efc12-292_fm8k.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 8-K
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
 
Date of Report (Date earliest event reported) March 14, 2012
 
 
Commission
File Number
Registrant, State of Incorporation, Address of
Principal Executive Offices, Telephone Number, and
IRS Employer Identification No.
 
 
Commission
File Number
Registrant, State of Incorporation, Address of
Principal Executive Offices, Telephone Number, and
IRS Employer Identification No.
         
         
333-179092 AEP TEXAS CENTRAL COMPANY
(a Texas corporation)
 
1 Riverside Plaza
Columbus, Ohio 43215

(614) 716-1000

76-0830689
  333-179092-01
AEP TEXAS CENTRAL TRANSITION FUNDING III LLC
(a Delaware limited liability company)
 
539 North Carancahua St, Suite 1700
Corpus Christi, Texas 78401
 
(361) 881-5399
 
45-4223169
 
________________________________________________________________________
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
 
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 
 

 
 
 

 

Item 8.01.  Other Events
 
 
In connection with the issuance on March 14, 2012 by AEP Texas Central Transition Funding III LLC (the “Issuing Entity”) of $800,000,000 Senior Secured Transition Bonds, offered pursuant to the Prospectus dated March 2, 2012 and the Prospectus Supplement dated March 7, 2012, the Issuing Entity and AEP Texas Central Company (“TCC”) entered into the agreements listed below in Item 9.01 which are annexed hereto as exhibits to this Current Report on Form 8-K.
 
Item 9.01. Financial Statements and Exhibits
 
 
(d)  
Exhibits
 

Exhibit No.
Description
1.1
Underwriting Agreement dated March 7, 2012 by and among TCC, the Issuing Entity and the representatives of the underwriters.
4.1
Indenture, dated as of March 14, 2012, by and between AEP Texas Central Transition Funding III LLC and U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”).
4.2
Series Supplement dated as of , dated as of March 14, 2012, by and between the Issuing Entity and the Indenture Trustee.
99.1
Transition Property Servicing Agreement, dated as of March 14, 2012, by and between the Issuing Entity and TCC, as servicer.
99.2
Transition Property Sale Agreement, dated as of March 14, 2012, by and between the Issuing Entity and TCC, as seller.
99.3
Administration Agreement, dated as of March 14, 2012, by and between the Issuing Entity and TCC, as administrator.
99.4
Amended and Restated Intercreditor Agreement, dated as of March 14, 2012, by and among TCC, AEP Texas Central Transition Funding LLC, U.S. Bank National Association, AEP Texas Central Transition Funding II LLC, The Bank of New York Mellon and the Issuing Entity, each in their respective capacities.

 
 
 

 
 
 

 

 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
  AEP TEXAS CENTRAL COMPANY  
       
       
       
    /s/ Charles E. Zebula  
 
By:
Charles E. Zebula  
  Title: Treasurer  
       
       
 
                                                                 
 
 

 
Date: March 16, 2012

 
 
 

 

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
AEP TEXAS CENTRAL TRANSITION
    FUNDING III LLC
 
       
       
       
    /s/ Charles E. Zebula  
 
By:
Charles E. Zebula  
  Title: Treasurer  
       
       
 
                                                                 
 
 
 

Date: March 16, 2012
 

 

 
 
 

 

INDEX TO EXHIBITS
 

Exhibit No.
Description
1.1
Underwriting Agreement dated March 7, 2012 by and among TCC, the Issuing Entity and the representatives of the underwriters.
4.1
Indenture, dated as of March 14, 2012, by and between AEP Texas Central Transition Funding III LLC and U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”).
4.2
Series Supplement dated as of , dated as of March 14, 2012, by and between the Issuing Entity and the Indenture Trustee.
99.1
Transition Property Servicing Agreement, dated as of March 14, 2012, by and between the Issuing Entity and TCC, as servicer.
99.2
Transition Property Sale Agreement, dated as of March 14, 2012, by and between the Issuing Entity and TCC, as seller.
99.3
Administration Agreement, dated as of March 14, 2012, by and between the Issuing Entity and TCC, as administrator.
99.4
Amended and Restated Intercreditor Agreement, dated as of March 14, 2012, by and among TCC, AEP Texas Central Transition Funding LLC, U.S. Bank National Association, AEP Texas Central Transition Funding II LLC, The Bank of New York Mellon and the Issuing Entity, each in their respective capacities.

 
 
 
 

efc12-292_ex11.htm
Exhibit 1.1
EXECUTION COPY

 
 
AEP TEXAS CENTRAL TRANSITION FUNDING III LLC
 
AEP TEXAS CENTRAL COMPANY
 
$800,000,000 SENIOR SECURED TRANSITION BONDS
 
UNDERWRITING AGREEMENT
 
    March 7, 2012
 
To the Representatives named in Schedule I hereto
of the Underwriters named in Schedule II hereto

Ladies and Gentlemen:

1.           Introduction.  AEP Texas Central Transition Funding III LLC, a Delaware limited liability company (the “Issuer”), proposes to issue and sell $800,000,000 aggregate principal amount of its Senior Secured Transition Bonds, (the “Bonds”), identified in Schedule I hereto.  The Issuer and AEP Texas Central Company, a Texas corporation and the Issuer’s direct parent (“TCC”), hereby confirm their agreement with the several Underwriters (as defined below) as set forth herein.
 
The term “Underwriters” as used herein shall be deemed to mean the entity or several entities named in Schedule II hereto and any underwriter substituted as provided in Section 7 hereof and the term “Underwriter” shall be deemed to mean any one of such Underwriters.  If the entity or entities listed in Schedule I hereto (the “Representatives”) are the same as the entity or entities listed in Schedule II hereto, then the terms “Underwriters” and “Representatives”, as used herein, shall each be deemed to refer to such entity or entities.  All obligations of the Underwriters hereunder are several and not joint.  If more than one entity is named in Schedule I hereto, any action under or in respect of this underwriting agreement (“Underwriting Agreement”) may be taken by such entities jointly as the Representatives or by one of the entities acting on behalf of the Representatives and such action will be binding upon all the Underwriters.
 
Capitalized terms used and not otherwise defined in this Underwriting Agreement shall have the meanings given to them in the Indenture (as defined below).
 
2.           Description of the Bonds.  The Bonds will be issued pursuant to an indenture to be dated as of March 14, 2012, as supplemented by one or more series supplements thereto (as so supplemented, the “Indenture”), between the Issuer and U.S. Bank National Association as indenture trustee (the “Indenture Trustee”).  The Bonds will be senior secured obligations of the Issuer and will be supported by transition property (as more fully described in the Financing Order relating to the Bonds, “Transition Property”), to be sold to the Issuer by TCC pursuant to the Transition Property Purchase and Sale Agreement, to be dated on or about
 
 
 

 
 
March 14, 2012, between TCC and the Issuer (the “Sale Agreement”).  The Transition Property securing the Bonds will be serviced pursuant to the Transition Property Servicing Agreement, to be dated on or about March 14, 2012, between TCC, as servicer, and the Issuer, as owner of the Transition Property sold to it pursuant to the Sale Agreement (the “Servicing Agreement”).
 
3.           Representations and Warranties of the Issuer.  The Issuer represents and warrants to the several Underwriters that:
 
(a)           The Issuer and the Bonds meet the requirements for the use of Form S-3 under the Securities Act of 1933, as amended (the “Securities Act”).  The Issuer, in its capacity as co-registrant and issuing entity with respect to the Bonds, and TCC, in its capacity as co-registrant and as sponsor for the Issuer, have filed with the Securities and Exchange Commission (the “Commission”) a registration statement on such form on January 19, 2012 (Registration Nos. 333-179092 and 333-179092-01), as amended by Amendment No. 1 thereto dated February 27, 2012 and Amendment No. 2 thereto dated February 29, 2012, including a prospectus and a form of prospectus supplement, for the registration under the Securities Act of up to $800,000,000 aggregate principal amount of the Bonds.  Such registration statement, as amended (“Registration Statement Nos. 333-179092 and 333-179092-01”), has been declared effective by the Commission and no stop order suspending such effectiveness has been issued under the Securities Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Issuer, threatened by the Commission.  No transition bonds registered with the Commission under the Securities Act pursuant to Registration Statement Nos. 333-179092 and 333-179092-01 have been previously issued.  References herein to the term “Registration Statement” shall be deemed to refer to Registration Statement Nos. 333-179092 and 333-179092-01, including any amendment thereto, all documents incorporated by reference therein pursuant to Item 12 of Form S-3 (“Incorporated Documents”) and any information in a prospectus or a prospectus supplement deemed or retroactively deemed to be a part thereof pursuant to Rule 430B (“Rule 430B”) under the Securities Act that has not been superseded or modified.  “Registration Statement” without reference to a time means the Registration Statement as of the Applicable Time (as defined below), which the parties agree is the time of the first contract of sale (as used in Rule 159) for the Bonds, and shall be considered the “Effective Date” of the Registration Statement relating to the Bonds.  For the purpose of this definition, information contained in a form of prospectus or prospectus supplement that is deemed retroactively to be a part of the Registration Statement pursuant to Rule 430B shall be considered to be included in the Registration Statement as of the time specified in Rule 430B.  The final prospectus and the final prospectus supplement relating to the Bonds, as filed with the Commission pursuant to Rule 424(b) under the Securities Act, are referred to herein as the “Final Prospectus”; and the most recent preliminary prospectus and prospectus supplement that omitted information to be included upon pricing in a form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act and that was used after the initial effectiveness of the Registration Statement and prior to the Applicable Time (as defined below) is referred to herein as the “Pricing Prospectus”.  The Pricing Prospectus and the Issuer Free Writing Prospectuses identified in Section B of Schedule III hereby considered together, are referred to herein as the “Pricing Package”.
 
 
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(b)           (i) At the earliest time after the filing of the Registration Statement that the Issuer or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act) of the Bonds and (ii) at the date hereof, the Issuer is not an “ineligible issuer,” as defined in Rule 405 under the Securities Act.
 
(c)           At the time the Registration Statement initially became effective, at the time of each amendment (whether by post-effective amendment, incorporated report or form of prospectus) and on the Effective Date relating to the Bonds, the Registration Statement, fully complied, and the Final Prospectus, both as of its date and the Closing Date, and the Indenture, at the Closing Date, will fully comply in all material respects with the applicable provisions of the Securities Act and the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), and, in each case, the applicable instructions, rules and regulations of the Commission thereunder; the Registration Statement, at each of the aforementioned dates, did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; the Final Prospectus, both as of its date and at the Closing Date, will not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading; and on said dates the Incorporated Documents, taken together as a whole, fully complied or will fully comply in all material respects with the applicable provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the applicable rules and regulations of the Commission thereunder; provided that the foregoing representations and warranties in this paragraph (c) shall not apply to statements or omissions made in reliance upon and in conformity with any Underwriter Information as defined in Section 11(b) below or to any statements in or omissions from any Statements of Eligibility on Form T-1 (or amendments thereto) of the Indenture Trustee under the Indenture filed as exhibits to the Registration Statement or Incorporated Documents or to any statements or omissions made in the Registration Statement or the Final Prospectus relating to The Depository Trust Company (“DTC”) Book-Entry System that are based solely on information contained in published reports of the DTC.
 
(d)           As of the Applicable Time (as defined below), on the date of its filing, if applicable, and on the Closing Date, the Pricing Prospectus and each Issuer Free Writing Prospectus (as defined below) (other than the Pricing Term Sheet, as defined in Section 5(b) below), did not and does not include any untrue statement of a material fact nor when considered together, omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading (except that the principal amount of the Bonds, the tranches, the initial principal balances, the scheduled final payment dates, the final maturity dates, the expected average lives, the Expected Amortization Schedule and the Expected Sinking Fund Schedule described in the Pricing Prospectus were subject to completion or change based on market conditions and the interest rate, price to the public and underwriting discounts and commissions for each tranche was not included in the Pricing Prospectus).  The Pricing Package, at the Applicable Time, and at all subsequent times through the completion of the offer and the sale of the Bonds on the Closing Date did not include any untrue statement of a material fact or omit to state any material fact necessary in order to
 
 
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make the statements therein, in the light of the circumstances in which they are made, not misleading.  The two preceding sentences do not apply to statements in or omissions from the Pricing Prospectus, the Pricing Term Sheet or any other Issuer Free Writing Prospectus in reliance upon and in conformity with any Underwriter Information.  “Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433(h), relating to the Bonds, in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Issuer’s records pursuant to Rule 433(g) of the Securities Act.  References to the term “Free Writing Prospectus” shall mean a free writing prospectus, as defined in Rule 405 under the Securities Act.  References to the term “Applicable Time” mean 4:53 PM, eastern time, on the date hereof, except that if, subsequent to such Applicable Time, the Issuer, TCC and the Underwriters have determined that the information contained in the Pricing Prospectus or any Issuer Free Writing Prospectus issued prior to such Applicable Time included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading and the Issuer, TCC and the Underwriters have agreed to terminate the old purchase contracts and have entered into new purchase contracts with purchasers of the Bonds, then “Applicable Time” will refer to the first of such times when such new purchase contracts are entered into.  The Issuer represents, warrants and agrees that it has treated and agrees that it will treat each of the free writing prospectuses listed on Schedule III hereto as an Issuer Free Writing Prospectus, and that each such Issuer Free Writing Prospectus has fully complied and will fully comply with the applicable requirements of Rules 164 and 433, including timely Commission filing where required, legending and record keeping.
 
(e)           Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the offer and sale of the Bonds on the Closing Date or until any earlier date that the Issuer notified or notifies the Representatives as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement.  If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information then contained in the Registration Statement or included or would include an untrue statement of a material fact or, when considered together with the Pricing Prospectus, omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, (i) TCC or the Issuer has promptly notified or will promptly notify the Representatives and (ii) TCC or the Issuer has promptly amended or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.  The foregoing two sentences do not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon and in conformity with any Underwriter Information.
 
(f)           The Issuer has been duly formed and is validly existing as a limited liability company in good standing under the Limited Liability Company Act of the State of Delaware, as amended, with full limited liability company power and authority to
 
 
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execute, deliver and perform its obligations under this Underwriting Agreement, the Bonds, the Sale Agreement, the Servicing Agreement, the Indenture, the LLC Agreement, the Intercreditor Agreement, the Administration Agreement and the other agreements and instruments contemplated by the Pricing Prospectus (collectively, the “Issuer Documents”) and to own its properties and conduct its business as described in the Pricing Prospectus; the Issuer has been duly qualified as a foreign limited liability company for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where failure to so qualify or to be in good standing would not have a material adverse effect on the business, properties or financial condition of the Issuer; the Issuer has conducted and will conduct no business in the future that would be inconsistent with the description of the Issuer’s business set forth in the Pricing Prospectus; the Issuer is not a party to or bound by any agreement or instrument other than the Issuer Documents and other agreements or instruments incidental to its formation; the Issuer has no material liabilities or obligations other than those arising out of the transactions contemplated by the Issuer Documents and as described in the Pricing Prospectus; TCC is the beneficial owner of all of the limited liability company interests of the Issuer; and based on current law, the Issuer is not classified as an association taxable as a corporation for United States federal income tax purposes.
 
(g)           The issuance and sale of the Bonds by the Issuer, the purchase of the Transition Property by the Issuer from TCC and the consummation of the transactions herein contemplated by the Issuer, and the fulfillment of the terms hereof on the part of the Issuer to be fulfilled, will not result in a breach of any of the terms or provisions of, or constitute a default under the Issuer’s certificate of formation or limited liability company agreement (collectively, the “Issuer Charter Documents”), or any indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer is now a party.
 
(h)           This Underwriting Agreement has been duly authorized, executed and delivered by the Issuer, which has the necessary limited liability company power and authority to execute, deliver and perform its obligations under this Underwriting Agreement.
 
(i)           The Issuer (i) is not in violation of the Issuer Charter Documents, (ii) is not in default and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust or other  agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject, except for any such defaults that would not, individually or in the aggregate, have a material adverse effect on its business, property or financial condition, and (iii) is not in violation of any law, ordinance, governmental rule, regulation or court decree to which it or its property may be subject, except for any such violations that would not, individually or in the aggregate, have a material adverse effect on its business, property or financial condition.
 
(j)           The Indenture has been duly authorized by the Issuer, and, on the Closing Date, will have been duly executed and delivered by the Issuer and will be a valid and
 
 
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binding instrument, enforceable against the Issuer in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors’ or secured parties’ rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law; and limitations on enforceability of rights to indemnification by federal or state securities laws or regulations or by public policy.  On the Closing Date, the Indenture will (i) comply as to form in all material respects with the requirements of the Trust Indenture Act and (ii) conform in all material respects to the description thereof in the Pricing Prospectus and Final Prospectus.
 
(k)           The Bonds have been duly authorized by the Issuer for issuance and sale to the Underwriters pursuant to this Underwriting Agreement and, when executed by the Issuer and authenticated by the Indenture Trustee in accordance with the Indenture and delivered to the Underwriters against payment therefor in accordance with the terms of this Underwriting Agreement, will constitute valid and binding obligations of the Issuer entitled to the benefits of the Indenture and enforceable against the Issuer in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors’ or secured parties’ rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law; and limitations on enforceability of rights to indemnification by federal or state securities laws or regulations or by public policy, and the Bonds conform in all material respects to the description thereof in the Pricing Prospectus and Final Prospectus.  The Issuer has all requisite limited liability company power and authority to issue, sell and deliver the Bonds in accordance with and upon the terms and conditions set forth in this Underwriting Agreement and in the Pricing Prospectus and Final Prospectus.
 
(l)           There is no litigation or governmental proceeding to which the Issuer is a party or to which any property of the Issuer is subject or which is pending or, to the knowledge of the Issuer, threatened against the Issuer that could reasonably be expected to, individually or in the aggregate, result in a material adverse effect on the Issuer’s business, property or financial condition.
 
(m)           Other than the filing of the issuance advice letter and non-action on the part of the PUCT contemplated by Ordering Paragraph 5 of the financing order issued by the PUCT on January 12, 2012 to the Company (the “Financing Order”), no approval, authorization, consent or order of any public board or body (except such as have been already obtained and other than in connection or in compliance with the provisions of applicable blue-sky laws or securities laws of any state, as to which the Issuer makes no representations or warranties), is legally required for the issuance and sale by the Issuer of the Bonds.
 
(n)           The Issuer is not, and, after giving effect to the sale and issuance of the Bonds, will not be an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “1940 Act”).
 
 
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(o)           The nationally recognized accounting firm which has performed certain procedures with respect to certain statistical and structural information contained in the Pricing Prospectus and the Final Prospectus, are independent public accountants.
 
(p)           Each of the Sale Agreement, the Servicing Agreement, the Intercreditor Agreement, the Administration Agreement and LLC Agreement has been duly authorized by the Issuer, and when executed and delivered by the Issuer and the other parties thereto, will constitute a valid and legally binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors’ or secured parties’ rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law, and limitations on enforceability of rights to indemnification by federal or state securities laws or regulations or by public policy.
 
(q)           The Issuer has complied with the written representations, acknowledgements and covenants (the “17g-5 Representations”) relating to compliance with Rule 17g-5 under the Exchange Act set forth in the (i) undertaking, dated as of January 25, 2012, by the Issuer to Moody’s (as defined below), (ii) letter, dated January 25, 2012, from the Issuer to S&P (as defined below), and (iii) letter, dated January 24, 2012, between Fitch (as defined below, and together with Moody’s and S&P, the “Rating Agencies”) and the Issuer (collectively, the “Rating Agency Letters”), other than (x) any noncompliance of the 17g-5 Representations that would not have a material adverse effect on the rating of the Bonds or the Bonds or (y) any noncompliance arising from the breach by an Underwriter of the representations and warranties and covenants set forth in Section 13 hereof.
 
(r)           The Issuer will comply, and has complied, in all material respects, with its diligence and disclosure obligations in respect to the Bonds under Rule 193 of the Act and Items 1111(a)(7) and 1111(a)(8) of Regulation AB.
 
4.           Representations and Warranties of TCC.  TCC represents and warrants to the several Underwriters that:
 
(a)           TCC, in its capacity as co-registrant and sponsor with respect to the Bonds, meets the requirements to use Form S-3 under the Securities Act and has filed with the Commission Registration Statement Nos. 333-179092 and 333-179092-01 for the registration under the Securities Act of up to $800,000,000 aggregate principal amount of the Bonds.  Registration Statement Nos. 333-179092 and 333-179092-01 have been declared effective by the Commission and no stop order suspending such effectiveness has been issued under the Securities Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of TCC, threatened by the Commission.
 
(b)           (i) At the earliest time after the filing of the Registration Statement that the Issuer or another offering participant made a bona fide offer (within the meaning of Rule
 
 
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164(h)(2)) of the Bonds and (ii) at the date hereof, TCC was not and is not an “ineligible issuer”, as defined in Rule 405 under the Securities Act.
 
(c)           At the time the Registration Statement initially became effective, at the time of each amendment (whether by post-effective amendment, incorporated report or form of prospectus) and on the Effective Date relating to the Bonds, the Registration Statement fully complied, and the Final Prospectus, both as of its date and at the Closing Date, and the Indenture, at the Closing Date, will fully comply in all material respects with the applicable requirements of the Securities Act, the Trust Indenture Act, respectively, and, in each case, the applicable instructions, rules and regulations of the Commission thereunder; the Registration Statement, at the date it initially became effective and at the Effective Date, did not contain an untrue statement of a material fact, or omit to state a material fact required to be stated therein or necessary to make the statements therein, not misleading; the Final Prospectus, both as of its date and at and as of the Closing Date, will not include an 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 in which they were made, not misleading; provided, that the foregoing representations and warranties in this paragraph (c) shall not apply to statements or omissions made in reliance upon and in conformity with any Underwriter Information or to any statements in or omissions from any Statement of Eligibility on Form T-1, or amendments thereto, of the Indenture Trustee under the Indenture filed as exhibits to the Registration Statement or Incorporated Documents or to any statements or omissions made in the Registration Statement or the Final Prospectus relating to The Depository Trust Company (“DTC”) Book-Entry System that are based solely on information contained in published reports of the DTC.
 
(d)           As of its date, at the Applicable Time, on the date of its filing, if applicable, and on the Closing Date, the Pricing Prospectus and each Issuer Free Writing Prospectus (other than the Pricing Term Sheet), considered together, did not include any untrue statement of a material fact or when considered together, did not omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading (except that (i) the principal amount of the Bonds, the tranches, the initial principal balances, the scheduled final payment dates, the final maturity dates, the expected average lives, the Expected Amortization Schedule and the Expected Sinking Fund Schedule described in the Pricing Prospectus were subject to change based on market conditions, and the interest rate, price to the public and underwriting discounts and commissions for each tranche was not included in the Pricing Prospectus).  The Pricing Package, at the Applicable Time, and at all subsequent times through the completion of the offer and the sale of the Bonds on the Closing Date, did not and does not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading.  The two preceding sentences do not apply to statements in or omissions from the Pricing Prospectus, the Pricing Term Sheet or any other Issuer Free Writing Prospectus in reliance upon and in conformity with any Underwriter Information.  TCC represents, warrants and agrees that it has treated and agrees that it will treat each of the free writing prospectuses listed on Schedule III hereto as an Issuer Free Writing Prospectus, and that each such Issuer Free
 
 
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Writing Prospectus has fully complied and will fully comply with the applicable requirements of Rules 164 and 433, including timely Commission filing where required, legending and record keeping.
 
(e)           Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the offer and sale of the Bonds on the Closing Date or until any earlier date that the Issuer or TCC notified or notifies the Representatives as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement.  If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information then contained in the Registration Statement or included or would include an untrue statement of a material fact or, when considered together with the Pricing Prospectus, omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, (i) TCC or the Issuer has promptly notified or will promptly notify the Representatives and (ii) TCC or the Issuer has promptly amended or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.  The foregoing two sentences do not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon and in conformity with any Underwriter Information.
 
(f)           TCC has been duly formed and is validly existing as a corporation in good standing under the laws of the jurisdiction of its formation, has the corporate power and authority to own, lease and operate its properties and to conduct its business as presently conducted and as set forth in or contemplated by the Pricing Prospectus, and is qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not have a material adverse effect on the business, property or financial condition of TCC and its subsidiaries considered as a whole, and has all requisite power and authority to sell Transition Property as described in the Pricing Prospectus and to otherwise perform its obligation under any Issuer Document to which it is a party.  TCC is the beneficial owner of all of the limited liability company interests of the Issuer.
 
(g)           Other than AEP Texas Central Transition Funding II LLC, TCC has no significant subsidiaries within the meaning of Rule 1-02(w) of Regulation S-X.
 
(h)           The transfer by TCC of all of its rights and interests under the Financing Order relating to the Bonds to the Issuer and the consummation of the transactions herein contemplated by TCC, and the fulfillment of the terms hereof on the part of TCC to be fulfilled, will not result in a breach of any of the terms or provisions of, or constitute a default under, TCC’s articles of incorporation or bylaws (collectively, the “TCC Charter Documents”), or in a material breach of any of the terms of, or constitute a material default under, any indenture, mortgage, deed of trust or other agreement or instrument to which TCC is now a party.
 
 
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(i)           This Underwriting Agreement has been duly authorized, executed and delivered by TCC, which has the necessary corporate power and authority to execute, deliver and perform its obligations under this Underwriting Agreement.
 
(j)           TCC (i) is not in violation of the TCC Charter Documents, (ii) is not in default and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject, except for any such defaults that would not, individually or in the aggregate, have a material adverse effect on the business, property or financial condition of TCC and its subsidiaries considered as a whole, or (iii) is not in violation of any law, ordinance, governmental rule, regulation or court decree to which it or its property may be subject, except for any such violations that would not, individually or in the aggregate, have a material adverse effect on the business, property or financial condition of TCC and its subsidiaries considered as a whole.
 
(k)           Except as set forth or contemplated in the Pricing Prospectus, there is no litigation or governmental proceeding to which TCC or any of its subsidiaries is a party or to which any property of TCC or any of its subsidiaries is subject or which is pending or, to the knowledge of TCC, threatened against TCC or any of its subsidiaries that would reasonably be expected to, individually or in the aggregate, result in a material adverse effect on the Issuer’s business, property, or financial condition or on TCC’s ability to perform its obligations under the Sale Agreement and the Servicing Agreement.
 
(l)           Other than the filing of the issuance advice letter and non-action on the part of the PUCT contemplated by Ordering Paragraph 5 of the Financing Order, no approval, authorization, consent or order of any public board or body (except such as have been already obtained and other than in connection or in compliance with the provisions of applicable blue-sky laws or securities laws of any state, as to which TCC makes no representations or warranties), is legally required for the issuance and sale by the Issuer of the Bonds.
 
(m)           TCC is not and after giving effect to the sale and issuance of the Bonds, neither TCC or the Issuer will be, an “investment company” within the meaning of the 1940 Act.
 
(n)           Each of the Sale Agreement and Servicing Agreement, the Intercreditor Agreement and Administration Agreement has been duly and validly authorized by TCC, and when executed and delivered by TCC and the other parties thereto will constitute a valid and legally binding obligation of TCC, enforceable against TCC in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors’ or secured parties’ rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law, and limitations on
 
 
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enforceability of rights to indemnification by federal or state securities laws or regulations or by public policy.
 
(o)           There are no Texas transfer taxes related to the transfer of the Transition Property or the issuance and sale of the Bonds to the Underwriters pursuant to this Underwriting Agreement required to be paid at or prior to the Closing Date by TCC or the Issuer.
 
(p)           The nationally recognized accounting firm referenced in Section 3(o) and 9(x) is a firm of independent public accountants with respect to TCC as required by the Securities Act and the rules and regulations of the Commission thereunder.
 
(q)           TCC, in its capacity as sponsor with the respect to the Bonds, has caused the Issuer to comply with the 17g-5 Representations, other than (x) any noncompliance of the 17g-5 Representations that would not have a material adverse effect on the rating of the Bonds or the Bonds or (y) any noncompliance arising from the breach by an Underwriter of the representations and warranties and covenants set forth in Section 13 hereof.
 
(r)           TCC will comply, and has complied, in all material respects, with its diligence and disclosure obligations in respect to the Bonds under Rule 193 of the Act and Items 1111(a)(7) and 1111(a)(8) of Regulation AB.
 
5.           Investor Communications.
 
(a)           Issuer and TCC represent and agree that, unless they obtain the prior consent of the Representatives, and each Underwriter represents and agrees that,, unless it obtains the prior consent of the Issuer and TCC and the Representatives, it has not made and will not make any offer relating to the Bonds that would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a “free writing prospectus,” required to be filed by the Issuer or TCC, as applicable, with the Commission or retained by the Issuer or TCC, as applicable, under Rule 433 under the Securities Act; provided that the prior written consent of the parties hereto shall be deemed to have been given in respect of the Term Sheets and each other Free Writing Prospectus identified in Schedule III hereto.
 
(b)           TCC and the Issuer (or the Representatives at the direction of the Issuer) will prepare a final pricing term sheet relating to the Bonds (the “Pricing Term Sheet”), containing only information that describes the final pricing terms of the Bonds and otherwise in a form consented to by the Representatives, and will file the Pricing Term Sheet within the period required by Rule 433(d)(5)(ii) under the Securities Act following the date such final pricing terms have been established for all classes of the offering of the Bonds.  The Pricing Term Sheet is an Issuer Free Writing Prospectus for purposes of this Underwriting Agreement.
 
(c)           Each Underwriter may provide to investors one or more of the Free Writing Prospectuses, including the preliminary term sheet, as filed by the Issuer with the
 
 
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Commission on March 5, 2012 and the Pricing Term Sheet (collectively, the “Term Sheets”), subject to the following conditions:
 
(i)           Unless preceded or accompanied by a prospectus satisfying the requirements of Section 10(a) of the Securities Act, an Underwriter shall not convey or deliver any Written Communication (as defined herein) to any person in connection with the initial offering of the Bonds, unless such Written Communication (i) is made in reliance on Rule 134 under the Securities Act, (ii) constitutes a prospectus satisfying the requirements of Rule 430B under the Securities Act, (iii) constitutes “ABS informational and computational information” as defined in Item 1101 of Regulation AB, (iv)  is an Issuer Free Writing Prospectus listed on Schedule III hereto or (v) is an Underwriter Free Writing Prospectus (as defined below).  “Written Communication” has the same meaning as that term is defined in Rule 405 under the Securities Act.
 
An “Underwriter Free Writing Prospectus” means any free writing prospectus that contains only preliminary or final terms of the Transition Bonds and is not required to be filed by TCC or the Issuer pursuant to Rule 433 and that contains information substantially the same as the information contained in the Pricing Prospectus or Pricing Term Sheet (including, without limitation, (i) the class, size, rating, price, CUSIPs, coupon, yield, spread, benchmark, status and/or legal maturity date of the Bonds, the weighted average life, expected first and final payment dates, trade date, settlement date, transaction parties, credit enhancement, logistical details related to the location and timing of access to the roadshow, ERISA eligibility, legal investment status and payment window of one or more classes of Bonds and (ii) a column or other entry showing the status of the subscriptions for the Bonds, both for the Bonds as a whole and for each Underwriter’s retention, and/or expected pricing parameters of the Bonds).
 
(ii)           Each Underwriter shall comply with all applicable laws and regulations in connection with the use of Free Writing Prospectuses and Term Sheets, including but not limited to Rules 164 and 433 under the Securities Act.
 
(iii)           All Free Writing Prospectuses provided to investors, whether or not filed with the Commission, shall bear a legend including substantially the following statement:
 
The Issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates.  Before you invest, you should read the prospectus in that registration statement and other documents the Issuer has filed with the SEC for more complete information about the Issuer and the offering.  You may get these documents for free by visiting EDGAR on the SEC web site at www.sec.gov.  Alternatively, Issuer, any underwriter or any dealer participating in the offering will arrange to send you the base prospectus if you request it by calling toll free at 1-866-718-1649.
 
 
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The Issuer and the Representatives shall have the right to require additional specific legends or notations to appear on any Free Writing Prospectus, the right to require changes regarding the use of terminology and the right to determine the types of information appearing therein with the approval of, in the case of the Issuer, Representatives and, in the case of the Representatives, the Issuer (which in either case shall not be unreasonably withheld).
 
(iv)           Each Underwriter covenants with the Issuer and TCC that after the Final Prospectus is available such Underwriter shall not distribute any written information concerning the Bonds to an investor unless such information is preceded or accompanied by the Final Prospectus or by notice to the investor that the Final Prospectus is available for free by visiting EDGAR on the SEC website at www.sec.gov.
 
(v)           Each Underwriter covenants that if an Underwriter shall use an Underwriter Free Writing Prospectus that contains information in addition to (x) “issuer information”, including information with respect to TCC, as defined in Rule 433(h)(2) or (y) the information in the Pricing Package, the liability arising from its use of such additional information shall be the sole responsibility of the Underwriter using such Underwriting Free Writing Prospectus unless the Underwriter Free Writing Prospectus (or any information contained therein) was consented to in advance by TCC; provided, however, that, for the avoidance of doubt, this clause (v) shall not be interpreted as tantamount to the indemnification obligations contained in Section 11(b) hereof.
 
6.           Purchase and Sale.  On the basis of the representations and warranties herein contained, and subject to the terms and conditions herein set forth, the Issuer shall sell to each of the Underwriters, and each Underwriter shall purchase from the Issuer, at the time and place herein specified, severally and not jointly, 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.  The Underwriters agree to make a public offering of the Bonds.  The Issuer shall pay (in the form of a discount to the principal amount of the offered Bonds) to the Underwriters a commission equal to $3,200,000.
 
7.           Time and Place of Closing.  Delivery of the Bonds against payment of the aggregate purchase price therefor by wire transfer in federal funds shall be made at the place, on the date and at the time specified in Schedule I hereto, or at such other place, time and date as shall be agreed upon in writing by the Issuer and the Representatives.  The hour and date of such delivery and payment are herein called the “Closing Date”.  The Bonds shall be delivered to DTC or to U.S. Bank National Association, as custodian for DTC, in fully registered global form registered in the name of Cede & Co., for the respective accounts specified by the Representatives not later than the close of business on the business day preceding the Closing Date or such other time as may be agreed upon by the Representatives.  The Issuer agrees to make the Bonds available to the Representatives for checking purposes not later than 1:00 P.M. New York Time on the last business day preceding the Closing Date at the place specified for delivery of the Bonds in Schedule I hereto, or at such other place as the Issuer may specify.
 
 
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If any Underwriter shall fail or refuse to purchase and pay for the aggregate principal amount of Bonds that such Underwriter has agreed to purchase and pay for hereunder, the Issuer shall immediately give notice to the other Underwriters of the default of such Underwriter, and the other Underwriters shall have the right within 24 hours after the receipt of such notice to determine to purchase, or to procure one or more others, who are members of the Financial Industry Regulatory Authority  (“FINRA”) (or, if not members of the FINRA, who are not eligible for membership in the FINRA and who agree (i) to make no sales within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein and (ii) in making sales to comply with the FINRA’s Conduct Rules) and satisfactory to the Issuer, to purchase, upon the terms herein set forth, the aggregate principal amount of Bonds that the defaulting Underwriter had agreed to purchase.  If any non-defaulting Underwriter or Underwriters shall determine to exercise such right, such Underwriter or Underwriters shall give written notice to the Issuer of the determination in that regard within 24 hours after receipt of notice of any such default, and thereupon the Closing Date shall be postponed for such period, not exceeding three business days, as the Issuer shall determine.  If in the event of such a default no non-defaulting Underwriter shall give such notice, then this Underwriting Agreement may be terminated by the Issuer, upon like notice given to the non-defaulting Underwriters, within a further period of 24 hours.  If in such case the Issuer shall not elect to terminate this Underwriting Agreement it shall have the right, irrespective of such default:
 
(a)           to require each non-defaulting Underwriter to purchase and pay for the respective aggregate principal amount of Bonds that it had agreed to purchase hereunder as hereinabove provided and, in addition, the aggregate principal amount of Bonds that the defaulting Underwriter shall have so failed to purchase up to an aggregate principal amount of Bonds equal to one-ninth (1/9) of the aggregate principal amount of Bonds that such non-defaulting Underwriter has otherwise agreed to purchase hereunder, and/or
 
(b)           to procure one or more persons, reasonably acceptable to the Representatives, who are members of the FINRA (or, if not members of the FINRA, who are not eligible for membership in the FINRA and who agree (i) to make no sales within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein and (ii) in making sales to comply with the FINRA’s Conduct Rules), to purchase, upon the terms herein set forth, either all or a part of the aggregate principal amount of Bonds that such defaulting Underwriter had agreed to purchase or that portion thereof that the remaining Underwriters shall not be obligated to purchase pursuant to the foregoing clause (a).
 
In the event the Issuer shall exercise its rights under (a) and/or (b) above, the Issuer shall give written notice thereof to the non-defaulting Underwriters within such further period of 24 hours, and thereupon the Closing Date shall be postponed for such period, not exceeding three business days, as the Issuer shall determine.
 
In the computation of any period of 24 hours referred to in this Section 7, there shall be excluded a period of 24 hours in respect of each Saturday, Sunday or legal holiday that would otherwise be included in such period of time.
 
 
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Any action taken by the Issuer or TCC under this Section 7 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Underwriting Agreement.  Termination of this Underwriting Agreement pursuant to Section 7 shall be without any liability on the part of the Issuer, TCC or any non-defaulting Underwriter, except as otherwise provided in Sections 8(a)(vii) and 11 hereof.
 
8.           Covenants.
 
(a)           Covenants of the Issuer.  The Issuer covenants and agrees with the several Underwriters that:
 
(i)           The Issuer will upon request promptly deliver to the Representatives and Counsel to the Underwriters a conformed copy of the Registration Statement, certified by an officer of the Issuer to be in the form as originally filed, including all Incorporated Documents and exhibits and all amendments thereto.
 
(ii)           The Issuer will deliver to the Underwriters, as soon as practicable after the date hereof, as many copies of the Pricing Prospectus and Final Prospectus as they may reasonably request.
 
(iii)           The Issuer will cause or has caused the Final Prospectus to be filed with the Commission pursuant to Rule 424 as soon as practicable and will advise the Underwriters of any stop order suspending the effectiveness of the Registration Statement or the institution of any proceeding therefor of which Issuer shall have received notice.  The Issuer will use its reasonable best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof.  The Issuer has complied and will comply with Rule 433 under the Securities Act in connection with the offering of the Bonds.
 
(iv)           If, during such period of time (not exceeding nine months) after the Final Prospectus has been filed with the Commission pursuant to Rule 424 as in the opinion of Counsel for the Underwriters a prospectus covering the Bonds is required by law to be delivered in connection with sales by an Underwriter or dealer (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), any event relating to or affecting the Issuer, the Bonds or the Transition Property or of which the Issuer shall be advised in writing by the Representatives shall occur that in the Issuer’s reasonable judgment after consultation with Counsel for the Underwriters (as defined below) should be set forth in a supplement to, or an amendment of the Pricing Package or the Final Prospectus in order to make the Pricing Package or the Final Prospectus not misleading in the light of the circumstances when it is delivered to a purchaser (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Issuer will, at its expense, amend or supplement the Pricing Package or the Final Prospectus by either (A) preparing and furnishing to the Underwriters at the Issuer’s expense a reasonable number of copies of a supplement or supplements or an amendment or
 
 
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amendments to the Pricing Package or the Final Prospectus or (B) making an appropriate filing pursuant to Section 13 or Section 15 of the Exchange Act, which will supplement or amend the Pricing Package or the Final Prospectus so that, as supplemented or amended, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Pricing Package or the Final Prospectus is delivered to a purchaser (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), not misleading; provided that should such event relate solely to the activities of any of the Underwriters, then such Underwriters shall assume the expense of preparing and furnishing any such amendment or supplement.  The Issuer will also fulfill its obligations set out in Section 3(e) above.
 
(v)           The Issuer will furnish such proper information as may be lawfully required and otherwise cooperate in qualifying the Bonds for offer and sale under the blue-sky laws of the states of the United States as the Representatives may designate; provided that the Issuer shall not be required to qualify as a foreign limited liability company or dealer in securities, to file any consents to service of process under the laws of any jurisdiction, or meet any other requirements deemed by the Issuer to be unduly burdensome.
 
(vi)           The Issuer or TCC will, except as herein provided, pay or cause to be paid all expenses and taxes (except transfer taxes) in connection with (i) the preparation and filing by it of the Registration Statement, Pricing Prospectus and Final Prospectus (including any amendments and supplements thereto) and any Issuer Free Writing Prospectuses, (ii) the issuance and delivery of the Bonds as provided in Section 7 hereof (including, without limitation, reasonable fees and disbursements of Counsel for the Underwriters and all trustee, rating agency and PUCT advisor fees), (iii) the qualification of the Bonds under blue-sky laws (including counsel fees not to exceed $15,000), (iv) the printing and delivery to the Underwriters of reasonable quantities of the Registration Statement and, except as provided in Section 8(a)(iv) hereof, of the Pricing Package and Final Prospectus. If the obligation of the Underwriters to purchase the Bonds terminates in accordance with the provisions of Sections 7 (but excluding terminations arising thereunder out of an Underwriter default), 9, 10 or 12 hereof, the Issuer or TCC (i) will reimburse the Underwriters for the reasonable fees and disbursements of Counsel for the Underwriters, and (ii) will reimburse the Underwriters for their reasonable out-of-pocket expenses, such out-of pocket expenses in an aggregate amount not exceeding $200,000, incurred in contemplation of the performance of this Underwriting Agreement.  The Issuer shall not in any event be liable to any of the several Underwriters for damages on account of loss of anticipated profits.
 
(vii)           During the period from the date of this Underwriting Agreement to the date that is five days after the Closing Date, the Issuer will not, without the prior written consent of the Representatives, offer, sell or contract to sell, or
 
 
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otherwise dispose of, directly or indirectly, or announce the offering of, any asset-backed securities (other than the Bonds).
 
(viii)           To the extent, if any, that any rating necessary to satisfy the condition set forth in Section 9(bb) 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.
 
(ix)           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 shall file with the Commission, and to the extent permitted by and consistent with the Issuer’s obligations under applicable law, make available on the website associated with the Issuer’s parent, such periodic reports, if any, as are required (without regard to the number of holders of Bonds to the extent permitted by and consistent with the Issuer’s obligations under applicable law) from time to time under Section 13 or Section 15(d) of the Exchange Act; provided that the Issuer shall not voluntarily suspend or terminate its filing obligations with the Commission unless permitted under applicable law and the terms of the Basic Documents.  The Issuer shall also, to the extent permitted by and consistent with the Issuer’s obligations under applicable law, include in the periodic and other reports to be filed with the Commission as provided above or posted on the website associated with the Issuer’s parent, such information as required by Section 3.07(d) of the Indenture with respect to the Bonds.  To the extent that the Issuer’s obligations are terminated or limited by an amendment to Section 3.07(d) of the Indenture, or otherwise, such obligations shall be correspondingly terminated or limited hereunder.
 
(x)           The Issuer and TCC will not file any amendment to the Registration Statement or amendment or supplement to the Final Prospectus or amendment or supplement to the Pricing Package during the period when a prospectus relating to the Bonds is required to be delivered under the Securities Act, without prior notice to the Underwriters, or to which Dewey & LeBoeuf LLP, who are acting as counsel for the Underwriters (“Counsel for the Underwriters”), shall reasonably object by written notice to TCC and the Issuer.
 
(xi)           So long as any of the Bonds are outstanding, the Issuer will furnish to the Representatives, if and to the extent not posted on the Issuer or its affiliate’s website, (A) as soon as available, a copy of each report of the Issuer filed with the Commission under the Exchange Act or mailed to the Bondholders (to the extent such reports are not publicly available on the Commission’s website), (B) a copy of any filings with the PUCT pursuant to the Financing Order including, but not limited to, any issuance advice letter or any annual, semi-annual or more frequent True-Up Adjustment filings, and (C) from time to time, any information concerning the Issuer as the Representatives may reasonably request.
 
 
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(xii)           So long as the Bonds are rated by any Rating Agency, the Issuer will comply with the 17g-5 Representations, other than (x) any noncompliance of the 17g-5 Representations that would not have a material adverse effect on the rating of the Bonds or the Bonds or (y) any noncompliance arising from the breach by an Underwriter of the representations and warranties and covenants set forth in Section 13 hereof.
 
(b)           Covenants of TCC.  TCC covenants and agrees with the several Underwriters that, to the extent that the Issuer has not already performed such act pursuant to Section 8(a):
 
(i)           To the extent permitted by applicable law and the agreements and instruments that bind TCC, TCC will use its reasonable best efforts to cause the Issuer to comply with the covenants set forth in Section 8(a) hereof.
 
(ii)           TCC will use its reasonable best efforts to prevent the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement and, if issued, to obtain as soon as possible the withdrawal thereof.
 
(iii)           If, during such period of time (not exceeding nine months) after the Final Prospectus has been filed with the Commission pursuant to Rule 424 as in the opinion of Counsel for the Underwriters a prospectus covering the Bonds is required by law to be delivered in connection with sales by an Underwriter or dealer, any event relating to or affecting TCC, the Bonds or the Transition Property or of which TCC shall be advised in writing by the Representatives shall occur that in TCC’s reasonable judgment after consultation with Counsel for the Underwriters should be set forth in a supplement to, or an amendment of, the Final Prospectus in order to make the Final Prospectus not misleading in the light of the circumstances when it is delivered to a purchaser, TCC will cause the Issuer, at TCC’s or the Issuer’s expense, to amend or supplement the Final Prospectus by either (A) preparing and furnishing to the Underwriters at TCC’s or the Issuer’s expense a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Final Prospectus or (B) causing the Issuer to make an appropriate filing pursuant to Section 13 or Section 15 of the Exchange Act, which will supplement or amend the Final Prospectus so that, as supplemented or amended, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Final Prospectus is delivered to a purchaser, not misleading; provided that should such event relate solely to the activities of any of the Underwriters, then such Underwriters shall assume the expense of preparing and furnishing any such amendment or supplement.  TCC will also fulfill its obligations set out in Section 4(d).
 
(iv)           During the period from the date of this Underwriting Agreement to the date that is five days after the Closing Date, TCC will not, without the prior written consent of the Representatives, offer, sell or contract to sell, or otherwise
 
 
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dispose of, directly or indirectly, or announce the offering of, any asset-backed securities (other than the Bonds).
 
(v)           TCC will cause the proceeds for the issuance and sale of the Bonds to be applied for the purposes described in the Pricing Prospectus.
 
(vi)           As soon as practicable, but not later than 16 months, after the date hereof, the TCC will make generally available (by posting on its website or otherwise) to its security holders, an earnings statement (which need not be audited) that will satisfy the provisions of Section 11(a) of the Securities Act.
 
(vii)           To the extent, if any, that any rating necessary to satisfy the condition set forth in Section 9(bb) of this Underwriting Agreement is conditioned upon the furnishing of documents or the taking of other actions by TCC on or after the Closing Date, TCC shall furnish such documents and take such other actions.
 
(viii)           The initial Transition Charge will be calculated in accordance with the Financing Order.
 
(ix)           So long as the Bonds are rated by a Rating Agency, TCC, in its capacity as sponsor with respect to the Bonds, will cause the Issuer to comply with the 17g-5 Representations, other than (x) any noncompliance of the 17g-5 Representations that would not have a material adverse effect on the rating of the Bonds or the Bonds or (y) any noncompliance arising from the breach by an Underwriter of the representations and warranties and covenants set forth in Section 13 hereof.
 
9.           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 and TCC contained in this Underwriting Agreement, on the part of TCC contained in Article III of the Sale Agreement, and on the part of TCC contained in Section 6.01 of the Servicing Agreement as of the Closing Date, to the accuracy of the statements of the Issuer and TCC made in any certificates pursuant to the provisions hereof, to the performance by the Issuer and TCC of their obligations hereunder, and to the following additional conditions:
 
(a)           The Final Prospectus shall have been filed with the Commission pursuant to Rule 424 prior to 5:30 P.M., New York time, on the second business day after the date of this Underwriting Agreement.  In addition, all material required to be filed by the Issuer or TCC pursuant to Rule 433(d) under the Securities Act that was prepared by either of them or that was prepared by any Underwriter and timely provided to the Issuer or TCC shall have been filed with the Commission within the applicable time period prescribed for such filing by such Rule 433(d).
 
(b)           No stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for that purpose shall be pending before, or threatened by, the Commission on the Closing Date; and the Underwriters shall have
 
 
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received one or more certificates, dated the Closing Date and signed by an officer of TCC and the Issuer, as appropriate, to the effect that no such stop order is in effect and that no proceedings for such purpose are pending before, or to the knowledge of TCC or the Issuer, as the case may be, threatened by, the Commission.
 
(c)           Dewey & LeBoeuf LLP, counsel for the Underwriters, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (a) hereto), dated the Closing Date, with respect to the issuance and sale of the Bonds, the Indenture, the other Issuer Documents, the Registration Statement and other related matters; and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters.
 
(d)           Richards, Layton & Finger, P.A., special Delaware counsel for TCC and the Issuer, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (b) hereto), dated the Closing Date, regarding the filing of a voluntary bankruptcy petition.
 
(e)           Richards, Layton & Finger, P.A., special Delaware counsel for TCC and the Issuer, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (c) hereto), dated the Closing Date, regarding certain Delaware Uniform Commercial Code matters.
 
(f)           Sidley Austin LLP, counsel for the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (d) hereto), dated the Closing Date, regarding certain aspects of the transactions contemplated by the Issuer Documents, including the Indenture and the Trustee’s security interest under the Uniform Commercial Code.
 
(g)           Sidley Austin LLP, counsel for the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (e) hereto), dated the Closing Date, regarding negative assurances and other corporate matters.
 
(h)           Sidley Austin LLP, counsel for the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (f) hereto), dated the Closing Date, i) to the effect that a court sitting in bankruptcy would not order the substantive consolidation of the assets and liabilities of the Issuer with those of TCC in connection with a bankruptcy, reorganization or other insolvency proceeding involving TCC, ii) that if TCC were to become a debtor in such insolvency proceeding, such court would hold that the Transition Property is not property of the estate of TCC and iii) regarding bankruptcy and corporate governance matters.
 
(i)           Bracewell & Giuliani LLP, counsel for the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (g) hereto), dated the Closing Date, regarding certain Texas constitutional matters relating to the Transition Property.
 
 
- 20 -

 
(j)           Sidley Austin LLP, counsel for the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (h) hereto), dated the Closing Date, regarding certain federal tax matters.
 
(k)           [Reserved]
 
(l)           Bracewell & Giuliani LLP, counsel for the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (j) hereto), dated the Closing Date, with respect to the characterization of the transfer of the Transition Property by TCC to the Issuer as a “true sale” for Texas law purposes.
 
(m)           Sidley Austin LLP, counsel for the Issuer and TCC, shall have furnished to the Representatives its written respective opinions (substantially in the form attached as Annex I (k) hereto), dated the Closing Date, regarding certain federal constitutional matters relating to the Transition Property.
 
(n)           Dorsey & Whitney LLP, counsel for the Indenture Trustee, shall have furnished to the Representatives their written opinions (each substantially in the form attached as Annex I (l) hereto), dated the Closing Date, regarding certain matters relating to the Indenture Trustee.
 
(o)           Duggins Wren Mann & Romero, LLP, counsel for TCC and the Issuer, shall have furnished to the representatives their opinion (substantially in the form attached as Annex I (m) hereto), dated the Closing Date, regarding certain Texas regulatory issues.
 
(p)           Duggins Wren Mann & Romero, LLP, counsel for TCC and the Issuer, shall have furnished to the representatives their opinion (substantially in the form attached as Annex I (n) hereto), dated the Closing Date, with respect to the treatment of Retail Electric Provider payments as transition charges.
 
(q)           Bracewell & Giuliani LLP, counsel for the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (o) hereto), dated the Closing Date, regarding enforceability and certain Texas perfection and priority issues.
 
(r)           Sidley Austin LLP, counsel for the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (p) hereto), dated the Closing Date, regarding certain bankruptcy matters relating to the Issuer.
 
(s)           Richards, Layton & Finger, P.A., counsel for the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (q) hereto), dated the Closing Date, regarding certain matters of Delaware law.
 
 
- 21 -

 
(t)           Duggins Wren Mann & Romero, LLP, counsel for the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (r) hereto), dated the Closing Date, regarding the constitutionality under the United States Constitution of the Texas Electric Choice Plan (Tex. Util. Code Ann. §§ 11.001-64.158).
 
(u)           Bracewell & Giuliani LLP, counsel to the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (s) hereto), dated the Closing Date, regarding certain Texas tax matters.
 
(v)           Bracewell & Giuliani LLP, counsel to the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (t) hereto), dated the Closing Date, regarding the consequences of the abolishment of the PUCT or the repeal of PURA by operation of the Texas Sunset Act.
 
(w)           Bracewell & Giuliani LLP, counsel to the Issuer and TCC, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (u) hereto), dated the Closing Date, regarding additional corporate matters.
 
(x)           On or before the date of this Underwriting Agreement and on or before the Closing Date, a nationally recognized accounting firm reasonably acceptable to the Representatives shall have furnished to the Representatives one or more reports regarding certain calculations and computations relating to the Bonds, in form or substance reasonably satisfactory to the Representatives, in each case in respect of which the Representatives shall have made specific requests therefor and shall have provided acknowledgment or similar letters to such firm reasonably necessary in order for such firm to issue such reports.
 
(y)           Subsequent to the respective dates as of which information is given in each of the Registration Statement, the Pricing Prospectus and the Final Prospectus, there shall not have been any change specified in the letters required by subsection (x) of this Section 9 which is, in the judgment of the Representatives, so material and adverse as to make it impracticable or inadvisable to proceed with the offering or the delivery of the Bonds as contemplated by the Registration Statement and the Final Prospectus.
 
(z)           The LLC Agreement, the Administration Agreement, the Intercreditor Agreement, the Sale Agreement, the Servicing Agreement and the Indenture and any amendment or supplement to any of the foregoing shall have been executed and delivered.
 
(aa)           Since the respective dates as of which information is given in each of the Registration Statement and in the Pricing Prospectus and as of the Closing Date there shall have been no (i) material adverse change in the business, property or financial condition of TCC and its subsidiaries, taken as a whole, whether or not in the ordinary course of business, or of the Issuer or (ii) adverse development concerning the business or assets of TCC and its subsidiaries, taken as a whole, or of the Issuer which would be reasonably likely to result in a material adverse change in the prospective business,
 
 
- 22 -

 
 
property or financial condition of TCC and its subsidiaries, taken as a whole, whether or not in the ordinary course of business, or the of Issuer or (iii) development which would be reasonably likely to result in a material adverse change, in the Transition Property, the Bonds or the Financing Order.
 
(bb)           At the Closing Date, (i) the Bonds shall be rated at least the ratings set forth in the Pricing Term Sheet by Moody’s Investors Service, Inc. (“Moody’s”), Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business (“S&P”) and Fitch, Inc. (“Fitch”), respectively, and the Issuer shall have delivered to the Underwriters a letter from each such rating agency, or other evidence satisfactory to the Underwriters, confirming that the Bonds have such ratings, and (ii) none of  Moody’s, S&P and Fitch shall have, since the date of this Underwriting Agreement, downgraded or publicly announced that it has under surveillance or review, with possible negative implications, its ratings of the Bonds.
 
(cc)           The Issuer and TCC shall have furnished or caused to be furnished to the Representatives at the Closing Date certificates of officers of TCC and the Issuer, reasonably satisfactory to the Representatives, as to the accuracy of the representations and warranties of the Issuer and TCC herein, in the Sale Agreement, Servicing Agreement and the Indenture at and as of the Closing Date, as to the performance by the Issuer and TCC of all of their obligations hereunder to be performed at or prior to such Closing Date, as to the matters set forth in subsections (b) and (aa) of this Section and as to such other matters as the Representatives may reasonably request.
 
(dd)           An issuance advice letter, in a form consistent with the provisions of the Financing Order, shall have been filed with the PUCT and shall have become effective.
 
(ee)           On or prior to the Closing Date, the Issuer shall have delivered to the Representatives evidence, in form and substance reasonably satisfactory to the Representatives, that appropriate filings have been or are being made in accordance with the Restructuring Act, the Financing Order and other applicable law reflecting the grant of a security interest by the Issuer in the collateral relating to the Bonds to the Indenture Trustee, including the filing of the requisite notices in the office of the Secretary of State of the State of Texas.
 
(ff)             On or prior to the Closing Date, TCC shall have funded the capital subaccount of the Issuer with cash in an amount equal to $4,000,000.
 
(gg)           The Issuer and TCC shall have furnished or caused to be furnished or agree to furnish to the Rating Agencies at the Closing Date such opinions and certificates as the Rating Agencies shall have reasonably requested prior to the Closing Date.
 
Any opinion letters delivered on the Closing Date to the Rating Agencies beyond those being delivered to the Underwriters above shall either (x) include the Underwriters as addressees or (y) be accompanied by reliance letters addressed to the Underwriters referencing such letters.
 
 
- 23 -

 
If any of the conditions specified in this Section 9 shall not have been fulfilled 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 Representatives and Counsel for the Underwriters, all obligations of the Underwriters hereunder may be canceled at, or at any time prior to, the Closing Date by the Representatives.  Notice of such cancellation shall be given to the Issuer in writing or by telephone or facsimile confirmed in writing.
 
10.           Conditions of Issuer’s Obligations.  The obligation of the Issuer to deliver the Bonds shall be subject to the conditions that no stop order suspending the effectiveness of the Registration Statement shall be in effect at the Closing Date and no proceeding for that purpose shall be pending before, or threatened by, the Commission at the Closing Date and the issuance advice letter described in Section 9(dd) shall have become effective.  In case these conditions shall not have been fulfilled, this Underwriting Agreement may be terminated by the Issuer upon notice thereof to the Underwriters.  Any such termination shall be without liability of any party to any other party except as otherwise provided in Sections 8(a)(vii) and 11 hereof.
 
11.           Indemnification and Contribution.
 
(a)           TCC and the Issuer, jointly and severally, shall indemnify, defend and hold harmless each Underwriter, each Underwriter’s officers and directors and each person who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act or Exchange Act or any other statute or common law and shall reimburse each such Underwriter and controlling person for any reasonable legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) as and when incurred by them in connection with investigating any such losses, claims, damages or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the Pricing Prospectus, each Issuer Free Writing Prospectus, the Pricing Package, the Final Prospectus or, in each case, any amendment or supplement thereto, collectively, or any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading or (iii) any information prepared by or on behalf of TCC or the Issuer and provided to the Underwriters; provided, however, that the indemnity agreement contained in this Section 11 shall not apply to any such losses, claims, damages, liabilities, expenses or actions arising out of, or based upon, any such untrue statement or alleged untrue statement, or any such omission or alleged omission, in each case if such statement or omission was made in reliance upon and in conformity with any Underwriter Information (as defined in Section 11(b) hereof), or arising out of, or based upon, statements in or omissions from that part of the Registration Statement that shall constitute the Statement of Eligibility under the Trust Indenture Act of the Indenture Trustee with respect to any
 
 
- 24 -

 
 
indenture qualified pursuant to the Registration Statement; provided, further that the indemnity agreement contained in this Section 11 shall not inure to the benefit of any Underwriter (or of any officer or director of such Underwriter or of any person controlling such Underwriter within the meaning of Section 15 of the Securities Act) on account of any such losses, claims, damages, liabilities, expenses or actions, joint or several, arising from the sale of the Bonds to any person to whom such Underwriter has sold Bonds if a copy of the Pricing Prospectus (including any amendment or supplement thereto if any amendments or supplements thereto shall have been furnished to the Underwriters reasonably prior to the time of the sale involved) (exclusive of the Incorporated Documents) shall, if then available and not yet filed with the Commission pursuant to Rule 424, not have been given or sent to such person by or on behalf of such Underwriter at the time of or prior to the sale of the Bonds to such person unless the alleged omission or alleged untrue statement was not corrected in the Pricing Prospectus (including any amendment or supplement thereto if any amendments or supplements thereto have been furnished to the Underwriters reasonably prior to the time of the sale involved) at the time of such sale.  The indemnity agreement of TCC and Issuer contained in this Section 11 and the representations and warranties of the Issuer and TCC contained in Sections 3 and 4 hereof shall remain operative and in full force and effect regardless of any termination of this Underwriting Agreement or of any investigation made by or on behalf of any Underwriter, its officers or its directors or any such controlling person, and shall survive the delivery of the Bonds.
 
(b)           Each Underwriter shall severally and not jointly indemnify, defend and hold harmless TCC and the Issuer, each of TCC’s and Issuer’s respective officers, directors, and managers, and each person who controls the Issuer or TCC within the meaning of Section 15 of the Securities Act, from and against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act or any other statute or common law and shall reimburse each of them for any reasonable legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) as and when incurred by them in connection with investigating any such losses, claims, damages or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with the Underwriter Information or (ii) any untrue statement or alleged untrue statement of a material fact contained in the Final Prospectus, each Issuer Free Writing Prospectus, the Pricing Package, collectively, or any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; if such statement or omission was made in reliance upon and in conformity with the Underwriter Information.  The only such information furnished to TCC by the Underwriters in writing expressly for use in such foregoing documents is set forth in Schedule IV hereto (the “Underwriter Information”).  The indemnity agreement of the respective Underwriters contained in this Section 11 and the representations and warranties of the Underwriters contained in Sections 5 and 13 hereof shall remain operative and in full force and effect regardless of
 
 
- 25 -

 
 
any termination of this Underwriting Agreement or of any investigation made by or on behalf of TCC or the Issuer, their directors, managers or officers, any such Underwriter, or any such controlling person, and shall survive the delivery of the Bonds.
 
(c)           TCC, the Issuer and the several Underwriters each shall, upon the receipt of notice of the commencement of any action against it or any person controlling it as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, promptly give written notice of the commencement thereof to the party or parties against whom indemnity shall be sought under (a) or (b) above, but the failure to notify such indemnifying party or parties of any such action shall not relieve such indemnifying party or parties from any liability hereunder to the extent such indemnifying party or parties is/are not materially prejudiced as a result of such failure to notify and in any event shall not relieve such indemnifying party or parties from any liability which it or they may have to the indemnified party otherwise than on account of such indemnity agreement.  In case such notice of any such action shall be so given, such indemnifying party shall be entitled to participate at its own expense in the defense, or, if it so elects, to assume (in conjunction with any other indemnifying parties) the defense of such action, in which event such defense shall be conducted by counsel chosen by such indemnifying party or parties and reasonably satisfactory to the indemnified party or parties who shall be defendant or defendants in such action, and such defendant or defendants shall bear the fees and expenses of any additional counsel retained by them; but if the indemnifying party shall elect not to assume the defense of such action, such indemnifying party will reimburse such indemnified party or parties for the reasonable fees and expenses of any counsel retained by them; provided, however, if the defendants in any such action (including impleaded parties) include both the indemnified party and the indemnifying party and counsel for the indemnifying party shall have reasonably concluded that there may be a conflict of interest involved in the representation by a single counsel of both the indemnifying party and the indemnified party, the indemnified party or parties shall have the right to select separate counsel, satisfactory to the indemnifying party, whose reasonable fees and expenses shall be paid by such indemnifying party, to participate in the defense of such action on behalf of such indemnified party or parties (it being understood, however, that the indemnifying party shall not be liable for the fees and expenses of more than one separate counsel (in addition to local counsel) representing the indemnified parties who are parties to such action).  Each of TCC, Issuer and the several Underwriters agrees that without the other party’s prior written consent, which consent shall not be unreasonably withheld, it will not settle, compromise or consent to the entry of any judgment in any claim in respect of which indemnification may be sought under the indemnification provisions of this Underwriting Agreement, unless such settlement, compromise or consent (i) includes an unconditional release of such other party from all liability arising out of such claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of such other party.
 
(d)           If the indemnification provided for in subparagraph (a) or (b) above shall be unavailable to or insufficient to hold harmless an indemnified party, each indemnifying party agrees to contribute to such indemnified party with respect to any and all losses, claims, damages, liabilities and expenses for which each such indemnification
 
 
- 26 -

 
 
provided for in subparagraph (a) or (b) above shall be unavailable or insufficient, in such proportion as shall be appropriate to reflect (i) the relative benefits received by TCC and the Issuer on the one hand and the Underwriters on the other hand from the offering of the Bonds pursuant to this Underwriting Agreement or (ii) if an allocation solely on the basis provided by clause (i) is not permitted by applicable law or is inequitable or against public policy, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of each indemnifying party on the one hand and the indemnified party on the other in connection with the statements or omissions which have resulted in such losses, claims, damages, liabilities and expenses and (iii) any other relevant equitable considerations; provided, however, that no indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party not guilty of such fraudulent misrepresentation.  Relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or the indemnified party and each such party’s relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission.  TCC, the Issuer and each of the Underwriters agree that it would not be just and equitable if contributions pursuant to this subparagraph (d) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above.  Notwithstanding the provisions of this Section 11, no Underwriter shall be required to contribute in excess of the amount equal to the excess of (i) the total underwriting discount and commissions received by it, over (ii) the amount of any damages which such Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission.  The obligations of each Underwriter to contribute pursuant to this Section 11 are several and not joint and shall be in the same proportion as such Underwriter’s obligation to underwrite Bonds is to the total number of Bonds set forth in Schedule II hereto.
 
12.           Termination.  This Underwriting Agreement may be terminated, at any time prior to the Closing Date with respect to the Bonds by the Representatives by written notice to the Issuer if after the date hereof and at or prior to the Closing Date (a) there shall have occurred any general suspension of trading in securities on the New York Stock Exchange (“NYSE”) or there shall have been established by the NYSE, or by the Commission any general limitation on prices for such trading or any general restrictions on the distribution of securities, or a general banking moratorium declared by New York or federal authorities or (b) there shall have occurred any (i) material outbreak of hostilities (including, without limitation, an act of terrorism) or (ii) declaration by the United States of war or national or international calamity or crisis, including, but not limited to, a material escalation of hostilities that existed prior to the date of this Underwriting Agreement or (iii) material adverse change in the financial markets in the United States, and the effect of any such event specified in clause (a) or (b) above on the financial markets of the United States shall be such as to materially and adversely affect, in the reasonable judgment of the Representatives, their ability to proceed with the public offering or the delivery of the Bonds on the terms and in the manner contemplated by the Final Prospectus.  Any termination hereof pursuant to this Section 12 shall be without liability of any party to any other party except as otherwise provided in Sections 8(a)(vii) and 11 hereof.
 
 
- 27 -

 
13.           Representations, Warranties and Covenants of the Underwriters.  The Underwriters, severally and not jointly,  represent, warrant and agree with the Issuer and TCC that, unless the Underwriters obtained, or will obtain, the prior written consent of the Issuer or TCC, the Representatives (x) have not delivered, and will not deliver, any Rating Information (as defined below) to any Rating Agency until and unless the Issuer or TCC advises the Underwriters that such Rating Information is posted to the Issuer’s website maintained by the Issuer pursuant to paragraph (a)(3)(iii)(B) of Rule 17g-5 under the Exchange Act in the same form as it will be provided to such Rating Agency, and (y) have not participated, and will not participate, with any Rating Agency in any oral communication of any Rating Information without the participation of a representative of the Issuer or TCC.  For purposes of this Section 13, “Rating Information” means any information provided to a Rating Agency for the purpose of determining an initial credit rating on the Bonds. 
 
14.           Absence of Fiduciary Relationship.  Each of the Issuer and TCC acknowledges and agrees that the Underwriters are acting solely in the capacity of an arm’s length contractual counterparty to the Issuer and TCC with respect to the offering of the Bonds contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Issuer or TCC.  Additionally, none of the Underwriters is advising the Issuer or TCC as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.  The Issuer and TCC shall consult with their own advisors concerning such matters and shall be responsible for making their own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or liability to the Issuer or TCC with respect thereto.  Any review by the Underwriters of the Issuer or TCC, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Issuer or TCC.
 
15.           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 Representatives, to it at the address specified in Schedule I hereto; and if sent to TCC, to it at 1 Riverside Plaza, Columbus, Ohio 43215, Attention: Treasurer; and if sent to the Issuer, to it at 539 North Carancahua Street, Suite 1700, Corpus Christi, Texas, 78401, Attention: Manager.  The parties hereto, by notice to the others, may designate additional or different addresses for subsequent communications.
 
16.           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 11 hereof, and no other person will have any right or obligation hereunder.
 
17.           Applicable Law.  This Underwriting Agreement will be governed by and construed in accordance with the laws of the State of New York.
 
 
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18.           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.
 
19.           Integration.  This Agreement supersedes all prior agreements and understandings (whether written or oral) among the Issuer, TCC and the Underwriters, or any of them, with respect to the subject matter hereof.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- 29 -

 
 
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 TCC, the Issuer and the several Underwriters.
 
  Very truly yours,  
     
 
AEP TEXAS CENTRAL COMPANY
 
       
 
By:
/s/ Charles E. Zebula  
       
  Name:  Charles E. Zebula  
  Title: Treasurer  
       
 
 
AEP TEXAS CENTRAL TRANSITION FUNDING III LLC
 
       
 
By:
/s/ Charles E. Zebula  
       
  Name:  Charles E. Zebula  
  Title: Vice President and Treasurer   
       
 


 
 
 
 

 
 
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  The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representatives on behalf of the Underwriters as of the date specified in Schedule I hereto.  
     
 
MORGAN STANLEY & CO. LLC
 
       
 
By:
/s/ Charles N. Atkins  
       
  Name:  Charles N. Atkins  
  Title: Executive Director  
       
 
 
BARCLAYS CAPITAL INC.
 
       
 
By:
/s/ Kieran Brady  
       
  Name:  Kieran Brady  
  Title: Director  
       
 
 
CITIGROUP GLOBAL MARKETS INC.
 
       
 
By:
/s/ Kosta Karantzoulis  
       
  Name:  Kosta Karantzoulis  
  Title: Director  
       
 


 
- 31 -

 
SCHEDULE I
 
Underwriting Agreement dated March 7, 2012
 
Registration Statement Nos. 333-179092 and 333-197092-01
 
Representatives: Morgan Stanley & Co. LLC, Barclays Capital Inc. and Citigroup Global Markets Inc.
 
c/o Morgan Stanley & Co. LLC

 
Address: 
1585 Broadway
New York, New York 10036

 
Attention: 
Charles Atkins

Title, Purchase Price and Description of Bonds:
 
 
Title:
AEP Texas Central Transition Funding III LLC Senior Secured Transition Bonds,
 
   
Total Principal
Amount of
Tranche
   
Bond Rate
   
Price to Public
   
Underwriting
Discounts and
Commissions
   
Proceeds to
Issuer
 
                               
Per Tranche A-1 Bond
  $ 307,900,000       0.8801 %     99.99971 %     0.40 %   $ 306,667,507  
Per Tranche A-2 Bond
  $ 180,200,000       1.9764 %     99.99967 %     0.40 %   $ 179,478,605  
Per Tranche A-3 Bond
  $ 311,900,000       2.8449 %     99.99948 %     0.40 %   $ 310,650,778  
                                         
Total
  $ 800,000,000                             $ 796,796,891  


Original Issue Discount (if any): $3,109
 
Redemption provisions:     None
 
Other provisions:       None
 
Closing Date, Time and Location:
March 14, 2012, 10:00 a.m.; offices of Sidley Austin LLP; One South Dearborn Street, Chicago, Illinois 60603 and simultaneously in the offices of Dewey & LeBoeuf LLP, 1301 Ave. of the Americas, New York, New York 10019
 
 
 
 
I-1

 
 
SCHEDULE II
 
Principal Amount of Bonds to be Purchased
 
                         
                         
Underwriter
 
Tranche A-1
   
Tranche A-2
   
Tranche A-3
   
Total
 
Morgan Stanley & Co. LLC
  $ 98,528,000     $ 57,664,000     $ 99,808,000     $ 256,000,000  
Barclays Capital Inc.
    73,896,000       43,248,000       74,856,000       192,000,000  
Citigroup Global Markets Inc.
    73,896,000       43,248,000       74,856,000       192,000,000  
Goldman, Sachs & Co.
    15,395,000       9,010,000       15,595,000       40,000,000  
Samuel A. Ramirez & Company, Inc.
    15,395,000       9,010,000       15,595,000       40,000,000  
RBS Securities Inc.
    15,395,000       9,010,000       15,595,000       40,000,000  
Wells Fargo Securities, LLC
    15,395,000       9,010,000       15,595,000       40,000,000  
                                 
Total
  $ 307,900,000     $ 180,200,000     $ 311,900,000     $ 800,000,000  
 
 
 
 
 
 
 
 
 
 
II-1

 
 
 
SCHEDULE III
 
Schedule of Issuer Free Writing Prospectuses
 
A. 
Free Writing Prospectuses not required to be filed
 
Electronic Road Show
 
B. 
Free Writing Prospectuses required to be filed pursuant to Rule 433
 
Preliminary Term Sheet
 
Pricing Term Sheet, dated March 7, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
III-1

 

 
SCHEDULE IV
 
Descriptive List of Underwriter Provided Information
 
A. 
Pricing Prospectus
 
(a) under the heading “UNDERWRITING THE BONDS” in the Preliminary Prospectus Supplement: (i) the second paragraph immediately thereunder; (ii) the third sentence under the caption “No Assurance as to Resale Price or Resale Liquidity for the Bonds”; (iii) the entire first full paragraph under the caption “Various Types of Underwriter Transactions Which May Affect the Price of the Bonds” (except the last sentence thereof); and (iv) the last sentence of the second full paragraph and the last sentence of the fifth full paragraph under the caption “Various Types of Underwriter Transactions Which May Affect the Price of the Bonds”; and (b) under the heading “OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE TRANSITION BONDS” in the Prospectus, the first sentence under the caption “The Absence of a Secondary Market for a Series of Transition Bonds Might Limit Your Ability to Resell Your Transition Bonds of Such Series.”
 
B. 
Final Prospectus
 
(a)           the penultimate full paragraph on the cover page of the Prospectus Supplement; (b) under the heading “UNDERWRITING THE BONDS” in the Prospectus Supplement: (i) the first and second paragraphs (including the table) immediately thereunder; (ii) the entire two paragraphs under the caption “The Underwriters’ Sales Price for the Bonds”; (iii) the third sentence under the caption “No Assurance as to Resale Price or Resale Liquidity for the Bonds”; (iii) the entire first full paragraph under the caption “Various Types of Underwriter Transactions Which May Affect the Price of the Bonds” (except the last sentence thereof); and (iv) the last sentence of the second full paragraph and the last sentence of the fifth full paragraph under the caption “Various Types of Underwriter Transactions Which May Affect the Price of the Bonds”; and (c) under the heading “OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE TRANSITION BONDS” in the Prospectus, the first sentence under the caption “The Absence of a Secondary Market for a Series of Transition Bonds Might Limit Your Ability to Resell Your Transition Bonds of Such Series.”
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IV-1

 
 
Annex I
 
For purposes of Annex I (a) to Annex I (u) please see closing documents numbers 38 – 58, as so labeled in the closing checklist.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

efc12-292_ex41.htm
Exhibit 4.1
EXECUTION COPY

 

 

 

 

 
AEP TEXAS CENTRAL TRANSITION FUNDING III LLC,
 
Issuer,
 
and
 
U.S. BANK NATIONAL ASSOCIATION,
 
Indenture Trustee and Securities Intermediary
 

 
 


INDENTURE
 
Dated as of March 14, 2012
 

 

 
 
 

 
TABLE OF CONTENTS
 
Page
 
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE
2
SECTION 1.01. Definitions.
2
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
2
SECTION 1.03. Rules of Construction.
2
ARTICLE II THE TRANSITION BONDS
3
SECTION 2.01. Form.
3
SECTION 2.02. Denominations of Transition Bonds.
3
SECTION 2.03. Execution, Authentication and Delivery.
4
SECTION 2.04. Temporary Transition Bonds.
5
SECTION 2.05. Registration; Registration of Transfer and Exchange of Transition Bonds.
5
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Transition Bonds.
6
SECTION 2.07. Persons Deemed Owner.
7
SECTION 2.08. Payment of Principal, Premium, if any, and Interest; Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights Preserved.
7
SECTION 2.09. Cancellation.
9
SECTION 2.10. Outstanding Amount; Authentication and Delivery of Transition Bonds.
9
SECTION 2.11. Book-Entry Transition Bonds.
12
SECTION 2.12. Notices to Clearing Agency.
13
SECTION 2.13. Definitive Transition Bonds.
13
SECTION 2.14. CUSIP Number.
13
SECTION 2.15. Letter of Representations.
14
SECTION 2.16. Tax Treatment.
14
SECTION 2.17. State Pledge.
14
SECTION 2.18. Security Interests.
14
ARTICLE III COVENANTS
16
SECTION 3.01. Payment of Principal, Premium, if any, and Interest.
16
SECTION 3.02. Maintenance of Office or Agency.
16
SECTION 3.03. Money for Payments To Be Held in Trust.
16
SECTION 3.04. Existence.
17
SECTION 3.05. Protection of Transition Bond Collateral.
18
SECTION 3.06. Opinions as to Transition Bond Collateral.
18
SECTION 3.07. Performance of Obligations; Servicing; SEC Filings.
19
SECTION 3.08. Certain Negative Covenants.
22
SECTION 3.09. Annual Statement as to Compliance.
23
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
23
SECTION 3.11. Successor or Transferee.
25
SECTION 3.12. No Other Business.
26
SECTION 3.13. No Borrowing.
26
SECTION 3.14. Servicer’s Obligations.
26
 
 
 
 
 
 

 
 
 
Page
 
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.
26
SECTION 3.16. Capital Expenditures.
26
SECTION 3.17. Restricted Payments.
26
SECTION 3.18. Notice of Events of Default.
27
SECTION 3.19. Further Instruments and Acts.
27
SECTION 3.20. [Reserved].
27
SECTION 3.21. Inspection.
27
SECTION 3.22. Sale Agreement, Servicing Agreement, Administration Agreement and Intercreditor Agreement Covenants.
28
SECTION 3.23. Taxes.
29
ARTICLE IV SATISFACTION AND DISCHARGE; DEFEASANCE
30
SECTION 4.01. Satisfaction and Discharge of Indenture; Defeasance.
30
SECTION 4.02. Conditions to Defeasance.
31
SECTION 4.03. Application of Trust Money.
33
SECTION 4.04. Repayment of Moneys Held by Paying Agent.
33
ARTICLE V REMEDIES
33
SECTION 5.01. Events of Default.
33
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.
35
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.
36
SECTION 5.04. Remedies; Priorities.
37
SECTION 5.05. Optional Preservation of the Transition Bond Collateral.
39
SECTION 5.06. Limitation of Suits.
39
SECTION 5.07. Unconditional Rights of Holders To Receive Principal, Premium, if any, and Interest.
40
SECTION 5.08. Restoration of Rights and Remedies.
40
SECTION 5.09. Rights and Remedies Cumulative.
40
SECTION 5.10. Delay or Omission Not a Waiver.
40
SECTION 5.11. Control by Holders.
40
SECTION 5.12. Waiver of Past Defaults.
41
SECTION 5.13. Undertaking for Costs.
41
SECTION 5.14. Waiver of Stay or Extension Laws.
42
SECTION 5.15. Action on Transition Bonds.
42
ARTICLE VI THE INDENTURE TRUSTEE
42
SECTION 6.01. Duties of Indenture Trustee.
42
SECTION 6.02. Rights of Indenture Trustee.
44
SECTION 6.03. Individual Rights of Indenture Trustee.
45
SECTION 6.04. Indenture Trustee’s Disclaimer.
45
SECTION 6.05. Notice of Defaults.
45
SECTION 6.06. Reports by Indenture Trustee to Holders.
46
SECTION 6.07. Compensation and Indemnity.
47
SECTION 6.08. Replacement of Indenture Trustee and Securities Intermediary.
48
SECTION 6.09. Successor Indenture Trustee by Merger.
49
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee.
49
SECTION 6.11. Eligibility; Disqualification.
50
 
 
 
 
ii

 
 
Page
 
SECTION 6.12. Preferential Collection of Claims Against Issuer.
51
SECTION 6.13. Representations and Warranties of Indenture Trustee.
51
SECTION 6.14. Annual Report by Independent Registered Public Accountants.
51
SECTION 6.15. Custody of Transition Bond Collateral.
51
ARTICLE VII HOLDERS’ LISTS AND REPORTS
52
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of Holders.
52
SECTION 7.02. Preservation of Information; Communications to Holders.
52
SECTION 7.03. Reports by Issuer.
52
SECTION 7.04. Reports by Indenture Trustee.
53
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES
53
SECTION 8.01. Collection of Money.
53
SECTION 8.02. Collection Account and REP Deposit Accounts.
54
SECTION 8.03. General Provisions Regarding the Collection Account.
57
SECTION 8.04. Release of Transition Bond Collateral.
58
SECTION 8.05. Opinion of Counsel.
59
SECTION 8.06. Reports by Independent Registered Public Accountants.
59
ARTICLE IX SUPPLEMENTAL INDENTURES
60
SECTION 9.01. Supplemental Indentures Without Consent of Holders.
60
SECTION 9.02. Supplemental Indentures with Consent of Holders.
61
SECTION 9.03. PUCT Condition.
63
SECTION 9.04. Execution of Supplemental Indentures.
64
SECTION 9.05. Effect of Supplemental Indenture.
64
SECTION 9.06. Conformity with Trust Indenture Act.
64
SECTION 9.07. Reference in Transition Bonds to Supplemental Indentures.
64
ARTICLE X MISCELLANEOUS
64
SECTION 10.01. Compliance Certificates and Opinions, etc.
64
SECTION 10.02. Form of Documents Delivered to Indenture Trustee.
66
SECTION 10.03. Acts of Holders.
67
SECTION 10.04. Notices, etc., to Indenture Trustee, Issuer and Rating Agencies.
67
SECTION 10.05. Notices to Holders; Waiver.
69
SECTION 10.06. [Reserved]
69
SECTION 10.07. Conflict with Trust Indenture Act.
69
SECTION 10.08. Effect of Headings and Table of Contents.
69
SECTION 10.09. Successors and Assigns.
69
SECTION 10.10. Severability.
69
SECTION 10.11. Benefits of Indenture.
70
SECTION 10.12. Legal Holidays.
70
SECTION 10.13. GOVERNING LAW.
70
SECTION 10.14. Counterparts.
70
SECTION 10.15. Recording of Indenture.
70
SECTION 10.16. Issuer Obligation.
70
SECTION 10.17. No Recourse to Issuer.
71
SECTION 10.18. Basic Documents.
71
SECTION 10.19. No Petition.
71
 
 
 
 
 
iii

 
 
 
Page
 
SECTION 10.20. Securities Intermediary.
72
 
 
 
 
 
 
 
 
 
 

 
iv

 
  
EXHIBITS AND SCHEDULES
                                
 
EXHIBIT A Form of Transition Bonds
EXHIBIT B Form of Series Supplement
EXHIBIT C Servicing Criteria to be Addressed by Indenture Trustee in Assessment of Compliance
 
                                                                
APPENDIX

 
APPENDIX A Definitions
 
                            
 
 
 
 

 
 
v

 
TRUST INDENTURE ACT CROSS REFERENCE TABLE

TRUST INDENTURE ACT CROSS REFERENCE TABLE
 
 TIA Section  Indenture Section
310
(a)(1)
6.11
 
(a)(2)
6.11
 
(a)(3)
6.10(b)(i)
 
(a)(4)
N.A.
 
(a)(5)
6.11
 
(b)
6.11
311
(a)
6.12
 
(b)
6.12
312
(a)
7.01 and 7.02
 
(b)
7.02(b)
 
(c)
7.02(c)
313
(a)
7.04
 
(b)(1)
7.04
 
(b)(2)
7.04
 
(c)
7.04
 
(d)
7.04
314
(a)
3.09, 4.01, and 7.03(a)
 
(b)
3.06 and 4.01
 
(c)(1)
2.10, 4.01, 8.04(b) and 10.01(a)
 
(c)(2)
2.10, 4.01, 8.04(b) and 10.01(a)
 
(c)(3)
2.10 4.01 and 10.01(a)
 
(d)
2.10, 8.04(b) and 10.01(b)
 
(e)
10.01(a)
 
(f)
10.01(a)
 
 
 
 
 
vi

 
 
 
 TIA Section  Indenture Section
315
(a)
6.01(b)(i) and (ii)
 
(b)
6.05
 
(c)
6.01 (a)
 
(d)
6.01(c)(i)-(iii)
 
(e)
5.13
316
(a) (last sentence)
Appendix A – definition of “Outstanding”
 
(a)(1)(A)
5.11
 
(a)(1)(B)
5.12
 
(a)(2)
N/A
 
(b)
5.07
 
(c)
Appendix A – definition of “Record Date”
317
(a)(1)
5.03(a)
 
(a)(2)
5.03(c)(iv)
 
(b)
3.03
318
(a)
10.06
 
(b)
10.06
 
(c)
10.06
 
 

**           “N.A.”  shall mean “not applicable.”
 
THIS CROSS REFERENCE TABLE SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE PART OF THIS INDENTURE.
 
 
 
 
 
 
vii

 

This INDENTURE dated as of March 14, 2012, by and between AEP TEXAS CENTRAL TRANSITION FUNDING III LLC, a Delaware limited liability company (the “Issuer”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association, in its capacity as indenture trustee (the “Indenture Trustee”) for the benefit of the Secured Parties (as defined herein) and in its separate capacity as a securities intermediary (the “Securities Intermediary”).
 
In consideration of the mutual agreements herein contained, each party agrees as follows for the benefit of the other and each of the Holders:
 
RECITALS OF THE ISSUER
 
The Issuer has duly authorized the execution and delivery of this Indenture and the creation and issuance of the Transition Bonds issuable hereunder, which will be of substantially the tenor set forth herein and in the Series Supplement.
 
The Transition Bonds shall be non-recourse obligations and shall be secured by and payable solely out of the proceeds of the Transition Property and the other Transition Bond Collateral.  If and to the extent that such proceeds of Transition Property and the other Transition Bond Collateral are insufficient to pay all amounts owing with respect to the Transition Bonds, then, except as otherwise expressly provided hereunder, the Holders shall have no Claim in respect of such insufficiency against the Issuer or the Indenture Trustee, and the Holders, by their acceptance of the Transition Bonds, waive any such Claim.
 
All things necessary to (a) make the Transition Bonds, when executed by the Issuer and authenticated and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, valid obligations, and (b) make this Indenture a valid agreement of the Issuer, in each case, in accordance with their respective terms, have been done.
 
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
 
That the Issuer, in consideration of the premises herein contained and of the purchase of the Transition Bonds by the Holders and of other good and lawful consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure, equally and ratably without prejudice, priority or distinction, except as specifically otherwise set forth in this Indenture, the payment of the Transition Bonds, the payment of all other amounts due under or in connection with this Indenture (including, without limitation, all fees, expenses, counsel fees and other amounts due and owing to the Indenture Trustee) and the performance and observance of all of the covenants and conditions contained herein or in the Transition Bonds, has hereby executed and delivered this Indenture and by these presents does hereby and under the Series Supplement will convey, grant and assign, transfer and pledge, in each case, in and unto the Indenture Trustee, its successors and assigns forever, for the benefit of the Secured Parties, all and singular the property described in the Series Supplement (such property hereinafter referred to as the “Transition Bond Collateral”).  The Series Supplement will more particularly describe the obligations of the Issuer secured by the Transition Bond Collateral.
 

 
 

 
 
AND IT IS HEREBY COVENANTED, DECLARED AND AGREED between the parties hereto that all Transition Bonds are to be issued, countersigned and delivered and that all of the Transition Bond Collateral is to be held and applied, subject to the further covenants, conditions, releases, uses and trusts hereinafter set forth, and the Issuer, for itself and any successor, does hereby covenant and agree to and with the Indenture Trustee and its successors in said trust, for the benefit of the Secured Parties, as follows:
 
ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE
 
SECTION 1.01. Definitions.  Except as otherwise specified herein or as the context may otherwise require, the capitalized terms used herein shall have the respective meanings set forth in Appendix A attached hereto and made a part hereof for all purposes of this Indenture.
 
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.  Whenever this Indenture refers to a provision of the TIA, that provision is incorporated by reference in and made a part of this Indenture.  The following TIA terms used in this Indenture have the following meanings:
 
“indenture securities” means the Transition Bonds.
 
“indenture security holder” means a Holder.
 
“indenture to be qualified” means this Indenture.
 
“indenture trustee” or “institutional trustee” means the Indenture Trustee.
 
“obligor” on the indenture securities means the Issuer and any other obligor on the indenture securities.
 
All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.
 
SECTION 1.03. Rules of Construction.  Unless the context otherwise requires:
 
(i) a term has the meaning assigned to it;
 
(ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles in the United States of America as in effect from time to time;
 
(iii) “or” is not exclusive;
 
(iv) “including” means including without limitation;
 
 
 
 
2

 
(v) words in the singular include the plural and words in the plural include the singular; and
 
(vi) 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 Indenture Trustee’s certificate of authentication shall be in substantially the forms set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or by the 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 officers executing the Transition Bonds, as evidenced by their execution of the 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.
 
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 officers executing the Transition Bonds, as evidenced by their execution of the Transition Bonds.
 
Each Transition Bond shall be dated the date of its authentication.  The terms of the Transition Bonds set forth in Exhibit A are part of the terms of this Indenture.
 
SECTION 2.02. Denominations of Transition Bonds.  The Transition Bonds shall be issuable in the Minimum Denomination specified in the Series Supplement and, except as otherwise provided in the Series Supplement in integral multiples thereof.
 
The Transition Bonds may, at the election of and as authorized by a Responsible Officer of the Issuer, be issued in one or more Tranches, 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 Tranche as a Responsible Officer of the Issuer may determine.  Each Transition Bond shall bear upon its face the designation so selected for the Tranche to which it belongs.  All Transition Bonds shall be identical in all respects except for the denominations thereof, unless the Transition Bonds are comprised of one or more Tranches, in which case all Transition Bonds of the same Tranche shall be identical in all respects except for the denominations thereof.  All Transition Bonds of a particular Tranche shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority, or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture.
 
The Transition Bonds shall be created by the Series Supplement authorized by a Responsible Officer of the Issuer which shall establish the terms and provisions thereof.  The
 
 
 
 
 
3

 
several Tranches thereof may differ as between Tranches, in respect of any of the following matters:
 
  (1) designation of the Tranches thereof;
     
  (2) the principal amount;
     
  (3) the Transition Bond Interest Rate;
     
  (4) the Payment Dates;
     
  (5) the Scheduled Payment Dates;
     
  (6) the Scheduled Final Payment Date;
     
  (7) the Final Maturity Date;
     
  (8) the place or places for the payment of interest, principal and premium, if any;
     
  (9) the Minimum Denominations;
     
  (10) the Expected Amortization Schedule;
     
  (11) provisions with respect to the definitions set forth in Appendix A hereto;
     
  (12) whether or not the Transition Bonds are to be Book-Entry Transition Bonds and the extent to which Section 2.11 should apply; and
     
  (13) any other provisions expressing or referring to the terms and conditions upon which the Transition Bonds of any Tranche
are to be issued under this Indenture that are not in conflict with the provisions of this Indenture and as to which the Rating Agency Condition is satisfied.
 
SECTION 2.03. Execution, Authentication and Delivery.  The Transition Bonds shall be executed on behalf of the Issuer by any of its Responsible Officers.  The signature of any such Responsible Officer on the Transition Bonds may be manual or facsimile.
 
Transition Bonds bearing the manual or facsimile signature of individuals who were at any time Responsible Officers of the Issuer 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 the Transition Bonds or did not hold such offices at the date of the 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 by the Issuer to the Indenture Trustee pursuant to an Issuer Order for authentication; and the Indenture Trustee shall authenticate and deliver the Transition Bonds as in this Indenture provided and not otherwise.
 
 
 
 
4

 
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 therein executed by the Indenture 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 2.04. Temporary Transition Bonds.  Pending the preparation of Definitive Transition Bonds pursuant to Section 2.13, the Issuer may execute, and upon receipt of an Issuer Order the Indenture 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 officers executing the Transition Bonds may determine, as evidenced by their execution of the Transition Bonds.
 
If Temporary Transition Bonds are issued, the Issuer will cause Definitive Transition Bonds to be prepared without unreasonable delay.  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, the Transition Bond  Issuer shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Transition Bonds of authorized denominations.  Until so delivered in exchange, 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 of Transition Bonds.  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 Indenture 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 Indenture Trustee is appointed by the Issuer as Transition Bond Registrar, the Issuer will give the Indenture 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 Indenture Trustee shall have the right to inspect the Transition Bond Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee shall have the right to rely conclusively upon a certificate executed on behalf of the Transition Bond Registrar by a Responsible Officer thereof as to the names and addresses of the Holders and the principal amounts and number of the Transition Bonds (separately stated by Tranche).
 
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, provided that the requirements
 
 
 
 
5

 
of Section 8-401 of the UCC are met, the Issuer shall execute, and the Indenture Trustee shall authenticate and the Holder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, one or more new Transition Bonds in any Minimum Denominations, of the same Tranche and aggregate principal amount.
 
At the option of the Holder, Transition Bonds may be exchanged for other Transition Bonds in any Minimum Denominations, of the same Tranche and aggregate principal amount, upon surrender of the Transition Bonds to be exchanged at such office or agency as provided in Section 3.02.  Whenever any Transition Bonds are so surrendered for exchange, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute and, upon any such execution, the Indenture Trustee shall authenticate and the Holder shall obtain from the Indenture Trustee, the Transition Bonds which the Holder making the exchange is entitled to receive.
 
All Transition Bonds issued upon any registration of transfer or exchange of other 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) a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) such other guarantee program acceptable to the Indenture Trustee, and (b) such other documents as the Indenture Trustee may require.
 
No service charge shall be made to a Holder for any registration of transfer or exchange of Transition Bonds, but the Issuer or the Indenture Trustee may require payment of a sum sufficient to cover any tax or other governmental charge or any fees or expenses of the Indenture Trustee that may be imposed in connection with any registration of transfer or exchange of Transition Bonds, other than exchanges pursuant to Sections 2.04 or 2.06 not involving any transfer.
 
The preceding provisions of this Section 2.05 notwithstanding, the Issuer shall not be required to make, and the Transition Bond Registrar need not register transfers or exchanges of any Transition Bond that has been submitted within fifteen (15) days preceding the due date for any payment with respect to such Transition Bond until after such due date has occurred.
 
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Transition Bonds.  If (i) any mutilated Transition Bond is surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Transition Bond and (ii) there is delivered to the Indenture Trustee such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Transition Bond Registrar or the Indenture Trustee that such Transition Bond has been
 
 
 
 
 
6

 
acquired by a Protected Purchaser, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute and, upon the Issuer’s written request, the Indenture 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 Tranche, tenor and principal amount, 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 (7) days shall be due and payable, instead of issuing a replacement Transition Bond, the Issuer may pay such destroyed, lost or stolen Transition Bond when so due or payable 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 Indenture 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 Indenture Trustee in connection therewith.
 
Upon the issuance of any replacement Transition Bond under this Section 2.06, the Issuer and/or the Indenture Trustee 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 Indenture Trustee and the Transition Bond Registrar) connected therewith.
 
Every replacement Transition Bond issued pursuant to this Section 2.06 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 found at any time or enforced by any Person, 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 2.06 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 Indenture Trustee, the Transition Bond Registrar and any agent of the Issuer or the Indenture 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 Indenture Trustee nor any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary.
 
SECTION 2.08. Payment of Principal, Premium, if any, and Interest; Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights Preserved.
 
 
 
 
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(a) The Transition Bonds shall accrue interest as provided in the Series Supplement at the applicable Transition Bond Interest Rate, and such interest shall be payable on each applicable Payment Date.  Any installment of interest, principal or premium, if any, payable on any Transition Bond which is punctually paid or duly provided for 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 wire transfer to an account maintained by such Holder in accordance with payment instructions delivered to the Indenture Trustee by such Holder, and with respect to Book-Entry Transition Bonds, payments will be made by wire transfer in immediately available funds to the account designated by the Holder of the applicable Global Transition Bond unless and until such Global Transition Bond is exchanged for Definitive Transition Bonds (in which event payments shall be made as provided above) and except for the final installment of principal and premium, if any, payable with respect to such Transition Bond on a Payment Date which shall be payable as provided 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 Tranche shall be paid, to the extent funds are available therefor in the Collection Account, in installments on each Payment Date specified in the Series Supplement; provided that installments of principal not paid when scheduled to be paid in accordance with the Expected Amortization Schedule shall be paid upon receipt of money available for such purpose, in the order set forth in the Expected Amortization Schedule.  Failure to pay principal in accordance with such Expected Amortization Schedule because moneys are not available pursuant to Section 8.02 to make such payments shall not constitute a Default or Event of Default under this Indenture; provided, however that failure to pay the entire unpaid principal amount of the Transition Bonds of a Tranche upon the Final Maturity Date for the Transition Bonds shall constitute a Default or Event of Default under this Indenture.  Notwithstanding the foregoing, the entire unpaid principal amount of the Transition Bonds shall be due and payable, if not previously paid, on the date on which an Event of Default shall have occurred and be continuing, if the Indenture Trustee or the Holders of the Transition Bonds 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.  All payments of principal and premium, if any, on the Transition Bonds shall be made pro rata to the Holders entitled thereto unless otherwise provided in the Series Supplement.  The Indenture 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 installment 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 (5) days prior to such final Payment Date and shall specify that such final installment 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 installment.
 
(c) If interest on the Transition Bonds is not paid when due, such defaulted interest shall be paid (plus interest on such defaulted interest at the applicable Transition Bond Interest Rate to the extent lawful)  to the Persons who are Holders on a subsequent Special Record Date, which date shall be at least fifteen (15) Business Days prior to the Special Payment Date.  The Issuer shall fix or cause to be fixed any such Special Record Date and Special Payment Date, and, at least ten (10) days before any such Special Record Date, the Issuer shall
 
 
 
 
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mail to each affected Holder a notice that states the Special Record Date, the Special Payment Date and the amount of defaulted interest (plus interest on such defaulted interest) to be paid.
 
SECTION 2.09. Cancellation.  All Transition Bonds surrendered for payment, registration of transfer or exchange shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee.  The Issuer may at any time deliver to the Indenture 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 Indenture Trustee.  No Transition Bonds shall be authenticated in lieu of or in exchange for any Transition Bonds canceled as provided in this Section 2.09, except as expressly permitted by this Indenture.  All canceled Transition Bonds may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time.
 
SECTION 2.10. Outstanding Amount; Authentication and Delivery of Transition Bonds.  The aggregate Outstanding Amount of Transition Bonds that may be authenticated and delivered under this Indenture shall not exceed the aggregate of the amounts of Transition Bonds that are authorized in the Financing Order but otherwise shall be unlimited.
 
Transition Bonds created and established by the Series Supplement may at any time be executed by the Issuer and delivered to the Indenture Trustee for authentication and thereupon the same shall be authenticated and delivered by the Indenture Trustee upon Issuer Request and upon delivery by the Issuer to the Indenture Trustee, and receipt by the Indenture Trustee, or the causing to occur by the Issuer, of the following; provided, however, that compliance with such conditions and delivery of such documents shall only be required in connection with the original issuance of the Transition Bonds:
 
(1) Issuer Action.  An Issuer Order authorizing and directing the authentication and delivery of the Transition Bonds by the Indenture Trustee and specifying the principal amount of Transition Bonds to be authenticated.
 
(2) Authorizations.  Copies of (x) the Financing Order which shall be in full force and effect and be Final, (y) certified resolutions of the Managers or Member of the Issuer authorizing the execution and delivery of the Series Supplement and the execution, authentication and delivery of the Transition Bonds and (z) a duly executed Series Supplement.
 
(3) Opinions.  An opinion or opinions, portions of which may be delivered by one or more Independent counsel for the Issuer, portions of which may be delivered by one or more Independent counsel for the Servicer, and portions of which may be delivered by one or more Independent counsel for the Seller, dated the Closing Date, in each case subject to the customary exceptions, qualifications and assumptions contained therein, to the collective effect, that (a) all conditions precedent provided for in this Indenture relating to (i) the authentication and delivery of the Issuer’s Senior Secured Transition Bonds and (ii) the execution of the Series Supplement to this Indenture dated as of the date of this Indenture, have been complied with, and (b) the execution of the
 
 
 
 
 
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Series Supplement to this Indenture dated as of the date of this Indenture is permitted by this Indenture, together with the other Opinions of Counsel set forth in Sections 9(d)-(f), 9(h)-(j) and 9(l)-(w) of the Underwriting Agreement relating to the Issuer’s Senior Secured Transition Bonds.
 
(4) Authorizing Certificate.  An Officer’s Certificate, dated the Closing Date, of the Issuer certifying that (a) the Issuer has duly authorized the execution and delivery of this Indenture and the Series Supplement and the execution and delivery of the Transition Bonds and (b) that the Series Supplement is in the form attached thereto, and it shall comply with the requirements of Section 2.02.
 
(5) The Transition Bond Collateral.  The Issuer shall have made or caused to be made all filings with the PUCT and the Texas Secretary of State pursuant to the Financing Order and the Securitization Law and all other filings necessary to perfect the Grant of the Transition Bond Collateral to the Indenture Trustee and the Lien of this Indenture.
 
(6) Certificates of the Issuer and the Seller.
 
(a) An Officer’s Certificate from the Issuer, dated as of the Closing Date:
 
(i) to the effect that (A) the Issuer is not in Default under this Indenture and that the issuance of the Transition Bonds will not result in any Default or in any breach of any of the terms, conditions or provisions of or constitute a default under the Financing Order or any indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer is a party or by which it or its property is bound or any order of any court or administrative agency entered in any Proceeding to which the Issuer is a party or by which it or its property may be bound or to which it or its property may be subject and (B) that all conditions precedent provided in this Indenture relating to the execution, authentication and delivery of the Transition Bonds have been complied with;
 
(ii) to the effect that the Issuer has not assigned any interest or participation in the Transition Bond Collateral except for the Grant contained in the Indenture and the Series Supplement; the Issuer has the power and right to Grant the Transition Bond Collateral to the Indenture Trustee as security hereunder and thereunder; and the Issuer, subject to the terms of this Indenture, has Granted to the Indenture Trustee a first priority perfected security interest in all of its right, title and interest in and to such Transition Bond Collateral free and clear of any Lien, mortgage, pledge, charge, security interest, adverse claim or other encumbrance arising as a result of actions of the Issuer or through the Issuer, except Permitted Liens;
 
(iii) to the effect that the Issuer has appointed the firm of Independent registered public accountants as contemplated in Section 8.06;
 
(iv) to the effect that attached thereto are duly executed, true and complete copies of the Sale Agreement, the Servicing Agreement, the
 
 
 
 
 
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Administration Agreement and the Intercreditor Agreement, which are, to the knowledge of the Issuer, in full force and effect and, to the knowledge of the Issuer, that no party is in default of its obligations under such agreements; and
 
(v) stating that all filings with the PUCT, the Texas Secretary of State and the Delaware Secretary of State pursuant to the Securitization Law, the UCC and the Financing Order and all UCC financing statements with respect to the Transition Bond Collateral which are required to be filed by the terms of the Financing Order, the Securitization Law, the Sale Agreement, the Servicing Agreement and this Indenture have been filed as required.
 
(b) An officer’s certificate from the Seller, dated as of the Closing Date, to the effect that, in the case of the Transition Property identified in the Bill of Sale, immediately prior to the conveyance thereof to the Issuer pursuant to the Sale Agreement:
 
(i) the Seller was the original and the sole owner of such Transition Property, free and clear of any Lien; the Seller had not assigned any interest or participation in such Transition Property and the proceeds thereof other than to the Issuer pursuant to the Sale Agreement; the Seller has the power, authority and right to own, sell and assign such Transition Property and the proceeds thereof to the Issuer; and the Seller, subject to the terms of the Sale Agreement, has validly sold and assigned to the Issuer all of its right, title and interest in and to such Transition Property and the proceeds thereof, free and clear of any Lien (other than Permitted Liens) and such sale and assignment is absolute and irrevocable and has been perfected; and
 
(ii) the attached copy of the Financing Order creating such Transition Property is true and complete and is in full force and effect.
 
(7)   Accountant’s Certificate or Letter.  One or more certificates or letters, addressed to the Issuer, of a firm of Independent registered public accountants of recognized national reputation to the effect that (a) such accountants are Independent with respect to the Issuer within the meaning of this 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 Transition Bond Collateral, they have applied such procedures as instructed by the addressees of such certificate or letter.
 
(8)   Rating Agency Condition.  The Indenture Trustee shall receive evidence reasonably satisfactory to it that the Transition Bonds have received the ratings from the Rating Agencies required by the Underwriting Agreement as a condition to the issuance of the Transition Bonds.
 
(9)   Requirements of Series Supplement.  Such other funds, accounts, documents, certificates, agreements, instruments or opinions as may be required by the terms of the Series Supplement.
 
 
 
 
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(10)   Required Capital Level.  Evidence satisfactory to the Indenture Trustee that the Required Capital Level has been credited to the Capital Subaccount.
 
(11)   Other Requirements.  Such other documents, certificates, agreements, instruments or opinions as the Indenture Trustee may reasonably require.
 
SECTION 2.11. Book-Entry Transition Bonds.  Unless the Series Supplement provides otherwise, all of the Transition Bonds shall be issued in Book-Entry Form, and the Issuer shall execute and the Indenture Trustee shall, in accordance with this Section 2.11 and the Issuer Order, authenticate and deliver one or more Global Transition Bonds, evidencing the Transition Bonds which (i) shall be an aggregate original principal amount equal to the aggregate original principal amount of the Transition Bonds to be issued pursuant to the Issuer Order, (ii) shall be registered in the name of the Clearing Agency therefor or its nominee, which shall initially be Cede & Co., as nominee for The Depository Trust Company, the initial Clearing Agency, (iii) shall be delivered by the Indenture Trustee pursuant to such Clearing Agency’s or such nominee’s instructions, and (iv) shall bear a legend substantially to the effect set forth in Exhibit A.
 
Each Clearing Agency designated pursuant to this Section 2.11 must, at the time of its designation and at all times while it serves as Clearing Agency hereunder, be a “clearing agency” registered under the Exchange Act and any other applicable statute or regulation.
 
No Holder of Transition Bonds issued in Book-Entry Form shall receive a Definitive Transition Bond representing such Holder’s interest in any of the Transition Bonds, except as provided in Section 2.13.  Unless (and until) certificated, fully registered Transition Bonds (the “Definitive Transition Bonds”) have been issued to the Holders pursuant to Section 2.13 or pursuant to the Series Supplement relating thereto:
 
(a) the provisions of this Section 2.11 shall be in full force and effect;
 
(b) the Issuer, the Servicer, the Paying Agent, the Transition Bond Registrar and the Indenture Trustee may deal with the Clearing Agency for all purposes (including the making of distributions on the Transition Bonds and the giving of instructions or directions hereunder) as the authorized representative of the Holders;
 
(c) to the extent that the provisions of this Section 2.11 conflict with any other provisions of this Indenture, the provisions of this Section 2.11 shall control;
 
(d) the rights of Holders shall be exercised only through the Clearing Agency and the Clearing Agency Participants and shall be limited to those established by law and agreements between such Holders and the Clearing Agency and/or the Clearing Agency Participants.  Pursuant to the Letter of Representations, 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 distributions of principal and interest on the Book-Entry Transition Bonds to such Clearing Agency Participants; and
 
 
 
 
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(e) whenever this Indenture requires or permits actions to be taken based upon instruction or directions of the Holders evidencing a specified percentage of the Outstanding Amount of Transition Bonds, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from the Holders and/or the Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Transition Bonds and has delivered such instructions to a Responsible Officer of the Indenture Trustee.
 
SECTION 2.12. Notices to Clearing Agency.  Unless and until Definitive Transition Bonds shall have been issued to Holders pursuant to Section 2.13, whenever notice, payment, or other communications to the holders of Book-Entry Transition Bonds is required under this Indenture, the Indenture Trustee, the Servicer and the Paying Agent, as applicable, shall give all such notices and communications specified herein to be given to Holders to the Clearing Agency.
 
SECTION 2.13. Definitive Transition Bonds.  If (a) (i) the Issuer advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities under any Letter of Representations and (ii) the Issuer is unable to locate a qualified successor Clearing Agency, (b) the Issuer, at its option, advises the Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or (c) after the occurrence of an Event of Default hereunder, Holders holding Transition Bonds aggregating not less than a majority of the aggregate Outstanding Amount of Transition Bonds maintained as Book-Entry Transition Bonds advise the Indenture Trustee, the Issuer and the Clearing Agency (through the Clearing Agency Participants) in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Holders, the Issuer shall notify the Clearing Agency, the Indenture Trustee and all such Holders in writing of the occurrence of any such event and of the availability of Definitive Transition Bonds to the Holders requesting the same.  Upon surrender to the Indenture Trustee of the Global Transition Bonds by the Clearing Agency accompanied by registration instructions from such Clearing Agency for registration, the Issuer shall execute, and the Indenture Trustee shall authenticate and deliver, Definitive Transition Bonds in accordance with the instructions of the Clearing Agency.  None of the Issuer, the Transition Bond Registrar, the Paying Agent or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.  Upon the issuance of Definitive Transition Bonds, the Indenture Trustee shall recognize the Holders of the Definitive Transition Bonds as Holders hereunder.
 
Definitive Transition Bonds will be transferable and exchangeable at the offices of the Transition Bonds Registrar.  With respect to any transfer of such listed Transition Bonds, the new Definitive Transition Bonds registered in the names specified by the transferee and the original transferor shall be available at the offices of such transfer agent.
 
SECTION 2.14. CUSIP Number.  The Issuer in issuing any Transition Bonds may use a “CUSIP” number and, if so used, the Indenture Trustee shall use the CUSIP number provided to it by the Issuer in any notices to the Holders thereof as a convenience to such Holders; provided, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Transition Bonds
 
 
 
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and that reliance may be placed only on the other identification numbers printed on the Transition Bonds.  The Issuer shall promptly notify the Indenture Trustee in writing of any change in the CUSIP number with respect to any Transition Bond.
 
SECTION 2.15. Letter of Representations.  Notwithstanding anything to the contrary in this Indenture or the Series Supplement, the parties hereto shall comply with the terms of each Letter of Representations applicable to such party.
 
SECTION 2.16. Tax Treatment.  The Issuer and the Indenture Trustee, by entering into this Indenture, and the Holders and any Persons holding a beneficial interest in any Transition Bond, by acquiring any Transition Bond or interest therein, (a) express their intention that, solely for the purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for the purposes of state, local and other taxes, the Transition Bonds qualify under applicable tax law as indebtedness of the Member secured by the Transition Bond Collateral and (b) solely for the purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes, so long as any of the Transition Bonds are outstanding, agree to treat the Transition Bonds as indebtedness of the Member secured by the Transition Bond Collateral unless otherwise required by appropriate taxing authorities.
 
SECTION 2.17. State Pledge.  Under the laws of the State of Texas in effect on the Closing Date, the State of Texas has agreed for the benefit of the Holders, pursuant to Section 39.310 of the Securitization Law, as follows:
 
“Transition bonds are not a debt or obligation of the state and are not a charge on its full faith and credit or taxing power.  The state pledges, however, for the benefit and protection of financing parties and the electric utility, that it will not take or permit any action that would impair the value of transition property, or, except as permitted by Section 39.307, reduce, alter, or impair the transition charges to be imposed, collected, and remitted to financing parties, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the related transition bonds have been paid and performed in full.  Any party issuing transition bonds is authorized to include this pledge in any documentation relating to those bonds.”
 
The Issuer hereby acknowledges that the purchase of any Transition Bond by a Holder or the purchase of any beneficial interest in a Transition Bond by any Person and the Indenture Trustee’s obligations to perform hereunder are made in reliance on such agreement and pledge by the State of Texas.
 
SECTION 2.18. Security Interests.  The Issuer hereby makes the following representations and warranties.  Other than the security interests granted to the Indenture Trustee pursuant to this Indenture, the Issuer has not pledged, granted, sold, conveyed or otherwise assigned any interests or security interests in the Transition Bond Collateral and no security agreement, financing statement or equivalent security or Lien instrument listing the Issuer as debtor covering all or any part of the Transition Bond Collateral is on file or of record in any jurisdiction, except such as may have been filed, recorded or made by the Issuer in favor of the Indenture Trustee on behalf of the Secured Parties in connection with this Indenture.  This
 
 
 
 
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Indenture constitutes a valid and continuing lien on, and first priority perfected security interest in, the Transition Bond Collateral in favor of the Indenture Trustee on behalf of the Secured Parties, which lien and security interest is prior to all other Liens and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing.  With respect to all Transition Bond Collateral, this Indenture, together with the Series Supplement, creates a valid and continuing first priority perfected security interest (as defined in the UCC and as such term is used in the Securitization Law) in such Transition Bond Collateral, which security interest is prior to all other Liens and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing.  The Issuer has good and marketable title to the Transition Bond Collateral free and clear of any Lien, claim or encumbrance of any Person other than Permitted Liens.  All of the Transition Bond Collateral constitutes either Transition Property or accounts, deposit accounts, investment property or general intangibles (as each such term is defined in the UCC) except that proceeds of the Transition Bond Collateral may also take the form of instruments.  The Issuer has taken, or caused the Servicer to take, all action necessary to perfect the security interest in the Transition Bond Collateral granted to the Indenture Trustee, for the benefit of the Secured Parties.  The Issuer has filed (or has caused the Servicer to file) all appropriate financing statements in the proper filing offices in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Transition Bond Collateral granted to the Indenture Trustee. The Issuer has not authorized the filing of and is not aware, after due inquiry, of any financing statements against the Issuer that include a description of the Transition Bond Collateral other than those filed in favor of the Indenture Trustee.  The Issuer is not aware of any judgment or tax Lien filings against the Issuer.  The Collection Account (including all subaccounts thereof) constitutes a “securities account” within the meaning of the UCC.  The Issuer has taken all steps necessary to cause the Securities Intermediary of each such securities account to identify in its records the Indenture Trustee as the person having a security entitlement against the Securities Intermediary in such securities account, no Collection Account is in the name of any person other than the Indenture Trustee, and the Issuer has not consented to the Securities Intermediary of the Collection Account to comply with entitlement orders of any person other than the Indenture Trustee.  All of the Transition Bond Collateral constituting investment property has been and will have been credited to the Collection Account or a subaccount thereof, and the Securities Intermediary for the Collection Account has agreed to treat all assets credited to the Collection Account as “financial assets” within the meaning of the UCC.  Accordingly, the Indenture Trustee has a first priority perfected security interest in the Collection Account, all funds and financial assets on deposit therein, and all securities entitlements relating thereto.  The representations and warranties set forth in this Section 2.18 shall survive the execution and delivery of this Indenture and the issuance of any Transition Bonds, shall be deemed re-made on each date on which any funds in the Collection Account are distributed to Issuer or otherwise released from the Lien of the Indenture and may not be waived by any party hereto except
 
 
 
 
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pursuant to a supplemental indenture executed in accordance with Article IX and as to which the Rating Agency Condition has been satisfied.
 
ARTICLE III
 
COVENANTS
 
SECTION 3.01. Payment of Principal, Premium, if any, and Interest.  The principal of and premium, if any, and interest on the Transition Bonds shall be duly and punctually paid by the Issuer, or the Servicer on behalf of the Issuer, in accordance with the terms of the Transition Bonds and this Indenture; provided that except on a Final Maturity Date 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 the 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 or other tax laws by any Person from a payment to any Holder of interest or principal or premium, if any, shall be considered as having been paid by the Issuer to such Holder for all purposes of this Indenture.
 
SECTION 3.02. Maintenance of Office or Agency.  The Issuer shall maintain in St Paul, Minnesota, an office or agency where Transition Bonds may be surrendered for registration of transfer or exchange.  The Issuer shall give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency.  The Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes and the Corporate Trust Office of the Indenture Trustee shall serve as the offices provided in the prior sentence.  If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders may be made at the office of the Indenture Trustee located at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders.
 
SECTION 3.03. Money for Payments To Be Held in Trust.  As provided in Section 8.02(a), all payments of amounts due and payable with respect to any Transition Bonds that are to be made from amounts withdrawn from the Collection Account pursuant to Section 8.02(d) shall be made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from such Collection Account for payments with respect to any Transition Bonds shall be paid over to the Issuer except as provided in this Section 3.03 and Section 8.02.
 
Each Paying Agent shall meet the eligibility criteria set forth for any Indenture Trustee under Section 6.11.  The Issuer will cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.03, that such Paying Agent will:
 
(i) hold all sums held by it for the payment of amounts due with respect to 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;
 
 
 
 
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(ii) give the Indenture Trustee and the Rating Agencies written notice of any Default by the Issuer of which it 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 Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent;
 
(iv) immediately, with notice to the Rating Agencies, resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Transition Bonds if at any time the Paying Agent determines that it has ceased to meet the standards required to be met by a Paying Agent at the time of such determination; and
 
(v) comply with all requirements of the Code and other tax laws 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 Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture 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 Indenture 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 Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Transition Bond and remaining unclaimed for two (2) years after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer on an Issuer Request; and, subject to Section 10.16, 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 Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Indenture 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 thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuer.  The Indenture 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 right to or interest in moneys due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Holder).
 
SECTION 3.04. Existence.  The Issuer shall keep in full effect its existence, rights and franchises as a 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
 
 
 
 
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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 other Basic Documents, the Transition Bonds, the Transition Bond Collateral and each other instrument or agreement referenced herein or therein.
 
SECTION 3.05. Protection of Transition Bond Collateral.  The Issuer shall from time to time execute and deliver all such supplements and amendments hereto and all filings with the PUCT or the Texas Secretary of State pursuant to the Financing Order or to the Securitization Law and all financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action necessary or advisable to:
 
(i) maintain or preserve the Lien and security interest (and the priority thereof) of this Indenture and the Series Supplement 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 Transition Bond Collateral;
 
(iv) preserve and defend title to the Transition Bond Collateral and the rights of the Indenture Trustee and the Holders in such Transition Bond Collateral against the Claims of all Persons and parties, including, without limitation, the challenge by any party to the validity or enforceability of the Financing Order, any Tariff, the Transition Property or any proceeding relating thereto and institute any action or proceeding necessary to compel performance by the PUCT or the State of Texas of any of its obligations or duties under the Securitization Law, the State Pledge, or the Financing Order or Tariff; or
 
(v) pay any and all taxes levied or assessed upon all or any part of the Transition Bond Collateral.
 
The Issuer hereby designates the Indenture Trustee its agent and attorney-in-fact to execute or authorize, as the case may be, any filings with the PUCT or the Texas Secretary of State, financing statements, continuation statements or other instrument required pursuant to this Section 3.05, it being understood that the Indenture Trustee shall have no such obligation or any duty to prepare such documents.  The Indenture Trustee is specifically authorized to file financing statements covering the Transition Bond Collateral, including, without limitation, financing statements that describe the Transition Bond Collateral as “all assets” or “all personal property” of the Issuer.
 
SECTION 3.06. Opinions as to Transition Bond Collateral.
 
(a) On the Closing Date, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer either stating that, in the opinion of such counsel, such action has been taken with respect to the recording and filing of this Indenture, any
 
 
 
 
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indentures supplemental hereto, and any other requisite documents, and with respect to the execution and filing of any filings with the PUCT or the Texas Secretary of State pursuant to the Securitization Law and the Financing Order and any financing statements and continuation statements, as are necessary to perfect and make effective the Lien, and the first priority perfected security interest created by this Indenture and the Series Supplement, and no other Lien or security interest is equal or prior to the Lien and security interest of the Indenture Trustee in the Transition Bond Collateral, and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to make effective such Lien and security interest.
 
(b) Within ninety (90) days after the beginning of each calendar year beginning with the calendar year beginning January 1, 2013, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and with respect to the execution and filing of any filings with the PUCT or the Texas Secretary of State pursuant to the Securitization Law and the Financing Order and any financing statements and continuation statements as are necessary to maintain the Lien and the first priority perfected security interest 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.  Such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and the execution and filing of any filings with the PUCT or the Texas Secretary of State, financing statements and continuation statements that will, in the opinion of such counsel, be required within the twelve-month period following the date of such opinion to maintain the Lien and the first priority perfected security interest created by this Indenture and the Series Supplement.
 
(c) Prior to the effectiveness of any amendment to the Sale Agreement, the Intercreditor Agreement or the Servicing Agreement, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer either (i) stating that, in the opinion of such counsel, all filings, including UCC financing statements and other filings with the PUCT and the Texas Secretary of State pursuant to the Securitization Law or the Financing Order, have been executed and filed that are necessary fully to preserve and protect the Lien and security interest of the Issuer and the Indenture Trustee in the Transition Property and the Transition Bond Collateral, respectively, 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 (ii) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such Lien and security interest.
 
SECTION 3.07. Performance of Obligations; Servicing; SEC Filings.
 
(a) The Issuer (i) shall diligently pursue any and all actions to enforce its rights under each instrument or agreement included in the Transition Bond Collateral and (ii) shall not take any action and shall 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,
 
 
 
 
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 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 Series Supplement, the Sale Agreement, 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 Indenture Trustee herein or in an Officer’s Certificate shall be deemed to be action taken by the Issuer.  Initially, the Issuer has contracted with the Servicer 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 this Indenture, the Series Supplement, the other Basic Documents and in the instruments and agreements included in the Transition Bond Collateral, including filing or causing to be filed all filings with the PUCT or the Texas Secretary of State pursuant to the Securitization Law or the Financing Order, all UCC financing statements and continuation statements required to be filed by it by the terms of this Indenture, the Series Supplement, the Sale Agreement and the Servicing Agreement in accordance with and within the time periods provided for herein and therein.
 
(d) 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 Indenture Trustee and the Rating Agencies, and shall specify in such notice the response or action, if any, the Issuer has taken or 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 Transition Property, the Transition Bond Collateral or the Transition Charges, the Issuer shall take all reasonable steps available to it to remedy such failure.
 
(e) 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 7.01 of the Servicing Agreement, the Indenture Trustee may and shall, at the written direction of the Holders evidencing not less than a majority of the Outstanding Amount of the Transition Bonds and subject to the terms of the Intercreditor Agreement, 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 Indenture Trustee.  A Person shall qualify as a Successor Servicer only if such Person satisfies the requirements of the Servicing Agreement.  If within thirty (30) days after the delivery of the notice referred to above, a new Servicer shall not have been appointed, the Indenture Trustee may petition the PUCT or a court of competent jurisdiction to appoint a Successor Servicer.  In connection with any such appointment, TCC may make such arrangements for the compensation of such Successor Servicer as it and such successor shall agree, subject to the limitations set forth in Section 8.02 and in the Servicing Agreement.
 
(f) Upon any termination of the Servicer’s rights and powers pursuant to the Servicing Agreement, the Indenture Trustee shall promptly notify the Issuer, the Holders and the Rating Agencies.  As soon as a Successor Servicer is appointed, the Indenture Trustee shall
 
 
 
 
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notify the Issuer, the Holders and the Rating Agencies of such appointment, specifying in such notice the name and address of such Successor Servicer.
 
(g) The Issuer shall (or shall cause the Sponsor to) post on its website and, to the extent consistent with the Issuer’s and the Sponsor’s obligations under applicable law, file with or furnish to the SEC in periodic reports and other reports as are required from time to time under Section 13 or Section 15(d) of the Exchange Act, and shall direct the Indenture Trustee to post on its website for investors the following information (other than any such information filed with the SEC and publicly available to investors unless the Issuer specifically requests such items to be posted) with respect to the Outstanding Transition Bonds, in each case to the extent such information is reasonably available to the Issuer:
 
(i) statements of any remittances of Transition Charges made to the Indenture Trustee (to be included in a Form 10-D or Form 10-K, or successor forms thereto);
 
(ii) a statement reporting the balances in the Collection Account and in each subaccount of the Collection Account as of the end of each quarter or the most recent date available (to be included in a Form 10-D  or Form 10-K, or successor forms thereto);
 
(iii) a statement showing the balance of Outstanding Transition Bonds that reflects the actual periodic payments made on the Transition Bonds during the applicable period (to be included in the next Form 10-D  or Form 10-K filed, or successor forms thereto);
 
(iv) the Servicer’s Certificate as required to be submitted pursuant to the Servicing Agreement (to be filed with a Form 10-D, Form 10-K or Form 8-K, or successor forms thereto);
 
(v) the Monthly Servicer’s Certificate as required to be submitted pursuant to the Servicing Agreement;
 
(vi) the text (or a link to the website where a reader can find the text) of each filing of a True-Up Adjustment and the results of each such filing;
 
(vii) any change in the long-term or short-term credit ratings of the Servicer assigned by the Rating Agencies;
 
(viii) material legislative or regulatory developments directly relevant to the Outstanding Transition Bonds (to be filed or furnished in a Form 8-K);
 
(ix) any reports and other information that the Issuer is required to file with the SEC under the Securities Exchange Act of 1934; and
 
(x) a quarterly statement either affirming that, to the Issuer’s or the Sponsor’s knowledge, as applicable, in all material respects, for each materially significant REP (to be included in each Form 10-D and each Form 10-K, or
 
 
 
 
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successor forms thereto) (A) each such REP has been billed in compliance with the requirements outlined in the Financing Order, (B) each such REP has made payments in compliance with the requirements outlined in the Financing Order, and (C) each such REP satisfies the creditworthiness requirements of the Financing Order, or if clauses (A), (B) and (C) has not occurred, such quarterly statements shall describe the Servicer’s actions.

Notwithstanding the foregoing, nothing herein shall preclude the Issuer from voluntarily suspending or terminating its filing obligations as Issuer with the SEC to the extent permitted by applicable law.

The address of the Indenture Trustee’s website for investors is https://www.usbank.com/abs.  The Indenture Trustee shall immediately notify the Issuer, the Bondholders and the Rating Agencies of any change to the address of the website for investors.
 
(h) The Issuer shall make all filings required under the Securitization Law relating to the transfer of the ownership or security interest in the Transition Property other than those required to be made by the Seller or the Servicer pursuant to the Basic Documents.
 
SECTION 3.08. Certain Negative Covenants.  So long as any Transition Bonds are Outstanding, the Issuer shall not:
 
(i) except as expressly permitted by this Indenture and the other Basic Documents, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Issuer, including those included in the Transition Bond Collateral, unless directed to do so by the Indenture 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 other tax laws) or assert any claim against any present or former Holder by reason of the payment of the taxes levied or assessed upon any part of the Transition Bond Collateral;
 
(iii) terminate its existence or dissolve or liquidate in whole or in part, except in a transaction permitted by Section 3.10;
 
(iv) (A) permit the validity or effectiveness of this Indenture or the other Basic Documents to be impaired, or permit the Lien of this Indenture and the Series Supplement 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 of this Indenture or the Series Supplement) to be created on or extend to or otherwise arise upon or burden the Transition Bond Collateral or any part thereof or any interest therein or the proceeds thereof (other than tax liens arising by operation of law with respect to amounts not yet due) or (C) permit the Lien of
 
 
 
 
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the Series Supplement not to constitute a valid first priority perfected security interest in the Transition Bond Collateral;
 
(v) enter into any swap, hedge or similar financial instrument;
 
(vi) elect to be classified as an association taxable as a corporation for federal income tax purposes or otherwise take any action, file any tax return, or make any election inconsistent with the treatment of the Issuer, for purposes of federal taxes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the sole owner of the Issuer;
 
(vii) change its name, identity or structure or the location of its chief executive office, unless at least ten (10) Business Days’ prior to the effective date of any such change the Issuer delivers to the Indenture Trustee (with copies to the Rating Agencies) such documents, instruments or agreements, executed by the Issuer, as are necessary to reflect such change and to continue the perfection of the security interest of this Indenture and the Series Supplement;
 
(viii) take any action which is subject to a Rating Agency Condition without satisfying the Rating Agency Condition;
 
(ix) except to the extent permitted by applicable law, voluntarily suspend or terminate its filing obligations with the SEC as described in Section 3.07(g); or
 
(x) issue any transition bonds under the Securitization Law or any similar law (other than the Transition Bonds).
 
SECTION 3.09. Annual Statement as to Compliance.  The Issuer will deliver to the Indenture Trustee and the Rating Agencies not later than March 30 of each year (commencing with March 30, 2013), an Officer’s Certificate stating, as to the Responsible Officer signing such Officer’s Certificate, that:
 
(i) a review of the activities of the Issuer during the preceding twelve (12) months ended December 31 (or, in the case of the first such Officer’s Certificate, since the Closing Date) and of performance under this Indenture has been made; and
 
(ii) to the best of such Responsible Officer’s knowledge, based on such review, the Issuer has in all material respects complied with all conditions and covenants under this Indenture throughout such twelve-month period (or such shorter period in the case of the first such Officer’s Certificate), or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to such Responsible Officer and the nature and status thereof.
 
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
 
(a) The Issuer shall not consolidate or merge with or into any other Person, unless:
 
 
 
 
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(i) the Person (if other than the Issuer) formed by or surviving such consolidation or merger shall (A) be a Person organized and existing under the laws of the United States of America or any State, (B) expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance satisfactory to the Indenture Trustee, the performance or observance of every agreement and covenant of this Indenture and the Series Supplement on the part of the Issuer to be performed or observed, all as provided herein and in the Series Supplement, and (C) assume all obligations and succeed to all rights of the Issuer under the Sale Agreement, the Servicing Agreement and each other Basic Document to which the Issuer is a party;
 
(ii) immediately after giving effect to such merger or consolidation, no Default, Event of Default or Servicer Default shall have occurred and be continuing;
 
(iii) the Rating Agency Condition shall have been satisfied with respect to such merger or consolidation;
 
(iv) the Issuer shall have delivered to TCC, the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to TCC and the Indenture Trustee, and which may be based on a ruling from the Internal Revenue Service (unless the Internal Revenue Service has announced that it will not rule on the issues described in this paragraph)) to the effect that the consolidation or merger will not result in a material adverse federal or state income tax consequence to the Issuer, TCC, the Indenture Trustee or the then existing Bondholders;
 
(v) any action as is necessary to maintain the Lien and the first priority perfected security interest in the Transition Bond Collateral created by this Indenture and the Series Supplement shall have been taken as evidenced by an Opinion of Counsel of external counsel of the Issuer delivered to the Indenture Trustee; and
 
(vi) the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel of the Issuer each stating that such consolidation or merger and such supplemental indenture comply with this Indenture, the Series Supplement and that all conditions precedent herein provided for in this Section 3.10(a) with respect to such transaction have been complied with (including any filing required by the Exchange Act).
 
(b) Except as specifically provided herein, the Issuer shall not sell, convey, exchange, transfer or otherwise dispose of any of its properties or assets included in the Transition Bond Collateral, to any Person, unless:
 
(i) the Person that acquires the properties and assets of the Issuer, the conveyance or transfer of which is hereby restricted shall (A) be a United States citizen or a Person organized and existing under the laws of the United States of America or any State, (B) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance satisfactory to the Indenture
 
 
 
 
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 Trustee, 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 Series Supplement, (C) expressly agrees by means of such supplemental indenture that all right, title and interest so sold, conveyed, exchanged, transferred or otherwise disposed of shall be subject and subordinate to the rights of Holders, (D) unless otherwise provided in the supplemental indenture referred to in clause (B) above, expressly agrees to indemnify, defend and hold harmless the Issuer and the Indenture Trustee against and from any loss, liability or expense arising under or related to this Indenture, the Series Supplement and the Transition Bonds, (E) expressly agrees by means of such supplemental indenture that such Person (or if a group of Persons, then one specified Person) shall make all filings with the SEC (and any other appropriate Person) required by the Exchange Act in connection with the Transition Bonds and (F) if such sale, conveyance, exchange, transfer or disposal relates to the Issuer’s rights and obligations under the Sale Agreement or the Servicing Agreement, assume all obligations and succeed to all rights of the Issuer under the Sale Agreement and the Servicing Agreement, as applicable;
 
(ii) immediately after giving effect to such transaction, no Default, Event of Default or Servicer Default shall have occurred and be continuing;
 
(iii) the Rating Agency Condition shall have been satisfied with respect to such transaction;
 
(iv) the Issuer shall have delivered to TCC, the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to TCC and the Indenture Trustee, and which may be based on a ruling from the Internal Revenue Service) to the effect that the disposition will not result in a material adverse federal or state income tax consequence to the Issuer, TCC, the Indenture Trustee or the then existing Bondholders;
 
(v) any action as is necessary to maintain the Lien and the first priority perfected security interest in the Transition Bond Collateral created by this Indenture and the Series Supplement shall have been taken as evidenced by an Opinion of Counsel of external counsel of the Issuer delivered to the Indenture Trustee; and
 
(vi) the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel of the Issuer each stating that such sale, conveyance, exchange,  transfer or other disposition and such supplemental indenture comply with this Indenture and the Series Supplement and that all conditions precedent herein provided for in this Section 3.10(b) with respect to such transaction have been complied with (including any filing required by the Exchange Act).
 
SECTION 3.11. Successor or Transferee.
 
(a) Upon any consolidation or merger of the Issuer in accordance with Section 3.10(a), the Person formed by or surviving such consolidation or merger (if other than the Issuer)
 
 
 
 
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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) Except as set forth in Section 6.07, upon a sale, conveyance, exchange, transfer or other disposition of all the assets and properties of the Issuer in accordance with Section 3.10(b), the Issuer will be released from every covenant and agreement of this Indenture and the other Basic Documents to be observed or performed on the part of the Issuer with respect to the Transition Bonds and the Transition Property immediately following the consummation of such acquisition upon the delivery of written notice to the Indenture Trustee from the Person acquiring such assets and properties stating that the Issuer is to be so released.
 
SECTION 3.12. No Other Business.  The Issuer shall not engage in any business other than financing, purchasing, owning and managing the Transition Property and the other Transition Bond Collateral and the issuance of the Transition Bonds in the manner contemplated by the Financing Order and this Indenture and the Basic Documents and activities 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 except for the Transition Bonds and any other indebtedness expressly permitted by or arising under the Basic Documents.
 
SECTION 3.14. Servicer’s Obligations.  The Issuer shall enforce the Servicer’s compliance with and performance of all of the Servicer’s material obligations under the Servicing Agreement.
 
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.  Except as otherwise contemplated by the Sale Agreement, the Servicing Agreement or this Indenture, the 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 3.16. Capital Expenditures.  Other than the purchase of Transition Property from the Seller on each Closing Date, the Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).
 
SECTION 3.17. Restricted Payments.  Except as provided in Section 8.04(c), the Issuer shall not, directly or indirectly, (a) 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 an interest in the Issuer or otherwise with respect to any ownership or equity interest or similar security in or of the Issuer, (b) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or similar security or (c) 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 or would be caused thereby, the Issuer may make, or cause
 
 
 
 
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to be made, any such distributions to any owner of an interest in the Issuer or otherwise with respect to any ownership or equity interest or similar security in or of the Issuer using funds distributed to the Issuer pursuant to Section 8.02(e)(x) to the extent that such distributions would not cause the balance of the Capital Subaccount to decline below the Required Capital Level.  The Issuer will not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with this Indenture and the other Basic Documents.
 
SECTION 3.18. Notice of Events of Default.  The Issuer agrees to give the Indenture Trustee, the PUCT and the Rating Agencies prompt written notice of each Default or Event of Default hereunder as provided in Section 5.01, and each default on the part of the Seller or the Servicer of its obligations under the Sale Agreement or the Servicing Agreement, respectively.
 
SECTION 3.19. Further Instruments and Acts.  Upon request of the Indenture Trustee, the Issuer shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture and to maintain the first priority perfected security interest of the Indenture Trustee in the Transition Bond Collateral.
 
SECTION 3.20. [Reserved].
 
SECTION 3.21. Inspection.  The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Indenture 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 registered public accountants, and to discuss the Issuer’s affairs, finances and accounts with the Issuer’s officers, employees and Independent registered public accountants, all at such reasonable times and as often as may be reasonably requested.  The Indenture 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 Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder.  Notwithstanding anything herein to the contrary, the preceding sentence shall not be construed to prohibit (a) disclosure of any and all information that is or becomes publicly known, or information obtained by the Indenture Trustee from sources other than the Issuer, provided such parties are rightfully in possession of such information, (b) disclosure of any and all information (i) if required to do so by any applicable statute, law, rule or regulation, (ii) pursuant to any subpoena, civil investigative demand or similar demand or request of any court or regulatory authority exercising its proper jurisdiction, (iii) in any preliminary or final offering circular, registration statement or other document a copy of which has been filed with the SEC, (iv) to any affiliate, independent or internal auditor, agent, employee or attorney of the Indenture Trustee having a need to know the same, provided that such parties agree to be bound by the confidentiality provisions contained in this Section 3.21, or (v) to any Rating Agency or (c) any other disclosure authorized by the Issuer.
 
 
 
 
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SECTION 3.22. Sale Agreement, Servicing Agreement, Administration Agreement and Intercreditor Agreement Covenants.
 
(a) The Issuer agrees to take all such lawful actions to enforce its rights under the Sale Agreement, the Servicing Agreement, the Administration Agreement and the Intercreditor Agreement and to compel or secure the performance and observance by the Seller, the Servicer, the Administrator and TCC of each of their respective obligations to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement, the Administration Agreement and the Intercreditor Agreement in accordance with the terms thereof.  So long as no Event of Default occurs and is continuing, but subject to Section 3.22(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 Servicing Agreement, the Administration Agreement and the Intercreditor Agreement; provided that such action shall not adversely affect the interests of the Holders in any material respect.
 
(b) If an Event of Default occurs and is continuing, the Indenture Trustee may, and at the direction (which direction shall be in writing) of Holders of a majority of the Outstanding Amount of the Transition Bonds of all Tranches affected thereby shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, TCC, the Administrator and the Servicer, as the case may be, under or in connection with the Sale Agreement, the Servicing Agreement, the Administration Agreement and the Intercreditor Agreement, including the right or power to take any action to compel or secure performance or observance by the Seller, TCC, the Administrator 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 Servicing Agreement, the Administration Agreement and the Intercreditor Agreement, and any right of the Issuer to take such action shall be suspended.
 
(c) Except as set forth in Section 3.22(e), with the prior written consent of the Indenture Trustee and the consent of the PUCT pursuant to Section 9.03, the Administration Agreement, the Sale Agreement, the Intercreditor Agreement (except that any amendment to the Intercreditor Agreement shall not require the consent of the PUCT) and the Servicing Agreement may be amended in accordance with the provisions thereof, 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 Holders of the Transition Bonds; provided that all conditions precedent for such amendment have been satisfied, as evidenced by an Opinion of Counsel of external counsel of the Issuer.
 
(d) Except as set forth in Section 3.22(e), if the Issuer, the Seller, TCC, the Administrator, the Servicer or any other party to the respective agreement proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, waiver, supplement, termination or surrender of, the terms of the Sale Agreement, the Intercreditor Agreement, the Administration Agreement, or the Servicing Agreement, or waive timely performance or observance by the Seller, TCC, the Administrator or the Servicer under the Sale Agreement, the Intercreditor Agreement, the Administration Agreement or the Servicing Agreement, in each case in such a way as would materially and adversely affect the interests of any Holder of Transition Bonds, the Issuer shall first notify the Rating Agencies of the proposed amendment, modification, waiver, supplement, termination or surrender and shall promptly
 
 
 
 
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notify the Indenture Trustee and the PUCT in writing and the Indenture Trustee shall notify the Holders of the Transition Bonds of the proposed amendment, modification, waiver, supplement, termination or surrender and whether the Rating Agency Condition has been satisfied with respect thereto.  The Indenture Trustee shall consent to such proposed amendment, modification, waiver, supplement, termination or surrender only if the Rating Agency Condition is satisfied and only with the prior written consent of the Holders of a majority of the Outstanding Amount of Transition Bonds of the Tranches materially and adversely affected thereby and, if the proposed amendment, modification, waiver, supplement, termination or surrender, other than with respect to the Intercreditor Agreement, would increase ongoing Qualified Costs as defined in the Financing Order, the consent of the PUCT pursuant to Section 9.03.  If any such amendment, modification, waiver, supplement, termination or surrender shall be so consented to by the Indenture 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, or to agree to any amendment, modification, supplement, termination, waiver or surrender of, the process for True-Up Adjustments, the Issuer shall notify the PUCT and the Indenture Trustee in writing and the Indenture Trustee shall notify the Holders of the Transition Bonds of such proposal and the Indenture Trustee shall consent thereto only with the consent of the PUCT pursuant to Section 9.03 and the prior written consent of the Holders of a majority of the Outstanding Amount of Transition Bonds of the Tranches affected thereby and only if the Rating Agency Condition has been satisfied with respect thereto.
 
(f) Promptly following a default by the Seller under the Sale Agreement, by the Administrator under the Administration Agreement, by TCC or any successor to TCC under the Intercreditor Agreement or the occurrence of a Servicer Default under the Servicing Agreement, and at the Issuer’s expense, the Issuer agrees to take all such lawful actions as the Indenture Trustee may request to compel or secure the performance and observance by each of the Seller, TCC, the Administrator or the Servicer of their obligations under and in accordance with the Sale Agreement, the Servicing Agreement, the Administration Agreement and the Intercreditor Agreement, as the case may be, 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 such agreements to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of any default by the Seller, TCC, the Administrator or the Servicer, respectively, thereunder and the institution of legal or administrative actions or Proceedings to compel or secure performance of their obligations under the Sale Agreement, the Servicing Agreement, the Administration Agreement or the Intercreditor Agreement, as applicable.
 
Before consenting to any amendment, modification, supplement, termination, waiver or surrender under Sections 3.22(d) or (e), the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of Counsel stating that such action is authorized or permitted by this Indenture.
 
SECTION 3.23. Taxes.  So long as any of the Transition Bonds are Outstanding, the Issuer shall pay all taxes, assessments and governmental charges imposed upon it or any of
 
 
 
 
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its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the Transition Bond Collateral; provided that no such tax need be paid if the Issuer is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the Issuer has established appropriate reserves as shall be required in conformity with generally accepted accounting principles.
 
ARTICLE IV
 
SATISFACTION AND DISCHARGE; DEFEASANCE
 
SECTION 4.01. Satisfaction and Discharge of Indenture; Defeasance.
 
(a) This Indenture shall cease to be of further effect with respect to the Transition Bonds and the Indenture Trustee, on reasonable written 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, when:
 
(i) either
 
(A) all Transition Bonds theretofore authenticated and delivered (other than (1) Transition Bonds that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.06 and (2) 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 the last paragraph of Section 3.03) have been delivered to the Indenture Trustee for cancellation; or
 
(B) either (1) the Scheduled Final Payment Date has occurred with respect to all Transition Bonds not theretofore delivered to the Indenture Trustee for cancellation or (2) the Transition Bonds will be due and payable on their respective Scheduled Final Payment Dates within one year, and in any such case, the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Transition Bonds not theretofore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Transition Bonds when scheduled to be paid and to discharge the entire indebtedness on the Transition Bonds when due;
 
(ii) the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer; and
 
(iii) the Issuer has delivered to the Indenture Trustee an Officer’s Certificate, an Opinion of Counsel of external counsel of the Issuer and (if required by the TIA or the Indenture Trustee) an Independent Certificate from a firm of registered public
 
 
 
 
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accountants, each meeting the applicable requirements of Section 10.01(a) and each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to Transition Bonds 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 (“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 and 3.19 and the operation of Section 5.01(iii) (“Covenant Defeasance Option”) with respect to Transition Bonds.  The Issuer may exercise the Legal Defeasance Option with respect to Transition Bonds notwithstanding its prior exercise of the Covenant Defeasance Option.
 
If the Issuer exercises the Legal Defeasance Option, the maturity of the Transition Bonds may not be accelerated because of an Event of Default.  If the Issuer exercises the Covenant Defeasance Option, the maturity of the Transition Bonds may not be accelerated because of an Event of Default specified in Section 5.01(iii).
 
Upon satisfaction of the conditions set forth herein to the exercise of the Legal Defeasance Option or the Covenant Defeasance Option with respect to Transition Bonds, the Indenture Trustee, on reasonable written 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) substitution of mutilated, destroyed, lost or stolen Transition Bonds, (iii) rights of Holders to receive payments of principal, premium, if any, and interest, (iv) Sections 4.03 and 4.04, (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.07 and the obligations of the Indenture Trustee under Section 4.03) and (vi) the rights of Holders as beneficiaries hereof with respect to the property deposited with the Indenture Trustee payable to all or any of them, shall survive until this Indenture or certain obligations hereunder have been satisfied and discharged pursuant to Section 4.01(a) or 4.01(b) have been paid in full.  Thereafter the obligations in Sections 6.07 and 4.04 shall survive.
 
SECTION 4.02. Conditions to Defeasance.  The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Transition Bonds only if:
 
(a) the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Transition Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Transition Bonds when scheduled to be paid and to discharge the entire indebtedness on the Transition Bonds when due;
 
(b) the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the
 
 
 
 
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payments of principal and interest when due and without reinvestment of 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 (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Transition Bonds;
 
(c) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(v) or (vi) occurs which is continuing at the end of the period;
 
(d) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto;
 
(e) in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer 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 will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance 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 an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Transition Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance 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;
 
(g) the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent to the satisfaction and discharge of the Transition Bonds to the extent contemplated by this Article IV have been complied with;
 
(h) the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which TCC (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of TCC (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event TCC (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of TCC (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of TCC or such other Affiliate; and
 
 
 
 
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(i) the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option.
 
Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Transition Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.
 
SECTION 4.03. Application of Trust Money.  All moneys or U.S. Government Obligations deposited with the Indenture Trustee pursuant to Section 4.01 or 4.02 shall be held in trust 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 Indenture Trustee may determine, to the Holders of the particular Transition Bonds for the payment of which such moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, premium, if any, and interest; but such moneys need not be segregated from other funds except to the extent required herein or in the Servicing Agreement or required by law.  Notwithstanding anything to the contrary in this Article IV, the Indenture Trustee shall deliver or pay to the Issuer from time to time upon Issuer Request any moneys or U.S. Government Obligations held by it pursuant to Section 4.02 which, in the opinion of a nationally recognized firm of Independent registered public accountants expressed in a written certification thereof delivered to the Indenture Trustee (and not at the cost or expense of the Indenture Trustee), are in excess of the amount thereof which would be required to be deposited for the purpose for which such moneys or U.S. Government Obligations were deposited, provided that any such payment shall be subject to the satisfaction of the Rating Agency Condition.
 
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, all moneys then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture or the Intercreditor Agreement with respect to the Transition Bonds shall, upon demand of the Issuer, be paid to the Indenture 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 or more 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 (whether such failure to pay interest is caused by a
 
 
 
 
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shortfall in Transition Charges received or otherwise), and such default shall continue for a period of five (5) Business Days; or
 
(ii) default in the payment of the then unpaid principal of any Transition Bond of any Tranche on the Final Maturity Date for such Tranche; or
 
(iii) default in the observance or performance of any covenant or agreement of the Issuer made in this Indenture (other than defaults specified in clauses (i) or (ii) above), and such default shall continue or not be cured, for a period of thirty (30) days after the earlier of (A) the date that there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25 percent of the Outstanding Amount of the Transition Bonds, a written notice specifying such default and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder or (B) the date that the Issuer has actual knowledge of the default; or
 
(iv) 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 the same shall have been made, and the circumstance or condition in respect of which such misrepresentation or warranty was incorrect shall not have been eliminated or otherwise cured, within thirty (30) days after the earlier of (A) the date that there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25 percent of the Outstanding Amount of the Transition Bonds, a written notice specifying such 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 actual knowledge of the default, or
 
(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 Transition Bond 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 for any substantial part of the Transition Bond 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 ninety (90) consecutive days; or
 
(vi) the commencement by the Issuer 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 the Issuer to the entry of an order for relief in an involuntary case or proceeding 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 Transition Bond Collateral, or the making by the Issuer of any general 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
 
 
 
 
 
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(vii) any act or failure to act by the State of Texas or any of its agencies (including the PUCT), officers or employees which violates or is not in accordance with the State Pledge.
 
The Issuer shall deliver to a Responsible Officer of the Indenture Trustee and to the Rating Agencies, within five (5) days after a Responsible Officer of the Issuer has knowledge of the occurrence thereof, written notice in the form of an Officer’s Certificate of any event (I) which is an Event of Default under clauses (i), (ii), (v), (vi), (vii), or (viii) or (II) which with the giving of notice, the lapse of time, or both, would become an Event of Default under clause (ii), (iii) or (iv), including, in each case, the status of such Default or Event of Default and what action the Issuer is taking or proposes to take with respect thereto.
 
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) should occur and be continuing, then and in every such case the Indenture Trustee or the Holders representing not less than a majority of the Outstanding Amount of the Transition Bonds may declare the Transition Bonds to be immediately due and payable, by a notice in writing to the Issuer (and to the Indenture Trustee if given by Holders), and upon any such declaration the unpaid principal amount of the Transition Bonds, 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 Indenture Trustee as hereinafter in this Article V provided, the Holders representing not less than a majority of the Outstanding Amount of the Transition Bonds, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences if:
 
(i) the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay:
 
(A) all payments of principal of and premium, if any, and interest on all Transition Bonds due and owing at such time as if such Event of Default had not occurred and was not continuing and all other amounts that would then be due hereunder or upon the Transition Bonds if the Event of Default giving rise to such acceleration had not occurred; and
 
(B) all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel; and
 
(ii) all Events of Default, other than the nonpayment of the principal of the Transition Bonds 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.
 
 
 
 
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SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.
 
(a) If an Event of Default under Section 5.01(i) or (ii) has occurred and is continuing, subject to Section 10.19, the Indenture 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, subject to the limitations on recourse set forth herein, may enforce the same against the Issuer or other obligor upon the Transition Bonds and collect in the manner provided by law out of the property of the Issuer or other obligor upon the Transition Bonds, wherever situated the moneys payable, or the Transition Bond Collateral and the proceeds thereof, the whole amount then due and payable on the 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 installments of interest, at the respective rate borne by the Transition Bonds or the applicable Tranche and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel.
 
(b) If an Event of Default (other than Event of Default under clause (vii) of Section 5.01) occurs and is continuing, the Indenture Trustee shall, as more particularly provided in Section 5.04, proceed to protect and enforce its rights and the rights of the Holders, by such appropriate Proceedings as the Indenture 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 Indenture Trustee by this Indenture and the Series Supplement or by law, including foreclosing or otherwise enforcing the Lien of the Transition Bond Collateral securing the Transition Bonds or applying to a court of competent jurisdiction for sequestration of revenues arising with respect to the Transition Property.
 
(c) If an Event of Default under Section 5.01(v) or (vi) has occurred and is continuing, the Indenture 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 Indenture Trustee shall have made any demand pursuant to the provisions of this Section 5.03, shall be entitled and empowered, by intervention in any Proceedings related to such Event of Default 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 Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Holders allowed in such Proceedings;
 
 
 
 
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(ii) unless prohibited by applicable law and regulations, to vote on behalf of the Holders in any election of a trustee in bankruptcy, 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 Holders and of the Indenture Trustee on their behalf; and
 
(iv) to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Holders allowed in any judicial proceeding 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 Holders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to such Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith.
 
(d) Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Transition Bonds or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of any Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.
 
(e) All rights of action and of asserting claims under this Indenture, or under any of the Transition Bonds, may be enforced by the Indenture 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 Indenture 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 Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Transition Bonds.
 
(f) In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Holders of the Transition Bonds, and it shall not be necessary to make any Holder a party to any such Proceedings.
 
SECTION 5.04. Remedies; Priorities.
 
(a) If an Event of Default (other than an Event of Default under clause (vii) of Section 5.01) shall have occurred and be continuing, the Indenture Trustee may do one or more of the following (subject to Section 5.05):
 
 
 
 
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(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 of acceleration or otherwise, and, subject to the limitations on recovery set forth herein, enforce any judgment obtained, and collect from the Issuer or any other obligor moneys adjudged due upon the Transition Bonds;
 
(ii) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Transition Bond Collateral;
 
(iii) exercise any remedies of a secured party under the UCC, the Securitization Law or any other applicable law and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Holders of the Transition Bonds;
 
(iv) at the written direction of the Holders of a majority of the Outstanding Amount of the Transition Bonds, sell the Transition Bond 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, the Administrator, TCC or the Servicer under or in connection with, and pursuant to the terms of, the Sale Agreement, the Administration Agreement, the Intercreditor Agreement or the Servicing Agreement;
 
provided, however, that the Indenture Trustee may not sell or otherwise liquidate any portion of the Transition Bond Collateral following such an Event of Default, other than an Event of Default described in Section 5.01(i), or (ii), unless (A) the Holders of 100 percent of the Outstanding Amount of the Transition Bonds consent thereto, (B) the proceeds of such sale or liquidation distributable to the Holders are sufficient to discharge in full all amounts then due and unpaid upon the Transition Bonds for principal, premium, if any, and interest after taking into account payment of all amounts due prior thereto pursuant to the priorities set forth in Section 8.02(e) or (C) the Indenture Trustee determines that the Transition Bond Collateral will not continue to provide sufficient funds for all payments on the Transition Bonds  as they would have become due if the Transition Bonds had not been declared due and payable, and the Indenture Trustee obtains the written consent of Holders of 66-2/3 percent of the Outstanding Amount of the Transition Bonds.  In determining such sufficiency or insufficiency with respect to clause (B) and (C), the Indenture Trustee may, but need not, obtain and conclusively 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 Transition Bond Collateral for such purpose.
 
(b) If an Event of Default under clause (vii) of Section 5.01 shall have occurred and be continuing, the Indenture Trustee, for the benefit of the Secured Parties, shall be entitled and empowered to the extent permitted by applicable law, to institute or participate in Proceedings necessary to compel performance of or to enforce the State Pledge and to collect any monetary damages incurred by the Holders or the Indenture Trustee as a result of any such Event of Default, and may prosecute any such Proceeding to final judgment or decree.  Such
 
 
 
 
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remedy shall be the only remedy that the Indenture Trustee may exercise if the only Event of Default that has occurred and is continuing is an Event of Default under Section 5.01(vii).
 
(c) If the Indenture Trustee collects any money pursuant to this Article V, it shall pay out such money in accordance with the priorities set forth in Section 8.02(e).
 
SECTION 5.05. Optional Preservation of the Transition Bond 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 Indenture Trustee may, but need not, elect to maintain possession of the Transition Bond Collateral.  It is the desire of the parties hereto and the Holders 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 Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the Transition Bond Collateral.  In determining whether to maintain possession of the Transition Bond Collateral or sell or liquidate the same, the Indenture Trustee may, but need not, obtain and conclusively 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 Transition Bond Collateral for such purpose.
 
SECTION 5.06. Limitation of Suits.  No Holder of any Transition Bond shall have any right to institute any Proceeding, judicial or otherwise, to avail itself of any remedies provided in the Securitization Law or to avail itself of the right to foreclose on the Transition Bond Collateral or otherwise enforce the Lien and the security interest on the Transition Bond Collateral with respect to this Indenture and the Series Supplement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
 
(i) such Holder previously has given written notice to the Indenture Trustee of a continuing Event of Default;
 
(ii) the Holders of not less than a majority of the Outstanding Amount of the Transition Bonds  have made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder;
 
(iii) such Holder or Holders have offered to the Indenture Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in complying with such request;
 
(iv) the Indenture Trustee for sixty (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 Indenture Trustee during such sixty-day period by the Holders of a majority of the Outstanding Amount of the Transition Bonds;
 
it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or
 
 
 
 
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prejudice the rights of any other Holders 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 Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders, each representing less than a majority of the Outstanding Amount of the Transition Bonds, the Indenture 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 Holders 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, (a) to receive payment of (i) the interest, if any, on such Transition Bond on the due dates thereof expressed in such Transition Bond or in this Indenture or (ii) the unpaid principal, if any, of the Transition Bonds on the Final Maturity 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 Indenture Trustee or any Holder 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 Indenture Trustee or to such Holder, then and in every such case the Issuer, the Indenture Trustee and the Holders 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 Indenture Trustee and the Holders 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 Indenture Trustee or to the Holders 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 Indenture Trustee or any Holder 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 Indenture Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Holders, as the case may be.
 
SECTION 5.11. Control by Holders.  The Holders of not less than a majority of the Outstanding Amount of the Transition Bonds of an affected Tranche shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Transition Bonds of such Tranche or Tranches or exercising
 
 
 
 
 
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any trust or power conferred on the Indenture Trustee with respect to such Tranche or Tranches; provided that:
 
(i) such direction shall not be in conflict with any rule of law or with this Indenture and shall not involve the Indenture Trustee in any personal liability or expense;
 
(ii) subject to other conditions specified in Section 5.04, any direction to the Indenture Trustee to sell or liquidate any Transition Bond Collateral shall be by the Holders representing not less than 100 percent of the Outstanding Amount of the Transition Bonds;
 
(iii) if the conditions set forth in Section 5.05 have been satisfied and the Indenture Trustee elects to retain the Transition Bond Collateral pursuant to Section 5.05, then any direction to the Indenture Trustee by Holders representing less than 100 percent of the Outstanding Amount of the Transition Bonds to sell or liquidate the Transition Bond Collateral shall be of no force and effect; and
 
(iv) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction;
 
provided, however, that, the Indenture Trustee’s duties shall be subject to Section 6.01, and the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Holders not consenting to such action.  Furthermore and without limiting the foregoing, the Indenture Trustee shall not be required to take any action for which it reasonably believes that it will not be indemnified to its satisfaction against any cost, expense or liabilities.
 
SECTION 5.12. Waiver of Past Defaults.  Prior to the declaration of the acceleration of the maturity of the Transition Bonds as provided in Section 5.02, the Holders representing not less than a majority of the Outstanding Amount of the Transition Bonds of an affected Tranche, together with the PUCT, may waive any past Default or Event of Default and its consequences except a Default (a) in payment of principal of or premium, if any, or interest on any of the Transition Bonds or (b) 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 Tranches affected.  In the case of any such waiver, the Issuer, the Indenture Trustee and the Holders 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 Indenture Trustee for any action
 
 
 
 
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taken, suffered or omitted by it as Indenture 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 5.13 shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Holder, or group of Holders, in each case holding in the aggregate more than ten (10) percent of the Outstanding Amount of the Transition Bonds or (c) any suit instituted by any Holder 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 or (ii) the unpaid principal, if any, of any Transition Bond on or after the Final Maturity 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 Indenture 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 Indenture 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 Indenture Trustee or the Holders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Transition Bond Collateral or any other assets of the Issuer.
 
ARTICLE VI
 
THE INDENTURE TRUSTEE
 
SECTION 6.01. Duties of Indenture Trustee.
 
(a) If an Event of Default has occurred and is continuing, the Indenture 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 Indenture 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 Indenture Trustee; and
 
(ii) in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions
 
 
 
 
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expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture.
 
(c) The Indenture Trustee may not be relieved from liability for its own negligent action, its own bad faith, its own negligent failure to act or its own willful misconduct, except that:
 
(i) this paragraph (c) does not limit the effect of paragraph (b) of this Section 6.01;
 
(ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and
 
(iii) the Indenture 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 hereunder.
 
(d) Every provision of this Indenture that in any way relates to the Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section 6.01.
 
(e) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer.
 
(f) Money held in trust by the Indenture Trustee need not be segregated from other funds held by the Indenture Trustee except to the extent required by law or the terms of this Indenture, the Sale Agreement, the Servicing Agreement, the Administration Agreement or the Intercreditor Agreement.
 
(g) No provision of this Indenture shall require the Indenture 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 indemnity satisfactory to it 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 Indenture Trustee shall be subject to the provisions of this Section 6.01 and to the provisions of the TIA.
 
(i) In the event that the Indenture Trustee is also acting as Paying Agent or Transition Bond Registrar hereunder, the protections of this Article VI shall also be afforded to the Indenture Trustee in its capacity as Paying Agent or Transition Bond Registrar.
 
(j) Except for the express duties of the Indenture Trustee with respect to the administrative functions set forth in the Basic Documents, the Indenture Trustee shall have no obligation to administer, service or collect Transition Property or to maintain, monitor or otherwise supervise the administration, servicing or collection of the Transition Property.
 
 
 
 
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(k) Under no circumstance shall the Indenture Trustee be liable for any indebtedness of the Issuer, the Servicer or the Seller evidenced by or arising under the Transition Bonds or the Basic Documents.
 
(l) Commencing with March 15, 2013, on or before March 15th of each fiscal year ending December 31, the Indenture Trustee shall (i) deliver to the Issuer a report (in form and substance reasonably satisfactory to the Issuer and addressed to the Issuer and signed by an authorized officer of the Indenture Trustee) regarding the Indenture Trustee’s assessment of compliance, during the immediately preceding fiscal year ending December 31, with each of the applicable servicing criteria specified on Exhibit C hereto as required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB and (ii) deliver to the Issuer a report of an Independent registered public accounting firm reasonably acceptable to the Issuer that attests to and reports on, in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act, the assessment of compliance made by the Indenture Trustee and delivered pursuant to clause (i).
 
SECTION 6.02. Rights of Indenture Trustee.  (a)  The Indenture Trustee may conclusively rely and shall be fully protected in relying on any document believed by it to be genuine and to have been signed or presented by the proper person.  The Indenture Trustee need not investigate any fact or matter stated in such document.
 
(b) Before the Indenture Trustee acts or refrains from acting, it may require and shall be entitled to receive an Officer’s Certificate or an Opinion of Counsel of external counsel of the Issuer (at no cost or expense to the Indenture Trustee) that such action is required or permitted hereunder.  The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.
 
(c) The Indenture 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 Indenture 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 hereunder.  The Indenture Trustee shall give prompt written notice to the Rating Agencies of the appointment of any such agent, custodian or nominee to whom it delegates any of its express duties under this Agreement  provided, that the Indenture Trustee shall not be obligated to give such notice (i) if the Issuer or the Holders have directed the Trustee to appoint such agent, custodian or nominee (in which event the Issuer shall give prompt notice to the Rating Agencies of any such direction) or (ii) of the appointment of any agents, custodians or nominees made at any time that an Event of Default on account of non-payment of principal or interest on the Transition Bonds or insolvency of the Issuer has occurred and is continuing.
 
(d) The Indenture 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 Indenture Trustee’s conduct does not constitute willful misconduct, negligence or bad faith.
 
 
 
 
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(e) The Indenture 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.
 
(f) The Indenture Trustee shall be under no obligation to take any action or exercise any of the rights or powers vested in it by this Indenture or any other Basic Document, or to institute, conduct or defend any litigation hereunder or thereunder or in relation hereto or thereto, at the request, order or direction of any of the Bondholders pursuant to the provisions of this Indenture and the Series Supplement or otherwise, unless it shall have grounds to believe in its discretion that security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby is to its satisfaction assured to it.
 
SECTION 6.03. Individual Rights of Indenture Trustee.  The Indenture 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 Indenture Trustee.  Any Paying Agent, Transition Bond Registrar, co-registrar or co-paying agent or agent appointed under Section 3.02 may do the same with like rights.  However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
 
SECTION 6.04. Indenture Trustee’s Disclaimer.  The Indenture Trustee shall not be responsible for and makes no representation (other than as set forth in Section 6.13) as to the validity or adequacy of this Indenture or the Transition Bonds, it shall not be accountable for the Issuer’s use of the proceeds from the Transition Bonds, and it 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 Indenture Trustee’s certificate of authentication.  The Indenture Trustee shall not be responsible for the form, character, genuineness, sufficiency, value or validity of any of the Transition Bond Collateral, or for or in respect of the Transition Bonds (other than the certificate of authentication for the Transition Bonds) or the Basic Documents and the Indenture Trustee shall in no event assume or incur any liability, duty or obligation to any Holder, other than as expressly provided in this Indenture.  The Indenture Trustee shall not be liable for the default or misconduct of the Issuer, the Seller, or the Servicer under the Basic Documents or otherwise, and the Indenture Trustee shall have no obligation or liability to perform the obligations of such Persons.
 
SECTION 6.05. Notice of Defaults.
 
(a) If a Default occurs and is continuing and if it is actually known to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail to the PUCT, each Rating Agency and each Bondholder notice of the Default within ten (10) Business Days after actual notice of such Default was received by a Responsible Officer of the Indenture Trustee (provided that the Indenture Trustee shall give the Rating Agencies prompt notice of any payment default in respect of the Transition Bonds).  Except in the case of a Default in payment of principal of and premium, if any, or interest on any Transition Bond, the Indenture Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that prompt notice of  the Default is not likely to be material to Holders and the
 
 
 
 
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Default is likely to be cured and therefore that withholding the notice is in the interests of Holders.  Except for an Event of Default under Sections 5.01(i) or (ii) that occur at a time when the Indenture Trustee is acting as the Paying Agent, and except as provided in the first sentence of this Section 6.05, in no event shall the Indenture Trustee be deemed to have knowledge of a Default.
 
(b) If a Default occurs and is continuing and if it is actually known to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall promptly, but no more frequently than monthly, mail to the PUCT notice of any legal fees or other expenses incurred by the Indenture Trustee in defending or prosecuting any actual or threatened litigation, including any administrative proceeding, in respect of the Transition Bonds or the Transition Bond Collateral.
 
SECTION 6.06. Reports by Indenture Trustee to Holders.
 
(a) So long as Transition Bonds are Outstanding and the Indenture Trustee is the Transition Bond Registrar and Paying Agent, upon the written request of any Holder or the Issuer, within the prescribed period of time for tax reporting purposes after the end of each calendar year, it shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its federal income and any applicable local or state tax returns.  If the Transition Bond Registrar and Paying Agent is other than the Indenture Trustee, such Transition Bond Registrar and Paying Agent, within the prescribed period of time for tax reporting purposes after the end of each calendar year, shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its federal income and any applicable local or state tax returns.
 
(b) On or prior to each Payment Date or Special Payment Date therefor, the Indenture Trustee will deliver to the PUCT and each Holder of the Transition Bonds on such Payment Date or Special Payment Date a statement as provided and prepared by the Servicer which will include (to the extent applicable) the following information (and any other information so specified in the Series Supplement) as to the Transition Bonds with respect to such Payment Date or Special Payment Date or the period since the previous Payment Date, as applicable:
 
(i) the amount of the payment to Holders allocable to principal, if any;
 
(ii) the amount of the payment to Holders allocable to interest;
 
(iii) the aggregate Outstanding Amount of the Transition Bonds, before and after giving effect to any payments allocated to principal reported under clause (i) above;
 
(iv) the difference, if any, between the amount specified in clause (iii) above and the Outstanding Amount specified in the related Expected Amortization Schedule;
 
(v) any other transfers and payments to be made on such Payment Date or Special Payment Date, including amounts paid to the Indenture Trustee and to the Servicer; and
 
 
 
 
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(vi) the amounts on deposit in the Capital Subaccount and the Excess Funds Subaccount, after giving effect to the foregoing payments.
 
(c) The Issuer shall send a copy of each of the Certificate of Compliance delivered to it pursuant to Section 3.03 of the Servicing Agreement and the Annual Accountant’s Report delivered to it pursuant to Section 3.04 of the Servicing Agreement to the Rating Agencies and to the Servicer for posting on its website in accordance with Rule 17g-5 of the SEC.  A copy of such certificate and report may be obtained by any Holder by a request in writing to the Indenture Trustee.
 
(d) The Indenture Trustee may consult with counsel, and the advice or opinion of such counsel with respect to legal matters relating to this Indenture and the Transition Bonds shall be full and complete authorization and protection from liability with 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 6.07. Compensation and Indemnity.  The Issuer shall pay to the Indenture Trustee from time to time reasonable compensation for its services.  The Indenture Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Issuer shall reimburse the Indenture Trustee for all reasonable out-of-pocket expenses 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 Indenture Trustee’s agents, counsel, accountants and experts.  The Issuer shall indemnify and hold harmless the Indenture Trustee and its officers, directors, employees and agents against any and all cost, damage, loss, liability, tax or expense (including reasonable attorney’s fees and expenses) incurred by it in connection with the administration and the enforcement of this Indenture, the Series Supplement and the Basic Documents and the Indenture Trustee’s rights, powers and obligations under this Indenture, the Series Supplement and the Basic Documents and the performance of its duties hereunder and obligations under or pursuant to this Indenture, the Series Supplement and the Basic Documents.  The Indenture Trustee shall notify the Issuer as soon as is reasonably practicable of any claim for which it may seek indemnity.  Failure by the Indenture Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder.  The Issuer shall defend the claim and the Indenture Trustee may have separate counsel and the Issuer shall pay the reasonable fees and expenses of such counsel.  The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee through the Indenture Trustee’s own willful misconduct, negligence or bad faith.  The rights of the Indenture Trustee set forth in this Section 6.07 are subject to and limited by the priority of payments set forth in Section 8.02(e).
 
The payment obligations to the Indenture Trustee pursuant to this Section 6.07 shall survive the discharge of this Indenture and the Series Supplement or the earlier resignation or removal of the Indenture Trustee.  When the Indenture 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 the Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency or similar law.
 
 
 
 
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SECTION 6.08. Replacement of Indenture Trustee and Securities Intermediary.
 
(a) The Indenture Trustee may resign at any time upon thirty (30) days’ prior written notice to the Issuer subject to clause (c) below.  The Holders of a majority of the Outstanding Amount of the Transition Bonds  may remove the Indenture Trustee by so notifying the Indenture Trustee and may appoint a successor Indenture Trustee.  The Issuer shall remove the Indenture Trustee if:
 
(i) the Indenture Trustee fails to comply with Section 6.11;
 
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
 
(iii) a receiver or other public officer takes charge of the Indenture Trustee or its property;
 
(iv) the Indenture Trustee otherwise becomes incapable of acting; or
 
(v) the Indenture Trustee fails to provide to the Issuer any information reasonably requested by the Issuer pertaining to the Indenture Trustee and necessary for the Issuer or the Sponsor to comply with its reporting obligations under the Exchange Act and Regulation AB and such failure is not resolved to the Issuer’s and the Indenture Trustee’s mutual satisfaction within a reasonable period of time.
 
Any removal or resignation of the Indenture Trustee shall also constitute a removal or resignation of the Securities Intermediary.
 
(b) If the Indenture Trustee gives notice of resignation or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall promptly appoint a successor Indenture Trustee and Securities Intermediary.
 
(c) A successor Indenture Trustee shall deliver a written acceptance of its appointment as the Indenture Trustee and as the Securities Intermediary to the retiring Indenture Trustee and to the Issuer.  Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee and Securities Intermediary, as applicable, under this Indenture and the Intercreditor Agreement.  No resignation or removal of the Indenture Trustee pursuant to this Section 6.08 shall become effective until acceptance of the appointment by a successor Indenture Trustee having the qualifications set forth in Section 6.11.  Notice of any such appointment shall be promptly given to each Rating Agency by the successor Indenture Trustee.  The successor Indenture Trustee shall mail a notice of its succession to Holders.  The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee (including unless otherwise agreed by the successor Indenture Trustee, all REP Deposit Accounts held by the Indenture Trustee) to the successor Indenture Trustee.
 
(d) If a successor Indenture Trustee does not take office within sixty (60) days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the
 
 
 
 
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Issuer or the Holders of a majority in Outstanding Amount of the Transition Bonds  may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.
 
(e) If the Indenture Trustee fails to comply with Section 6.11, any Holder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee.
 
(f) Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.08, the Issuer’s obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee.
 
SECTION 6.09. Successor Indenture Trustee by Merger.  If the Indenture 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 without any further act shall be the successor Indenture Trustee; provided, however, that if such successor Indenture Trustee is not eligible under Section 6.11, then the successor Indenture Trustee shall be replaced in accordance with Section 6.08.  Notice of any such event shall be promptly given to each Rating Agency by the successor Indenture 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 Indenture Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver the Transition Bonds so authenticated; and in case at that time any of the Transition Bonds shall not have been authenticated, any successor to the Indenture Trustee may authenticate the Transition Bonds either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Transition Bonds or in this Indenture provided that the certificate of the Indenture Trustee shall have.
 
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 trust created by this Indenture or the Transition Bond Collateral may at the time be located, the Indenture 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 trust created by this Indenture or the Transition Bond Collateral, and to vest in such Person or Persons, in such capacity and for the benefit of the Secured Parties, such title to the Transition Bond Collateral, or any part hereof, and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Indenture 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 Holders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08.  Notice of any such appointment shall be promptly given to each Rating Agency and the PUCT by the Indenture Trustee.
 
 
 
 
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(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 Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture 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 Indenture 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 Indenture 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 Transition Bond 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 Indenture Trustee;
 
(ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and
 
(iii) the Indenture 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 Indenture 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 Indenture 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 Indenture Trustee.  Every such instrument shall be filed with the Indenture Trustee.
 
(d) Any separate trustee or co-trustee may at any time constitute the Indenture 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 Indenture 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 Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.
 
SECTION 6.11. Eligibility; Disqualification.  The Indenture Trustee shall at all times satisfy the requirements of TIA § 310(a)(1) and § 310(a)(5) and Section 26(a)(1) of the Investment Company Act.  The Indenture 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 “BBB-” or better by Standard & Poor’s and, if Fitch provides a rating thereon, “BBB-” or better by Fitch.  The Indenture Trustee shall comply with TIA § 310(b), including the optional provision permitted by the second
 
 
 
 
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sentence of TIA § 310(b)(9); provided, however, that there shall be excluded from the operation of TIA § 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 § 310(b)(1) are met.
 
SECTION 6.12. Preferential Collection of Claims Against Issuer.  The Indenture Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b).  An Indenture Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.
 
SECTION 6.13. Representations and Warranties of Indenture Trustee.  The Indenture Trustee hereby represents and warrants that:
 
(a) the Indenture Trustee is a national banking association validly existing and in good standing under the laws of the United States; and
 
(b) the Indenture Trustee has full power, authority and legal right to execute, deliver and perform this Indenture and the Basic Documents to which the Indenture Trustee is a party and has taken all necessary action to authorize the execution, delivery, and performance by it of this Indenture and such Basic Documents.
 
SECTION 6.14. Annual Report by Independent Registered Public Accountants.  In the event the firm of Independent registered public accountants requires the Indenture Trustee to agree or consent to the procedures performed by such firm pursuant to Section 3.05 of the Servicing Agreement, the Indenture Trustee shall deliver such letter of agreement or consent in conclusive reliance upon the direction of the Issuer in accordance with Section 3.05 of the Servicing Agreement.  In the event such firm requires the Indenture Trustee to agree to the procedures performed by such firm, the Issuer shall direct the Indenture Trustee in writing to so agree; it being understood and agreed that the Indenture Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.
 
SECTION 6.15. Custody of Transition Bond Collateral.  The Indenture Trustee shall hold such of the Transition Bond Collateral (and any other collateral that may be granted to the Indenture Trustee) as consists of instruments, deposit accounts, negotiable documents, money, goods, letters of credit, and advices of credit in the State of New York.  The Indenture Trustee shall hold such of the Transition Bond Collateral as constitute investment property through the Securities Intermediary (which, as of the date hereof, is U.S. Bank National Association).  The initial Securities Intermediary, hereby agrees (and each future Securities Intermediary shall agree) with the Indenture Trustee that (a) such investment property shall at all times be credited to a securities account of the Indenture Trustee, (b) the Securities Intermediary shall treat the Indenture Trustee as entitled to exercise the rights that comprise each financial asset credited to such securities account, (c) all property credited to such securities account shall be treated as a financial asset, (d) the Securities Intermediary shall comply with entitlement orders originated by the Indenture Trustee without the further consent of any other person or entity, (e) the Securities Intermediary will not agree with any person other than the Indenture Trustee to comply with entitlement orders originated by such other person, (f) such securities
 
 
 
 
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accounts and the property credited thereto shall not be subject to any Lien or right of set-off in favor of the Securities Intermediary or anyone claiming through it (other than the Indenture Trustee), and (g) such agreement shall be governed by the internal laws of the State of New York.  Terms used in the preceding sentence that are defined in the UCC and not otherwise defined herein shall have the meaning set forth in the UCC.  Except as permitted by this Section 6.15, or elsewhere in this Indenture, the Indenture Trustee shall not hold Transition Bond Collateral through an agent or a nominee.
 
ARTICLE VII
 
HOLDERS’ LISTS AND REPORTS
 
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of Holders.  The Issuer will furnish or cause to be furnished to the Indenture Trustee (a) not more than five (5) days after the earlier of (i) each Record Date and (ii) six (6) months after the last Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the BondHolders as of such Record Date, (b) at such other times as the Indenture Trustee may request in writing, within thirty (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 ten (10) days prior to the time such list is furnished; provided, however, that so long as the Indenture Trustee is the Transition Bond Registrar, no such list shall be required to be furnished.
 
SECTION 7.02. Preservation of Information;  Communications to Holders.
 
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.01 and the names and addresses of Holders received by the Indenture Trustee in its capacity as Transition Bond Registrar.  The Indenture Trustee may destroy any list furnished to it as provided in such Section 7.01 upon receipt of a new list so furnished.
 
(b) Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Indenture or under the Transition Bonds.  In addition, upon the written request of any Holder or group of Holders of Outstanding Transition Bonds evidencing not less than 10 percent of the Outstanding Amount of the Transition Bonds, the Indenture Trustee shall afford the Holder or Holders making such request a copy of a current list of Holders for purposes of communicating with other Holders with respect to their rights hereunder.
 
(c) The Issuer, the Indenture Trustee and the Transition Bond Registrar shall have the protection of TIA § 312(c).
 
SECTION 7.03. Reports by Issuer.
 
(a) The Issuer shall:
 
(i) so long as the Issuer or the Sponsor is required to file such documents with the SEC, provide to the Indenture Trustee, within fifteen (15) days after the Issuer is
 
 
 
 
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required to file the same with the SEC, 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 SEC may from time to time by rules and regulations prescribe) which the Issuer or the Sponsor may be required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act;
 
(ii) provide to the Indenture Trustee and file with the SEC, in accordance with rules and regulations prescribed from time to time by the SEC 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 Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Holders described in TIA § 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 SEC.
 
(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 Indenture Trustee.  If required by TIA § 313(a), within sixty (60) days after March 30 of each year, commencing with March 30, 2013, the Indenture Trustee shall mail to each Bondholder as required by TIA § 313(c) a brief report dated as of such date that complies with TIA § 313(a). The Indenture Trustee also shall comply with TIA § 313(b); provided, however, that the initial report so issued shall be delivered not more than twelve (12) months after the initial issuance thereof.
 
A copy of each report at the time of its mailing to Holders shall be filed by the Servicer with the SEC and each stock exchange, if any, on which the Transition Bonds are listed.  The Issuer shall notify the Indenture Trustee in writing if and when the Transition Bonds are listed on any stock exchange.
 
ARTICLE VIII
 
ACCOUNTS, DISBURSEMENTS AND RELEASES
 
SECTION 8.01. Collection of Money.  Except as otherwise expressly provided herein, the Indenture 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 Indenture Trustee pursuant to this Indenture and the other Basic Documents.  The Indenture 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 Transition Bond Collateral, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, subject to Article VI, including the institution and prosecution of appropriate Proceedings.  Any such
 
 
 
 
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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.
 
SECTION 8.02. Collection Account and REP Deposit Accounts.
 
(a) Prior to the Closing Date, the Issuer shall open or cause to be opened with the Securities Intermediary located at the Indenture Trustee’s office located at the Corporate Trust Office, or at another Eligible Institution, one or more segregated trust accounts in the Indenture Trustee’s name for the deposit of Estimated TC Collections, TC Collections and all other amounts received with respect to the Transition Bond Collateral (the “Collection Account”).  The Collection Account will consist of three subaccounts: a general subaccount (the “General Subaccount”), an excess funds subaccount (the “Excess Funds Subaccount”) and a capital subaccount (the “Capital Subaccount” and, together with the General Subaccount and the Excess Funds Subaccount, the “Subaccounts”).  For administrative purposes, the Subaccounts may be established by the Indenture Trustee as separate accounts.  Such separate accounts will be recognized individually as a Subaccount and collectively as the “Collection Account.” Prior to or concurrently with the issuance of Transition Bonds, the Member shall deposit into the Capital Subaccount an amount equal to the Required Capital Level.  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 Level) 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 Section 8.02(d) and (e).  The Collection Account shall at all times be maintained in an Eligible Account, will be under the sole dominion and exclusive control of the Indenture Trustee, and only the Indenture 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 with any other moneys. 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 as directed in writing by the Issuer with such moneys, including all income or other gain from such investments, shall be held by the Indenture Trustee in the Collection Account as part of the Transition Bond Collateral as herein provided.  The Indenture 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 its date of redemption or the failure of the Issuer or the Servicer to provide timely written investment direction.
 
(b) The Securities Intermediary hereby confirms that (i) the Collection Account is, or at inception will be established as, a “securities account” as such term is defined in Section 8-501(a) of the UCC, (ii) it is a “securities intermediary” (as such term is defined in Section 8-102(a) (14) of the UCC) and is acting in such capacity with respect to such accounts, and (iii) the Indenture Trustee for the benefit of the Secured Parties is the sole “entitlement holder” (as such term is defined in Section 8-102(a)(7) of the UCC) with respect to such accounts and no other Person shall have the right to give “entitlement orders” (as such term is defined in Section 8-102(a)(8)) with respect to such accounts.  The Securities Intermediary hereby further agrees that each item of property (whether investment property, financial asset, security, instrument or cash) received by it will be credited to the Collection Account and shall
 
 
 
 
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be treated by it as a “financial asset” within the meaning of Section 8-102(a)(9) of the UCC.  Notwithstanding anything to the contrary, New York State shall be deemed to be the jurisdiction of the Securities Intermediary for purposes of Section 8-110 of the UCC, and the Collection Account (as well as the securities entitlements related thereto) shall be governed by the laws of the State of New York.
 
(c) The Indenture Trustee shall have sole dominion and exclusive control over all moneys in the Collection Account and shall apply such amounts therein as provided in this Section 8.02.  The Indenture Trustee shall also pay from the Collection Account any amounts requested to be paid by or to the Servicer pursuant to Section 6.11(c)(ii) of the Servicing Agreement.
 
(d) TC Collections shall be deposited in the General Subaccount as provided in Section 6.11 of the Servicing Agreement.  All deposits to and withdrawals from the Collection Account, all allocations to the subaccounts of the Collection Account and any amounts to be paid to the Servicer under Section 8.02(c) shall be made by the Indenture Trustee in accordance with the written instructions provided by the Servicer in the Monthly Servicer’s Certificate, the Servicer’s Certificate or upon other written notice provided by the Servicer pursuant to Section 6.11(c)(ii) of the Servicing Agreement, as applicable.
 
(e) On each Payment Date, the Indenture Trustee shall apply all amounts on deposit in the Collection Account, including all Investment Earnings thereon, to pay the following amounts, in accordance with the Servicer’s Certificate, in the following priority:
 
(i) all amounts owed by the Issuer to the Indenture Trustee (including legal fees and expenses) shall be paid to the Indenture Trustee (subject to Section 6.07) in an amount not to exceed annually the amount set forth in the Series Supplement or such greater amount as approved by the PUCT in the Financing Order;
 
(ii) the Servicing Fee with respect to such Payment Date and all unpaid Servicing Fees for prior Payment Dates shall be paid to the Servicer;
 
(iii) the Administration Fee for such Payment Date shall be paid to the Administrator and the Independent Manager Fee for such Payment Date shall be paid to the Independent Managers;
 
(iv) all other ordinary and periodic Operating Expenses for such Payment Date not described above shall be paid to the parties to which such Operating Expenses are owed;
 
(v) Periodic Interest for such Payment Date, including any overdue Periodic Interest (together with, to the extent lawful, interest on such overdue Periodic Interest at the applicable Transition Bond Interest Rate), with respect to the Transition Bonds shall be paid to the Holders of Transition Bonds;
 
(vi) principal due and payable on the Transition Bonds as a result of an Event of Default or on the Final Maturity Date of the Transition Bonds shall be paid to the Holders of Transition Bonds;
 
 
 
 
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(vii) Periodic Principal for such Payment Date, including any overdue Periodic Principal, with respect to the Transition Bonds shall be paid to the Holders of Transition Bonds, pro rata;
 
(viii) any other unpaid Operating Expenses, fees, expenses and indemnity amounts owed to the Indenture Trustee;
 
(ix) the amount, if any, by which the Required Capital Level exceeds the amount in the Capital Subaccount as of such Payment Date shall be allocated to the Capital Subaccount;
 
(x) if there is a positive balance after making the foregoing allocations, an amount not to exceed the lesser of such balance and the investment earnings on the Capital Subaccount shall be paid to the Issuer; provided that no Event of Default has occurred or is continuing;
 
(xi) the balance, if any, shall be allocated to the Excess Funds Subaccount for distribution on subsequent Payment Dates; and
 
(xii) after principal of and premium, if any, and interest on all the Transition Bonds, and all of the other foregoing amounts, have been paid in full, including, without limitation, amounts due and payable to the Indenture Trustee under Section 6.07 or otherwise, the balance (including all amounts then held in the Capital Subaccount and the Excess Funds Subaccount), if any, shall be paid to the Issuer, free from the Lien of this Indenture and the Series Supplement.
 
All payments to the Holders of the Transition Bonds pursuant to clauses (v), (vi) and (vii) above shall be made to such Holders pro rata based on the respective amounts of interest and/or principal owed, unless, in the case of Transition Bonds comprised of two or more Tranches, the Series Supplement provides otherwise.  Payments in respect of principal of and premium, if any, and interest on any Tranche of Transition Bonds will be made on a pro rata basis among all the Holders of such Tranche.  In the case of an Event of Default, then, in accordance with Section 5.04(c), moneys will be applied pursuant to clauses (v) and (vi), in such order, on a pro rata basis, based upon the interest or the principal owed.
 
The amounts paid during any calendar year pursuant to clauses (i), (ii), (iii), (iv) and (viii) may not exceed the amounts approved in the Series Supplement unless the PUCT approves a different aggregate amount for such payments.
 
(f) If on any Payment Date funds on deposit in the General Subaccount are insufficient to make the payments contemplated by clauses (i) through (viii) of Section 8.02(e) above, the Indenture Trustee shall (i) first, draw from amounts on deposit in the Excess Funds Subaccount and (ii) second, draw from amounts on deposit in the Capital Subaccount, in each case, up to the amount of such shortfall in order to make the payments contemplated by clauses (i) through (viii) of Section 8.02(e).  In addition, if on any Payment Date funds on deposit in the General Subaccount are insufficient to make the allocations contemplated by clause (ix) above, the Indenture Trustee shall draw from amounts on deposit in the Excess Funds Subaccount to make such allocations.
 
 
 
 
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(g) Pursuant to the written direction of the Servicer, the Issuer shall open, at the Trustee’s Corporate Trust Office, or at another Eligible Institution, one or more segregated non-interest-bearing trust accounts in the Trustee’s name (each a “REP Deposit Account”), each such account for the benefit of one Depositing REP with respect to the Transition Bonds.  Pursuant to and in accordance with the Financing Order, amounts received from any REP as a security deposit with respect to the Transition Bonds shall be deposited into the applicable REP Deposit Account.  The REP Deposit Accounts shall at all times be maintained in an Eligible Account and only the Trustee shall have access to the REP Deposit Accounts for the purpose of making deposits in and withdrawals from the REP Deposit Accounts in accordance with this Indenture, the Servicing Agreement and the Financing Order.  Funds in the REP Deposit Accounts shall not be commingled by the Issuer with any other moneys, and shall not be commingled by the Trustee.  All or a portion of the funds in the REP Deposit Accounts shall be invested in Eligible Investments and reinvested by the Trustee pursuant to the written direction of the Servicer or the REP making the deposit.  All income or other gain from investments of moneys deposited in any REP Deposit Account shall be deposited by the Trustee into such REP Deposit Account, and any loss resulting from such investments shall be charged to such REP Deposit Account.  In addition, each Depositing REP shall be responsible for the payment of income taxes with respect to such investments, and the Indenture Trustee shall not be required to provide any tax reporting with respect to any REP Deposit Account unless so requested by the applicable REP.  The Trustee shall not in any way be held liable for the selection of Eligible Investments for the REP Deposit Accounts or for investment losses incurred thereon.  The Trustee shall have no obligation to invest or reinvest any amounts held hereunder in the absence of timely and specific written investment direction from the Servicer and appropriate documents from the applicable REP.  The Trustee shall release property from any REP Deposit Account only as and to the extent directed by the Servicer pursuant to the Financing Order and the Servicing Agreement.
 
SECTION 8.03. General Provisions Regarding the Collection Account.
 
(a) So long as no Default or Event of Default shall have occurred and be continuing, all or a portion of the funds in the Collection Account shall be invested in Eligible Investments and reinvested by the Indenture Trustee upon Issuer Order; provided, however, that (i) such Eligible Investments shall not mature or be redeemed later than the Business Day prior to the next Payment Date or Special Payment Date, if applicable, for the Transition Bonds and (ii) such Eligible Investments shall not be sold, liquidated or otherwise disposed of at a loss prior to the maturity or the date of redemption thereof.  All income or other gain from investments of moneys deposited in the Collection Account shall be deposited by the Indenture Trustee in such Collection Account, and any loss resulting from such investments shall be charged to such Collection Account.  The Issuer will not direct the Indenture 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 Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer (at the Issuer’s cost and expense) to such effect.  In no event shall the Indenture Trustee be liable for the selection of Eligible Investments or for investment losses incurred thereon.  The Indenture Trustee shall have no liability in respect of losses incurred as a
 
 
 
 
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result of the liquidation of any Eligible Investment prior to its stated maturity or its date of redemption or the failure of the Issuer or the Servicer to provide timely written investment direction.  The Indenture 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.
 
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in any way be held liable by reason of any insufficiency in the Collection Account resulting from any loss on any Eligible Investment included therein except for losses attributable to the Indenture Trustee’s failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms.
 
(c) If (i) the Issuer shall have failed to give written investment directions for any funds on deposit in the Collection Account to the Indenture Trustee by 11:00 a.m. Eastern Time (or such other time as may be agreed by the Issuer and Indenture Trustee) on any Business Day; or (ii) a Default or Event of Default shall have occurred and be continuing with respect to the Transition Bonds but the Transition Bonds shall not have been declared due and payable pursuant to Section 5.02, then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in such Collection Account in the money market fund (described under clause (d) of the definition of “Eligible Investments”) specified in the most recent written investment directions delivered by the Issuer to the Indenture Trustee with respect to such type of Eligible Investments; provided that if the Issuer has never delivered written investment directions to the Indenture Trustee, the Indenture Trustee shall not invest or reinvest such funds in any investments.
 
(d) The parties hereto acknowledge that the Servicer may, pursuant to the Servicing Agreement, select Eligible Investments on behalf of the Issuer.
 
SECTION 8.04. Release of Transition Bond Collateral.
 
(a) So long as the Issuer is not in default hereunder and no Default hereunder would occur as a result of such action, the Issuer, through the Servicer, may collect, sell or otherwise dispose of written-off receivables, at any time and from time to time in the ordinary course of business, without any notice to, or release or consent by, the Indenture Trustee, but only as and to the extent permitted by the Basic Documents; provided, however, that any and all proceeds of such dispositions shall become Transition Bond Collateral and be deposited to the General Subaccount immediately upon receipt thereof by the Issuer or any other Person, including the Servicer.  Without limiting the foregoing, the Servicer, may, at any time and from time to time without any notice to, or release or consent by, the Indenture Trustee, sell or otherwise dispose of any Transition Bond Collateral previously written-off as a defaulted or uncollectible account in accordance with the terms of the Servicing Agreement and the requirements of the proviso in the immediately preceding sentence.
 
(b) The Indenture 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 Indenture 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 Indenture Trustee as provided in this Article VIII shall be bound to ascertain the
 
 
 
 
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Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys.  The Indenture Trustee shall release property from the Lien of this Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer Request accompanied by an Officer’s Certificate, an Opinion of Counsel of external counsel of the Issuer (at the Issuer’s cost and expense) and (if required by the TIA) Independent Certificates in accordance with TIA §§ 314(c) and 314(d)(1) meeting the applicable requirements of Section 10.01.
 
(c) The Indenture Trustee shall, at such time as there are no Transition Bonds Outstanding and all sums payable to the Indenture Trustee pursuant to Section 6.07 or otherwise have been paid, release any remaining portion of the Transition Bond Collateral that secured the Transition Bonds from the Lien of this Indenture, release to the Issuer or any other Person entitled thereto any funds or investments then on deposit in or credit to the Collection Account and, subject to the instructions of the Servicer, shall release the REP Deposit Accounts in accordance with Section 8.02.
 
SECTION 8.05. Opinion of Counsel.  The Indenture Trustee shall receive at least seven (7) days’ notice when requested by the Issuer to take any action pursuant to Section 8.04, accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, as a condition to such action, an Opinion of Counsel of external counsel of the Issuer, in form and substance satisfactory to the Indenture 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 Holders in contravention of the provisions of this Indenture and the Series Supplement; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Transition Bond 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 Indenture Trustee in connection with any such action.
 
SECTION 8.06. Reports by Independent Registered Public Accountants.  As of the Closing Date, the Issuer shall appoint a firm of Independent registered 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 Series Supplement.  In the event such firm requires the Indenture Trustee to agree to the procedures performed by such firm, the Issuer shall direct the Indenture Trustee in writing to so agree; it being understood and agreed that the Indenture Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.  Upon any resignation by, or termination by the Issuer of, such firm the Issuer shall provide written notice thereof to the Indenture Trustee and shall promptly appoint a successor thereto that shall also be a firm of Independent registered public accountants of recognized national reputation.  If the Issuer shall fail to appoint a successor to a firm of Independent registered public accountants that has resigned or been terminated within fifteen (15) days after such resignation or termination, the Indenture Trustee shall promptly notify the Issuer of such failure in writing.  If the Issuer shall not have appointed a successor within ten (10) days thereafter the Indenture Trustee shall promptly appoint a successor firm of Independent
 
 
 
 
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registered public accountants of recognized national reputation; provided that the Indenture Trustee shall have no liability with respect to such appointment.  The fees of such Independent registered public accountants and its successor shall be payable by the Issuer.
 
ARTICLE IX
 
Supplemental Indentures
 
SECTION 9.01. Supplemental Indentures Without Consent of Holders.
 
(a) Without the consent of the Holders of any Transition Bonds but with prior notice to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an Issuer Order, and, if the contemplated amendment may in the judgment of the PUCT increase ongoing Qualified Costs, with the consent of the PUCT pursuant to Section 9.03 (which consent shall not be required with regard to the Series Supplement), 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 TIA as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, for any of the following purposes:
 
(i) to correct or amplify the description of any property, including, without limitation, the Transition Bond Collateral, at any time subject to the Lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the Lien of this Indenture and the Series Supplement, or to subject to the Lien of this Indenture and the Series Supplement 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 such successor of the covenants of the Issuer herein and in the Transition Bonds;
 
(iii) to add to the covenants of the Issuer, for the benefit of the Secured Parties, or to surrender any right or power herein conferred upon the Issuer;
 
(iv) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee;
 
(v) to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture, including the Series Supplement, which may be inconsistent with any other provision herein or in any supplemental indenture, including the Series Supplement, or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture; provided that (i) such action shall not, as evidenced by an Opinion of Counsel of external counsel of the Issuer, adversely affect in any material respect the interests of the Holders of the Transition Bonds and (ii) the Rating Agency Condition shall have been satisfied with respect thereto;
 
(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
 
 
 
 
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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 or successor federal statute hereafter enacted and to add to this Indenture such other provisions as may be expressly required by the TIA;
 
(viii) to evidence the final terms of the Transition Bonds in the Series Supplement;
 
(ix) to qualify the Transition Bonds for registration with a Clearing Agency; or
 
(x) to satisfy any Rating Agency requirements.
 
The Indenture 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 Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Holders of the Transition Bonds, with the consent of the PUCT pursuant to Section 9.03, 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 Opinion of Counsel of nationally recognized counsel of the Issuer experienced in structured finance transactions, adversely affect in any material respect the interests of the Holders and (ii) the Rating Agency Condition shall have been satisfied with respect thereto.
 
SECTION 9.02. Supplemental Indentures with Consent of Holders.  The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with the consent of the PUCT pursuant to Section 9.03, with prior notice to the Rating Agencies and with the consent of the Holders of not less than a majority of the Outstanding Amount of the Transition Bonds of each Tranche to be affected, by Act of such Holders delivered to the Issuer and the Indenture 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 Tranche affected thereby:
 
(i) change the date of payment of any installment of principal of or premium, if any, or interest on any Transition Bond of such Tranche, or reduce the principal amount thereof, the interest rate thereon or premium, if any, with respect thereto, change the provisions of this Indenture and the Series Supplement relating to the application of collections on, or the proceeds of the sale of, the Transition Bond Collateral to payment of principal of or premium, if any, or interest on the Transition Bonds, or change any place of payment where, or the coin or currency in which, any Transition Bond or the interest thereon is payable;
 
 
 
 
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(ii) reduce the percentage of the Outstanding Amount of the Transition Bonds or of a Tranche 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 certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture;
 
(iii) reduce the percentage of the Outstanding Amount of the Transition Bonds required to direct the Indenture Trustee to direct the Issuer to sell or liquidate the Transition Bond Collateral pursuant to Section 5.04;
 
(iv) 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 other Basic Documents referenced in this Section 9.02 cannot be modified or waived without the consent of the Holder of each Outstanding Transition Bond affected thereby;
 
(v) modify any of the provisions of this Indenture in such manner as to affect the calculation of the amount of any payment of interest, principal or premium, if any, due on any Transition Bond on any Payment Date (including the calculation of any of the individual components of such calculation) or change the Expected Amortization Schedule or Final Maturity Date of any Tranche of Transition Bonds;
 
(vi) decrease the Required Capital Level;
 
(vii) 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 Transition Bond 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; or
 
(viii) cause any material adverse federal income tax consequence to the Seller, the Issuer, the Managers, the Indenture Trustee or the then existing Holders; or
 
(ix) impair the right to institute suit for the enforcement of the provisions of this Indenture regarding payment or application of funds.
 
It shall not be necessary for any Act of Holders under this Section 9.02 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 Indenture Trustee of any supplemental indenture pursuant to this Section 9.02, the Issuer shall mail to the Rating Agencies a copy of such supplemental indenture and to the Holders of the Transition Bonds to which such supplemental indenture relates either a copy of such supplemental indenture or a notice setting forth in general terms the substance of such supplemental indenture.  Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.
 
 
 
 
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SECTION 9.03. PUCT Condition.  Notwithstanding anything to the contrary in Section 9.01 or 9.02, no supplemental indenture (other than the Series Supplement) shall be effective unless the process set forth in this Section 9.03 has been followed.
 
(a) At least thirty-one (31) days prior to the effectiveness of any such supplemental indenture and after obtaining the other necessary approvals set forth in Section 9.01 or 9.02, as applicable, except for the consent of the Indenture Trustee and the Holders if the consent of the Holders is required or sought by the Indenture Trustee in connection with such supplemental indenture, the Issuer shall have delivered to the PUCT’s executive director and general counsel written notification of any proposed supplemental indenture, which notification shall contain:
 
(i) a reference to Docket No. 39931;
 
(ii) an Officer’s Certificate stating that the proposed supplemental indenture has been approved by all parties to this Indenture; and
 
(iii) a statement identifying the person to whom the PUCT or its staff is to address any response to the proposed supplemental indenture or to request additional time.
 
(b) The PUCT or its staff shall, within thirty (30) days of receiving the notification complying with Section 9.03(a) above, either:
 
(i)            provide notice of its determination that the proposed supplemental indenture will not under any circumstances have the effect of increasing the ongoing Qualified Costs related to the Transition Bonds,
 
(ii) provide notice of its consent or lack of consent to the person specified in Section 9.03(a)(iii) above, or
 
(iii) be conclusively deemed to have consented to the proposed supplemental indenture,
 
unless, within thirty (30) days of receiving the notification complying with Section 9.03(a) above, the PUCT or its staff delivers to the office of the person specified in Section 9.03(a)(iii) above a written statement requesting an additional amount of time not to exceed thirty (30) days in which to consider whether to consent to the proposed supplemental indenture.  If the PUCT or its staff requests an extension of time in the manner set forth in the preceding sentence, then the PUCT shall either provide notice of its consent or lack of consent or notice of its determination that the proposed supplemental indenture will not under any circumstances increase ongoing Qualified Costs to the person specified in Section 9.03(a)(iii) above no later than the last day of such extension of time or be conclusively deemed to have consented to the proposed supplemental indenture on the last day of such extension of time.  Any supplemental indenture requiring the consent of the PUCT shall become effective on the later of (i) the date proposed by the parties to such supplemental indenture and (ii) the first day after the expiration of the thirty (30)-day period provided for in this Section 9.03(b), or, if such period has been extended pursuant hereto, the first day after the expiration of such period as so extended.
 
 
 
 
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(c) Following the delivery of a notice to the PUCT  by the Issuer under Section 9.03(a) above, the Issuer shall have the right at any time to withdraw from the PUCT further consideration of any notification of a proposed supplemental indenture.  Such withdrawal shall be evidenced by the prompt written notice thereof by the Issuer to the PUCT, the Indenture Trustee and the Servicer.
 
SECTION 9.04. Execution of Supplemental Indentures.  In executing any supplemental indenture permitted by this Article IX or the modifications thereby of the trust created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture.  The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise.
 
SECTION 9.05. 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 Tranche of Transition Bonds affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the Holders 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 9.06. 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 9.07. 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 Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture.  If the Issuer or the Indenture Trustee shall so determine, new Transition Bonds so modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Transition Bonds.
 
ARTICLE X
 
Miscellaneous
 
SECTION 10.01. Compliance Certificates and Opinions, etc.
 
(a) Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture
 
 
 
 
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Trustee (i) an 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 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 registered public accountants meeting the applicable requirements of this Section 10.01, 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:
 
(i) 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;
 
(ii) 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;
 
(iii) 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
 
(iv) a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with.
 
(b) (i)  Prior to the deposit of any Transition Bond Collateral or other property or securities with the Indenture Trustee that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 10.01(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within ninety (90) days of such deposit) to the Issuer of the Transition Bond Collateral or other property or securities to be so deposited.
 
(ii) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signer thereof as to the matters described in clause (i) above, the Issuer shall also deliver to the Indenture Trustee an Independent Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or release since the commencement of the then-current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to clause (i) above and this clause (ii), is ten percent or more of the Outstanding Amount of the Transition Bonds, but such a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to the Issuer as set forth in the related Officer’s Certificate is less than the
 
 
 
 
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lesser of (A) $25,000 or (B) one percent of the Outstanding Amount of the Transition Bonds.
 
(iii) Whenever any property or securities are to be released from the Lien of this Indenture other than pursuant to Section 8.02(e), the Issuer shall also furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within ninety (90) days of such release) of the property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof.
 
(iv) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signatory thereof as to the matters described in clause (iii) above, the Issuer shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value of the property or securities with respect thereto, or securities released from the Lien of this Indenture (other than pursuant to Section 8.02(e)) since the commencement of the then-current calendar year, as set forth in the certificates required by clause (iii) above and this clause (iv), equals 10 percent or more of the Outstanding Amount of the Transition Bonds, but such certificate need not be furnished in the case of any release of property or securities if the fair value thereof as set forth in the related Officer’s Certificate is less than the lesser of (A) $25,000 or (B) one percent of the then Outstanding Amount of the Transition Bonds.
 
(v) Notwithstanding any other provision of this Section 10.01, the Indenture Trustee may (A) collect, liquidate, sell or otherwise dispose of the Transition Property and the other Transition Bond Collateral as and to the extent permitted or required by the Basic Documents and (B) make cash payments out of the Collection Account as and to the extent permitted or required by the Basic Documents.
 
SECTION 10.02. Form of Documents Delivered to Indenture 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 a Responsible 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 or her certificate or opinion is based are erroneous.  Any such certificate of a Responsible Officer or 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 or the Issuer stating that the information with respect to such factual matters is in the possession of the Servicer or the
 
 
 
 
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Issuer, unless such 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.
 
Whenever in this Indenture, in connection with any application or certificate or report to the Indenture 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 Indenture Trustee’s right to rely conclusively upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.
 
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.
 
SECTION 10.03. Acts of Holders.
 
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders 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 Indenture 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 Holders 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 Indenture Trustee and the Issuer, if made in the manner provided in this Section 10.03.
 
(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 Indenture 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 Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Transition Bond.
 
SECTION 10.04. Notices, etc., to Indenture Trustee, Issuer and Rating Agencies.
 
 
 
 
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(a) Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other documents provided or permitted by this Indenture to be made upon, given or furnished to or filed with:
 
(i) the Indenture Trustee by any Holder or by the Issuer shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing by facsimile transmission, first-class mail or overnight delivery service to or with the Indenture Trustee at the Corporate Trust Office,
 
(ii) the Issuer by the Indenture Trustee or by any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first-class, postage prepaid, to the Issuer addressed to:  AEP Texas Central Transition Funding III LLC at 539 N. Carancahua Street, Suite 1700, Corpus Christi, Texas 78401, Attention: Manager, Telephone: (361) 881-5399, Facsimile: (361) 880-6128, or at any other address previously furnished in writing to the Indenture Trustee by the Issuer.  The Issuer shall promptly transmit any notice received by it from the Holders to the Indenture Trustee, or
 
(iii) the PUCT by the Seller, the Issuer or the Indenture Trustee shall be sufficient for every purpose hereunder if in writing and mailed, first-class, postage prepaid, to the PUCT addressed to: to 1701 N. Congress Avenue, Austin, Texas 78711-3326, Attention of Executive Director and General Counsel, telephone: (512) 936-7040, facsimile: (512) 936-7036.
 
(b) Notices required to be given to the Rating Agencies by the Issuer or the Indenture Trustee shall be in writing, facsimile, personally delivered or mailed by certified mail, return receipt requested to:
 
(i) in the case of Moody’s, to: Moody’s Investors Service, Inc., ABS/RMBS  Monitoring Department, 25th Floor, 7 World Trade Center, 250 Greenwich, New York, New York 10007, Email: ServicerReports@moodys.com (all such notices to be delivered to Moody’s in writing by email);
 
(ii) in the case of Standard & Poor’s, to Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, Structured Credit Surveillance, 55 Water Street, New York, New York 10041, Telephone: (212) 438-8991, Email: servicer_reports@standardandpoors.com (all such notices to be delivered to Standard & Poor’s in writing by email);
 
(iii) in the case of Fitch, to Fitch Ratings, One State Street Plaza, New York, New York 10004, Attention: ABS Surveillance, Telephone: (212) 908-0500, Facsimile: (212) 908-0355; and
 
(iv) as to each of the foregoing, at such other address as shall be designated by written notice to the other parties.
 
Any notice, report or other communication given hereunder may be in writing and addressed as follows or to the extent receipt is confirmed telephonically sent by Electronic Means to the address provided above.
 
 
 
 
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SECTION 10.05.