate capacity as securities intermediary (the
“Securities
Intermediary”), as the same may be amended, restated, supplemented or
otherwise modified from time to time.
(b) Whenever
used in this Agreement, the following words and phrases shall have the following
meanings:
“▇▇▇▇ of Sale” means a
▇▇▇▇ of sale substantially in the form of Exhibit A hereto
delivered pursuant to Section 2.03(i).
“Losses” means (i) any
and all amounts of principal and interest on the Transition Bonds not paid when
due or when scheduled to be paid in accordance with their terms and the amounts
of any deposits by or to the Issuer required to have been made in accordance
with the terms of the Basic Documents or the Financing Order which are not made
when so required and (ii) any and all other liabilities, obligations, losses,
claims, damages, payments, costs or expenses of any kind
whatsoever.
“Transfer Date” means,
the Closing Date.
“Transition Property”
means the Transition Property sold, transferred, assigned, set over and conveyed
by the Seller to the Issuer as of the Transfer Date pursuant to this
Agreement.
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 Issuer’s delivery to or
upon the order of the Seller of $540,603,774, subject to the conditions
specified in Section 2.03, the Seller does hereby irrevocably sell,
transfer, assign, set over and otherwise convey to the Issuer, without recourse
or warranty, except as set forth herein, all right, title and interest of the
Seller in and to the Transition Property (such sale, transfer, assignment,
setting over and conveyance of the Transition Property includes, to the fullest
extent permitted by the Securitization Law, the right to impose, collect and
receive Transition Charges and the assignment of all revenues, collections,
claims, rights, payments, money or proceeds of or arising from the Transition
Charges related to the Transition Property, as the same may be adjusted from
time to time). Such sale, transfer, assignment, setting over and conveyance is
hereby expressly stated to be a sale 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 Transition Property. The Seller and the 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 Transition Property to which 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 Transition Property to the 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 a pledge
of such Transition Property and as the creation of a security interest (within
the meaning of the Securitization Law and the UCC) in the Transition Property
and, without prejudice to its position that it has absolutely transferred all of
its rights in the Transition Property to the Issuer, the Seller hereby grants a
security interest in the Transition Property to the Issuer (and, to the extent
necessary to qualify the grant as a security interest under the Securitization
Law and the UCC, to the Indenture Trustee for the benefit of the Secured Parties
to secure the right of the Issuer under the Basic Documents to receive the
Transition Charges and all other Transition Property).
(b) Subject
to Section 2.03, the Issuer does hereby purchase the Transition Property
from the Seller for the consideration set forth in
Section 2.01(a).
SECTION
2.02. [RESERVED]
SECTION
2.03. Conditions to Conveyance of
Transition Property. The obligation of the Issuer to purchase
Transition Property on the Transfer Date shall be subject to the satisfaction or
waiver by the Issuer of each of the following conditions:
(i) on or
prior to the Transfer Date, the Seller shall have delivered to the Issuer a duly
executed ▇▇▇▇ of Sale identifying the Transition Property to be conveyed on the
Transfer Date;
(ii) on or
prior to the Transfer Date, the Seller shall have received the Financing Order
creating the Transition Property;
(iii) as of the
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;
(iv) as of the
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 the Transfer Date (except to the extent that they relate to an earlier
date); on and as of the Transfer Date, no breach of any covenant or agreement of
the Seller contained in this Agreement has occurred and is continuing; and no
Servicer Default shall have occurred and be continuing;
(v) as of the
Transfer Date, (A) the Issuer shall have sufficient funds available to pay the
purchase price for the Transition Property to be conveyed on such date and (B)
all conditions to the issuance of the Transition Bonds intended to provide such
funds set forth in the Indenture shall have been satisfied or
waived;
(vi) on or
prior to the Transfer Date, the Seller shall have taken all action required to
transfer to the Issuer ownership of the Transition Property to be conveyed on
such date, free and clear of all Liens other than Liens created by the Issuer
pursuant to the Basic Documents and to perfect such transfer, including, without
limitation, filing any statements or filings under the Securitization Law or the
UCC; and the Issuer or the Servicer, on behalf of the Issuer, shall have taken
all actions required for the Issuer to grant the Indenture Trustee a first
priority perfected security interest in the Transition Bond Collateral and
maintain such security interest as of such date;
(vii) [RESERVED]
(viii) the
Seller shall have delivered to the Rating Agencies and the Issuer any Opinions
of Counsel required by the Rating Agencies;
(ix) the
Seller shall have received and delivered to the Issuer and the Indenture
Trustee: (i) an opinion of Independent tax counsel (as selected by the Seller,
and in form and substance reasonably satisfactory to the Issuer and the
Indenture Trustee) to the effect that the Issuer will not be subject to United
States federal income tax as an entity separate from its sole owner and that the
Transition Bonds will be treated as debt of the Issuer’s sole owner for United
States federal income tax purposes and (ii) an opinion of Independent tax
counsel (as selected by the Seller, and in form and substance reasonably
satisfactory to the Issuer and the Indenture Trustee) to the effect that, for
United States federal income tax purposes, the issuance of the Transition Bonds
will not result in gross income to the Seller;
(x) on and as
of the Transfer Date, each of the LLC Agreement, the Servicing Agreement,
the Administration Agreement, this Agreement, the Indenture, the Financing
Order, any issued Tariff and the Securitization Law shall be in full force and
effect;
(xi) the
Transition Bonds shall have received a rating of AAA, or its equivalent, from
each Rating Agency; and
(xii) the
Seller shall have delivered to the Indenture Trustee and the Issuer an Officer’s
Certificate confirming the satisfaction of each condition precedent specified in
this Section 2.03.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLER
Subject
to Section 3.09, the Seller makes the following representations and
warranties, as of the Transfer Date, and the Seller acknowledges that the Issuer
has relied thereon in acquiring the Transition Property. The
representations and warranties shall survive the sale and transfer of the
Transition Property to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture. The Seller agrees that (i) the
Issuer may assign the right to enforce the following representations and
warranties to the Indenture Trustee and (ii) the representations and warranties
inure to the benefit of the Issuer and the Indenture Trustee.
SECTION
3.01. Organization and Good
Standing. The Seller is duly organized and validly existing
and is in good standing under the laws of the state of its organization, with
the requisite corporate or other 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 or other power and
authority to obtain the Financing Order and own, sell and transfer the
Transition Property.
SECTION
3.02. Due
Qualification. The Seller is duly qualified to do business and
is 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 or other
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 action on the part of the Seller under its
organizational or governing documents and laws.
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 and will 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
Seller’s organizational documents, or any indenture or other agreement or
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 in the Issuer’s favor
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.
SECTION
3.06. No
Proceedings. 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 Issuer or, to the Seller’s knowledge,
any other Person: (i) asserting the invalidity of the Securitization Law, the
Financing Order, this Agreement, any of the other Basic Documents or the
Transition Bonds, (ii) seeking to prevent the issuance of the Transition Bonds
or the consummation of any of the transactions contemplated by 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 the
Securitization Law, the Financing Order, this Agreement, any of the other Basic
Documents or the Transition Bonds or (iv) seeking to adversely affect the
federal income tax or state income or franchise tax classification of the
Transition Bonds as debt.
SECTION
3.07. Approvals. Except
for UCC financing statement filings and other filings under the Securitization
Law, 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.
(a) Information. Subject
to subsection (f)
below, at the Transfer Date, all written information, as amended or supplemented
from time to time, provided by the Seller to the Issuer with respect to the
Transition Property (including the Expected Amortization Schedule, the Financing
Order and the Issuance Advice Letter relating thereto) is true and correct in
all material respects.
(b) Title. It
is the intention of the parties hereto that (other than for federal income tax
purposes and, to the extent consistent with applicable state tax law, state
income and franchise tax purposes) the transfers and assignments herein
contemplated each constitute a sale and absolute transfer of the Transition
Property from the Seller to the Issuer and that no interest in, or right or
title to, the 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 Transition Property has been sold,
transferred, assigned or pledged or otherwise conveyed by the Seller to any
Person other than the Issuer, and no security agreement, financing statement or
equivalent security or lien instrument listing the Seller as debtor covering all
or any part of the Transition Property is on file or of record in any
jurisdiction, except such as may have been filed, recorded or made in favor of
the Issuer or the Secured Parties in connection with the Basic
Documents. The Seller has not authorized the filing of and is not
aware (after due inquiry) of any financing statement against it that includes a
description of collateral including the Transition Property other than any
financing statement filed, recorded or made in favor of the Issuer or the
Secured Parties in connection with the Basic Documents. The Seller is
not aware (after due inquiry) of any judgment or tax lien filings against either
the Seller or the Issuer. At the Transfer Date, immediately prior to
the sale of the Transition Property hereunder, the Seller is the original and
the sole owner of the Transition Property free and clear of all Liens and rights
of any other Person, and no offsets, defenses or counterclaims exist or have
been asserted with respect thereto.
(c) Transfer
Filings. On the Transfer Date, immediately upon the sale
hereunder, the Transition Property shall be validly transferred and sold to the
Issuer, the Issuer shall own all of the Transition Property free and clear of
all Liens (except for any Lien created in favor of the Secured Parties pursuant
to Section 39.309 of the Securitization Law or any Lien that may be granted
under the Basic Documents) and all filings and action to be made or taken by the
Seller (including, without limitation, filings with the Secretary of State of
the State of Texas under the Securitization Law) necessary in any jurisdiction
to give the Issuer a perfected 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) in the
Transition Property have been made or taken. No further action is
required to maintain such ownership interest (subject to any Lien created in
favor of the Secured Parties 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 Transition Property. All filings and action have also been
made or taken to perfect the security interest in the Transition Property
granted by the Seller to the Issuer (subject to any Lien created in favor of the
Secured Parties pursuant to Section 39.309 of the Securitization Law and
any Lien that may be granted under the Basic Documents) and, to the extent
necessary the Indenture Trustee, pursuant to Section 2.01.
(d) Financing Order, Issuance
Advice Letter and Tariff; Other Approvals. On the Transfer
Date, under the laws of the State of Texas and the United States in effect on
the 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 Charges and, in and to the Transition Property transferred on such
date have been created, is Final and non-appealable and is in full force and
effect; (ii) as of the issuance of the Transition Bonds, the Transition Bonds
are entitled to the protection of the Securitization Law and, accordingly, the
Financing Order, the Transition Charges and the Issuance Advice Letter are not
revocable by the PUCT; (iii) as of the issuance of the Transition Bonds, 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;
(iv) the process by which the Financing Order creating the Transition Property
transferred on such date was adopted and approved, and such 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 an officer of the Seller has provided the certification to the PUCT
required by the Issuance Advice Letter; 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.
(e) State
Action. Under the Securitization Law, the State of Texas has
pledged that it will not 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 the Transition Property until the principal,
interest and premium and any other charges incurred and contracts to be
performed in connection with the Transition Bonds relating to the Transition
Property have been paid and performed in full. 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 Securitization Law, which would substantially limit, alter
or impair the Transition Property or other rights vested in the Holders pursuant
to the Financing Order or substantially limit, alter or reduce the value or
amount of the Transition Property, unless such action is a reasonable exercise
of the sovereign powers of the State of Texas and of a character reasonable and
appropriate to further a legitimate public purpose, and, under the takings
clauses of the United States and Texas Constitutions, the State of Texas could
not repeal or amend the Securitization Law or take any other action in
contravention of its pledge quoted above without paying just compensation to the
Holders, as determined by a court of competent jurisdiction if doing so would
constitute a permanent appropriation of a substantial property interest of the
Holders in the Transition Property and deprive the Holders of their reasonable
expectations arising from their investments in the Transition
Bonds. There is no assurance, however, that, even if a court were to
award just compensation it would be sufficient to pay the full amount of
principal and interest on the Transition Bonds.
(f) Assumptions. On
the Transfer Date, based upon the information available to the Seller on such
date, the assumptions used in calculating the Transition Charges are reasonable
and are made in good faith. Notwithstanding the foregoing, the Seller
makes no representation or warranty, express or implied, that amounts actually
collected arising from those Transition Charges will in fact be sufficient to
meet the payment obligations on the Transition Bonds or that the assumptions
used in calculating such Transition Charges will in fact be
realized.
(g) Creation of Transition
Property. Upon the effectiveness of the Financing Order, the
Issuance Advice Letter and the Tariff with respect to the Transition Property
and the transfer of the 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 Transition Property
constitutes a present property right vested in the Issuer; (iii) the Transition
Property includes (A) the right, title and interest of the Seller in
the Financing Order and the Transition Charges and (B) the right to impose,
collect and obtain periodic adjustments (with respect to adjustments, in the
manner and with the effect provided in Section 4.01(b)
of the Servicing Agreement) of such Transition Charges, 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 Charges; (iv) the
owner of the Transition Property is legally entitled to ▇▇▇▇ Transition Charges
and collect payments in respect of the Transition Charges in the aggregate
sufficient to pay the interest on and principal of the Transition Bonds in
accordance with the Indenture, to pay the fees and expenses of servicing the
Transition Bonds, to replenish the Capital Subaccount to the Required Capital
Level until the Transition Bonds 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, and the Customer class
allocation percentages in the Financing Order do not prohibit the owner of the
Transition Property from obtaining adjustments and effecting allocations to the
Transition Charges in order to collect payments of such amounts; and (v) the
Transition Property is not subject to any Lien other than the Lien created by
the Basic Documents.
(h) 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 Transition Bonds, and to reflect the parties’ agreement that, if
such understanding turns out to be incorrect or inaccurate, the Seller will be
obligated to indemnify the Issuer and its permitted assigns (to the extent
required by and in accordance with Section 5.01), and that the Issuer and
its permitted assigns will be entitled to enforce any rights and remedies under
the Basic Documents, on account of such inaccuracy to the same extent as if the
Seller had breached any other representations or warranties
hereunder.
(i) Prospectus. As
of the date hereof, the information describing the Seller under the caption “The
Seller, Initial Servicer and Sponsor” in the prospectus dated October 23, 2009
relating to the Transition Bonds is true and correct in all material
respects.
(j) Solvency. After
giving effect to the sale of the 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 purpose;
(iii) is not
engaged in nor does it expect to engage in a business for which its remaining
property represents an unreasonably small capital;
(iv) reasonably
believes that it will be able to pay its debts as they come due;
and
(v) is able
to pay its debts as they mature and does not intend to incur, or believes that
it will not incur, indebtedness that it will not be able to repay at its
maturity.
(k) No Court
Order. There is no order by any court providing for the
revocation, alteration, limitation or other impairment of the Securitization
Law, the Financing Order, the Issuance Advice Letter, the 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.
(l) No Proceedings Concerning
the Securitization Law. Except as disclosed in the Prospectus,
there are no proceedings pending, and to 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
Securitization Law or the Financing Order.
(m) Survival of Representations
and Warranties The representations and warranties set forth in
this Section 3.08 shall survive the execution and delivery of this
Agreement and may not be waived by any party hereto except pursuant to a written
agreement executed in accordance with Article VI and as to which the Rating
Agency Condition has been satisfied.
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. THE SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, THAT BILLED TRANSITION CHARGES WILL BE ACTUALLY COLLECTED FROM
CUSTOMERS.
ARTICLE
IV
COVENANTS
OF THE SELLER
SECTION
4.01. Existence. Subject
to Section 5.02, so long as any of the Transition Bonds are Outstanding,
the Seller (a) will keep in full force and effect its existence and remain in
good standing 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 or to the extent necessary
for the Seller to perform its obligations hereunder or thereunder and (c) will
continue to own and operate its transmission and distribution system (or, if by
law, the Seller is no longer required to own and/or operate both the
transmission and distribution systems, then the Seller’s distribution system) in
order and to the extent required to provide electric services to the Seller’s
Customers within the Service Area. Nothing in this Section
4.01 shall prohibit the Seller from selling, assigning or otherwise divesting
any of its properties or assets; provided that in the event that the Seller
sells, assigns or otherwise divests of all or any portion of its
transmission and distribution system required to provide electric service to the
Seller’s Customers in the Service Area (or, if by law, the Seller is no longer
required to own and/operate both the transmission and distribution systems, if
the Seller sells, assigns or otherwise divests all or any portion of its
distribution system required to provide electric service to the Seller’s
Customers in the Service Area), then the entity acquiring such
distribution (and if owned and/or operated jointly, transmission) facilities is
either required by law or agrees by contract to continue operating the
facilities to provide electric services to Seller’s Customers in the Service
Area, and, in the case of a portion of the distribution (and, if applicable
transmission) assets, the conditions of Section 5.02(c)(4) are
satisfied.
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 Issuer (as
the Issuer) and the Secured Parties, the Seller will not sell, pledge, assign or
transfer, or grant, create, incur, assume or suffer to exist any Lien on, any of
the Transition Property, or any interest therein, and the Seller shall defend
the right, title and interest of the Issuer and the Indenture Trustee, on behalf
of the Secured Parties, in, to and under the Transition Property against all
claims of third parties claiming through or under the Seller. ETI, in
its capacity as Seller, will not at any time assert any Lien against, or with
respect to, any of the Transition Property.
SECTION
4.03. Delivery of
Collections. In the event that the Seller receives Collections
in respect of the Transition Charges or the proceeds thereof other than in its
capacity as the Servicer, the Seller agrees to pay to the Servicer, on behalf of
the Issuer, all payments received by it in respect thereof as soon as
practicable after receipt thereof. Prior to such remittance to the
Servicer by the Seller, the Seller agrees that such amounts are held by it in
trust for the Issuer and the Indenture Trustee. If the Seller becomes
a party to any future trade receivables purchase and sale arrangement or similar
arrangement under which it sells all or any portion of its accounts receivables,
the Seller and the other parties to such arrangement shall enter into an
intercreditor agreement in connection therewith and the terms of the
documentation evidencing such trade receivables purchase and sale arrangement or
similar arrangement shall expressly exclude Transition Charges from any
receivables or other assets pledged or sold under such arrangement.
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 of the Transition
Property, other than the conveyances hereunder, any Lien under the Basic
Documents or any Lien under Section 39.309 of the Securitization Law or the
UCC for the benefit of the Issuer or the Secured Parties.
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
Issuer’s or the Indenture Trustee’s interests in the 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
Transition Bonds and Transition Property.
(a) So long
as any of the Transition Bonds are outstanding, the Seller shall treat the
Transition Bonds as debt for all purposes and specifically as debt of the
Issuer, other than for financial reporting, state or federal regulatory or tax
purposes.
(b) Solely
for the purposes of federal taxes and, to the extent consistent with applicable
state, local and other tax law, for purposes of state, local and other taxes, so
long as any of the Transition Bonds are outstanding, the Seller agrees to treat
the Transition Bonds as indebtedness of the Seller (as the sole owner of the
Issuer) secured by the Transition Bond Collateral unless otherwise required by
appropriate taxing authorities.
(c) So long
as any of the Transition Bonds are outstanding, the Seller shall disclose in its
financial statements that the Issuer and not the Seller is the owner of the
Transition Property and that the assets of the Issuer are not available to pay
creditors of the Seller or its Affiliates (other than the Issuer).
(d) So long
as any of the Transition Bonds are outstanding, the Seller shall not own or
purchase any Transition Bonds.
(e) So long
as any of the Transition Bonds are outstanding, the Seller shall disclose the
effects of all transactions between the Seller and the Issuer in accordance with
generally accepted accounting principles.
(f) The
Seller agrees that, upon the sale by the Seller of the Transition Property to
the Issuer pursuant to this Agreement, (i) to the fullest extent permitted by
law, including applicable PUCT Regulations and the Securitization Law, the
Issuer shall have all of the rights originally held by the Seller with respect
to the 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 Transition Property,
notwithstanding any objection or direction to the contrary by the Seller (and
the Seller agrees not to make any such objection or to take any such contrary
action) and (ii) any payment by any Customer or REP directly to the Issuer shall
discharge such Customer’s or REP’s obligations, if any, to the Seller in respect
of the Transition Property to the extent of such payment, notwithstanding any
objection or direction to the contrary by the Seller.
(g) So long
as any of the Transition Bonds are outstanding, (i) in all proceedings relating
directly or indirectly to the Transition Property, the Seller shall
affirmatively certify and confirm that it has sold all of its rights and
interests in and to such property (other than for financial reporting or tax
purposes), (ii) the Seller shall not make any statement or reference in respect
of the Transition Property that is inconsistent with the ownership interest of
the Issuer (other than for financial accounting, state or federal regulatory or
tax purposes), (iii) the Seller shall not take any action in respect of the
Transition Property except solely in its capacity as the Servicer thereof
pursuant to the Servicing Agreement or as otherwise contemplated by the Basic
Documents, (iv) the Seller shall not sell transition property under a separate
financing order in connection with the issuance of additional transition bonds
unless the Rating Agency Condition shall have been satisfied, and (v) neither
the Seller nor the Issuer shall take any action, file any tax return, or make
any election inconsistent with the treatment of the Issuer, for purposes of
federal taxes and, to the extent consistent with applicable state, local and
other tax law, for purposes of state, local and other taxes, as a disregarded
entity that is not separate from the Seller (or, if relevant, from another sole
owner of the Issuer).
SECTION
4.07. Protection of
Title. The Seller shall execute and file such filings,
including, without limitation, 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, protect and perfect the ownership interest of the
Issuer and the first priority security interest of the Indenture Trustee in the
Transition Property, including, without limitation, all filings required under
the Securitization Law and the UCC relating to the transfer of the ownership of
the rights and interest in the Transition Property by the Seller to the Issuer
or the pledge of the Issuer’s interest in such Transition Property 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 PUCT, the State of Texas or any of their
respective agents, of any of their obligations or duties under the
Securitization Law, the 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 (i) to protect
the Issuer and the Secured Parties 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 any covenant set
forth in Article IV and (ii) to block or overturn any attempts to cause a
repeal of, modification of or supplement to the Securitization Law, the
Financing Order, any Issuance Advice Letter or the rights of Holders by
legislative enactment or constitutional amendment that would be materially
adverse to the Issuer or the Secured Parties or which would otherwise cause an
impairment of the rights of the Issuer or the Secured Parties. The
costs of any such actions or proceedings will be payable by the
Seller.
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 and payment in full of
the Transition Bonds or any other amounts owed under the Indenture, petition or
otherwise invoke or cause the Issuer to invoke the process of any Government
Authority for the purpose of commencing or sustaining an involuntary case
against the 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 Issuer or any substantial part of
the property of the Issuer, or ordering the winding up or liquidation of the
affairs of the Issuer.
SECTION
4.09. Taxes. So
long as any of the Transition Bonds are outstanding, the Seller shall, and shall
cause each of its subsidiaries to, pay all 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 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. Notice of Breach to Rating
Agencies, Etc. Promptly after obtaining knowledge thereof, in
the event of a breach in any material respect (without regard to any materiality
qualifier contained in such representation, warranty or covenant) of any of the
Seller’s representations, warranties or covenants contained herein, the Seller
shall promptly notify the Issuer, the Indenture Trustee, the PUCT and the Rating
Agencies of such breach. For the avoidance of doubt, any breach which
would adversely affect scheduled payments on the Transition Bonds will be deemed
to be a material breach for purposes of this Section 4.12.
SECTION
4.13. Use of
Proceeds. The Seller shall use the proceeds of the sale of the
Transition Property in accordance with the Financing Order and the
Securitization Law.
SECTION
4.14. Further
Assurances. Upon the request of the Issuer, the Seller shall
execute and deliver such further instruments and do such further acts as may be
reasonably necessary to carry out more effectually the provisions and purposes
of this Agreement.
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 Issuer and the Indenture Trustee (for the benefit of
the Secured Parties) and each of their respective officers, directors,
employees, trustees, managers and agents for, and defend and hold harmless each
such Person from and against, any and all taxes (other than taxes imposed on
Bondholders as a result of their ownership of a Transition Bond) that may at any
time be imposed on or asserted against any such Person as a result of the sale
of the Transition Property to the Issuer, including any franchise, 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 with respect to payments on any Transition
Bond.
(c) The
Seller shall indemnify the Issuer and the Indenture Trustee (for the benefit of
the Secured Parties) and each of their respective officers, directors,
employees, trustees, managers, and agents for, and defend and hold harmless each
such Person from and against, any and all taxes (other than taxes imposed on
Bondholders as a result of their ownership of a Transition Bond) that may at any
time be imposed on or asserted against any such Person as a result of
the Issuer’s ownership and assignment of the Transition Property, the issuance
and sale by the Issuer of the Transition Bonds or the other transactions
contemplated in the Basic Documents, including any franchise, 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 with respect to payments on any Transition
Bond.
(d) The
Seller shall indemnify the Issuer, the Indenture Trustee (for the benefit of the
Secured Parties) and each of their respective officers, directors, employees and
agents for, and defend and hold harmless each such Person from and against all
Losses that may be imposed on, incurred by or asserted against each such Person,
in each such case, as a result of the Seller’s breach of any of its
representations, warranties or covenants contained in this
Agreement.
(e) Indemnification
under Sections 5.01(b), 5.01(c), 5.01(d) and 5.01(f) shall include reasonable
out-of-pocket fees and expenses of investigation and litigation (including
reasonable attorney’s fees and expenses), except as otherwise expressly provided
in this Agreement.
(f) 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 the Seller’s
breach of any of its representations and warranties or covenants contained in
this Agreement, except to the extent of Losses either resulting from the willful
misconduct, bad faith or gross negligence of such Indemnified Person or
resulting from a breach of a representation or warranty made by such 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(f), 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(f) 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(f), 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,
(iii) the Seller shall authorize the Indemnified Person to employ separate
counsel at the expense of the Seller or (iv) in the case of the Indenture
Trustee, such action exposes the Indenture Trustee to a material risk of
criminal liability or forfeiture or a Servicer Default has occurred and is
continuing. 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.
(g) The
Seller shall indemnify the Servicer (if the Servicer is not the Seller) for the
costs of any action instituted by the Servicer pursuant to Section 5.02(d)
of the Servicing Agreement which are not paid as Operating Expenses in
accordance with the priorities set forth in Section 8.02(e) of the
Indenture.
(h) The
remedies provided in this Agreement are the 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 the
Financing Order and shall survive the resignation or removal of the Indenture
Trustee or the termination of this Agreement and will rank in priority with
other general, unsecured obligations of the Seller.
SECTION
5.02. Merger, Conversion or
Consolidation of, or Assumption of the Obligations of,
Seller. Any Person (a) into which the Seller may be merged,
converted or consolidated, (b) that may result from any reorganization, merger
(including, but not limited to, merger as defined in Art. 1.02.A.(18) of the
Texas Business Corporation Act or in Section 1.002(55) of the Texas
Business Organizations Code, as applicable to the Seller, as amended from time
to time (including, without limitation, any merger commonly referred to as a
“merger by division”)), conversion or consolidation to which the Seller shall be
a party, or (c) that may acquire or succeed to (whether by merger, division,
conversion, consolidation, reorganization, sale, transfer, lease, management
contract or otherwise) 1) the properties and assets of the Seller substantially
as a whole, 2) all or substantially all of the electric transmission and
distribution business of the Seller which is required to provide electric
service to the Seller’s customers in the Service Area (or, if transmission and
distribution are not provided by a single entity, the distribution business of
the Seller required to provide electric service to the Seller’s Customers in the
Service Area), or 3) the distribution system business assets of the Seller in a
portion of the Service Area, and which Person in any of the foregoing cases
executes an agreement of assumption to perform all of the obligations of the
Seller hereunder (including the Seller’s obligations under Section 5.01
incurred at any time prior to or after the date of such assumption), shall be a
successor to the Seller under this Agreement (a “Permitted Successor”) 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 representation, warranty or covenant
made pursuant to Article III or Article IV shall be breached and 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 Issuer, the Indenture Trustee and each Rating
Agency an Officer’s Certificate and an Opinion of Counsel from Independent
counsel stating that such consolidation, conversion, merger, division,
reorganization, sale, transfer, lease, management contract transaction,
acquisition or other 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,
(iii) the
Seller shall have delivered to the Issuer, the Indenture Trustee and each Rating
Agency an Opinion of Counsel from Independent counsel of the Seller either (A)
stating that, in the opinion of such counsel, all filings to be made by the
Seller and the Issuer, including filings with the PUCT pursuant to the
Securitization Law, have been authorized, executed and filed that are necessary
to fully preserve and protect the respective interests of the Issuer and the
Indenture Trustee in all of the 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,
(iv) the
Seller shall have delivered to the Issuer, the Indenture Trustee, the Rating
Agencies and the PUCT an Opinion of Counsel from Independent tax counsel stating
that, for federal income tax purposes, notwithstanding such consolidation,
conversion, merger, division, reorganization, sale, transfer, lease, management
contract transaction, acquisition or other succession and such agreement of
assumption, (a) the Issuer will not be subject to tax as an entity separate from
its sole owner, (b) the Transition Bonds will be treated as debt of the Issuer’s
sole owner, and (c) the Transition Bonds will not be treated as transferred in a
taxable exchange; and
(v) the
Seller shall have given the Rating Agencies prior written notice of such
transaction, or, in the case of clause (c)(4) above, the Rating Agency
Condition shall be satisfied.
When the
conditions set forth in this Section 5.02 have been satisfied, the
preceding Seller shall automatically and without further notice (except as
provided in clause (v) above) be released from all of its obligations
hereunder.
When any
Person (or more than one Person) acquires the properties and assets of the
Seller substantially as a whole or otherwise becomes the successor, whether by
merger, conversion, consolidation, sale, transfer, lease, management contract or
otherwise, to all or substantially all of the electric transmission and
distribution business of the Seller (or, if transmission and distribution are
not provided by a single entity, provides distribution service directly to
Customers taking service at facilities, premises or loads located in the Service
Area 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 preceding 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. Subject to
Section 4.07, the Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its obligations
under this Agreement, and that in its opinion may involve it in any expense or
liability.
ARTICLE
VI
MISCELLANEOUS
PROVISIONS
SECTION
6.01. Amendment. This
Agreement may be amended in writing by the Seller and the Issuer, with (i) the
prior written consent of the Indenture Trustee, (ii) the satisfaction of the
Rating Agency Condition, (iii) the satisfaction of the condition set forth below
in Section 6.02, (iv) if such amendment may in the judgment of the PUCT
increase ongoing Qualified Costs, the consent of the PUCT pursuant to
Section 6.02 and (v) if any amendment would adversely affect in any
material respect the interest of any Holder of the Transition Bonds, the consent
of a majority of the Holders of each affected Tranche of Transition
Bonds. 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.
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 from
Independent counsel of the Seller stating that the execution of such amendment
is authorized or permitted by this Agreement and the Opinion of Counsel referred
to in Section 3.01(c)(i) of the Servicing Agreement. The Issuer and 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. PUCT
Condition. Notwithstanding anything to the contrary in
Section 6.01, no amendment or modification of this Agreement shall be
effective unless the process set forth in this Section 6.02 has been
followed.
(a) At least
thirty-one (31) days prior to the effectiveness of any such amendment or
modification and after obtaining the other necessary approvals set forth in
Section 6.01, (except that the consent of the Indenture Trustee may be
subject to the consent of the Holders if such consent is required or sought by
the Indenture Trustee in connection with such amendment or modification), the
Seller shall have delivered to the PUCT’s executive director and general counsel
written notification of any proposed amendment or modification, which
notification shall contain:
(i) a
reference to Docket No. 37247;
(ii) an
Officer’s Certificate stating that the proposed amendment or modification has
been approved by all parties to this Agreement; and
(iii) a
statement identifying the person to whom the PUCT or its staff is to address any
response to the proposed amendment or modification or to request additional
time;
(b) The PUCT
or its staff shall, within thirty (30) days of receiving the notification
complying with Section 6.02(a) above, either:
(i) provide
notice of its determination that the proposed amendment or modification will not
under any circumstances have the effect of increasing the ongoing Qualified
Costs related to the Transition Bonds,
(ii) provide
notice of its consent or lack of consent to the person specified in
Section 6.02(a)(iii) above, or
(iii) be
conclusively deemed to have consented to the proposed amendment or
modification,
unless,
within thirty (30) days of receiving the notification complying with
Section 6.02(a) above, the PUCT or its staff delivers to the office of the
person specified in Section 6.02(a)(iii) above a written statement
requesting an additional amount of time not to exceed thirty (30) days in which
to consider whether to consent to the proposed amendment or
modification. If the PUCT or its staff requests an extension of time
in the manner set forth in the preceding sentence, then the PUCT shall either
provide notice of its consent or lack of consent or notice of its determination
that the proposed amendment or modification will not under any circumstances
increase ongoing Qualified Costs to the person specified in
Section 6.02(a)(iii) no later than the last day of such extension of time
or be conclusively deemed to have consented to the proposed amendment or
modification on the last day of such extension of time. Any amendment
or modification requiring the consent of the PUCT shall become effective on the
later of (i) the date proposed by the parties to such amendment or modification
and (ii) the first day after the expiration of the thirty (30)-day period
provided for in this Section 6.02(b), or, if such period has been extended
pursuant hereto, the first day after the expiration of such period as so
extended.
(c) Following
the delivery of a notice to the PUCT by the Seller under Section 6.02(a),
the Seller and the Issuer shall have the right at any time to withdraw from the
PUCT further consideration of any notification of a proposed
amendment. Such withdrawal shall be evidenced by the prompt written
notice thereof by the Seller to the PUCT, the Indenture Trustee, the Issuer and
the Servicer.
SECTION
6.03. Notices. All
demands, notices and communications upon or to the Seller, the 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 Entergy Texas, Inc., at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: President, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇,
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇;
(b) in the
case of the Issuer, to Entergy Texas Restoration Funding, LLC at Capital
Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
President, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇;
(c) in the
case of the Indenture Trustee, to the Corporate Trust Office;
(d) in the
case of the PUCT, to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, Texas
78711-3326, Attention: Executive Director, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇,
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ and General Counsel, Telephone: (▇▇▇)
▇▇▇-▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇;
(e) in the
case of Moody’s, to ▇▇▇▇▇’▇ Investors Service, Inc., ABS Monitoring
Department, 7 World Trade Center at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇;
(f) in the
case of Standard & Poor’s, to Standard & Poor’s Ratings
Services, a Standard & Poor’s Financial Services LLC business, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Structured Credit
Surveillance Group, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇;
(g) in the
case of Fitch, to Fitch Ratings, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ABS Surveillance, 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
6.04. 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
6.05. Limitations on Rights of
Third Parties. The provisions of this Agreement are solely for
the benefit of the Seller, the Issuer, the Indenture Trustee (for the benefit of
the Secured Parties) 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
6.06. 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 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
6.07. 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. Assignment to Indenture
Trustee. The Seller hereby acknowledges and consents to any
mortgage, pledge, assignment and grant of a security interest by the Issuer to
the Indenture Trustee pursuant to the Indenture for the benefit of the Secured
Parties of all right, title and interest of the Issuer in, to and under this
Agreement, the Transition Property and the proceeds thereof and the assignment
of any or all of the Issuer’s rights hereunder to the Indenture Trustee for the
benefit of the Secured Parties.
SECTION
6.11. 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 Secured Parties, in the exercise of the powers and authority
conferred and vested in it. The Indenture Trustee in acting hereunder
is entitled to all rights, benefits, protections, immunities and indemnities
accorded to it under the Indenture.
SECTION
6.12. Waivers. Any
term or 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; provided, however, that no such
waiver delivered by the Issuer shall be effective unless the Indenture Trustee
has given its prior written consent thereto. 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.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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.
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ENTERGY
TEXAS RESTORATION FUNDING, LLC, as Issuer
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By:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Title: Vice
President and Treasurer:
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ENTERGY
TEXAS, INC., as Seller
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By:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Title: Assistant
Treasurer
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ACKNOWLEDGED
AND ACCEPTED:
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THE
BANK OF NEW YORK MELLON, as Indenture Trustee
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By:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇
▇▇▇▇▇▇▇
Title: Senior
Associate
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EXHIBIT A
FORM OF
▇▇▇▇ OF SALE
This ▇▇▇▇
of Sale is being delivered pursuant to the Transition Property Purchase and Sale
Agreement, dated as of November 6, 2009 (the “Sale Agreement”), by
and between Entergy Texas, Inc. (the “Seller”) and Entergy
Texas Restoration Funding, LLC (the “Issuer”). All
capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Sale Agreement.
In
consideration of the Issuer’s delivery to or upon the order of the Seller of
$540,603,774, 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
and to the Transition Property identified on Schedule 1 hereto
(such sale, transfer, assignment, setting over and conveyance of the Transition
Property includes, to the fullest extent permitted by the Securitization Law,
the right to impose, collect and receive Transition Charges and the assignment
of all revenues, collections, claims, rights, payments, money or proceeds of or
arising from the Transition Charges related to the Transition Property, as the
same may be adjusted from time to time). Such sale, transfer,
assignment, setting over and conveyance is hereby expressly stated to be a sale
and, pursuant to Section 39.308 of the Securitization Law and other
applicable 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 Transition Property. The Seller and the 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 Transition Property to which a security interest could attach because (i)
it has sold, transferred, assigned, set over and conveyed all right in and to
the Transition Property to the 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 a pledge of such Transition Property and as
the creation of a security interest (within the meaning of the Securitization
Law and the UCC) in the Transition Property and, without prejudice to its
position that it has absolutely transferred all of its rights in the Transition
Property to the Issuer, the Seller hereby grants a security interest in the
Transition Property to the Issuer (and, to the extent necessary to qualify the
grant as a security interest under the Securitization Law and the UCC, to the
Indenture Trustee for the benefit of the Secured Parties to secure the right of
the Issuer under the Basic Documents to receive the Transition Charges and all
other Transition Property).
The
Issuer does hereby purchase the Transition Property from the Seller for the
consideration set forth in the preceding paragraph.
The
Seller and the Issuer each acknowledge and agree that the purchase price for the
Transition Property sold pursuant to this ▇▇▇▇ of Sale and the Sale Agreement is
equal to its fair market value at the time of sale.
The
Seller confirms that (i) 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 and (ii) each
condition precedent that must be satisfied under Section 2.03 of the Sale
Agreement has been satisfied upon or prior to the execution and delivery of this
▇▇▇▇ of Sale by the Seller.
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.
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 LAW.
IN
WITNESS WHEREOF, the Seller and the Issuer have duly executed this ▇▇▇▇ of Sale
as of the ___ day of ___________, ______.
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By:
________________________________
Name:
Title:
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ENTERGY
TEXAS, INC.
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By:
________________________________
Name:
Title:
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SCHEDULE
1
to
▇▇▇▇ OF
SALE
TRANSITION
PROPERTY
All
Transition Property created or arising under the Financing Order dated as of
September 11, 2009, issued by the PUCT pursuant to the Securitization Law,
Docket No. 37247.