INTANGIBLE TRANSITION PROPERTY SERVICING AGREEMENT
between
PP&L Transition Bond Company LLC
Issuer
and
PP&L, INC.,
Servicer
Dated August 10, 1999
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions................................................................1
SECTION 1.02. Other Definitional Provisions..............................................1
ARTICLE II
APPOINTMENT AND AUTHORIZATION OF SERVICER
SECTION 2.01. Appointment of Servicer; Acceptance of Appointment.........................1
SECTION 2.02. Authorization..............................................................2
SECTION 2.03. Dominion and Control over Transferred Intangible Transition Property.......2
ARTICLE III
BILLING SERVICES
SECTION 3.01. Duties of Servicer.........................................................2
SECTION 3.02. Collection and Allocation of Intangible Transition Charges.................3
SECTION 3.03. Payment of ITC Collections.................................................5
SECTION 3.04. Servicing and Maintenance Standards........................................5
SECTION 3.05. Servicer's Certificates....................................................6
SECTION 3.06. Annual Statement as to Compliance; Notice of Default.......................6
SECTION 3.07. Annual Independent Certified Public Accountants' Report....................7
SECTION 3.08. Intangible Transition Property Documentation...............................7
SECTION 3.09. Computer Records; Audits of Documentation..................................7
SECTION 3.10. Defending Intangible Transition Property Against Claims....................8
SECTION 3.11. Opinions of Counsel........................................................8
ARTICLE IV
SERVICES RELATED TO INTANGIBLE TRANSITION CHARGES ADJUSTMENTS
SECTION 4.01. Intangible Transition Charges Adjustments..................................9
ARTICLE V
THE SERVICER
SECTION 5.01. Representations and Warranties of Servicer.................................9
SECTION 5.02. Indemnities of Servicer; Release of Claims................................11
SECTION 5.03. Merger or Consolidation of, or Assumption of the Obligations of, Servicer.12
SECTION 5.04. Assignment of Servicer's Obligations......................................14
SECTION 5.05. Limitation on Liability of Servicer and Others............................14
SECTION 5.06. PP&L Not To Resign as Servicer............................................14
SECTION 5.07. Quarterly Servicing Fee...................................................15
SECTION 5.08. Servicer Expenses.........................................................15
SECTION 5.09. Appointments..............................................................15
SECTION 5.10. Remittances...............................................................15
SECTION 5.11. Protection of Title.......................................................16
ARTICLE VI
SERVICER DEFAULT
SECTION 6.01. Servicer Default..........................................................17
SECTION 6.02. Notice of Servicer Default................................................18
SECTION 6.03. Waiver of Past Defaults...................................................18
SECTION 6.04. Appointment of Successor..................................................19
SECTION 6.05. Cooperation with Successor................................................19
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01. Amendment.................................................................20
SECTION 7.02. Notices...................................................................20
SECTION 7.03. Assignment................................................................21
SECTION 7.04. Limitations on Rights of Others...........................................21
SECTION 7.05. Severability..............................................................21
SECTION 7.06. Separate Counterparts.....................................................21
SECTION 7.07. Headings..................................................................21
SECTION 7.08. Governing Law.............................................................21
SECTION 7.09. Assignment to the Trustee.................................................21
SECTION 7.10. Nonpetition Covenants.....................................................21
SECTION 7.11. Termination...............................................................22
ANNEX 1 ITC Adjustment Process and Reports - PP&L Transition Bond Company LLC
EXHIBIT A Servicing Procedures
APPENDIX A Master Definitions
SERVICING AGREEMENT dated August 10, 1999 (this
"Agreement") between PP&L Transition Bond Company LLC, a Delaware limited
liability company (the "Issuer"), and PP&L, INC., a Pennsylvania
corporation ("PP&L"), as the servicer of the Intangible Transition Property
(together with each successor to PP&L (in the same capacity) pursuant to
Section 5.03 or 6.02, the "Servicer").
WHEREAS the Servicer is willing to service the Intangible
Transition Property purchased from the Seller by the Issuer; and
WHEREAS the Issuer, in connection with ownership of
Transferred Intangible Transition Property, desires to engage the Servicer
to carry out the functions described herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained and intending to be legally bound hereby,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used but not otherwise
defined in this Agreement have the respective meanings set forth in
Appendix A hereto
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) 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, Annex,
Schedule and Exhibit references contained in this Agreement are references
to Sections, Annexes, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(b) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms.
ARTICLE II
APPOINTMENT AND AUTHORIZATION OF SERVICER
SECTION 2.01. APPOINTMENT OF SERVICER; ACCEPTANCE OF APPOINTMENT.
Subject to Section 5.04 and Article VI, the Issuer hereby appoints the
Servicer, and the Servicer hereby accepts such appointment, to perform the
Servicer's obligations pursuant to this Agreement on behalf of and for the
benefit of the Issuer in accordance with the terms of this Agreement. This
appointment and the Servicer's acceptance thereof may not be revoked except
in accordance with the express terms of this Agreement.
SECTION 2.02. AUTHORIZATION. With respect to all or any portion of
the Transferred Intangible Transition Property, the Servicer shall be, and
hereby is, authorized and empowered by the Issuer to:
(a) execute and deliver, on behalf of itself or the Issuer, as the
case may be, any and all instruments, documents or notices, and
(b) on behalf of itself or the Issuer, as the case may be, make any
filing and participate in proceedings of any kind with any governmental
authorities, including with the PUC.
The Issuer shall furnish the Servicer with such documents as have
been prepared by the Servicer for execution by the Issuer, and with such
other documents as may be in the Issuer's possession, as necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. Upon the written request of the Servicer,
the Issuer shall furnish the Servicer with any powers of attorney or other
documents necessary or appropriate to enable the Servicer to carry out its
duties hereunder.
SECTION 2.03. DOMINION AND CONTROL OVER TRANSFERRED INTANGIBLE
TRANSITION PROPERTY. Notwithstanding any other provision herein, the
Servicer and the Issuer agree that the Issuer shall have dominion and
control over the Transferred Intangible Transition Property, and the
Servicer, in accordance with the terms hereof, is acting solely as the
servicing agent of the Issuer with respect to the Transferred Intangible
Transition Property. The Servicer hereby agrees that it shall not take any
action that is not authorized by this Agreement, that is not consistent
with its customary procedures and practices, or that shall impair the
rights of the Issuer with respect to the Transferred Intangible Transition
Property, in each case unless such action is required by law or court or
regulatory order.
ARTICLE III
BILLING SERVICES
SECTION 3.01. DUTIES OF SERVICER. The Servicer, as agent for the
Issuer (to the extent provided herein), shall have the following duties:
(a) Duties of Servicer Generally. The Servicer will manage,
service, administer and make collections in respect of the Transferred
Intangible Transition Property. The Servicer's duties will include:
(i) calculating and billing the Intangible Transition Charges and
collecting (from Customers and Third Parties, as applicable) and posting
all ITC Collections;
(ii) responding to inquiries by Customers, Third Parties, the PUC,
or any federal, local or other state governmental authority with respect to
the Transferred Intangible Transition Property and the Intangible
Transition Charges;
(iii) accounting for ITC Collections, investigating delinquencies,
processing and depositing collections, making periodic remittances and
furnishing periodic reports to the Issuer, the Trustee and the Rating
Agencies;
(iv) selling, as the agent for the Issuer, as its interest may
appear, defaulted or written off accounts in accordance with the Servicer's
usual and customary practices; and
(v) taking action in connection with Intangible Transition Charge
Adjustments as is set forth herein.
Anything to the contrary notwithstanding, the duties of the
Servicer set forth in this Agreement shall be qualified in their entirety
by the Pennsylvania Public Utility Code and any PUC Regulations, orders or
directions as in effect at the time such duties are to be performed.
Without limiting the generality of this Section 3.01(a), in furtherance of
the foregoing, the Servicer hereby agrees that it shall also have, and
shall comply with, the duties and responsibilities relating to data
acquisition, usage and ▇▇▇▇ calculation, billing, customer service
functions, collections, payment processing and remittance set forth in
Exhibit A hereto.
(b) Notification of Laws and Regulations. The Servicer shall
immediately notify the Issuer, the Trustee and the Rating Agencies in
writing of any laws or PUC Regulations, orders or directions hereafter
promulgated that have a material adverse effect on the Servicer's ability
to perform its duties under this Agreement.
(c) Other Information. Upon the reasonable request of the Issuer,
the Trustee or any Rating Agency, the Servicer shall provide to the Issuer,
the Trustee or the Rating Agency, as the case may be, any public financial
information in respect of the Servicer, or any material information
regarding the Intangible Transition Property to the extent it is reasonably
available to the Servicer, that may be reasonably necessary and permitted
by law for the Issuer, the Trustee or the Rating Agency to monitor the
performance by the Servicer hereunder. In addition, so long as any of the
Transition Bonds of any Series are outstanding, the Servicer shall provide
to the Issuer and to the Trustee, within a reasonable time after written
request therefor, any information available to the Servicer or reasonably
obtainable by it that is necessary to calculate the Intangible Transition
Charges applicable to each Customer Class.
SECTION 3.02. COLLECTION AND ALLOCATION OF INTANGIBLE TRANSITION
CHARGES.
(a) The Servicer shall use all reasonable efforts, consistent with
its customary servicing procedures, to collect all amounts owed in respect
of Intangible Transition Charges as and when the same shall become due and
shall follow such collection procedures as it follows with respect to
collection activities that the Servicer conducts for itself or others. The
Servicer shall not change the amount of or reschedule the due date of any
scheduled payment of Intangible Transition Charges, except as contemplated
in this Agreement or as required by law or court or PUC order or directive;
provided, however, that the Servicer may take any of the foregoing actions
to the extent that such action would be in accordance with customary
billing and collection practices of the Servicer with respect to billing
and collection activities that it conducts for itself.
(b) As specified in PUC Order Docket No. M-00960890; F. 0011, July
11, 1997, any amounts received by the Servicer from a Customer that
represent a partial payment toward an outstanding balance will be applied
in the following manner:
(i) If the Customer has a Pre-Retail Access balance, the payment
will be applied as follows:
(A) to the outstanding Pre-Retail Access balance or the
installment amount for a payment agreement on this
amount;
(B) to Intangible Transition Charges and Competitive
Transition Charges, pro rata;
(C) to transmission and distribution charges;
(D) to supply charges; and
(E) to non-basic services charges.
If the Customer has a Post-Retail Access balance, partial
payments will be applied to the Pre-Retail Access balance,
according to the terms of the Pre-Retail Access payment
agreement, before being applied to any other outstanding
Post-Retail Access charges.
(ii)For a Customer with no Pre-Retail Access balance but with a
Post-Retail Access balance, the payment will be applied as
follows:
(A) to the balance due for prior Intangible Transition
Charges, Competitive Transition Charges and transmission
and distribution charges;
(B) to current Intangible Transition Charges and Competitive
Transition Charges, pro rata;
(C) to current transmission and distribution charges;
(D) to the balance due for prior supply charges;
(E) to current supply charges; and
(F) to non-basic services.
SECTION 3.03. PAYMENT OF ITC COLLECTIONS. The Servicer shall
prepare annually a Collections Curve for each Billing Month. The Servicer
agrees to remit actual ITC Collections for any Billing Month to the Trustee
for deposit in the Collection Account not later than the Remittance Date
immediately following the Reconciliation Date for such Billing Month. In
addition, the Servicer shall make periodic payments on account of ITC
Collections to the Trustee for deposit in the Collection Account, as
follows: For so long as the Servicer has satisfied the conditions of
Section 5.10(b), on each Monthly Remittance Date the Servicer shall remit
to the Trustee for each of the seven preceding Billing Months an amount
equal to the amount of ITC Collections estimated to have been received
during the preceding calendar month, based on the applicable Collections
Curve for each Customer Class then in effect, for those Billing Months.
If the Servicer has not satisfied the conditions of Section
5.10(b), on each Daily Remittance Date, the Servicer shall remit to the
Trustee for each of the seven preceding Billing Months an amount equal to
(x) the amount of ITC Collections estimated to have been received during
the preceding calendar month, based on the applicable Collections Curve for
each Customer Class then in effect, for those Billing Months, divided by
(y) one-half the number of Business Days in the current remittance month.
On or before the Reconciliation Date for each Billing Month, the
Servicer shall determine whether there exists a Curve Payment Shortfall or
an Excess Curve Payment with respect to such Billing Month. In the event
that there is a Curve Payment Shortfall with respect to the applicable
Billing Month, the Servicer shall pay the Curve Payment Shortfall to the
Trustee for deposit into the Collection Account on that Reconciliation
Date. In the event that there is an Excess Curve Payment for the applicable
Billing Month, the Servicer may either (i) reduce the amount that the
Servicer is required to remit to the Trustee for deposit in the Collection
Account on the corresponding Remittance Date (and, if necessary, succeeding
Remittance Dates) by the amount of the Excess Curve Payment, or (ii)
require the Trustee to pay to the Servicer from the Collection Account the
amount of the Excess Curve Payment which payment shall become the property
of the Servicer.
SECTION 3.04. SERVICING AND MAINTENANCE STANDARDS. The Servicer
shall, on behalf of the Issuer:
(a) manage, service, administer and make collections in respect of
the Transferred Intangible Transition Property with reasonable care and in
compliance with applicable law, including all applicable PUC Regulations
and guidelines, using the same degree of care and diligence that the
Servicer exercises with respect to billing and collection activities that
the Servicer conducts for itself and others;
(b) follow standards, policies and procedures in performing its
duties as Servicer that are customary in the electric distribution
industry;
(c) use all reasonable efforts, consistent with its customary
servicing procedures, to enforce and maintain the Issuer's and the
Trustee's rights in respect of the Intangible Transition Property; and
(d) calculate Intangible Transition Charges in compliance with the
Competition Act, the Qualified Rate Order and any applicable tariffs;
except where the failure to comply with any of the foregoing would not
materially and adversely affect the Issuer's or the Trustee's interest in
the Transferred Intangible Transition Property. The Servicer shall follow
such customary and usual practices and procedures as it shall deem
necessary or advisable in its servicing of all or any portion of the
Transferred Intangible Transition Property, which, in the Servicer's
judgment, may include the taking of legal action pursuant to Section 3.10
hereof or otherwise. Notwithstanding the foregoing, the Servicer shall not
change its customary and usual practices and procedures in any manner that
would materially and adversely affect the Issuer's or the Trustee's
interest in the Transferred Intangible Transition Property unless it shall
have provided the Rating Agencies with prior written notice.
SECTION 3.05. SERVICER'S CERTIFICATES. The Servicer will provide to
the Issuer and to the Trustee the statements and certificates specified in
Annex 1.
SECTION 3.06. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Issuer, to the Trustee and to
each Rating Agency, on or before March 31 of each year beginning March 31,
2000, an Officers' Certificate, stating that:
(i) a review of the activities of the Servicer during the preceding
calendar year (or relevant portion thereof) and of its performance
under this Agreement has been made under such officers' supervision
and
(ii) to the best of such officers' knowledge, based on such review,
the Servicer has fulfilled all its obligations under this Agreement
throughout such period or, if there has been a default in the
fulfillment of any such obligation, describing each such default.
(b) The Servicer shall deliver to the Issuer, to the Trustee and to
each Rating Agency, promptly after having obtained knowledge thereof, but
in no event later than five Business Days thereafter, written notice in an
Officers' Certificate of any event which with the giving of notice or lapse
of time, or both, would become a Servicer Default under Section 6.01 or a
default under any other Basic Document.
SECTION 3.07. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT.
(a) The Servicer shall cause a firm of independent certified public
accountants (which may also provide other services to the Servicer or the
Seller) to prepare, and the Servicer shall deliver to the Issuer, to the
Trustee and to each Rating Agency, on or before March 31 of each year,
beginning March 31, 2000 to and including the March 31 succeeding the
retirement of all Transition Bonds, a report addressed to the Servicer (the
"Annual Accountant's Report"), which may be included as part of the
Servicer's customary auditing activities, to the effect that such firm has
performed certain procedures in connection with the Servicer's compliance
with its obligations under this Agreement during the preceding calendar
year (or, in the case of the first Annual Accountant's Report, the period
of time from the first Sale Date until December 31, 1999), identifying the
results of such procedures and including any exceptions noted. In the event
such accounting firm requires the Trustee or the Issuer to agree or consent
to the procedures performed by such firm, the Issuer shall direct the
Trustee in writing to so agree; it being understood and agreed that the
Trustee will deliver such letter of agreement or consent in conclusive
reliance upon the direction of the Issuer, and the Trustee will not make
any independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
(b) The Annual Accountant's Report shall also indicate that the
accounting firm providing such report is independent of the Servicer within
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
SECTION 3.08. INTANGIBLE TRANSITION PROPERTY DOCUMENTATION. To
assure uniform quality in servicing the Transferred Intangible Transition
Property and to reduce administrative costs, the Servicer shall keep on
file, in accordance with its customary procedures, all Intangible
Transition Property Documentation.
SECTION 3.09. COMPUTER RECORDS; AUDITS OF DOCUMENTATION.
(a) Safekeeping. The Servicer shall maintain accurate and complete
accounts, records and computer systems pertaining to the Intangible
Transition Property and the Intangible Transition Property Documentation in
accordance with its standard accounting procedures and in sufficient detail
to permit reconciliation between payments or recoveries on (or with respect
to) Intangible Transition Charges and the ITC Collections from time to time
remitted to the Trustee pursuant to Section 5.10 and to enable the Issuer
to comply with this Agreement and the Indenture. The Servicer shall
conduct, or cause to be conducted, periodic audits of the Intangible
Transition Property Documentation held by it under this Agreement and of
the related accounts, records and computer systems, in such a manner as
shall enable the Issuer and the Trustee, as pledgee of the Issuer, to
verify the accuracy of the Servicer's record keeping. The Servicer shall
promptly report to the Issuer and to the Trustee any failure on the
Servicer's part to hold the Intangible Transition Property Documentation
and maintain its accounts, records and computer systems as herein provided
and promptly take appropriate action to remedy any such failure. Nothing
herein shall be deemed to require an initial review or any periodic review
by the Issuer or the Trustee of the Intangible Transition Property
Documentation.
(b) Maintenance of and Access to Records. The Servicer shall
maintain the Intangible Transition Property Documentation at ▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ or at such other office as shall be
specified to the Issuer and to the Trustee by written notice not later than
30 days prior to any change in location. The Servicer shall permit the
Issuer and the Trustee or their respective duly authorized representatives,
attorneys, agents or auditors at any time during normal business hours to
inspect, audit and make copies of and abstracts from the Servicer's records
regarding the Intangible Transition Property and Intangible Transition
Charges and the Intangible Transition Property Documentation. The failure
of the Servicer to provide access to such information as a result of an
obligation or applicable law (including PUC Regulations) prohibiting
disclosure of information regarding customers shall not constitute a breach
of this Section 3.09(b).
SECTION 3.10. DEFENDING INTANGIBLE TRANSITION PROPERTY AGAINST
CLAIMS. The Servicer shall institute any action or proceeding necessary to
compel performance by the PUC or the Commonwealth of Pennsylvania of any of
their obligations or duties under the Competition Act or the Qualified Rate
Order with respect to the Intangible Transition Property. The costs of any
such action reasonably allocated by the Servicer to the Transferred
Intangible Transition Property shall be payable from ITC Collections as an
Operating Expense in accordance with the Indenture. The Servicer's
obligations pursuant to this Section 3.10 shall survive and continue
notwithstanding the fact that the payment of Operating Expenses pursuant to
the Indenture may be delayed (it being understood that the Servicer may be
required to advance its own funds to satisfy its obligations hereunder).
SECTION 3.11. OPINIONS OF COUNSEL. The Servicer shall deliver to
the Issuer and to the Trustee:
(a) promptly after the execution and delivery of this Agreement and of
each amendment hereto, promptly after the execution of the Sale
Agreement and of each amendment thereto and on each Sale Date, an
Opinion of Counsel either:
(i) to the effect that, in the opinion of such counsel, all
filings, including filings with the PUC pursuant to the Competition
Act, that are necessary to fully preserve and protect the interests
of the Trustee in the Transferred Intangible Transition Property
have been executed and filed, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such
details are given, or
(ii) to the effect that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest;
and
(b) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the first Sale Date, an Opinion of Counsel, dated as of a date during
such 90-day period, either:
(i) to the effect that, in the opinion of such counsel, all
filings, including filings with the PUC pursuant to the Competition
Act, have been executed and filed that are necessary to preserve
fully and protect fully the interest of the Trustee in the
Transferred Intangible Transition Property, and reciting the
details of such filings or referring to prior Opinions of Counsel
in which such details are given, or
(ii) to the effect that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (a) or (b) above shall
specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such
interest.
ARTICLE IV
SERVICES RELATED TO INTANGIBLE TRANSITION CHARGES ADJUSTMENTS
SECTION 4.01. INTANGIBLE TRANSITION CHARGES ADJUSTMENTS. The
Servicer shall perform the calculations and take the actions relating to
adjusting the Intangible Transition Charges, as set forth in Annex 1.
ARTICLE V
THE SERVICER
SECTION 5.01. REPRESENTATIONS AND WARRANTIES OF SERVICER. The
Servicer makes the following representations and warranties as of each Sale
Date, on which the Issuer has relied and will rely in acquiring Transferred
Intangible Transition Property. The representations and warranties shall
survive the sale of any of the Transferred Intangible Transition Property
to the Issuer and the pledge thereof to the Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Servicer is a corporation
duly organized and in good standing under the laws of the state of its
incorporation, with the corporate power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is presently conducted and to execute, deliver and carry out the
terms of this Servicing Agreement, and has the power, authority and legal
right to service the Transferred Intangible Transition Property.
(b) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in, all jurisdictions in which the
ownership or lease of property or the conduct of its business (including
the servicing of the Transferred Intangible Transition Property as required
by this Agreement) requires such qualifications, licenses or approvals
(except where the failure to so qualify would not be reasonably likely to
have a material adverse effect on the Servicer's business, operations,
assets, revenues, properties or prospects or adversely affect the servicing
of the Transferred Intangible Transition Property).
(c) Power and Authority. The Servicer has the 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 the Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Servicer enforceable against the Servicer in
accordance with its terms subject to bankruptcy, receivership, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof will not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the Servicer, or any indenture,
agreement or other instrument to which the Servicer is a party or by which
it is bound; or result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument; or violate any law or any order, rule or regulation
applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties.
(f) Approvals. Except for filings with the PUC for adjusting
Intangible Transition Charges pursuant to Section 4.01 and Annex 1 and UCC
continuation filings, no approval, authorization, consent, order or other
action of, or filing with, any court, federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with the execution and delivery by the Servicer of this
Agreement, the performance by the Servicer of the transactions contemplated
hereby or the fulfillment by the Servicer of the terms hereof, except those
that have been obtained or made.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's best knowledge, threatened before any court,
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties:
(i) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability against the Servicer of,
this Agreement; or
(ii) relating to the Servicer and which might materially and
adversely affect the treatment of the Transition Bonds as debt for
federal or state income tax purposes.
(h) Reports and Certificates. Each report and certificate delivered
in connection with any filing made to the PUC by the Servicer on behalf of
the Issuer with respect to Intangible Transition Charges or Intangible
Transition Charges Adjustments will constitute a representation and
warranty by the Servicer that each such report or certificate, as the case
may be, is true and correct in all material respects; provided, however,
that to the extent any such report or certificate is based in part upon or
contains assumptions, forecasts or other predictions of future events, the
representation and warranty of the Servicer with respect thereto will be
limited to the representation and warranty that such assumptions, forecasts
or other predictions of future events are reasonable based upon historical
performance.
SECTION 5.02. INDEMNITIES OF SERVICER; RELEASE OF CLAIMS.
(a) The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Servicer under
this Agreement.
(b) The Servicer shall indemnify the Issuer and the Trustee (for
itself and on behalf of the Transition Bondholders) and each of their
respective trustees, members, managers, officers, directors, employees and
agents for, and defend and hold harmless each such Person from and against,
any and all Losses that may be imposed upon, incurred by or asserted
against any such Person as a result of
(i) the Servicer's wilful misconduct, bad faith or gross negligence
in the performance of its duties or observance of its covenants
under this Agreement or the Servicer's reckless disregard of its
obligations and duties under this Agreement;
(ii) the Servicer's breach of any of its representations or
warranties in this Agreement; and
(iii) litigation and related expenses relating to its status and
obligations as Servicer.
(c) If any action, claim, demand or proceeding (including any
governmental investigation) shall be brought or asserted against a party
(the "indemnified party") entitled to any indemnification provided for under
this Section 5.02, such indemnified party shall promptly notify the
Servicer in writing; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except
to the extent the Servicer shall have been actually prejudiced as a result
of such failure.
(d) The Servicer shall indemnify the Trustee and its respective
officers, directors and agents for, and defend and hold harmless each such
Person from and against, any and all Losses that may be imposed upon,
incurred by or asserted against any such Person as a result of the
acceptance or performance of the trusts and duties contained herein and in
the Indenture, except to the extent that any such Loss shall be due to the
wilful misconduct, bad faith or gross negligence of the Trustee. Such
amounts with respect to the Trustee shall be deposited and distributed in
accordance with the Indenture.
(e) The Servicer's indemnification obligations under Section
5.02(b) and (d) for events occurring prior to the removal or resignation of
the Trustee or the termination of this Agreement shall survive the
resignation or removal of the Trustee or the termination of this Agreement
and shall include reasonable costs, fees and expenses of investigation and
litigation (including the Issuer's and the Trustee's reasonable attorneys'
fees and expenses).
(f) Except to the extent expressly provided for in this Agreement,
the Sale Agreement or the Formation Documents (including the Servicer's
claims with respect to the Quarterly Servicing Fees and the Seller's claim
for payment of the purchase price of Intangible Transition Property), the
Servicer hereby releases and discharges the Issuer (including its Member,
managers, officers, employees and agents, if any), and the Trustee
(including its respective officers, directors and agents) (collectively,
the "Released Parties") from any and all actions, claims and demands
whatsoever, which the Servicer shall or may have against any such Person
relating to the Transferred Intangible Transition Property or the
Servicer's activities with respect thereto other than any actions, claims
and demands arising out of the wilful misconduct, bad faith or gross
negligence of the Released Parties.
SECTION 5.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER. Any Person:
(a) into which the Servicer may be merged or consolidated and which
succeeds to all or substantially all of the electric distribution
business of the Servicer,
(b) which results from the division of the Servicer into two or
more Persons and which succeeds to all or substantially all of the
electric distribution business of the Servicer,
(c) which may result from any merger or consolidation to which the
Servicer shall be a party and which succeeds to all or
substantially all of the electric distribution business of the
Servicer,
(d) which may succeed to the properties and assets of the Servicer
substantially as a whole and which succeeds to all or substantially
all of the electric distribution business of the Servicer or
(e) which may otherwise succeed to all or substantially all of the
electric distribution business of the Servicer,
which Person in any of the foregoing cases, as a condition to the
effectiveness of such transaction, shall execute an agreement of
assumption to perform every obligation of the Servicer under this
Agreement,
shall be the successor to the Servicer under this Agreement without the
execution or filing of any document or any further act by any of the
parties to this Agreement; provided, however, that:
(i) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 5.01 shall have
been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default,
shall have occurred and be continuing,
(ii) the Servicer shall have delivered to the Issuer and the
Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 5.03 and that all
conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with,
(iii) the Servicer shall have delivered to the Issuer and to the
Trustee an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, all
filings to be made by the Servicer, including filings with
the PUC pursuant to the Competition Act, that are necessary
fully to preserve and protect the interests of the Trustee
in the Transferred Intangible Transition Property have been
executed and filed and reciting the details of such filings
or
(B) stating that, in the opinion of such counsel, no such
action is necessary to preserve and protect such interests.
(iv) the Rating Agencies shall have received prior written notice
of such transaction; and
(v) the Servicer shall have delivered to the Issuer and the Trustee
an opinion of independent tax counsel (as selected by, and in form
and substance reasonably satisfactory to, the Servicer, and which
may be based on a ruling from the Internal Revenue Service) to the
effect that, for federal income tax purposes, such consolidation or
merger will not result in a material adverse federal income tax
consequence to the Servicer, the Issuer, the Trustee or the then
existing Transition Bondholders.
The Servicer shall not consummate any transaction referred to in clauses
(a), (b), (c), (d) or (e) above except upon execution of the above
described agreement of assumption and compliance with clauses (i), (ii),
(iii), (iv) and (v) above. When any Person acquires the properties and
assets of the Servicer substantially as a whole and becomes the successor
to the Servicer in accordance with the terms of this Section 5.03, then
upon the satisfaction of all of the other conditions of this Section 5.03,
the Servicer shall automatically and without further notice be released
from its obligations hereunder.
SECTION 5.04. ASSIGNMENT OF SERVICER'S OBLIGATIONS. Pursuant to
paragraph 17 of the Qualified Rate Order in which the PUC authorizes PP&L
to contract with an alternative party to perform PP&L's obligations
contemplated in the Qualified Rate Order, the Servicer may assign its
obligations hereunder to any electric distribution company (as such term is
defined in the Competition Act) which succeeds to all or substantially all
of PP&L's electric distribution business upon the satisfaction of the
requirements specified in Section 5.03.
SECTION 5.05. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. The
Servicer shall not be liable to the Issuer or the Trustee, except as
provided under this Agreement, for any action taken or for refraining from
the taking of any action pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall not protect the
Servicer against any liability that would otherwise be imposed by reason of
wilful misconduct, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of obligations and duties under
this Agreement. The Servicer and any director or officer or employee or
agent of the Servicer may rely in good faith on the advice of counsel
reasonably acceptable to the Trustee or on any document of any kind, prima
facie properly executed and submitted by any Person, respecting any matters
arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action
that is not incidental to its duties to service the Transferred Intangible
Transition Property in accordance with this Agreement or related to its
obligation to pay indemnification, and that in its reasonable opinion may
cause it to incur any expense or liability.
SECTION 5.06. PP&L NOT TO RESIGN AS SERVICER. Subject to the
provisions of Sections 5.03 and 5.04, PP&L shall not resign from the
obligations and duties imposed on it as Servicer under this Agreement
except upon a determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law. Notice of
any such determination permitting the resignation of PP&L shall be
communicated to the Issuer, to the Trustee and to each Rating Agency at the
earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time), and any
such determination shall be evidenced by an Opinion of Counsel to such
effect delivered to the Issuer and the Trustee concurrently with or
promptly after such notice. No such resignation shall become effective
until a successor Servicer shall have assumed the servicing obligations and
duties hereunder of the Servicer in accordance with Section 6.02.
SECTION 5.07. QUARTERLY SERVICING FEE. The Issuer agrees to pay the
Servicer on the Business Day preceding each Payment Date, solely to the
extent amounts are available therefor in accordance with the Indenture, the
Quarterly Servicing Fee with respect to all Series of Transition Bonds. For
so long as PP&L is the Servicer, the Quarterly Servicing Fee shall be
$312,500. The Servicer shall be entitled to retain as additional
compensation net investment income on ITC Collections related to
Transferred Intangible Transition Property received by the Servicer during
any Collection Period and earned or accrued prior to the remittance of ITC
Collections by the Servicer to the Collection Account, and the late fees,
if any, paid by Customers to the Servicer. The foregoing fees constitute a
fair and reasonable price for the obligations to be performed by the
Servicer.
SECTION 5.08. SERVICER EXPENSES. Except as otherwise expressly
provided herein, the Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder, including fees
and disbursements of independent accountants and counsel, taxes imposed on
the Servicer and expenses incurred in connection with reports to Transition
Bondholders.
SECTION 5.09. APPOINTMENTS. The Servicer may at any time appoint a
subservicer to perform all or any portion of its obligations as Servicer
hereunder; provided, however, that the Rating Agency Condition (other than
with respect to Moody's) shall have been satisfied in connection therewith
and that prior notice of such appointment shall have been given to Moody's;
and provided further that the Servicer shall remain obligated and be liable
to the Issuer for the servicing and administering of the Transferred
Intangible Transition Property in accordance with the provisions hereof
without diminution of such obligation and liability by virtue of the
appointment of such subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and
administering the Transferred Intangible Transition Property. The fees and
expenses of the subservicer shall be as agreed between the Servicer and its
subservicer from time to time, and none of the Issuer, the Trustee or the
Transition Bondholders shall have any responsibility therefor.
SECTION 5.10. REMITTANCES.
(a) The Servicer shall remit all ITC Collections (from whatever
source) in accordance with Section 3.03, and all proceeds of other
Collateral of the Issuer, if any, received by the Servicer, to the Trustee
for deposit pursuant to the Indenture, not later than each Daily Remittance
Date. The Servicer shall remit any Indemnity Amounts paid or received by it
immediately to the Trustee for deposit pursuant to the Indenture.
(b) Notwithstanding the foregoing clause (a), as long as :
(i) PP&L or any successor to PP&L's electric distribution business
remains the Servicer,
(ii) no Servicer Default has occurred and is continuing,
(iii)
(A) PP&L or such successor maintains a short-term
rating of "A-1" or better by Standard & Poor's, "P-1"
or better by Moody's and "F-1" or better by Fitch
(and for five Business Days following a reduction in
either such rating), or
(B) the Rating Agency Condition shall have been
satisfied (and any conditions or limitations imposed
by the Rating Agencies in connection therewith are
complied with), and
(iv) the amount remitted on any Monthly Remittance Date does not
exceed $50,000,000,
the Servicer need not make the daily remittances required by clause
(a), but in lieu thereof, shall remit all ITC Collections (from
whatever source) in accordance with Section 3.03, and all proceeds
of other Collateral of the Issuer, if any, received by the Servicer
during any Collection Period, to the Trustee for deposit pursuant
to the Indenture, not later than the corresponding Monthly
Remittance Date.
In order to permit remittances on Monthly Remittance Dates, the
Servicer has obtained a surety bond from National Fire Insurance Company of
Hartford. The Servicer shall give notice to Moody's promptly upon the
termination of that surety bond. If at any time the Issuer receives any
payment on the surety bond, the Issuer shall forward such payment to the
Trustee for deposit to the credit of the Collection Account on the same day
on which such payment is received by the Issuer.
SECTION 5.11. PROTECTION OF TITLE. The Servicer shall execute and
file such filings, including filings with the PUC pursuant to the
Competition Act, and cause to be executed and filed such filings, all in
such manner and in such places as may be required by law fully to preserve,
maintain, and protect the interests of the Trustee in the Transferred
Intangible Transition Property, including all filings required under the
Competition Act relating to the transfer of the ownership or security
interest in the Transferred Intangible Transition Property by the Seller to
the Issuer or any security interest granted by the Issuer to the Trustee in
the Transferred Intangible Transition Property. The Servicer shall deliver
(or cause to be delivered) to the Issuer and the Trustee file-stamped
copies of, or filing receipts for, any document filed as provided above, as
soon as available following such filing.
ARTICLE VI
SERVICER DEFAULT
SECTION 6.01. SERVICER DEFAULT. If any one of the following events
(a "Servicer Default") occurs and is continuing:
(a) any failure by the Servicer to remit to the Trustee, on behalf
of the Issuer, any required remittance that continues unremedied for a
period of five Business Days after written notice of such failure is
received by the Servicer from the Issuer or the Trustee; or
(b) any failure by the Servicer duly to observe or perform in any
material respect any other covenant or agreement of the Servicer set forth
in this Agreement or any other Basic Document to which it is a party in
such capacity, which failure
(i) materially and adversely affects the Intangible Transition
Property, and
(ii) continues unremedied for a period of 60 days after written
notice of such failure has been given to the Servicer by the Issuer
or by the Trustee or after discovery of such failure by an officer
of the Servicer; or
(c) any representation or warranty made by the Servicer in this
Agreement proves to have been incorrect when made, which has a material
adverse effect on the Issuer or the Transition Bondholders and which
material adverse effect continues unremedied for a period of 60 days after
the date on which written notice thereof shall have been given to the
Servicer by the Issuer or the Trustee or after discovery of such failure by
an officer of the Servicer, as the case may be; or
(d) an Insolvency Event occurs with respect to the Servicer;
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, the Trustee, with the consent of the Holders of a
majority of the outstanding principal amount of the Transition Bonds of all
Series, by notice then given in writing to the Servicer (a "Termination
Notice") may terminate all the rights and obligations (other than the
indemnification obligations set forth in Section 5.02 hereof and the
obligation under Section 6.04 to continue performing its functions as
Servicer until a successor Servicer is appointed) of the Servicer under
this Agreement. In addition, upon a Servicer Default, the Issuer and the
Trustee shall be entitled to apply to the PUC for sequestration and payment
to the Trustee of revenues arising with respect to the Transferred
Intangible Transition Property.
On or after the receipt by the Servicer of a Termination Notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Transferred Intangible Transition Property, the related
Intangible Transition Charges or otherwise, shall, upon appointment of a
successor Servicer pursuant to Section 6.04, without further action, pass
to and be vested in such successor Servicer and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such
Termination Notice, whether to complete the transfer of the Intangible
Transition Property Documentation and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer, the
Trustee and the Issuer in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including the
transfer to the successor Servicer for administration by it of all cash
amounts that shall at the time be held by the predecessor Servicer for
remittance, or shall thereafter be received by it with respect to the
Transferred Intangible Transition Property or the related Intangible
Transition Charges. As soon as practicable after receipt by the Servicer of
such Termination Notice, the Servicer shall deliver the Intangible
Transition Property Documentation to the successor Servicer. All reasonable
costs and expenses (including attorneys fees and expenses) incurred in
connection with transferring the Intangible Transition Property
Documentation to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section shall be paid
by the predecessor Servicer upon presentation of reasonable documentation
of such costs and expenses. Termination of PP&L as Servicer shall not
terminate PP&L's rights or obligations under the Contribution Agreement.
SECTION 6.02. NOTICE OF SERVICER DEFAULT. The Servicer shall
deliver to the Issuer, to the Trustee and to each Rating Agency promptly
after having obtained knowledge thereof, but in no event later than five
Business Days thereafter, written notice in an Officer's Certificate of any
event or circumstance which, with the giving of notice or the passage of
time, would become a Servicer Default under Section 6.01.
SECTION 6.03. WAIVER OF PAST DEFAULTS. The Trustee, with the
consent of Holders of the majority of the outstanding principal amount of
the Transition Bonds of all Series, may waive in writing any default by the
Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required remittances to the
Trustee of ITC Collections from Transferred Intangible Transition Property
in accordance with Section 5.10 of this Agreement. Upon any such waiver of
a past default, such default shall cease to exist, and any Servicer Default
arising therefrom shall be deemed to have been remedied for every purpose
of this Agreement. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereto.
SECTION 6.04. APPOINTMENT OF SUCCESSOR.
(a) Upon the Servicer's receipt of a Termination Notice pursuant to
Section 6.01 or the Servicer's resignation in accordance with the terms of
this Agreement, the predecessor Servicer shall continue to perform its
functions as Servicer under this Agreement and shall be entitled to receive
the requisite portion of the Quarterly Servicing Fees, until a successor
Servicer shall have assumed in writing the obligations of the Servicer
hereunder as described below. In the event of the Servicer's removal or
resignation hereunder, the Trustee shall appoint a successor Servicer, with
the consent of the Holders of a majority of the outstanding principal
amount of the Transition Bonds of all Series, and the successor Servicer
shall accept its appointment by a written assumption in form acceptable to
the Issuer and the Trustee. If, within 30 days after the delivery of the
Termination Notice, a new Servicer shall not have been appointed and
accepted such appointment, the Trustee may petition the PUC or a court of
competent jurisdiction to appoint a successor Servicer under this
Agreement. A Person shall qualify as a successor Servicer only if:
(i) such Person is permitted under PUC Regulations to perform the
duties of the Servicer pursuant to the Competition Act, the
Qualified Rate Order and this Agreement,
(ii) the Rating Agency Condition shall have been satisfied,
(iii) such Person enters into a servicing agreement with the Issuer
having substantially the same provisions as this Agreement,
(iv) such Person is Y2K Compliant.
(b) Upon appointment, the successor Servicer shall be the successor
in all respects to the predecessor Servicer under this Agreement and shall
be subject to all the responsibilities, duties and liabilities arising
thereafter relating thereto placed on the predecessor Servicer and shall be
entitled to the Quarterly Servicing Fees and all the rights granted to the
predecessor Servicer by the terms and provisions of this Agreement. No
successor Servicer shall be entitled to any Quarterly Servicing Fee in
excess of one and one-half percent of the Outstanding Amount of the Bonds
unless (i) prior notice shall have been given to the Rating Agencies and
(ii) the PUC shall have approved such Quarterly Servicing Fee.
(c) The successor Servicer may not resign unless it is prohibited
from serving as such by law.
SECTION 6.05. COOPERATION WITH SUCCESSOR. The Servicer covenants
and agrees with the Issuer that it will, on an ongoing basis, cooperate
with the successor Servicer and provide whatever information is, and take
whatever actions are, reasonably necessary to assist the successor Servicer
in performing its obligations hereunder.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01. AMENDMENT. This Agreement may be amended by the
Servicer and the Issuer, with the consent of the Trustee and the
satisfaction of the Rating Agency Condition (other than with respect to
Moody's), provided that prior notice of such amendment, accompanied by a
form of the proposed amendment, shall have been given to Moody's. 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 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 and the Opinion of Counsel
referred to in Section 3.11. The Issuer and the Trustee may, but shall not
be obligated to, enter into any such amendment which affects their own
rights, duties or immunities under this Agreement or otherwise.
SECTION 7.02. NOTICES. All demands, notices and communications upon
or to the Servicer, the Issuer, the Trustee or the Rating Agencies under
this Agreement shall be in writing, delivered personally, via facsimile,
reputable overnight courier or by first class mail, postage prepaid, and
shall be deemed to have been duly given upon receipt
(a) in the case of the Servicer, to PP&L, ▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention of Treasurer;
(b) in the case of the Issuer, to PP&L Transition Bond Company LLC,
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ Number 3; ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention of Managers;
(c) in the case the Trustee, at the address provided for notices or
communications to such Person in the Indenture;
(d) in the case of Moody's, to ▇▇▇▇▇'▇ Investors Service, Inc., ABS
Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
(e) in the case of Standard & Poor's, to Standard & Poor's
Corporation, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset
Backed Surveillance Department; and
(f) in the case of Fitch IBCA, to Fitch IBCA, Inc., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS Surveillance;
or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
SECTION 7.03. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 5.03 and 5.04 and as
provided in the provisions of this Agreement concerning the resignation of
the Servicer, this Agreement may not be assigned by the Servicer.
SECTION 7.04. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of
this Agreement are solely for the benefit of the Servicer, the Issuer and
the Trustee, on behalf of itself and the Transition Bondholders, and
nothing in this Agreement, whether express or implied, shall be construed
to give to any other Person any legal or equitable right, remedy or claim
in any Collateral or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 7.05. 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 remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 7.06. 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 7.07. 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 7.08. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Pennsylvania, 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 7.09. ASSIGNMENT TO THE TRUSTEE. The Servicer hereby
acknowledges and consents to any pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the
benefit of the Transition Bondholders of all right, title and interest of
the Issuer in, to and under the Transferred Intangible Transition Property
owned by the Issuer and the proceeds thereof and the assignment of any or
all of the Issuer's rights hereunder to the Trustee. In no event shall the
Trustee have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer, hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
SECTION 7.10. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the PUC's
rights to order the sequestration and payment of revenues arising with
respect to the Transferred Intangible Transition Property notwithstanding
any bankruptcy, reorganization or other insolvency proceedings with respect
to the debtor, pledgor or transferor of the Transferred Intangible
Transition Property pursuant to Section 2812(d)(3)(v) of the Competition
Act, the Servicer shall not, prior to the date which is one year and one
day after the termination of the Indenture, petition or otherwise invoke or
cause the Issuer to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Issuer under
any federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of the property of
the Issuer, or ordering the winding up or liquidation of the affairs of the
Issuer.
SECTION 7.11. TERMINATION. This Agreement shall terminate when all
Transition Bonds have been retired, redeemed or defeased in full.
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.
PP&L TRANSITION BOND
COMPANY LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Title: Manager
PP&L, INC., as Servicer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title: Senior Vice President and
Chief Financial Officer
Acknowledged and Accepted:
THE BANK OF NEW YORK,
not in its individual
capacity but solely as
Trustee on behalf of the
Holders of the
Transition Bonds
By: /s/ Hugo Jendrot
----------------------------
Title: Assistant Vice President
ANNEX 1
TO
SERVICING AGREEMENT
The Servicer agrees to comply with the following with respect to PP&L
Transition Bond Company LLC (the "Issuer"):
SECTION 1. DEFINITIONS.
(a) Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Appendix A to the Servicing
Agreement dated August 10, 1999, between the Issuer and PP&L, Inc.,
as Servicer.
(b) Whenever used in this Annex 1, the following words and phrases
shall have the following meanings:
Adjustment Request means an application filed by the Servicer with
the PUC for revised Intangible Transition Charges pursuant to
Section 5(b) of this Annex.
SECTION 2. CALCULATION DATE STATEMENTS. For each Calculation Date,
the Servicer will provide to the Issuer and the Trustee a statement
indicating
(a) the Transition Bond Balance and the Projected Transition Bond
Balance for each Series as of the immediately preceding Payment
Date,
(b) the amount on deposit in the Overcollateralization Subaccount
and the Scheduled Overcollateralization Level as of the immediately
preceding Payment Date,
(c) the amount on deposit in the Capital Subaccount and the
required Capital Subaccount balance as of the immediately preceding
Payment Date;
(d) the amount on deposit in the Reserve Subaccount as of the
immediately preceding Payment Date;
(e) the Projected Transition Bond Balance and the Servicer's
projection of the Transition Bond Balance for the Payment Date
immediately preceding the next succeeding Adjustment Date;
(f) the Scheduled Overcollateralization Level and the Servicer's
projection of the amount on deposit in the Overcollateralization
Subaccount for the Payment Date immediately preceding the next
succeeding Adjustment Date;
(g) the required Capital Subaccount balance and the Servicer's
projection of the amount on deposit in the Capital Subaccount for
the Payment Date immediately preceding the next succeeding
Adjustment Date; and
(h) the Servicer's projection of the amount on deposit in the
Reserve Subaccount for the Payment Date immediately preceding the
next succeeding Adjustment Date;
On each annual Adjustment Date, the Servicer shall provide ▇▇▇▇▇'▇
with a schedule indicating any changes to Intangible Transition Charges by
Rate Schedule.
On a monthly basis, the Servicer shall prepare and deliver to
▇▇▇▇▇'▇ a statement setting forth (i) the Scheduled Overcollateralization
Level as of the immediately preceding Payment Date, (ii) the amount on
deposit in the Overcollateralization Subaccount as of the date of such
statement, (iii) any deposits or withdrawals from the Overcollateralization
Subaccount since the preceding statement, (iv) the required Capital
Subaccount balance as of the immediately preceding Payment Date, (v) the
amount on deposit in the Capital Subaccount as of the date of such
statement, (vi) any deposits or withdrawals from the Capital Subaccount
since the preceding statement, and (vii) the amount on deposit in the
Reserve Subaccount as of the date of such statement.
SECTION 3. REMITTANCE DATE STATEMENTS. On or before each Remittance
Date, but not more frequently than monthly, the Servicer shall prepare and
furnish to the Issuer and the Trustee a statement setting forth the
aggregate amount remitted or to be remitted by the Servicer to the Trustee
(net of any unreimbursed Excess Curve Payments) for deposit on such
Remittance Date pursuant to the Indenture.
SECTION 4. PAYMENT DATE STATEMENTS. On or before each Payment Date,
the Servicer will prepare and furnish to the Issuer and to the Trustee a
statement setting forth the transfers and payments to be made in respect of
such Payment Date pursuant to Section 8.02(d) of the Indenture and the
amounts thereof and the amounts to be paid to Holders of Transition Bonds
of each Series pursuant to Section 8.02(e) of the Indenture.
SECTION 5. INTANGIBLE TRANSITION CHARGES ADJUSTMENTS.
(a) Prior to each Calculation Date, the Servicer shall calculate
(i) the Transition Bond Balance as of each Calculation Date (a
written copy of which shall be delivered by the Servicer to the
Trustee within five days following such Calculation Date) and
(ii) the revised Intangible Transition Charges with respect to
the Transferred Intangible Transition Property for the
then-current calendar year and each subsequent calendar year,
such that the Servicer projects that ITC Collections therefrom
allocable to the Issuer will be sufficient so that:
(A) the Transition Bond Balance on the Payment Date
immediately preceding the next Adjustment Date will equal
the Projected Transition Bond Balance as of such date or,
with respect to the period in which monthly rate
adjustments are utilized, the 25th day of the month (or if
such day is not a Business Day, the next following Business
Day) immediately preceding the next monthly Adjustment
Date, taking into account any amounts on deposit in the
Reserve Subaccount,
(B) the amount on deposit in the Overcollateralization
Subaccount on the Payment Date immediately preceding the
next Adjustment Date or, with respect to the period in
which monthly rate adjustments are utilized, the 25th day
of the month (or if such day is not a Business Day, the
next following Business Day) immediately preceding the next
monthly Adjustment Date, will equal the Scheduled
Overcollateralization Level for such date, taking into
account amounts on deposit in the Reserve Subaccount,
(C) the amount on deposit in the Capital Subaccount on the
Payment Date immediately preceding the next Adjustment
Date, or, with respect to the period in which monthly rate
adjustments are utilized, the 25th day of the month (or if
such day is not a Business Day, the next following Business
Day) immediately preceding the next monthly Adjustment
Date, will equal its required level for such date, taking
into account any amounts on deposit in the Reserve
Subaccount, and
(D) thereafter the ITC Collections will provide for
amortization of the remaining outstanding principal amount
of each Series in accordance with the Expected Amortization
Schedule therefor, payment of interest on each Series when
due and deposits to the Overcollateralization Subaccount
such that the balance therein will equal the Scheduled
Overcollateralization Level on each Payment Date.
(b) On each Calculation Date, the Servicer shall take the following
actions:
(i) The Servicer shall make annual reconciliation filings with
the PUC on October 1 of each year to and including the October
1 2007 Calculation Date. These filings shall include:
(A) actual over-collections of Intangible Transition
Charges or under-collections of Intangible Transition
Charges (collectively, "Over/Under Collections") for the
eight months from the beginning of the current calendar
year until August 31,
(B) an estimate of Over/Under Collections for the four
months ending on the immediately following December 31 and
(C) forecasts of other items as permitted by the Qualified
Rate Order.
On December 15, the Servicer shall file actual Over/Under
Collection data as of November 30, replacing the estimates
submitted on October 1; the December 15 filing shall include a
tariff supplement and supporting data setting forth new
Intangible Transition Charges to become effective on the next
January 1.
(ii) The Servicer shall make interim reconciliation filings
with the PUC, with respect to the July 1, 2008 and October 1,
2008 Adjustment Dates, on June 15, 2008 and September 15, 2008,
respectively, and on the fifteenth day of the month preceding
each monthly Adjustment Date thereafter commencing with the
December 15, 2008 Calculation Date, in order to minimize any
possible Over/Under Collection of Intangible Transition Charges
until the next interim reconciliation adjustment becomes
effective. Each such interim adjustment will become effective
on the immediately following Adjustment Date. Such interim
reconciliation filings will be based upon, inter alia, the
cumulative differences between:
(A) the amount needed in order to provide for amortization
of the remaining outstanding principal amount of each
Series in accordance with the Expected Amortization
Schedule therefor, payment of interest on each Series when
due, deposits to the Overcollateralization Subaccount such
that the balance therein will equal the applicable
Scheduled Overcollateralization Level and replenishment of
any withdrawals from the Capital Account, and
(B) actual remittances of Intangible Transition Charges to
the Trustee.
(c) On each Adjustment Date, the Servicer shall
(i) take all reasonable actions and make all reasonable efforts
in order to effectuate all adjustments approved by the PUC to
the Intangible Transition Charges, and
(ii) promptly send to the Trustee copies of all material
notices and documents relating to such adjustments.
EXHIBIT A
TO
SERVICING AGREEMENT
The Servicer agrees to comply with the following servicing
procedures:
SECTION 1. Definitions.
(a) Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Servicing Agreement dated as of
August 10, 1999, between the Issuer and
PP&L, as Servicer (the "Servicing Agreement").
(b) Whenever used in this Exhibit A, the following words and
phrases shall have the following meanings:
Adjustment Request has, with respect to the Issuer, the meaning
given to such term in Annex 1.
Applicable MDMA means with respect to each Customer, the meter
data management agent or Third Party providing meter reading
services for that Customer's account.
Applicable Third Party means, with respect to each Customer, the
Third Party, if any, providing billing or metering services to
that Customer.
Billed Intangible Transition Charges means the amounts billed to
Customers pursuant to the Intangible Transition Charges, whether
billed directly to such Customers by the Servicer or indirectly
through a Third Party pursuant to Consolidated Third Party
Billing.
Bills means each of the regular monthly bills, the summary
bills, the opening bills and the Closing Bills issued to
Customers or Third Parties by PP&L.
Budget Payment Plan means a levelized payment plan offered by
PP&L, which, if elected by a Customer, provides for level
monthly ▇▇▇▇ charges to such Customer. For Residential
Customers, this charge is calculated by calculating actual
electricity charges for the previous year, adjusted for weather,
and dividing this amount by twelve. The number which result from
this calculation is charged to the Residential Customer each
month. In the twelfth month, PP&L bills the Residential customer
for actual use in that month, adjusted for any excess or deficit
the Customer has paid PP&L over the prior eleven months. If the
Customer owes PP&L $4 or more over the normal budget amount,
that Customer has the option repaying the full amount in the
twelfth month, or spreading the amount of this deficit in equal
installments over the first four months of the Customer's next
budget year. The procedure is similar for Small Commercial and
Industrial and Large Commercial and Industrial Customers, except
that the charges for previous year is divided by eleven to
determine the amount that is charged for each month.
Closing ▇▇▇▇ means the final ▇▇▇▇ issued to a Customer at the
time service is terminated.
Consolidated Third Party Billing means the billing option
available to Customers served by a Third Party pursuant to which
such Third Party will be responsible for billing and collecting
all charges to Customers electing such billing option, including
the Intangible Transition Charges, and will become obligated to
the Servicer for such Billed Intangible Transition Charges, all
in accordance with applicable PUC Regulations and orders.
Full Consolidated Third Party Billing means the billing option
available to Customers served by a Third Party, if such option
is approved by the utility with respect to such Third Party,
pursuant to which such Third Party performs the same tasks it
would perform under Consolidated Third Party Billing, including
billing Customers the itemized charges supplied by the Servicer
to such Third Party.
Intangible Transition Charge Effective Date means the date on
which the initial Intangible Transition Charges go into effect
pursuant to the QRO.
Intangible Transition Charge Termination Date means the date on
which the Intangible Transition Charges will cease to be billed
pursuant to the terms of the QRO.
Net Write-Off Percent means the number (expressed as a percent)
equal to:
(i) the amount by which Write-Offs attributable to a
particular Billing Period exceed Write-Off recoveries
attributable to such Billing Period, divided by
(ii) the total billed revenue attributable to such Billing
Period.
Servicer Policies and Practices means, with respect to the
Servicer's duties under this Exhibit A, the policies and
practices of the Servicer applicable to such duties that the
Servicer follows with respect to comparable assets that it
services for itself.
Variables means the following variables for each Customer Class
used in calculating Adjustment Requests:
(i) the 30-day outstanding billed revenue;
(ii) the 60-day outstanding billed revenue;
(iii) the 90-day outstanding billed revenue (which may be
solved for in accordance with applicable Servicer Policies
and Practices);
(iv) the 120-day outstanding billed revenue (which may be
solved for in accordance with applicable Servicer Policies
and Practices);
(v) the 150-day outstanding billed revenue (which may be
solved for in accordance with applicable Servicer Policies
and Practices);
(vi) the 180-day outstanding billed revenue (which may be
solved for in accordance with applicable Servicer Policies
and Practices);
(vii) the estimated Net Write-Off percentage; and
(viii) the projected billed revenue to which Intangible
Transaction Charges apply.
Write-Offs means write-offs of Billed Intangible Transition
Charges that remain unpaid by Customers or Third Parties as of
210 days after the issuance of the Closing
Bills containing such charges.
SECTION 2. Data Acquisition.
(a) Installation and Maintenance of Meters. Except to the extent
that a Third Party is responsible for such services, the Servicer
shall use its best efforts to cause to be installed, replaced and
maintained meters in such places and in such condition as will
enable the Servicer to obtain usage measurements for each Customer
approximately every 30 days or as provided in the applicable
tariff.
(b) Meter Reading. At least once each calendar month, the Servicer
shall obtain usage measurements from the Applicable MDMA for each
Customer; provided, however, that the Servicer may determine any
Customer's usage on the basis of estimates in accordance with
applicable PUC Regulations.
(c) Cost of Metering. The Issuer shall not be obligated to pay any
costs associated with the metering duties set forth in this Section
2, including, but not limited to, the costs of installing,
replacing and maintaining meters, nor shall the Issuer be entitled
to any credit against the Servicing Fee for any cost savings
realized by the Servicer or any Third Party as a result of new
metering and/or billing technologies.
SECTION 3. Usage and ▇▇▇▇ Calculation.
The Servicer shall obtain a calculation of each Customer's usage
(which may be based on data obtained from such Customer's meter read or on
usage estimates determined in accordance with applicable PUC Regulations)
at least once each calendar month and shall determine therefrom each
Customer's individual Intangible Transition Charge to be included on such
Customer's ▇▇▇▇ pursuant to PUC Regulations.
SECTION 4. Billing.
The Servicer shall implement the Intangible Transition Charges as
of the Intangible Transition Charge Effective Date and shall thereafter
▇▇▇▇ each Customer or the Applicable Third Party for the respective
Customer's outstanding current and past due Intangible Transition Charges
accruing through the Intangible Transition Charge Termination Date, all in
accordance with the following:
(a) Frequency of Bills; Billing Practices. In accordance with the
Servicer's then-existing Servicer Policies and Practices for its
own charges, as such Servicer Policies and Practices may be
modified from time to time, the Servicer shall generate and issue a
▇▇▇▇ to each Customer, or, in the case of a Customer who has
elected Consolidated Third Party Billing, to an Applicable Third
Party, for such Customer's respective Intangible Transition Charge
as a general practice once approximately every 30 days or such
other time period as allowed by the PUC, at the same time, with the
same frequency and on the same ▇▇▇▇ as that containing the
Servicer's own charges to such Customer or Third Party, as the case
may be. In the event that the Servicer makes any material
modification to these practices, it shall notify the Issuer, the
Trustee and the Rating Agencies as soon as practicable, and in no
event later than 60 Business Days after such modification goes into
effect; provided, however, that
(i) the Servicer may not make any modification that will
materially adversely affect the Transition Bondholders and
(ii) the Rating Agencies shall receive prior notice of any
modification that would change the frequency with which
Bills are issued or would change any tariff
charged.
(b) Format.
(i) Each ▇▇▇▇ to a Customer shall contain the charge
corresponding to the respective Intangible Transition Charge
owed by such Customer for the Billing Period. For residential
Customers, the Customer's ▇▇▇▇ will include a line-item
containing a combined Intangible Transition Charge and
Competitive Transaction Charge, and the amount of the Intangible
Transition Charge will appear as a footnote to the ▇▇▇▇. For all
other Customers, each Customer's ▇▇▇▇ will include a separate
line-item for the Customer's Intangible Transition Charge.
(ii) In the case of each Customer that has elected Consolidated
Third Party Billing, the Servicer shall deliver to the
Applicable Third Party itemized charges for such Customer
including the amount of such Customer's Intangible Transition
Charge to be remitted by the Servicer to the Issuer.
(iii) The Servicer shall conform to such requirements in respect
of the format, structure and text of Bills delivered to
Customers and Third Parties as applicable PUC Regulations shall
from time to time prescribe. To the extent that ▇▇▇▇ format,
structure and text are not prescribed by the Competition Act,
other applicable law or PUC Regulations, the Servicer shall,
subject to clauses (i) and (ii) above, determine the format,
structure and text of all Bills in accordance with its
reasonable business judgment, its Servicer Policies and
Practices with respect to its own charges and prevailing
industry standards.
(c) Delivery. The Servicer shall deliver all Bills to Customers
(i) by United States mail in such class or classes as are
consistent with the Servicer Policies and Practices followed by
the Servicer with respect to its own charges or
(ii) by any other means, whether electronic or otherwise, that
the Servicer may from time to time use to present its own
charges to its customers.
In the case of Customers that have elected Consolidated Third Party
Billing, the Servicer shall deliver all Bills to the Applicable
Third Parties by such means as are prescribed by applicable PUC
Regulations, or if not prescribed by applicable PUC Regulations, by
such means as are mutually agreed upon by the Servicer and the
Applicable Third Party and are consistent with PUC Regulations. The
Servicer or a Third Party, as applicable, shall pay from its own
funds all costs of issuance and delivery of all Bills, including
but not limited to printing and postage costs as the same may
increase or decrease from time to time.
SECTION 5. Customer Service Functions.
The Servicer shall handle all Customer inquiries and other Customer
service matters according to the same procedures it uses to service
Customers with respect to its own charges.
SECTION 6. Collections; Payment Processing; Remittance.
(a) Collection Efforts, Policies, Procedures.
(i) The Servicer shall use reasonable efforts to collect all
Billed Intangible Transition Charges from Customers and Third
Parties as and when the same become due and shall follow such
collection procedures as it follows with respect to comparable
assets that it services for itself or others, including with
respect to the following:
(A) The Servicer shall prepare and deliver overdue notices
to Customers and Third Parties in accordance with applicable
PUC Regulations and Servicer Policies and Practices.
(B) The Servicer shall apply late payment charges to
outstanding Customer and Third Party balances in accordance
with applicable PUC Regulations. All late payment charges
and interest collected shall be payable to and retained by
the Servicer as a component of its compensation under the
Servicing Agreement, and the Issuer shall not have any right
to share in the same.
(C) The Servicer shall deliver verbal and written final call
notices in accordance with applicable PUC Regulations and
Servicer Policies and Practices.
(D) The Servicer shall adhere and carry out disconnection
policies in accordance with the Competition Act, other
applicable law and PUC Regulations and Servicer Policies and
Practices.
(E) The Servicer may employ the assistance of collections
agents in accordance with applicable PUC Regulations and
Servicer Policies and Practices.
(F) The Servicer shall apply Customer and Third Party
deposits to the payment of delinquent accounts in accordance
with applicable PUC Regulations and Servicer Policies and
Practices and according to the priorities set forth in
Section 6(b)(ii), (iii) and (iv) of this Exhibit A.
(G) The Servicer shall promptly take all necessary action in
accordance with applicable PUC Regulation to terminate
billing of Intangible Transition Charges by Third Parties
whose payments are 25 or more days delinquent for
residential Customers or 20 or more days delinquent for all
other Customers and to collect the Billed Intangible
Transition Charges directly from the applicable Customers.
(ii) The Servicer shall not waive any late payment charge or any
other fee or charge relating to delinquent payments, if any, or
waive, vary or modify any terms of payment of any amounts
payable by a Customer, in each case unless such waiver or
action:
(A) would be in accordance with the Servicer's customary
practices or those of any successor Servicer with respect to
comparable assets that it services for itself and for
others;
(B) would not materially adversely affect the rights of the
Transition Bondholders; and
(C) would comply with applicable law; provided, however,
that notwithstanding anything in the Servicing Agreement or
this Exhibit A to the contrary, the Servicer is authorized
to write off any Billed Intangible Transition Charges, in
accordance with its Servicer Policies and Practices, that
remain outstanding for 210 days.
(iii) The Servicer shall accept payment from Customers in
respect of Billed Intangible Transition Charges in such forms
and methods and at such times and places as it accepts for
payment of its own charges. The Servicer shall accept payment
from Third Parties in respect of Billed Intangible Transition
Charges in such forms and methods and at such times and places
as the Servicer and each Third Party shall mutually agree in
accordance with applicable PUC Regulations.
(b) Payment Processing; Allocation; Priority of Payments.
(i) The Servicer shall post all payments received to Customer
accounts as promptly as practicable, and, in any event,
substantially all payments shall be posted no later than
two Business Days after receipt.
(ii) Subject to clause (iii) below, the Servicer shall apply
payments received to each Customer's or Third Party's account in
proportion to the charges contained on the outstanding ▇▇▇▇ to
such Customer or Third Party.
(iii) Any amounts collected by the Servicer that represent
partial payments of the total ▇▇▇▇ to a Customer or Third Party
shall be allocated in accordance with the priorities set forth
in Section 3.02(b) of the Servicing Agreement.
(iv) The Servicer shall hold all over-payments for the benefit
of the Issuer and shall apply such funds to future ▇▇▇▇ charges
in accordance with clauses (ii) and (iii) above as such charges
become due.
(v) For Customers on a Budget Payment Plan, the Servicer shall
treat ITC Collections received from such Customers as if such
Customers had been billed for their respective Intangible
Transition Charges in the absence of the Budget Payment Plan.
Partial payment of a Budget Payment Plan payment shall be
allocated according to clause (iii) above, and overpayment of a
Budget Payment Plan payment shall be allocated according to
clause (iv) above.
(c) Accounts; Records.
(i) The Servicer shall maintain accounts and records as to the
Transferred Intangible Transition Property accurately and in
accordance with its standard accounting procedures and in
sufficient detail to permit reconciliation between payments or
recoveries with respect to the Transferred Intangible Transition
Property and the amounts from time to time remitted to the
Collection Account in respect of the Transferred Intangible
Transition Property.
(ii) The Servicer shall maintain accounts and records as to
Third Parties performing Consolidated Third Party Billing or
Full Consolidated Third Party Billing for Customers accurately
and in accordance with its standard accounting procedures and in
sufficient detail to permit reconciliation between payments or
recoveries with respect to the Transferred Intangible Transition
Property and amounts owed by such Customers in respect of
Intangible Transition Charges.
(d) Investment of ITC Collections Received. Prior to remittance on
the applicable Remittance Date, the Servicer may invest ITC
Collections received at its own risk and for its own benefit, and
such investments and funds shall not be required to be segregated
from the other investments and funds of the Servicer.
(e) Calculation of Collections; Determination of Aggregate
Remittance Amount.
(i) On or before each Remittance Date, the Servicer shall
calculate the total ITC Collections received by the Servicer
from or on behalf of Customers during prior Collection Periods
in respect of all previously Billed Intangible Transition
Charges.
(ii) In accordance with Section 4.01 of the Servicing Agreement
and Annex I, the Servicer shall update the Variables and shall
prepare Adjustment Requests to reflect the updated Variables
when required to do so pursuant to Annex I.
(f) Remittances.
(i) The Servicer shall make remittances to the Issuer in
accordance with Section 5.10 of the Servicing Agreement.
(ii) In the event of any change of account or change of
institution affecting the remittances, the Issuer shall provide
written notice thereof to the Servicer by the earlier of:
(A) five Business Days from the effective date of such
change, or
(B) five Business Days prior to the next applicable
Remittance Date.
APPENDIX A
MASTER DEFINITIONS
The definitions contained in this Appendix A are applicable to the singular
as well as the plural forms of such terms.
Act has the meaning specified in Section 11.03 of the Indenture.
Adjustment Date means (i) January 1 of each year through January 1,
2008, (ii) July 1, 2008 and October 1, 2008 and (iii) the first day
of each calendar month thereafter, commencing January 1, 2009.
Administration Agreement means the Administration Agreement dated
August 10, 1999, between PP&L, as Administrator, and the Issuer.
Administrator means PP&L as administrator under the Administration
Agreement.
Affiliate means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with
such specified Person. For the purposes of this definition, control
when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms controlling and controlled
have meanings correlative to the foregoing.
Annual Accountant's Report has the meaning assigned to that term in
Section 3.07 of the Servicing Agreement.
Assignment means the Assignment executed and delivered by PP&L in
favor of CEP Securities pursuant to, and in the form set forth in
Exhibit A of, the Contribution Agreement.
Authorized Denominations means, with respect to any Series or Class
of Transition Bonds, $1,000 and integral multiples thereof, or such
other denominations as may be specified in the Series Supplement
therefor.
Authorized Officer means, with respect to the Issuer, any Manager
or the Member of the Issuer and, with respect to the Member of the
Issuer, any officer who is authorized to act for the Member in
matters relating to the Issuer and who is identified on the list of
Authorized Officers delivered by the Member to the Trustee as of
the date hereof (as such list may be modified or supplemented from
time to time thereafter).
Basic Documents means the Issuer LLC Agreement, the Issuer
Certificate of Formation, the Contribution Agreement, the
Assignment, the Sale Agreement, the Servicing Agreement, the
Administration Agreement, the Indenture and any Bills of Sale.
Billing Month means a particular calendar month during which
Intangible Transition Charges are billed to Customers.
▇▇▇▇ of Sale means any ▇▇▇▇ of sale issued by CEP Securities to the
Issuer pursuant to the Sale Agreement evidencing the sale of
Intangible Transition Property by CEP Securities to the Issuer.
Bond Rate means, with respect to each Series or, if applicable,
each Class of Transition Bonds, the rate at which interest accrues
on the principal balance of Transition Bonds of such Series or
Class, as specified in the Series Supplement therefor.
Book-Entry Transition Bonds means beneficial interests in the
Transition Bonds, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section
2.11 of the Indenture.
Business Day means any day other than a Saturday or Sunday or a day
on which banking institutions in the City of Allentown,
Pennsylvania, or in the City of New York, New York are required or
authorized by law or executive order to remain closed.
Calculation Date means, (i) with respect to each Adjustment Date
through the January 1, 2008 Adjustment Date, the October 1
preceding such Adjustment Date through October 1, 2007, and (ii)
thereafter, the fifteenth day of the month preceding each
Adjustment Date, commencing June 15, 2008 with respect to the July
1, 2008 Adjustment Date.
Capital Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
CEP Securities means CEP Securities Co. LLC, a Delaware limited
liability company, or its successor.
Class means, with respect to any Series, any one of the classes of
Transition Bonds of that Series, as specified in the Series
Supplement for that Series.
Class Final Maturity Date means the Final Maturity Date of a
Class, as specified in the Series Supplement for the related Series.
Clearing Agency means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
Clearing Agency Participant means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency.
Code means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
Collateral has the meaning specified in the Granting Clause of the
Indenture.
Collection Account has the meaning specified in Section 8.02(a) of
the Indenture.
Collection Period means the period from and including the first day
of a calendar month to but excluding the first day of the next
calendar month.
Collections Curve means a separate forecast prepared by the
Servicer for each Customer Class of the percentages of amounts
billed in a Billing Month that are expected to be received during
each of the following seven months.
Collections Curve Payment means, with respect to a Billing Month,
the sum of the amounts paid to the Trustee over a seven-month
period following that Billing Month based on the Collections Curves
for that Billing Month.
Commission means the U.S. Securities and Exchange Commission, and
any successor thereof.
Competition Act means the Pennsylvania Electricity Generation
Customer Choice and Competition Act, Chapter 28 of Title 66 of the
Pennsylvania Consolidated Statutes, 66 Pa. C.S., Sections 2801, et
seq.
Competitive Transition Charges means the competitive transition
charges that PP&L may impose on Customers pursuant to the
Competition Act and the Qualified Rate Order.
Contract Rights has the meaning specified in Section 2.01 of the
Contribution Agreement.
Contributed Property has the meaning specified in Section 2.01 of
the Contribution Agreement.
Contribution Agreement means the Contribution Agreement, dated as
of May 13, 1999, among PP&L, Group, Reserves and CEP Securities, as
amended by the Amendment No. 1 thereto dated August 10, 1999, as
the same may be further amended and supplemented from time to time.
Corporate Trust Office means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at date of the execution of this
Indenture is located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Asset Backed Finance Unit or at such
other address as the Trustee may designate from time to time by
notice to the Transition Bondholders and the Issuer, or the
principal corporate trust office of any successor Trustee (the
address of which the successor Trustee will notify the Transition
Bondholders and the Issuer).
Covenant Defeasance Option has the meaning specified in Section
4.01 of the Indenture.
Curve Payment Shortfall means, with respect to each Billing Month
and the Reconciliation Date for such Billing Month, the excess of
actual ITC Collections the Servicer has received for that Billing
Month over the Collections Curve Payments previously made to the
Trustee for that Billing Month.
Customer Class means each of the customer classes specified in the
Qualified Rate Order.
Customers means each person that
(a) was a retail customer of electric service of PP&L located
within PP&L's service territory on January 1, 1997 or that
became a retail customer of electric service of PP&L located
within PP&L's service territory after January 1, 1997,
(b) is still located within PP&L's service territory, and
(c) is receiving distribution service from PP&L.
Daily Remittance Date means, if the Servicer has not satisfied the
conditions of Section 5.10(b) of the Servicing Agreement, every
second Business Day.
Default means any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
Defeasance Subaccount has the meaning specified in Section 8.02(a)
of the Indenture.
Definitive Transition Bonds has the meaning specified in Section
2.11 of the Indenture.
DTC Agreement means the agreement between the Issuer, the Trustee
and The Depository Trust Company, as the initial Clearing Agency,
dated as of the Closing Date, relating to the Transition Bonds,
as the same may be amended and supplemented from time to time.
Eligible Securities Account means either:
(a) a segregated account with an Eligible Institution or
(b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws
of the United States of America or any State (or any domestic
branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long
as any of the securities of such depository institution shall
have a credit rating from each Rating Agency in one of its
generic rating categories which signifies investment grade.
Eligible Guarantor Institution means a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as "an eligible
guarantor institution," including (as such terms
are defined therein):
(a) a bank;
(b) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;
(c) a credit union;
(d) a national securities exchange, registered securities
association or clearing agency; or
(e) a savings association that is a participant in a securities
transfer association.
Eligible Institution means:
(a) the corporate trust department of the Trustee, so long as
any of the securities of the Trustee have a credit rating from
each Rating Agency in one of its generic rating categories which
signifies investment grade, or
(b) a depository institution organized under the laws of the
United States of America or any State (or any domestic branch of
a foreign bank), which
(i) has either
(A) with respect to any Eligible Investment having a
maturity of greater than one month, a long-term unsecured
debt rating of "AAA" by Standard & Poor's, "AAA" by Fitch
and "Al" by Moody's or
(B) with respect to any Eligible Investment having a
maturity one month or less, a certificate of deposit
rating of "A-1+" by Standard & Poor's and "P-1" by
Moody's, or any other long-term, short-term or
certificate of deposit rating acceptable to the Rating
Agencies and
(ii) whose deposits are insured by the FDIC.
Eligible Investments mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or
registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depositors institution or trust company incorporated under
the laws of the United States of America or any State thereof
(or any domestic branch of a foreign bank) and subject to
supervision and examination by Federal or State banking or
depository institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is
based on the credit of a Person other than such depository
institution or trust company) thereof shall have a credit rating
from each of the Rating Agencies in the highest investment
category granted thereby;
(c) commercial paper or other short term obligations of any
corporation organized under the laws of the United States of
America (other than PP&L) whose ratings, at the time of the
investment or contractual commitment to invest therein, from
each of the Rating Agencies are in the highest investment
category granted thereby;
(d) investments in money market funds having a rating from each
of the Rating Agencies in the highest investment category
granted thereby (including funds for which the Trustee or any of
its Affiliates act as investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is
a direct obligation of, or fully guaranteed by, the United
States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of
the United States of America, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (b) above;
(g) repurchase obligations with respect to any security or whole
loan entered into with
(i) a depository institution or trust company (acting as
principal) described in clause (b) above (except that the
rating referred to in the proviso in this clause (b) shall
be A-1+ or higher in the case of Standard & Poor's) (any
depository institution or trust company being referred to in
this definition as a "financial institution"),
(ii) a broker/dealer (acting as principal) registered as a
broker or dealer under Section 15 of the Exchange Act (any
broker/dealer being referred to in this definition as a
"broker/dealer"), the unsecured short-term debt obligations
of which are rated P-1 by Moody's and at least A-1+ by
Standard & Poor's at the time of entering into this
repurchase obligation, or
(iii) an unrated broker/dealer, acting as principal, that is
a wholly-owned subsidiary of a non-bank or bank holding
company the unsecured short-term debt obligations of which
are rated P-1 by Moody's and at least A-1+ by Standard &
Poor's at the time of purchase; or
(h) any other investment permitted by each of the Rating
Agencies;
provided, that, unless otherwise permitted by the Rating
Agencies, upon the failure of any Eligible Institution to
maintain any applicable rating set forth in this definition or
the definition of Eligible Institution, the related investments
at such institution shall be reinvested in Eligible Investments
at a successor Eligible Institution within 10 days.
Event of Default has the meaning specified in Section 5.01 of the
Indenture.
Excess Curve Payment means, with respect to each Billing Month and
the Reconciliation Date for such Billing Month, the excess of the
Collections Curve Payments previously made to the Trustee for that
Billing Month over actual ITC Collections the Servicer has
received for that Billing Month.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Expected Amortization Schedule means, with respect to each Series
or, if applicable, each Class of Transition Bonds, the expected
amortization schedule for principal thereof, as specified in the
Series Supplement therefor.
Expected Final Payment Date means, with respect to each Series or,
if applicable, each Class of Transition Bonds, the date when all
interest and principal is scheduled to be paid for that Series or
Class in accordance with the Expected Amortization Schedule, as
specified in the Series Supplement therefor.
FDIC means the Federal Deposit Insurance Corporation or any
successor.
Final Maturity Date means, for each Series or, if applicable, each
Class of Transition Bonds, the date by which all principal and
interest on the Transition Bonds is required to be paid, as
specified in the Series Supplement therefor.
Financing Issuance means an issuance of a new Series of Transition
Bonds under the Indenture to provide funds to finance the purchase
by the Issuer of Intangible Transition Property.
Fitch IBCA means Fitch IBCA, Inc., or its successor.
Formation Documents means, collectively, the Issuer LLC Agreement,
the Issuer Certificate of Formation and any other document pursuant
to which the Issuer is formed or governed, as the same may be
amended and supplemented from time to time.
General Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
Grant means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and ▇▇▇▇▇ ▇ ▇▇▇▇
upon and a security interest in and right of set-off against,
deposit, set over and confirm pursuant to this Indenture. A Grant
of the Collateral or of any other agreement or instrument shall
include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and
give receipt for principal, interest and other payments in respect
of the Collateral and all other moneys payable thereunder, to give
and receive notices and other communications, to make waivers or
other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and
generally to do and receive anything that the Granting party is or
may be entitled to do or receive thereunder or with respect
thereto.
Group means CEP Group, Inc., a Pennsylvania corporation, or its
successor.
Holder or Transition Bondholder means the Person in whose name a
Transition Bond of any Series or Class is registered on the
Transition Bond Register.
Indemnification Event means an event which triggers PP&L's
obligation to indemnify CEP Securities, the Issuer and the Trustee,
for itself and on behalf of the Transition Bondholders, and each of
their respective managers, officers, directors and agents, pursuant
to Section 5.01 of the Contribution Agreement.
Indemnity Amounts means any indemnification obligations payable by
PP&L pursuant to Section 5.01 of the Contribution Agreement or the
Servicer pursuant to Section 5.01 of the Servicing Agreement, as
applicable.
Indenture means the Indenture dated August 10, 1999, between the
Issuer and the Trustee, as the same may be amended and supplemented
from time to time by one or more indentures supplemental hereto,
and shall include the forms and terms of the Transition Bonds
established thereunder.
Independent means, when used with respect to any specified Person,
that the Person
(a) is in fact independent of the Issuer, any other obligor upon
the Transition Bonds, PP&L, Group, Reserves, CEP Securities and
any Affiliate of any of the foregoing Persons,
(b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other
obligor, PP&L, Group, Reserves, CEP Securities or any Affiliate
of any of the foregoing Persons and
(c) is not connected with the Issuer, any such other obligor,
PP&L, Group, Reserves, CEP Securities or any Affiliate of any of
the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing
similar functions.
Independent Certificate means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section
11.01 of the Indenture, made by an Independent appraiser or other
expert appointed by an Issuer Order and approved by the Trustee in
the exercise of reasonable care, and such opinion or certificate
shall state that the signer has read the definition of
"Independent" in this Appendix A and that the signer is Independent
within the meaning thereof.
Independent Manager has the meaning set forth in the Issuer LLC
Agreement.
Initial Intangible Transition Property means the Intangible
Transition Property sold by the Seller to the Issuer as of the
Initial Transfer Date pursuant to the Sale
Agreement.
Initial Transfer Date means the Series Issuance Date for the first
Series of Transition Bonds.
Insolvency Event means, with respect to a specified Person,
(a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any
substantial part of its property in an involuntary case under
any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part
of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain
unstayed and in effect for a period of 90 consecutive days or
(b) the commencement by such Person of a voluntary case under
any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such
Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official
for such Person or for any substantial part of its property, or
the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to
pay its debts as such debts become due, or the taking of action
by such Person in furtherance of any of the foregoing.
Intangible Transition Charge Adjustment means each adjustment to
Intangible Transition Charges related to the Transferred Intangible
Transition Property made in accordance with Section 4.01 of the
Servicing Agreement and the Issuer Annex.
Intangible Transition Charge Adjustment Process means the process
by which Intangible Transition Charges are adjusted pursuant to the
Servicing Agreement and the Competition Act.
Intangible Transition Charges means the intangible transition
charges authorized by the PUC to be imposed on all Customer bills
through a non-bypassable mechanism by PP&L or its successor or by
any other entity which provides electric service to Customers, to
recover Qualified Transition Expenses pursuant to the Competition
Act and the Qualified Rate Order.
Intangible Transition Property means the irrevocable right of PP&L
or its successor or assignee to collect Intangible Transition
Charges from Customers to recover through the issuance of
Transition Bonds the Qualified Transition Expenses described in the
Qualified Rate Order, including all right, title and interest of
PP&L or its successor or assignee in such order and in all
revenues, collections, claims, payments, money or proceeds of or
arising from Intangible Transition Charges pursuant to the
Qualified Rate Order, and all proceeds of any of the foregoing,
which term is intended and shall be construed to be the same as
"intangible transition property" as used in the Competition Act and
the Qualified Rate Order.
Intangible Transition Property Documentation means all documents
relating to the Intangible Transition Property, including copies of
the Qualified Rate Order and all documents filed with the PUC in
connection with any Intangible Transition Charges Adjustment, as
described in Section 3.08 of the Servicing Agreement.
Interest means, for any Payment Date for any Series or Class of
Transition Bonds, the sum, without duplication, of:
(a) an amount equal to the amount of interest accrued at the
applicable interest rates from the prior Payment Date
with respect to that Series or Class;
(b) any unpaid interest, to the extent permitted by law, plus
any interest accrued on this unpaid interest;
(c) if the Transition Bonds have been declared due and
payable, all accrued and unpaid interest thereon; and
(d) with respect to a Series or Class to be redeemed prior to
the next Payment Date, the amount of interest that will
be payable as interest on the Series on that Redemption
Date.
Issuer means PP&L Transition Bond Company LLC, a Delaware limited
liability company, or its successor or the party named as such in
the Indenture until a successor replaces it and, thereafter, means
the successor.
Issuer Annex means, Annex 1 of the Servicing Agreement.
Issuer Certificate of Formation means the Certificate of Formation
of the Issuer which was filed with the Delaware Secretary of
State's Office on March 25, 1999.
Issuer LLC Agreement means the Amended and Restated Limited
Liability Company Agreement between the Issuer and PP&L, as sole
Member, dated August 10, 1999.
Issuer Officer's Certificate means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described
in, and otherwise complying with, the applicable requirements of
Section 11.01 of the Indenture, and delivered to the Trustee.
Unless otherwise specified, any reference in the Indenture to an
Officer's Certificate shall be to an Officer's Certificate of any
Authorized Officer of the Issuer.
Issuer Opinion of Counsel means one or more written opinions of
counsel who may, except as otherwise expressly provided in the
Indenture, be employees of or counsel to the Issuer and who shall
be reasonably satisfactory to the Trustee, and which opinion or
opinions shall be addressed to the Trustee, as Trustee, and shall
comply with any applicable requirements of Section 11.01 of the
Indenture, and shall be in a form reasonably satisfactory to the
Trustee.
Issuer Order and Issuer Request means a written order or request
signed in the name of the Issuer by any one of its Authorized
Officers and delivered to the Trustee.
ITC Collections means amounts collected in respect of Intangible
Transition Charges.
Legal Defeasance Option has the meaning specified in Section
4.01(b) of the Indenture.
Lien means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.
Losses means collectively, any and all liabilities, obligations,
losses, damages, payments, costs or expenses of any kind
whatsoever.
Manager means any manager of the Issuer.
Member means PP&L, as the sole member of the Issuer.
Monthly Remittance Date means, if the Servicer has satisfied the
conditions of Section 5.10(b) of the Servicing Agreement, the
fifteenth (15th) day of each calendar month (or if such fifteenth
(15th) day is not a Business Day, the next Business day).
Moody's means ▇▇▇▇▇'▇ Investors Service Inc., or its successor.
Officers' Certificate means a certificate signed, in the case of
PP&L, by
(a) the chairman of the board, the president, the vice chairman
of the board, any executive vice president or any vice
president; and
(b) the treasurer, any assistant treasurer, the secretary or any
assistant secretary
and, in the case of CEP Securities, by two of the Managers of CEP
Securities.
Operating Expenses means, with respect to the Issuer, all fees,
costs, expenses and indemnity payments owed by the Issuer,
including all amounts owed by the Issuer to the Trustee, the
Quarterly Servicing Fee, the quarterly fee payable by the Issuer to
the Administrator under the Administration Agreement, the fees and
expenses payable by the Issuer to the independent managers of the
Issuer, legal fees and expenses of the Servicer pursuant to Section
3.09 of the Servicing Agreement, and legal and accounting fees,
costs and expenses of the Issuer.
Opinion of Counsel means one or more written opinions of counsel
who may be an employee of or counsel to CEP Securities or PP&L,
which counsel shall be reasonably acceptable to the Trustee, the
Issuer or the Rating Agencies, as applicable, and which shall be in
form reasonably satisfactory to the Trustee, if applicable.
Outstanding with respect to Transition Bonds means, as of the date
of determination, all Transition Bonds theretofore authenticated
and delivered under the Indenture except:
(a) Transition Bonds theretofore canceled by the Transition Bond
Registrar or delivered to the Transition Bond Registrar for
cancellation;
(b) Transition Bonds or portions thereof the payment for which
money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Holders of
such Transition Bonds; provided, however, that if such
Transition Bonds are to be redeemed, notice of such redemption
has been duly given pursuant to the Indenture or provision
therefor, satisfactory to the Trustee, made; and
(c) Transition Bonds in exchange for or in lieu of other
Transition Bonds which have been authenticated and delivered
pursuant to the Indenture unless proof satisfactory to the
Trustee is presented that any such Transition Bonds are held by
a protected purchaser;
provided that in determining whether the Holders of the requisite
Outstanding Amount of the Transition Bonds or any Series or Class
thereof have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document,
Transition Bonds owned by the Issuer, any other obligor upon the
Transition Bonds, PP&L, Group, Reserves, CEP Securities or any
Affiliate of any of the foregoing Persons shall be disregarded and
deemed not to be Outstanding, except that, in determining whether
the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Transition Bonds that the Trustee knows to be so owned shall be so
disregarded. Transition Bonds so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Transition Bonds and that the
pledgee is not the Issuer, any other obligor upon the Transition
Bonds, PP&L, Group, Reserves, CEP Securities or any Affiliate of
any of the foregoing Persons.
Outstanding Amount means the aggregate principal amount of all
Outstanding Transition Bonds or, if the context requires, all
Outstanding Transition Bonds of a Series or Class Outstanding at
the date of determination.
Overcollateralization means, with respect to any Payment Date, an
amount that, if deposited to the Overcollateralization Subaccount,
would cause the balance in such subaccount to equal the Scheduled
Overcollateralization Level for such Payment Date, without regard
to investment earnings.
Overcollateralization Amount means, with respect to any Series of
Transition Bonds, the amount specified as such in the Series
Supplement therefor.
Overcollateralization Subaccount has the meaning specified in
Section 8.02(a) of the Indenture.
Paying Agent means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 of
the Indenture and is authorized by the Issuer to make the payments
of principal of or premium, if any, or interest on the Transition
Bonds on behalf of the Issuer.
Payment Date means, with respect to each Series or, if applicable,
each Class of Transition Bonds, each date or dates specified as
Payment Dates for such Series or Class in the Series Supplement
therefor.
Person means any individual, corporation, estate, partnership,
joint venture, association, joint stock company, trust (including
any beneficiary thereof), business trust, limited liability
company, unincorporated organization or government or any agency or
political subdivision thereof.
PP&L means PP&L, Inc., a Pennsylvania corporation, or its
successor.
Predecessor Transition Bond means, with respect to any particular
Transition Bond, every previous Transition Bond evidencing all or a
portion of the same debt as that evidenced by such particular
Transition Bond; and, for the purpose of this definition, any
Transition Bond authenticated and delivered under Section 2.06 of
the Indenture in lieu of a mutilated, lost, destroyed or stolen
Transition Bond shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Transition Bond.
Post-Retail Access means any period after the time that a Customer
was permitted to choose its electricity generation supplier.
Pre-Retail Access means any period prior to the time that a
Customer was permitted to choose its electricity generation
supplier.
Principal means, with respect to any Payment Date and each Series
or, if applicable, each Class of Transition Bonds:
(a) the amount of principal scheduled to be paid on such Payment
Date in accordance with the Expected Amortization Schedule;
(b) the amount of principal due on the Final Maturity Date of
any Series or Class on such Payment Date;
(c) the amount of principal due as a result of the occurrence
and continuance of an Event of Default and acceleration of
the Transition Bonds;
(d) the amount of principal and premium, if any, due as a result
of a redemption of Transition Bonds on such Payment Date; and
(e) any overdue payments of principal.
Proceeding means any suit in equity, action at law or other
judicial or administrative proceeding.
Projected Transition Bond Balance means, as of any date, the sum of
the amounts provided for in the Expected Amortization Schedules for
each outstanding Series of Transition Bonds and such date.
PUC means the Pennsylvania Public Utility Commission or any
successor.
PUC Regulations means any regulations, orders or directives
promulgated, issued or adopted by the PUC.
Qualified Rate Order means the Final Order issued by the PUC on
August 27, 1998 pursuant to the Competition Act, as such order has
been supplemented by the Supplemental Order issued by the PUC on
May 21, 1999, and as such order may hereafter be further
supplemented by an order of the PUC issued pursuant to paragraph 19
of the August 27, 1998 order.
Qualified Transition Expenses has the meaning assigned to that term
in the Competition Act and the Qualified Rate Order.
Quarterly Servicing Fee means the fee payable to the Servicer on
the Business Day preceding each Payment Date for services rendered,
in accordance with Section 5.07 of the Servicing Agreement.
Rating Agency means any rating agency rating the Transition Bonds
of any Class or Series at the time of issuance thereof at the
request of the Issuer. If no such organization or successor is any
longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable
Person designated by the Issuer, notice of which designation shall
be given to the Trustee under the Indenture, the Member of the
Issuer and the Servicer.
Rating Agency Condition means, with respect to any action, the
notification in writing by each Rating Agency to the Trustee and
the Issuer that such action will not result in a reduction or
withdrawal of the then current rating by such Rating Agency of any
outstanding Series or Class of Transition Bonds.
Reconciliation Date means, with respect to any Billing Month, the
twelfth (12th) day (or if such twelfth (12th) day is not a Business
Day, the next Business day) in the eighth month after such Billing
Month.
Record Date means, with respect to any Payment Date for a Series or
Class, the date set forth as such in the Series Supplement
therefor.
Redemption Date means, with respect to each Series or, if
applicable, each Class of Transition Bonds, the date for the
redemption of the Transition Bonds of such Series or Class pursuant
to Sections 10.01 or 10.02 of the Indenture or the Series
Supplement for such Series or Class, which in each case shall be a
Payment Date.
Redemption Price has the meaning set forth in Section 10.01 of the
Indenture.
Refunding Issuance means issuance of a new Series of Transition
Bonds hereunder to pay the cost of refunding, through redemption or
payment on the Expected Final Payment Date for a Series or Class of
Transition Bonds, all or part of the Transition Bonds of such
Series or Class to the extent permitted by the terms thereof.
Registered Holder means, as of any date, the Person in whose name a
Transition Bond is registered on the Transition Bond Register on
such date.
Released Parties has the meaning specified in Section 5.02(f) of
the Servicing Agreement.
Remittance Date means a Daily Remittance Date or a Monthly
Remittance Date, as applicable.
Required Capital Amount means a capital contribution in an amount
equal to the amount specified in the related Series Supplement,
representing a capital contribution from PP&L.
Reserve Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
Reserves means CEP Reserves, Inc., a Delaware corporation, or its
successor.
Responsible Officer means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any
Vice President, Assistant Vice President, Secretary, Assistant
Secretary, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
Retiring Trustee means a Trustee that resigns or vacates the office
of Trustee for any reason.
Sale Agreement means the Intangible Transition Property Sale
Agreement dated August 10, 1999, between the Seller and the Issuer.
Sale Date means each date on which the Seller sells, transfers,
assigns and conveys the Intangible Transition Property to the
Issuer.
Scheduled Overcollateralization Level means, with respect to any
Payment Date, the amount set forth as such in Schedule 1 of the
Indenture, as such Schedule has been adjusted in accordance with
Section 3.19 of the Indenture to reflect redemptions or defeasances
of Transition Bonds and issuances of additional Series of
Transition Bonds.
Seller means CEP Securities Co. LLC, a Delaware limited liability
company, or its successor, in its capacity as seller of the
Intangible Transition Property to the Issuer pursuant to the Sale
Agreement.
Series means any series of Transition Bonds issued and
authenticated by the Issuer pursuant to the Indenture, as specified
in the Series Supplement therefor.
Series Final Maturity Date means the Final Maturity Date for a Series.
Series Issuance Date means, with respect to any Series, the date on
which the Transition Bonds of such Series are to be originally
issued in accordance with Section 2.10 of the Indenture and the
Series Supplement for such Series.
Series Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
Series Supplement means an indenture supplemental to the Indenture
that authorizes a particular Series of Transition Bonds.
Servicer means PP&L, as the servicer of the Intangible Transition
Property, and each successor to PP&L (in the same capacity)
pursuant to Section 5.03 or 6.04 of the Servicing Agreement.
Servicer Default means an event specified in Section 6.01 of the
Servicing Agreement.
Servicing Agreement means the Servicing Agreement dated August 10,
1999, between the Issuer and the Servicer, as the same may be
amended and supplemented from time to time.
Servicing Fee means the fee paid by the Issuer to the Servicer on
each Payment Date with respect to each Series of Transition Bonds
in an amount to be specified in the Section 5.07 of the Servicing
Agreement.
Standard & Poor's, or S&P, means Standard & Poor's Rating Group, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, or its successor.
State means any one of the 50 states of the United States of
America or the District of Columbia.
Subsequent Intangible Transition Property means Intangible
Transition Property sold by the Seller to the Issuer as of a
Subsequent Transfer Date pursuant to the Sale Agreement.
Subsequent Sale means the sale of additional Intangible Transition
Property by the Seller to the Issuer after the Initial Transfer
Date, subject to the satisfaction of the conditions
specified in the Sale Agreement and the Indenture.
Subsequent Transfer Date means the date that a Subsequent Sale will
be effective, specified in a written notice provided by the Seller
to the Issuer pursuant to the Sale Agreement.
Successor Servicer means a successor Servicer appointed by the
Trustee pursuant to Section 6.01 of the Servicing Agreement which
will succeed to all the rights and duties of the Servicer under the
Servicing Agreement.
Supplemental Indenture means a supplemental indenture entered into
by the Issuer and the Trustee pursuant to Article IX of the
Indenture.
Supplemental Order means the Order of the PUC dated May 21, 1999,
supplementing the Qualified Rate Order.
Termination Notice has the meaning specified in Section 6.01 of the
Servicing Agreement.
Third Party means any third party, including any electric
generation supplier, providing billing or metering services,
licensed by the PUC pursuant to relevant provisions of the
Competition Act and any PUC order.
Transfer Date means the Initial Transfer Date or any Subsequent
Transfer Date, as applicable.
Transferred Intangible Transition Property means Intangible
Transition Property which has been sold, assigned and transferred
to the Issuer pursuant to the Sale Agreement.
Transition Bond means any of the transition bonds (as defined in
the Competition Act) issued by the Issuer pursuant to the
Indenture.
Transition Bond Balance means, as of any date, the aggregate
Outstanding Amount of all Series of Transition Bonds on such date.
Transition Bond Owner means, with respect to a Book-Entry
Transition Bond, the Person who is the beneficial owner of such
Book-Entry Transition Bond, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
Transition Bond Register means a register, kept by the Transition
Bond Registrar on behalf of the Issuer in which, subject to such
reasonable regulations as it may prescribe, the Transition Bond
Registrar shall provide for the registration of Transition Bonds
and the registration of transfers of Transition Bonds.
Transition Bond Registrar means the Trustee, in its capacity as
keeper of the Transition Bond Register, or any successor to the
Trustee in such capacity.
Trust Indenture Act or TIA means the Trust Indenture Act of 1939 as
in force on the date hereof, unless otherwise specifically
provided.
Trustee means The Bank of New York, a New York banking corporation,
or its successor or any successor Trustee under the Indenture.
UCC means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as
amended from time to time.
U.S. Government Obligations means direct obligations (or
certificates representing an ownership interest in such
obligations) of the United States of America (including any agency
or instrumentality thereof) for the payment of which the full faith
and credit of the United States of America is pledged and which are
not callable at the issuer's option.
Y2K Compliant means that computer systems and equipment with
date-sensitive chips will accurately process date and time data.