SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 10, 1999
PP&L Transition Bond Company LLC
(Exact name of registrant as specified in its charter)
Delaware 333-75369 23-3004428
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File No.) Identification No.)
Two North Ninth Street, GENA9-2, Room 3
Allentown, Pennsylvania 18101
(Address of Principal Executive Offices) (Zip Code)
(610) 774-7934
Registrant's telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Events
The Registrant registered issuances of Transition Bonds on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 by a Registration Statement on Form S-3 (Registration File No. 333-
75369). Pursuant to this Registration Statement, the Registrant issued and
sold $2,420,000,000 in aggregate principal amount of Transition Bonds,
Series 1999-1. The transaction was closed on August 10, 1999. In
connection with this transaction, the Registrant entered into the material
agreements and received the opinions attached hereto as exhibits.
Item 7. Financial Statements and Exhibits
A list of the Exhibits filed herewith is attached hereto.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
PP&L Transition Bond Company LLC
By: /s/ James E. Abel
-----------------------------
Name: James E. Abel
Title: Manager
Dated: August 17, 1999
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
1.1 Underwriting Agreement dated July 29, 1999 among PP&L,
Inc., PP&L Transition Bond Company LLC, CEP Securities Co.
LLC and Morgan Stanley & Co. Incorporated, as
representative of the several underwriters named therein.
4.1.2 Amended and Restated Limited Liability Company Agreement of
PP&L Transition Bond Company LLC dated August 10, 1999.
4.3.1 Indenture dated as of August 10, 1999 between PP&L
Transition Bond Company LLC and the Bank of New York.
4.3.2 Series Supplement dated as of August 10, 1999 between PP&L
Transition Bond Company LLC and the Bank of New York.
5.1 Opinion of Morgan, Lewis & Bockius LLP, relating to the
legality of the Transition Bonds.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with
respect to material federal tax matters.
10.1 Intangible Transition Property Sale Agreement dated August
10, 1999 between PP&L Transition Bond Company LLC and CEP
Securities Co. LLC.
10.2 Amendment Number 1 to the Intangible Transition Property
Contribution Agreement among PP&L, Inc., CEP Group, Inc.,
CEP Reserves, Inc. and PP&L Transition Bond Company LLC
dated August 10, 1999.
10.3 Intangible Transition Property Servicing Agreement dated
August 10, 1999 between PP&L Transition Bond Company LLC
and PP&L, Inc.
EXECUTION VERSION
PP&L TRANSITION BOND COMPANY LLC TRANSITION BONDS, SERIES 1999-1
PP&L TRANSITION BOND COMPANY LLC
UNDERWRITING AGREEMENT
New York, New York
July 29, 1999
To the Representative
named in Schedule I hereto
of the Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
1. Introduction. PP&L Transition Bond Company LLC (the
"ISSUER") proposes to sell to the underwriters named in Schedule II hereto
(the "UNDERWRITERS"), for whom you (the "REPRESENTATIVE") are acting as
representative, the principal amount of the PP&L Transition Bond Company
LLC Transition Bonds, Series 1999-1 (the "BONDS"), identified in Schedule I
hereto. If the firm or firms listed in Schedule II hereto include only the
firm or firms listed in Schedule I hereto, then the terms "Underwriters"
and "Representative", as used herein, shall each be deemed to refer to such
firm or firms.
The Bonds will be issued pursuant to a base indenture dated
on or about August 10, 1999, as supplemented by the Series 1999-1
Supplemental Indenture thereto (as so supplemented, the "INDENTURE"),
between the Issuer and The Bank of New York, as bond trustee (the
"TRUSTEE"). The Bonds will be secured primarily by Transferred Intangible
Transition Property sold to the Issuer by CEP Securities Co. LLC, a
Delaware limited liability company (the "SELLER"). The sole member and
owner of the entire equity interest in the Seller is CEP Reserves, Inc., a
Delaware corporation ("RESERVES"). All the issued and outstanding capital
stock of Reserves is owned by CEP Group, Inc., a Pennsylvania corporation
("GROUP"). All the issued and outstanding capital stock of Group is owned
by PP&L, Inc., an operating electric utility incorporated under the laws of
the Commonwealth of Pennsylvania (the "COMPANY"). The Seller acquired the
Intangible Transition Property pursuant to an Intangible Transition
Property Contribution Agreement among the Company, Group, Reserves and the
Seller dated May 13, 1999 (as amended and supplemented from time to time,
the "CONTRIBUTION AGREEMENT"). The Seller's sale of Transferred Intangible
Transition Property to the Issuer will occur pursuant to a Sale Agreement
between the Seller and the Issuer, dated on or about August 10, 1999 (the
"SALE AGREEMENT"). The Transferred Intangible Transition Property will be
serviced pursuant to a Servicing Agreement, dated on or about August 10,
1999, between the Company, as servicer, and the Issuer, as owner of the
Transferred Intangible Transition Property (as amended and supplemented
from time to time, the "SERVICING AGREEMENT").
Capitalized terms used and not otherwise defined in this
Underwriting Agreement shall have the meanings given to them in the
Indenture.
2. Representations and Warranties. I. Each of the Company
and the Issuer represents and warrants to, and agrees with, each
Underwriter as set forth below in this Section 2.I. Certain terms used in
this Underwriting Agreement are defined in Section 2.I(c) below.
(a) If the offering of the Bonds is a Delayed Offering (as
specified in Schedule I hereto), paragraph (i) below is applicable
and, if the offering of the Bonds is a Non-Delayed Offering (as so
specified), paragraph (ii) below is applicable.
(i) The Issuer and the Bonds meet the requirements
for the use of Form S-3 under the Securities Act of 1933
(the "ACT"), and the Issuer has filed with the Securities
and Exchange Commission (the "SEC") a registration statement
(the file number of which is set forth in Schedule I hereto)
on such Form, including a basic prospectus, for registration
under the Act of the offering and sale of the Bonds. The
Issuer may have filed one or more amendments thereto, and
may have used a Preliminary Final Prospectus, each of which
has previously been furnished to you. Such registration
statement, as so amended, has become effective. The offering
of the Bonds is a Delayed Offering and, although the Basic
Prospectus may not include all the information with respect
to the Bonds and the offering thereof required by the Act
and the rules thereunder to be included in the Final
Prospectus, the Basic Prospectus includes all such
information required by the Act and the rules thereunder to
be included therein as of the Effective Date. The Issuer
will next file with the SEC pursuant to Rules 415 and
424(b)(2) or (5) a final supplement to the form of
prospectus included in such registration statement relating
to the Bonds and the offering thereof. As filed, such final
prospectus supplement shall include all required information
with respect to the Bonds and the offering thereof and,
except to the extent the Representative shall agree in
writing to a modification, shall be in all substantive
respects in the form furnished to you prior to the Execution
Time or, to the extent not completed at the Execution Time,
shall contain only such specific additional information and
other changes (beyond that contained in the Basic Prospectus
and any Preliminary Final Prospectus) as the Issuer has
advised you, prior to the Execution Time, will be included
or made therein.
(ii) The Issuer and the Bonds meet the requirements
for the use of Form S-3 under the Act and the Issuer has
filed with the SEC a registration statement (the file number
of which is set forth in Schedule I hereto) on such Form,
including a basic prospectus, for registration under the Act
of the offering and sale of the Bonds. The Issuer may have
filed one or more amendments thereto, including a
Preliminary Final Prospectus, each of which has previously
been furnished to you. The Issuer will next file with the
SEC either (x) a final prospectus supplement relating to the
Bonds in accordance with Rules 430A and 424(b)(1) or (4), or
(y) prior to the effectiveness of such registration
statement, an amendment to such registration statement,
including the form of final prospectus supplement. In the
case of clause (x), the Issuer has included in such
registration statement, as amended at the Effective Date,
all information (other than Rule 430A Information) required
by the Act and the rules thereunder to be included in the
Final Prospectus with respect to the Bonds and the offering
thereof. As filed, such final prospectus supplement or such
amendment and form of final prospectus supplement shall
contain all Rule 430A Information, together with all other
such required information, with respect to the Bonds and the
offering thereof and, except to the extent the
Representative shall agree in writing to a modification,
shall be in all substantive respects in the form furnished
to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond
that contained in the Basic Prospectus and any Preliminary
Final Prospectus) as the Issuer has advised you, prior to
the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Final Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Final
Prospectus (and any supplement thereto) will, comply in all
material respects with the applicable requirements of the Act, the
Securities Exchange Act of 1934 (the "EXCHANGE ACT") and the Trust
Indenture Act of 1939 (the "TRUST INDENTURE ACT") and the
respective rules thereunder; on the Effective Date, the
Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; on the Effective Date and on the
Closing Date the Indenture did or will comply in all material
respects with the requirements of the Trust Indenture Act and the
rules thereunder; and, on the Effective Date, the Final Prospectus,
if not filed pursuant to Rule 424(b), did not or will not, and on
the date of any filing pursuant to Rule 424(b) and on the Closing
Date, the Final Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that neither the Issuer,
the Seller nor the Company makes any representations or warranties
as to (i) that part of the Registration Statement that shall
constitute the Statement of Eligibility and Qualification (Forms
T-1) under the Trust Indenture Act of the Trustee or (ii) the
information contained in or omitted from the Registration Statement
or the Final Prospectus (or any supplement thereto) in reliance
upon and in conformity with information furnished in writing to the
Issuer by or on behalf of any Underwriter through the
Representative specifically for inclusion in the Registration
Statement or the Final Prospectus (or any supplement thereto).
(c) The terms that follow, when used in this Underwriting
Agreement, shall have the meanings indicated. The term the
"EFFECTIVE DATE" shall mean each date that the Registration
Statement and any post-effective amendment or amendments thereto
became or become effective and each date after the date hereof on
which a document incorporated by reference in the Registration
Statement is filed. "EXECUTION TIME" shall mean the date and time
that this Underwriting Agreement is executed and delivered by the
parties hereto. "BASIC PROSPECTUS" shall mean the prospectus
referred to in paragraph (a) above contained in the Registration
Statement at the Effective Date including, in the case of a
Non-Delayed Offering, any Preliminary Final Prospectus.
"PRELIMINARY FINAL PROSPECTUS" shall mean any preliminary
prospectus supplement to the Basic Prospectus that describes the
Bonds and the offering thereof and is used prior to filing of the
Final Prospectus. "FINAL PROSPECTUS" shall mean the prospectus
supplement relating to the Bonds that is first filed pursuant to
Rule 424(b) after the Execution Time, together with the Basic
Prospectus or, if, in the case of a Non-Delayed Offering, no filing
pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Bonds, including the Basic Prospectus,
included in the Registration Statement at the Effective Date.
"REGISTRATION STATEMENT" shall mean the registration statement
referred to in paragraph (a) above, including incorporated
documents, exhibits and financial statements, as amended at the
Execution Time (or, if not effective at the Execution Time, in the
form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the
Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended. Such term shall include any
Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A. "Rule 415", "Rule 424",
"Rule 430A" and "Regulation S-K" refer to such rules or regulation
under the Act. "Rule 430A Information" means information with
respect to the Bonds and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A. Any reference herein to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of
Form S-3 that were filed under the Exchange Act on or before the
Effective Date of the Registration Statement or the issue date of
the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be; and any reference herein to the
terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement or the issue date of
the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be, deemed to be incorporated therein
by reference. A "NON-DELAYED OFFERING" shall mean an offering of
securities which is intended to commence promptly after the
effective date of a registration statement, with the result that,
pursuant to Rules 415 and 430A, all information (other than Rule
430A Information) with respect to the securities so offered must be
included in such registration statement at the effective date
thereof. A "DELAYED OFFERING" shall mean an offering of securities
pursuant to Rule 415 that does not commence promptly after the
effective date of a registration statement, with the result that
only information required pursuant to Rule 415 need be included in
such registration statement at the effective date thereof with
respect to the securities so offered. Whether the offering of the
Bonds is a Non-Delayed Offering or a Delayed Offering shall be set
forth in Schedule I hereto.
(d) PricewaterhouseCoopers LLP are independent certified
public accountants with respect to the Company, the Issuer and the
Seller as required by the Act and the rules
and regulations of the Commission thereunder.
(e) The Issuer has been duly organized and is validly
existing in good standing as a limited liability company under the
laws of the State of Delaware, has the power and authority to
conduct its business as presently conducted and as described in the
Final Prospectus and is duly qualified as a foreign corporation to
do business and in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary and in which the failure to so qualify
would have a materially adverse effect on the Issuer; and the
Issuer has all requisite power and authority to issue the Bonds and
purchase the Transferred Intangible Transition Property as
described in the Final Prospectus.
(f) The Company is a validly existing and subsisting
corporation under the laws of the Commonwealth of Pennsylvania;
each of the Company's subsidiaries is a validly existing
corporation under the laws of its jurisdiction of incorporation;
the Company has all requisite power and authority to own and occupy
its properties and carry on its business as presently conducted and
as described in the Final Prospectus and is duly qualified as a
foreign corporation to do business and in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary and in
which the failure to so qualify would have a materially adverse
effect on the Company.
(g) Each of the Basic Documents to which the Company or the
Issuer is a party has been duly authorized by the Company or the
Issuer, as applicable, and when executed and delivered by the
Issuer or the Company, as applicable, will constitute a valid and
binding obligation of the Company or the Issuer, as applicable,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditor's rights and to
general equity principles.
(h) The Bonds have been duly authorized and executed by the
Issuer and will conform to the description thereof in the
Prospectus; and when the Bonds are authenticated by the Trustee and
delivered to the Underwriters and are paid for by the Underwriters
in accordance with the terms of this Underwriting Agreement, the
Bonds will constitute the legal, valid and binding obligations of
the Issuer, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditor's rights
and to general principles of equity;
(i) The issue and sale of the Bonds by the Issuer, the
execution, delivery and compliance by the Issuer with all of the
provisions of each of this Underwriting Agreement and the Basic
Documents to which the Issuer is a party, and the consummation of
the transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any trust agreement,
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Issuer is a party or by which
the Issuer is bound or to which any of the property or assets of
the Issuer is subject, which conflict, breach, violation or default
would be material to the issue of the Bonds or would have a
material adverse effect on the Issuer, nor will such action result
in any violation of the Issuer's Certificate of Formation or
Limited Liability Company Agreement or any statute, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Issuer or its properties.
(j) The assignment of the Transferred Intangible Transition
Property by the Company to the Seller, the execution, delivery and
compliance by the Company with all of the provisions of each of
this Underwriting Agreement and the Basic Documents to which the
Company is a party, and the consummation of the transactions herein
and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any trust agreement, indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which the Company
is bound or to which any of the property or assets of the Company
is subject, which conflict, breach, violation or default would be
material to the issue and sale of the Bonds or would have a
material adverse effect on the financial position or results of
operations of the Company, nor will such action result in any
violation of the provisions of the Articles of Incorporation or
Bylaws of the Company or any statute, order, rule or regulation of
any court or governmental agency or body having jurisdiction over
the Company or any of its properties.
(k) Except for:
(i) the order of the SEC making the Registration
Statement effective,
(ii) permits and similar authorizations required
under the securities or blue sky laws of any jurisdiction,
and
(iii) the qualified rate order of the Pennsylvania
Public Utilities Commission dated August 27, 1998, as
supplemented by an order dated May 21, 1999 (collectively,
the "QRO"),
no consent, approval, authorization or other order of any governmental
authority is legally required for the execution, delivery and performance
of this Underwriting Agreement by the Issuer and the Company and the
consummation of the transactions contemplated hereby.
(l) This Underwriting Agreement has been duly authorized,
executed and delivered by the Issuer and the Company and
constitutes a valid and binding obligation of the Company and the
Issuer, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditor's rights
and to general equity principles.
II. The Seller represents and warrants to each Underwriter
as set forth below in this Section 2.II.
(a) The Seller is a limited liability company duly organized
and in good standing under the laws of the State of Delaware, with
power and authority to own its properties and conduct its business
as currently owned or conducted, and is duly qualified as a foreign
corporation to do business and in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary and in
which the failure to so qualify would have a materially adverse
effect on the Seller. The Seller had at all relevant times, and
has, the requisite power, authority and legal right to own the
Intangible Transition Property and to sell the Transferred
Intangible Transition Property to the Issuer as described in the
Final Prospectus.
(b) This Underwriting Agreement has been duly authorized,
executed and delivered by the Seller and constitutes a valid and
binding obligation of the Seller enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditor's rights and to general equity principles.
(c) Each of the Basic Documents to which the Seller is a
party has been duly authorized by the Seller and when executed and
delivered by the Seller will constitute a valid and binding
obligation of the Seller enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditor's rights and to general equity principles.
(d) The sale of the Transferred Intangible Transition
Property by the Seller to the Issuer, the execution, delivery and
compliance by the Seller with this Underwriting Agreement and the
Basic Documents to which the Seller is a party, and the
consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
trust agreement, indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Seller is a party or
by which the Seller is bound or to which any of the property or
assets of the Seller is subject, which conflict, breach, violation
or default would be material to the issue and sale of the Bonds,
nor will such action result in any violation of the provisions of
the Seller's Certificate of Formation or Limited Liability Company
Agreement or any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Seller or
any of its properties.
(e) No consent, approval, authorization or other order of
any governmental authority is legally required for the execution
and delivery of this Underwriting Agreement by the Seller.
III. The Company represents and warrants to each Underwriter
as set forth below in this Section 2.III.
(a) Group has been duly organized and is validly existing in
good standing as a corporation under the laws of the Commonwealth
of Pennsylvania, has the power and authority to conduct its
business as presently conducted and is duly qualified as a foreign
corporation to do business and in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary and in
which the failure to so qualify would have a materially adverse
effect on Group; and Group has all requisite power and authority to
enter into the Contribution Agreement.
(b) The Contribution Agreement has been duly authorized,
executed and delivered by Group and constitutes a valid and binding
obligation of Group enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditor's rights and to general equity principles.
(c) The execution and delivery by Group of the Contribution
Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any trust agreement, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which
Group is a party or by which Group is bound or to which any of the
property or assets of Group is subject, which conflict, breach,
violation or default would be material to the issue and sale of the
Bonds, nor will such action result in any violation of the
provisions of the Articles of Incorporation or Bylaws of Group or
any statute, order, rule or regulation of any court or governmental
agency or body having jurisdiction over Group or any of its
properties.
(d) No consent, approval, authorization or other order of
any governmental authority is legally required for the execution
and delivery of the Contribution Agreement by Group.
IV. The Company represents and warrants to each Underwriter
as set forth below in this Section 2.IV.
(a) Reserves has been duly organized and is validly existing
in good standing as a corporation under the laws of the State of
Delaware, has the power and authority to conduct its business as
presently conducted and is duly qualified as a foreign corporation
to do business and in good standing in every jurisdiction in which
the nature of the business conducted or property owned by it makes
such qualification necessary and in which the failure to so qualify
would have a materially adverse effect on Reserves; and Reserves
has all requisite power and authority to enter into the
Contribution Agreement.
(b) The Contribution Agreement has been duly authorized,
executed and delivered by Reserves and constitutes a valid and
binding obligation of Reserves enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditor's rights and to general equity principles.
(c) The execution and delivery by Reserves of the
Contribution Agreement, and the consummation of the transactions
herein and therein contemplated will not conflict with or result in
a breach or violation of any of the terms or provisions of, or
constitute a default under, any trust agreement, indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which Reserves is a party or by which Reserves is
bound or to which any of the property or assets of Reserves is
subject, which conflict, breach, violation or default would be
material to the issue and sale of the Bonds, nor will such action
result in any violation of the provisions of the Articles of
Incorporation or Bylaws of Reserves or any statute, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over Reserves or any of its properties.
(d) No consent, approval, authorization or other order of
any governmental authority is legally required for the execution
and delivery of the Contribution Agreement by Reserves.
V. Each of the several Underwriters represents and warrants
to, and agrees with, the Issuer, its directors and such of its
officers as shall have signed the Registration Statement, and to
each other Underwriter, that the information furnished in writing
to the Issuer by, or through the Representative on behalf of, such
Underwriter expressly for use in the Registration Statement or the
Prospectus does not contain an untrue statement of a material fact
and does not omit to state a material fact in connection with such
information required to be stated therein or necessary to make such
information not misleading.
3. Purchase and Sale. Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth,
the Issuer agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Issuer, at the purchase
price set forth in Schedule I hereto, the principal amount of the Bonds set
forth opposite such Underwriter's name in Schedule II hereto.
4. Delivery and Payment. Delivery of and payment for the
Bonds shall be made on the date and at the time specified in Schedule I
hereto (or such later date not later than five business days after such
specified date as the Representative shall designate), which date and time
may be postponed by agreement between the Representative and the Issuer or
as provided in Section 10 hereof (such date and time of delivery and
payment for the Bonds being herein called the "CLOSING DATE"). Delivery of
the Bonds shall be made to the Representative for the respective accounts
of the several Underwriters against payment by the several Underwriters
through the Representative of the purchase price thereof to the Issuer by
wire transfer of immediately available funds. Delivery of the Bonds shall
be made at such location as the Representative shall reasonably designate
at least one business day in advance of the Closing Date. The Bonds to be
so delivered initially shall be represented by Bonds registered in the name
of Cede & Co., as nominee of The Depository Trust Company ("DTC"). The
interests of beneficial owners of the Bonds will be represented by book
entries on the records of DTC and participating members thereof. Definitive
Bonds will be available only under limited circumstances.
The Issuer agrees to have the Bonds available for
inspection, checking and packaging by the Representative in New York, New
York, not later than 1:00 PM on the business day prior to the Closing Date.
5. Covenants.
(a) Covenants of the Issuer. The Issuer covenants and agrees
with the several Underwriters that:
(i) The Issuer will use its best efforts to cause the
Registration Statement, if not effective at the Execution
Time, and any amendment thereto, to become effective. Prior
to the termination of the offering of the Bonds, the Issuer
will not file any amendment of the Registration Statement or
supplement (including the Final Prospectus or any
Preliminary Final Prospectus) to the Basic Prospectus unless
the Issuer has furnished you a copy for your review prior to
filing and will not file any such proposed amendment or
supplement to which you reasonably object. Subject to the
foregoing sentence, the Issuer will cause the Final
Prospectus, properly completed, and any supplement thereto
to be filed with the SEC pursuant to the applicable
paragraph of Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to the Representative
of such timely filing. The Issuer will promptly advise the
Representative (A) when the Registration Statement, if not
effective at the Execution Time, and any amendment thereto,
shall have become effective, (B) when the Final Prospectus,
and any supplement thereto, shall have been filed with the
SEC pursuant to Rule 424(b), (C) when any amendment to the
Registration Statement shall have been filed or become
effective, (D) of any request by the SEC for any amendment
of the Registration Statement or supplement to the Final
Prospectus or for any additional information, (E) of the
issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that
purpose, (F) of the receipt by the Issuer of any
notification with respect to the suspension of the
qualification of the Bonds for sale in any jurisdiction or
the initiation or threatening of any proceeding for such
purpose and (G) of the happening of any event during the
period mentioned in subparagraph (ii) below. The Issuer will
use its best efforts to prevent the issuance of any such
stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If at any time when a prospectus relating to the
Bonds is required to be delivered under the Act in
connection with sales by an Underwriter or dealer, any event
occurs as a result of which the Final Prospectus as then
amended or supplemented would include an untrue statement of
a material fact, or omit to state any material fact
necessary to make the statements therein, in the light of
the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the
Registration Statement or supplement the Final Prospectus to
comply with the Act in connection with sales by an
Underwriter or dealer, the Issuer agrees to advise you of
such event or necessity, as the case may be, and, promptly
upon request made by you, to prepare and file with the
Commission an amendment or supplement which will correct
such statement or omission or an amendment which will effect
such compliance, provided that the expense of preparing and
filing any such amendment or supplement (A) which is
necessary in connection with such a delivery of a prospectus
more than nine months after the date of this Underwriting
Agreement or (B) which relates solely to the activities of
any Underwriter shall be borne by the Underwriter or
Underwriters or the dealer or dealers requiring the same;
and provided further that you shall, upon inquiry by the
Company, advise the Company whether or not any Underwriter
or dealer which shall have been selected by you retains any
unsold Bonds and, for the purposes of this subsection (ii),
the Company shall be entitled to assume that the
distribution of the Bonds has been completed when it is
advised by you that no Underwriter or such dealer retains
any Bonds.
(iii) As soon as practicable and no later than 12
months after the Closing Date, the Issuer will make
generally available to the Bondholders and to the
Representative an earnings statement or statements of the
Issuer which will satisfy the provisions of Section 11(a) of
the Act and Rule 158 under the Act.
(iv) The Issuer will furnish to the Representative
and counsel for the Underwriters, without charge, copies of
the Registration Statement (including exhibits thereto) and,
so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of any
Preliminary Final Prospectus and the Final Prospectus and
any supplement thereto as the Representative may reasonably
request. The Issuer will pay the expenses of printing or
other production of all documents relating to the offering.
(v) The Issuer will arrange for the qualification of
the Bonds for sale under the laws of such jurisdictions as
the Representative may designate, will maintain such
qualifications in effect so long as required for the
distribution of the Bonds and will arrange for the
determination of the legality of the Bonds for purchase by
institutional investors; provided that in no event shall the
Issuer be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any
action that would subject it to service of process in suits,
other than those arising out of the offering or sale of the
Bonds, in any jurisdiction where it is not now so subject or
meet any other requirement in connection with this clause
(v) deemed by the Issuer to be unduly burdensome.
(vi) Until the business date set forth on Schedule I
hereto, the Issuer will not, without the consent of the
Representative, offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce
the offering of, any asset-backed securities (other than the
Bonds).
(vii) For a period from the date of this Underwriting
Agreement until the retirement of the Bonds, or until such
time as the Underwriters shall cease to maintain a secondary
market in the Bonds, whichever occurs first, the Issuer will
deliver to the Representative the annual statements of
compliance and the annual independent auditor's servicing
reports furnished to the Issuer or the Trustee pursuant to
the Servicing Agreement or the Indenture, as applicable, as
soon as such statements and reports are furnished to the
Issuer or the Trustee.
(viii) So long as any of the Bonds are outstanding,
the Issuer will furnish to the Representative (A) as soon as
available, a copy of each report of the Issuer filed with
the SEC under the Exchange Act, or mailed to Bondholders,
(B) a copy of any filings with the Pennsylvania Public
Utility Commission pursuant to the QRO including, but not
limited to, any annual or more frequent adjustment filings,
and (C) from time to time, any information concerning the
Company or the Issuer as the Representative may reasonably
request.
(ix) To the extent, if any, that any rating necessary
to satisfy the condition set forth in Section 7(l) of this
Underwriting Agreement is conditioned upon the furnishing of
documents or the taking of other actions by the Issuer on or
after the Closing Date, the Issuer shall furnish such
documents and take such other actions.
(x) The Issuer will file with the Commission a report
on Form 8-K setting forth all Computational Materials and
ABS Term Sheets (as such terms are defined in Section 6)
provided to the Issuer by any Underwriter and identified by
it as such within the time period allotted for such filing
pursuant to the No-Action Letters (as defined in Section 6);
provided, however, that prior to any filing of the
Computational Materials and ABS Term Sheets by the Issuer,
such Underwriter must comply with its obligations pursuant
to Section 6 and the Issuer must receive a letter from
PricewaterhouseCoopers LLP, certified public accountants,
satisfactory in form and substance to the Issuer and such
Underwriter, to the effect that such accountants have
performed specified procedures, all of which have been
agreed to by the Issuer and such Underwriter, as a result of
which they have determined that the information included in
the Computational Materials and ABS Term Sheets (if any),
provided by such Underwriter to the Issuer for filing on
Form 8-K pursuant to Section 6 and this subsection (x), and
which the accountants have examined in accordance with such
agreed upon procedures, is accurate except as to such
matters that are not deemed by the Issuer and such
Underwriter to be material. The Issuer shall file any
corrected Computational Materials or ABS Terms Sheets
described in Section 6(a)(iv) as soon as practicable
following receipt thereof.
(b) Covenants of the Seller. The Seller covenants and agrees
with the several Underwriters that, to the extent that the Issuer
has not already performed such act pursuant to Section 5(a), to the
extent, if any, that any rating necessary to satisfy the condition
set forth in Section 7(l) of this Underwriting Agreement is
conditioned upon the furnishing of documents or the taking of other
actions by the Seller on or after the Closing Date, the Seller
shall furnish such documents and take such other actions.
(c) Covenants of the Company. The Company covenants and
agrees with the several Underwriters that, to the extent that the
Issuer or the Seller has not already performed such act pursuant to
Section 5(a) or Section 5(b):
(i) the Company will use its best efforts to cause
the Registration Statement, if not effective at the
Execution Time, and any amendment thereto, to become
effective. The Company will use its best efforts to prevent
the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement and, if issued,
to obtain as soon as possible the withdrawal thereof. If, at
any time when a prospectus relating to the Bonds is required
to be delivered under the Act, any event occurs as a result
of which the Final Prospectus as then supplemented would
include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements
therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to
amend the Registration Statement or supplement the Final
Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Company will, or will cause
the Issuer to (A) prepare and file with the SEC, subject to
the second sentence of paragraph (a) of this Section 5, an
amendment or supplement which will correct such statement or
omission or effect such compliance and (B) supply any
supplemented Prospectus to you in such quantities as you may
reasonably request.
(ii) until the business date set forth on Schedule I
hereto, the Company will not, without the consent of the
Representative, offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce
the offering of, any asset-backed securities (other than the
Bonds).
(iii) so long as any of the Bonds are outstanding and
the Company is the Servicer, the Company will furnish to the
Representative (A) as soon as available, a copy of each
report of the Issuer filed with the SEC under the Exchange
Act, or mailed to Bondholders, (B) a copy of any filings
with the Pennsylvania Public Utility Commission pursuant to
the QRO, including, but not limited to, any annual or more
frequent adjustment filings, and (C) from time to time, any
information concerning the Company, the Seller, and the
Issuer as the Representative may reasonably request.
(iv) to the extent, if any, that any rating necessary
to satisfy the condition set forth in Section 7(l) of this
Underwriting Agreement is conditioned upon the furnishing of
documents or the taking of other actions by the Company on
or after the Closing Date, the Company shall furnish such
documents and take such other actions.
6. Offering by Underwriters.
(a) In connection with the offering of the Bonds, each
Underwriter may prepare and provide to prospective investors (i)
items similar to computational materials ("COMPUTATIONAL
MATERIALS") as defined in the no-action letter of May 20, 1994
issued by the Commission to Kidder, Peabody Acceptance Corporation
I, Kidder, Peabody & Co. Incorporated and Kidder Structured Asset
Corporation, as made applicable to other issuers and underwriters
by the Commission in response to the request of the Public
Securities Association dated May 24, 1994, as well as the PSA
Letter referred to below (collectively, the "NO-ACTION LETTERS")
and (ii) items similar to ABS term sheets ("ABS TERM SHEETS") as
defined in the no-action letter of February 17, 1995 issued by the
Commission to the Public Securities Association, subject to the
following conditions:
(i) All Computational Materials and ABS Term Sheets
provided to prospective investors that are required to be
filed pursuant to the No-Action Letters shall bear a legend
substantially in the form attached hereto as Exhibit A. The
Issuer shall have the right to require additional specific
legends or notations to appear on any Computational
Materials or ABS Term Sheets, the right to require changes
regarding the use of terminology and the right to determine
the types of information appearing therein. Notwithstanding
the foregoing, this subsection (i) will be satisfied if all
Computational Materials and ABS Term Sheets referred to
herein bear a legend in a form previously approved in
writing by the Issuer.
(ii) Such Underwriter shall provide to the Issuer,
for approval by the Issuer, representative forms of all
Computational Materials and ABS Term Sheets prior to their
first use, to the extent such forms have not previously been
approved by the Issuer for use by such Underwriter. Such
Underwriter shall provide to the Issuer, for filing on Form
8-K as provided in Section 5(a)(x), copies (in such format
as required by the Issuer) of all Computational Materials
and ABS Term Sheets that are required to be filed with the
Commission pursuant to the No-Action Letters. The
Underwriter may provide copies of the foregoing in a
consolidated or aggregated form including all information
required to be filed if filing in such format is permitted
by the No-Action Letters. All Computational Materials and
ABS Term Sheets described in this subsection (ii) must be
provided to the Issuer not later than 10:00 a.m. New York
City time one business day before filing thereof is required
pursuant to the terms of this Underwriting Agreement. Such
Underwriter shall not provide to any investor or prospective
investor in the Bonds any Computational Materials or ABS
Term Sheets on or after the day on which Computational
Materials or ABS Term Sheets are required to be provided to
the Issuer pursuant to this paragraph (ii) (other than
copies of Computational Materials or ABS Term Sheets
previously submitted to the Issuer in accordance with this
paragraph (ii) for filing pursuant to Section 5(a)(x)),
unless such Computational Materials or ABS Term Sheets are
preceded or accompanied by the delivery of a Final
Prospectus to such investor or prospective investor.
(iii) All information included in the Computational
Materials and ABS Term Sheets shall be generated based on
substantially the same methodology and assumptions that are
used to generate the information in the Registration
Statement as set forth therein. However, the Computational
Materials and ABS Term Sheets may include information based
on alternative methodologies or assumptions if specified
therein. If any Computational Materials or ABS Term Sheets
are based on assumptions with respect to the Transferred
Intangible Transition Property that differ from the final
Transferred Intangible Transition Property Information (as
defined in Section 8(a)) in any material respect or on Bond
structuring terms that were revised in any material respect
prior to the printing of the Final Prospectus, the
Underwriters shall prepare revised Computational Materials
or ABS Term Sheets, as the case may be, based on the final
Transferred Intangible Transition Property Information and
structuring assumptions, deliver with the Final Prospectus
such revised Computational Materials and ABS Term Sheets to
each recipient of the preliminary versions thereof that
indicated orally to any Underwriter that such recipient
would purchase all or any portion of the Bonds, and include
such revised Computational Materials and ABS Term Sheets
(marked, "AS REVISED") in the materials delivered to the
Issuer pursuant to paragraph (ii) above. The expenses of
each Underwriter relating to the preparation and
transmission of its Computational Materials and ABS Term
Sheets, including without limitation fees and expenses of
accountants, shall be the responsibility of the Issuer.
(iv) The Issuer shall not be obligated to file any
Computational Materials or ABS Term Sheets that have been
determined to contain any material error or omission,
provided that, at the request of any Underwriter, the Issuer
will file Computational Materials or ABS Term Sheets that
contain a material error or omission if clearly marked
"SUPERSEDED BY MATERIALS DATED _____" and accompanied by
corrected Computational Materials or ABS Term Sheets that
are marked, "MATERIAL PREVIOUSLY DATED, _____ AS CORRECTED."
If, within the period during which a prospectus relating to
the Bonds is required to be delivered under the Act, any
Computational Materials or ABS Term Sheets are determined,
in the reasonable judgment of the Issuer or such
Underwriter, to contain a material error or omission, such
Underwriter shall prepare a corrected version of such
Computational Materials or ABS Term Sheets, shall circulate
such corrected Computational Materials or ABS Term Sheets to
all recipients of the prior versions thereof that either
indicated orally to such Underwriter they would purchase all
or any portion of the Bonds, or actually purchased all or
any portion thereof, and shall deliver copies of such
corrected Computational Materials or ABS Term Sheets
(marked, "AS CORRECTED") to the Issuer for filing with the
Commission in a subsequent Form 8-K submission (subject to
the Issuer's obtaining an accountant's comfort letter in
respect of such corrected Computational Materials and ABS
Term Sheets, which the parties acknowledge shall be at the
expense of the Issuer).
(v) Each Underwriter shall be deemed to have
represented, as of the Closing Date, that, except for
Computational Materials and ABS Term Sheets provided to the
Issuer pursuant to subsection (ii) above, such Underwriter
did not provide any prospective investors with any
information in written or electronic form in connection with
the offering of the Bonds that is required to be filed with
the Commission in accordance with the No-Action Letters.
(vi) In the event any delay in the delivery by any
Underwriter to the Issuer of all Computational Materials and
ABS Term Sheets required to be delivered in accordance with
subsection (ii) above, or in the delivery of the
accountant's comfort letter in respect thereof pursuant to
Section 5(a)(x), the Issuer shall have the right to delay
the release of the Final Prospectus to investors or to any
Underwriter, to delay the Closing Date and to take other
appropriate actions in each case set forth in Section
5(a)(x) to file the Computational Materials and ABS Term
Sheets by the time specified therein.
(vii) Each Underwriter represents that it has in
place, and covenants that it shall maintain, internal
controls and procedures that it reasonably believes to be
sufficient to ensure full compliance with all applicable
legal requirements of the No-Action Letters with respect to
the generation and use of Computational Materials and ABS
Term Sheets in connection with the offering of the Bonds.
(b) Each Underwriter further represents and warrants that,
if and to the extent it has provided any prospective investors with
any Computational Materials or ABS Term Sheets prior to the date
hereof in connection with the offering of the Bonds, all of the
conditions set forth in clause (a) above have been satisfied with
respect thereto.
7. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Bonds shall be subject to
the accuracy of the representations and warranties on the part of the
Issuer, the Seller, Group, Reserves and the Company contained in this
Underwriting Agreement, on the part of the Seller contained in Article III
of the Sale Agreement, and on the part of the Company contained in Section
5.01 of the Servicing Agreement and in Article III of the Contribution
Agreement as of the Execution Time and the Closing Date; to the accuracy of
the statements of the Issuer, the Seller, Group, Reserves and the Company
made in any certificates pursuant to the provisions hereof, to the
performance by the Issuer, the Seller, Group, Reserves and the Company of
their obligations hereunder, and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representative agrees in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time, on the
date of determination of the public offering price, if such
determination occurred at or prior to 3:00 PM New York City time on
such date, or (ii) 12:00 Noon on the business day following the day
on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such
date; if filing of the Final Prospectus, or any supplement thereto,
is required pursuant to Rule 424(b), the Final Prospectus, and any
such supplement, shall have been filed in the manner and within the
time period required by Rule 424(b); and no stop order suspending
the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Representative shall have received from Michael A.
McGrail, Esq., Senior Counsel, or such other counsel for the
Company as may be acceptable to the Representative, an opinion,
dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under
laws of the Commonwealth of Pennsylvania, with power and
authority (corporate and others) to own its properties and
conduct its businesses as described in the Registration
Statement and the Final Prospectus, and is duly qualified to
do business in all jurisdictions (and is in good standing
under the laws of all such jurisdictions) to the extent that
such qualification and good standing is or shall be
necessary to protect the validity and enforceability of this
Underwriting Agreement, the Contribution Agreement, the
Servicing Agreement, the Administration Agreement and each
other instrument or agreement necessary or appropriate to
the proper administration of this Underwriting Agreement and
the transactions contemplated hereby;
(ii) this Underwriting Agreement, the Contribution
Agreement, the Servicing Agreement, the Administration
Agreement and each of the other Basic Documents to which the
Company is a party, has been duly authorized, executed and
delivered, and constitutes a valid and legally binding
obligation of the Company enforceable according to its terms
(except to the extent limited by bankruptcy, insolvency, or
reorganization laws or laws relating to or affecting the
enforcement of creditors' rights and by general equity
principles); and no authorization, notice, consent or action
by the holders of any of the outstanding shares of capital
stock of the Company is necessary with respect thereto;
(iii) such counsel does not know of any legal or
governmental proceedings required to be described in the
Registration Statement or Final Prospectus which are not
described, or of any franchises, contracts or documents of a
character required to be described in the Registration
Statement or the Final Prospectus or to be filed as exhibits
to the Registration Statement which are not described and
filed as required; it being understood that such counsel
need express no opinion as to the financial statements and
other financial data contained in the Registration Statement
or the Final Prospectus;
(iv) except as described in the Registration
Statement and the Final Prospectus, the Company holds all
franchises, certificates of public convenience, licenses and
permits necessary to carry on the utility business in which
it is engaged; and
(v) neither the execution and delivery of this
Underwriting Agreement, the Servicing Agreement, the
Administration Agreement nor the consummation of the
transactions contemplated by this Underwriting Agreement,
the Contribution Agreement or the Servicing Agreement, the
Administration Agreement nor the fulfillment of the terms of
this Underwriting Agreement, the Sale Agreement, the
Contribution Agreement, the Administration Agreement or the
Servicing Agreement by the Company, will (A) conflict with,
result in any breach of any of the terms or provisions of,
or constitute (with or without notice or lapse of time) a
default under the articles of incorporation, bylaws or other
organizational documents of the Company, or conflict with or
breach any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a
default under, any indenture, agreement or other instrument
to which the Company is a party or by which the Company is
bound, (B) result in the creation or imposition of any lien
upon any properties of the Company pursuant to the terms of
any such indenture, agreement or other instrument (other
than as contemplated by the Indenture), or (C) violate any
law or any order, rule or regulation promulgated by the
United States or the Commonwealth of Pennsylvania applicable
to the Company of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Company, or any
of its properties.
(c) The Representative shall have received an opinion,
portions of which shall be rendered by Morgan, Lewis & Bockius LLP,
counsel for the Company, the Seller, Group, Reserves and the
Issuer, portions of which may be rendered by Skadden, Arps, Slate,
Meagher & Flom LLP, special counsel for the Issuer, portions of
which may be rendered by Thelen, Reid & Priest LLP, special counsel
for the Company, and portions of which may be rendered by Stewart &
Associates, special counsel for Reserves and the Seller, each such
opinion dated the Closing Date, in form and substance reasonably
satisfactory to the Representative, to the effect that:
(i) Each of the Issuer, the Seller, Group and
Reserves has been duly incorporated or organized and is
validly existing as a limited liability company or
corporation under the laws of the State of Delaware or the
Commonwealth of Pennsylvania, as applicable, with power and
authority to own its properties and conduct its businesses
as described in the Registration Statement and the Final
Prospectus and contemplated by the Contribution Agreement,
and is duly qualified to do business in all jurisdictions
(and is in good standing under the laws of all
jurisdictions) to the extent that such qualification and
good standing is or shall be necessary to protect the
validity and enforceability of this Underwriting Agreement,
the Contribution Agreement, the Sale Agreement, and each
other instrument or agreement necessary or appropriate to
the proper administration of this Underwriting Agreement and
the transactions contemplated herein.
(ii) The Sale Agreement and the Contribution
Agreement have been duly authorized, executed and delivered
by, and constitute valid and legally binding obligations of,
the Seller, Group and/or Reserves, as applicable,
enforceable according to their terms (except to the extent
limited by bankruptcy, insolvency, or reorganization laws or
laws relating to or affecting the enforcement of creditors'
rights and by general equity principles); and no
authorization, notice, consent or action by the holders of
any outstanding equity interest in the Seller, Group or
Reserves, as applicable, is necessary with respect thereto.
(iii) This Underwriting Agreement, the Contribution
Agreement, the Servicing Agreement and all other Basic
Documents to which the Company is a party, have been duly
authorized, executed and delivered by the Company, and
constitute valid and legally binding obligations of the
Company, enforceable according to their terms (except to the
extent limited by bankruptcy, insolvency or reorganization
laws or by laws relating to or affecting the enforcement of
creditors' rights and by general equity principles) and no
authorization, notice, consent or actions by the holders of
any outstanding capital stock of the Company is necessary
with respect thereto.
(iv) This Underwriting Agreement, the Sale Agreement,
the Servicing Agreement, the Bonds, the Indenture, and all
other Basic Documents to which the Issuer is a party have
been duly authorized, executed and delivered by the Issuer,
and constitute valid and legally binding obligations of the
Issuer, enforceable according to their terms (except to the
extent limited by bankruptcy, insolvency or reorganization
laws or by laws relating to or affecting the enforcement of
creditors' rights and by general equity principles); and no
authorization, notice, consent or action by the holders of
any outstanding equity interest in the Issuer is necessary
with respect thereto.
(v) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated herein, except
such as have been obtained under Pennsylvania law and such
as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and
distribution of the Bonds by the Underwriters and such other
approvals (specified in such opinion) as have been obtained.
(vi) Sections 2804 and 2812 of the Competition Act
are authorized by and validly enacted pursuant to the
Pennsylvania Constitution.
(vii) The QRO has been duly authorized and issued by
the Pennsylvania Public Utility Commission in accordance
with the Competition Act; and the QRO and the process by
which it was issued comply with all applicable laws, rules
and regulations, and the QRO is in full force and effect.
(viii) The Bonds are "transition bonds" within the
meaning of the Competition Act, the Bonds are entitled to
the protections provided in Section 2812(c) of the
Competition Act, and the issuance and sale of the Bonds and
the consummation of the transactions contemplated by the
Basic Documents comply in all respects with the requirements
of the Competition Act and the QRO.
(ix) The Commonwealth Pledge set forth in Section
2812(c) of the Competition Act is enforceable according to
its terms pursuant to Pennsylvania and federal law.
(x) Under Section 2812(b)(3) of the Competition Act,
neither the QRO nor the intangible transition charges
authorized to be imposed and collected pursuant to the QRO
may be revoked, reduced, postponed, impaired or terminated
by any subsequent action of the Pennsylvania Public Utility
Commission.
(xi) Under the Taking Clauses of the United States
and Commonwealth of Pennsylvania Constitutions, the
Commonwealth of Pennsylvania could not repeal or amend the
Competition Act or take any action in contravention of the
pledge set forth in Section 2812(c)(2) of the Competition
Act without paying just compensation to the holders of the
Bonds if so doing would constitute a permanent appropriation
of the property interest of the holders of the Bonds in the
Transferred Intangible Transition Property and would deprive
the holders of the Bonds of their reasonable expectations
arising from their investment in the Bonds.
(xii) Under the Contract Clauses of the United States
and Commonwealth of Pennsylvania Constitutions, the
Commonwealth of Pennsylvania could not repeal or amend the
Competition Act or take any other action that substantially
impairs the rights of holders of the Bonds, without making
adequate compensation by law pursuant to Section 2812(c)(2)
of the Competition Act, unless such action is a reasonable
exercise of the sovereign powers of the Commonwealth of
Pennsylvania and is of a character appropriate to the public
purpose justifying such action. A court would not hold that
the Commonwealth of Pennsylvania could reduce, modify, alter
or take any other action with respect to the Transferred
Intangible Transition Property that would substantially
impair the rights of holders of the Bonds unless this action
is reasonable and appropriate to further a legitimate public
purpose.
(xiii) The Seller is an "assignee" within the meaning
of Section 2812(g) of the Competition Act and the transfer
of the Intangible Transition Property from the Company to
the Seller pursuant to the Contribution Agreement, and from
the Seller to the Issuer pursuant to the Sale Agreement,
have been effected in compliance with the Competition Act.
(xiv) Holders of the Bonds are entitled to the
protections provided in the first sentence of Section
2812(c)(2) of the Competition Act. The QRO authorizes the
issuance of up to $2.85 billion aggregate principal amount
of transition bonds, the transfer of Intangible Transition
Property from the Company to the Seller, the transfer of the
Transferred Intangible Transition Property from the Seller
to the Issuer, the imposition of Intangible Transition
Charges, and the collection thereof from consumers of
electricity within the Company's historic electric service
area who receive electric distribution service from the
Company or its successor, annual adjustments to the
Intangible Transition Charges and, in the last twelve months
preceding the scheduled maturity of the latest maturing
Class of Bonds, monthly or quarterly adjustments, in order
to ensure full recovery of Intangible Transition Charges and
the appointment of the Company as servicer for a specified
contractual fee. The sections of the QRO authorizing the
preceding matters have been declared irrevocable and are
entitled to the protection of Section 2812(b)(3) of the
Competition Act, which prohibits the PUC from reducing,
postponing, impairing or terminating such an order or the
Intangible Transition Charges authorized to be imposed and
collected under such an order by its subsequent action.
(xv) The Issuer will not be subject to utility gross
receipts taxes or any other taxes imposed by the
Commonwealth of Pennsylvania or by any of its agencies,
instrumentalities or political subdivisions, other than
franchise taxes in respect of the capital stock value of the
Issuer.
(xvi) The descriptions of both federal and
Pennsylvania tax consequences to holders of the Bonds set
forth in the Final Prospectus under "Material Income Tax
Matters for the Transition Bondholders" are accurate and
complete in all material respects.
(xvii) The transfer of the Intangible Transition
Property by the Company to the Seller pursuant to the
Contribution Agreement and the Assignment was an absolute
transfer of the entire right, title and interest in (as in a
"true sale" of) the Intangible Transition Property by the
Company directly to the Seller; this transfer of the
Intangible Transition Property is perfected; and immediately
prior to the execution and delivery of the Sale Agreement,
the Seller owns all right, title and interest in and to the
Intangible Transition Property.
(xviii) Searches have been made of the relevant
filing offices and based on those searches, there is not on
file under the Pennsylvania Uniform Commercial Code or the
Competition Act any filing that purports to cover the
Intangible Transition Property, other than the filings
required hereunder.
(xix) Either (1) (A) the transfer of the Transferred
Intangible Transition Property by the Seller to the Issuer
pursuant to the Sale Agreement is an absolute transfer of
the entire right, title and interest of the Seller in (as in
a "true sale" of) the Transferred Intangible Transition
Property, (B) such transfer is perfected, and (C) such
transfer has priority over any other transfer by the Seller
of the Transferred Intangible Transition Property; or (2)
(A) the Sale Agreement creates in favor of the Issuer a
security interest in the rights of the Seller in the
Transferred Intangible Transition Property, (B) such
security interest is valid and enforceable against the
Seller and third parties and has attached, (C) such security
interest is perfected, and (D) such perfected security
interest is of first priority.
(xx) A court would not order the substantive
consolidation of the assets and liabilities of the Issuer
with those of the Company or Group in the event of a
bankruptcy, reorganization or other insolvency proceeding
involving the Company or Group.
(xxi) A court would not order the substantive
consolidation of the assets and liabilities of the Seller
with those of the Company or Reserves in the event of a
bankruptcy, reorganization or other insolvency proceeding
involving the Company or Reserves.
(xxii) Neither the Intangible Transition Property nor
any interest therein would become property of the estate of
Group or Reserves under 11 U.S.C. ss. 541(a)(1) or (6) as a
result of the Contribution Agreement or the Assignment in a
case under the Bankruptcy Code in which Group or Reserves
was the debtor and the automatic stay of 11 U.S.C. ss.
362(a) would not apply to prevent the collections of
Intangible Transition Charges from being applied as provided
in the Basic Documents.
(xxiii) The Bonds have been duly authorized and
executed, and when authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by
the Underwriters in accordance with the terms hereof, will
constitute legal, valid and binding obligations of the
Issuer entitled to the benefits of the Indenture (subject,
as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws
or equitable principles affecting creditors' rights
generally from time to time in effect).
(xxiv) The Bonds, the Indenture, the Servicing
Agreement, the Contribution Agreement and the Sale Agreement
conform to the descriptions thereof contained in the
Registration Statement and the Final Prospectus.
(xxv) The Indenture has been duly qualified under the
Trust Indenture Act, and the Contribution Agreement, the
Sale Agreement and the Servicing Agreement are not required
to be registered under the Trust Indenture Act.
(xxvi) There is no pending or threatened action, suit
or proceeding before any court or governmental agency,
authority or body or any arbitrator involving the Issuer, or
relating to the Bonds, the QRO or the collection of
Intangible Transition Charges or the use and enjoyment of
Intangible Transition Property under the Competition Act of
a character required to be disclosed in the Registration
Statement that is not adequately disclosed in the Final
Prospectus, and there is no franchise, contract or other
document of a character required to be described in the
Registration Statement or Final Prospectus, or to be filed
as an exhibit, that is not described or filed as required.
(xxvii) The statements included or incorporated in
the Final Prospectus in the base prospectus under the
headings "Risk Factors -- Legal, Legislative or Regulatory
Action that May Adversely Affect Your Investment," "Risk
Factors -- Unusual Nature of Intangible Transition Property,"
"The Competition Act," "PP&L's Restructuring Plan," "The PUC
Order and the Intangible Transition Charges," "Prior Legal
Challenges to the Competition Act or the PUC Order," "The
Transition Bonds," "The Contribution Agreement," "The Sale
Agreement," "The Servicing Agreement," "The Indenture" and
"ERISA Considerations" and in the prospectus supplement
under the headings "The Series 1999-1 Bonds," and
"Description of Intangible Transition Property" fairly
summarize the matters described therein.
(xxviii) The Registration Statement has become
effective under the Act; any required filing of the Basic
Prospectus, any Preliminary Final Prospectus and the Final
Prospectus, and any supplements thereto, pursuant to Rule
424(b) has been made in the manner and within the time
period required by Rule 424(b); no stop order suspending the
effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or
threatened, and the Registration Statement and the Final
Prospectus comply as to form in all material respects with
the applicable requirements of the Act, the Exchange Act and
the Trust Indenture Act and the respective rules thereunder;
all portions of the Registration Statement and the Final
Prospectus that describe Pennsylvania law are accurate in
all material respects, including (but not limited to)
descriptions of the Competition Act, the QRO, Intangible
Transition Property and the Intangible Transition Charges;
and no facts have come to the attention of such counsel to
lead them to believe that at the Effective Date the
Registration Statement contained any untrue statement of a
material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading or that the Final Prospectus as of
its date and the Closing Date includes any untrue statement
of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of
the circumstances under which they were made, not
misleading.
(xxix) Neither the execution and delivery of this
Underwriting Agreement, the Contribution Agreement, the Sale
Agreement, the Servicing Agreement, the Indenture, nor the
issuance and sale of the Bonds, nor the consummation of the
transactions contemplated by this Underwriting Agreement,
the Contribution Agreement, the Sale Agreement, the
Servicing Agreement and the Indenture, nor the fulfillment
of the terms of this Underwriting Agreement, the
Contribution Agreement, the Sale Agreement, the Servicing
Agreement and the Indenture, will (A) conflict with, result
in any breach of any of the terms or provisions of, or
constitute (with or without notice or lapse of time) a
default under the Amended and Restated Limited Liability
Company Agreement of the Issuer, or under the Amended and
Restated Limited Liability Company Agreement of the Seller,
or conflict with or breach any of the material terms or
provisions of, or constitute (with or without notice or
lapse of time) a default under, any indenture, agreement or
other instrument to which the Issuer or the Seller is a
party or by which the Issuer or the Seller is bound, (B)
result in the creation or imposition of any lien upon any
properties of the Issuer or the Seller pursuant to the terms
of any such indenture, agreement or other instrument (other
than as contemplated by the Indenture), or (C) violate any
law or any order, rule or regulation promulgated by the
United States, the State of Delaware, or the Commonwealth of
Pennsylvania applicable to the Issuer or the Seller of any
court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality
having jurisdiction over the Issuer, or any of its
properties.
(xxx) (A) The Indenture creates in favor of the
Trustee a security interest in the rights of the Issuer in
the Intangible Transition Property including proceeds of or
arising from Intangible Transition Charges to secure the
Bonds, (B) such security interest is valid and enforceable
against the Issuer and third parties and has attached under
the Competition Act, (C) such security interest is perfected
under the Competition Act, and (D) such perfected security
interest is of first priority under the Competition Act.
(xxxi) (A) The Indenture creates in favor of the
Trustee a security interest in the rights of the Issuer in
the Collateral, other than the Collateral described in
paragraph (xxx) above, (B) such security interest is valid
and enforceable against the Issuer and third parties and has
attached, (C) such security interest is perfected, and (D)
such perfected security interest is of first priority.
(xxxii) The Issuer is not, and after giving effect to
the offering and sale of the Bonds and the application of
the proceeds thereof as described in the Final Prospectus,
will not be an "investment company" or under the "control"
of an "investment company" as such terms are defined under
the Investment Company Act of 1940, as amended.
(xxxiii) Unless adequate compensation is made by law
for the protection of holders of the Bonds, the Competition
Act and the QRO require the Commonwealth of Pennsylvania and
the PUC to require the imposition of intangible transition
charges at times and in amounts that are designed to ensure
the collection of intangible transition charge revenues
sufficient to discharge the Bonds in accordance with their
terms.
(xxxiv) The Intangible Transition Property and the
other Collateral are not subject to the lien created by the
Mortgage Indenture, and the transfer of the Intangible
Transition Property to the Seller on May 13, 1999 pursuant
to the terms and conditions of the Contribution Agreement
was, and the transfer of other Collateral to the Issuer on
the date of issuance of the Bonds, is free and clear of the
lien created by the Mortgage Indenture.
(xxxv) There presently is no judicial, statutory or
constitutional authority for placing a voter initiative or
referendum with state-wide application on a ballot in any
election in the Commonwealth of Pennsylvania.
(xxxvi) The Competition Act is severable; the
invalidation of any provision of the Competition Act that
does not adversely affect the holders of the Bonds would not
invalidate the provisions that do affect the holders of the
Bonds.
(xxxvii) An attempt by the Commonwealth of
Pennsylvania, the PUC or any other entity to repeal, amend
or otherwise impair the Competition Act or the rights of the
holders of the Bonds would be subject to preliminary
injunction if a court of competent jurisdiction hearing a
request for preliminary injunction finds that such relief is
necessary to prevent immediate and irreparable harm which
cannot be compensated by damages, that greater injury will
occur from refusing the injunction than from granting it,
that the preliminary injunction will restore the parties to
the status quo as it existed immediately before the alleged
wrongful conduct, that the alleged wrong is manifest and the
injunction is reasonably suited to abate it and that the
right to such relief by the challenging party is clear.
Further, upon final adjudication of the challenged repeal,
amendment or impairment, a court of competent jurisdiction
would permanently enjoin the alleged wrongful conduct if the
court concluded that such conduct constitutes a legal wrong
for which no adequate remedy at law was available.
(xxxviii) Such other opinions as may be required by
the Rating Agencies.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than
the Commonwealth of Pennsylvania, the State of Delaware, the State of New
York, the State of Nevada or the federal laws of the United States of
America, to the extent deemed proper and specified in such opinion, upon
the opinion of other counsel of good standing believed to be reliable and
who are satisfactory to counsel for the Underwriters, and (B) as to matters
of fact, to the extent deemed proper, on certificates of responsible
officers of the Issuer, the Seller, Group, Reserves, the Company and public
officials. References to the Final Prospectus in this paragraph (c) include
any supplements thereto at the Closing Date.
(d) The Representative shall have received an opinion of
counsel to the Trustee, dated the Closing Date, in form and
substance reasonably satisfactory to the Representative, to the
effect that:
(i) the Trustee is validly existing as a banking
corporation in good standing under the laws of the State of
New York; and
(ii) the Indenture has been duly authorized, executed
and delivered, and constitutes a legal, valid and binding
instrument enforceable against the Trustee in accordance
with its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws or equitable principles
affecting creditors' rights generally from time to time in
effect); and
(iii) the Bonds have been duly authenticated by the
Trustee.
(e) The Representative shall have received from Orrick,
Herrington & Sutcliffe LLP, counsel for the Underwriters, such
opinion or opinions, dated the Closing Date, with respect to the
issuance and sale of the Bonds, the Indenture, the Registration
Statement, the Final Prospectus (together with any supplement
thereto) and other related matters as the Representative may
reasonably require, and the Company, the Seller, and the Issuer
shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(f) The Representative shall have received a certificate of
the Issuer, signed by a duly authorized manager of the Issuer,
dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Final Prospectus, any supplement to the Final Prospectus and this
Underwriting Agreement and that:
(i) the representations and warranties of the Issuer
in this Underwriting Agreement and in the Indenture are true
and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing
Date, and the Issuer has complied with all the agreements
and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceedings for that purpose have been instituted or
threatened; and
(iii) since the dates as of which information is
given in the Final Prospectus (exclusive of any supplement
thereto), there has been no material adverse change in (A)
the condition (financial or other), prospects, business or
properties of the Issuer, whether or not arising from
transactions in the ordinary course of business, or (B) the
Transferred Intangible Transition Property, except as set
forth in or contemplated in the Final Prospectus (exclusive
of any supplement thereto).
(g) The Representative shall have received a certificate of
the Company, signed by the President and the principal financial or
accounting officer of the Company, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined
the Registration Statement, the Final Prospectus, any supplement to
the Final Prospectus and this Underwriting Agreement and that:
(i) the representations and warranties of the Company
in this Underwriting Agreement, the Contribution Agreement,
the Sale Agreement and the Servicing Agreement are true and
correct in all material respects on and as of the Closing
Date with the same effect as if made on the Closing Date,
and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the
Company's knowledge, threatened; and
(iii) since the dates as of which information is
given in the Final Prospectus (exclusive of any supplement
thereto), there has been no material adverse change in (A)
the Company's financial position or results of operation, or
(B) the Transferred Intangible Transition Property.
(h) The Representative shall have received a certificate of
the Seller, signed by a duly authorized manager of the Seller,
dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Final Prospectus, any supplement to the Final Prospectus and this
Underwriting Agreement and that:
(i) the representations and warranties of the Seller
in this Underwriting Agreement, the Contribution Agreement
and the Sale Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect
as if made on the Closing Date, and the Seller has complied
with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the
Closing Date; and
(ii) since the dates as of which information is given
in the Final Prospectus (exclusive of any supplement
thereto), there has been no material adverse change in the
Seller's financial position or results of operation.
(i) The Representative shall have received a certificate of
the Company, signed by the President and the principal financial or
accounting officer of the Company, dated the Closing Date, to the
effect that:
(i) the representations and warranties of Group and
Reserves in this Underwriting Agreement and in the
Contribution Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect
as if made on the Closing Date, and Group and Reserves have
complied with all the agreements and satisfied all the
conditions on their part to be performed or satisfied at or
prior to the Closing Date; and
(ii) since the dates as of which information is given
in the Final Prospectus (exclusive of any supplement
thereto), there has been no material adverse change in the
condition (financial or other), prospects, earnings,
business or properties of Group or Reserves, whether or not
arising from transactions in the ordinary course of
business.
(j) At the Closing Date, PricewaterhouseCoopers LLP shall
have furnished to the Representative (i) a letter or letters (which
may refer to letters previously delivered to the Representative),
dated as of the Closing Date, in form and substance satisfactory to
the Representative, confirming that they are independent
accountants within the meaning of the Act and the Exchange Act and
the respective applicable published rules and regulations
thereunder and stating in effect that they have performed certain
specified procedures as a result of which they determined that
certain information of an accounting, financial or statistical
nature set forth in the Registration Statement and the Final
Prospectus, agrees with the accounting records of the Company and
its subsidiaries, excluding any questions of legal interpretation,
and (ii) the opinion or certificate, dated as of the Closing Date,
in form and substance satisfactory to the Representative,
satisfying the requirements of Section 2.10(7) of the Indenture.
In addition, except as provided in Schedule I hereto, at the
Execution Time, PricewaterhouseCoopers LLP shall have furnished to
the Representative a letter or letters, dated as of the Execution
Time, in form and substance satisfactory to the Representative, to
the effect set forth above.
(k) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Final
Prospectus (exclusive of any supplement thereto), there shall not
have occurred any change, or any development involving a
prospective change, in or any event affecting either (i) the
business, prospects, properties or financial condition of the
Company, the Seller or the Issuer, or (ii) the Transferred
Intangible Transition Property, the Bonds, the QRO or the
Competition Act, the effect of which is, in the judgment of the
Representative, so material and adverse as to make it impractical
or inadvisable to proceed with the offering or delivery of the
Bonds as contemplated by the Registration Statement (exclusive of
any amendment thereof) and the Final Prospectus (exclusive of any
supplement thereto).
(l) The Bonds shall have been rated in the highest long-term
rating category by each of the Rating Agencies.
(m) On or prior to the Closing Date, the Issuer shall have
delivered to the Representative evidence, in form and substance
reasonably satisfactory to the Representative, that appropriate
filings have been made in accordance with the Competition Act and
other applicable law reflecting (1) the transfer of the Intangible
Transition Property by the Company directly to the Seller,
including the filing of notices with the PUC under the Competition
Act and of UCC financing statements in the office of the Secretary
of the Commonwealth of Pennsylvania, (2) the transfer of the
Transferred Intangible Transition Property by the Seller to the
Issuer, including the filing of UCC financing statements in the
office of the Secretary of State of the State of Nevada and the
filing of notices with the PUC under the Competition Act, and (3)
the grant of a security interest by the Issuer in the Collateral to
the Trustee, including the filing of notices with the PUC under the
Competition Act and of UCC financing statements in the office of
the Secretary of the Commonwealth of Pennsylvania.
(n) On or prior to the Closing Date, the Company shall have
delivered to the Representative evidence, in form and substance
satisfactory to the Representative, of the Pennsylvania Public
Utility Commission's issuance of the QRO relating to the
Transferred Intangible Transition Property.
(o) Prior to the Closing Date, the Issuer, the Seller and
the Company shall have furnished to the Representative such further
information, certificates, opinions and documents as the
Representative may reasonably request.
If any of the conditions specified in this Section 7 shall
not have been fulfilled in all material respects when and as provided in
this Underwriting Agreement, or if any of the opinions and certificates
mentioned above or elsewhere in this Underwriting Agreement shall not be in
all material respects reasonably satisfactory in form and substance to the
Representative and counsel for the Underwriters, this Underwriting
Agreement and all obligations of the Underwriters hereunder may be canceled
at, or at any time prior to, the Closing Date by the Representative. Notice
of such cancellation shall be given to the Issuer in writing or by
telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 7
shall be delivered at the office of Skadden, Arps, Slate, Meagher & Flom
LLP in the City of New York on the Closing Date.
8. Indemnification and Contribution.
(a) The Company, the Seller and the Issuer will, jointly and
severally, indemnify and hold harmless each Underwriter, the
directors, officers, members, employees and agents of each
Underwriter and each person who controls any Underwriter within the
meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange
Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading, contained in (i) the Transferred
Intangible Transition Property Information and the Computational
Materials and ABS Term Sheets delivered to investors by any
Underwriter to the extent such loss, claim, damage or liability
arises from the Transferred Intangible Transition Property
Information and (ii) the Registration Statement for the
registration of the Bonds as originally filed or in any amendment
thereof, or in the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus, or in any amendment thereof or
supplement thereto and, except as hereinafter in this Section 8
provided, will reimburse each such indemnified party for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability
or action; provided, however, that none of the Company, the Seller
or the Issuer will be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Issuer, the
Seller or the Company by or on behalf of any Underwriter through
the Representative specifically for inclusion therein or Trust
Indenture Act statement of eligibility; provided further, that with
respect to any untrue statement or omission of material fact made
in any Preliminary Final Prospectus, the indemnity agreement
contained in this Section 8(a) shall not inure to the benefit of
any Underwriter or any person controlling such Underwriter from
whom the person asserting any such loss, claim, damage or liability
purchased the Bonds that are the subject thereof, to the extent
that any such loss, claim, damage or liability of such Underwriter
occurs under the circumstance where it shall have been determined
by a court of competent jurisdiction by final and nonappealable
judgment that (i) the Company, the Seller or the Issuer had
previously furnished copies of the Final Prospectus to the
Representative, (ii) delivery of the Final Prospectus was required
by the Act to be made to such person, (iii) the untrue statement or
omission of a material fact contained in the Preliminary Final
Prospectus was corrected in the Final Prospectus and (iv) there was
not sent or given to such person, at or prior to the written
confirmation of the sale of such Bonds to such person, a copy of
the Final Prospectus. This indemnity agreement will be in addition
to any liability which the Company, the Seller and the Issuer
otherwise may have. As used herein, the term "TRANSFERRED
INTANGIBLE TRANSITION PROPERTY INFORMATION" means information,
whether in written or electronic format or otherwise, regarding the
Transferred Intangible Transition Property provided to the
Underwriters by or on behalf of the Company or the Issuer.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, the Seller and the Issuer,
each of their directors, each of their officers who signs the
Registration Statement, and each person who controls the Company,
the Seller or the Issuer within the meaning of either the Act or
the Exchange Act, to the same extent as the foregoing indemnity
from the Company, the Seller and the Issuer to each Underwriter,
but only with reference to (i) written information relating to such
Underwriter furnished to the Issuer, the Seller or the Company by
or on behalf of such Underwriter through the Representative
specifically for inclusion in the documents referred to in the
foregoing indemnity and (ii) untrue statements or alleged untrue
statements in the Computational Materials or ABS Term Sheets
delivered to the purchasers of the Bonds by such Underwriter except
to the extent that such losses, claims, damages or other
liabilities arise from factual errors in the Transferred Intangible
Transition Property Information. This indemnity agreement will be
in addition to any liability which any Underwriter may otherwise
have.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraph (a)
or (b) above. The indemnifying party shall be entitled to appoint
counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying
party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that such
counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear
the reasonable fees, costs and expenses of such separate counsel if
(i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a
conflict of interest, or (ii) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not,
without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may
be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such
claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 8 is unavailable to or insufficient to
hold harmless an indemnified party for any reason, the Company, the
Seller, the Issuer and the Underwriters agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal
or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "LOSSES") to which
the Issuer and one or more of the Underwriters may be subject in
such proportion as is appropriate to reflect the relative benefits
received by the Issuer and by the Underwriters from the offering of
the Bonds. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company, the Issuer,
the Seller and the Underwriters shall contribute in such proportion
as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company, the Issuer, the Seller and
of the Underwriters in connection with the statements or omissions
which resulted in such Losses as well as any other relevant
equitable considerations. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission
relates to information provided by the Company, the Issuer, the
Seller or the Underwriters. The Company, the Issuer, the Seller and
the Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8(d),
each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer,
employee and agent of an Underwriter shall have the same rights to
contribution as such Underwriter, and each person who controls the
Issuer, the Seller or the Company within the meaning of either the
Act or the Exchange Act, each officer of the Issuer, the Seller or
the Company who shall have signed the Registration Statement and
each director of the Issuer, the Seller or the Company shall have
the same rights to contribution as the Issuer, the Seller or the
Company, subject in each case to the applicable terms and
conditions of this paragraph (d). The Underwriters' obligations to
contribute pursuant to this Section 8 are several in proportion to
the respective principal amounts of Bonds set forth opposite their
names in Schedule II hereto and not joint.
(e) Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of
the amount by which the total price of the Bonds underwritten by it
and distributed to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission.
9. Reimbursement of Expenses. If the sale of the Bonds
provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or
because of any refusal, inability or failure on the part of the Company,
the Seller or the Issuer to perform any agreement herein or comply with any
provision hereof other than by reason of a default (including under Section
10) by any of the Underwriters, the Company, the Seller and the Issuer
will, jointly and severally, reimburse the Underwriters upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Bonds; provided, however, that the
reimbursement of fees and expenses of counsel to the Underwriters shall be
subject to the engagement letter dated June 4, 1999 between the Company and
the Representative.
10. Default by an Underwriter. If any Underwriter or
Underwriters defaults in their obligations under this Underwriting
Agreement, the non-defaulting Underwriters may make arrangements
satisfactory to the Issuer and the Company for the purchase of such Bonds
by other persons, including any of the Underwriters, but if no such
arrangement are made by the Closing Date, the other Underwriters shall be
obligated, severally in the proportion that their respective commitments in
Schedule II hereto bear to the total commitment of the non-defaulting
Underwriters set forth opposite the names of all the remaining
Underwriters, to purchase the Bonds that the defaulting Underwriter or
Underwriters agreed but failed to purchase. In the event that any
Underwriter or Underwriters defaults in their obligations to purchase Bonds
hereunder, the Company may by prompt written notice to the non-defaulting
Underwriters postpone the Closing Date for a period of not more than seven
full business days to effect whatever changes may thereby be made necessary
in the Registration Statement and the Final Prospectus or in any other
documents, and the Company will promptly file any amendments to the
Registration Statement or supplements to the Final Prospectus that may
thereby be necessary. As used in this Underwriting Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing contained in this Underwriting Agreement shall relieve any
defaulting Underwriter of its liability, if any, to the Issuer, the Seller
and the Company and any non-defaulting Underwriter for damages occasioned
by its default hereunder.
11. Termination. This Underwriting Agreement shall be
subject to termination, in the absolute discretion of the Representative,
by notice given to the Issuer prior to delivery of and payment for the
Bonds, if prior to such time (i) there shall have occurred any change, or
any development involving a prospective change, in or any event affecting
either (A) the business, prospects, properties or financial condition of
the Issuer, the Seller, or the Company or (B) the Transferred Intangible
Transition Property, the Bonds, the QRO or the Competition Act, the effect
of which, in the judgment of the Representative, materially impairs the
investment quality of the Bonds or makes it impractical or inadvisable to
market the Bonds, (ii) trading in the Common Stock of PP&L Resources, Inc.
shall have been suspended by the SEC or the New York Stock Exchange or
trading in securities generally on the New York Stock Exchange shall
have been suspended or limited or minimum prices shall have been
established on such Exchange, (iii) a banking moratorium shall have been
declared either by Federal, New York State or Pennsylvania State
authorities or (iv) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or
war or other calamity or crisis the effect of which on financial markets is
such as to make it, in the judgment of the Representative, impracticable or
inadvisable to proceed with the offering or delivery of the Bonds as
contemplated by the Final Prospectus (exclusive of any supplement thereto)
and the Representative shall have made a similar determination with respect
to all other underwritings of stranded cost asset-backed securities in
which it is participating and has the contractual right to make such a
determination.
12. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers, the Issuer or its officers,
Group or its officers, Reserves or its officers, the Seller or its
officers, and of the Underwriters set forth in or made pursuant to this
Underwriting Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or of the
Company, the Issuer, Group, Reserves, the Seller or any of the officers,
directors or controlling persons referred to in Section 8 hereof, and will
survive delivery of and payment for the Bonds. The provisions of Sections 7
and 8 hereof shall survive the termination or cancellation of this
Underwriting Agreement.
13. Notices. All communications hereunder will be in writing
and may be given by United States mail, courier service, telecopy, telefax
or facsimile (confirmed by telephone or in writing in the case of notice by
telecopy, telefax or facsimile) or any other customary means of
communication, and any such communication shall be effective when
delivered, or if mailed, three days after deposit in the United States mail
with proper postage for ordinary mail prepaid, and if sent to the
Representative, to it at the address specified in Schedule I hereto; and if
sent to the Company, to it at Two North Ninth Street, Allentown, PA 18101,
Attention: Senior Vice President and Chief Financial Officer; if sent to
the Seller to it at 3960 Howard Hughes Parkway, Suite 630, Las Vegas,
Nevada 89107, Attention: Manager; and if sent to the Issuer, to it at Two
North Ninth Street, GENA 9-2, Room 3, Allentown, PA 18101, Attention:
Manager. The parties hereto, by notice to the others, may designate
additional or different addresses for subsequent communications.
14. Successors. This Underwriting Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons referred
to in Section 8 hereof, and no other person will have any right or
obligation hereunder.
15. Applicable Law. This Underwriting Agreement will be
governed by and construed in accordance with the laws of the State of New
York.
16. Counterparts. This Underwriting Agreement may be signed
in any number of counterparts, each of which shall be deemed an original,
which taken together shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding
agreement among the Company, the Seller, the Issuer and the several
Underwriters.
Very truly yours,
PP&L, INC.
By: /s/ John R. Biggar
___________________________
Name: John R. Biggar
Title: Senior Vice President
and Chief Financial Officer
PP&L TRANSITION BOND COMPANY LLC
By: /s/ James E. Abel
____________________________
Name: James E. Abel
Title: Manager
CEP SECURITIES CO. LLC
By: /s/ John H. Yardley
___________________________
Name: John H. Yardley
Title: Manager
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date specified in Schedule I hereto.
MORGAN STANLEY & CO. INCORPORATED
By: /s/ R. H. Hoffman
__________________________
Name: R. H. Hoffman
Title: Vice President
For itself and the other several
Underwriters, if any, named in Schedule II
to the foregoing Underwriting Agreement.
SCHEDULE I
Underwriting Agreement dated July 29, 1999
Registration Statement No. 333-75369
Representative:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Title, Purchase Price and Description of Bonds:
Title: PP&L Transition Bond Company LLC Transition Bonds,
Series 1999-1
Principal amount, Price to
Public, Underwriting Discounts
and Commissions and Proceeds
to Issuer:
<TABLE>
<CAPTION>
Total
Principal Underwriting
Amount of Discounts and Proceeds to
Class Bond Rate Price to Public Commissions Issuer
-------------- ------------ --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Per Class A-1 Bond $ 293,000,000 6.08% 99.99269% 0.22400% 99.76869%
Per Class A-2 Bond $ 178,000,000 6.41% 99.98213% 0.30000% 99.68213%
Per Class A-3 Bond $ 303,000,000 6.60% 99.99922% 0.35000% 99.64922%
Per Class A-4 Bond $ 201,000,000 6.72% 99.99466% 0.40000% 99.59466%
Per Class A-5 Bond $ 313,000,000 6.83% 99.96589% 0.45000% 99.51589%
Per Class A-6 Bond $ 223,000,000 6.96% 99.98204% 0.50000% 99.48204%
Per Class A-7 Bond $ 455,000,000 7.05% 99.99491% 0.60000% 99.39491%
Per Class A-8 Bond $ 454,000,000 7.15% 99.99409% 0.67500% 99.31909%
--------------
Total $ 2,420,000,000
</TABLE>
Plus, the Underwriters will be
reimbursed by the Issuer for
expenses pursuant to the
engagement letter dated June 4,
1999 between the Company and
the Representative
Original Issue Discount (if any): None
Redemption provisions: At the Issuer's option when the
outstanding principal balance
of the Bonds has been reduced
to 5% of the original principal
balance.
Other provisions: None
Closing Date, Time and Location: August 10, 1999, 10:00 a.m.;
offices of Skadden, Arps,
Slate, Meagher & Flom LLP, New
York, New York
Type of Offering: Delayed Offering
Date referred to in Section 5(a)(vi) and Section 5(b)(ii) after which the
Company, the Seller and the Issuer may offer or sell asset-backed
securities without the consent of the Representative: January 29, 2000
SCHEDULE II
Principal Amount of Bonds to be Purchased (in thousands)
<TABLE>
<CAPTION>
Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class A-6 Class A-7 Class A-8
Underwriters Bonds Bonds Bonds Bonds Bonds Bonds Bonds Bonds Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Morgan Stanley Dean
Witter $172,870 $105,020 $178,770 $118,590 $184,670 $131,570 $268,450 $267,860 $1,427,800
Credit Suisse First
Boston $29,300 $17,800 $30,300 $20,100 $31,300 $22,300 $45,500 $45,400 $242,000
Merrill Lynch & Co. $29,300 $17,800 $30,300 $20,100 $31,300 $22,300 $45,500 $45,400 $242,000
Salomon Smith Barney $29,300 $17,800 $30,300 $20,100 $31,300 $22,300 $45,500 $45,400 $242,000
Banc One Capital
Markets, Inc. $2,930 $1,780 $3,030 $2,010 $3,130 $2,230 $4,550 $4,540 $24,200
Chase Securities Inc. $8,790 $5,340 $9,090 $6,030 $9,390 $6,690 $13,650 $13,620 $72,600
First Union Capital
Markets Corp. $8,790 $5,340 $9,090 $6,030 $9,390 $6,690 $13,650 $13,620 $72,600
Mellon Financial
Markets, Inc. $8,790 $5,340 $9,090 $6,030 $9,390 $6,690 $13,650 $13,620 $72,600
Janney Montgomery Scott
Inc. $1,465 $890 $1,515 $1,005 $1,565 $1,115 $2,275 $2,270 $12,100
Pryor, McClendon, Counts
& Co., Inc. $1,465 $890 $1,515 $1,005 $1,565 $1,115 $2,275 $2,270 $12,100
Total $293,000 $178,000 $303,000 $201,000 $313,000 $223,000 $455,000 $454,000 $2,420,000
</TABLE>
EXHIBIT A
This information has been prepared in connection with the issuance of the
securities described herein, and is based on information provided by PP&L,
Inc. with respect to the expected characteristics of the intangible
transition property securing these securities. The actual characteristics
and performance of the intangible transition property will differ from the
assumptions used in preparing these materials, which are hypothetical in
nature. Changes in the assumptions may have a material impact on the
information set forth in these materials. No representation is made that
any performance or return indicated herein will be achieved. This
information may not be used or otherwise disseminated in connection with
the offer or sale of these or any other securities, except in connection
with the initial offer or sale of these securities to you to the extent set
forth below. NO REPRESENTATION IS MADE AS TO THE APPROPRIATENESS,
USEFULNESS, ACCURACY OR COMPLETENESS OF THESE MATERIALS OR THE ASSUMPTIONS
ON WHICH THEY ARE BASED. The underwriters disclaim any and all liability
relating to this information, including without limitation any express or
implied representations and warranties for, statements contained in, and
omissions from this information. Additional information is available upon
request. These materials do not constitute an offer to buy or sell or a
solicitation of an offer to buy or sell any security or instrument or to
participate in any particular trading strategy. ANY SUCH OFFER TO BUY OR
SELL ANY SECURITY WOULD BE MADE PURSUANT TO A DEFINITIVE PROSPECTUS AND
PROSPECTUS SUPPLEMENT PREPARED BY THE ISSUER WHICH WOULD CONTAIN MATERIAL
INFORMATION NOT CONTAINED IN THESE MATERIALS. SUCH PROSPECTUS AND
PROSPECTUS SUPPLEMENT WILL CONTAIN ALL MATERIAL INFORMATION IN RESPECT OF
ANY SUCH SECURITY OFFERED THEREBY AND ANY DECISION TO INVEST IN SUCH
SECURITIES SHOULD BE MADE SOLELY IN RELIANCE UPON SUCH PROSPECTUS AND
PROSPECTUS SUPPLEMENT. ANY CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN
ARE TO BE READ IN CONJUNCTION WITH SUCH PROSPECTUS AND PROSPECTUS
SUPPLEMENT. In the event of any such offering, these materials, including
any description of the intangible transition property contained herein,
shall be deemed superseded, amended and supplemented in their entirety by
such Prospectus and Prospectus Supplement. To Our Readers Worldwide: In
addition, please note that this information has been provided by Morgan
Stanley & Co., Incorporated and approved by Morgan Stanley & Co.
International Limited, a member of the Securities and Futures Authority,
and Morgan Stanley Japan Ltd. We recommend that investors obtain the advice
of their Morgan Stanley & Co. International Limited or Morgan Stanley Japan
Ltd. representative about the investment concerned. NOT FOR DISTRIBUTION TO
PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES AND FUTURES AUTHORITY.
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
PP&L TRANSITION BOND COMPANY LLC
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
PP&L TRANSITION BOND COMPANY LLC,
a Delaware Limited Liability Company
(the "Company")
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated
August 10, 1999 (as further amended, supplemented or otherwise modified and
in effect from time to time, the "Agreement"), of PP&L Transition Bond
Company LLC, a Delaware limited liability company (the "Company"), having
its principal office at Two North Ninth Street, Allentown, Pennsylvania
18101.
WHEREAS, CEP Group, Inc., as sole Member, on March 25, 1999 filed
a Certificate of Formation of the Company with the Delaware Secretary of
State, and executed a Limited Liability Company Agreement, dated March 25,
1999, as amended on April 26, 1999 (the "Original LLC Agreement"); and
WHEREAS, on May 13, 1999, CEP Group, Inc. transferred its sole
Common Interest in the Company to its parent corporation, PP&L, Inc., as a
dividend on account of the common stock in CEP Group, Inc. held by PP&L,
Inc., such that PP&L, Inc. succeeded to the Common Interest of CEP Group,
Inc. as the sole Member of the Company; and
WHEREAS, this Agreement amends and restates the Original LLC
Agreement in all respects, and from and after the date hereof constitutes
the governing instrument of the Company;
NOW THEREFORE, the Member hereby amends and restates the Original
LLC Agreement as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Capitalized Terms. For all purposes of this
Agreement, the following terms shall have the meanings set forth below:
"Act" shall mean the Delaware Limited Liability Company Act, as
amended, as in effect on the date hereof (currently Chapter 18 of Title 6,
Sections 18-101 through 18-1109 of the Delaware Code) and as it may be
amended hereafter, from time to time.
"Administration Agreement" shall mean the Administration
Agreement, dated August 10, 1999, between the Company and PP&L, Inc., as
administrator.
"Affiliate" shall mean, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" shall mean this Amended and Restated Limited
Liability Company Agreement of the Company, as the same may be amended from
time to time in accordance with the provisions hereof.
"Bankruptcy" means, with respect to any Person, if such Person
(i) makes an assignment for the benefit of creditors, (ii) files a
voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or
insolvent, or has entered against it an order for relief, in any bankruptcy
or insolvency proceedings, (iv) files a petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment,
liquidation or similar relief under any statute, law or regulation, (v)
files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against it in any proceeding of
this nature, (vi) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the Person or of all or any substantial
part of its properties, or (vii) if 120 days after the commencement of any
proceeding against the Person seeking reorganization, arrangement,
composition, readjustment, liquidation or similar relief under any statute,
law or regulation, the proceeding has not been dismissed, or if within 90
days after the appointment without such Person's consent or acquiescence of
a trustee, receiver or liquidator of such Person or of all or any
substantial part of its properties, the appointment is not vacated or
stayed, or if within 90 days after the expiration of any such stay, the
appointment is not vacated. The foregoing definition of "Bankruptcy" is
intended to replace and shall supersede and replace the definition of
"Bankruptcy" set forth in Sections 18-101(1) and 18-304 of the Act.
"Basic Documents" shall mean this Agreement, the Certificate of
Formation of the Company, the Contribution Agreement, the Assignment dated
May 13, 1999 executed and delivered by PP&L, Inc. in favor of CEP
Securities Co. LLC pursuant to the Contribution Agreement, the Sale
Agreement dated August 10, 1999 between CEP Securities Co. LLC and the
Company, the bill of sale dated August 10, 1999 issued by CEP Securities
Co. LLC to the Company pursuant to the Sale Agreement, the Servicing
Agreement dated August 10, 1999 between the Company and PP&L, Inc., as
servicer, the Administration Agreement, and the Indenture.
"Bonds" shall have the meaning set forth in Section 2.03(b).
"Business Day" shall mean any day other than a Saturday, Sunday
or other day on which banks are authorized or required by law to be closed
in New York City, New York or Allentown, Pennsylvania.
"Certificate of Formation" shall mean the Certificate of
Formation of the Company as filed with the Secretary of State of the State
of Delaware on March 25, 1999, in accordance with the Act.
"Code" shall mean the Internal Revenue Code of 1986, as amended
(or any successor law).
"Common Interest" shall mean the limited liability company
interest of the Member in the Company. The Company shall have one class of
Common Interest.
"Company" shall mean PP&L Transition Bond Company LLC, a Delaware
limited liability company.
"Competition Act" shall mean the Pennsylvania Electricity
Generation Customer Choice and Competition Act Chapter 28 of Title 66 of
the Pennsylvania Consolidated Statutes, 66 Pa. C.S. Section 2801, et seq.
"Contribution Agreement" shall mean the Contribution Agreement,
dated as of May 13, 1999, among PP&L, Inc., CEP Group, Inc., CEP Reserves,
Inc. and CEP Securities Co. LLC, as amended.
"Fiscal Year" shall mean, unless the Managers shall at any time
determine otherwise pursuant to the requirements of the Code, a calendar
year.
"GAAP" shall mean the generally accepted accounting principles
promulgated or adopted by the Financial Accounting Standards Board and its
successors from time to time.
"Governmental Authority" shall mean any federal, state, local or
foreign court or governmental department, commission, board, bureau,
agency, authority, instrumentality or regulatory body.
"Indenture" shall mean the Indenture, dated August 10, 1999,
between the Company and the Trustee, as amended, modified or supplemented
from time to time, including any Supplement thereto creating a new Series
of Bonds.
"Independent Manager" shall mean, with respect to the Company, a
Manager who is not, and within the last five years was not (except solely
by virtue of such Person's serving as, or affiliation with any other Person
serving as, an independent director or manager, as applicable, of PP&L,
Inc., CEP Group, Inc., CEP Reserves, Inc. or CEP Securities Co. LLC or any
bankruptcy remote special purpose entity that is an Affiliate of PP&L, Inc.
or the Company), (i) a stockholder, member, partner, director, officer,
employee, Affiliate, customer, supplier, creditor or independent contractor
of, or any Person that has received any benefit in any form whatever from
(other than in such Manager's capacity as a ratepayer or customer of PP&L,
Inc. in the ordinary course of business), or any Person that has provided
any service in any form whatsoever to, or any major creditor (or any
Affiliate of any major creditor) of, the Company, PP&L, Inc., or any of
their Affiliates, or (ii) any Person owning beneficially, directly or
indirectly, any outstanding shares of common stock, any limited liability
company interests or any partnership interests, as applicable, of the
Company, PP&L, Inc. or any of their Affiliates, or of any major creditor
(or any Affiliate of any major creditor) of any of the foregoing, or a
stockholder, member, partner, director, officer, employee, Affiliate,
customer, supplier, creditor or independent contractor of, or any Person
that has received any benefit in any form whatever from (other than in such
Person's capacity as a ratepayer or customer of PP&L, Inc. in the ordinary
course of business), or any Person that has provided any service in any
form whatever to, such beneficial owner or any of such beneficial owner's
Affiliates, or (iii) a member of the immediate family of any person
described above; provided that the indirect or beneficial ownership of
stock through a mutual fund or similar diversified investment vehicle with
respect to which the owner does not have discretion or control over the
investments held by such diversified investment vehicle shall not preclude
such owner from being an Independent Manager. For purposes of this
definition, "major creditor" shall mean a natural person or business entity
to which the Company, PP&L, Inc. or any of their Affiliates has outstanding
indebtedness for borrowed money or credit on open account in a sum
sufficiently large as would reasonably be expected to influence the
judgment of the proposed Independent Manager adversely to the interests of
the Company when the interests of that Person are adverse to those of the
Company.
"Intangible Transition Property" shall mean the irrevocable right
of PP&L, Inc. or its successor or assignee to collect intangible transition
charges from customers as defined in the Qualified Rate Order to recover
through the issuance of Bonds the qualified transition expenses described
in the Qualified Rate Order, including all right, title and interest of
PP&L, Inc. 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 such order, and all proceeds of
any of the foregoing, such term being intended to be and being construed to
be the same as "intangible transition property" as used in the Competition
Act and such order.
"Manager" shall mean any manager of the Company, including the
Independent Managers.
"Member" shall mean PP&L, Inc., in its capacity as a member in
the Company under this Agreement, or any successor thereto as a member
pursuant to Article VI; provided, however, the term "Member" shall not
include the Special Members.
"Person" shall mean any natural person, corporation, business
trust, joint venture, association, company, partnership, limited liability
company, joint stock company, corporation, trust, unincorporated
organization or Governmental Authority.
"PUC" shall mean the Pennsylvania Public Utility Commission.
"Proceeding" shall have the meaning set forth in Section 8.01.
"Qualified Rate Order" shall mean 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.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the United States Securities and
Exchange Commission promulgated thereunder.
"Series" means each series of Bonds issued and authenticated
pursuant to the Indenture and a related Supplement.
"Special Member" shall mean, upon such person's admission to the
Company as a member of the Company pursuant to Section 5.05, a person
acting as Independent Manager, in such person's capacity as a member of the
Company. A "Special Member" shall have the rights and duties expressly set
forth in this Agreement.
"Supplement" shall mean a supplement to the Indenture complying
(to the extent applicable) with the terms of Article 9 of the Indenture.
"Treasury Regulations" shall mean regulations, including proposed
or temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trustee" shall mean the party named as such in the Indenture
until a successor replaces it in accordance with the applicable provisions
of the Indenture and thereafter means the successor serving thereunder.
SECTION 1.02 Other Definitional Provisions.
(a) All terms in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.
(b) As used in this Agreement and in any certificate or other
documents made or delivered pursuant hereto or thereto, accounting terms
not defined in this Agreement or in any such certificate or other document,
and accounting terms partly defined in this Agreement or in any such
certificate or other document to the extent not defined, shall have the
respective meanings given to them under GAAP. To the extent that the
definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such
terms under GAAP, the definitions contained in this Agreement or in any
such certificate or other document shall control.
(c) 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
references contained in this Agreement are references to Sections in this
Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation".
(d) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms.
(e) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
FORMATION OF THE LIMITED LIABILITY COMPANY
SECTION 2.01 Formation; Filings. Pursuant to the Act and in
accordance with the further terms and provisions hereof, the Member and
the Special Members hereby continue the Company as a limited liability
company. The Certificate of Formation of the Company has been executed and
filed with the Secretary of State of the State of Delaware by Michael A.
McGrail, as an authorized person within the meaning of the Act. The Member
shall execute or cause to be executed from time to time all other
instruments, certificates, notices and documents, and shall do or cause to
be done all such filing, recording, publishing and other acts, in each
case, as may be necessary or appropriate from time to time to comply with
all applicable requirements for the formation and/or operation and, when
appropriate, termination of a limited liability company in the State of
Delaware and all other jurisdictions where the Company shall desire to
conduct its business.
SECTION 2.02 Name and Office.
(a) The name of the Company shall be "PP&L Transition Bond
Company LLC." All business of the Company shall be conducted in such name
and all contracts, property and other assets of the Company shall be held
in that name and the Member shall not have any ownership interests in such
contracts, property or other assets in its individual name.
(b) The address of the registered office of the Company in the
State of Delaware is the Corporation Trust Center, 1209 Orange Street in
the city of Wilmington, County of New Castle, 19801. The name of its
registered agent at that address is The Corporation Trust Company.
(c) The Company may also have offices at such other places both
within and without the State of Delaware as the Member may from time to
time determine.
SECTION 2.03 Business Purpose. The nature of the business or
purpose to be conducted or promoted by the Company is to engage exclusively
in the following business and financial activities:
(a) to authorize, issue, sell and deliver one or more Series or
classes of transition bonds ("Bonds") under the Indenture and, in
connection therewith, to execute and deliver Supplements providing for the
issuance of additional Series of Bonds, each as permitted by and in
accordance with the terms of the Indenture;
(b) to purchase and hold Intangible Transition Property and
pledge the same to the Trustee pursuant to the terms and conditions of the
Basic Documents;
(c) to negotiate, authorize, execute, deliver, assume the
obligations under, and perform, the Basic Documents and any other
agreement or instrument or document relating to the activities set forth
in clauses (a) and (b) above, including but not limited to agreements with
third-party credit enhancers and interest rate swap agreements relating to
any Series of Bonds, provided, that the Company shall not incur any
indebtedness or other liability pursuant to any such other agreement or
instrument or document except for payments due to service providers and
trade creditors in the ordinary course of business and except for such
indebtedness or liability that by its terms provides that the holder
thereof may not cause the filing of a petition in bankruptcy or take any
similar action against the Company until one year and one day after every
other indebtedness or liability of the Company represented by any
previously issued Series of Bonds and amounts owed under the Indenture to
third-party credit enhancers with respect to such Bonds is paid in full;
and
(d) to engage in any activity and to exercise any powers
permitted to limited liability companies under the laws of the State of
Delaware that are related or incidental to the foregoing and necessary,
convenient or advisable to accomplish the foregoing.
SECTION 2.04 Term. The term of the Company shall
continue until the Company is dissolved and liquidated in accordance with
the Act, subject to Sections 6.03 and 9.05 hereof. The existence of the
Company as a separate legal entity shall continue until the cancellation of
the Certificate of Formation in accordance with the Act.
SECTION 2.05 No State Law Partnership. The Member and the
Special Members intend that the Company shall not be a partnership
(including, without limitation, a general partnership or a limited
partnership) or joint venture, and that neither the Member, the Special
Members nor any Manager shall be a partner or joint venturer of the Member,
the Special Members or any Manager with respect to the business of the
Company, for any purposes other than federal, state and local tax purposes,
and this Agreement shall not be construed to suggest otherwise.
SECTION 2.06 Authority of Member. Subject to Section 3.04, the
Member, acting in such capacity, shall have the authority or power to act
for or on behalf of the Company, to do any act that would be binding on the
Company, or to incur any expenditures, debts, liabilities or obligations on
behalf of the Company.
SECTION 2.07 Liability to Third Parties. Except as otherwise
expressly provided by the Act, neither the Member, the Special Members nor
any Manager shall be liable for the debts, obligations or liabilities of
the Company (whether arising in contract, tort or otherwise), including
without limitation under a judgment, decree or order of a court, by reason
of being the Member, the Special Members or acting as a Manager of the
Company.
SECTION 2.08 No Personal Liability of Member, Managers, Etc.
(a) The Member and the Special Members shall not be subject in such
capacity to any personal liability whatsoever to any Person in connection
with the assets or the acts, obligations or affairs of the Company, (b) the
Member and the Special Members shall have the same limitation of personal
liability as is extended to stockholders of a private corporation for
profit incorporated under the General Corporation Law of the State of
Delaware, and (c) no Manager or officer of the Company shall be subject in
such capacity to any personal liability whatsoever to any Person, other
than the Company or its Member, in connection with the assets or the
affairs of the Company; and, subject to the provisions of Article VIII, all
such Persons shall look solely to the assets of the Company for
satisfaction of claims of any nature arising in connection with the affairs
of the Member; provided, that such protection from personal liability shall
apply to the fullest extent permitted by applicable law, as the same exists
or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Company to provide greater or
broader indemnification rights than such law permitted the Company to
provide prior to such amendment).
SECTION 2.09 Separateness.
(a) Except as provided in the Basic Documents, the funds and
other assets of the Company shall not be commingled with those of any other
entity, and the Company shall maintain its accounts separate from the
Member and any other Person.
(b) The Company shall not hold itself out as being liable for
the debts of any other entity, and shall conduct its own business in its
own name.
(c) The Company shall not form, or cause to be formed, any
subsidiaries.
(d) The Company shall act solely in its limited liability
company name and through its duly authorized Member, Managers, officers or
agents in the conduct of its business, and shall conduct its business so as
not to mislead others as to the identity of the entity or assets with which
they are concerned.
(e) The Company shall maintain separate records, books of
account and financial statements, and shall not commingle its records and
books of account with the records and books of account of any other entity
or the Member.
(f) The Managers shall hold appropriate meetings to authorize
all of its limited liability company actions, which meetings may be held by
telephone conference call. The Company shall observe all formalities
required by this Agreement.
(g) The Company shall at all times ensure that its
capitalization is adequate in light of its business and purpose.
(h) Neither the Member nor any Manager shall guaranty, become
liable on or hold itself out as being liable for the debts of the Company.
The Company shall not guarantee or become obligated for the debts of the
Member or any Manager, any Affiliate thereof or any other Person, or
otherwise hold out its credit as being available to satisfy the obligations
of the Member, any Manager or any other Person, shall not pledge its assets
for the benefit of any entity other than the Trustee, shall not make loans
or advances to any Person, and shall not acquire obligations or securities
of the Member, any Manager or any Affiliate thereof.
(i) The Company shall pay its own liabilities out of its own
funds, including fees and expenses of the Administrator pursuant to the
Administration Agreement.
(j) The Company shall maintain an arm's-length relationship with
its Affiliates.
(k) The Company shall allocate fairly and reasonably any
overhead for office space shared with the Member or any Manager.
(l) The Company shall use its own separate stationery, invoices,
checks and other business forms.
(m) The Company shall correct any known misunderstanding
regarding its separate identity.
Failure of the Company or the Member or any Manager on behalf of the
Company to comply with any of the foregoing covenants of any of the
covenants contained in this Agreement shall not affect the status of the
Company as a separate legal entity or the limited liability of the Member
or any Manager.
SECTION 2.10 Limited Liability and Bankruptcy Remoteness.
Without limiting the generality of Section 2.09, the Company shall be
operated in such a manner as the Managers deem reasonable and necessary or
appropriate to preserve (a) the limited liability of PP&L, Inc. (or its
successor) as the Member in the Company and the limited liability of the
Special Members, (b) the separateness of the Company from the business of
PP&L, Inc. (or its successor), as the Member of the Company, or any other
Affiliate thereof and (c) until one year and one day after all of the Bonds
are paid in full, the special purpose, bankruptcy-remote status of the
Company.
ARTICLE III
MANAGEMENT
SECTION 3.01 Management by Managers. The powers of the Company
shall be exercised by or under the authority of, and the business and
affairs of the Company shall be managed under the direction of, the
Managers.
SECTION 3.02 Acts by Managers.
(a) The Managers shall be obliged to devote only as much of
their time to the Company's business as shall be reasonably required in
light of the Company's business and objectives. A Manager shall perform
his or her duties as a Manager in good faith, in a manner he or she
reasonably believes to be in the best interests of the Company, and with
such care as an ordinarily prudent person in a like position would use
under similar circumstances.
(b) Every Manager is an agent of the Company for the purpose of
its business, and the act of every Manager, including the execution in the
Company name of any instrument for carrying on the business of the Company,
binds the Company, unless such act is in contravention of this Agreement or
unless the Manager so acting otherwise lacks the authority to act for the
Company and the person with whom he or she is dealing has knowledge of the
fact that he or she has no such authority.
(c) The Managers shall have the right and authority to take all
actions which the Managers deem necessary, useful or appropriate for the
day-to-day management and conduct of the Company's business.
(d) The Managers may exercise all powers of the Company and do
all such lawful acts and things as are not by the Act, other applicable law
or this Agreement directed or required to be exercised or done by the
Member. All instruments, contracts, agreements and documents providing for
the acquisition or disposition of property of the Company shall be valid
and binding on the Company if executed by one or more of the Managers. All
instruments, contracts, agreements and documents of whatsoever type
executed on behalf of the Company shall be executed in the name of the
Company by one or more Managers.
SECTION 3.03 Number and Qualifications. The number of Managers
of the Company shall not be less than three nor more than five, as may be
determined by the Member from time to time, but no decrease in the number
of Managers shall have the effect of shortening the term of any incumbent
Manager.
SECTION 3.04 Independent Managers.
(a) The Company shall have at all times at least two individuals
who are each Independent Managers. The Independent Managers may not
delegate their duties, authorities or responsibilities hereunder. If any
Independent Manager resigns, dies or becomes incapacitated, or such
position is otherwise vacant, no action requiring the unanimous affirmative
vote of the Managers shall be taken until a successor Independent Manager
is appointed by the Member and qualifies and approves such action.
(b) Notwithstanding any other provision of this Agreement and
any provision of law that otherwise so empowers the Company, the Member,
any Manager or any other Person, the Company shall not, and neither the
Member nor any Manager nor any other Person on behalf of the Company shall,
without the prior unanimous consent of the Managers, including each of the
Independent Managers, do any of the following: (i) engage in any business
or activity other than those set forth in Article II hereof; (ii) incur any
indebtedness, other than the Bonds and ordinary course expenses as set
forth in Article II hereof, or assume or guaranty any indebtedness of any
other entity; (iii) make a general assignment for the benefit of creditors;
(iv) file a voluntary petition in bankruptcy; (v) file a petition or answer
seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or
regulation; (vi) file an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or
regulation, or the entry of any order appointing a trustee, liquidator or
receiver of it or of its assets or any substantial portion thereof; (vii)
seek, consent to or acquiesce in the appointment of a trustee, receiver or
liquidator of it or of all or any substantial part of its assets; (viii)
consolidate or merge with or into any other entity or convey or transfer
substantially all of its properties and assets substantially as an entirety
to any entity, or (ix) amend this Agreement or take action in furtherance
of any such action. With regard to any action contemplated by the
preceding sentence, or with regard to any action taken or determination
made at any time when the Company is insolvent, each Manager will, to the
fullest extent permitted by law, owe its primary fiduciary duty to the
Company (including the creditors of the Company).
SECTION 3.05 Appointment and Vacancy. The Member will appoint
each Manager, including any Manager to be appointed by reason of an
increase in the number of Managers.
SECTION 3.06 Term. Each Manager shall hold office until his
successor shall be selected by the Member and qualified, or until his or
her earlier death, resignation or removal as provided in this Agreement.
SECTION 3.07 Removal. Subject to Section 3.04(a) and Section
9.01 of this Agreement, the Member may remove, with or without cause, any
Manager.
SECTION 3.08 Resignation. Any Manager may resign at any time.
Such resignation shall be made in writing and shall take effect at the time
specified therein or, if no time is specified therein, at the time of its
receipt by the remaining Managers; provided, that the resignation of an
Independent Manager shall not be effective until a replacement Independent
Manager has been appointed. The acceptance of a resignation shall not be
necessary to make it effective, unless so expressly provided in the
resignation.
SECTION 3.09 Place of Meetings of Managers. Any meetings of the
Managers may be held either within or without the State of Delaware at such
place or places as shall be determined from time to time by resolution of
the Managers.
SECTION 3.10 Meetings of Managers. Meetings of the Managers may
be held when called by any Managers or Manager. The Manager or Managers
calling any meeting shall cause notice to be given of such meeting,
including therein the time, date and place of such meeting, to each Manager
at least two Business Days before such meeting. The business to be
transacted at, or the purpose of, any meeting of the Managers shall be
specified in the notice or waiver of notice of any such meeting. If fewer
than all the Managers are present in person, by telephone or by proxy,
business transacted at any such meeting shall be confined to the business
or purposes specifically stated in the notice or waiver of notice of such
meeting.
SECTION 3.11 Quorum; Majority Vote. At all meetings of the
Managers, the presence in person, by telephone or by proxy of a majority of
the Managers shall be necessary and sufficient to constitute a quorum for
the transaction of business unless a greater number is required by this
Agreement or by law. The act of a majority of the Managers present in
person, by telephone or by proxy at a meeting at which a quorum is present
in person, by telephone or by proxy shall be the act of the Managers,
except as otherwise provided by law or this Agreement. If a quorum shall
not be present in person, by telephone or by proxy at any meeting of the
Managers, the Managers present in person, by telephone or by proxy at the
meeting may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present in
person, by telephone or by proxy.
SECTION 3.12 Methods of Voting; Proxies. A Manager may vote
either in person, by telephone or by proxy executed in writing by the
Manager; provided further that the Person designated to act as proxy for an
Independent Manager must be an Independent Manager.
SECTION 3.13 Actions Without a Meeting. Any action required or
permitted to be taken at a meeting of the Managers may be taken without a
meeting, without prior notice, and without a vote, if a consent in writing,
setting forth the action so taken, is signed by the Managers having not
fewer than the minimum number of votes that would be necessary to take the
action at a meeting at which all Managers entitled to vote on the action
were present and voted. Copies of any such consents shall be filed with
the minutes and permanent records of the Company.
SECTION 3.14 Telephone and Similar Meetings. The Managers, or
members of any committee thereof, may participate in and hold meetings by
means of conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other.
Such participation in any such meeting shall constitute presence in person
at such meeting, except where a Person participates in such meeting for the
express purpose of objecting to the transaction of any business on the
ground that such meeting is not lawfully called or convened.
SECTION 3.15 Managers. The Member and each Manager shall take
all actions necessary from time to time to ensure that at all times the
number of Managers shall be not less than three nor more than five;
provided, however, that pursuant to Section 3.04, the Company shall at all
times have at least two Independent Managers. The Managers upon the
execution of this Agreement shall be John R. Biggar, James E. Abel, James
S. Pennington,) Peter H. Sorensen (who will serve as an Independent
Manager) and Dwight Jenkins (who will serve as an Independent Manager).
ARTICLE IV
OFFICERS
SECTION 4.01 Designation; Term; Qualifications. The Managers
may, from time to time, designate one or more Persons to be officers of the
Company. Any officer so designated shall have such title and authority and
perform such duties as the Managers may, from time to time, delegate to
them. Each officer shall hold office for the term for which such officer
is designated and until its successor shall be duly designated and shall
qualify or until its death, resignation or removal as provided in this
Agreement. Any Person may hold any number of offices. No officer need be a
Manager, the Member, a Delaware resident, or a United States citizen.
SECTION 4.02 Removal and Resignation. Any officer of the
Company may be removed as such, with or without cause, by the Managers at
any time. Any officer of the Company may resign as such at any time upon
written notice to the Company. Such resignation shall be made in writing
and shall take effect at the time specified therein or, if no time is
specified therein, at the time of its receipt by the Managers.
SECTION 4.03 Vacancies. Any vacancy occurring in any office of
the Company may be filled by the Managers.
SECTION 4.04 Compensation. The compensation, if any, of the
officers of the Company shall be fixed from time to time by the Managers.
ARTICLE V
MEMBER
SECTION 5.01 Powers. Subject to the provisions of this
Agreement and the Act, all powers shall be exercised by or under the
authority of, and the business and affairs of the Company shall be
controlled by, the Member pursuant to Section 5.03. Pursuant to Section
3.01 of this Agreement, the Member has delegated such powers to the
Managers. Without prejudice to such general powers, but subject to the
same limitations, it is hereby expressly declared that the Member shall
have the following powers, subject to Section 3.04 in all cases:
First: To select and remove the Managers and prescribe such
powers and duties for them as may be consistent with the Act and other
applicable law and this Agreement.
Second: To conduct, manage and control the affairs and business
of the Company, and to make such rules and regulations therefor consistent
with the Act and other applicable law and this Agreement.
Third: To change the registered office of the Company in
Delaware from one location to another; to fix and locate from time to time
one or more other offices of the Company; and to designate any place within
or without the State of Delaware for the conduct of the business of the
Company.
SECTION 5.02 Compensation of Member. The Company shall have
authority to pay to the Member reasonable compensation for the Member's
services to the Company. It is understood that the compensation paid to
the Member under the provisions of this Section shall be determined without
regard to the income of the Company, shall not be deemed to constitute
distributions to the recipient of any profit, loss or capital of the
Company and shall be considered as an operating expense of the Company.
SECTION 5.03 Actions by the Member. All actions of the Member
may be taken by written resolution of the Member which shall be signed on
behalf of the Member by an authorized officer of the Member and filed with
the records of the Company.
SECTION 5.04 Control by Member. To the extent the Member takes
any action with respect to the Company (including by means of its
appointment of any individual Manager or its control or employment of any
individual Manager in any other capacity), the Member, or any such Manager,
as applicable, will act in good faith in accordance with the terms of this
Agreement, and make decisions with respect to the business and daily
operations of the Company independent of, and not dictated by, in the case
of any such Manager, the Member, or in either case any Affiliate of the
foregoing, and, to the fullest extent permitted by law, any such Manager
shall bear a fiduciary duty to the Company (including its creditors) under
the circumstances set forth in Section 3.04 hereof.
SECTION 5.05 Special Member. Upon the occurrence of any event
that causes the Member to cease to be a member of the Company, each person
acting as an Independent Manager pursuant to Section 3.04 shall, without
any action of any Person and simultaneously with the Member ceasing to be a
member of the Company, automatically be admitted to the Company as a
Special Member and shall continue the Company without dissolution. No
Special Member may resign from the Company or transfer its rights as
Special Member unless (i) a successor Special Member has been admitted to
the Company as Special Member by executing a counterpart to this Agreement,
and (ii) such successor has also accepted its appointment as Independent
Manager, provided, however, the Special Members shall automatically cease
to be members of the Company upon the admission to the Company of a
substitute Member. Each Special Member shall be a member of the Company
that has no interest in the profits, losses and capital of the Company and
has no right to receive any distributions of Company assets. Pursuant to
Section 18-301 of the Act, a Special Member shall not be required to make
any capital contributions to the Company and shall not receive a limited
liability company interest in the Company. A Special Member, in its
capacity as Special Member, may not bind the Company. Except as required
by any mandatory provision of the Act, each Special Member, in its capacity
as Special Member, shall have no right to vote on, approve or otherwise
consent to any action by, or matter relating to, the Company, including,
without limitation, the merger, consolidation or conversion of the Company.
In order to implement the admission to the Company of each Special Member,
each person acting as an Independent Manager pursuant to Section 3.04 shall
execute a counterpart to this Agreement. Prior to its admission to the
Company as Special Member, each person acting as an Independent Manager
pursuant to Section 3.04 shall not be a member of the Company.
ARTICLE VI
COMMON INTEREST
SECTION 6.01 General. The Common Interest constitutes personal
property and shall be freely transferable and assignable in whole but not
in part upon registration of such transfer and assignment on the books of
the Company in accordance with the procedures established for such purpose
by the Managers of the Company. Upon registration of the transfer and
assignment of the Common Interest on the books of the Company, the
transferee/assignee shall be and become the sole Member of the Company and
shall have the rights and powers, and be subject to the restrictions and
liabilities, of the Member under this Agreement and the Act, and the
transferor/assignor shall cease to be the Member, each as of the date of
such registration. Notwithstanding the foregoing, the Common Interest may
not be transferred unless each Rating Agency (as defined in the Indenture)
then rating the Bonds of any class or Series shall have confirmed in
writing to the Trustee and the Company that such transfer will not result
in a reduction or withdrawal of the then current rating by any such Rating
Agency of any outstanding Series or class of Bonds. The Common Interest of
the Member in the Company shall be evidenced by a certificate in the form
set forth in Schedule B hereto.
SECTION 6.02 Distributions. The Member shall be entitled to
receive, out of the assets of the Company legally available therefor, when,
as and if declared by the Managers, distributions payable in cash in such
amounts, if any, as the Managers shall declare. Notwithstanding any
provision to the contrary contained in this Agreement, the Company shall
not be required to make a distribution to the Member on account of its
interest in the Company if such distribution would violate Section 18-607
of the Act or any other applicable law or any Basic Document.
SECTION 6.03 Rights on Liquidation, Dissolution or Winding Up.
(a) In the event of any liquidation, dissolution or winding up
of the Company, the Member shall be entitled to all remaining assets of the
Company available for distribution to the Member after payment of all
liabilities, debts and obligations of the Company to creditors, as set
forth in Section 18-804 of the Act.
(b) Neither the sale of all or substantially all of the property
or business of the Company, nor the merger or consolidation of the Company
into or with another Company or other entity, shall be deemed to be a
dissolution, liquidation or winding up, voluntary or involuntary, for the
purpose of this Section 6.03.
(c) The commencement of a bankruptcy, insolvency, receivership
or other similar proceeding by or against the Company or the Member shall
not result in the dissolution of the Company or in the cessation of the
interest of the Member in the Company. The withdrawal or resignation of
the Member or the dissolution of the Member shall not, by itself,
constitute a dissolution of the Company.
(d) Upon the occurrence of any event that causes the last
remaining member of the Company to cease to be a member of the Company, to
the fullest extent permitted by law, the personal representative of such
member is hereby authorized to, and shall, within 90 days after the
occurrence of the event that terminated the continued membership of such
member in the Company, agree in writing (i) to continue the Company and
(ii) to the admission of the personal representative or its nominee or
designee, as the case may be, as a substitute member of the Company,
effective as of the occurrence of the event that terminated the continued
membership of the last remaining member of the Company in the Company.
(e) Notwithstanding any other provision of this Agreement, the
Bankruptcy of the Member or any Special Member shall not cause the Member
or Special Member, respectively, to cease to be a member of the Company and
upon the occurrence of such an event, the business of the Company shall
continue without dissolution.
SECTION 6.04 Redemption. The Common Interest shall not be
redeemable.
SECTION 6.05 Voting Rights. The Member shall have the sole
right to vote on all matters as to which members of a limited liability
company shall be entitled to vote pursuant to the Act and other applicable
law.
ARTICLE VII
ALLOCATIONS; DISTRIBUTIONS; EXPENSES; TAXES;
BOOKS; RECORDS; AND BANK ACCOUNTS
SECTION 7.01 Allocations. Except as may be required by section
704(c) of the Code and Treasury Regulation section 1.704-1(b)(2)(iv)(f)(4),
all items of income, gain, loss, deduction, and credit of the Company for
each Fiscal Year shall be allocated to the Member. Any credit available
for federal income tax purposes shall be allocated to the Member in the
same manner.
SECTION 7.02 Distributions. All distributions shall be made to
the Member from surplus funds. Except as provided in Section 7.03 of this
Agreement, all distributions shall be made in such amounts and at such
times as determined by the Managers.
SECTION 7.03 Limitation Upon Distributions. No distribution
shall be declared and paid unless, after the distribution is made, the fair
value of the Company assets is in excess of all liabilities of the Company
and no default has occurred and is continuing under the Indenture or any
Series of Bonds then outstanding.
SECTION 7.04 Expenses. Except as otherwise provided in this
Agreement, and subject to the provisions of the Basic Documents, the
Company shall be responsible for all expenses and the allocation thereof
including without limitation:
(a) all expenses incurred by the Member or its Affiliates in
organizing the Company;
(b) all expenses related to the payment of the principal of and
interest on the transition bonds issued by the Company;
(i) all expenses related to the business of the Company and
all routine administrative expenses of the Company,
including any amounts payable under the Administration
Agreement, the maintenance of books and records of the
Company, the preparation and dispatch to the Member of
checks, financial reports, tax returns and notices
required pursuant to this Agreement;
(ii) all expenses incurred in connection with any litigation
or arbitration involving the Company (including the
cost of any investigation and preparation) and the
amount of any judgment or settlement paid in connection
therewith;
(c) all expenses for indemnity or contribution payable by
the Company to any person;
(d) all expenses incurred in connection with the collection of
amounts due to the Company from any person;
(e) all expenses incurred in connection with the preparation of
amendments to this Agreement;
(f) all expenses incurred in connection with the liquidation,
dissolution and winding up of the Company; and
(g) all expenses otherwise allocated in good faith to the
Company by the Managers.
SECTION 7.05 Tax Elections. The Managers shall make the
following elections on behalf of the Company:
(a) To elect the calendar year as the Company's Fiscal Year;
(b) To elect the accrual method of accounting;
(c) To elect to treat all organization and start-up costs of the
Company as deferred expenses amortizable over 60 months under Section 195
of the Code; and
(d) To elect with respect to such other federal, state and local
tax matters as the Managers shall agree upon from time to time.
SECTION 7.06 Annual Tax Information. The Managers shall cause
the Company to deliver to the Member all information necessary for the
preparation of the Member's federal or Commonwealth income tax return.
SECTION 7.07 Tax Matters Member. The Member shall communicate
and negotiate with the Internal Revenue Service on any tax matter on behalf
of the Member and the Company.
SECTION 7.08 Maintenance of Books. The Company shall keep books
and records of accounts and shall keep minutes of the proceedings of the
Member, the Managers and each committee of the Managers. The Fiscal Year
shall be the accounting year of the Company.
SECTION 7.09 Reports. Within sixty (60) days following the end
of each Fiscal Year during the term of the Company, the Managers shall
cause the Member to be furnished with a balance sheet, an income statement
and a statement of changes in Member's capital account for, or as of the
end of, that Fiscal Year. Such financial statements must be prepared in
accordance with the accounting method selected by the Managers consistently
applied (except as therein noted), and shall be accompanied by an audit
report from a nationally recognized accounting firm. The Managers also may
cause to be prepared or delivered such other reports as they may deem
appropriate. The Company shall bear the costs of all such financial
statements and reports.
SECTION 7.10 Bank and Investment Accounts. The Managers shall
establish and maintain one or more separate bank and investment accounts
and arrangements for Company funds in the Company name with financial
institutions and firms that the Managers determine.
ARTICLE VIII
INDEMNIFICATION OF MEMBER, MANAGERS AND OFFICERS
SECTION 8.01 Mandatory Indemnification of Member and Managers.
Any Person who was or is a party or is threatened to be made a party to or
is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative, or
investigative (hereafter a "Proceeding"), or any appeal in such a
Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that such Person is or was the Member, a
Special Member or a Manager, or while the Member, a Special Member or a
Manager is or was serving at the request of the Company as a director,
manager, officer, partner, venturer, proprietor, trustee, employee, agent
or similar functionary of another foreign or domestic corporation, limited
liability company or partnership, joint venture, partnership, trust, sole
proprietorship, employee benefit plan or other enterprise, shall be
indemnified by the Company to the fullest extent permitted by applicable
law, as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the
Company to provide greater or broader indemnification rights than such law
permitted the Company to provide prior to such amendment) against
judgments, penalties (including, without limitation, excise and similar
taxes and punitive damages), fines, settlements and reasonable expenses
(including, without limitation, attorneys' fees) actually incurred by such
Person in connection with such Proceeding. It is expressly acknowledged
that the indemnification provided in this Article VIII could involve
indemnification for negligence or under theories of strict liability.
Notwithstanding anything herein to the contrary, for so long as any Bonds
are outstanding, no payment from funds of the Company (as distinct from
funds from other sources, such as insurance) of any indemnity of the Member
under this Article VIII shall be payable except out of funds available for
payment of Company expenses as provided in the Indenture.
SECTION 8.02 Mandatory Advancement of Expenses. Expenses
incurred by a Person of the type entitled to be indemnified under Section
8.01 of this Agreement in defending any Proceeding shall be paid or
reimbursed by the Company in advance of the final disposition of the
Proceeding, without any determination as to such Person's ultimate
entitlement to indemnification under Section 8.01 of this Agreement, upon
receipt of a written affirmation by such Person of such Person's good faith
belief that such Person has met the standard of conduct necessary for
indemnification under applicable law and a written undertaking by or on
behalf of such Person to repay all amounts so advanced if it shall
ultimately be determined that such Person is not entitled to be indemnified
by the Company as authorized in Section 8.01 of this Agreement or
otherwise. The written undertaking shall be an unlimited general
obligation of the Person but need not be secured and shall be accepted
without reference to financial ability to make repayment.
SECTION 8.03 Indemnification of Officers, Employees and Agents.
The Company shall indemnify and pay and advance expenses to an officer,
employee or agent of the Company to the same extent and subject to the same
conditions under which it may indemnify and pay and advance expenses to the
Member or any Managers under this Article VIII; and the Company shall
indemnify and pay and advance expenses to any Person who is not or was not
the Member, a Special Member, a Manager, officer, employee or agent of the
Company but who is or was serving at the request of the Company as a
manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic
limited liability company or partnership, corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other
enterprise against any liability asserted against such Person and incurred
by such Person in such a capacity or arising out of such Person's status as
such to the same extent and subject to the same conditions that the Company
may indemnify and pay and advance expenses to the Member or a Special
Member or any Manager under this Article VIII.
SECTION 8.04 Nonexclusivity of Rights. The indemnification and
advancement and payment of expenses provided by this Article VIII (i) shall
not be deemed exclusive of any other rights to which the Member, a Special
Member or a Manager or other Person seeking indemnification may be entitled
under any statute, agreement, decision of the Member or disinterested
Managers, or otherwise both as to action in such Person's official capacity
and as to action in another capacity while holding such office, (ii) shall
continue as to any Person who has ceased to serve in the capacity which
initially entitled such Person to indemnity and advancement and payment of
expenses, and (iii) shall inure to the benefit of the heirs, executors,
administrators, successors and assigns of the Member, such Special Member,
such Manager or other Person.
SECTION 8.05 Contract Rights. The rights granted pursuant to
this Article VIII shall be deemed to be contract rights, and no amendment,
modification or repeal of this Article VIII shall have the effect of
limiting or denying any such rights with respect to actions taken or
Proceedings arising prior to any such amendment, modification or repeal.
SECTION 8.06 Insurance. The Company may purchase and maintain
insurance or other arrangement or both, at its expense, on behalf of itself
or any Person who is or was serving as the Member, a Special Member or a
Manager, officer, employee or agent of the Company, or is or was serving at
the request of the Company as a manager, director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of
another foreign or domestic limited liability company, partnership,
corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise, against any liability, expense
or loss, whether or not the Company would have the power to indemnify such
Person against such liability under the provisions of this Article VIII.
SECTION 8.07 Savings Clause. If this Article VIII or any
portion hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Company shall nevertheless indemnify and hold
harmless the Member, each Special Member, each Manager or any other Person
indemnified pursuant to this Article VIII as to costs, charges and expenses
(including, without limitation, attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, to the fullest
extent permitted by any applicable portion of this Article VIII that shall
not have been invalidated and to the fullest extent permitted by applicable
law.
SECTION 8.08. Other Ventures. It is expressly agreed that the
Member, any Manager and any Affiliates, officers, directors, managers,
stockholders, partners or employees of the Member or any Manager, may
engage in other business ventures of every nature and description, whether
or not in competition with the Company, independently or with others, and
the Company shall not have any rights in and to any independent venture or
activity or the income or profits derived therefrom.
SECTION 8.09 Other Arrangements Not Excluded. The
indemnification and advancement of expenses authorized in or ordered by a
court pursuant to this Article VIII:
(a) Does not exclude any other rights to which a Person seeking
indemnification or advancement of expenses may be entitled
under any agreement, decision of the Member or otherwise,
for either an action of the Member or any Manager, officer,
employee or agent in the official capacity of such Person or
an action in another capacity while holding such position,
except that indemnification, unless ordered by a court
pursuant to Section 8.05 above, may not be made to or on
behalf of the Member or any Manager if a final adjudication
established that its acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was
material to the cause of action; and
(b) Continues for a person who has ceased to be the Member,
Manager, officer, employee or agent and inures to the
benefit of the successors, heirs, executors and
administrators of such a person.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.01 Offset. Whenever the Company is to pay any sum to
the Member, any amounts the Member owes the Company may be deducted from
such sum before payment.
SECTION 9.02 Notices. Except as expressly set forth to the
contrary in this Agreement, all notices, requests, or consents provided for
or permitted to be given under this Agreement shall be in writing and shall
be given either by depositing such writing in the United States mail,
addressed to the recipient, postage paid, and registered or certified with
return receipt requested or by delivering such writing to the recipient in
person, by courier, or by facsimile transmission; and a notice, request, or
consent given under this Agreement shall be effective on receipt by the
Person to whom sent. All notices, requests, and consents to be sent to the
Member shall be sent to or made to Two North Ninth Street, Allentown,
Pennsylvania 18101, Attention: Treasurer or such other address as the
Member may specify by notice to the Company and the Managers. Any notice,
request, or consent to the Company or the Managers must be given to the
Managers at the following address: Two North Ninth Street, GENA9-2, room 3,
Allentown, PA 18101, Attention: Manager. Whenever any notice is required
to be given by law or this Agreement, a written waiver thereof, signed by
the Person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
SECTION 9.03 Effect of Waiver or Consent. A waiver or consent,
express or implied, to or of any breach or default by any Person in the
performance by such Person of its obligations with respect to the Company
shall not be a consent or waiver to or of any other breach or default in
the performance by such Person of the same or any other obligations of such
Person with respect to the Company.
SECTION 9.04 Governing Law; Severability. This Agreement shall
be governed by and shall be construed in accordance with the law of the
State of Delaware, excluding any conflict-of-laws rule or principle that
might refer the governance or the construction of this Agreement to the law
of another jurisdiction. In the event of a direct conflict between the
provisions of this Agreement and any mandatory provision of the Act, then
the applicable provision of the Act shall control. If any provision of
this Agreement or the application thereof to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of this
Agreement and the application of that provision to other Persons or
circumstances shall not be affected thereby and such provision shall be
enforced to the fullest extent permitted by law.
SECTION 9.05 No Bankruptcy Petition; No Dissolution. The Member
hereby covenants and agrees (or shall be deemed to have hereby covenanted
and agreed) that, prior to the date which is one year and one day after the
payment in full of every Series of Bonds and any amounts owed under the
Indenture to third-party credit enhancers or hedge agreement counterparties
with respect to the Bonds, it will not institute against the Company, or
join with any other Person in instituting against the Company, any
bankruptcy, reorganization, arrangement, insolvency, liquidation or other
proceeding under any Federal or state bankruptcy, insolvency or similar
law, provided, however, that nothing in this Section 9.05 shall constitute
a waiver of any right to indemnification, reimbursement or other payment
from the Company pursuant to this Agreement.
To the fullest extent permitted by law, the Member and each Manager
hereby covenants and agrees (or shall be deemed to have hereby covenanted
and agreed) that, until all of the Bonds and all amounts owed under the
Indenture have been paid in full, the Member and such Manager will not
consent to, or make application for, or institute or maintain any action
for, the dissolution of the Company under Section 18-801 or 18-802 of the
Act or otherwise.
In the event that the Member or any Manager takes action in violation
of this Section 9.05, the Company agrees that it will file an answer with
the court or otherwise properly contest the taking of such action and raise
the defense that the Member or the Manager, as the case may be, has agreed
in writing not to take such action and should be estopped and precluded
therefrom and such other defenses, if any, as its counsel advises that it
may assert.
The provisions of this Section 9.05 shall survive the termination of
this Agreement and the resignation, withdrawal or removal of the Member or
any Manager. Nothing herein contained shall preclude participation by the
Member or a Manager in assertion or defense of its claims in any such
proceeding involving the Company.
SECTION 9.06 Amendment. This Agreement may not be amended,
except in writing by the Member and the Company, upon prior approval of the
Trustee and receipt of notification in writing by each Rating Agency (as
defined in the Indenture) then rating the Bonds of any Class or Series, to
the Trustee and the Company that such amendment will not result in a
reduction or withdrawal of the then current rating by any such Rating
Agency of any outstanding Series or Class of Bonds.
SECTION 9.07 Headings and Sections. The headings in this
Agreement are inserted for convenience only and are in no way intended to
describe, interpret, define, or limit the scope, extent or intent of this
Agreement or any provision hereof.
SECTION 9.08 Binding Agreement. Notwithstanding any other
provision of this Agreement, the Member agrees that this Agreement
constitutes a legal, valid and binding agreement of the Member, and is
enforceable against the Member by the Independent Mangers, in accordance
with its terms. In addition, the Independent Managers shall be intended
beneficiaries of this Agreement.
IN WITNESS WHEREOF, this Limited Liability Company Agreement is
hereby executed by the undersigned as of August 10, 1999.
MEMBER:
PP&L, INC.
By: /s/ James E. Abel
----------------------------
Name: James E. Abel
Title: Vice President - Finance and
Treasurer
COMPANY:
PP&L TRANSITION BOND
COMPANY LLC
By: /s/ James S. Pennington
------------------------------
Name: James S. Pennington
Title: Manager
Agreed to and Consented to by
the Special Members and
Independent Mangers:
/s/ Peter H. Sorensen
-----------------------------------
Peter H. Sorensen
/s/ Dwight Jenkins
-----------------------------------
Dwight Jenkins
SCHEDULE A
Schedule of Capital Contributions of Member
COMMON INTEREST
CAPITAL COMMON INTEREST CAPITAL
MEMBER'S NAME CONTRIBUTION PERCENTAGE ACCOUNT
PP&L, Inc. $12,100,000 100% $12,100,000
SCHEDULE B
CERTIFICATE OF COMMON INTEREST
of
PP&L TRANSITION BOND COMPANY LLC
A Limited Liability Company
Organized under the Laws of the State of Delaware
This Certificate is issued and shall be held subject to the provisions
of the Certificate of Formation of PP&L TRANSITION BOND COMPANY LLC, a
Limited Liability Company organized under the laws of the State of Delaware
(the "Company"), filed on March 25, 1999 with the Secretary of State of the
State of Delaware, and the Limited Liability Company Agreement dated March
25, 1999 of the Company, as each may be amended from time to time.
This Certificate of Common Interest certifies that PP&L, Inc. is the
registered holder of the entire Common Interest of the Company, which
Common Interest shall be transferable only on the books of the Company by
the holder hereof in person or by a duly authorized attorney upon surrender
of this Certificate with a proper endorsement.
IN WITNESS WHEREOF, this Company has caused this Certificate to be
signed by one of its duly authorized Managers this __ day of _____, 1999.
--------------------------
Title: Manager
PP&L TRANSITION BOND COMPANY LLC
For Value Received the undersigned hereby sells, assigns and transfers
unto
____________________________________________________________________________
the entire Common Interest of the Company represented by the within
Certificate and does hereby irrevocably constitute and appoint
____________________________________________________________________________
Attorney, to transfer said Common Interest on the books of the Company
with full power of substitution in the premises.
Dated: ____________________
_____________________________
SCHEDULE C
Managers
Names
1) John R. Biggar
2) James E. Abel
3) James S. Pennington
4) Peter H. Sorensen
5) Dwight Jenkins
PP&L Transition Bond Company LLC,
Issuer
and
The Bank of New York,
Trustee
------------------------------
INDENTURE
Dated as of August 10, 1999
------------------------------
Securing Transition Bonds
Issuable in Series
TABLE OF CONTENTS
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . 2
SECTION 1.02 Incorporation by Reference of the
Trust Indenture Act . . . . . . . . . . . . 2
SECTION 1.03 Rules of Construction . . . . . . . . . . . . 3
ARTICLE II
The Transition Bonds
SECTION 2.01 Form . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.02 Execution, Authentication and
Delivery . . . . . . . . . . . . . . . . . . 4
SECTION 2.03 Denominations; Transition Bonds
Issuable in Series . . . . . . . . . . . . . 4
SECTION 2.04 Temporary Transition Bonds . . . . . . . . . . 6
SECTION 2.05 Registration; Registration of
Transfer and Exchange . . . . . . . . . . 6
SECTION 2.06 Mutilated, Destroyed, Lost or Stolen
Transition Bonds . . . . . . . . . . . . . . 8
SECTION 2.07 Persons Deemed Owner . . . . . . . . . . . . . 9
SECTION 2.08 Payment of Principal, Premium, if
any, and Interest; Interest on
Overdue Principal and Premium, if
any; Principal, Premium and
Interest Rights Preserved . . . . . . . . . 9
SECTION 2.09 Cancellation . . . . . . . . . . . . . . . . 11
SECTION 2.10 Amount; Authentication and Delivery
of Transition Bonds . . . . . . . . . . . 11
SECTION 2.11 Book-Entry Transition Bonds . . . . . . . . 16
SECTION 2.12 Notices to Clearing Agency . . . . . . . . . 18
SECTION 2.13 Definitive Transition Bonds . . . . . . . . 18
ARTICLE III
Covenants
SECTION 3.01 Payment of Principal, Premium, if
any, and Interest . . . . . . . . . . . . 19
SECTION 3.02 Maintenance of Office or Agency . . . . . . 19
SECTION 3.03 Money for Payments To Be Held in
Trust . . . . . . . . . . . . . . . . . . 19
SECTION 3.04 Existence . . . . . . . . . . . . . . . . . 21
SECTION 3.05 Protection of Collateral . . . . . . . . . . 21
SECTION 3.06 Opinions as to Collateral . . . . . . . . . 22
SECTION 3.07 Performance of Obligations . . . . . . . . . 23
SECTION 3.08 Negative Covenant . . . . . . . . . . . . . 24
SECTION 3.09 Annual Statement as to Compliance. . . . . . 24
SECTION 3.10 Issuer May Consolidate, etc., Only
on Certain Terms . . . . . . . . . . . . . 25
SECTION 3.11 Successor or Transferee . . . . . . . . . . 26
SECTION 3.12 No Other Business . . . . . . . . . . . . . 26
SECTION 3.13 No Borrowing. . . . . . . . . . . . . . . . 27
SECTION 3.14 Guarantees, Loans, Advances and
Other Liabilities. . . . . . . . . . . . 27
SECTION 3.15 Capital Expenditures . . . . . . . . . . . . 27
SECTION 3.16 Restricted Payments. . . . . . . . . . . . . 27
SECTION 3.17 Notice of Events of Default. . . . . . . . . 27
SECTION 3.18 Inspection . . . . . . . . . . . . . . . . . 28
SECTION 3.19 Adjusted Overcollateralization
Balance Schedules. . . . . . . . . . . . 28
SECTION 3.20 Sale Agreement, Contribution
Agreement, the Administration Agreement
and Servicing Agreement Covenants. . . . 28
SECTION 3.21 Taxes . . . . . . . . . . . . . . . . . . . 31
ARTICLE IV
Satisfaction and Discharge; Defeasance
SECTION 4.01 Satisfaction and Discharge of
Indenture; Defeasance . . . . . . . . . . 32
SECTION 4.02 Conditions to Defeasance . . . . . . . . . . 34
SECTION 4.03 Application of Trust Money . . . . . . . . . 36
SECTION 4.04 Repayment of Moneys Held by Paying
Agent. . . . . . . . . . . . . . . . . . 36
ARTICLE V
Remedies
SECTION 5.01 Events of Default . . . . . . . . . . . . . 36
SECTION 5.02 Acceleration of Maturity; Rescission
and Annulment . . . . . . . . . . . . . . 38
SECTION 5.03 Collection of Indebtedness and Suits
for Enforcement by Trustee . . . . . . . . 38
SECTION 5.04 Remedies; Priorities . . . . . . . . . . . . 41
SECTION 5.05 Optional Preservation of the
Collateral . . . . . . . . . . . . . . . . 42
SECTION 5.06 Limitation of Proceedings . . . . . . . . . 43
SECTION 5.07 Unconditional Rights of Transition
Bondholders To Receive Principal,
Premium, if any, and Interest . . . . . . 44
SECTION 5.08 Restoration of Rights and Remedies . . . . . 44
SECTION 5.09 Rights and Remedies Cumulative . . . . . . . 44
SECTION 5.10 Delay or Omission Not a Waiver . . . . . . . 45
SECTION 5.11 Control by Transition Bondholders . . . . . 45
SECTION 5.12 Waiver of Past Defaults . . . . . . . . . . 46
SECTION 5.13 Undertaking for Costs . . . . . . . . . . . 46
SECTION 5.14 Waiver of Stay or Extension Laws . . . . . . 47
SECTION 5.15 Action on Transition Bonds . . . . . . . . . 47
ARTICLE VI
The Trustee
SECTION 6.01 Duties and Liabilities of Trustee . . . . . 47
SECTION 6.02 Rights of Trustee . . . . . . . . . . . . . 49
SECTION 6.03 Individual Rights of Trustee . . . . . . . . 50
SECTION 6.04 Trustee's Disclaimer . . . . . . . . . . . . 50
SECTION 6.05 Notice of Defaults . . . . . . . . . . . . . 50
SECTION 6.06 Reports by Trustee to Holders . . . . . . . 50
SECTION 6.07 Compensation and Indemnity . . . . . . . . . 51
SECTION 6.08 Replacement of Trustee . . . . . . . . . . . 52
SECTION 6.09 Successor Trustee by Merger . . . . . . . . 53
SECTION 6.10 Appointment of Co-Trustee or
Separate Trustee . . . . . . . . . . . . . 54
SECTION 6.11 Eligibility; Disqualification . . . . . . . 55
SECTION 6.12 Preferential Collection of Claims
Against Issuer . . . . . . . . . . . . . . 55
ARTICLE VII
Transition Bondholders' Lists and Reports
SECTION 7.01 Issuer To Furnish Trustee Names and
Addresses of Transition Bondholders . . . 56
SECTION 7.02 Preservation of Information;
Communications to Transition Bondholders . 56
SECTION 7.03 Reports by Issuer . . . . . . . . . . . . . 56
SECTION 7.04 Reports by Trustee . . . . . . . . . . . . . 57
SECTION 7.05 Provision of Servicer Reports . . . . . . . 58
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.01 Collection of Money . . . . . . . . . . . . 58
SECTION 8.02 Collection Account . . . . . . . . . . . . . 58
SECTION 8.03 Release of Collateral . . . . . . . . . . . 63
SECTION 8.04 Issuer Opinion of Counsel . . . . . . . . . 64
SECTION 8.05 Reports by Independent Accountants . . . . . 64
ARTICLE IX
Supplemental Indentures
SECTION 9.01 Supplemental Indentures Without
Consent of Transition Bondholders . . . . 65
SECTION 9.02 Supplemental Indentures with Consent
of Transition Bondholders . . . . . . . . 66
SECTION 9.03 Execution of Supplemental Indentures . . . . 69
SECTION 9.04 Effect of Supplemental Indenture . . . . . . 69
SECTION 9.05 Conformity with Trust Indenture Act . . . . 69
SECTION 9.06 Reference in Transition Bonds to
Supplemental Indentures . . . . . . . . . 69
ARTICLE X
Redemption of Transition Bonds;
SECTION 10.01 Optional Redemption by Issuer . . . . . . . 70
SECTION 10.02 Mandatory Redemption by Issuer . . . . . . 70
SECTION 10.03 Form of Redemption Notice . . . . . . . . . 70
SECTION 10.04 Payment of Redemption Price . . . . . . . . 71
ARTICLE XI
Miscellaneous
SECTION 11.01 Compliance Certificates and
Opinions, etc . . . . . . . . . . . . . 73
SECTION 11.02 Form of Documents Delivered to
Trustee . . . . . . . . . . . . . . . . 74
SECTION 11.03 Acts of Transition Bondholders . . . . . . 75
SECTION 11.04 Notices, etc., to Trustee, Issuer
and Rating Agencies . . . . . . . . . . 75
SECTION 11.05 Notices to Transition Bondholders;
Waiver . . . . . . . . . . . . . . . . . 76
SECTION 11.06 Alternate Payment and Notice
Provisions . . . . . . . . . . . . . . . 77
SECTION 11.07 Conflict with Trust Indenture Act . . . . . 77
SECTION 11.08 Effect of Headings and Table of
Contents . . . . . . . . . . . . . . . . 77
SECTION 11.09 Successors and Assigns . . . . . . . . . . 77
SECTION 11.10 Separability . . . . . . . . . . . . . . . 78
SECTION 11.11 Benefits of Indenture . . . . . . . . . . . 78
SECTION 11.12 Legal Holidays . . . . . . . . . . . . . . 78
SECTION 11.13 Governing Law . . . . . . . . . . . . . . . 78
SECTION 11.14 Counterparts . . . . . . . . . . . . . . . 78
SECTION 11.15 Issuer Obligation . . . . . . . . . . . . . 78
SECTION 11.16 No Petition . . . . . . . . . . . . . . . . 79
Schedule 1 Scheduled Overcollateralization Levels
APPENDIX A Master Definitions
INDENTURE dated as of August 10, 1999, between PP&L Transition Bond
Company LLC, a Delaware limited liability company (the "Issuer"), and The
Bank of New York, a New York banking corporation, as trustee (the
"Trustee").
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for one or more Series of Transition Bonds, issuable
as provided in this Indenture. Each such Series of Transition Bonds will
be issued only under a separate Series Supplement to this Indenture duly
executed and delivered by the Issuer and the Trustee. The Issuer is
entering into this Indenture, and the Trustee is accepting the trusts
created hereby, each for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and each intending to be
legally bound hereby.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee as trustee for the benefit of
the Holders of the Transition Bonds from time to time issued and
outstanding, all of the Issuer's right, title and interest whether now
owned or hereafter acquired, in, to and under (a) the Intangible Transition
Property transferred by the Seller to the Issuer from time to time pursuant
to the Sale Agreement and all proceeds thereof, (b) the Sale Agreement, (c)
the Contribution Agreement and the Assignment, (d) all Bills of Sale
delivered by the Seller pursuant to the Sale Agreement, (e) the Servicing
Agreement, (f) the Collection Account and all sub-accounts thereof
(including, without limitation, the General Subaccount, the
Overcollateralization Subaccount, the Capital Subaccount, the Reserve
Subaccount, each Series Subaccount and any Defeasance Subaccount) and all
cash, securities, instruments, investment property or other assets credited
to the Collection Account or any subaccount thereof from time to time or
purchased with funds therefrom, (g) all other property of whatever kind
owned from time to time by the Issuer other than any cash released to the
Issuer by the Trustee pursuant to Section 8.02, (h) all present and future
claims, demands, causes and choses in action in respect of any or all of
the foregoing and (i) all payments on or under and all proceeds of every
kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts
receivable, general intangibles, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights
to payment of any and every kind, and other forms of obligations and
receivables, instruments and other property which at any time constitute
all or part of or are included in the proceeds of any of the foregoing
(collectively, the "Collateral").
Such Grants are made to the Trustee to have and to hold in trust to
secure the payment of principal of and premium, if any, and interest on,
and any other amounts (including all fees, expenses, counsel fees and other
amounts due and owing to the Trustee) owing in respect of, the Transition
Bonds equally and ratably without prejudice, preference, priority or
distinction, except as expressly provided in this Indenture and to secure
performance by the Issuer of all of the Issuer's obligations under this
Indenture with respect to the Transition Bonds, all as provided in this
Indenture.
The Trustee, as trustee on behalf of the Holders of the Transition
Bonds, acknowledges such Grant, accepts the trusts hereunder in accordance
with the provisions hereof and agrees to perform its duties herein
required.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 DEFINITIONS. Capitalized terms used but not
otherwise defined in this Agreement have the respective meanings set forth
in Appendix A hereto unless the context otherwise requires.
SECTION 1.02 INCORPORATION BY REFERENCE OF THE TRUST INDENTURE
ACT. Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this
Indenture. Each of the following TIA terms used in this Indenture has the
following meaning:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Transition Bonds.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
SECTION 1.03 RULES OF CONSTRUCTION.
(i) An accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(ii) "including" means including without limitation;
(iii) with respect to terms defined in Appendix A hereto, words
in the singular include the plural and words in the plural include the
singular;
(iv) unless otherwise specified, references herein to Sections
or Articles are to Sections or Articles of this Indenture; and
(v) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
ARTICLE II
THE TRANSITION BONDS
SECTION 2.01 FORM. The Transition Bonds and the Trustee's
certificate of authentication shall be in substantially the forms set forth
in the related Series Supplement, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted
by this Indenture or by the related Series Supplement and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by
the Managers of the Issuer executing such Transition Bonds, as evidenced by
their execution of such Transition Bonds. Any portion of the text of any
Transition Bond may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Transition Bond. Each
Transition Bond shall be dated the date of its authentication.
The Transition Bonds shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the Managers of the Issuer
executing such Transition Bonds, as evidenced by their execution of such
Transition Bonds.
Each Transition Bond shall bear upon its face the designation so
selected for the Series and Class, if any, to which it belongs. The terms
of all Transition Bonds of the same Series shall be the same, unless such
Series is comprised of one or more Classes, in which case the terms of all
Transition Bonds of the same Class shall be the same.
SECTION 2.02 EXECUTION, AUTHENTICATION AND DELIVERY. The
Transition Bonds shall be executed on behalf of the Issuer by a Manager.
The signature of any such Manager on the Transition Bonds may be manual or
facsimile.
Transition Bonds bearing the manual or facsimile signature of
individuals who were at any time Managers shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Transition
Bonds.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Transition Bonds executed on behalf
of the Issuer to the Trustee pursuant to an Issuer Order for
authentication; and the Trustee shall authenticate and deliver such
Transition Bond as in this Indenture provided and not otherwise.
No Transition Bond shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears
on such Transition Bond a certificate of authentication substantially in
the form provided for herein executed by the Trustee by the manual
signature of one of its authorized signatories, and such certificate upon
any Transition Bond shall be conclusive evidence, and the only evidence,
that such Transition Bond has been duly authenticated and delivered
hereunder.
SECTION 2.03 DENOMINATIONS; TRANSITION BONDS ISSUABLE IN SERIES.
The Transition Bonds of each Series shall be issuable as registered
Transition Bonds in the Authorized Denominations specified in the Series
Supplement therefor.
The Transition Bonds may, at the election of and as authorized by a
Manager and set forth in a Series Supplement, be issued in one or more
Series (each of which may be comprised of one or more Classes), and shall
be designated generally as the "Transition Bonds" of the Issuer, with such
further particular designations added or incorporated in such title for the
Transition Bonds of any particular Series or Class as a Manager of the
Issuer may determine and be set forth in the Series Supplement therefor.
Each Series of Transition Bonds shall be created by a Series
Supplement authorized by a Manager and establishing the terms and
provisions of such Series. The several Series and Classes thereof may
differ as between Series and Classes, in respect of any of the following
matters:
(i) designation of the Series and, if applicable, the Classes
thereof;
(ii) the aggregate principal amount of the Transition Bonds of
the Series and, if applicable, each Class thereof;
(iii) the Bond Rate of the Series and, if applicable, each Class
thereof or the formula, if any, used to calculate the applicable Bond
Rate or Bond Rates for the Series;
(iv) the Payment Dates for the Series;
(v) the Expected Final Payment Date of the Series, and, if
applicable, each Class thereof;
(vi) the Series Final Maturity Date for the Series and, if
applicable, the Class Final Maturity Dates for each Class thereof;
(vii) the Series Issuance Date for the Series;
(viii) the place or places for payments with respect to the
Series;
(ix) the Authorized Denominations for the Series;
(x) the provisions, if any, for redemption of the Series by the
Issuer;
(xi) the Expected Amortization Schedule for the Series;
(xii) the Overcollateralization Amount with respect to the
Series;
(xiii) the Required Capital Amount with respect to the Series;
(xiv) the Calculation Dates and Adjustment Dates for the Series;
(xv) the credit enhancement, if any, applicable to the Series;
and
(xvi) any other terms of the Series or Class that are not
inconsistent with the provisions of this Indenture.
SECTION 2.04 TEMPORARY TRANSITION BONDS. Pending the
preparation of definitive Transition Bonds, or by agreement of the
purchasers of all Transition Bonds or, in the case of Transition Bonds held
in a book-entry only system by a Clearing Agency, a Manager on behalf of
the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Transition Bonds which are
printed, lithographed, typewritten, mimeographed or otherwise produced, of
the tenor of the definitive Transition Bonds in lieu of which they are
issued and with such variations not inconsistent with the terms of this
Indenture as the Manager executing such Transition Bonds may determine, as
evidenced by their execution of such Transition Bonds.
If temporary Transition Bonds are issued, the Issuer will cause
definitive Transition Bonds to be prepared without unreasonable delay
except where temporary Transition Bonds are held by a Clearing Agency.
After the preparation of definitive Transition Bonds, the temporary
Transition Bonds shall be exchangeable for definitive Transition Bonds upon
surrender of the temporary Transition Bonds at the office or agency of the
Issuer to be maintained as provided in Section 3.02, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Transition Bonds, a Manager on behalf of the Issuer shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like initial
principal amount of definitive Transition Bonds in Authorized
Denominations. Until so exchanged, the temporary Transition Bonds shall in
all respects be entitled to the same benefits under this Indenture as
definitive Transition Bonds.
SECTION 2.05 REGISTRATION; REGISTRATION OF TRANSFER AND
EXCHANGE. The Issuer shall cause to be kept a register (the "Transition
Bond Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Transition
Bonds and the registration of transfers of Transition Bonds. The Trustee
shall be "Transition Bond Registrar" for the purpose of registering
Transition Bonds and transfers of Transition Bonds as herein provided.
Upon any resignation of any Transition Bond Registrar, the Issuer shall
promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of Transition Bond Registrar.
If a Person other than the Trustee is appointed by the Issuer as
Transition Bond Registrar, the Issuer shall give the Trustee prompt written
notice of the appointment of such Transition Bond Registrar and of the
location, and any change in the location, of the Transition Bond Register,
and the Trustee shall have the right to inspect the Transition Bond
Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf
of the Transition Bond Registrar by a duly authorized officer thereof as to
the names and addresses of the Holders of the Transition Bonds and the
principal amounts and number of such Transition Bonds.
Upon surrender for registration of transfer of any Transition Bond at
the office or agency of the Issuer to be maintained as provided in Section
3.02, a Manager on behalf of the Issuer shall execute, and the Trustee
shall authenticate and the Transition Bondholder shall obtain from the
Trustee, in the name of the designated transferee or transferees, one or
more new Transition Bonds in any Authorized Denominations, of a like Series
(and, if applicable, Class) and aggregate initial principal amount.
At the option of the Holder, Transition Bonds may be exchanged for
other Transition Bonds of a like Series (and, if applicable, Class) and
aggregate initial principal amount in Authorized Denominations, upon
surrender of the Transition Bonds to be exchanged at such office or agency.
Whenever any Transition Bonds are so surrendered for exchange, a Manager on
behalf of the Issuer shall execute, and the Trustee shall authenticate and
the Transition Bondholder shall obtain from the Trustee, the Transition
Bonds which the Transition Bondholder making the exchange is entitled to
receive.
All Transition Bonds issued upon any registration of transfer or
exchange of Transition Bonds shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Transition Bonds surrendered upon such registration of
transfer or exchange.
Every Transition Bond presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a
written instrument of transfer in the form set forth in Exhibit A hereto or
such other form as is satisfactory to the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an Eligible Guarantor Institution in the form
set forth in such Transition Bond.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Transition Bonds, but, other than in respect of
exchanges pursuant to Section 2.04 or 9.06 not involving any transfer, the
Issuer may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration
of transfer or exchange of Transition Bonds.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make, and the Transition Bond Registrar need not
register, transfers or exchanges of Transition Bonds selected for
redemption or transfers or exchanges of any Transition Bond for a period of
15 days preceding the date on which final payment of principal is to be
made with respect to such Transition Bond.
SECTION 2.06 MUTILATED, DESTROYED, LOST OR STOLEN TRANSITION
BONDS. If (i) any mutilated Transition Bond is surrendered to the Trustee,
or the Trustee receives evidence to its satisfaction of the destruction,
loss or theft of any Transition Bond, and (ii) there is delivered to the
Trustee such security or indemnity as may be required by it to hold the
Issuer and the Trustee harmless, then, in the absence of notice to the
Issuer, the Transition Bond Registrar or the Trustee that such Transition
Bond has been acquired by a protected purchaser, a Manager on behalf of the
Issuer shall execute, and upon a Manager's request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Transition Bond, a replacement Transition Bond of
like Series (and, if applicable, Class), tenor and initial principal amount
in Authorized Denominations, bearing a number not contemporaneously
outstanding; provided, however, that if any such destroyed, lost or stolen
Transition Bond, but not a mutilated Transition Bond, shall have become or
within seven days shall be due and payable, or shall have been called for
redemption, instead of issuing a replacement Transition Bond, the Issuer
may pay such destroyed, lost or stolen Transition Bond when so due or
payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Transition Bond or payment of a destroyed,
lost or stolen Transition Bond pursuant to the proviso to the preceding
sentence, a protected purchaser of the original Transition Bond in lieu of
which such replacement Transition Bond was issued presents for payment such
original Transition Bond, the Issuer and the Trustee shall be entitled to
recover such replacement Transition Bond (or such payment) from the Person
to whom it was delivered or any Person taking such replacement Transition
Bond from such Person to whom such replacement Transition Bond was
delivered or any assignee of such Person, except a protected purchaser, and
shall be entitled to recover upon the security or indemnity provided
therefor to the extent of any loss, damage, cost or expense incurred by the
Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Transition Bond under this
Section, the Issuer may require the payment by the Holder of such
Transition Bond of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable
expenses (including the fees and expenses of the Trustee) connected
therewith.
Every replacement Transition Bond issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Transition Bond
shall constitute an original additional contractual obligation of the
Issuer, whether or not the mutilated, destroyed, lost or stolen Transition
Bond shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and
all other Transition Bonds duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Transition
Bonds.
SECTION 2.07 PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Transition Bond, the Issuer, the Trustee
and any agent of the Issuer or the Trustee may treat the Person in whose
name any Transition Bond is registered (as of the day of determination) as
the owner of such Transition Bond for the purpose of receiving payments of
principal of and premium, if any, and interest on such Transition Bond and
for all other purposes whatsoever, whether or not such Transition Bond be
overdue, and neither the Issuer, the Trustee nor any agent of the Issuer or
the Trustee shall be affected by notice to the contrary.
SECTION 2.08 PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST; INTEREST ON OVERDUE PRINCIPAL AND PREMIUM, IF ANY; PRINCIPAL,
PREMIUM AND INTEREST RIGHTS PRESERVED.
(a) The Transition Bonds shall accrue interest as provided in the form
of Transition Bond attached to the Series Supplement for such Transition
Bonds, at the applicable Bond Rate specified therein, and such interest
shall be payable on each Payment Date as specified therein. Any instalment
of interest, principal or premium, if any, payable on any Transition Bond
which is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall be paid to the Person in whose name such
Transition Bond (or one or more Predecessor Transition Bonds) is registered
on the Record Date for such Payment Date, by check mailed first-class,
postage prepaid to such Person's address as it appears on the Transition
Bond Register on such Record Date or in such other manner as may be
provided in the related Series Supplement, except that with respect to
Transition Bonds registered on a Record Date in the name of the nominee of
the Clearing Agency (initially, such nominee to be Cede & Co.), payments
will be made by wire transfer in immediately available funds to the account
designated by such nominee and except for the final instalment of principal
and premium, if any, payable with respect to such Transition Bond on a
Payment Date which shall be payable as provided in clause (b) below. The
funds represented by any such checks returned undelivered shall be held in
accordance with Section 3.03.
(b) The principal of each Transition Bond of each Series (and, if
applicable, Class) shall be payable in instalments on each Payment Date
specified in the Expected Amortization Schedule included in the form of
Transition Bond attached to the Series Supplement for such Transition
Bonds, but only to the extent that moneys are available for such payment
pursuant to Section 8.02. Failure to pay in accordance with such Expected
Amortization Schedule because moneys are not so available pursuant to
Section 8.02 to make such payments shall not constitute a Default or Event
of Default under this Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Transition Bonds of any Series or Class
shall be due and payable, if not previously paid (i) on the Series Final
Maturity Date (or, if applicable, Class Final Maturity Date) therefor, (ii)
on the date on which the Transition Bonds of all Series have been declared
immediately due and payable in accordance with Section 5.02 or (iii) on the
Redemption Date, if any, therefor. The Trustee shall notify the Person in
whose name a Transition Bond is registered at the close of business on the
Record Date preceding the Payment Date on which the Issuer expects that the
final instalment of principal of and premium, if any, and interest on such
Transition Bond will be paid. Such notice shall be mailed no later than
five days prior to such final Payment Date and shall specify that such
final instalment of principal and premium, if any, will be payable only
upon presentation and surrender of such Transition Bond and shall specify
the place where such Transition Bond may be presented and surrendered for
payment of such instalment. Notices in connection with redemptions of
Transition Bonds shall be mailed to Transition Bondholders as provided in
Section 10.03.
(c) If the Issuer defaults in a payment of interest on the Transition
Bonds of any Series, the Issuer shall pay defaulted interest (plus interest
on such defaulted interest at the applicable Bond Rate to the extent
lawful) in any lawful manner. The Issuer may pay such defaulted interest
to the Persons who are Transition Bondholders on a subsequent special
record date, which date shall be at least five Business Days prior to the
payment date. The Issuer shall fix or cause to be fixed any such special
record date and payment date, and, at least 15 days before any such special
record date, the Issuer shall mail to each affected Transition Bondholder a
notice that states the special record date, the payment date and the amount
of defaulted interest to be paid.
SECTION 2.09 CANCELLATION. All Transition Bonds surrendered for
payment, registration of transfer, exchange or redemption shall, if
surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by the Trustee. The Issuer may at
any time deliver to the Trustee for cancellation any Transition Bonds
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Transition Bonds so delivered
shall be promptly canceled by the Trustee. No Transition Bonds shall be
authenticated in lieu of or in exchange for any Transition Bonds canceled
as provided in this Section, except as expressly permitted by this
Indenture. All canceled Transition Bonds may be held or disposed of by the
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that
they be destroyed or returned to it; provided that such Issuer Order is
timely and the Transition Bonds have not been previously disposed of by the
Trustee.
SECTION 2.10 AMOUNT; AUTHENTICATION AND DELIVERY OF TRANSITION
BONDS. The aggregate principal amount of Transition Bonds that may be
authenticated and delivered under this Indenture shall not exceed
$2,420,000,000 plus the amount of any Refunding Issuance. The Issuer may
issue Transition Bonds of a new Series as a Financing Issuance or a
Refunding Issuance.
Transition Bonds of a new Series may from time to time be executed by
a Manager on behalf of the Issuer and delivered to the Trustee for
authentication and thereupon the same shall be authenticated and delivered
by the Trustee upon Issuer Request and upon delivery by the Issuer, at the
Issuer's expense, to the Trustee of the following:
(1) Trust Action. An Issuer Order authorizing and directing the
execution, authentication and delivery of the Transition Bonds by the
Trustee and specifying the principal amount of Transition Bonds to be
authenticated.
(2) Authorizations. An Issuer Opinion of Counsel that no
authorization, approval or consent of any governmental body is
required for the valid issuance, authentication or delivery of such
Transition Bonds, except for any such authorization, approval or
consent as has already been obtained and such registrations as are
required under the Blue Sky and securities laws of any State.
(3) Authorizing Certificate. A certified resolution of the Managers
authorizing the execution and delivery of the Series Supplement for
the Transition Bonds applied for and the execution, authentication and
delivery of such Transition Bonds.
(4) A Series Supplement for the Series of Transition Bonds being
issued, which shall set forth the provisions and form of the
Transition Bonds of such Series (and, if applicable, each Class
thereof).
(5) Certificates of the Issuer and the Seller.
(a) An Issuer Officer's Certificate dated as of the Series
Issuance Date, stating:
(i) that no Default has occurred and is continuing under
this Indenture and that the issuance of the Transition Bonds
being issued will not result in any Default;
(ii) that the Issuer has not assigned any interest or
participation in the Collateral except for the Grant
contained in this Indenture; that the Issuer has the power
and authority to Grant the Collateral to the Trustee as
security hereunder; and that the Issuer, subject to the
terms of this Indenture, has Granted to the Trustee a
perfected security interest in all right, title and interest
in and to the Collateral free and clear of any Lien, except
the Lien of this Indenture;
(iii) that the Issuer has appointed the firm of independent
certified public accountants as contemplated in Section
8.05;
(iv) that attached thereto are duly executed, true and
complete copies of the Sale Agreement, the Contribution
Agreement and the Servicing Agreement;
(v) that all filings with the PUC pursuant to the
Competition Act and all UCC financing statements with
respect to the Collateral which are required to be filed by
the terms of the Sale Agreement, the Contribution Agreement,
the Servicing Agreement or this Indenture have been filed as
required; and
(vi) that all conditions precedent provided in the Indenture
relating to the authentication and delivery of the
Transition Bonds have been complied with.
(b) (i) An Officer's Certificate from the Seller, dated as of
the Series Issuance Date, to the effect that, in the case of the
Intangible Transition Property to be transferred to the Issuer on
such date, immediately prior to the conveyance thereof to the
Issuer pursuant to the Sale Agreement, the Seller was the sole
owner of such Intangible Transition Property and such ownership
interest was perfected; such Intangible Transition Property has
been validly transferred and sold to the Issuer free and clear of
all Liens (other than Liens created by the Issuer pursuant to
this Indenture) and such transfer has been perfected; the Seller
has the power and authority to own, sell and assign such
Intangible Transition Property to the Issuer; and the Seller has
duly authorized such sale and assignment to the Issuer; and
(ii) An Officer's Certificate from PP&L, dated as of the Series
Issuance Date, to the effect that (A) the attached copy of the
Qualified Rate Order creating such Intangible Transition Property
is true and correct and is in full force and effect; and (B)
immediately prior to the conveyance of the Intangible Transition
Property to the Seller pursuant to the Contribution Agreement,
PP&L was the sole owner of the Intangible Transition Property,
the Intangible Transition Property has been validly transferred
and assigned to the Seller free and clear of all Liens and such
transfer has been perfected, and all of the representations and
warranties of PP&L set forth in the Contribution Agreement are
true and correct as of the Series Issuance Date, as if such
representations and warranties had been made as of the Series
Issuance Date.
(6) Issuer Opinion of Counsel. An Issuer Opinion of Counsel, portions
of which may be delivered by counsel for the Issuer and portions of
which may be delivered by counsel for the Seller and/or the Servicer,
dated as of the Series Issuance Date, to the collective effect that:
(a) the Issuer has the power and authority to execute and
deliver the Series Supplement and this Indenture and to issue the
Transition Bonds being issued, each of the Series Supplement and
this Indenture and such Transition Bonds have been duly
authorized, executed and delivered, and the Issuer is duly
organized and in good standing under the laws of the jurisdiction
of its organization and is in good standing in any jurisdiction
where it is required to be qualified;
(b) the Transition Bonds being issued, when authenticated in
accordance with the provisions of the Indenture and delivered,
will constitute valid and binding obligations of the Issuer
entitled to the benefits of the Indenture and the related Series
Supplement;
(c) the Indenture (including the related Series Supplement), the
Sale Agreement and the Servicing Agreement are valid and binding
agreements of the Issuer, enforceable against the Issuer in
accordance with their respective terms except as such
enforceability may be subject to bankruptcy, insolvency,
reorganization and other similar laws affecting the rights of
creditors generally and general principles of equity (regardless
of whether such enforceability is considered in a proceeding in
equity or at law);
(d) the Sale Agreement is a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its
terms except as such enforceability may be subject to bankruptcy,
insolvency, reorganization and other similar laws affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(e) the Servicing Agreement is a valid and binding agreement of
the Servicer, enforceable against the Servicer in accordance with
its terms except as such enforceability may be subject to
bankruptcy, insolvency, reorganization and other similar laws
affecting the rights of creditors generally and general
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(f) the Contribution Agreement is a valid and binding agreement
of each of the parties thereto, enforceable in accordance with
its terms except as such enforceability may be subject to
bankruptcy, insolvency, reorganization and other similar laws
affecting the rights of creditors generally and general
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(g) the transfer of the Intangible Transition Property by PP&L to
the Seller pursuant to the Contribution Agreement and the
Assignment was an absolute transfer of the entire right, title
and interest in (as in a "true sale" of) the Intangible
Transition Property by the Company directly to the Seller; such
transfer of the Intangible Transition Property is perfected; and
immediately prior to the execution and delivery of the Sale
Agreement, the Seller owned all right, title and interest in and
to the Intangible Transition Property;
(h) either
(1) (A) the transfer of the Transferred Intangible
Transition Property by the Seller to the Issuer pursuant to
the Sale Agreement is an absolute transfer of the entire
right, title and interest of the Seller in (as in a "true
sale" of) the Transferred Intangible Transition Property,
(B) such transfer is perfected, and (C) such transfer has
priority over any other transfer by the Seller of the
Transferred Intangible Transition Property; or
(2) (A) the Sale Agreement creates in favor of the Issuer a
security interest in the rights of the Seller in the
Transferred Intangible Transition Property, (B) such
security interest is valid and enforceable against the
Seller and third parties and has attached, (C) such security
interest is perfected, and (D) such perfected security
interest is of first priority;
(i) (A) the Indenture creates in favor of the Trustee a security
interest in the rights of the Issuer in the Intangible
Transition Property including proceeds of or arising from
Intangible Transition Charges to secure the Bonds, (B) such
security interest is valid and enforceable against the Issuer and
third parties and has attached under the Competition Act, (C)
such security interest is perfected under the Competition Act,
and (D) such perfected security interest is of first priority
under the Competition Act;
(j) (A) the Indenture creates in favor of the Trustee a security
interest in the rights of the Issuer in the Collateral, other
than the Collateral described in paragraph (i) above, (B) such
security interest is valid and enforceable against the Issuer and
third parties and has attached, (C) such security interest is
perfected, and (D) such perfected security interest is of first
priority;
(k) the Indenture has been duly qualified under the Trust
Indenture Act and either the Series Supplement for the Transition
Bonds applied for has been duly qualified under the Trust
Indenture Act or no such qualification of such Series Supplement
is necessary;
(l) either
(1) the registration statement covering the Transition Bonds
is effective under the Securities Act of 1933 and, to the
best of such counsel's knowledge and information, no stop
order suspending the effectiveness of such registration
statement has been issued under the Securities Act of 1933
nor have proceedings therefor been instituted or threatened
by the Commission or
(2) the Transition Bonds are exempt from the registration
requirements under the Securities Act of 1933;
(m) the Indenture (including the related Series Supplement) has
been duly authorized, executed and delivered by the Issuer;
(n) the Sale Agreement, the Contribution Agreement and the
Servicing Agreement have been duly authorized, executed and
delivered by each of the parties thereto; and
(o) the Issuer is not now and, following the issuance of the
Transition Bonds will not be, required to be registered under the
Investment Company Act of 1940, as amended.
(7) Accountant's Certificate or Opinion. A certificate or opinion,
addressed to the Issuer and the Trustee, complying with the
requirements of Section 11.01 hereof, of a firm of Independent
certified public accountants of recognized national reputation to the
effect that (a) such accountants are Independent within the meaning of
the Indenture, and are independent public accountants within the
meaning of the standards of The American Institute of Certified Public
Accountants, and (b) with respect to the Collateral, they have made
such calculations as they deemed necessary for the purpose and
determined that, based on the assumptions used in calculating the
initial Intangible Transition Charges with respect to the Transferred
Intangible Transition Property or, if applicable, the most recent
revised Intangible Transition Charges with respect to the Transferred
Intangible Transition Property, and taking into account amounts on
deposit in the Reserve Subaccount, as of the Series Issuance Date for
such Series (after giving effect to the issuance of such Series and
the application of the proceeds therefrom) such Intangible Transition
Charges are sufficient to (a) pay Operating Expenses when incurred,
(b) pay interest on each Series of Transition Bonds at their
respective Bond Rates when due, (c) pay principal of the Transition
Bonds of all Series in accordance with their respective Expected
Amortization Schedules and (d) fund the Scheduled
Overcollateralization Level and replenish any shortfalls in the
Capital Subaccount as of each Payment Date.
(8) Rating Agency Condition. The Trustee shall receive written notice
from each Rating Agency that the Rating Agency Condition will be
satisfied with respect to the issuance of any additional Series of
Transition Bonds being issued.
(9) Bill of Sale. If the issuance of an additional Series of
Transition Bonds is a Financing Issuance, the Bill of Sale delivered
to the Issuer under the Sale Agreement with respect to the Intangible
Transition Property being purchased with the proceeds of such
Financing Issuance.
(10) Moneys for Refunding. If the issuance of a Series of Transition
Bonds is a Refunding Issuance, the amount of money necessary to pay
the outstanding principal balance of, and premium and interest on, the
Transition Bonds being refunded to the Redemption Date for the
Transition Bonds being refunded upon redemption, such money to be
deposited into a separate account with the Trustee.
SECTION 2.11 BOOK-ENTRY TRANSITION BONDS. Unless otherwise
specified in the related Series Supplement, each Series of Transition
Bonds, upon original issuance, will be issued in the form of a typewritten
Transition Bond or Transition Bonds representing the Book-Entry Transition
Bonds, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer. Such Transition Bond
shall initially be registered on the Transition Bond Register in the name
of Cede & Co., the nominee of the initial Clearing Agency, and no
Transition Bond Owner will receive a definitive Transition Bond
representing such Transition Bond Owner's interest in such Transition Bond,
except as provided in Section 2.13. Unless and until definitive, fully
registered Transition Bonds (the "Definitive Transition Bonds") have been
issued to Transition Bondholders pursuant to Section 2.13:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Transition Bond Registrar and the Trustee shall be
entitled to deal with the Clearing Agency for all purposes of
this Indenture (including the payment of principal of and
premium, if any, and interest on the Transition Bonds and the
giving of instructions or directions hereunder) as the sole
holder of the Transition Bonds, and shall have no obligation to
the Transition Bond Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Transition Bond Owners shall be exercised only
through the Clearing Agency and shall be limited to those
established by law and agreements between such Transition Bond
Owners and the Clearing Agency or the Clearing Agency
Participants. Pursuant to the DTC Agreement, unless and until
Definitive Transition Bonds are issued pursuant to Section 2.13,
the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit
payments of principal of and premium, if any, and interest on the
Transition Bonds to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of
Transition Bonds evidencing a specified percentage of the
Outstanding Amount of the Transition Bonds or a Series or Class
thereof, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions
to such effect from Transition Bond Owners or Clearing Agency
Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Transition Bonds or
such Series or Class and has delivered such instructions to the
Trustee.
SECTION 2.12 NOTICES TO CLEARING AGENCY. Whenever a notice or
other communication to the Transition Bondholders is required under this
Indenture, unless and until Definitive Transition Bonds shall have been
issued to Transition Bond Owners pursuant to Section 2.13, the Trustee
shall give all such notices and communications specified herein to be given
to Transition Bondholders to the Clearing Agency, and shall have no
obligation to the Transition Bond Owners.
SECTION 2.13 DEFINITIVE TRANSITION BONDS. If (i) the Issuer
advises the Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities as depository
with respect to any Series or Class of Transition Bonds and the Issuer is
unable to locate a qualified successor, (ii) the Issuer, at its option,
advises the Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency with respect to any Series or Class of
Transition Bonds or (iii) after the occurrence of an Event of Default,
Transition Bond Owners representing beneficial interests aggregating at
least a majority of the Outstanding Amount of the Transition Bonds of all
Series advise the Trustee through the Clearing Agency in writing that the
continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Transition Bond Owners, then the
Clearing Agency shall notify all affected Transition Bond Owners and the
Trustee of the occurrence of any such event and of the availability of
Definitive Transition Bonds to affected Transition Bond Owners requesting
the same. Upon surrender to the Trustee of the typewritten Transition Bond
or Transition Bonds representing the Book-Entry Transition Bonds by the
Clearing Agency, accompanied by registration instructions, a Manager on
behalf of the Issuer shall execute and the Trustee shall authenticate the
Definitive Transition Bonds in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Transition Bond Registrar or the
Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Transition Bonds, the
Trustee shall recognize the Holders of the Definitive Transition Bonds as
Transition Bondholders.
ARTICLE III
COVENANTS
SECTION 3.01 PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST. The Issuer will duly and punctually pay the principal of and
premium, if any, and interest on the Transition Bonds in accordance with
the terms of the Transition Bonds and this Indenture; provided that except
on the Series Final Maturity Date, the Class Final Maturity Date or the
Redemption Date for a Series or Class of Transition Bonds or upon the
acceleration of the Transition Bonds following the occurrence of an Event
of Default, the Issuer shall only be obligated to pay the principal of such
Transition Bonds on each Payment Date therefor to the extent moneys are
available for such payment pursuant to Section 8.02. Amounts properly
withheld under the Code by any Person from a payment to any Transition
Bondholder of interest or principal or premium, if any, shall be considered
as having been paid by the Issuer to such Transition Bondholder for all
purposes of this Indenture.
SECTION 3.02 MAINTENANCE OF OFFICE OR AGENCY. The Issuer will
maintain in the Borough of Manhattan, the City of New York, an office or
agency where Transition Bonds may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer
in respect of the Transition Bonds and this Indenture may be served. The
Issuer hereby initially appoints the Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the
Trustee of the location, and of any change in the location, of any such
office or agency. If at any time the Issuer shall fail to maintain any
such office or agency or shall fail to furnish the Trustee with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Trustee as its
agent to receive all such surrenders, notices and demands.
SECTION 3.03 MONEY FOR PAYMENTS TO BE HELD IN TRUST. As
provided in Section 8.02(a), all payments of principal of, or premium and
interest on, the Transition Bonds that are to be made from amounts
withdrawn from the Collection Account pursuant to Section 8.02(d) or (e) or
Section 4.03 shall be made on behalf of the Issuer by the Trustee or by
another Paying Agent, and no amounts so withdrawn from the Collection
Account for payments of Transition Bonds shall be paid over to the Issuer
except as provided in this Section and in Section 8.02.
The Issuer shall cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it
hereby so agrees), subject to the provisions of this Section, that such
Paying Agent will:
(i) hold all sums held by it for the payment of principal of, or
premium or interest on, the Transition Bonds in trust for the
benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided;
(ii) give the Trustee notice of any Default by the Issuer (or any
other obligor upon the Transition Bonds) of which the Paying
Agent has actual knowledge in the making of any payment required
to be made with respect to the Transition Bonds;
(iii) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Trustee all sums held by the Paying Agent in trust for the
payment of Transition Bonds if at any time the Paying Agent
ceases to meet the standards required to be met by a Paying Agent
at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Transition Bonds
of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection
therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which the sums were held by such Paying Agent;
and upon such payment by any Paying Agent to the Trustee, such Paying Agent
shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Trustee or any Paying Agent in trust for the payment of any
amount of principal of, premium on, if any, or interest on any Transition
Bond and remaining unclaimed for two years after such amount has become due
and payable shall be discharged from such trust and be paid to the Issuer;
and the Holder of such Transition Bond shall thereafter, as an unsecured
general creditor, look only to the Issuer for payment thereof (but only to
the extent of the amounts so paid to the Issuer), and all liability of the
Trustee or such Paying Agent with respect to such trust money shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general
circulation in the City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Issuer. The Trustee may
also adopt and employ, at the expense of the Issuer, any other reasonable
means of notification of such repayment (including mailing notice of such
repayment to Holders whose Transition Bonds have been called but have not
been surrendered for redemption or whose right to or interest in moneys due
and payable but not claimed is determinable from the records of the Trustee
or of any Paying Agent, at the last address of record for each such
Holder).
SECTION 3.04 EXISTENCE. Subject to Section 3.10, the Issuer
shall keep in full effect its existence, rights and franchises as a
statutory limited liability company under the laws of the State of Delaware
(unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of
America, in which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the
validity and enforceability of this Indenture, the Transition Bonds, the
Collateral and each other instrument or agreement included therein.
SECTION 3.05 PROTECTION OF COLLATERAL. The Issuer shall from
time to time execute and deliver all such supplements and amendments hereto
and all such filings (including filings with the PUC pursuant to the
Competition Act), financing statements, continuation statements,
instruments of further assurance and other instruments, and shall take such
other action necessary or advisable to:
(i) maintain and preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively
the purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral;
(iv) preserve and defend title to the Collateral and the rights
of the Trustee and the Transition Bondholders in the Collateral
against the claims of all Persons and parties; or
(v) pay any and all taxes levied or assessed up on all or any
part of the Collateral.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any filing with the PUC, financing statement, continuation
statement or other instrument required by the Trustee pursuant to this
Section.
SECTION 3.06 OPINIONS AS TO COLLATERAL. (a) On or before March
31 in each calendar year, while any Series is outstanding, the Issuer shall
furnish to the Trustee an Issuer Opinion of Counsel either stating that, in
the opinion of such counsel, such action has been taken with respect to the
recording, filing, re-recording and re-filing of this Indenture, any
indentures supplemental hereto and any other requisite documents and, with
respect to the execution and filing of any filings pursuant to the
Competition Act or the UCC, financing statements and continuation
statements as is necessary to maintain the lien and security interest, and
the first priority thereof, created by this Indenture and reciting the
details of such action or stating that in the opinion of such counsel no
such action is necessary to maintain such lien and security interest, and
the first priority thereof. Such Issuer Opinion of Counsel shall also
describe the recording, filing, re-recording and re-filing of this
Indenture, any indentures supplemental hereto and any other requisite
documents, and the execution and filing of any filings pursuant to the
Competition Act or the UCC, financing statements and continuation
statements that will, in the opinion of such counsel, be required to
maintain the lien and security interest of this Indenture until March 31 in
the following calendar year.
(b) Prior to the effectiveness of any amendment to the Sale Agreement,
the Contribution Agreement or the Servicing Agreement, the Issuer shall
furnish to the Trustee an Issuer Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all filings, including filings
pursuant to the Competition Act or the UCC, have been executed and filed
that are necessary fully to preserve and protect the interest of the Issuer
and the Trustee in the Transferred Intangible Transition Property and the
proceeds thereof, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest.
SECTION 3.07 PERFORMANCE OF OBLIGATIONS. (a) The Issuer (i)
shall diligently pursue any and all actions to enforce its rights under
each instrument or agreement included in the Collateral and (ii) shall not
take any action and will use its best efforts not to permit any action to
be taken by others that would release any Person from any of such Person's
covenants or obligations under any such instrument or agreement or that
would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such
instrument or agreement, except, in each case, as expressly provided in
this Indenture, the Sale Agreement, the Contribution Agreement or the
Servicing Agreement or such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such
duties by a Person identified to the Trustee in an Issuer Officer's
Certificate of the Issuer shall be deemed to be action taken by the Issuer.
Initially, the Issuer has contracted with the Administrator to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in the Sale Agreement, the Servicing
Agreement, the Contribution Agreement and in all other instruments and
agreements included in the Collateral.
SECTION 3.08 NEGATIVE COVENANTS. The Issuer shall not:
(i) except as expressly permitted by this Indenture, the Sale
Agreement or the Servicing Agreement, sell, transfer, exchange or
otherwise dispose of any of the Collateral, unless directed to do so
by the Trustee in accordance with Article V;
(ii) claim any credit on, or make any deduction from the
principal or premium, if any, or interest payable in respect of, the
Transition Bonds (other than amounts properly withheld from such
payments under the Code) or assert any claim against any present or
former Transition Bondholder by reason of the payment of taxes levied
or assessed upon the Issuer or any part of the Collateral; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations
with respect to the Transition Bonds under this Indenture except as
may be expressly permitted hereby, (B) permit any Lien (other than the
Lien created by this Indenture) to be created on or extend to or
otherwise arise upon or burden the Collateral or any part thereof or
any interest therein or the proceeds thereof or (C) permit the Lien of
this Indenture not to constitute a continuing valid first priority
security interest in the Collateral.
SECTION 3.09 ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will
deliver to the Trustee, within 120 days after the end of each fiscal year
of the Issuer (commencing with the fiscal year 1999), an Issuer Officer's
Certificate stating, as to the Manager signing such Issuer Officer's
Certificate, that
(i) a review of the activities of the Issuer during such year (or
relevant portion thereof) and of performance under this Indenture
has been made under such Manager's supervision; and
(ii) to the best of such Manager's knowledge, based on such
review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such calendar year (or relevant
portion thereof), or, if there has been a default in complying
with any such condition or covenant, describing each such default
and the nature and status thereof.
SECTION 3.10 ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS. The Issuer shall not consolidate or merge with or into any other
Person or sell substantially all of its assets to any other Person or
dissolve, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger or to whom substantially all of such
assets are sold shall be a Person organized and existing under
the laws of the United States of America or any State and shall
expressly assume by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of and
premium, if any, and interest on all Transition Bonds and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed,
all as provided herein and in the applicable Series Supplement or
Series Supplements;
(ii) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger or to whom substantially all of such
assets are sold shall expressly assume all obligations and
succeed to all rights of the Issuer under the Sale Agreement, the
Contribution Agreement, the Administration Agreement and the
Servicing Agreement pursuant to an assignment and assumption
agreement executed and delivered to the Trustee, in form
satisfactory to the Trustee;
(iii) immediately after giving effect to such consolidation or
merger or sale, no Default or Event of Default shall have
occurred and be continuing;
(iv) the Rating Agency Condition (other than with respect to
Moody's) shall have been satisfied with respect to such
consolidation or merger or sale and prior notice thereof shall
have been given to Moody's;
(v) the Issuer shall have received an Issuer Opinion of Counsel
(and shall have delivered copies thereof to the Trustee) to the
effect that such consolidation or merger or sale (a) will not
have any material adverse tax consequence to the Issuer or any
Transition Bondholder, (b) complies with this Indenture and all
of the conditions precedent herein relating to such transaction
and (c) will result in the Trustee maintaining a continuing valid
first priority perfected security interest in the Collateral;
(vi) neither the Intangible Transition Property nor the Qualified
Rate Order nor the Issuer's rights under the Competition Act or
the Qualified Rate Order shall be impaired thereby; and
(vii) any action as is necessary to maintain the Lien created by
this Indenture shall have been taken.
SECTION 3.11 SUCCESSOR OR TRANSFEREE. (a) Upon any consolidation
or merger of the Issuer in accordance with Section 3.10, the Person formed
by or surviving such consolidation or merger (if other than the Issuer)
shall succeed to, and be substituted for, and may exercise every right and
power of, the Issuer under this Indenture with the same effect as if such
Person had been named as the Issuer herein.
(b) Upon any sale by the Issuer of substantially all of its assets in
a sale which complies with Section 3.10, PP&L Transition Bond Company LLC
will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the
Transition Bonds and from every covenant and agreement of the Sale
Agreement, the Administration Agreement and the Servicing Agreement to be
observed or performed on the part of the Issuer.
SECTION 3.12 NO OTHER BUSINESS. The Issuer shall not engage in
any business other than purchasing and owning Intangible Transition
Property, issuing Transition Bonds from time to time, pledging its interest
in the Collateral to the Trustee under this Indenture in order to secure
the Transition Bonds and performing activities that are necessary, suitable
or convenient to accomplish these purposes or are incidental thereto.
SECTION 3.13 NO BORROWING. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for
any indebtedness and except for the Transition Bonds and except as
contemplated by the Basic Documents.
SECTION 3.14 GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.
Except as contemplated by the Basic Documents, Issuer shall not make any
loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance
on any obligation or capability of so doing or otherwise), endorse or
otherwise become contingently liable, directly or indirectly, in connection
with the obligations, stocks or dividends of, or own, purchase, repurchase
or acquire (or agree contingently to do so) any stock, obligations, assets
or securities of, or any other interest in, or make any capital
contribution to, any other Person.
SECTION 3.15 CAPITAL EXPENDITURES. The Issuer shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty) other than Intangible Transition
Property purchased from the Seller pursuant to, and in accordance with, the
Sale Agreement.
SECTION 3.16 RESTRICTED PAYMENTS. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities
or a combination thereof, to any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest in, or
ownership security of, the Issuer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or
security or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that if no Event of Default shall have occurred
and be continuing, the Issuer may make, or cause be made, any such
distributions to any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or security in
or of the Issuer using funds distributed to the Issuer pursuant to Section
8.02(d) to the extent that such distributions would not cause the book
value of the remaining equity in the Issuer to decline below 0.5% of the
original principal amount of all Series of Transition Bonds which remain
outstanding. The Issuer will not, directly or indirectly, make payments to
or distributions from the Collection Account except in accordance with this
Indenture and the Basic Documents.
SECTION 3.17 NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to
deliver to the Trustee and the Rating Agencies written notice in the form
of an Issuer Officer's Certificate of any Default or Event of Default
hereunder or under any of the Basic Documents, its status and what action
the Issuer is taking or proposes to take with respect thereto within five
Business Days after the occurrence thereof.
SECTION 3.18 INSPECTION. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Trustee, during the
Issuer's normal business hours, to examine all the books of account,
records, reports, and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited annually by
Independent certified public accountants, and to discuss the Issuer's
affairs, finances and accounts with the Issuer's officers, employees, and
Independent certified public accountants, all at such reasonable times and
as often as may be reasonably requested. The Trustee shall and shall cause
its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable
applications for confidential treatment are unavailing) and except to the
extent that the Trustee may reasonably determine that such disclosure is
consistent with its obligations hereunder.
SECTION 3.19 ADJUSTED OVERCOLLATERALIZATION BALANCE SCHEDULES.
Not later than the date on which a new Series of Transition Bonds is issued
or any outstanding Series of Transition Bonds is redeemed or defeased, the
Issuer shall deliver to the Trustee a replacement Schedule 1 hereto,
adjusted to reflect such issuance, redemption or defeasance and setting
forth the Scheduled Overcollateralization Level for each Payment Date.
SECTION 3.20 SALE AGREEMENT, CONTRIBUTION AGREEMENT, THE
ADMINISTRATION AGREEMENT AND SERVICING AGREEMENT COVENANTS. (a) The Issuer
agrees to take all such lawful actions to enforce its rights under the Sale
Agreement, the Contribution Agreement, the Administration Agreement and the
Servicing Agreement and to compel or secure the performance and observance
by the Seller, PP&L and the Servicer, of each of their obligations to the
Issuer under or in connection with the Sale Agreement, the Contribution
Agreement, the Administration Agreement and the Servicing Agreement in
accordance with the terms thereof. So long as no Event of Default occurs
and is continuing, but subject to Section 3.20(f), the Issuer may exercise
any and all rights, remedies, powers and privileges lawfully available to
the Issuer under or in connection with the Sale Agreement, the Contribution
Agreement, the Administration Agreement and the Servicing Agreement.
(b) If an Event of Default occurs and is continuing, the Trustee may,
and, at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of a majority of
the Outstanding Amount of the Transition Bonds of all Series shall,
exercise all right, remedies, powers, privileges and claims of the Issuer
against the Seller, PP&L or the Servicer under or in connection with the
Sale Agreement, the Contribution Agreement, the Administration Agreement
and the Servicing Agreement including the right or power to take any action
to compel or secure performance or observance by the Seller, PP&L or the
Servicer of each of their obligations to the Issuer thereunder and to give
any consent, request, notice, direction, approval, extension or waiver
under the Sale Agreement, the Contribution Agreement, the Administration
Agreement and the Servicing Agreement, and any right of the Issuer to take
such action shall be suspended.
(c) With the consent of the Trustee, the Sale Agreement, the
Contribution Agreement and the Servicing Agreement may be amended, so long
as the Rating Agency Condition is satisfied in connection therewith, at any
time and from time to time, without the consent of the Transition
Bondholders, provided that such amendment shall not, as evidenced by an
Issuer Opinion of Counsel, adversely affect the interest of any Transition
Bondholder in any material respect.
(d) If the Issuer, the Seller, PP&L, Reserves, Group or the Servicer
proposes to amend, modify, waive, supplement, terminate or surrender, or
agree to any amendment, modification, supplement, termination, waiver or
surrender of, the terms of the Sale Agreement, the Contribution Agreement
or the Servicing Agreement, or waive timely performance or observance by
the Servicer, PP&L or the Seller under the Sale Agreement, the Contribution
Agreement or the Servicing Agreement, in each case in such a way as would
materially and adversely affect the interests of Transition Bondholders,
the Issuer shall first notify the Rating Agencies of the proposed amendment
and shall notify the Trustee and the Trustee shall notify the Transition
Bondholders of the proposed amendment and whether the Rating Agency
Condition has been satisfied with respect thereto. The Trustee shall
consent to such proposed amendment, modification, supplement or waiver only
with the consent of the Holders of a majority of the Outstanding Amount of
the Transition Bonds of each Series materially and adversely affected
thereby. If any such amendment, modification, supplement or waiver shall
be so consented to by the Trustee or such Holders, the Issuer agrees to
execute and deliver, in its own name and at its own expense, such
agreements, instruments, consents and other documents as shall be necessary
or appropriate in the circumstances.
(e) If the Issuer or the Servicer proposes to amend, modify, waive,
supplement, terminate or surrender in any material respect, or to agree to
any material amendment, modification, supplement, termination, waiver or
surrender of, the Intangible Transition Charge Adjustment Process, the
Issuer shall notify the Trustee and the Trustee shall notify Transition
Bondholders of such proposal and the Trustee shall consent thereto only
with the consent of the Holders of a majority of the Outstanding Amount of
the Transition Bonds of each Series materially and adversely affected
thereby and only if the Rating Agency Condition (other than with respect to
Moody's) has been satisfied with respect thereto and prior notice thereof
has been given to Moody's.
(f) Promptly following a default by either the Seller, PP&L or the
Servicer under the Sale Agreement, the Contribution Agreement or the
Servicing Agreement and at the Issuer's expense, the Issuer agrees to take
all such lawful actions as the Trustee may request to compel or secure the
performance and observance by the Seller, PP&L or the Servicer, as
applicable, of each of their obligations to the Issuer under or in
connection with the Sale Agreement, the Contribution Agreement or the
Servicing Agreement in accordance with the terms thereof, and to exercise
any and all rights, remedies, powers and privileges lawfully available to
the Issuer under or in connection with the Sale Agreement, the Contribution
Agreement or the Servicing Agreement to the extent and in the manner
directed by the Trustee, including the transmission of notices of default
on the part of the Seller, PP&L or the Servicer thereunder and the
institution of legal or administrative actions or proceedings to compel or
secure performance by the Seller, PP&L or the Servicer of each of their
obligations under the Sale Agreement, the Contribution Agreement and the
Servicing Agreement.
(g) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Servicing Agreement, the Issuer shall promptly give
written notice thereof to the Trustee and the Rating Agencies, and shall
specify in such notice the action, if any, the Issuer is taking with
respect to such default. If a Servicer Default shall arise from the
failure of the Servicer to perform any of its duties or obligations under
the Servicing Agreement with respect to the Intangible Transition Property
or the Intangible Transition Charges, the Issuer shall take all reasonable
steps available to it to remedy such failure. The Issuer shall not take
any action to terminate the Servicer's rights and powers under the
Servicing Agreement following a Servicer Default without the prior written
consent of the Trustee and of the Holders of a majority of the Outstanding
Amount of the Transition Bonds of all Series.
(h) As promptly as possible after the giving of notice of termination
to the Servicer and the Rating Agencies of the Servicer's rights and powers
pursuant to Section 6.01 of the Servicing Agreement, the Trustee, with the
consent of the Holders of Transition Bonds evidencing not less than a
majority of the Outstanding Amount of the Transition Bonds of all Series,
may appoint a successor Servicer (the "Successor Servicer"), and such
Successor Servicer shall accept its appointment by a written assumption in
a form acceptable to the Issuer and the Trustee. A person shall qualify as
a Successor Servicer only if such Person satisfies the requirements of
Section 6.04 of the Servicing Agreement. If within 30 days after the
delivery of the notice referred to above, a Successor Servicer shall not
have been appointed and accepted its appointment as such, the Trustee, with
the consent of the Holders of Transition Bonds evidencing not less than a
majority of the Outstanding Amount of the Transition Bonds of all Series,
may petition the PUC or a court of competent jurisdiction to appoint a
Successor Servicer. In connection with any such appointment, the Issuer
may make such arrangements for the compensation of such Successor Servicer
as it and such Successor Servicer shall agree, subject to the limitations
set forth below and in the Servicing Agreement, and in accordance with
Section 6.04 of the Servicing Agreement, the Issuer shall enter into an
agreement with such Successor Servicer for the servicing of the Intangible
Transition Property (such agreement to be in form and substance
satisfactory to the Trustee).
(i) Upon termination of the Servicer's rights and powers pursuant to
the Servicing Agreement, the Trustee shall promptly notify the Issuer, the
Transition Bondholders and the Rating Agencies of such termination. As
soon as a Successor Servicer is appointed, the Issuer shall notify the
Trustee, the Transition Bondholders and the Rating Agencies of such
appointment, specifying in such notice the name and address of such
Successor Servicer.
SECTION 3.21 TAXES. So long as any of the Transition Bonds are
outstanding, the Issuer shall pay all material taxes, assessments and
governmental charges imposed upon it or any of its properties or assets or
with respect to any of its franchises, business, income or property before
any penalty accrues thereon if the failure to pay any such taxes,
assessments and governmental charges would, after any applicable grace
periods, notices or other similar requirements, result in a Lien on the
Collateral.
ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 4.01 SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE. (a) The Transition Bonds of any Series, all moneys payable with
respect thereto and this Indenture as it applies to such Series shall cease
to be of further effect and the Lien hereunder shall be released with
respect to such Series, interest shall cease to accrue on the Transition
Bonds of such Series and the Trustee, on demand of and at the expense of
the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Transition Bonds of such
Series, when
(A) either
(1) all Transition Bonds of such Series theretofore
authenticated and delivered (other than (i) Transition
Bonds that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 2.06
and (ii) Transition Bonds for whose payment money has
theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided
in Section 3.03) have been delivered to the Trustee for
cancellation; or
(2) the Expected Final Payment Date or Redemption Date
has occurred with respect to all Transition Bonds of
such Series not theretofore delivered to the Trustee
for cancellation, and the Issuer has irrevocably
deposited or caused to be irrevocably deposited with
the Trustee cash, in trust for such purpose, in an
amount sufficient to pay and discharge the entire
indebtedness on such Transition Bonds not theretofore
delivered to the Trustee on the Expected Final Payment
Date or Redemption Date, as applicable, therefor;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer with respect to such Series; and
(C) the Issuer has delivered to the Trustee an Issuer Officer's
Certificate, an Issuer Opinion of Counsel and (if required by the
TIA or the Trustee) an Independent Certificate from a firm of
certified public accountants, each meeting the applicable
requirements of Section 11.01 and each stating that all
conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture with respect to
Transition Bonds of such Series have been complied with.
(b) Subject to Sections 4.01(c) and 4.02, the Issuer at any time may
terminate (i) all its obligations under this Indenture with respect to the
Transition Bonds of any Series ("Legal Defeasance Option") or (ii) its
obligations under Sections 3.04, 3.05, 3.06, 3.07, 3.08, 3.09, 3.10, 3.12,
3.13, 3.14, 3.15, 3.16, 3.17, 3.18, 3.19 and 3.20 and the operation of
Section 5.01(iv) ("Covenant Defeasance Option") with respect to any Series
of Transition Bonds. The Issuer may exercise the Legal Defeasance Option
with respect to any Series of Transition Bonds notwithstanding its prior
exercise of the Covenant Defeasance Option with respect to such Series.
If the Issuer exercises the Legal Defeasance Option with respect to
any Series, the maturity of the Transition Bonds of such Series may not be
(a) accelerated because of an Event of Default or (b) except as provided in
Section 4.02, redeemed. If the Issuer exercises the Covenant Defeasance
Option with respect to any Series, the maturity of the Transition Bonds of
such Series may not be accelerated because of an Event of Default specified
in Section 5.01(iv).
Upon satisfaction of the conditions set forth herein to the exercise
of the Legal Defeasance Option or the Covenant Defeasance Option with
respect to any Series of Transition Bonds, the Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of the obligations that are terminated pursuant
to such exercise.
(c) Notwithstanding Sections 4.01(a) and 4.01(b) above, (i) rights of
registration of transfer and exchange, (ii) rights of substitution of
mutilated, destroyed, lost or stolen Transition Bonds, (iii) rights of
Transition Bondholders to receive payments of principal, premium, if any,
and interest, but only from the amounts deposited with the Trustee for such
payments, (iv) Sections 4.03 and 4.04, (v) the rights, obligations and
immunities of the Trustee hereunder (including the rights of the Trustee
under Section 6.07 and the obligations of the Trustee under Section 4.03)
and (vi) the rights of Transition Bondholders under this Indenture with
respect to the property deposited with the Trustee payable to all or any of
them, shall survive until the Transition Bonds of the Series as to which
this Indenture or certain obligations hereunder have been satisfied and
discharged pursuant to Section 4.01(a) or 4.01(b) and have been paid in
full. Thereafter, the obligations in Sections 6.07 and 4.04 with respect
to such Series shall survive.
SECTION 4.02 CONDITIONS TO DEFEASANCE. The Issuer may exercise
the Legal Defeasance Option or the Covenant Defeasance Option with respect
to any Series of Transition Bonds only if:
(a) the Issuer irrevocably deposits or causes to be deposited in
trust with the Trustee cash or U.S. Government Obligations for
the payment of principal of and premium, if any, and interest on
such Series of Transition Bonds to the Expected Payment Date or
Redemption Date therefor, as applicable, such deposit to be made
in the Defeasance Subaccount for such Series of Transition Bonds;
(b) the Issuer delivers to the Trustee a certificate from a
nationally recognized firm of Independent accountants expressing
its opinion that the payments of principal and interest when due
and without reinvestment on the deposited U.S. Government
Obligations plus any deposited cash without investment will
provide cash at such times and in such amounts (but, in the case
of the Legal Defeasance Option only, not more than such amounts)
as will be sufficient to pay in respect of the Transition Bonds
of such Series (i) subject to clause (ii), principal in
accordance with the Expected Amortization Schedule therefor, (ii)
if such Series is to be redeemed, the Redemption Price therefor
on the Redemption Date therefor and (iii) interest when due;
(c) in the case of the Legal Defeasance Option, 125 days pass
after the deposit is made and during the 125-day period no
Default specified in Section 5.01(v) or (vi) occurs which is
continuing at the end of the period; provided, however, that in
determining whether a default under Section 5.01(v) has occurred,
the requirement that the decree or order shall remain unstayed
and in effect for 90 days shall be disregarded;
(d) no Default has occurred and is continuing on the day of such
deposit and after giving effect thereto;
(e) in the case of the Legal Defeasance Option, the Issuer
delivers to the Trustee an Issuer Opinion of Counsel stating that
(i) the Issuer has received from, or there has been published by,
the Internal Revenue Service a ruling, or (ii) since the date of
execution of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the
Holders of the Transition Bonds of such Series will not recognize
income, gain or loss for federal income tax purposes as a result
of the exercise of such Legal Defeasance Option and will be
subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
Legal Defeasance had not occurred;
(f) in the case of the Covenant Defeasance Option, the Issuer
delivers to the Trustee an Issuer Opinion of Counsel to the
effect that the Holders of the Transition Bonds of such Series
will not recognize income, gain or loss for federal income tax
purposes as a result of the exercise of such Covenant Defeasance
Option and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred; and
(g) the Issuer delivers to the Trustee an Issuer Officer's
Certificate and an Issuer Opinion of Counsel, each stating that
all conditions precedent to the satisfaction and discharge of the
Transition Bonds of such Series to the extent contemplated by
this Article IV have been complied with.
Notwithstanding any other provision of this Section 4.02 to the
contrary, no delivery of cash or U.S. Government Obligations to the Trustee
under this Section shall terminate any obligations of the Issuer under this
Indenture with respect to any Transition Bonds which are to be redeemed
prior to the Expected Final Payment Date therefor until such Transition
Bonds shall have been irrevocably called or designated for redemption on a
date thereafter on which such Transition Bonds may be redeemed in
accordance with the provisions of this Indenture and proper notice of such
redemption shall have been given in accordance with the provisions of this
Indenture or the Issuer shall have given the Trustee, in form satisfactory
to the Trustee, irrevocable instructions to give, in the manner and at the
times prescribed herein, notice of redemption of such Series.
SECTION 4.03 APPLICATION OF TRUST MONEY. All moneys or U.S.
Government Obligations deposited with the Trustee pursuant to Section 4.01
or 4.02 hereof with respect to any Series of Transition Bonds shall be held
in trust in the Defeasance Subaccount for such Series and applied by it, in
accordance with the provisions of the Transition Bonds and this Indenture,
to the payment, either directly or through any Paying Agent, as the Trustee
may determine, to the Holders of the particular Transition Bonds for the
payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal, premium,
if any, and interest. Such moneys shall be segregated and held apart
solely for paying such Transition Bonds and such Transition Bonds shall not
be entitled to any amounts on deposit in the Collection Account other than
amounts on deposit in the Defeasance Subaccount for such Transition Bonds.
SECTION 4.04 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In
connection with the satisfaction and discharge of this Indenture or the
Covenant Defeasance Option or Legal Defeasance Option with respect to the
Transition Bonds of any Series, all moneys then held by any Paying Agent
other than the Trustee under the provisions of this Indenture with respect
to such Transition Bonds shall, upon demand of the Issuer, be paid to the
Trustee to be held and applied according to Section 3.03 and thereupon such
Paying Agent shall be released from all further liability with respect to
such moneys.
ARTICLE V
REMEDIES
SECTION 5.01 EVENTS OF DEFAULT. "Event of Default" wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(i) default in the payment of any interest on any Transition
Bond when the same becomes due and payable and the continuation of
such default for five Business Days;
(ii) default in the payment of the then unpaid principal of any
Transition Bond of any Series on the Series Final Maturity Date for
such Series or, if applicable, any Class on the Class Final Maturity
Date for such Class;
(iii) default in the payment of the Redemption Price for any
Transition Bond on the Redemption Date therefor;
(iv) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant
or agreement, a default in the observance or performance of which is
specifically dealt with in clause (i), (ii) or (iii) above), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when made, and any such default shall continue
or not be cured, for a period of 30 days after (A) there shall have
been given, by registered or certified mail, to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at least
25% of the Outstanding Amount of the Transition Bonds of any Series or
Class, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder or (B) the date
the Issuer has knowledge of the default;
(v) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any
substantial part of the Collateral in an involuntary case or
proceeding 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 of the Issuer or its property or for
any substantial part of the Collateral, or ordering the winding-up or
liquidation of the Issuer's affairs, and such decree or order shall
remain unstayed and in effect for a period of 90 consecutive days;
(vi) the commencement by the Issuer of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the
consent by the Issuer to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Issuer to
the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Collateral, or the making by
the Issuer of any assignment for the benefit of creditors, or the
failure by the Issuer generally to pay its debts as such debts become
due, or the taking of action by the Issuer in furtherance of any of
the foregoing; or
(vii) any act or failure to act by the Commonwealth of
Pennsylvania or any of its agencies (including the PUC), officers or
employees that violates or is not in accordance with the pledge and
agreement of the Commonwealth in Section 2812(c)(2) of the Competition
Act.
SECTION 5.02 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default under clause (vii)
of Section 5.01) occurs and is continuing, then and in every such case
either the Trustee or the Holders of Transition Bonds representing not less
than a majority of the Outstanding Amount of the Transition Bonds of all
Series may, but need not, declare all the Transition Bonds to be
immediately due and payable, by a notice in writing to the Issuer (and to
the Trustee if given by Transition Bondholders), and upon any such
declaration the unpaid principal amount of the Transition Bonds of all
Series, together with accrued and unpaid interest thereon through the date
of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter in this Article V provided, the
Holders of Transition Bonds representing a majority of the Outstanding
Amount of the Transition Bonds of all Series, by written notice to the
Issuer and the Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Issuer has paid or deposited with the Trustee, for
deposit in the General Subaccount of the Collection Account, a sum
sufficient to pay
(A) all payments of principal of and premium, if any, and
interest on all Transition Bonds of all Series and all other
amounts that would then be due hereunder or upon such Transition
Bonds if the Event of Default giving rise to such acceleration
had not occurred; and
(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of
the Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Transition Bonds of all Series that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.12.
No such rescission shall affect any subsequent Default or impair any
right consequent thereto.
SECTION 5.03 COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE. (a) The Issuer covenants that if (i) Default is
made in the payment of any interest on any Transition Bond when such
interest becomes due and payable and such Default continues for five
Business Days, (ii) Default is made in the payment of the then unpaid
principal of any Transition Bond on the Series Final Maturity Date or Class
Final Maturity Date, as applicable, therefor (iii) Default is made in the
payment of the Redemption Price or for any Transition Bond on the
Redemption Date therefor, the Issuer shall, upon demand of the Trustee, pay
to it, for the benefit of the Holders of the Transition Bonds of such
Series, such amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel and
the whole amount then due and payable on such Transition Bonds for
principal, premium, if any, and interest, with interest upon the overdue
principal and premium, if any, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue instalments of
interest, at the respective Bond Rate of such Series or the applicable
Class of such Series.
(b) In case the Issuer shall fail forthwith to pay the amounts
specified in clause (a) above upon such demand, the Trustee, in its own
name and as trustee of an express trust, may institute a Proceeding for the
collection of the sums so due and unpaid, and may prosecute such Proceeding
to judgment or final decree, and may enforce the same against the Issuer or
other obligor upon such Transition Bonds and collect in the manner provided
by law out of the property of the Issuer or other obligor upon such
Transition Bonds, wherever situated, the moneys adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Trustee
may, as more particularly provided in Section 5.04, in its discretion,
proceed to protect and enforce its rights and the rights of the Transition
Bondholders, by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy
or legal or equitable right vested in the Trustee by this Indenture or by
law including foreclosing or otherwise enforcing the Lien on the Intangible
Transition Property securing the Transition Bonds or applying to the PUC
for sequestration of revenues arising with respect to such Intangible
Transition Property.
(d) In case there shall be pending, relative to the Issuer or
any other obligor upon the Transition Bonds or any Person having or
claiming an ownership interest in the Collateral, Proceedings under Title
11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or other similar law, or in case a receiver,
assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the
Issuer or other obligor upon the Transition Bonds, or to the creditors or
property of the Issuer or such other obligor, the Trustee, irrespective of
whether the principal of any Transition Bonds shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions
of this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect
of the Transition Bonds and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the
Trustee (including any claim for reasonable compensation to the
Trustee and each predecessor Trustee, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee, except as a result of negligence or bad faith)
and of the Transition Bondholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Transition Bonds in any election of a
trustee, a standby trustee or Person performing similar functions in
any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Transition
Bondholders and of the Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee or the Holders of Transition Bonds allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official
in any such Proceeding is hereby authorized by each of such Transition
Bondholders to make payments to the Trustee, and, in the event that the
Trustee shall consent to the making of payments directly to such Transition
Bondholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf
of any Transition Bondholder any plan of reorganization, arrangement,
adjustment or composition affecting the Transition Bonds or the rights of
any Holder thereof or to authorize the Trustee to vote in respect of the
claim of any Transition Bondholder in any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Transition Bonds, may be enforced by the
Trustee without the possession of any of the Transition Bonds or the
production thereof in any trial or other Proceedings relative thereto, and
any such action or proceedings instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of
the Transition Bonds.
(g) In any Proceedings brought by the Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture
to which the Trustee shall be a party), the Trustee shall be held to
represent all the Holders of the Transition Bonds, and it shall not be
necessary to make any Transition Bondholder a party to any such
Proceedings.
SECTION 5.04 REMEDIES; PRIORITIES. (a) If an Event of Default
occurs and is continuing, the Trustee may do one or more of the following
(subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Transition Bonds or under this Indenture with respect thereto, whether
by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Transition
Bonds moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC or
the Competition Act or any other applicable law and take any other
appropriate action to protect and enforce the rights and remedies of
the Trustee and the Holders of the Transition Bonds of such Series;
(iv) sell the Collateral or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; and
(v) exercise all rights, remedies, powers, privileges and claims
of the Issuer against the Seller, PP&L or the Servicer under or in
connection with the Sale Agreement, the Contribution Agreement, the
Administration Agreement or the Servicing Agreement as provided in
Section 3.20(b);
provided, however, that the Trustee may not sell or otherwise liquidate any
portion of the Collateral following an Event of Default, other than an
Event of Default described in Section 5.01(i), (ii) or (iii), with respect
to any Series unless (A) the Holders of 100% of the Outstanding Amount of
the Transition Bonds of all Series consent thereto, (B) the proceeds of
such sale or liquidation distributable to the Transition Bondholders of all
Series are sufficient to discharge in full all amounts then due and unpaid
upon such Transition Bonds for principal, premium, if any, and interest or
(C) the Trustee determines that the Collateral will not continue to provide
sufficient funds for all payments on the Transition Bonds of all Series as
they would have become due if the Transition Bonds had not been declared
due and payable, and the Trustee obtains the consent of Holders of 66-2/3%
of the Outstanding Amount of the Transition Bonds of all Series. In
determining such sufficiency or insufficiency with respect to clause (B)
and (C), the Trustee may, but need not, obtain and rely upon an opinion of
an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of
the Collateral for such purpose.
(b) If an Event of Default under clause (vii) of Section 5.01
occurs and is continuing, the Trustee, for the benefit of the Holders,
shall be entitled and empowered to the extent permitted by applicable law,
to institute or participate in Proceedings reasonably necessary to compel
performance of or to enforce the pledge and agreement of the Commonwealth
in Section 2812(c)(2) of the Competition Act and to collect any monetary
damages incurred by the Holders or the Trustee as a result of any such
Event of Default, and may prosecute any such Proceeding to final judgment
or decree.
SECTION 5.05 OPTIONAL PRESERVATION OF THE COLLATERAL. If the
Transition Bonds have been declared to be due and payable under Section
5.02 following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, the Trustee may, but
need not, elect, as provided in Section 5.11(iii), to maintain possession
of the Collateral and not sell or liquidate the same. It is the desire of
the parties hereto and the Transition Bondholders that there be at all
times sufficient funds for the payment of principal of and premium, if any,
and interest on the Transition Bonds, and the Trustee shall take such
desire into account when determining whether or not to maintain possession
of the Collateral or sell or liquidate the same. In determining whether to
maintain possession of the Collateral or sell or liquidate the same, the
Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Collateral for such purpose.
SECTION 5.06 LIMITATION OF PROCEEDINGS. No Holder of any
Transition Bond of any Series shall have any right to institute any
Proceeding, judicial or otherwise, or to avail itself of the remedies
provided in Section 2812(d)(3)(v) of the Competition Act, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount
of the Transition Bonds of all Series have made written request to the
Trustee to institute such Proceeding in respect of such Event of
Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against
the costs, expenses and liabilities to be incurred in complying with
such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Transition Bonds of all
Series;
it being understood and intended that no one or more Holders of Transition
Bonds shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders of Transition Bonds or to obtain
or to seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner herein
provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Transition
Bonds, each representing less than a majority of the Outstanding Amount of
the Transition Bonds of all Series, the Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
SECTION 5.07 UNCONDITIONAL RIGHTS OF TRANSITION BONDHOLDERS TO
RECEIVE PRINCIPAL, PREMIUM, IF ANY, AND INTEREST. Notwithstanding any
other provisions in this Indenture, the Holder of any Transition Bond shall
have the right, which is absolute and unconditional, and shall not be
impaired without the consent of each such Holder, (a) to receive payment of
(i) the interest, if any, on such Transition Bond on or after the due dates
thereof expressed in such Transition Bond or in this Indenture, (ii) the
unpaid principal, if any, of such Transition Bonds on or after the Series
Final Maturity Date or Class Final Maturity Date therefor or (iii) in the
case of redemption, receive payment of the unpaid principal, if any, of and
premium, if any, and interest, if any, on such Transition Bond on or after
the Redemption Date therefor and (b) to institute suit for the enforcement
of any such payment, and such right shall not be impaired without the
consent of such Holder.
SECTION 5.08 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee
or any Transition Bondholder has instituted any Proceeding to enforce any
right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely
to the Trustee or to such Transition Bondholder, then and in every such
case the Issuer, the Trustee and the Transition Bondholders shall, subject
to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights
and remedies of the Trustee and the Transition Bondholders shall continue
as though no such Proceeding had been instituted.
SECTION 5.09 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Trustee or to the Transition
Bondholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 5.10 DELAY OR OMISSION NOT A WAIVER. No delay or
omission of the Trustee or any Transition Bondholder to exercise any right
or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this
Article V or by law to the Trustee or to the Transition Bondholders may be
exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Transition Bondholders, as the case may be.
SECTION 5.11 CONTROL BY TRANSITION BONDHOLDERS. The Holders of
a majority of the Outstanding Amount of the Transition Bonds of all Series
(or, if less than all Series or Classes are affected, the affected Series
or Class or Classes) shall have the right to direct the time, method and
place of conducting any Proceeding for any remedy available to the Trustee
with respect to the Transition Bonds of such Series or Class or Classes or
exercising any trust or power conferred on the Trustee with respect to such
Series or Class or Classes; provided that
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction
to the Trustee to sell or liquidate the Collateral shall be by the
Holders of Transition Bonds representing not less than 100% of the
Outstanding Amount of the Transition Bonds of all Series;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Trustee elects to retain the Collateral pursuant to
such Section and elects not to sell or liquidate the same, then any
direction to the Trustee by Holders of Transition Bonds representing
less than 100% of the Outstanding Amount of the Transition Bonds of
all Series to sell or liquidate the Collateral shall be of no force
and effect; and
(iv) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.01, the Trustee need not take
any action that it determines might involve it in liability for which it
reasonably believes it will not be adequately indemnified against the
costs, expenses and liabilities which might be incurred by it in complying
with this request. The Trustee also need not take any action that it
determines might materially and adversely affect the rights of any
Transition Bondholders not consenting to such action.
SECTION 5.12 WAIVER OF PAST DEFAULTS. Prior to the declaration
of the acceleration of the maturity of the Transition Bonds of all Series
as provided in Section 5.02, the Holders of not less than a majority of the
Outstanding Amount of the Transition Bonds of all Series may waive any past
Default or Event of Default and its consequences except a Default (i) in
payment of principal of or premium, if any, or interest on any of the
Transition Bonds or (ii) in respect of a covenant or provision hereof which
cannot be modified or amended without the consent of the Holder of each
Transition Bond of all Series or Classes affected. In the case of any such
waiver, the Issuer, the Trustee and the Holders of the Transition Bonds
shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have
occurred, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto.
SECTION 5.13 UNDERTAKING FOR COSTS. All parties to this
Indenture agree, and each Holder of any Transition Bond by such Holder's
acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to
(a) any suit instituted by the Trustee, (b) any suit instituted by any
Transition Bondholder, or group of Transition Bondholders, in each case
holding in the aggregate more than 10% of the Outstanding Amount of the
Transition Bonds of a Series or (c) any suit instituted by any Transition
Bondholder for the enforcement of the payment of (i) interest on any
Transition Bond on or after the due dates expressed in such Transition Bond
and in this Indenture, (ii) the unpaid principal, if any, of any Transition
Bond on or after the Series Final Maturity Date or Class Final Maturity
Date, if applicable, therefor or (iii) in the case of redemption, the
unpaid principal of and premium, if any, and interest on any Transition
Bond on or after the Redemption Date therefor.
SECTION 5.14 WAIVER OF STAY OR EXTENSION LAWS. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead or in any manner whatsoever, claim or take
the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
SECTION 5.15 ACTION ON TRANSITION BONDS. The Trustee's right to
seek and recover judgment on the Transition Bonds or under this Indenture
shall not be affected by the seeking, obtaining or application of any other
relief under or with respect to this Indenture. Neither the Lien of this
Indenture nor any rights or remedies of the Trustee or the Transition
Bondholders shall be impaired by the recovery of any judgment by the
Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Collateral or upon any of the assets of
the Issuer.
ARTICLE VI
THE TRUSTEE
SECTION 6.01 DUTIES AND LIABILITIES OF TRUSTEE. (a) If an
Event of Default has occurred and is continuing, the Trustee shall exercise
the rights and powers vested in it by this Indenture and use the same
degree of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of this Section 6.01.
(e) The Trustee shall not be liable for interest on any money
received by it except as provided in this Indenture or as the Trustee may
agree in writing with the Issuer.
(f) Money held in trust by the Trustee need not be segregated
from other funds held by the Trustee except to the extent required by law
or the terms of this Indenture or the Sale Agreement or the Servicing
Agreement.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) Under no circumstances shall the Trustee be liable for any
indebtedness of the Issuer, the Servicer, the Seller or PP&L evidenced by
or arising under the Transition Bonds or any Basic Document.
SECTION 6.02 RIGHTS OF TRUSTEE. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented
by the proper Person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Issuer Officer's Certificate or an Issuer Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on an Issuer Officer's Certificate or an Issuer Opinion of
Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent attorney, custodian, or nominee appointed
with due care by it thereunder.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Transition Bonds shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of
such counsel.
SECTION 6.03 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Transition Bonds and may otherwise deal with the Issuer or its affiliates
with the same rights it would have if it were not Trustee. Any Paying
Agent, Transition Bond Registrar, co-registrar or co-paying agent may do
the same with like rights. However, the Trustee must comply with Sections
6.11 and 6.12.
SECTION 6.04 TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy
of this Indenture or the Transition Bonds. The Trustee shall not be
accountable for the Issuer's use of the proceeds from the Transition Bonds,
and the Trustee shall not be responsible for any statement of the Issuer in
the Indenture or in any document issued in connection with the sale of the
Transition Bonds or in the Transition Bonds other than the Trustee's
certificate of authentication. The Trustee shall not be responsible for
the form, character, genuineness, sufficiency, value or validity of any of
the Collateral, or for or in respect of the validity or sufficiency of the
Transition Bonds (other than the certificate of authentication for the
Transition Bonds) or the Basic Documents and the Trustee shall in no event
assume or incur any liability, duty or obligation to any Holder of a
Transition Bond, other than as expressly provided for in this Indenture.
The Trustee shall not be liable for the default or misconduct of the
Issuer, the Seller, the Servicer or the Member or any Manager of the Issuer
under any Basic Document or otherwise and the Trustee shall have no
obligation or liability to perform the obligations of the Issuer.
SECTION 6.05 NOTICE OF DEFAULTS. If a Default occurs and is
continuing with respect to any Class or Series and if it is known to a
Responsible Officer of the Trustee, the Trustee shall mail to each Rating
Agency and to each Holder of Transition Bonds of all Series notice of the
Default within 90 days after it occurs. Except in the case of a Default in
payment of principal of or premium, if any, or interest on any Transition
Bond, the Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that withholding the
notice is in the interests of Transition Bondholders.
SECTION 6.06 REPORTS BY TRUSTEE TO HOLDERS. (a) The Trustee
shall deliver to each Holder of Transition Bonds such information as may
be required to enable such Holder to prepare its federal and state income
tax returns.
(b) With respect to each Series of Transition Bonds, on or prior
to each Payment Date therefor, the Trustee will deliver a statement
prepared by the Trustee to each Holder of Transition Bonds which will
include (to the extent applicable) the following information (and any other
information so specified in the Series Supplement for such Series) as to
the Transition Bonds of such Series with respect to such Payment Date or
the period since the previous Payment Date, as applicable:
(i) the amount paid to Holders of such Transition Bonds in
respect of principal; such amount to be expressed as a dollar amount
per thousand;
(ii) the amount paid to Holders of such Transition Bonds in
respect of interest; such amount to be expressed as a dollar amount
per thousand;
(iii) the Transition Bond Balance, after giving effect to the
payments to be made on such Payment Date, and the Projected Transition
Bond Balance, in each case for such Series and as of such Payment
Date;
(iv) the amount on deposit in the Overcollateralization
Subaccount and the Scheduled Overcollateralization Level as of such
Payment Date;
(v) the amount on deposit in the Capital Subaccount as of such
Payment Date; and
(vi) the amount, if any, on deposit in the Reserve Subaccount as
of such Payment Date.
(c) The Trustee's responsibility for disbursing the information
described in subsection (b) above to Holders of Transition Bonds is limited
to the availability, timeliness and accuracy of the information provided by
the Servicer pursuant to Section 3.05 and Annex 1 of the Servicing
Agreement.
SECTION 6.07 COMPENSATION AND INDEMNITY. The Issuer shall pay
to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation
of a trustee of an express trust. The Issuer shall reimburse the Trustee
for all reasonable out-of-pocket expenses, disbursements and advances
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's
agents, counsel, accountants and experts. The Issuer shall indemnify and
hold harmless the Trustee from and against any and all costs, damages,
expenses, losses, liabilities or other amounts whatsoever (including
counsel fees) incurred by the Trustee in connection with the administration
of this trust, the enforcement of this trust and all of the Trustee's
rights, powers and duties under this Indenture and the performance by the
Trustee of the duties and obligations of the Trustee under or pursuant to
this Indenture. The Trustee shall notify the Issuer promptly of any claim
for which it may seek indemnity. Failure by the Trustee to so notify the
Issuer shall not relieve the Issuer of its obligations hereunder. The
Issuer shall defend the claim and the Trustee may have separate counsel and
the Issuer shall pay the fees and expenses of such counsel. The Issuer
need not reimburse any expense or indemnify against any loss, liability or
expense incurred by the Trustee (i) through the Trustee's own wilful
misconduct, negligence or bad faith or (ii) to the extent the Trustee was
reimbursed for or indemnified against any such loss, liability or expense
by the Seller pursuant to the Sale Agreement, by PP&L pursuant to the
Contribution Agreement or by the Servicer pursuant to the Servicing
Agreement.
When the Trustee incurs expenses after the occurrence of a Default
specified in Section 5.01(v) or (vi) with respect to the Issuer, the
expenses are intended to constitute expenses of administration under Title
11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or similar law.
In the event that there is any withdrawal of funds from the
Capital Subaccount, which funds constitute all or any portion of the
initial deposit made into the Capital Subaccount as the Required Capital
Amount for any Series, the Issuer shall, upon the written request of the
Trustee, within thirty (30) days after the date of such request, deliver to
the Trustee and keep in force until this Indenture ceases to be of any
further effect pursuant to the provisions of Section 4.01, one or more
policies of insurance, surety bonds and/or letters of credit in the
aggregate face amount of five million dollars ($5,000,000) which policies,
surety bonds and/or letters of credit are sufficient to provide coverage
for, and to insure to the Trustee the payment of, all amounts due and owing
to the Trustee under this Indenture (collectively, the "Trustee Policies"),
subject to reasonable commercial availability and provided that the
premiums or fees for the Trustee Policies shall not exceed fifty thousand
dollars ($50,000) during any calendar year. The terms and conditions of
the Trustee Policies shall be in form and substance reasonably acceptable
to the Trustee and shall be issued by one or more carriers or issuers
reasonably acceptable to the Trustee.
SECTION 6.08 REPLACEMENT OF TRUSTEE. The Trustee may resign at
any time upon 30 days notice by so notifying the Issuer. The Issuer
shall remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) the Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Trustee or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred
to herein as the "Retiring Trustee"), the Issuer shall promptly appoint a
successor Trustee.
In addition, the Holders of a majority in Outstanding Amount of the
Transition Bonds of all Series may remove the Trustee by so notifying the
Issuer and the Trustee and such Holders may appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the Retiring Trustee and to the Issuer. Thereupon the
resignation or removal of the Retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. No resignation or removal of the Trustee
will become effective until the acceptance of the appointment by a
successor Trustee. The successor Trustee shall mail a notice of its
succession to Transition Bondholders. The Retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 60 days after the
Retiring Trustee resigns or is removed, the Retiring Trustee, the Issuer or
the Holders of a majority in Outstanding Amount of the Transition Bonds of
all Series may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.11, any Transition
Bondholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section 6.08, the Issuer's obligations under Section 6.07 shall continue
for the benefit of the Retiring Trustee.
SECTION 6.09 SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation or banking association shall, without any further act be the
successor Trustee. Notice of any such event shall be promptly given to
each Rating Agency by the successor Trustee.
In case at the time such successor or successors by merger,
conversion, consolidation or transfer shall succeed to the trusts created
by this Indenture any of the Transition Bonds shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any Retiring Trustee, and deliver such
Transition Bonds so authenticated; and in case at that time any of the
Transition Bonds shall not have been authenticated, any successor to the
Trustee may authenticate such Transition Bonds either in the name of any
Retiring Trustee hereunder or in the name of the successor to the Trustee;
and in all such cases such certificates shall have the full force and
effect granted by the Transition Bonds or by this Indenture and this force
and effect shall be equal to any certificate issued by the Trustee.
SECTION 6.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Indenture, at any time, for
the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee
or separate trustees, of all or any part of the Collateral, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Transition Bondholders, such title to the Collateral, or any part hereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 6.11
and no notice to Transition Bondholders of the appointment of any
co-trustee or separate trustee shall be required under Section 6.08 hereof.
Notice of any such appointment shall be promptly given to each Rating
Agency by the Trustee.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Collateral or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to
this Indenture and the conditions of this Article VI. Each separate
trustee and co-trustee, upon its acceptance of the trusts conferred, shall
be vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may be
provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the
conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under
or in respect of this Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
SECTION 6.11 ELIGIBILITY; DISQUALIFICATION. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a), and shall at
all times warrant that it will use commercially reasonable
efforts to ensure that the computer software and hardware systems
("Systems") that are owned by the Trustee and will be used in connection
with the Trustee's duties under this Indenture are 2000 Compliant or will
be made 2000 Compliant before December 31, 1999. As used in the preceding
sentence, the term "2000 Compliant" means that the Systems will function
without material error caused by the introduction of dates falling on or
after January 1, 2000. Notwithstanding the foregoing, the Issuer
acknowledges and agrees that the Trustee cannot and does not warrant that
the Systems will continue to interface with the hardware, firmware,
software (including operating systems), records or data used by the Issuer
or third parties, nor does the Trustee make any warranties hereunder with
respect to any public utility, communications service provider,
correspondent bank, securities or commodities exchange, or funds transfer
network. The Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition and it shall have a long term debt rating of "Baa3" or better by
Moody's and "BBB-" or better by Fitch IBCA. The Trustee shall comply with
TIA Section 310(b), including the optional provision permitted by the
second sentence of TIA Section 310(b)(9); provided, however, that there
shall be excluded from the operation of TIA Section 310(b)(1) any indenture
or indentures under which other securities of the Issuer are outstanding if
the requirements for such exclusion set forth in TIA Section 310(b)(1) are
met.
SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or
been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VII
TRANSITION BONDHOLDERS' LISTS AND REPORTS
SECTION 7.01 ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
TRANSITION BONDHOLDERS. The Issuer shall furnish or cause to be furnished
to the Trustee (a) not more than five days after the earlier of (i) each
Record Date with respect to each Series and (ii) three months after the
last Record Date with respect to each Series, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders
of Transition Bonds of such Series as of such Record Date, (b) at such
other times as the Trustee may request in writing, within 30 days after
receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the Transition
Bond Registrar, no such list shall be required to be furnished.
SECTION 7.02 PRESERVATION OF INFORMATION; COMMUNICATIONS TO
TRANSITION BONDHOLDERS. (a) The Trustee shall preserve, in as current a
form as is reasonably practicable, the names and addresses of the Holders
of Transition Bonds contained in the most recent list furnished to the
Trustee as provided in Section 7.01 and the names and addresses of Holders
of Transition Bonds received by the Trustee in its capacity as Transition
Bond Registrar. The Trustee may destroy any list furnished to it as
provided in such Section 7.01 upon receipt of a new list so furnished.
(b) Transition Bondholders may communicate with other Transition
Bondholders pursuant to Section 312(b) of the TIA, with respect to their
rights under this Indenture or under the Transition Bonds.
(c) The Issuer, the Trustee and the Transition Bond Registrar
shall have the protection of Section 312(c) of the TIA.
SECTION 7.03 REPORTS BY ISSUER. (a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) which the Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports
with respect to compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from time to time
by such rules and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit
by mail to all Transition Bondholders described in TIA Section
313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) as may be required by rules and
regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on December 31 of each year.
SECTION 7.04 REPORTS BY TRUSTEE. If required by TIA Section
313(a), within 60 days after the end of each fiscal year of the Issuer,
commencing with the year after the issuance of the Transition Bonds of any
Series, the Trustee shall mail to each Holder of Transition Bonds of such
Series as required by TIA Section 313(c) a brief report dated as of such
date that complies with TIA Section 313(a). The Trustee also shall comply
with TIA Section 313(b); provided, however, that the initial report so
issued shall be delivered not more than 12 months after the initial
issuance of each Series.
A copy of each report at the time of its mailing to Transition
Bondholders shall be filed by the Trustee with the Commission and each
stock exchange, if any, on which the Transition Bonds are listed (to the
extent required by the rules of such exchange). The Issuer shall notify
the Trustee if and when the Transition Bonds are listed on any stock
exchange.
SECTION 7.05 PROVISION OF SERVICER REPORTS. Upon the written
request of any Transition Bondholder to the Trustee addressed to the
Corporate Trust Office, the Trustee shall provide such Transition
Bondholder with a copy of the Issuer Officer's Certificate referred to in
Section 3.05 of the Servicing Agreement and the Annual Accountant's Report
referred to in Section 3.06 of the Servicing Agreement.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01 COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to
or receivable by the Trustee pursuant to this Indenture. The Trustee shall
apply all such money received by it as provided in this Indenture. Except
as otherwise expressly provided in this Indenture, if any default occurs in
the making of any payment or performance under any agreement or instrument
that is part of the Collateral, the Trustee may take such action as may be
appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action
shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as
provided in Article V. If the Servicer has provided a surety bond to the
Trustee with respect to the Servicer's obligations under Section 3.03 of
the Servicing Agreement and the Servicer fails to remit to the Trustee any
funds required to be remitted on any Remittance Date, the Trustee shall
make a payment demand under such surety bond in accordance with the terms
thereof.
SECTION 8.02 COLLECTION ACCOUNT. (a) On or prior to the Series
Issuance Date for the first Series issued hereunder, the Issuer shall open,
at the Trustee's Corporate Trust Office, or at another Eligible
Institution, one or more segregated trust accounts in the Trustee's name
for the benefit of the Holders (collectively, the "Collection Account").
The Collection Account shall initially be divided into subaccounts, which
need not be separate bank accounts: a general subaccount (the "General
Subaccount"), an overcollateralization subaccount (the
"Overcollateralization Subaccount"), a capital subaccount (the "Capital
Subaccount"), a reserve subaccount (the "Reserve Subaccount"), and a series
subaccount for each Series of Transition Bonds issued on such date (each a
"Series Subaccount"). On or prior to the Series Issuance Date for each
Series issued after the Series Issuance Date for the first Series issued
hereunder, the Issuer shall establish an additional Series Subaccount
therefor as a Subaccount of the Collection Account. Prior to depositing
funds or U.S. Government Obligations in the Collection Account pursuant to
Sections 4.01 or 4.02, the Issuer shall establish defeasance subaccounts
(each a "Defeasance Subaccount") for each Series for which funds shall be
deposited, as subaccounts of the Collection Account. All amounts in the
Collection Account not allocated to any other Subaccount shall be allocated
to the General Subaccount. Prior to the Initial Payment Date, all amounts
in the Collection Account (other than funds deposited into the Capital
Subaccount, up to the Required Capital Amount) shall be allocated to the
General Subaccount. All references to the Collection Account shall be
deemed to include reference to all subaccounts contained therein.
Withdrawals from and deposits to each of the foregoing subaccounts of the
Collection Account shall be made as set forth in Sections 4.01, 4.02, 4.03
and 8.02(d) and (e). The Collection Account shall at all times be
maintained in an Eligible Security Account and only the Trustee shall have
access to the Collection Account for the purpose of making deposits in and
withdrawals from the Collection Account in accordance with this Indenture.
Funds in the Collection Account shall not be commingled by the Issuer with
any other moneys, and shall not be commingled by the Trustee. All moneys
deposited from time to time in the Collection Account, all deposits therein
pursuant to this Indenture, and all investments made in Eligible
Investments with such moneys, including all income or other gain from such
investments, shall be held by the Trustee in the Collection Account as part
of the Collateral as herein provided.
Notwithstanding any other provision of this Indenture, the
Collection Account shall be a securities account and shall be established
only with a securities intermediary (as defined in Section 8-102(a)(13) of
the applicable UCC) that agrees with the Trustee that (I) the Collection
Account shall be a securities account of the Trustee, (II) all property
credited to the Collection Account shall be treated as a financial asset,
(III) such securities intermediary shall treat the Trustee as entitled to
exercise the rights that comprise each financial asset credited to the
Collection Account, (IV) such securities intermediary shall comply with
entitlement orders originated by the Trustee without the further consent of
any other person or entity, (V) such securities intermediary will not agree
with any person other than the Trustee to comply with entitlement orders
originated by such other person, (VI) the Collection Account and all
property credited to it shall not be subject to any lien, security
interest, right of set-off in favor of such securities intermediary or
anyone claiming through it (other than the Trustee), and (VII) such
agreement shall be governed by the laws of the Commonwealth of
Pennsylvania. The Collection Account shall be under the control (within
the meaning of Section 8-106 of the applicable UCC) of the Trustee. If at
any time the Collection Account ceases to be an Eligible Securities
Account, the Trustee shall, within 10 days, establish a new Collection
Account as an Eligible Securities Account.
(b) So long as no Default or Event of Default has occurred and
is continuing, all or a portion of the funds in the Collection Account
shall be invested in Eligible Investments and reinvested by the Trustee
upon Issuer Order; provided, however, that (i) such Eligible Investments
shall not mature later than the Business Day prior to the next Payment Date
(except as otherwise provided in any Series Supplement with respect to
funds in the Series Subaccount for any Series of Transition Bonds), (ii)
such Eligible Investments shall not be sold, liquidated or otherwise
disposed of at a loss prior to the maturity thereof, and (iii) no funds in
the Defeasance Subaccount for any Series of Transition Bonds shall be
invested in Eligible Investments or otherwise, except that U.S. Government
Obligations deposited by the Issuer with the Trustee pursuant to Sections
4.01 or 4.02 shall remain as such. All income or other gain from
investments of moneys deposited in the Collection Account shall be
deposited by the Trustee in the Collection Account, and any loss resulting
from such investments shall be charged to the Collection Account. The
Issuer shall not direct the Trustee to make any investment of any funds or
to sell any investment held in the Collection Account unless the security
interest granted and perfected in such account will continue to be
perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any
direction to the Trustee to make any such investment or sale, if requested
by the Trustee, the Issuer shall deliver to the Trustee an Issuer Opinion
of Counsel, acceptable to the Trustee, to such effect. Subject to Section
6.01(c), the Trustee shall not in any way be held liable for the selection
of Eligible Investments or for investment losses incurred thereon except
for losses attributable to the Trustee's failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial capacity as
principal obligor and not as Trustee, in accordance with their terms. The
Trustee shall have no liability in respect of losses incurred as a result
of the liquidation of any Eligible Investment prior to its stated maturity
or the failure of the Issuer to provide timely written investment
direction. The Trustee shall have no obligation to invest or reinvest any
amounts held hereunder in the absence of written investment direction
pursuant to an Issuer Order; provided, however, that if (i) the Issuer
shall have failed to give investment directions for any funds on deposit in
the Collection Account to the Trustee by 11:00 a.m. Eastern Time (or such
other time as may be agreed by the Issuer and Trustee) on any Business Day,
or (ii) a Default or Event of Default shall have occurred and be continuing
but the Transition Bonds shall not have been declared due and payable
pursuant to Section 5.02, then the Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Collection Account in one or
more Eligible Investments.
(c) Any ITC Collections remitted by the Servicer to the Trustee,
any Indemnity Amounts remitted to the Trustee by PP&L or the Servicer or
otherwise received by the Trustee or the Issuer, and any other proceeds of
Collateral received by the Servicer, the Issuer or the Trustee shall be
deposited in the General Subaccount.
(d) On the Business Day preceding each Payment Date, the Trustee
shall by 12:00 noon (New York City time) apply all amounts on deposit in
the General Subaccount of the Collection Account and any investment
earnings on the subaccounts in the Collection Account in the following
priority:
(i) fees owed to the Trustee in an amount equal to $5,625 for
such Payment Date, plus legal fees and expenses, Indemnity Amounts and
any other amounts due and owing to the Trustee pursuant to the Basic
Documents for such Payment Date so long as no Event of Default would
result from the payment of or failure to pay such Indemnity Amount,
shall be paid to the Trustee;
(ii) fees owed to the Independent Managers in an amount equal to
$875 for such Payment Date, plus legal fees and expenses and Indemnity
Amounts for such Payment Date so long as no Event of Default would
result from the payment of or failure to pay such Indemnity Amount,
shall be paid to the Independent Managers;
(iii) the Servicing Fee and all unpaid Servicing Fees from prior
Payment Dates shall be paid to the Servicer;
(iv) the administration fee payable under the Administration
Agreement between the Issuer and the Administrator, in an amount equal
to $25,000 for such Payment Date, shall be paid to the Administrator;
(v) so long as no Event of Default has occurred and is
continuing or would be caused by such payment, all Operating Expenses
other than (i), (ii), (iii) and (iv) above shall be paid to the
Persons entitled thereto, provided that the amount paid on any Payment
Date pursuant to this clause (v) may not exceed $100,000 for such
Payment Date in the aggregate for all Series;
(vi) an amount equal to Interest payable on each Series of
Transition Bonds for the Payment Date shall be allocated on a Pro Rata
Basis to the corresponding Series Subaccount or will be paid to the
counterparty on any interest rate swap agreement between the Issuer
and such counterparty, specified in the related Series Supplement, if
such swap agreement remains in effect for such Payment Date;
(vii) an amount equal to any Principal of any Series or Class of
Transition Bonds payable as a result of acceleration pursuant to
Section 5.02, any Principal of any Series or Class of Transition Bonds
payable on a Series Final Maturity Date or Class Final Maturity Date
for that Series or Class and any Principal of and premium, if any, on
a Series or Class of Transition Bonds payable on a Redemption Date
shall be allocated on a Pro Rata basis to the corresponding Series
Subaccount;
(viii) an amount equal to Principal scheduled to be paid on each
Series of Transition Bonds on the next Payment Date, excluding any
amounts provided for pursuant to clause (vii) above, shall be
allocated on a Pro Rata basis to the corresponding Series Subaccount;
(ix) all remaining unpaid Operating Expenses and Indemnity
Amounts shall be paid to the Persons entitled thereto;
(x) any amount necessary to replenish any shortfalls in the
Capital Subaccount shall be allocated to the Capital Subaccount;
(xi) an amount shall be allocated to the Overcollateralization
Subaccount sufficient to cause the amount in the Overcollateralization
Subaccount to equal the Scheduled Overcollateralization Level;
(xii) so long as no Event of Default has occurred and is
continuing, an amount equal to investment earnings on amounts in the
Capital Subaccount shall be released to the Issuer;
(xiii) the balance, if any, shall be allocated to the Reserve
Subaccount; and
(xiv) following repayment of all outstanding Series of
Transition Bonds, the balance, if any, shall be released to the Issuer
free from the Lien of the Indenture.
"Pro Rata" means with respect to any Series or Class of Transition
Bonds a ratio, (i) in the case of clause (d)(vi) above, the numerator of
which is the aggregate amount of Interest payable with respect to such
Series or Class on such Payment Date and the denominator of which is the
sum of the aggregate amounts of Interest payable with respect to all
Outstanding Series or Classes on such Payment Date; and (ii) in the case of
clauses (d)(vii) and (d)(viii) above, the numerator of which is the
aggregate amount of Principal scheduled to be paid or payable pursuant to
each such clause with respect to such Series or Class on such Payment Date
and the denominator of which is the sum of the aggregate amounts of
Principal scheduled to be paid or payable pursuant to each such clause with
respect to all Outstanding Series or Classes on such Payment Date, unless
and to the extent, with respect to either clause (i) or (ii) above, in the
case of a Series comprised of two or more Classes, the Series Supplement
for such Series provides otherwise.
If, on any Payment Date, funds on deposit in the General Subaccount
are insufficient to make the payments or transfers contemplated by clauses
(i) through (ix) above, the Trustee shall draw from amounts on deposit in
the following subaccounts in the following order up to the amount of such
shortfall, in order to make such payments and transfers:
(i) from the Reserve Subaccount,
(ii) from the Overcollateralization Subaccount, and
(iii) from the Capital Subaccount.
(e) On each Payment Date for any Series, the amounts on deposit
in the Series Subaccount for that Series shall be applied or transferred as
follows (in the priority indicated): (i) to pay Interest due and payable on
the Transition Bonds of such Series on such Payment Date to the Holders of
Transition Bonds of such Series, (ii) the balance, if any, up to the amount
of Principal scheduled to be paid or payable on the Transition Bonds of
such Series on such Payment Date, to pay such Principal to the Holders of
Transition Bonds of such Series and (iii) the balance, if any, to the
General Subaccount for allocation on the next Payment Date.
All payments to the Transition Bondholders of a Series pursuant to (A)
clause (i) of the preceding paragraph shall be made pro rata based on the
respective aggregate amounts of Interest due and payable with respect to
Outstanding Transition Bonds of such Series held by such Holders, and (B)
clause (ii) of the preceding paragraph shall be made pro rata based on the
respective aggregate amounts of Principal scheduled to be paid or payable
with respect to Outstanding Transition Bonds of such Series held by such
Holders, unless and to the extent, with respect to either clause (i) or
(ii) above, in the case of a Series comprised of two or more Classes, the
Series Supplement for such Series provides otherwise. All payments to
Transition Bondholders of a Class pursuant to clause (i) or (ii) of the
preceding paragraph shall be made pro rata based on the respective
principal amounts of Transition Bonds of such Class held by such Holders.
SECTION 8.03 RELEASE OF COLLATERAL. (a) All money and other
property withdrawn from the Collection Account by the Trustee for payment
to the Issuer as provided in this Indenture in accordance with Section 8.02
hereof shall be deemed released from the Indenture when so withdrawn and
applied in accordance with the provisions of Article VIII, without further
notice to, or release or consent by, the Trustee.
(b) Other than as provided for in clause (a) above, the Trustee
shall release property from the Lien of this Indenture only as and to the
extent permitted by the Basic Documents and only upon receipt of an Issuer
Request accompanied by an Issuer Officer's Certificate, an Issuer Opinion
of Counsel and Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01
or an Issuer Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificate.
(c) Subject to the payment of its fees and expenses pursuant to
Section 6.07, the Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the Lien of
this Indenture, or convey the Trustee's interest in the same, in a manner
and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the
Trustee as provided in this Article VIII shall be bound to ascertain the
Trustee's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any moneys.
(d) Subject to Section 8.03(b), the Trustee shall, at such time
as there are no Transition Bonds Outstanding and all sums due the Trustee
pursuant to Section 6.07 have been paid, release any remaining portion of
the Collateral that secured the Transition Bonds from the Lien of this
Indenture and release to the Issuer or any other Person entitled thereto
any funds or investments then on deposit in or credited to the Collection
Account.
SECTION 8.04 ISSUER OPINION OF COUNSEL. The Trustee shall
receive at least five days notice when requested by the Issuer to take any
action pursuant to Section 8.03, accompanied by copies of any instruments
involved, and the Trustee shall also require, as a condition to such
action, an Issuer Opinion of Counsel, in form and substance satisfactory to
the Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such
action will not materially and adversely impair the security for the
Transition Bonds or the rights of the Transition Bondholders in
contravention of the provisions of this Indenture; provided, however, that
such Issuer Opinion of Counsel shall not be required to express an opinion
as to the fair value of the Collateral. Counsel rendering any such opinion
may rely, without independent investigation, on the accuracy and validity
of any certificate or other instrument delivered to the Trustee in
connection with any such action.
SECTION 8.05 REPORTS BY INDEPENDENT ACCOUNTANTS. The Issuer
shall appoint a firm of Independent certified public accountants of
recognized national reputation for purposes of preparing and delivering the
reports or certificates of such accountants required by this Indenture and
the related Series Supplements. Upon any resignation by such firm, the
Issuer shall promptly appoint a successor thereto that shall also be a firm
of Independent certified public accountants of recognized national
reputation. If the Issuer shall fail to appoint a successor to a firm of
Independent certified public accountants that has resigned within 15 days
after such resignation, the Trustee shall promptly notify the Issuer of
such failure in writing. If the Issuer shall not have appointed a
successor within 10 days thereafter, the Trustee shall promptly appoint a
successor firm of Independent certified public accountants of recognized
national reputation. The fees of such firm of Independent certified public
accountants and its successor shall be payable by the Issuer.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
TRANSITION BONDHOLDERS. (a) Without the consent of the Holders of any
Transition Bonds but with prior notice to the Rating Agencies, the Issuer
and the Trustee, when authorized by an Issuer Order, at any time and from
time to time, may enter into one or more indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act as in
force at the date of the execution thereof), in form satisfactory to the
Trustee, for any of the following purposes:
(i) to correct or amplify the description of the Collateral, or
better to assure, convey and confirm unto the Trustee the Collateral,
or to subject to the Lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any applicable successor of the covenants of the Issuer
contained herein and in the Transition Bonds;
(iii) to add to the covenants of the Issuer, for the benefit of
the Transition Bondholders, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to the Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any Supplemental Indenture which may be
inconsistent with any other provision herein or in any Supplemental
Indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any Supplemental
Indenture; provided, however, that (i) such action shall not, as
evidenced by an Issuer Opinion of Counsel, adversely affect in any
material respect the interests of any Transition Bondholder and (ii)
the Rating Agency Condition (other than with respect to Moody's) shall
have been satisfied with respect thereto and prior notice thereof
shall have been given to Moody's;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor Trustee with respect to the
Transition Bonds and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the
requirements of Article VI;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA; or
(viii) to set forth the terms of any Series that has not
theretofore been authorized by a Supplemental Indenture, provided that
the Rating Agency Condition has been satisfied.
The Trustee is hereby authorized to join in the execution of any such
Supplemental Indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the
Transition Bonds, enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Transition Bonds under this
Indenture; provided, however, that (i) such action shall not, as evidenced
by an Issuer Opinion of Counsel, adversely affect in any material respect
the interests of any Transition Bondholder and (ii) the Rating Agency
Condition (other than with respect to Moody's) shall have been satisfied
with respect thereto and prior notice thereof shall have been given to
Moody's.
SECTION 9.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF TRANSITION
BONDHOLDERS. The Issuer and the Trustee, when authorized by an Issuer
Order, also may, with prior notice to the Rating Agencies (with respect to
Moody's and Fitch) and upon satisfaction of the Rating Agency Condition
(with respect to S&P) (in each case, accompanied by the form of the
proposed supplemental indenture) and with the consent of the Holders of not
less than a majority of the Outstanding Amount of the Transition Bonds of
each Series or Class to be affected, by Act of such Holders delivered to
the Issuer and the Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Holders of the
Transition Bonds under this Indenture; provided, however, that no such
Supplemental Indenture shall, without the consent of the Holder of each
Outstanding Transition Bond of each Series or Class affected thereby:
(i) change the date of payment of any instalment of principal of
or premium, if any, or interest on any Transition Bond, or reduce the
principal amount thereof, the interest rate thereon or the redemption
price or the premium, if any, with respect thereto, change the
provisions of this Indenture and the related applicable Series
Supplement relating to the application of collections on, or the
proceeds of the sale of, the Collateral to payment of principal of or
premium, if any, or interest on the Transition Bonds, or change the
currency in which, any Transition Bond or the interest thereon is
payable;
(ii) impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any
such amount due on the Transition Bonds on or after the respective due
dates thereof (or, in the case of redemption, on or after the
Redemption Date);
(iii) reduce the percentage of the Outstanding Amount of the
Transition Bonds or of a Series or Class thereof, the consent of the
Holders of which is required for any such Supplemental Indenture, or
the consent of the Holders of which is required for any waiver of
compliance with provisions of this Indenture or defaults hereunder and
their consequences provided for in this Indenture or modify or alter
the provisions of the proviso to the definition of the term
"Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Transition Bonds required to direct the Trustee to direct the Issuer
to sell or liquidate the Collateral pursuant to Section 5.04 or to
preserve the Collateral pursuant to Section 5.05;
(v) modify any provision of this Section 9.02 except to increase
any percentage specified herein or to provide that those provisions of
this Indenture or the Basic Documents referenced in this Section
cannot be modified or waived without the consent of the Holder of each
Outstanding Transition Bond affected thereby;
(vi) modify any of the provisions of this Indenture in such
manner so as to affect the amount of any payment of interest,
principal or premium, if any, payable on any Transition Bond on any
Payment Date or change the Redemption Dates, Expected Amortization
Schedules or Series Final Maturity Dates or Class Final Maturity Dates
of any Transition Bonds;
(vii) decrease the Overcollateralization Amount or Required
Capital Amount with respect to any Series or the Scheduled
Overcollateralization Level with respect to any Payment Date;
(viii) modify or alter the provisions of this Indenture
regarding the voting of Transition Bonds held by the Issuer, the
Seller, an Affiliate of either of them or any obligor on the
Transition Bonds;
(ix) decrease the percentage of the aggregate principal amount
of Transition Bonds required to amend the sections of this Indenture
which specify the applicable percentage of the aggregate principal
amount of the Transition Bonds necessary to amend this Indenture or
any other Basic Documents; or
(x) permit the creation of any Lien ranking prior to or on a
parity with the Lien of this Indenture with respect to any part of the
Collateral or, except as otherwise permitted or contemplated herein,
terminate the Lien of this Indenture on any property at any time
subject hereto or deprive the Holder of any Transition Bond of the
security provided by the Lien of this Indenture.
It shall not be necessary for any Act of Transition Bondholders under
this Section to approve the particular form of any proposed Supplemental
Indenture, but it shall be sufficient if such Act shall approve the
substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
Supplemental Indenture pursuant to this Section, the Trustee shall mail to
the Holders of the Transition Bonds to which such amendment or Supplemental
Indenture relates a notice setting forth in general terms the substance of
such Supplemental Indenture. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such Supplemental Indenture.
SECTION 9.03 EXECUTION OF SUPPLEMENTAL INDENTURES. In
executing, or permitting the additional trusts created by, any Supplemental
Indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive,
and subject to Sections 6.01 and 6.02, shall be fully protected in relying
upon, an Issuer Opinion of Counsel stating that the execution of such
Supplemental Indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such
Supplemental Indenture that affects the Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 9.04 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the
execution of any Supplemental Indenture pursuant to the provisions hereof,
this Indenture shall be and be deemed to be modified and amended in
accordance therewith with respect to each Series or Class of Transition
Bonds affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Trustee, the Issuer and the Holders of the Transition Bonds shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and
conditions of any such Supplemental Indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 9.05 CONFORMITY WITH TRUST INDENTURE ACT. Every
amendment of this Indenture and every Supplemental Indenture executed
pursuant to this Article IX shall conform to the requirements of the TIA as
then in effect so long as this Indenture shall then be qualified under the
TIA.
SECTION 9.06 REFERENCE IN TRANSITION BONDS TO SUPPLEMENTAL
INDENTURES. Transition Bonds authenticated and delivered after the
execution of any Supplemental Indenture pursuant to this Article IX may,
and if required by the Trustee shall, bear a notation in form approved by
the Trustee as to any matter provided for in such Supplemental Indenture.
If the Issuer or the Trustee shall so determine, new Transition Bonds so
modified as to conform, in the opinion of the Trustee and the Issuer, to
any such Supplemental Indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Transition Bonds.
ARTICLE X
REDEMPTION OF TRANSITION BONDS;
SECTION 10.01 OPTIONAL REDEMPTION BY ISSUER. If so provided in
the related Series Supplement, the Issuer may, at its option, redeem all,
but not less than all, of the Transition Bonds of a Series on any Payment
Date if, after giving effect to payments that would otherwise be made on
such Payment Date, the Outstanding Amount of any such Series of Transition
Bonds has been reduced to less than five percent of the initial principal
balance of such Series. The redemption price in any case shall be equal to
the outstanding principal amount of the Bonds to be redeemed plus accrued
and unpaid interest thereon at the Bond Rate to the Redemption Date ( the
"Redemption Price"). If the Issuer elects to redeem the Transition Bonds
of a Series pursuant to this Section 10.01, it shall furnish notice of such
election to the Trustee not later than 25 days prior to the Redemption Date
for such redemption and shall deposit with the Trustee the Redemption Price
of the Transition Bonds to be redeemed plus interest accrued thereon to
such Redemption Date on or prior to such Redemption Date whereupon all such
Transition Bonds shall be due and payable on such Redemption Date upon the
furnishing of a notice complying with Section 10.03 hereof to each Holder
of the Transition Bonds of such Series pursuant to this Section 10.01.
SECTION 10.02 MANDATORY REDEMPTION BY ISSUER. The Issuer shall
redeem the Transition Bonds of a Series on the Redemption Date or Dates, if
any, in the amounts required, if any, and at the redemption price specified
in the Series Supplement for such Series, which in any case shall be not
less than the outstanding principal amount of the Bonds to be redeemed,
plus accrued interest thereon to such Redemption Date. If the Issuer is
required to redeem the Transition Bonds of a Series pursuant to this
Section 10.02, it shall furnish notice of such requirement to the Trustee
not later than 25 days prior to the Redemption Date for such redemption and
shall deposit with the Trustee the redemption price of the Transition Bonds
to be redeemed whereupon all such Transition Bonds shall be due and payable
on the Redemption Date upon the furnishing of a notice complying with
Section 10.03 hereof to each Holder of the Transition Bonds of such Series
pursuant to this Section 10.02.
SECTION 10.03 FORM OF REDEMPTION NOTICE. Unless otherwise
specified in the Series Supplement relating to a Series of Transition
Bonds, notice of redemption under Section 10.01 or 10.02 hereof shall be
given by the Trustee by first-class mail, postage prepaid, mailed not less
than five days nor more than 45 days prior to the applicable Redemption
Date to each Holder of Transition Bonds to be redeemed, as of the close of
business on the Record Date preceding the applicable Redemption Date at
such Holder's address appearing in the Transition Bond Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the amount of such Transition Bonds to be redeemed;
(3) the Redemption Price; and
(4) the place where such Transition Bonds are to be surrendered
for payment of the Redemption Price and accrued interest (which
shall be the office or agency of the Issuer to be maintained as
provided in Section 3.02 hereof).
Notice of redemption of the Transition Bonds to be redeemed shall be
given by the Trustee in the name and at the expense of the Issuer. Failure
to give notice of redemption, or any defect therein, to any Holder of any
Transition Bond selected for redemption shall not impair or affect the
validity of the redemption of any other Transition Bond. Notice of
optional redemption shall be irrevocable once given.
SECTION 10.04 PAYMENT OF REDEMPTION PRICE. If notice of
redemption has been duly mailed, or duly waived by the Holders of all
Transition Bonds called for redemption, and the redemption moneys have been
duly deposited with the Trustee, then the Transition Bonds called for
redemption shall be payable on the applicable Redemption Date at the
applicable Redemption Price plus accrued interest thereon. No further
interest will accrue on the principal amount of any Transition Bonds called
for redemption after the Redemption Date for such redemption if payment of
the Redemption Price thereof plus accrued interest thereon has been duly
provided for, and the Holder of such Transition Bonds will have no rights
with respect thereto, except to receive payment of the Redemption Price
thereof and unpaid interest accrued to the Redemption Date. Payment of the
Redemption Price together with accrued interest shall be made by the
Trustee to or upon the order of the Holders of the Transition Bonds called
for redemption upon surrender of such Transition Bonds, and the Transition
Bonds so redeemed shall cease to be of further effect and the Lien
hereunder shall be released with respect to such Transition Bonds.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 COMPLIANCE CERTIFICATES AND OPINIONS, ETC. Upon
any application or request by the Issuer to the Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the
Trustee (i) an Issuer Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Issuer Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any,
have been complied with and (iii) (if required by the TIA) an Independent
Certificate from a firm of certified public accountants meeting the
applicable requirements of this Section, except that, in the case of any
such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is necessary
to enable such signatory to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
SECTION 11.02 FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any
case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but
one such Person may certify or give an opinion with respect to some matters
and one or more other such Persons as to other matters, and any such Person
may certify or give an opinion as to such matters in one or several
documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Issuer Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Servicer, the Seller or
the Issuer, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Seller or the Issuer,
unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or
as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the
case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Issuer to have such
application granted or to the sufficiency of such certificate or report.
The foregoing shall not, however, be construed to affect the Trustee's
right to rely upon the truth and accuracy of any statement or opinion
contained in any such document as provided in Article VI.
SECTION 11.03 ACTS OF TRANSITION BONDHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or
taken by Transition Bondholders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Transition
Bondholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Transition Bondholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive
in favor of the Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Transition Bonds shall be proved by the
Transition Bond Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Transition Bonds shall
bind the Holder of every Transition Bond issued upon the registration
thereof or in exchange therefor or in lieu thereof, in respect of anything
done, omitted or suffered to be done by the Trustee or the Issuer in
reliance thereon, whether or not notation of such action is made upon such
Transition Bond.
SECTION 11.04 NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING
AGENCIES. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Transition Bondholders or other documents provided or
permitted by this Indenture to be made upon, given or furnished to or filed
with:
(a) the Trustee by any Transition Bondholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing, delivered personally, via facsimile transmission, by
reputable overnight courier or by first-class mail, postage prepaid, to the
Trustee at its Corporate Trust Office, or
(b) the Issuer by the Trustee or by any Transition Bondholder
shall be sufficient for every purpose hereunder if in writing, delivered
personally, via facsimile transmission, by reputable overnight courier or
by first-class mail, postage prepaid, to the Issuer addressed to: PP&L
Transition Bond Company LLC, Two North Ninth Street, GENA9-2, Room Number
3, Allentown, Pennsylvania 18101, Attention: Managers, or at any other
address previously furnished in writing to the Trustee by the Issuer. The
Issuer shall promptly transmit any notice received by it from the
Transition Bondholders to the Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Trustee or a Manager shall be in writing, delivered personally, via
facsimile transmission, by reputable overnight courier or by first-class
mail, postage prepaid, to: (i) in the case of Moody's: Moody's Investors
Service, Inc., Attention: ABS Monitoring Department, 99 Church Street, New
York, New York 10007; (ii) in the case of Standard & Poor's: Standard &
Poor's Corporation, 55 Water Street New York, NY 10041, Attention: Asset
Backed Surveillance Department; and (iii) in the case of Fitch IBCA: Fitch
IBCA, Inc., 1 State Street Plaza, New York, New York 10004, Attention: ABS
Surveillance.
SECTION 11.05 NOTICES TO TRANSITION BONDHOLDERS; WAIVER. Where
this Indenture provides for notice to Transition Bondholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and delivered by first-class mail, postage prepaid,
to each Transition Bondholder affected by such event, at the address of
such Transition Bondholder as it appears on the Transition Bond Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to
Transition Bondholders is given by mail, neither the failure to mail such
notice nor any defect in any notice so mailed to any particular Transition
Bondholder shall affect the sufficiency of such notice with respect to
other Transition Bondholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent
of such notice. Waivers of notice by Transition Bondholders shall be filed
with the Trustee but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such a waiver.
In case it shall be impractical to deliver notice in accordance with
the first paragraph of this Section 11.05 to the Holders of Transition
Bonds when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of
such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance
constitute a Default or Event of Default.
SECTION 11.06 ALTERNATE PAYMENT AND NOTICE PROVISIONS.
Notwithstanding any provision of this Indenture or any of the Transition
Bonds to the contrary, the Issuer may enter into any agreement with any
Holder of a Transition Bond providing for a method of payment, or notice by
the Trustee or any Paying Agent to such Holder, that is different from the
methods provided for in this Indenture for such payments or notices. The
Issuer will furnish to the Trustee a copy of each such agreement and the
Trustee will cause payments to be made and notices to be given in
accordance with such agreements.
SECTION 11.07 CONFLICT WITH TRUST INDENTURE ACT. If any
provision hereof limits, qualifies or conflicts with another provision
hereof that is required to be included in this Indenture by any of the
provisions of the TIA, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
SECTION 11.08 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.09 SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Indenture and the Transition Bonds by the Issuer shall
bind its successors and permitted assigns, whether so expressed or not.
All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 11.10 SEPARABILITY. In case any provision in this
Indenture or in the Transition Bonds shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 11.11 BENEFITS OF INDENTURE. Nothing in this Indenture
or in the Transition Bonds, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, and the
Transition Bondholders, and any other party secured hereunder, and any
other Person with an ownership interest in any part of the Collateral, any
benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 11.12 LEGAL HOLIDAYS. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding
any other provision of the Transition Bonds or this Indenture) payment need
not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the date on which
nominally due, and no interest shall accrue for the period from and after
any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED
BY AND 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 11.14 COUNTERPARTS. This Indenture may be executed in
any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one
and the same instrument.
SECTION 11.15 ISSUER OBLIGATION. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer or
the Trustee on the Transition Bonds or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Member or any Manager, employee or agent of the Issuer or
(ii) any stockholder, officer, director, employee or agent of the Trustee
(it being understood that none of the Trustee's obligations are in its
individual capacity).
SECTION 11.16 NO PETITION. The Trustee, by entering into this
Indenture, and each Transition Bondholder, by accepting a Transition Bond,
hereby covenant and agree that they will not at any time institute against
the Issuer or the Seller, or join in the institution against the Issuer or
the Seller of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation Proceeding, or other Proceeding under any United States federal
or state bankruptcy or similar law in connection with any obligations
relating to the Transition Bonds, this Indenture or any of the Basic
Documents.
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective Manager and officer,
respectively, thereunto duly authorized, all as of the day and year first
above written.
PP&L TRANSITION BOND
COMPANY LLC,
By: /s/ James E. Abel
---------------------------
Name: James E. Abel
Title: Manager
THE BANK OF NEW YORK,
By: /s/ Cheryl L. Laser
-----------------------------
Name: Cheryl L. Laser
Title: Assistant Vice President
SCHEDULE 1
SCHEDULED OVERCOLLATERALIZATION LEVELS
Payment Date Scheduled Overcollateralization Level
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.
Bill of Sale means any bill 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 101 Barclay Street, Floor 12 East, New York, NY 10286,
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 grant a lien
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 Moody's 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 McGraw-Hill 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.
PP&L TRANSITION BOND COMPANY LLC,
Issuer
and
THE BANK OF NEW YORK,
Trustee
------------------------------
1999-1 SERIES SUPPLEMENT
Dated as of August 10, 1999
------------------------------
1999-1 SERIES SUPPLEMENT dated as of August 10, 1999 (this
"Supplement"), by and between PP&L TRANSITION BOND COMPANY LLC, a Delaware
limited liability company (the "Issuer"), and THE BANK OF NEW YORK, a New
York banking corporation (the "Trustee"), as Trustee under the Indenture
dated as of August 10, 1999, between the Issuer and the Trustee (the
"Indenture").
PRELIMINARY STATEMENT
Section 9.01 of the Indenture provides, among other things, that the
Issuer and the Trustee may at any time and from time to time enter into one
or more indentures supplemental to the Indenture for the purposes of
authorizing the issuance by the Issuer of a Series of Transition Bonds and
specifying the terms thereof. The Issuer has duly authorized the execution
and delivery of this Supplement and the creation of a Series of Transition
Bonds with an initial aggregate principal amount of $2,420,000,000 to be
known as the Issuer's Transition Bonds, Series 1999-1 (the "Series 1999-1
Transition Bonds"). All acts and all things necessary to make the Series
1999-1 Transition Bonds, when duly executed by the Issuer and authenticated
by the Trustee as provided in the Indenture and this Supplement and issued
by the Issuer, the valid, binding and legal obligations of the Issuer and
to make this Supplement a valid and enforceable supplement to the Indenture
have been done, performed and fulfilled and the execution and delivery
hereof have been in all respects duly and lawfully authorized. The Issuer
and the Trustee are executing and delivering this Supplement in order to
provide for the Series 1999-1 Transition Bonds.
In order to secure the payment of principal of and interest on the
Series 1999-1 Transition Bonds issued and to be issued under the Indenture
and/or any Series Supplement, the Issuer hereby confirms the Grant to the
Trustee for the benefit of the Holders of the Series 1999-1 Transition
Bonds from time to time issued and outstanding, all of the Issuer's right,
title and interest in, to and under the Collateral, including without
limitation, the Intangible Transition Property transferred by the Seller to
the Issuer as of the Initial Transfer Date pursuant to the Sale Agreement
and all proceeds thereof.
The Trustee, on behalf of the Holders of the Series 1999-1 Transition
Bonds, acknowledges the confirmation of such Grant, accepts the trusts
hereunder in accordance with the provisions hereof and agrees to perform
its duties required in the Indenture and this Supplement.
SECTION 1. DEFINITIONS.
All terms used in this Supplement that are defined in the Indenture,
either directly or by reference therein, have the meanings assigned to them
therein, except to the extent such terms are defined or modified in this
Supplement or the context clearly requires otherwise.
SECTION 2. OTHER DEFINITIONAL PROVISIONS.
Authorized Denominations shall mean $1,000 and integral multiples
thereof.
Bond Rate has the meaning set forth in Section 4 of this
Supplement.
Class Final Maturity Date means, with respect to any Class of the
Series 1999-1 Transition Bonds, the final maturity date thereof,
as specified in Section 4 of this Supplement.
Expected Amortization Schedule means Schedule A to this
Supplement.
Expected Final Payment Date means, with respect to any Class of
the Series 1999-1 Transition Bonds, the expected final payment
date therefor, as specified in Section 4 of this Supplement.
Overcollateralization Amount has the meaning set forth in Section
5(d) of this Supplement.
Payment Date has the meaning set forth in Section 5(a) of this
Supplement.
Record Date shall mean, with respect to any Payment Date, the
close of business on the Business Day prior to such Payment Date.
Required Capital Amount has the meaning set forth in Section 5(e)
of this Supplement.
Series Issuance Date has the meaning set forth in Section 3(b) of
this Supplement.
Series Final Maturity Date has the meaning set forth in Section 4
of this Supplement.
SECTION 3. DESIGNATION; SERIES ISSUANCE DATES.
(a) Designation. The Series 1999-1 Transition Bonds shall be
designated generally as the Issuer's Transition Bonds, Series 1999-1 and
further denominated as Classes A-1 through A-8.
(b) Series Issuance Date. The Series 1999-1 Transition Bonds that are
authenticated and delivered by the Trustee to or upon the order of the
Issuer on August 10, 1999 (the "Series Issuance Date") shall have as their
date of authentication August 10, 1999.
SECTION 4. INITIAL PRINCIPAL AMOUNT; BOND RATE; EXPECTED FINAL PAYMENT
DATE; CLASS FINAL MATURITY DATES.
The Transition Bonds of each Class of the Series 1999-1 Transition
Bonds shall have the initial principal amounts, bear interest at the rates
per annum and have Expected Final Payment Dates and Class Final Maturity
Dates as set forth below:
Initial
Principal Bond Expected Final Class Final
Class Amount Rate Payment Date Maturity Date
----- --------- ---- -------------- -------------
A-1 $293,000,000 6.08% March 25, 2001 March 25, 2003
A-2 $178,000,000 6.41% December 26, 2001 December 26, 2003
A-3 $303,000,000 6.60% March 25, 2003 March 25, 2005
A-4 $201,000,000 6.72% December 26, 2003 December 26, 2005
A-5 $313,000,000 6.83% March 25, 2005 March 25, 2007
A-6 $223,000,000 6.96% December 26, 2005 December 26, 2007
A-7 $455,000,000 7.05% June 25, 2007 June 25, 2009
A-8 $454,000,000 7.15% December 26, 2008 June 25, 2009
The Bond Rate for Classes A-1, A-2, A-3, A-4, A-5, A-6, A-7 and A-8
shall be computed on the basis of a 360-day year of four 90-day quarters.
SECTION 5. PAYMENT DATES; EXPECTED AMORTIZATION SCHEDULE FOR
PRINCIPAL; INTEREST; OVERCOLLATERALIZATION AMOUNT; REQUIRED CAPITAL
AMOUNT.
(a) Payment Dates. The Payment Dates for each Class of the Series
1999-1 Transition Bonds are March 25, June 25, September 25 and December 26
of each year or, if any such date is not a Business Day, the next
succeeding Business Day, commencing on December 27, 1999 and continuing
until the earlier of repayment of such Class in full and the applicable
Class Final Maturity Date.
(b) Expected Amortization Schedule for Principal. Unless an Event
of Default has occurred and is continuing and the unpaid principal amount
of all Series of Transition Bonds has been declared to be due and payable
together with accrued and unpaid interest thereon, on each Payment Date the
Trustee shall distribute to the Series 1999-1 Transition Bondholders of
record as of the related Record Date amounts payable in respect of the
Series 1999-1 Transition Bonds pursuant to Section 8.02(e) of the Indenture
as principal, in accordance with the Expected Amortization Schedule.
Notwithstanding the foregoing, if one or more Classes did not receive
principal on any prior Payment Date and as a result the aggregate
Outstanding Amount of such Class or Classes was not reduced to the balance
indicated in the Expected Amortization Schedule on such Payment Date, then
such Classes will be allocated funds from the Series 1999-1 Subaccount to
make up such shortfalls in the order in which such amounts were scheduled
to be paid prior to any Classes receiving funds in respect of principal
scheduled to be paid on the current Payment Date; provided, however, that
in no event shall a principal payment pursuant to this Section 5(b) on any
Class on a Payment Date be greater than the amount that reduces the
Outstanding Amount of such Class of Series 1999-1 Transition Bonds to the
amount specified in the Expected Amortization Schedule for such Class and
Payment Date.
(c) Interest. Interest will be payable on each Class of the Series
1999-1 Transition Bonds on each Payment Date in an amount equal to one-
quarter of the product of
(i) the applicable Bond Rate and
(ii) the Outstanding Amount of the related Class of Transition
Bonds as of the close of business on the preceding Payment Date
after giving effect to all payments of principal made to the
holders of the related Class of Series 1999-1 Transition Bonds on
such preceding Payment Date;
provided that, with respect to the initial Payment Date or if no payment
has yet been made, interest on the outstanding principal balance shall
accrue from and including the Series Issuance Date to, but excluding, the
following Payment Date computed on the basis of the actual number of days
elapsed since the Series Issuance Date divided by 360.
(d) Overcollateralization Amount. The Overcollateralization Amount
for the Series 1999-1 Transition Bonds shall be $12,100,000.
(e) Required Capital Amount. The Required Capital Amount for the
Series 1999-1 Transition Bonds shall be $12,100,000.
SECTION 6. AUTHORIZED DENOMINATIONS. The Series 1999-1 Transition
Bonds shall be issuable in the Authorized Denominations.
SECTION 7. REDEMPTION.
(a) Mandatory Redemption. The Series 1999-1 Transition Bonds shall
not be subject to mandatory redemption.
(b) Optional Redemption. The Issuer may redeem the Transition Bonds
of Series 1999-1, at its option, on any Payment Date in accordance with
Section 10.01 of the Indenture if, after giving effect to payments that
would otherwise be made on such Payment Date, the Outstanding Amount of
such Series has been reduced to less than five percent of the initial
principal balance of such Series.
SECTION 8. CREDIT ENHANCEMENT. No credit enhancement (other than
the Overcollateralization Amount, the Required Capital Amount and any
adjustments to the Intangible Transition Charges approved by the PUC as
contemplated in the Servicing Agreement) is provided for the Series 1999-1
Transition Bonds.
SECTION 9. DELIVERY AND PAYMENT FOR THE SERIES 1999-1 TRANSITION
BONDS; FORM OF THE SERIES 1999-1 TRANSITION BONDS. The Trustee shall
deliver the Series 1999-1 Transition Bonds to the Issuer when authenticated
in accordance with Section 2.02 of the Indenture. The Series 1999-1
Transition Bonds of each Class shall be in the form of Exhibits A through H
hereto.
SECTION 10. CONFIRMATION OF INDENTURE. As supplemented by this
Supplement, the Indenture is in all respects ratified and confirmed and the
Indenture, as so supplemented by this Supplement, shall be read, taken, and
construed as one and the same instrument.
SECTION 11. COUNTERPARTS. This Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one
and the same instrument.
SECTION 12. GOVERNING LAW. This Supplement 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.
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Supplement to be duly executed by their respective officers thereunto duly
authorized as of the first day of the month and year first above written.
PP&L TRANSITION BOND COMPANY LLC,
as Issuer
By: /s/ James E. Abel
----------------------------
Name: James E. Abel
Title: Manager
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf
of the Transition Bondholders,
By: /s/ Cheryl L. Laser
------------------------------
Name: Cheryl L. Laser
Title: Assistant Vice President
SCHEDULE A
Expected Amortization Schedule
Outstanding Principal Balance
All amounts are in United States Dollars
<TABLE>
<CAPTION>
Payment
Date Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class A-6 Class A-7 Class A-8
- ----------------------- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/27/99 263,315,284 178,000,000 303,000,000 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
3/25/00 201,074,523 178,000,000 303,000,000 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
6/25/00 140,987,613 178,000,000 303,000,000 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
9/25/00 88,690,386 178,000,000 303,000,000 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
12/26/00 36,616,412 178,000,000 303,000,000 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
3/25/01 - 148,795,346 303,000,000 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
6/25/01 - 85,478,334 303,000,000 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
9/25/01 - 29,831,440 303,000,000 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
12/26/01 - - 277,308,357 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
3/25/02 - - 209,424,797 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
6/25/02 - - 145,286,566 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
9/25/02 - - 88,534,909 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
12/26/02 - - 31,832,576 201,000,000 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
3/25/03 - - - 163,274,080 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
6/25/03 - - - 96,517,432 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
9/25/03 - - - 36,944,118 313,000,000 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
12/26/03 - - - - 290,339,977 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
3/25/04 - - - - 218,538,788 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
6/25/04 - - - - 149,923,675 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
9/25/04 - - - - 88,234,499 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
12/26/04 - - - - 26,437,199 223,000,000 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
3/25/05 - - - - - 176,722,080 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
6/25/05 - - - - - 107,969,661 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
9/25/05 - - - - - 45,728,103 455,000,000 454,000,000
------------ ------------------------------------------------------------------------------ --------------
12/26/05 - - - - - - 438,304,028 454,000,000
------------ ------------------------------------------------------------------------------ --------------
3/25/06 - - - - - - 362,494,702 454,000,000
------------ ------------------------------------------------------------------------------ --------------
6/25/06 - - - - - - 287,655,428 454,000,000
------------ ------------------------------------------------------------------------------ --------------
9/25/06 - - - - - - 219,322,507 454,000,000
------------ ------------------------------------------------------------------------------ --------------
12/26/06 - - - - - - 150,687,290 454,000,000
------------ ------------------------------------------------------------------------------ --------------
3/25/07 - - - - - - 70,515,210 454,000,000
------------ ------------------------------------------------------------------------------ --------------
6/25/07 - - - - - - - 447,302,056
------------ ------------------------------------------------------------------------------ --------------
9/25/07 - - - - - - - 376,326,600
------------ ------------------------------------------------------------------------------ --------------
12/26/07 - - - - - - - 304,969,223
------------ ------------------------------------------------------------------------------ --------------
3/25/08 - - - - - - - 223,215,871
------------ ------------------------------------------------------------------------------ --------------
6/25/08 - - - - - - - 145,058,241
------------ ------------------------------------------------------------------------------ --------------
9/25/08 - - - - - - - 72,753,715
------------ ------------------------------------------------------------------------------ --------------
12/26/08 - - - - - - - -
------------ ------------------------------------------------------------------------------ --------------
</TABLE>
Exhibit A to Series Supplement
REGISTERED $
No. R- _____
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 69350E AA 8
THE PRINCIPAL OF THIS CLASS A-1 TRANSITION BOND WILL BE PAID IN
INSTALMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS CLASS A-1 TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
PP&L TRANSITION BOND COMPANY LLC
TRANSITION BONDS, SERIES 1999-1, CLASS A-1.
Bond Original Principal Expected Final Class Final
Rate Amount Payment Date Maturity Date
6.08% $293,000,000 March 25, 2001 March 25, 2003
PP&L Transition Bond Company LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
the Registered Holder hereof, or registered assigns, the Original Principal
Amount shown above in quarterly instalments on the Payment Dates (as
defined below) and in the amounts specified on the reverse hereof or, if
less, the amounts determined pursuant to Section 8.02(e) of the Indenture,
in each year, commencing on the date determined as provided on the reverse
hereof and ending on or before the Class Final Maturity Date, to pay the
entire unpaid principal hereof on the Class Final Maturity Date and to pay
interest, at the Bond Rate shown above at a fixed rate, on each March 25,
June 25, September 25 and December 26, and or if any such day is not a
Business Day, the next succeeding Business Day, commencing on December 27,
1999 and continuing until the earlier of the payment of the principal
hereof and the Class Final Maturity Date (each a "Payment Date"), on the
principal amount of this Series 1999-1, Class A-1 Transition Bond
outstanding from time to time. Interest will be computed (i) for the first
Payment Date on the basis of the actual number of days elapsed from and
including August 10, 1999, to but excluding such Payment Date, divided by
360 and (ii) for each succeeding Payment Date on the basis of a 360-day
year of four 90-day quarters. Such principal of and interest on this
Series 1999-1, Class A-1 Transition Bond shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Series 1999-1, Class A-1
Transition Bond are payable in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public
and private debts. All payments made by the Issuer with respect to this
Class A-1 Transition Bond shall be applied first to interest due and
payable on this Class A-1 Transition Bond as provided above and then to the
unpaid principal of and premium, if any, on this Class A-1 Transition Bond,
all in the manner set forth in Section 8.02(e) of the Indenture.
Reference is made to the further provisions of this Class A-1
Transition Bond set forth on the reverse hereof, which shall have the same
effect as though fully set forth on the face of this Class A-1 Transition
Bond.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Class A-1
Transition Bond shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an authorized Manager of the Issuer.
Dated: August 10, 1999
PP&L TRANSITION BOND
COMPANY LLC
By:________________________
Name: James E. Abel
Title: Manager
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: August 10, 1999
This is one of the Class A-1 Transition Bonds of the Series 1999-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf of the
Transition Bondholders,
By:_______________________
Name:
Title:
REVERSE OF TRANSITION BOND
This Series 1999-1, Class A-1 Transition Bond is one of a duly
authorized issue of Transition Bonds of the Issuer, designated as its
Transition Bonds (herein called the "Transition Bonds"), issued and to be
issued in one or more Series, which Series are issuable in one or more
Classes, and this Series Transition Bond, in which this Series 1999-1,
Class A-1 Transition Bond represents an interest, consists of Classes,
including the Class A-1 Transition Bonds (herein called the "Class A-1
Transition Bonds"), all issued and to be issued under an indenture dated as
of August 10, 1999, and a series supplement thereto dated as of August 10,
1999 (such series supplement, as supplemented or amended, the "Series
Supplement" and, collectively with such indenture, as supplemented or
amended, the "Indenture"), each between the Issuer and The Bank of New
York, as Trustee (the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the Collateral property
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the
Holders of the Transition Bonds and the terms and conditions under which
additional Transition Bonds may be issued. All terms used in this Class A-1
Transition Bond that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in the Indenture.
The Class A-1 Transition Bonds, the other Classes of Series 1999-1
Transition Bonds and any other Series of Transition Bonds issued by the
Issuer are and will be equally and ratably secured by the Collateral
pledged as security therefor as provided in the Indenture or the Series
1999-1 Supplement.
The principal of this Class A-1 Transition Bond shall be payable on
each Payment Date only to the extent that amounts in the Collection Account
are available therefor, and only until the outstanding principal balance
thereof on such Payment Date (after giving effect to all payments of
principal, if any, made on such Payment Date) has been reduced to the
principal balance specified in the Expected Amortization Schedule which is
attached to the Series Supplement as Schedule A, unless payable earlier
either because
(i) an Event of Default shall have occurred and be continuing and the
Trustee or the Holders of Transition Bonds representing not less than
a majority of the Outstanding Amount of the Transition Bonds of all
Series have declared the Transition Bonds to be immediately due and
payable in accordance with Section 5.02 of the Indenture, or
(ii) the Issuer, at its option, shall have called for the redemption
of the Series 1999-1 Transition Bonds in whole pursuant to Section
7(b) of the Series Supplement and Section 10.01 of the Indenture.
However, actual principal payments may be made in lesser than expected
amounts and at later than expected times as determined pursuant to Section
8.02(e) of the Indenture. The entire unpaid principal amount of this Series
1999-1, Class A-1 Transition Bond shall be due and payable on the earlier
of the Class Final Maturity Date hereof and the Redemption Date, if any,
herefor. Notwithstanding the foregoing, the entire unpaid principal amount
of the Transition Bonds shall be due and payable, if not then previously
paid, on the date on which an Event of Default shall have occurred and be
continuing and the Trustee or the Holders of the Transition Bonds of all
Series representing not less than a majority of the Outstanding Amount of
the Transition Bonds have declared the Transition Bonds to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture.
All principal payments on the Class A-1 Transition Bonds shall be made pro
rata to the Class A-1 Transition Bondholders entitled thereto based on the
respective principal amounts of the Series 1999-1, Class A-1 Transition
Bonds held by them.
Payments of interest on this Class A-1 Transition Bond due and payable
on each Payment Date, together with the instalment of principal or premium,
if any, due on this Class A-1 Transition Bond on such Payment Date shall be
made by check mailed first-class, postage prepaid, to the Person whose name
appears as the Registered Holder of this Class A-1 Transition Bond (or one
or more predecessor of such Transition Bond) in the Transition Bond
Register as of the close of business on the Record Date or in such other
manner as may be provided in the Series Supplement, except that with
respect to Class A-1 Transition Bonds registered on the Record Date in the
name of a Clearing Agency, payments will be made by wire transfer in
immediately available funds to the account designated by such Clearing
Agency and except for the final instalment of principal and premium, if
any, payable with respect to this Class A-1 Transition Bond on a Payment
Date which shall be payable as provided below. Such checks shall be mailed
to the Person entitled thereto at the address of such Person as it appears
in the Transition Bond Register as of the applicable Record Date without
requiring that this Class A-1 Transition Bond be submitted for notation of
payment. Any reduction in the principal amount of this Class A-1 Transition
Bond (or any one or more predecessor to such Transition Bond) effected by
any payments made on any Payment Date shall be binding upon all future
Holders of this Class A-1 Transition Bond and of any Class A-1 Transition
Bond issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Class A-1 Transition Bond on a
Payment Date, then the Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Registered Holder hereof as of the
second preceding Record Date to such Payment Date by notice mailed no later
than five days prior to such final Payment Date and shall specify that such
final instalment will be payable to the Registered Holder hereof as of the
Record Date immediately preceding such final Payment Date and only upon
presentation and surrender of this Class A-1 Transition Bond and shall
specify the place where this Series 1999-1, Class A-1 Transition Bond may
be presented and surrendered for payment of such instalment.
The Issuer shall pay interest on overdue instalments of interest on
this Class A-1 Transition Bond at the Bond Rate for Class A-1 to the extent
lawful.
As provided in the Indenture, the Class A-1 Transition Bonds may be
redeemed, in whole, but not in part, in certain circumstances as provided
in Section 7(b) of the Series Supplement.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class A-1 Transition Bond may be
registered in the Transition Bond Register upon surrender of this Class A-1
Transition Bond for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized
in writing, with such signature guaranteed by an Eligible Guarantor
Institution, and thereupon one or more new Class A-1 Transition Bonds of
any Authorized Denominations and in the same aggregate initial principal
amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange
of this Class A-1 Transition Bond, but the transferor may be required to
pay a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection with any registration of transfer or exchange.
Prior to the due presentment for registration of transfer of this
Class A-1 Transition Bond, the Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Person in whose name this Class A-1
Transition Bond is registered (as of the day of determination) as the owner
hereof for the purpose of receiving payments of principal of and premium,
if any, and interest on this Class A-1 Transition Bond and for all other
purposes whatsoever, whether or not this Class A-1 Transition Bond may be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Issuer and the rights of the Holders of the Transition Bonds under the
Indenture at any time by the Issuer with the consent of the Holders of
Transition Bonds representing a majority of the Outstanding Amount of all
Transition Bonds at the time Outstanding of each Series or Class to be
affected. The Indenture also contains provisions permitting the Holders of
Transition Bonds representing specified percentages of the Outstanding
Amount of the Transition Bonds of all Series, on behalf of the Holders of
all the Transition Bonds, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Class A-1 Transition Bond (or any one of more predecessor of such
transition bonds) shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-1 Transition Bond and of any Class A-1
Transition Bond issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent
or waiver is made upon this Class A-1 Transition Bond. The Indenture also
permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Transition
Bonds issued thereunder.
The term "Issuer" as used in this Series 1999-1, Class A-1 Transition
Bond includes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the
Holders of Transition Bonds under the Indenture.
The Class A-1 Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Series
Supplement, subject to certain limitations therein set forth.
This Class A-1 Transition Bond, the Indenture and the Series
Supplement 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 and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Class A-1
Transition Bond or of the Indenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, to pay the principal of
and interest on this Class A-1 Transition Bond at the times, place, and
rate, and in the coin or currency herein prescribed.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ___
(name and address of assignee)
the within Class A-1 Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
(name and address of appointee)
attorney, to transfer said Class A-1 Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
___________ _________________________*
Signature Guaranteed:
___________ ________________________
* NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Class
A-1 Transition Bond in every particular, without alteration,
enlargement or any change whatsoever.
Exhibit B to Series Supplement
REGISTERED $
No. R- _______
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 69350E AB 6
THE PRINCIPAL OF THIS CLASS A-2 TRANSITION BOND WILL BE PAID IN
INSTALMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS CLASS A-2 TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
PP&L TRANSITION BOND COMPANY LLC
TRANSITION BONDS, SERIES 1999-1, CLASS A-2.
Bond Original Principal Expected Final Class Final
Rate Amount Payment Date Maturity Date
6.41% $178,000,000 December 26, 2001 December 26, 2003
PP&L Transition Bond Company LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
the Registered Holder hereof, or registered assigns, the Original Principal
Amount shown above in quarterly instalments on the Payment Dates (as
defined below) and in the amounts specified on the reverse hereof or, if
less, the amounts determined pursuant to Section 8.02(e) of the Indenture,
in each year, commencing on the date determined as provided on the reverse
hereof and ending on or before the Class Final Maturity Date, to pay the
entire unpaid principal hereof on the Class Final Maturity Date and to pay
interest, at the Bond Rate shown above at a fixed rate, on each March 25,
June 25, September 25 and December 26, and or if any such day is not a
Business Day, the next succeeding Business Day, commencing on December 27,
1999 and continuing until the earlier of the payment of the principal
hereof and the Class Final Maturity Date (each a "Payment Date"), on the
principal amount of this Series 1999-1, Class A-2 Transition Bond
outstanding from time to time. Interest will be computed (i) for the first
Payment Date on the basis of the actual number of days elapsed from and
including August 10, 1999, to but excluding such Payment Date, divided by
360 and (ii) for each succeeding Payment Date on the basis of a 360-day
year of four 90-day quarters. Such principal of and interest on this
Series 1999-1, Class A-2 Transition Bond shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Series 1999-1, Class A-2
Transition Bond are payable in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public
and private debts. All payments made by the Issuer with respect to this
Class A-2 Transition Bond shall be applied first to interest due and
payable on this Class A-2 Transition Bond as provided above and then to the
unpaid principal of and premium, if any, on this Class A-2 Transition Bond,
all in the manner set forth in Section 8.02(e) of the Indenture.
Reference is made to the further provisions of this Class A-2
Transition Bond set forth on the reverse hereof, which shall have the same
effect as though fully set forth on the face of this Class A-2 Transition
Bond.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Class A-2
Transition Bond shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an authorized Manager of the Issuer.
Dated: August 10, 1999
PP&L TRANSITION BOND
COMPANY LLC
By:________________________
Name: James E. Abel
Title: Manager
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: August 10, 1999
This is one of the Class A-2 Transition Bonds of the Series 1999-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf of the
Transition Bondholders,
By:_______________________
Name:
Title:
REVERSE OF TRANSITION BOND
This Series 1999-1, Class A-2 Transition Bond is one of a duly
authorized issue of Transition Bonds of the Issuer, designated as its
Transition Bonds (herein called the "Transition Bonds"), issued and to be
issued in one or more Series, which Series are issuable in one or more
Classes, and this Series Transition Bond, in which this Series 1999-1,
Class A-2 Transition Bond represents an interest, consists of Classes,
including the Class A-2 Transition Bonds (herein called the "Class A-2
Transition Bonds"), all issued and to be issued under an indenture dated as
of August 10, 1999, and a series supplement thereto dated as of August 10,
1999 (such series supplement, as supplemented or amended, the "Series
Supplement" and, collectively with such indenture, as supplemented or
amended, the "Indenture"), each between the Issuer and The Bank of New
York, as Trustee (the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the Collateral property
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the
Holders of the Transition Bonds and the terms and conditions under which
additional Transition Bonds may be issued. All terms used in this Class A-2
Transition Bond that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in the Indenture.
The Class A-2 Transition Bonds, the other Classes of Series 1999-1
Transition Bonds and any other Series of Transition Bonds issued by the
Issuer are and will be equally and ratably secured by the Collateral
pledged as security therefor as provided in the Indenture or the Series
1999-1 Supplement.
The principal of this Class A-2 Transition Bond shall be payable on
each Payment Date only to the extent that amounts in the Collection Account
are available therefor, and only until the outstanding principal balance
thereof on such Payment Date (after giving effect to all payments of
principal, if any, made on such Payment Date) has been reduced to the
principal balance specified in the Expected Amortization Schedule which is
attached to the Series Supplement as Schedule A, unless payable earlier
either because
(i) an Event of Default shall have occurred and be continuing and the
Trustee or the Holders of Transition Bonds representing not less than
a majority of the Outstanding Amount of the Transition Bonds of all
Series have declared the Transition Bonds to be immediately due and
payable in accordance with Section 5.02 of the Indenture, or
(ii) the Issuer, at its option, shall have called for the redemption
of the Series 1999-1 Transition Bonds in whole pursuant to Section
7(b) of the Series Supplement and Section 10.01 of the Indenture.
However, actual principal payments may be made in lesser than expected
amounts and at later than expected times as determined pursuant to Section
8.02(e) of the Indenture. The entire unpaid principal amount of this Series
1999-1, Class A-2 Transition Bond shall be due and payable on the earlier
of the Class Final Maturity Date hereof and the Redemption Date, if any,
herefor. Notwithstanding the foregoing, the entire unpaid principal amount
of the Transition Bonds shall be due and payable, if not then previously
paid, on the date on which an Event of Default shall have occurred and be
continuing and the Trustee or the Holders of the Transition Bonds of all
Series representing not less than a majority of the Outstanding Amount of
the Transition Bonds have declared the Transition Bonds to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture.
All principal payments on the Class A-2 Transition Bonds shall be made pro
rata to the Class A-2 Transition Bondholders entitled thereto based on the
respective principal amounts of the Series 1999-1, Class A-2 Transition
Bonds held by them.
Payments of interest on this Class A-2 Transition Bond due and payable
on each Payment Date, together with the instalment of principal or premium,
if any, due on this Class A-2 Transition Bond on such Payment Date shall be
made by check mailed first-class, postage prepaid, to the Person whose name
appears as the Registered Holder of this Class A-2 Transition Bond (or one
or more predecessor of such Transition Bond) in the Transition Bond
Register as of the close of business on the Record Date or in such other
manner as may be provided in the Supplement, except that with respect to
Class A-2 Transition Bonds registered on the Record Date in the name of a
Clearing Agency, payments will be made by wire transfer in immediately
available funds to the account designated by such Clearing Agency and
except for the final instalment of principal and premium, if any, payable
with respect to this Class A-2 Transition Bond on a Payment Date which
shall be payable as provided below. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears in the
Transition Bond Register as of the applicable Record Date without requiring
that this Class A-2 Transition Bond be submitted for notation of payment.
Any reduction in the principal amount of this Class A-2 Transition Bond (or
any one or more predecessor to such Transition Bond) effected by any
payments made on any Payment Date shall be binding upon all future Holders
of this Class A-2 Transition Bond and of any Class A-2 Transition Bond
issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Class A-2 Transition Bond on a
Payment Date, then the Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Registered Holder hereof as of the
second preceding Record Date to such Payment Date by notice mailed no later
than five days prior to such final Payment Date and shall specify that such
final instalment will be payable to the Registered Holder hereof as of the
Record Date immediately preceding such final Payment Date and only upon
presentation and surrender of this Class A-2 Transition Bond and shall
specify the place where this Series 1999-1, Class A-2 Transition Bond may
be presented and surrendered for payment of such instalment.
The Issuer shall pay interest on overdue instalments of interest on
this Class A-2 Transition Bond at the Bond Rate for Class A-2 to the extent
lawful.
As provided in the Indenture, the Class A-2 Transition Bonds may be
redeemed, in whole, but not in part, in certain circumstances as provided
in Section 7(b) of the Series Supplement.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class A-2 Transition Bond may be
registered in the Transition Bond Register upon surrender of this Class A-2
Transition Bond for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized
in writing, with such signature guaranteed by an Eligible Guarantor
Institution, and thereupon one or more new Class A-2 Transition Bonds of
any Authorized Denominations and in the same aggregate initial principal
amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange
of this Class A-2 Transition Bond, but the transferor may be required to
pay a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection with any registration of transfer or exchange.
Prior to the due presentment for registration of transfer of this
Class A-2 Transition Bond, the Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Person in whose name this Class A-2
Transition Bond is registered (as of the day of determination) as the owner
hereof for the purpose of receiving payments of principal of and premium,
if any, and interest on this Class A-2 Transition Bond and for all other
purposes whatsoever, whether or not this Class A-2 Transition Bond may be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Issuer and the rights of the Holders of the Transition Bonds under the
Indenture at any time by the Issuer with the consent of the Holders of
Transition Bonds representing a majority of the Outstanding Amount of all
Transition Bonds at the time Outstanding of each Series or Class to be
affected. The Indenture also contains provisions permitting the Holders of
Transition Bonds representing specified percentages of the Outstanding
Amount of the Transition Bonds of all Series, on behalf of the Holders of
all the Transition Bonds, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Class A-2 Transition Bond (or any one of more predecessor of such
transition bonds) shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-2 Transition Bond and of any Class A-2
Transition Bond issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent
or waiver is made upon this Class A-2 Transition Bond. The Indenture also
permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Transition
Bonds issued thereunder.
The term "Issuer" as used in this Series 1999-1, Class A-2 Transition
Bond includes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the
Holders of Transition Bonds under the Indenture.
The Class A-2 Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Series
Supplement, subject to certain limitations therein set forth.
This Class A-2 Transition Bond, the Indenture and the Series
Supplement 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 and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Class A-2
Transition Bond or of the Indenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, to pay the principal of
and interest on this Class A-2 Transition Bond at the times, place, and
rate, and in the coin or currency herein prescribed.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ___
(name and address of assignee)
the within Class A-2 Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
(name and address of appointee)
attorney, to transfer said Class A-2 Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
*
___________ _________________________
Signature Guaranteed:
___________ _________________________
* NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Class
A-2 Transition Bond in every particular, without alteration,
enlargement or any change whatsoever.
Exhibit C to Series Supplement
REGISTERED $
No. R- ________
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 69350E AC 4
THE PRINCIPAL OF THIS CLASS A-3 TRANSITION BOND WILL BE PAID IN
INSTALMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS CLASS A-3 TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
PP&L TRANSITION BOND COMPANY LLC
TRANSITION BONDS, SERIES 1999-1, CLASS A-3.
Bond Original Principal Expected Final Class Final
Rate Amount Payment Date Maturity Date
6.60% $303,000,000 March 25, 2003 March 25, 2005
PP&L Transition Bond Company LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
the Registered Holder hereof, or registered assigns, the Original Principal
Amount shown above in quarterly instalments on the Payment Dates (as
defined below) and in the amounts specified on the reverse hereof or, if
less, the amounts determined pursuant to Section 8.02(e) of the Indenture,
in each year, commencing on the date determined as provided on the reverse
hereof and ending on or before the Class Final Maturity Date, to pay the
entire unpaid principal hereof on the Class Final Maturity Date and to pay
interest, at the Bond Rate shown above at a fixed rate, on each March 25,
June 25, September 25 and December 26, and or if any such day is not a
Business Day, the next succeeding Business Day, commencing on December 27,
1999 and continuing until the earlier of the payment of the principal
hereof and the Class Final Maturity Date (each a "Payment Date"), on the
principal amount of this Series 1999-1, Class A-3 Transition Bond
outstanding from time to time. Interest will be computed (i) for the first
Payment Date on the basis of the actual number of days elapsed from and
including August 10, 1999, to but excluding such Payment Date, divided by
360 and (ii) for each succeeding Payment Date on the basis of a 360-day
year of four 90-day quarters. Such principal of and interest on this
Series 1999-1, Class A-3 Transition Bond shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Series 1999-1, Class A-3
Transition Bond are payable in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public
and private debts. All payments made by the Issuer with respect to this
Class A-3 Transition Bond shall be applied first to interest due and
payable on this Class A-3 Transition Bond as provided above and then to the
unpaid principal of and premium, if any, on this Class A-3 Transition Bond,
all in the manner set forth in Section 8.02(e) of the Indenture.
Reference is made to the further provisions of this Class A-3
Transition Bond set forth on the reverse hereof, which shall have the same
effect as though fully set forth on the face of this Class A-3 Transition
Bond.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Class A-3
Transition Bond shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an authorized Manager of the Issuer.
Dated: August 10, 1999
PP&L TRANSITION BOND
COMPANY LLC
By:________________________
Name: James E. Abel
Title: Manager
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: August 10, 1999
This is one of the Class A-3 Transition Bonds of the Series 1999-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf of the
Transition Bondholders,
By:_______________________
Name:
Title:
REVERSE OF TRANSITION BOND
This Series 1999-1, Class A-3 Transition Bond is one of a duly
authorized issue of Transition Bonds of the Issuer, designated as its
Transition Bonds (herein called the "Transition Bonds"), issued and to be
issued in one or more Series, which Series are issuable in one or more
Classes, and this Series Transition Bond, in which this Series 1999-1,
Class A-3 Transition Bond represents an interest, consists of Classes,
including the Class A-3 Transition Bonds (herein called the "Class A-3
Transition Bonds"), all issued and to be issued under an indenture dated as
of August 10, 1999, and a series supplement thereto dated as of August 10,
1999 (such series supplement, as supplemented or amended, the "Series
Supplement" and, collectively with such indenture, as supplemented or
amended, the "Indenture"), each between the Issuer and The Bank of New
York, as Trustee (the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the Collateral property
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the
Holders of the Transition Bonds and the terms and conditions under which
additional Transition Bonds may be issued. All terms used in this Class A-3
Transition Bond that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in the Indenture.
The Class A-3 Transition Bonds, the other Classes of Series 1999-1
Transition Bonds and any other Series of Transition Bonds issued by the
Issuer are and will be equally and ratably secured by the Collateral
pledged as security therefor as provided in the Indenture or the Series
1999-1 Supplement.
The principal of this Class A-3 Transition Bond shall be payable on
each Payment Date only to the extent that amounts in the Collection Account
are available therefor, and only until the outstanding principal balance
thereof on such Payment Date (after giving effect to all payments of
principal, if any, made on such Payment Date) has been reduced to the
principal balance specified in the Expected Amortization Schedule which is
attached to the Series Supplement as Schedule A, unless payable earlier
either because
(i) an Event of Default shall have occurred and be continuing and the
Trustee or the Holders of Transition Bonds representing not less than
a majority of the Outstanding Amount of the Transition Bonds of all
Series have declared the Transition Bonds to be immediately due and
payable in accordance with Section 5.02 of the Indenture, or
(ii) the Issuer, at its option, shall have called for the redemption
of the Series 1999-1 Transition Bonds in whole pursuant to Section
7(b) of the Series Supplement and Section 10.01 of the Indenture.
However, actual principal payments may be made in lesser than expected
amounts and at later than expected times as determined pursuant to Section
8.02(e) of the Indenture. The entire unpaid principal amount of this Series
1999-1, Class A-3 Transition Bond shall be due and payable on the earlier
of the Class Final Maturity Date hereof and the Redemption Date, if any,
herefor. Notwithstanding the foregoing, the entire unpaid principal amount
of the Transition Bonds shall be due and payable, if not then previously
paid, on the date on which an Event of Default shall have occurred and be
continuing and the Trustee or the Holders of the Transition Bonds of all
Series representing not less than a majority of the Outstanding Amount of
the Transition Bonds have declared the Transition Bonds to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture.
All principal payments on the Class A-3 Transition Bonds shall be made pro
rata to the Class A-3 Transition Bondholders entitled thereto based on the
respective principal amounts of the Series 1999-1, Class A-3 Transition
Bonds held by them.
Payments of interest on this Class A-3 Transition Bond due and payable
on each Payment Date, together with the instalment of principal or premium,
if any, due on this Class A-3 Transition Bond on such Payment Date shall be
made by check mailed first-class, postage prepaid, to the Person whose name
appears as the Registered Holder of this Class A-3 Transition Bond (or one
or more predecessor of such Transition Bond) in the Transition Bond
Register as of the close of business on the Record Date or in such other
manner as may be provided in the Supplement, except that with respect to
Class A-3 Transition Bonds registered on the Record Date in the name of a
Clearing Agency, payments will be made by wire transfer in immediately
available funds to the account designated by such Clearing Agency and
except for the final instalment of principal and premium, if any, payable
with respect to this Class A-3 Transition Bond on a Payment Date which
shall be payable as provided below. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears in the
Transition Bond Register as of the applicable Record Date without requiring
that this Class A-3 Transition Bond be submitted for notation of payment.
Any reduction in the principal amount of this Class A-3 Transition Bond (or
any one or more predecessor to such Transition Bond) effected by any
payments made on any Payment Date shall be binding upon all future Holders
of this Class A-3 Transition Bond and of any Class A-3 Transition Bond
issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Class A-3 Transition Bond on a
Payment Date, then the Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Registered Holder hereof as of the
second preceding Record Date to such Payment Date by notice mailed no later
than five days prior to such final Payment Date and shall specify that such
final instalment will be payable to the Registered Holder hereof as of the
Record Date immediately preceding such final Payment Date and only upon
presentation and surrender of this Class A-3 Transition Bond and shall
specify the place where this Series 1999-1, Class A-3 Transition Bond may
be presented and surrendered for payment of such instalment.
The Issuer shall pay interest on overdue instalments of interest on
this Class A-3 Transition Bond at the Bond Rate for Class A-3 to the extent
lawful.
As provided in the Indenture, the Class A-3 Transition Bonds may be
redeemed, in whole, but not in part, in certain circumstances as provided
in Section 7(b) of the Series Supplement.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class A-3 Transition Bond may be
registered in the Transition Bond Register upon surrender of this Class A-3
Transition Bond for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized
in writing, with such signature guaranteed by an Eligible Guarantor
Institution, and thereupon one or more new Class A-3 Transition Bonds of
any Authorized Denominations and in the same aggregate initial principal
amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange
of this Class A-3 Transition Bond, but the transferor may be required to
pay a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection with any registration of transfer or exchange.
Prior to the due presentment for registration of transfer of this
Class A-3 Transition Bond, the Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Person in whose name this Class A-3
Transition Bond is registered (as of the day of determination) as the owner
hereof for the purpose of receiving payments of principal of and premium,
if any, and interest on this Class A-3 Transition Bond and for all other
purposes whatsoever, whether or not this Class A-3 Transition Bond may be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Issuer and the rights of the Holders of the Transition Bonds under the
Indenture at any time by the Issuer with the consent of the Holders of
Transition Bonds representing a majority of the Outstanding Amount of all
Transition Bonds at the time Outstanding of each Series or Class to be
affected. The Indenture also contains provisions permitting the Holders of
Transition Bonds representing specified percentages of the Outstanding
Amount of the Transition Bonds of all Series, on behalf of the Holders of
all the Transition Bonds, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Class A-3 Transition Bond (or any one of more predecessor of such
transition bonds) shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-3 Transition Bond and of any Class A-3
Transition Bond issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent
or waiver is made upon this Class A-3 Transition Bond. The Indenture also
permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Transition
Bonds issued thereunder.
The term "Issuer" as used in this Series 1999-1, Class A-3 Transition
Bond includes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the
Holders of Transition Bonds under the Indenture.
The Class A-3 Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Series
Supplement, subject to certain limitations therein set forth.
This Class A-3 Transition Bond, the Indenture and the Series
Supplement 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 and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Class A-3
Transition Bond or of the Indenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, to pay the principal of
and interest on this Class A-3 Transition Bond at the times, place, and
rate, and in the coin or currency herein prescribed.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ___
(name and address of assignee)
the within Class A-3 Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
(name and address of appointee)
attorney, to transfer said Class A-3 Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
*
___________ ________________________
Signature Guaranteed:
___________ _________________________
* NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Class
A-3 Transition Bond in every particular, without alteration,
enlargement or any change whatsoever.
Exhibit D to Series Supplement
REGISTERED $
No. R- ____________
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 69350E AD 2
THE PRINCIPAL OF THIS CLASS A-4 TRANSITION BOND WILL BE PAID IN
INSTALMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS CLASS A-4 TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
PP&L TRANSITION BOND COMPANY LLC
TRANSITION BONDS, SERIES 1999-1, CLASS A-4
Bond Original Principal Expected Final Class Final
Rate Amount Payment Date Maturity Date
6.72% $201,000,000 December 26, 2003 December 26, 2005
PP&L Transition Bond Company LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
the Registered Holder hereof, or registered assigns, the Original Principal
Amount shown above in quarterly instalments on the Payment Dates (as
defined below) and in the amounts specified on the reverse hereof or, if
less, the amounts determined pursuant to Section 8.02(e) of the Indenture,
in each year, commencing on the date determined as provided on the reverse
hereof and ending on or before the Class Final Maturity Date, to pay the
entire unpaid principal hereof on the Class Final Maturity Date and to pay
interest, at the Bond Rate shown above at a fixed rate, on each March 25,
June 25, September 25 and December 26, and or if any such day is not a
Business Day, the next succeeding Business Day, commencing on December 27,
1999 and continuing until the earlier of the payment of the principal
hereof and the Class Final Maturity Date (each a "Payment Date"), on the
principal amount of this Series 1999-1, Class A-4 Transition Bond
outstanding from time to time. Interest will be computed (i) for the first
Payment Date on the basis of the actual number of days elapsed from and
including August 10, 1999, to but excluding such Payment Date, divided by
360 and (ii) for each succeeding Payment Date on the basis of a 360-day
year of four 90-day quarters. Such principal of and interest on this
Series 1999-1, Class A-4 Transition Bond shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Series 1999-1, Class A-4
Transition Bond are payable in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public
and private debts. All payments made by the Issuer with respect to this
Class A-4 Transition Bond shall be applied first to interest due and
payable on this Class A-4 Transition Bond as provided above and then to the
unpaid principal of and premium, if any, on this Class A-4 Transition Bond,
all in the manner set forth in Section 8.02(e) of the Indenture.
Reference is made to the further provisions of this Class A-4
Transition Bond set forth on the reverse hereof, which shall have the same
effect as though fully set forth on the face of this Class A-4 Transition
Bond.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Class A-4
Transition Bond shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed,
manually or in facsimile, by an authorized Manager of the Issuer.
Dated: August 10, 1999
PP&L TRANSITION BOND
COMPANY LLC
By:________________________
Name: James E. Abel
Title: Manager
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: August 10, 1999
This is one of the Class A-4 Transition Bonds of the Series 1999-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf of the
Transition Bondholders,
By:_______________________
Name:
Title:
REVERSE OF TRANSITION BOND
This Series 1999-1, Class A-4 Transition Bond is one of a duly
authorized issue of Transition Bonds of the Issuer, designated as its
Transition Bonds (herein called the "Transition Bonds"), issued and to be
issued in one or more Series, which Series are issuable in one or more
Classes, and this Series Transition Bond, in which this Series 1999-1,
Class A-4 Transition Bond represents an interest, consists of Classes,
including the Class A-4 Transition Bonds (herein called the "Class A-4
Transition Bonds"), all issued and to be issued under an indenture dated as
of August 10, 1999, and a series supplement thereto dated as of August 10,
1999 (such series supplement, as supplemented or amended, the "Series
Supplement" and, collectively with such indenture, as supplemented or
amended, the "Indenture"), each between the Issuer and The Bank of New
York, as Trustee (the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the Collateral property
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the
Holders of the Transition Bonds and the terms and conditions under which
additional Transition Bonds may be issued. All terms used in this Class A-4
Transition Bond that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in the Indenture.
The Class A-4 Transition Bonds, the other Classes of Series 1999-1
Transition Bonds and any other Series of Transition Bonds issued by the
Issuer are and will be equally and ratably secured by the Collateral
pledged as security therefor as provided in the Indenture or the Series
1999-1 Supplement.
The principal of this Class A-4 Transition Bond shall be payable on
each Payment Date only to the extent that amounts in the Collection Account
are available therefor, and only until the outstanding principal balance
thereof on such Payment Date (after giving effect to all payments of
principal, if any, made on such Payment Date) has been reduced to the
principal balance specified in the Expected Amortization Schedule which is
attached to the Series Supplement as Schedule A, unless payable earlier
either because
(i) an Event of Default shall have occurred and be continuing and the
Trustee or the Holders of Transition Bonds representing not less than
a majority of the Outstanding Amount of the Transition Bonds of all
Series have declared the Transition Bonds to be immediately due and
payable in accordance with Section 5.02 of the Indenture, or
(ii) the Issuer, at its option, shall have called for the redemption
of the Series 1999-1 Transition Bonds in whole pursuant to Section
7(b) of the Series Supplement and Section 10.01 of the Indenture.
However, actual principal payments may be made in lesser than expected
amounts and at later than expected times as determined pursuant to Section
8.02(e) of the Indenture. The entire unpaid principal amount of this Series
1999-1, Class A-4 Transition Bond shall be due and payable on the earlier
of the Class Final Maturity Date hereof and the Redemption Date, if any,
herefor. Notwithstanding the foregoing, the entire unpaid principal amount
of the Transition Bonds shall be due and payable, if not then previously
paid, on the date on which an Event of Default shall have occurred and be
continuing and the Trustee or the Holders of the Transition Bonds of all
Series representing not less than a majority of the Outstanding Amount of
the Transition Bonds have declared the Transition Bonds to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture.
All principal payments on the Class A-4 Transition Bonds shall be made pro
rata to the Class A-4 Transition Bondholders entitled thereto based on the
respective principal amounts of the Series 1999-1, Class A-4 Transition
Bonds held by them.
Payments of interest on this Class A-4 Transition Bond due and payable
on each Payment Date, together with the instalment of principal or premium,
if any, due on this Class A-4 Transition Bond on such Payment Date shall be
made by check mailed first-class, postage prepaid, to the Person whose name
appears as the Registered Holder of this Class A-4 Transition Bond (or one
or more predecessor of such Transition Bond) in the Transition Bond
Register as of the close of business on the Record Date or in such other
manner as may be provided in the Supplement, except that with respect to
Class A-4 Transition Bonds registered on the Record Date in the name of a
Clearing Agency, payments will be made by wire transfer in immediately
available funds to the account designated by such Clearing Agency and
except for the final instalment of principal and premium, if any, payable
with respect to this Class A-4 Transition Bond on a Payment Date which
shall be payable as provided below. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears in the
Transition Bond Register as of the applicable Record Date without requiring
that this Class A-4 Transition Bond be submitted for notation of payment.
Any reduction in the principal amount of this Class A-4 Transition Bond (or
any one or more predecessor to such Transition Bond) effected by any
payments made on any Payment Date shall be binding upon all future Holders
of this Class A-4 Transition Bond and of any Class A-4 Transition Bond
issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Class A-4 Transition Bond on a
Payment Date, then the Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Registered Holder hereof as of the
second preceding Record Date to such Payment Date by notice mailed no later
than five days prior to such final Payment Date and shall specify that such
final instalment will be payable to the Registered Holder hereof as of the
Record Date immediately preceding such final Payment Date and only upon
presentation and surrender of this Class A-4 Transition Bond and shall
specify the place where this Series 1999-1, Class A-4 Transition Bond may
be presented and surrendered for payment of such instalment.
The Issuer shall pay interest on overdue instalments of interest on
this Class A-4 Transition Bond at the Bond Rate for Class A-4 to the extent
lawful.
As provided in the Indenture, the Class A-4 Transition Bonds may be
redeemed, in whole, but not in part, in certain circumstances as provided
in Section 7(b) of the Series Supplement.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class A-4 Transition Bond may be
registered in the Transition Bond Register upon surrender of this Class A-4
Transition Bond for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized
in writing, with such signature guaranteed by an Eligible Guarantor
Institution, and thereupon one or more new Class A-4 Transition Bonds of
any Authorized Denominations and in the same aggregate initial principal
amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange
of this Class A-4 Transition Bond, but the transferor may be required to
pay a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection with any registration of transfer or exchange.
Prior to the due presentment for registration of transfer of this
Class A-4 Transition Bond, the Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Person in whose name this Class A-4
Transition Bond is registered (as of the day of determination) as the owner
hereof for the purpose of receiving payments of principal of and premium,
if any, and interest on this Class A-4 Transition Bond and for all other
purposes whatsoever, whether or not this Class A-4 Transition Bond may be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Issuer and the rights of the Holders of the Transition Bonds under the
Indenture at any time by the Issuer with the consent of the Holders of
Transition Bonds representing a majority of the Outstanding Amount of all
Transition Bonds at the time Outstanding of each Series or Class to be
affected. The Indenture also contains provisions permitting the Holders of
Transition Bonds representing specified percentages of the Outstanding
Amount of the Transition Bonds of all Series, on behalf of the Holders of
all the Transition Bonds, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Class A-4 Transition Bond (or any one of more predecessor of such
transition bonds) shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-4 Transition Bond and of any Class A-4
Transition Bond issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent
or waiver is made upon this Class A-4 Transition Bond. The Indenture also
permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Transition
Bonds issued thereunder.
The term "Issuer" as used in this Series 1999-1, Class A-4 Transition
Bond includes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the
Holders of Transition Bonds under the Indenture.
The Class A-4 Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Series
Supplement, subject to certain limitations therein set forth.
This Class A-4 Transition Bond, the Indenture and the Series
Supplement 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 and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Class A-4
Transition Bond or of the Indenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, to pay the principal of
and interest on this Class A-4 Transition Bond at the times, place, and
rate, and in the coin or currency herein prescribed.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ___
(name and address of assignee)
the within Class A-4 Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
(name and address of appointee)
attorney, to transfer said Class A-4 Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
*
___________ _____________________
Signature Guaranteed:
___________ _____________________
* NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Class
A-4 Transition Bond in every particular, without alteration,
enlargement or any change whatsoever.
Exhibit E to Series Supplement
REGISTERED $
No. R- _________
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 69350E AE 0
THE PRINCIPAL OF THIS CLASS A-5 TRANSITION BOND WILL BE PAID IN
INSTALMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS CLASS A-5 TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
PP&L TRANSITION BOND COMPANY LLC
TRANSITION BONDS, SERIES 1999-1, CLASS A-5.
Bond Original Principal Expected Final Class Final
Rate Amount Payment Date Maturity Date
6.83% $313,000,000 March 25, 2005 March 25, 2007
PP&L Transition Bond Company LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
the Registered Holder hereof, or registered assigns, the Original Principal
Amount shown above in quarterly instalments on the Payment Dates (as
defined below) and in the amounts specified on the reverse hereof or, if
less, the amounts determined pursuant to Section 8.02(e) of the Indenture,
in each year, commencing on the date determined as provided on the reverse
hereof and ending on or before the Class Final Maturity Date, to pay the
entire unpaid principal hereof on the Class Final Maturity Date and to pay
interest, at the Bond Rate shown above at a fixed rate, on each March 25,
June 25, September 25 and December 26, and or if any such day is not a
Business Day, the next succeeding Business Day, commencing on December 27,
1999 and continuing until the earlier of the payment of the principal
hereof and the Class Final Maturity Date (each a "Payment Date"), on the
principal amount of this Series 1999-1, Class A-5 Transition Bond
outstanding from time to time. Interest will be computed (i) for the first
Payment Date on the basis of the actual number of days elapsed from and
including August 10, 1999, to but excluding such Payment Date, divided by
360 and (ii) for each succeeding Payment Date on the basis of a 360-day
year of four 90-day quarters. Such principal of and interest on this Series
1999-1, Class A-5 Transition Bond shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Series 1999-1, Class A-5
Transition Bond are payable in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public
and private debts. All payments made by the Issuer with respect to this
Class A-5 Transition Bond shall be applied first to interest due and
payable on this Class A-5 Transition Bond as provided above and then to the
unpaid principal of and premium, if any, on this Class A-5 Transition Bond,
all in the manner set forth in Section 8.02(e) of the Indenture.
Reference is made to the further provisions of this Class A-5
Transition Bond set forth on the reverse hereof, which shall have the same
effect as though fully set forth on the face of this Class A-5 Transition
Bond.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Class A-5
Transition Bond shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an authorized Manager of the Issuer.
Dated: August 10, 1999
PP&L TRANSITION BOND
COMPANY LLC
By:________________________
Name: James E. Abel
Title: Manager
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: August 10, 1999
This is one of the Class A-5 Transition Bonds of the Series 1999-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf of the
Transition Bondholders,
By:_______________________
Name:
Title:
REVERSE OF TRANSITION BOND
This Series 1999-1, Class A-5 Transition Bond is one of a duly
authorized issue of Transition Bonds of the Issuer, designated as its
Transition Bonds (herein called the "Transition Bonds"), issued and to be
issued in one or more Series, which Series are issuable in one or more
Classes, and this Series Transition Bond, in which this Series 1999-1,
Class A-5 Transition Bond represents an interest, consists of Classes,
including the Class A-5 Transition Bonds (herein called the "Class A-5
Transition Bonds"), all issued and to be issued under an indenture dated as
of August 10, 1999, and a series supplement thereto dated as of August 10,
1999 (such series supplement, as supplemented or amended, the "Series
Supplement" and, collectively with such indenture, as supplemented or
amended, the "Indenture"), each between the Issuer and The Bank of New
York, as Trustee (the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the Collateral property
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the
Holders of the Transition Bonds and the terms and conditions under which
additional Transition Bonds may be issued. All terms used in this Class A-5
Transition Bond that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in the Indenture.
The Class A-5 Transition Bonds, the other Classes of Series 1999-1
Transition Bonds and any other Series of Transition Bonds issued by the
Issuer are and will be equally and ratably secured by the Collateral
pledged as security therefor as provided in the Indenture or the Series
1999-1 Supplement.
The principal of this Class A-5 Transition Bond shall be payable on
each Payment Date only to the extent that amounts in the Collection Account
are available therefor, and only until the outstanding principal balance
thereof on such Payment Date (after giving effect to all payments of
principal, if any, made on such Payment Date) has been reduced to the
principal balance specified in the Expected Amortization Schedule which is
attached to the Series Supplement as Schedule A, unless payable earlier
either because
(i) an Event of Default shall have occurred and be continuing and the
Trustee or the Holders of Transition Bonds representing not less than
a majority of the Outstanding Amount of the Transition Bonds of all
Series have declared the Transition Bonds to be immediately due and
payable in accordance with Section 5.02 of the Indenture, or
(ii) the Issuer, at its option, shall have called for the redemption
of the Series 1999-1 Transition Bonds in whole pursuant to Section
7(b) of the Series Supplement and Section 10.01 of the Indenture.
However, actual principal payments may be made in lesser than expected
amounts and at later than expected times as determined pursuant to Section
8.02(e) of the Indenture. The entire unpaid principal amount of this Series
1999-1, Class A-5 Transition Bond shall be due and payable on the earlier
of the Class Final Maturity Date hereof and the Redemption Date, if any,
herefor. Notwithstanding the foregoing, the entire unpaid principal amount
of the Transition Bonds shall be due and payable, if not then previously
paid, on the date on which an Event of Default shall have occurred and be
continuing and the Trustee or the Holders of the Transition Bonds of all
Series representing not less than a majority of the Outstanding Amount of
the Transition Bonds have declared the Transition Bonds to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture.
All principal payments on the Class A-5 Transition Bonds shall be made pro
rata to the Class A-5 Transition Bondholders entitled thereto based on the
respective principal amounts of the Series 1999-1, Class A-5 Transition
Bonds held by them.
Payments of interest on this Class A-5 Transition Bond due and payable
on each Payment Date, together with the instalment of principal or premium,
if any, due on this Class A-5 Transition Bond on such Payment Date shall be
made by check mailed first-class, postage prepaid, to the Person whose name
appears as the Registered Holder of this Class A-5 Transition Bond (or one
or more predecessor of such Transition Bond) in the Transition Bond
Register as of the close of business on the Record Date or in such other
manner as may be provided in the Supplement, except that with respect to
Class A-5 Transition Bonds registered on the Record Date in the name of a
Clearing Agency, payments will be made by wire transfer in immediately
available funds to the account designated by such Clearing Agency and
except for the final instalment of principal and premium, if any, payable
with respect to this Class A-5 Transition Bond on a Payment Date which
shall be payable as provided below. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears in the
Transition Bond Register as of the applicable Record Date without requiring
that this Class A-5 Transition Bond be submitted for notation of payment.
Any reduction in the principal amount of this Class A-5 Transition Bond (or
any one or more predecessor to such Transition Bond) effected by any
payments made on any Payment Date shall be binding upon all future Holders
of this Class A-5 Transition Bond and of any Class A-5 Transition Bond
issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Class A-5 Transition Bond on a
Payment Date, then the Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Registered Holder hereof as of the
second preceding Record Date to such Payment Date by notice mailed no later
than five days prior to such final Payment Date and shall specify that such
final instalment will be payable to the Registered Holder hereof as of the
Record Date immediately preceding such final Payment Date and only upon
presentation and surrender of this Class A-5 Transition Bond and shall
specify the place where this Series 1999-1, Class A-5 Transition Bond may
be presented and surrendered for payment of such instalment.
The Issuer shall pay interest on overdue instalments of interest on
this Class A-5 Transition Bond at the Bond Rate for Class A-5 to the extent
lawful.
As provided in the Indenture, the Class A-5 Transition Bonds may be
redeemed, in whole, but not in part, in certain circumstances as provided
in Section 7(b) of the Series Supplement.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class A-5 Transition Bond may be
registered in the Transition Bond Register upon surrender of this Class A-5
Transition Bond for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized
in writing, with such signature guaranteed by an Eligible Guarantor
Institution, and thereupon one or more new Class A-5 Transition Bonds of
any Authorized Denominations and in the same aggregate initial principal
amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange
of this Class A-5 Transition Bond, but the transferor may be required to
pay a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection with any registration of transfer or exchange.
Prior to the due presentment for registration of transfer of this
Class A-5 Transition Bond, the Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Person in whose name this Class A-5
Transition Bond is registered (as of the day of determination) as the owner
hereof for the purpose of receiving payments of principal of and premium,
if any, and interest on this Class A-5 Transition Bond and for all other
purposes whatsoever, whether or not this Class A-5 Transition Bond may be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Issuer and the rights of the Holders of the Transition Bonds under the
Indenture at any time by the Issuer with the consent of the Holders of
Transition Bonds representing a majority of the Outstanding Amount of all
Transition Bonds at the time Outstanding of each Series or Class to be
affected. The Indenture also contains provisions permitting the Holders of
Transition Bonds representing specified percentages of the Outstanding
Amount of the Transition Bonds of all Series, on behalf of the Holders of
all the Transition Bonds, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Class A-5 Transition Bond (or any one of more predecessor of such
transition bonds) shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-5 Transition Bond and of any Class A-5
Transition Bond issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent
or waiver is made upon this Class A-5 Transition Bond. The Indenture also
permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Transition
Bonds issued thereunder.
The term "Issuer" as used in this Series 1999-1, Class A-5 Transition
Bond includes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the
Holders of Transition Bonds under the Indenture.
The Class A-5 Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Series
Supplement, subject to certain limitations therein set forth.
This Class A-5 Transition Bond, the Indenture and the Series
Supplement 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 and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Class A-5
Transition Bond or of the Indenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, to pay the principal of
and interest on this Class A-5 Transition Bond at the times, place, and
rate, and in the coin or currency herein prescribed.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ___
(name and address of assignee)
the within Class A-5 Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
(name and address of appointee)
attorney, to transfer said Class A-5 Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
_________ _________________________*
Signature Guaranteed:
__________ _________________________
* NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Class
A-5 Transition Bond in every particular, without alteration,
enlargement or any change whatsoever.
Exhibit F to Series Supplement
REGISTERED $
No. R-_________
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 69350E AF 7
THE PRINCIPAL OF THIS CLASS A-6 TRANSITION BOND WILL BE PAID IN
INSTALMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS CLASS A-6 TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
PP&L TRANSITION BOND COMPANY LLC
TRANSITION BONDS, SERIES 1999-1, CLASS A-6.
Bond Original Principal Expected Final Class Final
Rate Amount Payment Date Maturity Date
6.96% $223,000,000 December 26, 2005 December 26, 2007
PP&L Transition Bond Company LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
the Registered Holder hereof, or registered assigns, the Original Principal
Amount shown above in quarterly instalments on the Payment Dates (as
defined below) and in the amounts specified on the reverse hereof or, if
less, the amounts determined pursuant to Section 8.02(e) of the Indenture,
in each year, commencing on the date determined as provided on the reverse
hereof and ending on or before the Class Final Maturity Date, to pay the
entire unpaid principal hereof on the Class Final Maturity Date and to pay
interest, at the Bond Rate shown above at a fixed rate, on each March 25,
June 25, September 25 and December 26, and or if any such day is not a
Business Day, the next succeeding Business Day, commencing on December 27,
1999 and continuing until the earlier of the payment of the principal
hereof and the Class Final Maturity Date (each a "Payment Date"), on the
principal amount of this Series 1999-1, Class A-6 Transition Bond
outstanding from time to time. Interest will be computed (i) for the first
Payment Date on the basis of the actual number of days elapsed from and
including August 10, 1999, to but excluding such Payment Date, divided by
360 and (ii) for each succeeding Payment Date on the basis of a 360-day
year of four 90-day quarters. Such principal of and interest on this
Series 1999-1, Class A-6 Transition Bond shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Series 1999-1, Class A-6
Transition Bond are payable in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public
and private debts. All payments made by the Issuer with respect to this
Class A-6 Transition Bond shall be applied first to interest due and
payable on this Class A-6 Transition Bond as provided above and then to the
unpaid principal of and premium, if any, on this Class A-6 Transition Bond,
all in the manner set forth in Section 8.02(e) of the Indenture.
Reference is made to the further provisions of this Class A-6
Transition Bond set forth on the reverse hereof, which shall have the same
effect as though fully set forth on the face of this Class A-6 Transition
Bond.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Class A-6
Transition Bond shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an authorized Manager of the Issuer.
Dated: August 10, 1999
PP&L TRANSITION BOND
COMPANY LLC
By:________________________
Name: James E. Abel
Title: Manager
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: August 10, 1999
This is one of the Class A-6 Transition Bonds of the Series 1999-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf of the
Transition Bondholders,
By:_______________________
Name:
Title:
REVERSE OF TRANSITION BOND
This Series 1999-1, Class A-6 Transition Bond is one of a duly
authorized issue of Transition Bonds of the Issuer, designated as its
Transition Bonds (herein called the "Transition Bonds"), issued and to be
issued in one or more Series, which Series are issuable in one or more
Classes, and this Series Transition Bond, in which this Series 1999-1,
Class A-6 Transition Bond represents an interest, consists of Classes,
including the Class A-6 Transition Bonds (herein called the "Class A-6
Transition Bonds"), all issued and to be issued under an indenture dated as
of August 10, 1999, and a series supplement thereto dated as of August 10,
1999 (such series supplement, as supplemented or amended, the "Series
Supplement" and, collectively with such indenture, as supplemented or
amended, the "Indenture"), each between the Issuer and The Bank of New
York, as Trustee (the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the Collateral property
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the
Holders of the Transition Bonds and the terms and conditions under which
additional Transition Bonds may be issued. All terms used in this Class A-6
Transition Bond that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in the Indenture.
The Class A-6 Transition Bonds, the other Classes of Series 1999-1
Transition Bonds and any other Series of Transition Bonds issued by the
Issuer are and will be equally and ratably secured by the Collateral
pledged as security therefor as provided in the Indenture or the Series
1999-1 Supplement.
The principal of this Class A-6 Transition Bond shall be payable on
each Payment Date only to the extent that amounts in the Collection Account
are available therefor, and only until the outstanding principal balance
thereof on such Payment Date (after giving effect to all payments of
principal, if any, made on such Payment Date) has been reduced to the
principal balance specified in the Expected Amortization Schedule which is
attached to the Series Supplement as Schedule A, unless payable earlier
either because
(i) an Event of Default shall have occurred and be continuing and the
Trustee or the Holders of Transition Bonds representing not less than
a majority of the Outstanding Amount of the Transition Bonds of all
Series have declared the Transition Bonds to be immediately due and
payable in accordance with Section 5.02 of the Indenture, or
(ii) the Issuer, at its option, shall have called for the redemption
of the Series 1999-1 Transition Bonds in whole pursuant to Section
7(b) of the Series Supplement and Section 10.01 of the Indenture.
However, actual principal payments may be made in lesser than expected
amounts and at later than expected times as determined pursuant to Section
8.02(e) of the Indenture. The entire unpaid principal amount of this Series
1999-1, Class A-6 Transition Bond shall be due and payable on the earlier
of the Class Final Maturity Date hereof and the Redemption Date, if any,
herefor. Notwithstanding the foregoing, the entire unpaid principal amount
of the Transition Bonds shall be due and payable, if not then previously
paid, on the date on which an Event of Default shall have occurred and be
continuing and the Trustee or the Holders of the Transition Bonds of all
Series representing not less than a majority of the Outstanding Amount of
the Transition Bonds have declared the Transition Bonds to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture.
All principal payments on the Class A-6 Transition Bonds shall be made pro
rata to the Class A-6 Transition Bondholders entitled thereto based on the
respective principal amounts of the Series 1999-1, Class A-6 Transition
Bonds held by them.
Payments of interest on this Class A-6 Transition Bond due and payable
on each Payment Date, together with the instalment of principal or premium,
if any, due on this Class A-6 Transition Bond on such Payment Date shall be
made by check mailed first-class, postage prepaid, to the Person whose name
appears as the Registered Holder of this Class A-6 Transition Bond (or one
or more predecessor of such Transition Bond) in the Transition Bond
Register as of the close of business on the Record Date or in such other
manner as may be provided in the Series Supplement, except that with
respect to Class A-6 Transition Bonds registered on the Record Date in the
name of a Clearing Agency, payments will be made by wire transfer in
immediately available funds to the account designated by such Clearing
Agency and except for the final instalment of principal and premium, if
any, payable with respect to this Class A-6 Transition Bond on a Payment
Date which shall be payable as provided below. Such checks shall be mailed
to the Person entitled thereto at the address of such Person as it appears
in the Transition Bond Register as of the applicable Record Date without
requiring that this Class A-6 Transition Bond be submitted for notation of
payment. Any reduction in the principal amount of this Class A-6 Transition
Bond (or any one or more predecessor to such Transition Bond) effected by
any payments made on any Payment Date shall be binding upon all future
Holders of this Class A-6 Transition Bond and of any Class A-6 Transition
Bond issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Class A-6 Transition Bond on a
Payment Date, then the Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Registered Holder hereof as of the
second preceding Record Date to such Payment Date by notice mailed no later
than five days prior to such final Payment Date and shall specify that such
final instalment will be payable to the Registered Holder hereof as of the
Record Date immediately preceding such final Payment Date and only upon
presentation and surrender of this Class A-6 Transition Bond and shall
specify the place where this Series 1999-1, Class A-6 Transition Bond may
be presented and surrendered for payment of such instalment.
The Issuer shall pay interest on overdue instalments of interest on
this Class A-6 Transition Bond at the Bond Rate for Class A-6 to the extent
lawful.
As provided in the Indenture, the Class A-6 Transition Bonds may be
redeemed, in whole, but not in part, in certain circumstances as provided
in Section 7(b) of the Series Supplement.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class A-6 Transition Bond may be
registered in the Transition Bond Register upon surrender of this Class A-6
Transition Bond for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized
in writing, with such signature guaranteed by an Eligible Guarantor
Institution, and thereupon one or more new Class A-6 Transition Bonds of
any Authorized Denominations and in the same aggregate initial principal
amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange
of this Class A-6 Transition Bond, but the transferor may be required to
pay a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection with any registration of transfer or exchange.
Prior to the due presentment for registration of transfer of this
Class A-6 Transition Bond, the Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Person in whose name this Class A-6
Transition Bond is registered (as of the day of determination) as the owner
hereof for the purpose of receiving payments of principal of and premium,
if any, and interest on this Class A-6 Transition Bond and for all other
purposes whatsoever, whether or not this Class A-6 Transition Bond may be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Issuer and the rights of the Holders of the Transition Bonds under the
Indenture at any time by the Issuer with the consent of the Holders of
Transition Bonds representing a majority of the Outstanding Amount of all
Transition Bonds at the time Outstanding of each Series or Class to be
affected. The Indenture also contains provisions permitting the Holders of
Transition Bonds representing specified percentages of the Outstanding
Amount of the Transition Bonds of all Series, on behalf of the Holders of
all the Transition Bonds, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Class A-6 Transition Bond (or any one of more predecessor of such
transition bonds) shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-6 Transition Bond and of any Class A-6
Transition Bond issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent
or waiver is made upon this Class A-6 Transition Bond. The Indenture also
permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Transition
Bonds issued thereunder.
The term "Issuer" as used in this Series 1999-1, Class A-6 Transition
Bond includes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the
Holders of Transition Bonds under the Indenture.
The Class A-6 Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Series
Supplement, subject to certain limitations therein set forth.
This Class A-6 Transition Bond, the Indenture and the Series
Supplement 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 and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Class A-6
Transition Bond or of the Indenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, to pay the principal of
and interest on this Class A-6 Transition Bond at the times, place, and
rate, and in the coin or currency herein prescribed.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ___
(name and address of assignee)
the within Class A-6 Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
(name and address of appointee)
attorney, to transfer said Class A-6 Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
__________ _________________________*
Signature Guaranteed:
__________ ________________________
* NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Class
A-6 Transition Bond in every particular, without alteration,
enlargement or any change whatsoever.
Exhibit G to Series Supplement
REGISTERED $
No. R- _________
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 69350E AG 5
THE PRINCIPAL OF THIS CLASS A-7 TRANSITION BOND WILL BE PAID IN
INSTALMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS CLASS A-7 TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
PP&L TRANSITION BOND COMPANY LLC
TRANSITION BONDS, SERIES 1999-1, CLASS A-7.
Bond Original Principal Expected Final Class Final
Rate Amount Payment Date Maturity Date
7.05% $455,000,000 June 25, 2007 June 25, 2009
PP&L Transition Bond Company LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
the Registered Holder hereof, or registered assigns, the Original Principal
Amount shown above in quarterly instalments on the Payment Dates (as
defined below) and in the amounts specified on the reverse hereof or, if
less, the amounts determined pursuant to Section 8.02(e) of the Indenture,
in each year, commencing on the date determined as provided on the reverse
hereof and ending on or before the Class Final Maturity Date, to pay the
entire unpaid principal hereof on the Class Final Maturity Date and to pay
interest, at the Bond Rate shown above at a fixed rate, on each March 25,
June 25, September 25 and December 26, and or if any such day is not a
Business Day, the next succeeding Business Day, commencing on December 27,
1999 and continuing until the earlier of the payment of the principal
hereof and the Class Final Maturity Date (each a "Payment Date"), on the
principal amount of this Series 1999-1, Class A-7 Transition Bond
outstanding from time to time. Interest will be computed (i) for the first
Payment Date on the basis of the actual number of days elapsed from and
including August 10, 1999, to but excluding such Payment Date, divided by
360 and (ii) for each succeeding Payment Date on the basis of a 360-day
year of four 90-day quarters. Such principal of and interest on this Series
1999-1, Class A-7 Transition Bond shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Series 1999-1, Class A-7
Transition Bond are payable in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public
and private debts. All payments made by the Issuer with respect to this
Class A-7 Transition Bond shall be applied first to interest due and
payable on this Class A-7 Transition Bond as provided above and then to the
unpaid principal of and premium, if any, on this Class A-7 Transition Bond,
all in the manner set forth in Section 8.02(e) of the Indenture.
Reference is made to the further provisions of this Class A-7
Transition Bond set forth on the reverse hereof, which shall have the same
effect as though fully set forth on the face of this Class A-7 Transition
Bond.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Class A-7
Transition Bond shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an authorized Manager of the Issuer.
Dated: August 10, 1999
PP&L TRANSITION BOND
COMPANY LLC
By:________________________
Name: James E. Abel
Title: Manager
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: August 10, 1999
This is one of the Class A-7 Transition Bonds of the Series 1999-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf of the
Transition Bondholders,
By:_______________________
Name:
Title:
REVERSE OF TRANSITION BOND
This Series 1999-1, Class A-7 Transition Bond is one of a duly
authorized issue of Transition Bonds of the Issuer, designated as its
Transition Bonds (herein called the "Transition Bonds"), issued and to be
issued in one or more Series, which Series are issuable in one or more
Classes, and this Series Transition Bond, in which this Series 1999-1,
Class A-7 Transition Bond represents an interest, consists of Classes,
including the Class A-7 Transition Bonds (herein called the "Class A-7
Transition Bonds"), all issued and to be issued under an indenture dated as
of August 10, 1999, and a series supplement thereto dated as of August 10,
1999 (such series supplement, as supplemented or amended, the "Series
Supplement" and, collectively with such indenture, as supplemented or
amended, the "Indenture"), each between the Issuer and The Bank of New
York, as Trustee (the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the Collateral property
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the
Holders of the Transition Bonds and the terms and conditions under which
additional Transition Bonds may be issued. All terms used in this Class A-7
Transition Bond that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in the Indenture.
The Class A-7 Transition Bonds, the other Classes of Series 1999-1
Transition Bonds and any other Series of Transition Bonds issued by the
Issuer are and will be equally and ratably secured by the Collateral
pledged as security therefor as provided in the Indenture or the Series
1999-1 Supplement.
The principal of this Class A-7 Transition Bond shall be payable on
each Payment Date only to the extent that amounts in the Collection Account
are available therefor, and only until the outstanding principal balance
thereof on such Payment Date (after giving effect to all payments of
principal, if any, made on such Payment Date) has been reduced to the
principal balance specified in the Expected Amortization Schedule which is
attached to the Series Supplement as Schedule A, unless payable earlier
either because
(i) an Event of Default shall have occurred and be continuing and the
Trustee or the Holders of Transition Bonds representing not less than
a majority of the Outstanding Amount of the Transition Bonds of all
Series have declared the Transition Bonds to be immediately due and
payable in accordance with Section 5.02 of the Indenture, or
(ii) the Issuer, at its option, shall have called for the redemption
of the Series 1999-1 Transition Bonds in whole pursuant to Section
7(b) of the Series Supplement and Section 10.01 of the Indenture.
However, actual principal payments may be made in lesser than expected
amounts and at later than expected times as determined pursuant to Section
8.02(e) of the Indenture. The entire unpaid principal amount of this Series
1999-1, Class A-7 Transition Bond shall be due and payable on the earlier
of the Class Final Maturity Date hereof and the Redemption Date, if any,
herefor. Notwithstanding the foregoing, the entire unpaid principal amount
of the Transition Bonds shall be due and payable, if not then previously
paid, on the date on which an Event of Default shall have occurred and be
continuing and the Trustee or the Holders of the Transition Bonds of all
Series representing not less than a majority of the Outstanding Amount of
the Transition Bonds have declared the Transition Bonds to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture.
All principal payments on the Class A-7 Transition Bonds shall be made pro
rata to the Class A-7 Transition Bondholders entitled thereto based on the
respective principal amounts of the Series 1999-1, Class A-7 Transition
Bonds held by them.
Payments of interest on this Class A-7 Transition Bond due and payable
on each Payment Date, together with the instalment of principal or premium,
if any, due on this Class A-7 Transition Bond on such Payment Date shall be
made by check mailed first-class, postage prepaid, to the Person whose name
appears as the Registered Holder of this Class A-7 Transition Bond (or one
or more predecessor of such Transition Bond) in the Transition Bond
Register as of the close of business on the Record Date or in such other
manner as may be provided in the Supplement, except that with respect to
Class A-7 Transition Bonds registered on the Record Date in the name of a
Clearing Agency, payments will be made by wire transfer in immediately
available funds to the account designated by such Clearing Agency and
except for the final instalment of principal and premium, if any, payable
with respect to this Class A-7 Transition Bond on a Payment Date which
shall be payable as provided below. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears in the
Transition Bond Register as of the applicable Record Date without requiring
that this Class A-7 Transition Bond be submitted for notation of payment.
Any reduction in the principal amount of this Class A-7 Transition Bond (or
any one or more predecessor to such Transition Bond) effected by any
payments made on any Payment Date shall be binding upon all future Holders
of this Class A-7 Transition Bond and of any Class A-7 Transition Bond
issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Class A-7 Transition Bond on a
Payment Date, then the Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Registered Holder hereof as of the
second preceding Record Date to such Payment Date by notice mailed no later
than five days prior to such final Payment Date and shall specify that such
final instalment will be payable to the Registered Holder hereof as of the
Record Date immediately preceding such final Payment Date and only upon
presentation and surrender of this Class A-7 Transition Bond and shall
specify the place where this Series 1999-1, Class A-7 Transition Bond may
be presented and surrendered for payment of such instalment.
The Issuer shall pay interest on overdue instalments of interest on
this Class A-7 Transition Bond at the Bond Rate for Class A-7 to the extent
lawful.
As provided in the Indenture, the Class A-7 Transition Bonds may be
redeemed, in whole, but not in part, in certain circumstances as provided
in Section 7(b) of the Series Supplement.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class A-7 Transition Bond may be
registered in the Transition Bond Register upon surrender of this Class A-7
Transition Bond for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized
in writing, with such signature guaranteed by an Eligible Guarantor
Institution, and thereupon one or more new Class A-7 Transition Bonds of
any Authorized Denominations and in the same aggregate initial principal
amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange
of this Class A-7 Transition Bond, but the transferor may be required to
pay a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection with any registration of transfer or exchange.
Prior to the due presentment for registration of transfer of this
Class A-7 Transition Bond, the Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Person in whose name this Class A-7
Transition Bond is registered (as of the day of determination) as the owner
hereof for the purpose of receiving payments of principal of and premium,
if any, and interest on this Class A-7 Transition Bond and for all other
purposes whatsoever, whether or not this Class A-7 Transition Bond may be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Issuer and the rights of the Holders of the Transition Bonds under the
Indenture at any time by the Issuer with the consent of the Holders of
Transition Bonds representing a majority of the Outstanding Amount of all
Transition Bonds at the time Outstanding of each Series or Class to be
affected. The Indenture also contains provisions permitting the Holders of
Transition Bonds representing specified percentages of the Outstanding
Amount of the Transition Bonds of all Series, on behalf of the Holders of
all the Transition Bonds, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Class A-7 Transition Bond (or any one of more predecessor of such
transition bonds) shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-7 Transition Bond and of any Class A-7
Transition Bond issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent
or waiver is made upon this Class A-7 Transition Bond. The Indenture also
permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Transition
Bonds issued thereunder.
The term "Issuer" as used in this Series 1999-1, Class A-7 Transition
Bond includes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the
Holders of Transition Bonds under the Indenture.
The Class A-7 Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Series
Supplement, subject to certain limitations therein set forth.
This Class A-7 Transition Bond, the Indenture and the Series
Supplement 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 and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Class A-7
Transition Bond or of the Indenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, to pay the principal of
and interest on this Class A-7 Transition Bond at the times, place, and
rate, and in the coin or currency herein prescribed.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ___
(name and address of assignee)
the within Class A-7 Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
(name and address of appointee)
attorney, to transfer said Class A-7 Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
_________ _______________________*
Signature Guaranteed:
_________ _______________________
* NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Class
A-7 Transition Bond in every particular, without alteration,
enlargement or any change whatsoever.
Exhibit H to Series Supplement
REGISTERED $
No. R- ___________
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 69350E AH 3
THE PRINCIPAL OF THIS CLASS A-8 TRANSITION BOND WILL BE PAID IN
INSTALMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS CLASS A-8 TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
PP&L TRANSITION BOND COMPANY LLC
TRANSITION BONDS, SERIES 1999-1, CLASS A-8.
Bond Original Principal Expected Final Class Final
Rate Amount Payment Date Maturity Date
7.15 % $454,000,000 December 26, 2008 June 25, 2009
PP&L Transition Bond Company LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
the Registered Holder hereof, or registered assigns, the Original Principal
Amount shown above in quarterly instalments on the Payment Dates (as
defined below) and in the amounts specified on the reverse hereof or, if
less, the amounts determined pursuant to Section 8.02(e) of the Indenture,
in each year, commencing on the date determined as provided on the reverse
hereof and ending on or before the Class Final Maturity Date, to pay the
entire unpaid principal hereof on the Class Final Maturity Date and to pay
interest, at the Bond Rate shown above at a fixed rate, on each March 25,
June 25, September 25 and December 26, and or if any such day is not a
Business Day, the next succeeding Business Day, commencing on December 27,
1999 and continuing until the earlier of the payment of the principal
hereof and the Class Final Maturity Date (each a "Payment Date"), on the
principal amount of this Series 1999-1, Class A-8 Transition Bond
outstanding from time to time. Interest will be computed (i) for the first
Payment Date on the basis of the actual number of days elapsed from and
including August 10, 1999, to but excluding such Payment Date, divided by
360 and (ii) for each succeeding Payment Date on the basis of a 360-day
year of four 90-day quarters. Such principal of and interest on this Series
1999-1, Class A-8 Transition Bond shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Series 1999-1, Class A-8
Transition Bond are payable in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public
and private debts. All payments made by the Issuer with respect to this
Class A-8 Transition Bond shall be applied first to interest due and
payable on this Class A-8 Transition Bond as provided above and then to the
unpaid principal of and premium, if any, on this Class A-8 Transition Bond,
all in the manner set forth in Section 8.02(e) of the Indenture.
Reference is made to the further provisions of this Class A-8
Transition Bond set forth on the reverse hereof, which shall have the same
effect as though fully set forth on the face of this Class A-8 Transition
Bond.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Class A-8
Transition Bond shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an authorized Manager of the Issuer.
Dated: August 10, 1999
PP&L TRANSITION BOND
COMPANY LLC
By:________________________
Name: James E. Abel
Title: Manager
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: August 10, 1999
This is one of the Class A-8 Transition Bonds of the Series 1999-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf of the
Transition Bondholders,
By:_______________________
Name:
Title:
REVERSE OF TRANSITION BOND
This Series 1999-1, Class A-8 Transition Bond is one of a duly
authorized issue of Transition Bonds of the Issuer, designated as its
Transition Bonds (herein called the "Transition Bonds"), issued and to be
issued in one or more Series, which Series are issuable in one or more
Classes, and this Series Transition Bond, in which this Series 1999-1,
Class A-8 Transition Bond represents an interest, consists of Classes,
including the Class A-8 Transition Bonds (herein called the "Class A-8
Transition Bonds"), all issued and to be issued under an indenture dated as
of August 10, 1999, and a series supplement thereto dated as of August 10,
1999 (such series supplement, as supplemented or amended, the "Series
Supplement" and, collectively with such indenture, as supplemented or
amended, the "Indenture"), each between the Issuer and The Bank of New
York, as Trustee (the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the Collateral property
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the
Holders of the Transition Bonds and the terms and conditions under which
additional Transition Bonds may be issued. All terms used in this Class A-8
Transition Bond that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in the Indenture.
The Class A-8 Transition Bonds, the other Classes of Series 1999-1
Transition Bonds and any other Series of Transition Bonds issued by the
Issuer are and will be equally and ratably secured by the Collateral
pledged as security therefor as provided in the Indenture or the Series
1999-1 Supplement.
The principal of this Class A-8 Transition Bond shall be payable on
each Payment Date only to the extent that amounts in the Collection Account
are available therefor, and only until the outstanding principal balance
thereof on such Payment Date (after giving effect to all payments of
principal, if any, made on such Payment Date) has been reduced to the
principal balance specified in the Expected Amortization Schedule which is
attached to the Series Supplement as Schedule A, unless payable earlier
either because
(i) an Event of Default shall have occurred and be continuing and the
Trustee or the Holders of Transition Bonds representing not less than
a majority of the Outstanding Amount of the Transition Bonds of all
Series have declared the Transition Bonds to be immediately due and
payable in accordance with Section 5.02 of the Indenture, or
(ii) the Issuer, at its option, shall have called for the redemption
of the Series 1999-1 Transition Bonds in whole pursuant to Section
7(b) of the Series Supplement and Section 10.01 of the Indenture.
However, actual principal payments may be made in lesser than expected
amounts and at later than expected times as determined pursuant to Section
8.02(e) of the Indenture. The entire unpaid principal amount of this Series
1999-1, Class A-8 Transition Bond shall be due and payable on the earlier
of the Class Final Maturity Date hereof and the Redemption Date, if any,
herefor. Notwithstanding the foregoing, the entire unpaid principal amount
of the Transition Bonds shall be due and payable, if not then previously
paid, on the date on which an Event of Default shall have occurred and be
continuing and the Trustee or the Holders of the Transition Bonds of all
Series representing not less than a majority of the Outstanding Amount of
the Transition Bonds have declared the Transition Bonds to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture.
All principal payments on the Class A-8 Transition Bonds shall be made pro
rata to the Class A-8 Transition Bondholders entitled thereto based on the
respective principal amounts of the Series 1999-1, Class A-8 Transition
Bonds held by them.
Payments of interest on this Class A-8 Transition Bond due and payable
on each Payment Date, together with the instalment of principal or premium,
if any, due on this Class A-8 Transition Bond on such Payment Date shall be
made by check mailed first-class, postage prepaid, to the Person whose name
appears as the Registered Holder of this Class A-8 Transition Bond (or one
or more predecessor of such Transition Bond) in the Transition Bond
Register as of the close of business on the Record Date or in such other
manner as may be provided in the Supplement, except that with respect to
Class A-8 Transition Bonds registered on the Record Date in the name of a
Clearing Agency, payments will be made by wire transfer in immediately
available funds to the account designated by such Clearing Agency and
except for the final instalment of principal and premium, if any, payable
with respect to this Class A-8 Transition Bond on a Payment Date which
shall be payable as provided below. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears in the
Transition Bond Register as of the applicable Record Date without requiring
that this Class A-8 Transition Bond be submitted for notation of payment.
Any reduction in the principal amount of this Class A-8 Transition Bond (or
any one or more predecessor to such Transition Bond) effected by any
payments made on any Payment Date shall be binding upon all future Holders
of this Class A-8 Transition Bond and of any Class A-8 Transition Bond
issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Class A-8 Transition Bond on a
Payment Date, then the Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Registered Holder hereof as of the
second preceding Record Date to such Payment Date by notice mailed no later
than five days prior to such final Payment Date and shall specify that such
final instalment will be payable to the Registered Holder hereof as of the
Record Date immediately preceding such final Payment Date and only upon
presentation and surrender of this Class A-8 Transition Bond and shall
specify the place where this Series 1999-1, Class A-8 Transition Bond may
be presented and surrendered for payment of such instalment.
The Issuer shall pay interest on overdue instalments of interest on
this Class A-8 Transition Bond at the Bond Rate for Class A-8 to the extent
lawful.
As provided in the Indenture, the Class A-8 Transition Bonds may be
redeemed, in whole, but not in part, in certain circumstances as provided
in Section 7(b) of the Series Supplement.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class A-8 Transition Bond may be
registered in the Transition Bond Register upon surrender of this Class A-8
Transition Bond for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized
in writing, with such signature guaranteed by an Eligible Guarantor
Institution, and thereupon one or more new Class A-8 Transition Bonds of
any Authorized Denominations and in the same aggregate initial principal
amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange
of this Class A-8 Transition Bond, but the transferor may be required to
pay a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection with any registration of transfer or exchange.
Prior to the due presentment for registration of transfer of this
Class A-8 Transition Bond, the Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Person in whose name this Class A-8
Transition Bond is registered (as of the day of determination) as the owner
hereof for the purpose of receiving payments of principal of and premium,
if any, and interest on this Class A-8 Transition Bond and for all other
purposes whatsoever, whether or not this Class A-8 Transition Bond be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Issuer and the rights of the Holders of the Transition Bonds under the
Indenture at any time by the Issuer with the consent of the Holders of
Transition Bonds representing a majority of the Outstanding Amount of all
Transition Bonds at the time Outstanding of each Series or Class to be
affected. The Indenture also contains provisions permitting the Holders of
Transition Bonds representing specified percentages of the Outstanding
Amount of the Transition Bonds of all Series, on behalf of the Holders of
all the Transition Bonds, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Class A-8 Transition Bond (or any one of more predecessor of such
transition bonds) shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-8 Transition Bond and of any Class A-8
Transition Bond issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent
or waiver is made upon this Class A-8 Transition Bond. The Indenture also
permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Transition
Bonds issued thereunder.
The term "Issuer" as used in this Series 1999-1, Class A-8 Transition
Bond includes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the
Holders of Transition Bonds under the Indenture.
The Class A-8 Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Supplement,
subject to certain limitations therein set forth.
This Class A-8 Transition Bond, the Indenture and the Supplement 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 and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Class A-8
Transition Bond or of the Indenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, to pay the principal of
and interest on this Class A-8 Transition Bond at the times, place, and
rate, and in the coin or currency herein prescribed.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ___
(name and address of assignee)
the within Class A-8 Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
(name and address of appointee)
attorney, to transfer said Class A-8 Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
________ _______________________*
Signature Guaranteed:
_________ _______________________
* NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Class
A-8 Transition Bond in every particular, without alteration,
enlargement or any change whatsoever.
MORGAN, LEWIS & BOCKIUS LLP
1701 MARKET STREET
PHILADELPHIA, PA 19103-2921
(215) 963-5000
August 10, 1999
PP&L Transition Bond Company LLC
Two North Ninth Street
Allentown, Pennsylvania 18101-1179
Re: PP&L Transition Bond Company LLC
Ladies and Gentlemen:
We have acted as special Pennsylvania counsel to PP&L Transition Bond
Company LLC, a Delaware limited liability company (the "Company"), in
connection with the Registration Statement on Form S-3 (Registration No.
333-75369), as amended (the "Registration Statement"), filed by the Company
with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act") relating to
transition bonds (the "Transition Bonds") of the Company issued under the
Indenture dated as of August 10, 1999 between the Company and The Bank of
New York, as trustee.
We are familiar with the proceedings taken with respect to the
authorization, issuance and sale of the Transition Bonds. In this
connection, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and such
agreements, certificates of public officials, certificates of officers or
other representatives of the Company and others and such other documents,
certificates and records as we have deemed necessary or appropriate as a
basis for the opinion set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified, conformed or
photostatic copies and the authenticity of the originals of such latter
documents. In making our examination of documents, we have assumed that
the parties thereto have the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or other, and execution
and delivery by such parties of such documents and the validity and binding
effect thereof on such parties. As to any facts material to the opinions
expressed herein which we have not independently established or verified,
we have relied upon statements and representations of officers and other
representatives of the Company, PP&L, Inc. and others.
We do not express any opinion as to the laws of any jurisdiction
other than the laws of the Commonwealth of Pennsylvania and the federal
laws of the United States.
Based on and subject to the foregoing, we are of the opinion
that the Transition Bonds constitute valid and binding obligations of the
Company, are fully paid and non-assessable and are enforceable against the
Company in accordance with their terms, except to the extent that
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now
or hereafter in effect relating to creditor's rights generally and (2)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the references to this firm under the heading
"Various Legal Matters Relating to the Transition Bonds" in the Prospectus
included in the Registration Statement. In giving this consent, we do not
thereby admit that we are included in the category of persons whose consent
is required under Section 7 of the Securities Act or the rules and
regulations of the SEC.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
August 10, 1999
PP&L, Inc.
Two North Ninth Street
Allentown, PA 18101-1179
Re: PP&L Transition Bond Company LLC
Ladies and Gentlemen:
In connection with the filing of Registration Statement No. 333-
75369 on Form S-3 relating to PP&L Transition Bond Company LLC (the
"Issuer"), as amended from time to time, (the "Registration Statement")
with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act") which was
declared effective by the SEC on July 27, 1999, you have requested our
opinion regarding certain descriptions of tax consequences contained in the
form of prospectus (the "Prospectus") included in the Registration
Statement.
We have acted as special federal income tax counsel to the
Issuer, in connection with (a) the assignment and sale to the Issuer of
PP&L's Intangible Transition Property, which is the property right created
by the Commonwealth of Pennsylvania representing the irrevocable right of
PP&L, Inc. ("PP&L") or its assignee to receive through Intangible
Transition Charges amounts sufficient to recover all of its Qualified
Transition Expenses and (b) the Issuer's issuance of Transition Bonds which
are supported by the Intangible Transition Property and which are offered
and sold pursuant to the Registration Statement (such offered Transition
Bonds, the "Offered Bonds"). The Offered Bonds are being issued under the
Indenture dated as of August 10, 1999 (substantially in the form filed as
an exhibit to the Registration Statement) (the "Indenture") between the
Issuer and The Bank of New York, as trustee (the "Trustee"), as well as
under the Series Supplement dated as of August 10, 1999 (the "Series
Supplement") between the Issuer and the Trustee.
In connection with our engagement, we have examined and relied
upon the Certificate of Formation of PP&L Transition Bond Company and the
Amended and Restated Limited Liability Company Agreement for PP&L
Transition Bond Company (the "Agreement") included as exhibits to the
Registration Statement.
Furthermore, we are familiar with the proceedings taken to date
with respect to the authorization, issuance and sale of the Transition
Bonds and have examined originals or counterparts, or certified or other
copies identified to our satisfaction as being true copies of the
Registration Statement (including all amendments thereto), such
certificates, instruments, documents and other corporate records of each of
the Issuer and PP&L and matters of fact and law as we deem necessary for
the purposes of the opinion expressed below. Capitalized terms not
otherwise defined herein have the respective meanings assigned to such
terms in the Registration Statement.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of
such latter documents. As to any facts material to the opinions expressed
herein which were not independently established or verified, we have relied
upon statements, representations, and certifications of officers and other
representatives of the Issuer, PP&L, the Underwriters, and others.
In rendering our opinion, we have also considered and relied upon
the Internal Revenue Code of 1986, as amended, and administrative rulings,
judicial decisions, Treasury regulations, and such other authorities as we
have deemed appropriate, all as in effect as of the date hereof. In
particular we have relied on a private letter ruling addressed to PP&L
dated July 9, 1999 (the "PP&L Private Letter Ruling"). The statutory
provisions, regulations and interpretations upon which our opinion is based
are subject to changes, and such changes could apply retroactively. In
addition, there can be no assurance that positions contrary to those stated
in our opinion may not be taken by the Internal Revenue Service.
The above-referenced description of federal income taxes apply
only to the issuance of the Offered Bonds under the Indenture and the
Series Supplement. Accordingly, this description of federal income tax
consequences may not be applicable to the issuance of any other series of
bonds by the Issuer pursuant to the Registration Statement.
We express no opinions as to the laws of any jurisdiction other
than the federal laws of the United States of America to the extent
specifically referred to herein.
Based upon and subject to the foregoing, we are of the following
opinions:
1. the Issuer will not be subject to United States federal
income tax as an entity separate from PP&L; and
2. the statements in the Prospectus under the heading "Summary
of Terms - Prospectus" and under the heading "Material
Income Tax Matters for the Transition Bonds" subject to the
qualifications set forth therein, accurately describe the
material federal income tax consequences to holders of the
Offered Bonds that are not U.S. persons (within the meaning
of the Code), under existing law and the assumptions stated
therein.
Furthermore, subject to the qualifications and assumptions set forth
therein, we hereby adopt and confirm to you our opinion as set forth under
the heading "Material Income Tax Matters for the Transition Bonds" in the
Prospectus.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to Skadden, Arps, Slate,
Meagher & Flom LLP under the captions "Various Legal Matters Relating to
the Transition Bonds" in the Prospectus and "Material Income Tax Matters
for the Transition Bonds" in the Prospectus.
Very truly yours,
/s/ Skadden, Arps, Slate,
Meagher & Flom LLP
INTANGIBLE TRANSITION PROPERTY SALE AGREEMENT
between
PP&L TRANSITION BOND COMPANY LLC
Issuer
and
CEP SECURITIES CO. LLC
Seller
Dated August 10, 1999
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02 Other Definitional Provisions . . . . . . . . . . . . . . . 1
ARTICLE II
Conveyance of Intangible Transition Property
SECTION 2.01 Conveyance of Initial Intangible Transition Property . . . 2
SECTION 2.02 Conditions to Conveyance of Intangible Transition Property 3
ARTICLE III
Representations and Warranties of Seller
SECTION 3.01 Organization and Good Standing . . . . . . . . . . . . . . 5
SECTION 3.02 Due Qualification . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.03 Power and Authority . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.04 Binding Obligation . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.05 No Violation . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.06 No Proceedings . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.07 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.08 The Intangible Transition Property . . . . . . . . . . . . 6
SECTION 3.09 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV
Covenants of the Seller
SECTION 4.01 Seller's Existence . . . . . . . . . . . . . . . . . . . . 7
SECTION 4.02 No Liens or Conveyances . . . . . . . . . . . . . . . . . . 7
SECTION 4.03 Delivery of Collections . . . . . . . . . . . . . . . . . . 8
SECTION 4.04 Notice of Liens . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.05 Compliance with Law . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.06 Covenants Related to Intangible Transition Property . . . . 8
SECTION 4.07 Protection of Title . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.08 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.09 Reliance by Seller, etc . . . . . . . . . . . . . . . . . 10
ARTICLE V
Miscellaneous Provisions
SECTION 5.01 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.03 Assignment . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.04 Limitations on Rights of Others . . . . . . . . . . . . . 11
SECTION 5.05 Severability . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.06 Separate Counterparts . . . . . . . . . . . . . . . . . . 11
SECTION 5.07 Headings . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.08 Governing Law . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.09 Assignment to Trustee . . . . . . . . . . . . . . . . . . 11
SECTION 5.10 Nonpetition Covenants . . . . . . . . . . . . . . . . . . 11
APPENDIX A DEFINITIONS
EXHIBIT A BILL OF SALE
INTANGIBLE TRANSITION PROPERTY SALE AGREEMENT dated August 10,
1999, between PP&L TRANSITION BOND COMPANY LLC, a Delaware limited
liability company (the "Issuer"), and CEP SECURITIES CO. LLC, a Delaware
limited liability company, as seller (the "Seller").
WHEREAS the Issuer desires to purchase from time to time
Intangible Transition Property created pursuant to the Competition Act and
the Qualified Rate Order;
WHEREAS the Seller is willing to sell Intangible Transition
Property to the Issuer;
WHEREAS the Issuer, in order to finance the purchase of the
Transferred Intangible Transition Property, will from time to time issue
Transition Bonds under the Indenture; and
WHEREAS the Issuer, to secure its obligations under the
Transition Bonds and the Indenture, will pledge its right, title and
interest in the Transferred Intangible Transition Property to the Trustee
for the benefit of the Transition Bondholders.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in Appendix A
of this Sale Agreement.
SECTION 1.02 OTHER DEFINITIONAL PROVISIONS.
(a) Agreement means this Intangible Transition Property Sale Agreement,
as the same may be amended, supplemented or otherwise modified from time
to time.
(b) Non-capitalized terms used herein which are defined in the
Competition Act shall, as the context requires, have the meanings
assigned to such terms in the Competition Act, but without giving effect
to amendments to the Competition Act after the date hereof which have a
material adverse effect on the Issuer or the Transition Bondholders.
(c) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(d) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section,
Schedule and Exhibit references contained in this Agreement are
references to Sections, Schedules and Exhibits in or to this Agreement
unless otherwise specified; and the term "including" shall mean
"including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms.
ARTICLE II
CONVEYANCE OF INTANGIBLE TRANSITION PROPERTY
SECTION 2.01 CONVEYANCE OF INITIAL INTANGIBLE TRANSITION PROPERTY.
(a) In consideration of the Issuer's payment to or upon the order of
the Seller of $2,402,000,000.00 (the "Initial Purchase Price") by
wire transfer of funds immediately available on the date hereof to
Seller's account no. 3751319461 at Bank of America, routing transit #
111000012, subject to the conditions specified in Section 2.02, the
Seller does hereby irrevocably sell, transfer, assign, set over and
otherwise convey to the Issuer, without recourse (subject to the
obligations herein), all right, title and interest of the Seller in,
to and under (i) the Initial Intangible Transition Property (such
sale, transfer, assignment, setting over and conveyance of the Initial
Intangible Transition Property to include, to the fullest extent
permitted by the Competition Act, the assignment of all revenues,
collections, claims, rights, payments, money or proceeds of or arising
from the Intangible Transition Charges related to the Initial
Intangible Transition Property, as the same may be adjusted from time
to time) and (ii) all rights of the Seller under the Contribution
Agreement and the Assignment. Such sale, transfer, assignment,
setting over and conveyance of the Initial Intangible Transition
Property is hereby expressly stated to be a sale and, pursuant to
Section 2812(e) of the Competition Act, shall be treated as an
absolute transfer of all of the Seller's right, title and interest (as
in a true sale), and not as a pledge or other financing, of the
Initial Intangible Transition Property. The preceding sentence is the
statement referred to in Section 2812(e) of the Competition Act. The
Seller agrees and confirms that after giving effect to the sale
contemplated by clause (a), it has no rights in the Initial Intangible
Transition Property because it has sold all of its rights in the
Initial Intangible Transition Property to the Issuer pursuant to
Section 2812(e) of the Competition Act.
(b) Subject to the conditions specified in Section 2.02, the Issuer
does hereby purchase the Initial Intangible Transition Property from
the Seller for the consideration set forth in paragraph (a) above.
(c) The Seller and the Issuer each acknowledge and agree that the
purchase price for the Initial Intangible Transition Property sold
pursuant to this Agreement is equal to its fair market value at the
time of sale.
(d) The Seller and the Issuer further agree that from time to time, the
Seller may offer to sell, and the Issuer may purchase, Subsequent
Intangible Transition Property as of Subsequent Transfer Dates, subject
to the conditions specified in Section 2.02, in exchange for
consideration to be agreed upon (the "Subsequent Purchase Price"). The
Seller and the Issuer hereby agree that each such sale, transfer,
assignment, setting over and conveyance of any Subsequent Intangible
Transition Property shall be expressly stated to be a sale and, pursuant
to Section 2812(e) of the Competition Act, shall be treated as an
absolute transfer of all of the Seller's right, title and interest (as
in a true sale), and not as a pledge or other financing, of the
Subsequent Intangible Transition Property. The preceding sentence shall
constitute the statement referred to in Section 2812(e) of the
Competition Act with respect to any Subsequent Intangible Transition
Property. The Seller agrees and confirms that after giving effect to
any such sale contemplated by this clause (d), it shall have no rights
in the Subsequent Intangible Transition Property because it will have
sold all of its rights in the Subsequent Intangible Transition Property
to the Issuer pursuant to Section 2812(e) of the Competition Act.
SECTION 2.02 CONDITIONS TO CONVEYANCE OF INTANGIBLE TRANSITION
PROPERTY. The sale by the Seller to the Issuer, and the purchase by the
Issuer from the Seller, of Intangible Transition Property upon the Initial
Transfer Date or any Subsequent Transfer Date shall be subject to and
conditioned upon the satisfaction or waiver of each of the following
conditions:
(i) on or prior to the Transfer Date, the Seller shall deliver to the
Issuer a duly executed Bill of Sale identifying the Intangible
Transition Property to be conveyed as of that date, substantially in the
form of Exhibit A hereto;
(ii) as of the Transfer Date, no breach by the Seller of its
representations, warranties or covenants in this Agreement shall exist
and no Servicer Default shall have occurred and be continuing;
(iii) as of the Transfer Date, the representations and warranties of
PP&L under the Contribution Agreement shall be true and correct and no
default shall exist thereunder, and PP&L shall have delivered to the
Issuer and the Trustee an Officer's Certificate to such effect and
confirming that the Issuer may exercise all of the rights of the Seller
under the Contribution Agreement;
(iv) as of the Transfer Date:
(A) the Issuer shall have sufficient funds available to pay
the purchase price for the Transferred Intangible Transition
Property to be conveyed on such date, and
(B) all conditions to the issuance of one or more Series of
Transition Bonds intended to provide such funds set forth in
the Indenture shall have been satisfied or waived;
(v) on or prior to Transfer Date, the Seller shall have taken all
action required to transfer to the Issuer ownership of the Transferred
Intangible Transition Property to be conveyed on such date, free and
clear of all Liens other than Liens created by the Issuer pursuant to
the Indenture, including, without limitation, filing a notice of such
transfer with the PUC pursuant to the Competition Act; and the Issuer
shall have taken any action required for the Issuer to grant the Trustee
a first priority perfected security interest in the Collateral and
maintain such security interest as of such date;
(vi) in the case of any sale of Subsequent Intangible Transition
Property only, the Seller shall have provided the Issuer and the Rating
Agencies with a notice specifying the Subsequent Transfer Date for the
Subsequent Intangible Transition Property not later than 10 days prior
to the Subsequent Transfer Date;
(vii) the Seller shall have delivered to the Rating Agencies and to the
Issuer:
(A) an Opinion of Counsel to the Seller with respect to the
transfer of the Transferred Intangible Transition Property
then being conveyed to the Issuer substantially in the form
of Exhibit B hereto and
(B) an Opinion of Counsel to the Seller, substantially in
the form of Exhibit C hereto;
(viii) the Seller shall have delivered to the Trustee and the Issuer an
Officers' Certificate confirming the satisfaction of each condition
precedent specified in this Section 2.02;
(ix) with respect to any Subsequent Sale, the Seller shall have taken
any action necessary in order for the Rating Agency Condition to have
been satisfied; and
(x) the Seller shall have received the Initial Purchase Price or the
Subsequent Purchase Price, as applicable, in funds immediately available
on the applicable Transfer Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As of the Transfer Date, the Seller makes the following representations
and warranties on which the Issuer has relied and will rely in acquiring
Transferred Intangible Transition Property. The representations and
warranties shall survive the sale of Transferred Intangible Transition
Property to the Issuer and the pledge thereof to the Trustee pursuant to
the Indenture.
SECTION 3.01 ORGANIZATION AND GOOD STANDING. The Seller is a
limited liability company duly organized and in good standing under the
laws of the State of Delaware, with power and authority to own its
properties and conduct its business as currently owned or conducted and had
at all relevant times, and has, the requisite power, authority and legal
right to own the Intangible Transition Property.
SECTION 3.02 DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business 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 Seller's business, operations, assets, revenues, properties or
prospects).
SECTION 3.03 POWER AND AUTHORITY. The Seller has the power and
authority to execute and deliver this Agreement and to carry out its terms;
the Seller has full power and authority to own the Intangible Transition
Property and sell and assign the Intangible Transition Property to the
Issuer, and the Seller has duly authorized such sale and assignment to the
Issuer; and the execution, delivery and performance of this Agreement has
been duly authorized by the Seller.
SECTION 3.04 BINDING OBLIGATION. This Agreement constitutes a
legal, valid and binding obligation of the Seller enforceable against the
Seller in accordance with its terms subject to bankruptcy, receivership,
insolvency, reorganization, moratorium 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).
SECTION 3.05 NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do
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 limited liability company agreement or the certificate of
formation of the Seller, or any indenture, agreement or other instrument to
which the Seller 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; nor violate
any law or any order, rule or regulation applicable to the Seller of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or
its properties.
SECTION 3.06 NO PROCEEDINGS. There are no proceedings or
investigations pending or, to the Seller's best knowledge, threatened,
before any court, federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Seller
or its properties:
(i) asserting the invalidity of the Basic Documents or the Transition
Bonds;
(ii) seeking to prevent the issuance of the Transition Bonds or the
consummation of any of the transactions contemplated by the Basic
Documents or the Transition Bonds;
(iii) which might materially and adversely affect the treatment of the
Transition Bonds as debt for federal or state income tax purposes; or
(iv) seeking any determination or ruling that could reasonably be
expected to materially and adversely affect the performance by the
Seller of its obligations under, or the validity or enforceability of,
the Basic Documents or the Transition Bonds.
SECTION 3.07 APPROVALS. Except for 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 Seller of this Agreement, the performance by the Seller
of the transactions contemplated hereby or the fulfillment by the Seller of
the terms hereof, except those that have been obtained or made.
SECTION 3.08 THE INTANGIBLE TRANSITION PROPERTY.
(a) Information. All information provided by the Seller to the Issuer
with respect to the Transferred Intangible Transition Property is
correct in all material respects.
(b) Effect of Transfer. The transfers and assignments herein
contemplated constitute a sale of the Intangible Transition Property,
from the Seller to the Issuer and the Transferred Intangible
Transition Property and any right therein would not be part of the
debtor's estate in the event of the filing of a bankruptcy petition by
or against the Seller under any bankruptcy law.
(c) Transfer Filings. The Seller is the sole owner of the Intangible
Transition Property being sold to the Issuer on the Transfer Date; the
Transferred Intangible Transition Property has been validly
transferred and sold to the Issuer free and clear of all Liens other
than Liens created by the Issuer pursuant to the Indenture. All
actions or filings, including filings with the PUC under the
Competition Act, necessary in any jurisdiction to give the Issuer a
valid perfected ownership interest in the Transferred Intangible
Transition Property, free and clear of all Liens of the Seller or
anyone claiming through the Seller and to grant to the Trustee a first
priority perfected interest in the Transferred Intangible Transition
Property, have been taken or made.
SECTION 3.09 SOLVENCY. After giving effect to the sale of any
Transferred Intangible Transition Property hereunder, the Seller:
(i) is solvent and expects to remain solvent,
(ii) is adequately capitalized to conduct its business and affairs
considering its size and the nature of its business and intended
purposes,
(iii) is not engaged in nor does it expect to engage in a business for
which its remaining property represents an unreasonably small capital,
(iv) believes that it will be able to pay its debts as they come due
and that such belief is reasonable and
(v) is able to pay its debts as they mature and does not intend to
incur, or believe that it will incur, indebtedness that it will not be
able to repay at its maturity.
ARTICLE IV
COVENANTS OF THE SELLER
SECTION 4.01 SELLER'S EXISTENCE. So long as any of the Transition
Bonds are outstanding, the Seller shall keep in full force and effect its
existence as a limited liability company and remain in good standing, under
the laws of the jurisdiction of its organization, and shall obtain and
preserve its qualification to do business in each jurisdiction in which
such qualification is or will be necessary to protect the validity and
enforceability of this Agreement and each other instrument or agreement to
which the Seller is a party necessary to the proper administration of this
Agreement and the transactions contemplated hereby.
SECTION 4.02 NO LIENS OR CONVEYANCES. Except for the conveyances
hereunder, the Seller shall not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien
on, any of the Intangible Transition Property, whether now existing or
hereafter created, or any interest therein. The Seller shall not at any
time assert any Lien against or with respect to any Transferred Intangible
Transition Property, and shall defend the right, title and interest of the
Issuer and the Trustee, as assignee of the Issuer, in, to and under the
Intangible Transition Property, whether now existing or hereafter created,
against all claims of third parties claiming through or under the Seller.
SECTION 4.03 DELIVERY OF COLLECTIONS. If the Seller receives
collections in respect of the Intangible Transition Charges or the proceeds
thereof, the Seller shall pay the Servicer all payments received by the
Seller in respect thereof as soon as practicable after receipt thereof by
the Seller, but in no event later than two Business Days after such
receipt.
SECTION 4.04 NOTICE OF LIENS. The Seller shall notify the Trustee
promptly after becoming aware of any Lien on any Intangible Transition
Property other than the conveyances hereunder or under the Indenture.
SECTION 4.05 COMPLIANCE WITH LAW. The Seller shall comply with its
organizational or governing documents and all laws, treaties, rules,
regulations and determinations of any governmental instrumentality
applicable to the Seller, except to the extent that failure to so comply
would not adversely affect the Issuer's or the Trustee's interests in the
Intangible Transition Property or under any of the Basic Documents or the
Seller's performance of its obligations hereunder.
SECTION 4.06 COVENANTS RELATED TO INTANGIBLE TRANSITION PROPERTY.
(a) So long as any of the Transition Bonds are outstanding, the Seller
shall:
(i) clearly disclose in its financial statements that it is
not the owner of the Transferred Intangible Transition
Property and that the assets of the Issuer are not available
to pay creditors of the Seller or any of its Affiliates and
(ii) clearly disclose the effects of all transactions
between the Seller and the Issuer in accordance with
generally accepted accounting principles.
(b) The Seller agrees that upon the sale by the Seller of the
Transferred Intangible Transition Property to the Issuer pursuant to
this Agreement:
(i) to the fullest extent permitted by law, including
applicable PUC Regulations, the Issuer shall have all of the
rights originally held by the Seller or PP&L with respect to
the Transferred Intangible Transition Property, including
the right to collect any amounts payable by any Customer or
Third Party in respect of such Transferred Intangible
Transition Property, notwithstanding any objection or
direction to the contrary by the Seller or PP&L and
(ii) any payment by any Customer or Third Party to the
Issuer shall discharge such Customer's or such Third Party's
obligations in respect of such Transferred Intangible
Transition Property to the extent of such payment,
notwithstanding any objection or direction to the contrary
by the Seller.
(c) So long as any of the Transition Bonds are outstanding,
(i) the Seller shall not make any statement or reference in
respect of the Transferred Intangible Transition Property
that is inconsistent with the ownership thereof by the
Issuer and
(ii) the Seller shall not take any action in respect of the
Transferred Intangible Transition Property except as
contemplated by the Basic Documents.
SECTION 4.07 PROTECTION OF TITLE. The Seller shall execute and file
such filings, and cause to be executed and filed such filings, and take all
such actions, all in such manner and in such places as may be required by
law fully to preserve, maintain, and protect the interests of the Issuer
and the Trustee in the Transferred Intangible Transition Property,
including all filings required under the Competition Act relating to the
transfer of the ownership of the Transferred Intangible Transition Property
by the Seller to the Issuer and the pledge of the Intangible Transition
Property by the Issuer to the Trustee. The Seller 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. The Seller shall take, or shall cooperate
with PP&L in taking, such legal or administrative actions, including
defending against or instituting and pursuing legal actions and appearing
or testifying at hearings or similar proceedings, as may be reasonably
necessary:
(a) to protect the Issuer and the Transition Bondholders from claims,
state actions or other actions or proceedings of third parties
which, if successfully pursued, would result in a breach of any
representation set forth in Article III; or
(b) to block or overturn any attempts to cause a repeal of,
modification of or supplement to the Competition Act, the PUC Order
or the rights of Transition Bondholders by legislative enactment or
constitutional amendment that would be adverse to the Issuer, the
Trustee or the Transition Bondholders.
The costs of any such actions or proceedings shall be payable by the
Seller. The Seller designates the Issuer as its agent and attorney-in-fact
to execute any filings with the PUC, financing statements, continuation
statements or other instruments required by the Issuer pursuant to this
Section, it being understood that the Issuer shall have no obligation to
execute any such instruments.
SECTION 4.08 TAXES. So long as any of the Transition Bonds are
outstanding, the Seller shall pay all material taxes, assessments and
governmental charges imposed upon it or any of its properties or assets or
with respect to any of its franchises, business, income or property before
any penalty accrues thereon if the failure to pay any such taxes,
assessments and governmental charges would, after any applicable grace
periods, notices or other similar requirements, result in a lien on the
Intangible Transition Property; provided that no such tax need be paid if
the Seller or one of its subsidiaries is contesting the same in good faith
by appropriate proceedings promptly instituted and diligently conducted and
if the Seller or such subsidiary has established appropriate reserves as
shall be required in conformity with generally accepted accounting
principles.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ISSUER
As of the Transfer Date, the Issuer makes the following representations
and warranties on which the Seller is relying. The representations and
warranties shall survive the purchase of Transferred Intangible Transition
Property by the Issuer and the pledge thereof to the Trustee pursuant to
the Indenture.
SECTION 5.01 ORGANIZATION AND GOOD STANDING. The Issuer is a
limited liability company duly organized and in good standing under the
laws of the State of Delaware, with power and authority to own its
properties and conduct its business as currently owned or conducted.
SECTION 5.02 DUE QUALIFICATION. The Issuer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires such
qualifications, licenses or approvals (except where the failure to so
qualify would not be reasonably likely to have a material adverse effect on
the Issuer's business, operations, assets, revenues, properties or
prospects).
SECTION 5.03 POWER AND AUTHORITY. The Issuer has the power and
authority to execute and deliver this Agreement and to carry out its terms;
the Issuer has full power and authority to purchase the Intangible
Transition Property and the Issuer has duly authorized such purchase; and
the execution, delivery and performance of this Agreement has been duly
authorized by the Issuer.
SECTION 5.04 BINDING OBLIGATION. This Agreement constitutes a
legal, valid and binding obligation of the Issuer enforceable against the
Issuer 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).
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01 AMENDMENT. (a) This Agreement may be amended by the
Seller and the Issuer, with the consent of the Trustee and the satisfaction
of the Rating Agency Condition (other than with respect to Moody's) with
respect to the proposed amendment and provided that prior notice of such
amendment has 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.
(b) 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. 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 6.02 NOTICES. All demands, notices and communications
upon or to the Seller, the Issuer, the Trustee or the Rating Agencies under
this Agreement shall be in writing, delivered personally, via facsimile,
reputable overnight courier or by certified mail, return-receipt requested,
and shall be deemed to have been duly given upon receipt
(a) in the case of the Seller, to CEP Securities Co. LLC, 3930 Howard
Hughes Parkway, Suite 630, Las Vegas, NV 89109, Attention: Managers,
(b) in the case of the Issuer, to PP&L Transition Bond Company LLC, Two
North Ninth Street, GENA 9-2, Room Number 3, Allentown, PA 18101,
Attention: Managers,
(c) in the case of Moody's, to Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007,
(d) in the case of Standard & Poor's, to Standard & Poor's Corporation,
55 Water Street, New York, New York 10041, Attention: Asset Backed
Surveillance Department,
(e) in the case of Fitch IBCA, to Fitch IBCA, Inc., 1 State Street
Plaza, New York, New York, Attention: ABS Surveillance, and
(f) in the case the Trustee, at the address provided for notices or
communications to such Person in the Indenture;
or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
SECTION 6.03 ASSIGNMENT BY SELLER. Notwithstanding anything to the
contrary contained herein, this Agreement may not be assigned by the
Seller.
SECTION 6.04 ASSIGNMENT TO TRUSTEE. The Seller 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 and the
proceeds thereof and the assignment of any or all of the Issuer's rights
hereunder to the Trustee.
SECTION 6.05 LIMITATIONS ON RIGHTS OF OTHERS. The provisions of
this Agreement are solely for the benefit of the Seller, the Issuer and the
Trustee, on behalf of itself and the Transition Bondholders, and nothing in
this Agreement, whether express or implied, shall be construed to give to
any other Person any legal or equitable right, remedy or claim in the
Collateral or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 6.06 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 6.07 SEPARATE COUNTERPARTS. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 6.08 HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 6.09 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the 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 6.10 NONPETITION COVENANTS. (a) Notwithstanding any prior
termination of this Agreement or the Indenture, the Seller shall not, prior
to the date which is one year and one day after the termination of the
Indenture, petition or otherwise invoke or cause the Issuer to invoke the
process of any 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.
(b) Notwithstanding any prior termination of this Agreement or the
Indenture, the Issuer shall not, prior to the date which is one year and
one day after the termination of the Indenture, petition or otherwise
invoke or cause the Seller to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
Seller under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Seller or any substantial
part of the property of the Seller, or ordering the winding up or
liquidation of the affairs of the Seller.
SECTION 6.11 PERFECTION. In accordance with Section 2812(e) of the
Competition Act, upon the execution and delivery of this Sale Agreement and
the Bill of Sale, the transfer and assignment of the Intangible Transition
Property to the Issuer will be perfected as against all third persons,
including any judicial lien creditors.
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 BOND TRANSITION
COMPANY LLC,
as Issuer,
By: /s/ James E. Abel
_________________________
Name: James E. Abel
Title: Manager
CEP SECURITIES CO. LLC,
as Seller,
By: /s/ John H. Yardley
_______________________
Name: John H. Yardley
Title: Manager
APPENDIX A - DEFINITIONS
The definitions contained in this Appendix A are applicable to the singular
as well as the plural forms of such terms.
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.
Assignment means the Assignment executed and delivered by PP&L in
favor of CEP Securities Co. LLC pursuant to, and in the form set forth
in Exhibit A of, the Contribution Agreement.
Basic Documents means the Certificate of Formation of the Issuer which
was filed with the Delaware Secretary of State's Office on March 25,
1999; the Amended and Restated Limited Liability Company Agreement
between the Issuer and PP&L, as sole member, dated August 10, 1999;
the Certificate of Formation of the Seller which was filed with the
Delaware Secretary of State's Office on April 22, 1999; the Amended
and Restated Limited Liability Company Agreement between the Issuer
and Reserves, as sole member, dated August 10, 1999; the Contribution
Agreement; the Assignment; the Sale Agreement; the Bill of Sale; the
Servicing Agreement; the Administration Agreement; and the Indenture.
Bill of Sale means any bill 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.
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.
CEP Securities means CEP Securities Co. LLC, a Delaware limited
liability company, or its successor.
Collateral has the meaning specified in the Granting Clause of the
Indenture.
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.
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 thereto dated August 10, 1999, as the
same may be further amended and supplemented from time to time.
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.
Default means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
Event of Default has the meaning specified in Section 5.01 of the
Indenture.
Fitch IBCA means Fitch IBCA, Inc., or its successor.
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.
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.
Initial Intangible Transition Property means the Intangible
Transaction 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.
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.
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.
Lien means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.
Moody's means Moody's Investors Service Inc., or its successor.
Officers' Certificate means a certificate signed, in the case of
CEP Securities, by two of the managers of CEP Securities.
Opinion of Counsel means one or more written opinions of counsel
who may be an employee of or counsel to the Issuer, 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.
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.
Proceeding means any suit in equity, action at law or other judicial
or administrative proceeding.
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.
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.
Reserves means CEP Reserves, Inc., a Delaware corporation, or its
successor.
Sale Agreement means this Intangible Transition Property Sale
Agreement, as the same may be amended and supplemented from time
to time.
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 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 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.
Standard & Poor's, or S&P, means Standard & Poor's Rating Group,
a division of The McGraw-Hill 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.
Supplemental Order means the Order of the PUC dated May 21, 1999,
supplementing the Qualified Rate Order.
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 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.
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
EXHIBIT A
BILL OF SALE
For good and valuable consideration the receipt of which is hereby
acknowledged, CEP SECURITIES CO. LLC, a Delaware limited liability company
(the "Seller"), does hereby sell, assign, transfer and convey to PP&L
TRANSITION BOND COMPANY LLC, a Delaware limited liability company (the
"Issuer"), without recourse except as provided in the Sale Agreement all of
the Intangible Transition Property owned by the Seller, which sale,
assignment, transfer and conveyance of the Intangible Transition Property
shall include, as provided in the Competition Act, the sale, assignment,
transfer and conveyance of all revenues, collections, claims, payments,
money or proceeds of or arising from the Intangible Transition Charges
related to the Intangible Transition Property, as the same may be adjusted
from time to time in accordance with the Competition Act and the Qualified
Rate Order, to have and to hold the same unto the Issuer and to the
successors and assigns of the Issuer, forever.
Capitalized terms used herein and not defined shall have the meanings
set forth in the Sale Agreement dated August 10, 1999 between the Issuer
and the Seller.
IN WITNESS WHEREOF, the Seller has duly executed this Bill of Sale
this 10th day of August, 1999.
CEP SECURITIES CO. LLC
By: ________________________
Name: ______________________
Title: _______________________
Accepted this 10th day of August, 1999.
PP&L TRANSITION BOND COMPANY LLC
By: ________________________
Name: ______________________
Title: _______________________
AMENDMENT NO.1 TO
INTANGIBLE TRANSITION PROPERTY CONTRIBUTION AGREEMENT
among
PP&L, INC.
CEP GROUP, INC.,
CEP RESERVES, INC.
and
CEP SECURITIES CO. LLC
Dated August 10, 1999
Amendment No. 1 dated August 10, 1999 (this "Amendment") to
Intangible Transition Property Contribution Agreement dated May 13, 1999
(the "Original Agreement", and as amended by this Amendment and as further
amended, supplemented or otherwise modified from time to time, the
"Agreement"), among PP&L, Inc., a Pennsylvania corporation ("PP&L"), CEP
Group, Inc., a Pennsylvania corporation ("Group"), CEP Reserves, Inc., a
Delaware corporation ("Reserves"), and CEP Securities Co. LLC, a Delaware
limited liability company ("CEP Securities").
WHEREAS, PP&L, Group, Reserves and CEP Securities entered into
the Original Agreement on May 13, 1999;
WHEREAS, pursuant to Section 4.06(e) of the Original Agreement
PP&L has agreed, in connection with the issuance of any Transition Bonds,
to execute and deliver, or cause to be delivered, such amendments to this
Agreement and such additional agreements, certificates, documents and
opinions as may in PP&L's judgment be required to obtain the highest
possible rating for such Transition Bonds from each rating agency rating
such bonds and to effect the sale of such Transition Bonds to the
underwriters of such bonds;
WHEREAS, in connection with the issuance of the Transition Bonds
on the date hereof, the parties hereto desire to amend the Original
Agreement to add additional representations and warranties of PP&L and to
clarify certain provisions of the Original Agreement so as to obtain the
highest possible rating for such Transition Bonds;
NOW, THEREFORE, in consideration of the premises and intending to
be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Capitalized terms used in this Amendment and not
otherwise defined herein have the meanings assigned to them in the Original
Agreement.
ARTICLE II
AMENDMENTS
SECTION 2.01. Section 3.08 of the Original Agreement is hereby
amended to restate subsection (c) thereto in its entirety and to add new
subsections (h) and (i) thereto as follows:
"(c) Transfer Filings. PP&L is the sole owner of the Intangible
Transition Property being assigned to CEP Securities pursuant to
the Assignment; upon the execution and delivery of the
Assignment, the Intangible Transition Property will have been
validly assigned, transferred and conveyed to CEP Securities free
and clear of all Liens. All actions and filings, including
filings with the PUC under the Competition Act, necessary in any
jurisdiction to give CEP Securities and its permitted assignees a
valid perfected ownership interest in the Intangible Transition
Property, free and clear of all Liens have been taken or made."
"(h) Effect of Transfer to the Issuer. The sale, transfer
and assignment contemplated by the Sale Agreement constitute
an absolute transfer of the Intangible Transition Property
from CEP Securities to the Issuer as provided in Section
2812(e) of the Competition Act. The Transferred Intangible
Transition Property would not be part of the debtor's estate
in the event of the filing of a bankruptcy petition by or
against CEP Securities under any bankruptcy law."
"(i) Transfer Filings by CEP Securities. CEP Securities is
the sole owner of the Intangible Transition Property being
sold, transferred and assigned by CEP Securities to the
Issuer pursuant to the Bill of Sale; upon the execution and
delivery of the Bill of Sale, the Intangible Transition
Property will have been validly sold, assigned,
transferred and conveyed to the Issuer free and clear of all
Liens. All filings, including filings with the PUC under the
Competition Act, necessary in any jurisdiction to give the
Issuer and its permitted assignees a valid perfected
ownership interest in the Intangible Transition Property,
free and clear of all Liens have been made."
SECTION 2.02. Subsection (f)(ii)(A) and subsection (f)(iii) of
Section 3.08 of the Original Agreement are hereby restated in their
entirety to read as follows:
"[(f)(ii)](A) the irrevocable right of PP&L
to receive through Intangible Transition
Charges, unless adequate protection is made
by law for the protection of Transition
Bondholders, an amount sufficient to recover
all of the Qualified Transition Expenses
described in the Qualified Rate Order in an
amount equal to the aggregate principal
amount of the Transition Bonds plus an amount
sufficient to provide for any credit
enhancement (including the
Overcollateralization Amount relating to each
Series of Transition Bonds), to fund any
reserves, and to pay interest, premium, if
any, servicing fees and other expenses
relating to the Transition Bonds,"
"[f](iii) paragraphs five through twenty-one of the
Qualified Rate Order as issued on August 27, 1998, including
the right to collect Intangible Transition Charges, and the
Supplemental Order issued by the PUC on May 21, 1999 have
been declared to be irrevocable by the PUC, and any
supplemental order of the PUC adopted pursuant to paragraph
19 of the PUC's August 27, 1998 order when issued will have
been declared to be irrevocable by the PUC."
SECTION 2.03. The first two sentences of Section 4.08 of the
Original Agreement are hereby amended to read in their entirety as follows:
"PP&L shall execute and file or cause to be executed and
filed such filings, including filings with the PUC pursuant
to the Competition Act, and take such actions, in such
manner and in such places as may be required by law fully to
preserve, maintain and protect the interests of CEP
Securities, the Issuer and the Trustee in the Intangible
Transition Property, including all filings contemplated by
the Competition Act relating to the transfer of the
ownership of the Intangible Transition Property by PP&L to
CEP Securities and by CEP Securities to the Issuer and the
pledge of the Intangible Transition Property by the Issuer
to the Trustee. PP&L shall deliver to CEP Securities, 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."
SECTION 2.04. Article IV of the Original Agreement is hereby
amended to add a new Section 4.10 thereto as follows:
"SECTION 4.10. OPINIONS OF COUNSEL. PP&L shall deliver to
CEP Securities, the Issuer and the Trustee:
(a) promptly after the execution and delivery of the Sale
Agreement and of each amendment thereto or to the Servicing
Agreement and on each Subsequent Transfer Date (as defined
in the Sale Agreement), 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 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 is 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 Initial Transfer Date (as defined in
the Sale Agreement), 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 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 is 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."
SECTION 2.05. Subsections (b) and (c) of Section 5.01 of the
Original Agreement are hereby amended to read in their entirety as follows:
"(b) PP&L shall indemnify CEP Securities, the Issuer
and the Trustee, for itself and on behalf of the
Transition Bondholders, and each of their respective
officers, directors, managers, employees and agents
for, and defend and hold harmless each such Person from
and against, any and all taxes (other than any taxes
imposed on Transition Bondholders solely as a result of
their ownership of Transition Bonds) that may at any
time be imposed on or asserted against any such Person
under existing law as of any Transfer Date as a result
of the assignment of the Intangible Transition
Property by PP&L to CEP Securities, or the sale and
assignment of the Intangible Transition Property by CEP
Securities to the Issuer, or the acquisition or holding
of Intangible Transition Property by CEP Securities or
the Issuer, or the issuance and sale by the Issuer of
the Transition Bonds, including any sales, gross
receipts, general corporation, personal property,
privilege, franchise or license taxes not recovered by
the Issuer through Intangible Transition Charges, but
excluding any taxes imposed as a result of a failure of
such person to properly withhold or remit taxes imposed
with respect to payments on any Transition Bond.
(c) PP&L shall indemnify CEP Securities, the Issuer and the
Trustee, for itself and on behalf of the Transition
Bondholders, and each of their respective officers,
directors, managers, employees and agents for, and defend
and hold harmless each such Person from and against, (i) any
and all amounts of principal of and interest on the
Transition Bonds not paid when due or when scheduled to be
paid in accordance with their terms and the amount of any
deposits to the Issuer required to have been made in
accordance with the terms of the Basic Documents which are
not made when so required and (ii) any and all liabilities,
obligations, claims, actions, suits, or payments of any kind
whatsoever that may be imposed on or asserted against any
such Person, other than any liabilities, obligations or
claims for or payments of principal of or interest on the
Transition Bonds, together with any reasonable costs and
expenses incurred by such Person (collectively, "Losses"),
in any such case as a result of PP&L's breach of any of its
representations, warranties or covenants contained in
Articles III, IV or V."
SECTION 2.06. Clause (iii)(A) of Section 5.02 of the Original
Agreement is hereby amended to read in its entirety as follows:
"(A) stating that, in the opinion of such counsel, all
filings to be made by PP&L, including filings with the PUC
pursuant to the Competition Act, have been executed and
filed that are necessary fully to preserve and protect the
respective interests of CEP Securities, the Issuer and the
Trustee in the Intangible Transition Property and reciting
the details of such filings, or"
SECTION 2.07. Section 6.02 of the Original Agreement is hereby
amended to read in its entirety as follows:
"SECTION 6.02. NOTICES. All demands, notices and
communications upon or to PP&L, CEP Securities, Group, Reserves,
the Issuer, the Trustee or the Rating Agencies under this
Agreement shall be in writing, delivered personally, by
facsimile, overnight courier or certified mail, return-receipt
requested, and shall be deemed to have been duly given upon
receipt
(a) in the case of PP&L, to PP&L, Inc., Two North Ninth
Street, Allentown, PA 18101-1179, Attention: Senior Vice
President & Chief Financial Officer,
(b) in the case of CEP Securities, to CEP Securities Co. LLC,
3960 Howard Hughes Parkway, Suite 630, Las Vegas, Nevada 89109,
(c) in the case of the Issuer, to PP&L Transition Bond Company
LLC, Two North Ninth Street, GENA9-2, room 3, Allentown, PA
18101, Attention: Manager,
(d) in the case of Group, to CEP Group, Inc., Two North Ninth
Street, Allentown, PA 18101;
(e) in the case of Reserves, to CEP Reserves, Inc., 3773 Howard
Hughes Parkway, Suite 300 North, Las Vegas, Nevada 89109
(f) in the case of the Trustee, at the Corporate Trust
Office,
(g) in the case of Moody's, to Moody's Investors Service,
Inc., ABS Monitoring Department, 99 Church Street, New York,
New York 10007,
(h) in the case of Standard & Poor's, to Standard & Poor's
Corporation, 26 Broadway, New York, New York 10004,
Attention of Asset Backed Surveillance Department, and
(i) in the case of Fitch ICBA, to Fitch IBCA, Inc., 1 State
Street Plaza, New York, New York 10004.
or, as to each of the foregoing, at such other address as shall
be designated by written notice to the other parties."
SECTION 2.08. Appendix A of the Original Agreement is hereby
amended to add the following definitions:
Administration Agreement means the Administration Agreement
dated August 10, 1999, between PP&L, as administrator, and
the Issuer, as the same may be amended or supplemented from
time to time.
Administrator means PP&L as administrator under the
Administration Agreement.
Bill of Sale means any bill 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.
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.
SECTION 2.09. Appendix A of the Original Agreement is hereby
amended to restate the following definitions in their entirety as follows:
Collateral has the meaning set forth in the Granting Clause
of the Indenture.
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 the Qualified Rate
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.
Losses has the meaning set forth in Section 5.01(c) of
this Agreement.
Qualified Rate Order means the order of the PUC issued 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.
Servicer Default has the meaning set forth in the Servicing
Agreement.
Serviced Intangible Transition Property means all of the
Intangible Transition Property.
Transferred Intangible Transition Property means all of the
Intangible Transition Property."
ARTICLE III
MISCELLANEOUS
SECTION 3.01. The Agreement as amended by this Amendment is
hereby ratified and confirmed and as so amended shall remain in full force
and effect.
SECTION 3.02. PP&L represents and warrants that the
representations and warranties of PP&L in the Original Agreement are true
and correct on and as of the date of this Amendment as if made on the date
of this Amendment.
SECTION 3.03. This Amendment 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 3.04. This Amendment 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.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed by their respective officers or manager as of the day
and year first above written.
PP&L, INC.
by /s/ John R. Biggar
_____________________________
Name: John R. Biggar
Title: Senior Vice President and
Chief Financial Officer
CEP GROUP, INC.
by /s/ James E. Abel
_______________________________
Name: James E. Abel
Title: Treasurer
CEP RESERVES, INC.
by /s/ John H. Yardley
____________________________
Name: John H. Yardley
Title: Vice President
CEP SECURITIES CO. LLC
by /s/ John H. Yardley
_____________________________
Name: John H. Yardley
Title: Manager
INTANGIBLE TRANSITION PROPERTY SERVICING AGREEMENT
between
PP&L Transition Bond Company LLC
Issuer
and
PP&L, INC.,
Servicer
Dated August 10, 1999
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
<S> <C> <C>
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
</TABLE>
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 bill 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 2 North Ninth
Street, Allentown, Pennsylvania 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, 2 North Ninth Street,
Allentown, PA 18101, Attention of Treasurer;
(b) in the case of the Issuer, to PP&L Transition Bond Company LLC,
2 North Ninth Street, GENA 9-2, Room Number 3; Allentown, PA 18101,
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 Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007;
(e) in the case of Standard & Poor's, to Standard & Poor's
Corporation, 55 Water Street, New York, New York 10041, Attention: Asset
Backed Surveillance Department; and
(f) in the case of Fitch IBCA, to Fitch IBCA, Inc., 1 State Street
Plaza, New York, New York 10004, 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/ James E. Abel
----------------------------
Title: Manager
PP&L, INC., as Servicer
By: /s/ John R. Biggar
----------------------------
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 Moody's
with a schedule indicating any changes to Intangible Transition Charges by
Rate Schedule.
On a monthly basis, the Servicer shall prepare and deliver to
Moody's 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 Bill 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 Bill means the final bill 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 Bill 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 Bill 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
bill 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
Bill 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 Bill 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 Bill 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 Bill 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 Bill. For all
other Customers, each Customer's Bill 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 Bill 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 Bill to
such Customer or Third Party.
(iii) Any amounts collected by the Servicer that represent
partial payments of the total Bill 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 Bill 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.
Bill of Sale means any bill 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 101 Barclay Street, Floor 12 East, New
York, NY 10286, 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 grant a lien
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 Moody's 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 McGraw-Hill 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.
