DRAFT 2/1/01
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PECO ENERGY TRANSITION TRUST,
Issuer
and
THE BANK OF NEW YORK,
Bond Trustee
------------------------------
SERIES SUPPLEMENT
Dated as of [___]
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions......................................................3
SECTION 2. Designation; Series Issuance Dates...............................4
SECTION 3. Initial Principal Amount; Bond Rate; Special Payment Date;
Expected Final Payment Date; Series Termination Date; Class
Termination Dates................................................4
SECTION 4. Payment Dates; Expected Amortization Schedule
for Principal; Interest; Overcollateralization
Amount; Monthly Allocated Balances...............................5
SECTION 5. Authorized Initial Denominations.................................6
SECTION 6. Redemption.......................................................6
SECTION 7. Credit Enhancement...............................................7
SECTION 8. Delivery and Payment for the Series [_____]
Transition Bonds; Form of the Series [_____]
Transition Bonds.................................................7
SECTION 9. Confirmation of Indenture........................................7
SECTION 10. Counterparts.....................................................7
SECTION 11. Governing Law....................................................8
SECTION 12. Issuer Obligation................................................8
Schedule A Expected Amortization Schedule
Schedule B Monthly Allocated Balances
Exhibit A Form of Transition Bond
SERIES SUPPLEMENT dated as of [___] (this
"Supplement"), by and between PECO ENERGY TRANSITION
TRUST, a Delaware statutory business trust (the
"Issuer"), and THE BANK OF NEW YORK, a New York
banking corporation (the "Bond Trustee"), as Bond
Trustee under the Indenture dated as of March 1,
1999, between the Issuer and the Bond Trustee, as
amended and supplemented by the Series Supplement
thereto dated as of May 2, 2000, between the Issuer
and the Bond Trustee (the "Indenture").
PRELIMINARY STATEMENT
Section 9.01 of the Indenture provides, among other things,
that the Issuer and the Bond Trustee may at any time and from time to time enter
into one or more indentures supplemental to the Indenture for the purposes of
authorizing the issuance by the Issuer of a Series of Transition Bonds and
specifying the terms thereof and for modifying certain provisions of the
Indenture. The Issuer has duly authorized the execution and delivery of this
Supplement and the creation of a Series of Transition Bonds with an initial
aggregate principal amount of $[___] to be known as the Issuer's Transition
Bonds, Series [___] (the "Series [___] Transition Bonds"). All acts and all
things necessary to make the Series [___] Transition Bonds, when duly executed
by the Issuer and authenticated by the Bond Trustee as provided in the Indenture
and this Supplement and issued by the Issuer, the valid, binding and legal
obligations of the Issuer and to make this Supplement a valid and enforceable
supplement to the Indenture have been done, performed and fulfilled and the
execution and delivery hereof have been in all respects duly and lawfully
authorized. The Issuer and the Bond Trustee are executing and delivering this
Supplement in order to provide for the Series [___] Transition Bonds.
In order to secure the payment of principal of and interest on
the Series [___] Transition Bonds, and to further secure the payment of
principal of and interest on the Series 1999-A Bonds issued on March 25, 1999,
and the Series 2000-A Bonds issued on May 2, 2000, in each case issued and to be
issued under the Indenture and/or any Series Supplement, the Issuer hereby
Grants, and confirms its prior Grants on March 25, 1999 and May 2, 2000, in
connection with the issuance of the Series 1999-A Bonds and
2
the Series 2000-A Bonds, respectively, to the Bond Trustee as trustee for the
benefit of the Holders of the Transition Bonds from time to time issued and
outstanding, all of the Issuer's right, title and interest in and to (a) the
Intangible Transition Property transferred by the Seller to the Issuer from time
to time pursuant to the Sale Agreement and all proceeds thereof, (b) the Sale
Agreement except for Section 5.01 thereof solely to the extent such Section
provides for indemnification of the Issuer, (c) all Bills of Sale delivered by
the Seller pursuant to the Sale Agreement, (d) the Servicing Agreement except
for Section 5.02(b) thereof solely to the extent such Section provides for
indemnification of the Issuer, (e) the Collection Account and all amounts on
deposit therein from time to time, (f) all Swap Agreements with respect to the
Transition Bonds, (g) all other property of whatever kind owned from time to
time by the Issuer including all accounts, accounts receivable and chattel
paper, (h) all present and future claims, demands, causes and choses in action
in respect of any or all of the foregoing and (i) all payments on or under and
all proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, general intangibles, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind, and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing (collectively, the
"Collateral").
To have and to hold in trust to secure the payment of
principal of and premium, if any, and interest on, and any other amounts
(including all fees, expenses, counsel fees and other amounts due and owing to
the Bond Trustee) owing in respect of, the Transition Bonds equally and ratably
without prejudice, preference, priority or distinction, except as expressly
provided in the Indenture or any Series Supplement and to secure performance by
the Issuer of all of the Issuer's obligations under the Indenture and all Series
Supplements with respect to the Transition Bonds, all as provided in the
Indenture.
The Bond Trustee, as trustee on behalf of the Holders of the
Transition Bonds, acknowledges such Grant, accepts the trusts hereunder in
accordance with the provisions hereof and agrees to perform its duties required
in the Indenture and this Supplement.
3
SECTION 1. Definitions. (a) Article One of the Indenture
provides that the meanings of certain defined terms used in the Indenture shall,
when applied to the Transition Bonds of a particular Series, be as defined in
Article One but with such additional provisions as are specified in the related
Series Supplement. With respect to the Series [___] Transition Bonds, the
following definitions shall apply:
"Adjustment Date" shall mean initially each [___], until
[___], and commencing on [___], such date and the [___] day of each month
thereafter until the Series Termination Date.
"Authorized Initial Denominations" shall mean $1,000 and
integral multiples thereof.
"Bond Rate" has the meaning set forth in Section 3 of this
Supplement.
"Calculation Date" means initially each [___], until [___],
and commencing on [___], such date and the [___] day of each month thereafter
until the Series Termination Date.
"Class Termination Date" means, with respect to any Class of
the Series [___] Transition Bonds, the termination date therefor, as specified
in Section 3 of this Supplement.
"Expected Amortization Schedule" means Schedule A to this
Supplement.
"Expected Final Payment Date" means, with respect to any Class
of the Series [___] Transition Bonds, the expected final payment date therefor,
as specified in Section 3 of this Supplement.
"Interest Accrual Period" means, with respect to any Payment
Date, the period from and including the preceding Payment Date (or, in the case
of the first Payment Date, from and including the Series Issuance Date) to and
excluding such Payment Date.
"Monthly Allocated Interest Balance" has the meaning set forth
in Section 4(e) of this Supplement.
"Monthly Allocated Principal Balance" has the meaning set
forth in Section 4(e) of this Supplement.
4
"Overcollateralization Amount" has the meaning set forth in
Section 4(d) of this Supplement.
"Payment Date" has the meaning set forth in Section 4(a) of
this Supplement.
"Record Date" shall mean, with respect to any Payment Date,
the close of business on the day prior to such Payment Date.
"Series Issuance Date" has the meaning set forth in Section
2(b) of this Supplement.
"Series Termination Date" has the meaning set forth in Section
3 of this Supplement.
"Servicing Fee Rate" shall mean 0.25% per annum so long as ITC
Charges are included in electric bills otherwise sent to Customers or, if ITC
Charges are not included in such bills, 1.50% per annum.
"Special Payment Date" means December 31, 2010.
(b) All terms used in this Supplement that are defined in the
Indenture, either directly or by reference therein, have the meanings assigned
to them therein, except to the extent such terms are defined or modified in this
Supplement or the context clearly requires otherwise.
SECTION 2. Designation; Series Issuance Dates. (a)
Designation. The Series [___] Transition Bonds shall be designated generally as
the Issuer's Transition Bonds, Series [___] and further denominated as Classes
A-1 and A-2.
(b) Series Issuance Date. The Series [___] Transition Bonds
that are authenticated and delivered by the Bond Trustee to or upon the order of
the Issuer on [___] (the "Series Issuance Date") shall have as their date of
authentication [___]. Each other Series [___] Transition Bond shall be dated the
date of its authentication.
SECTION 3. Initial Principal Amount; Bond Rate; Special
Payment Date; Expected Final Payment Date; Series Termination Date; Class
Termination Dates. The Transition Bonds of each Class of the Series [___]
Transition Bonds shall have the initial principal amounts, bear interest at the
rates per annum and shall have Special Payment Dates, Expected Final Payment
Dates and Class Termination Dates as set forth below:
Initial
Class Principal Bond Special Expected Final Class
Amount Rate Payment Date Payment Date Termination Date
A-1 [___] [___]% [___] [___] [___]
A-2 [___] [___]% [___] [___] [___]
- --------------------------------------------------------------------------------
The Bond Rate for each Class shall be computed on the basis of
a 360-day year of twelve 30-day months.
5
SECTION 4. Payment Dates; Expected Amortization Schedule for
Principal; Interest; Overcollateralization Amount; Monthly Allocated Balances.
(a) Payment Dates. The Payment Dates for each Class of the
Series [___] Transition Bonds are March 1 and September 1 of each year and the
Special Payment Date or, if any such date is not a Business Day, the next
succeeding Business Day, commencing on [___] and continuing until the earlier of
repayment of such Class in full and the applicable Class Termination Date.
(b) Expected Amortization Schedule for Principal. Unless an
Event of Default shall have occurred and be continuing and the unpaid principal
amount of all Series of Transition Bonds has been declared to be due and payable
together with accrued and unpaid interest thereon, on each Payment Date, the
Bond Trustee shall distribute to the Series [___] Transition Bondholders of
record as of the related Record Date amounts payable in respect of the Series
[___] Transition Bonds pursuant to Section 8.02(e) of the Indenture as
principal, in accordance with the Expected Amortization Schedule. Available
funds in the Series [___] Subaccount will be allocated in a sequential manner,
to the extent funds are available, as follows: (1) to the holders of the Series
[___] Transition Bonds, Class A-1, until this Class is retired in full and (2)
to the holders of the Series [___] Transition Bonds and Class A-2, until this
Class is retired in full. Other than in the event of an acceleration of payments
following an Event of Default or a redemption, in no event shall a principal
payment pursuant to this Section 4(b) on any Class on a Payment Date be greater
than the amount that reduces the Outstanding Amount of such Class of Series
[___] Transition Bonds to the amount specified in the Expected Amortization
Schedule which is attached as Schedule A hereto for such Class and Payment Date.
In the event of an acceleration of payments following an Event of Default on the
Series [___] Transition Bonds, principal payments on each Class of Series [___]
Transition Bonds will be made on a pro rata basis based on the
6
respective Outstanding Amount of each Class as of the prior Payment Date.
(c) Interest. Interest will be payable on each Class of the
Series [___] Transition Bonds on each Payment Date in an amount equal to
one-half of the product of (i) the applicable Bond Rate and (ii) the Outstanding
Amount of the related Class of Transition Bonds as of the close of business on
the preceding Payment Date after giving effect to all payments of principal made
to the holders of the related Class of Series [___] Transition Bonds on such
preceding Payment Date; and provided, further, that with respect to the initial
Payment Date or, if no payment has yet been made, interest on the outstanding
principal balance will accrue from and including the Series Issuance Date to,
but excluding, the following Payment Date.
(d) Overcollateralization Amount. The Overcollateralization
Amount for the Series [___] Transition Bonds shall be $[___].
(e) Monthly Allocated Balances. The Monthly Allocated Interest
Balance and Monthly Allocated Principal Balance for any Monthly Allocation Date
and the Series [___] Transition Bonds shall be as set forth in Schedule B
hereto.
Not later than each Schedule Revision Date, the Issuer shall
deliver to the Bond Trustee replacement Schedules A and B hereto, adjusted to
reflect the event giving rise to such Schedule Revision Date and setting forth
the Expected Amortization Schedule for each Payment Date and the Monthly
Allocated Interest Balance and Monthly Allocated Principal Balance for each
Monthly Allocation Date; provided, however, that no such replacement schedules
shall be required if the event giving rise to such Schedule Revision Date is a
redemption of the Series [___] Transition Bonds in whole.
SECTION 5. Authorized Initial Denominations. The Series [___]
Transition Bonds shall be issuable in the Authorized Initial Denominations.
SECTION 6. Redemption. (a) Mandatory Redemption. The Series
[___] Transition Bonds shall not be subject to mandatory redemption except as
provided in Section 10.02 of the Indenture in the event that the Issuer receives
Liquidated Damages. If the Issuer receives Liquidated Damages from the Seller as
a result of a breach of a representation and warranty under the Sale Agreement
which relates to one or more of the Qualified Rate Orders,
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but not all of the Qualified Rate Orders, then (i) only the Affected Transition
Bonds will be redeemed and (ii) the Redemption Price shall be equal to the then
outstanding principal amount of the Affected Transition Bonds as of the
Liquidated Damages Redemption Date plus accrued interest to such Redemption
Date.
(b) Optional Redemption. The Series [___] Transition Bonds
shall not be subject to optional redemption by the Issuer except that the Series
[___] Transition Bonds may be redeemed in whole at a Redemption Price equal to
the principal amount thereof plus interest at the applicable Bond Rate accrued
to the Redemption Date on any Payment Date on which the Outstanding Amount
thereof (after giving effect to payments that would otherwise be made on such
Payment Date) has been reduced to less than or equal to 5% of the initial
principal balance thereof. Notwithstanding Section 10.01 of the Indenture, with
respect to an optional redemption pursuant to this Section 6(b), the Issuer
shall deposit with the Bond Trustee the Redemption Price of the Transition Bonds
to be redeemed plus accrued interest thereon to the Redemption Date on or prior
to the date that notice of such redemption is furnished.
SECTION 7. Credit Enhancement. No credit enhancement (other
than the Overcollateralization Amount) is provided for the Series [___]
Transition Bonds.
SECTION 8. Delivery and Payment for the Series [___]
Transition Bonds; Form of the Series [___] Transition Bonds. The Bond Trustee
shall deliver the Series [___] Transition Bonds to the Issuer when authenticated
in accordance with Section 2.02 of the Indenture. The Series [___] Transition
Bonds of each Class shall be in the form of Exhibit A.
SECTION 9. Confirmation of Indenture. As supplemented by this
Supplement, the Indenture is in all respects ratified and confirmed and the
Indenture, as so supplemented by this Supplement, shall be read, taken, and
construed as one and the same instrument.
SECTION 10. Counterparts. This Supplement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
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SECTION 11. Governing Law. This Supplement shall be construed
in accordance with the laws of the Commonwealth of Pennsylvania, without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
SECTION 12. Issuer Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer or the
Bond Trustee on the Transition Bonds or under this Supplement or any certificate
or other writing delivered in connection herewith or therewith, against (i) any
owner of a beneficial interest in the Issuer or (ii) any partner, owner,
beneficiary, agent, officer, director or employee of the Bond Trustee, any
holder of a beneficial interest in the Issuer or the Bond Trustee or of any
successor or assign of the Bond Trustee, except as any such Person may have
expressly agreed (it being understood that none of the Bond Trustee's
obligations are in its individual capacity).
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IN WITNESS WHEREOF, the Issuer and the Bond Trustee have
caused this Supplement to be duly executed by their respective officers
thereunto duly authorized as of the first day of the month and year first above
written.
PECO ENERGY TRANSITION TRUST,
by First Union Trust Company,
National Association, not in
its individual capacity but
solely as Issuer Trustee,
Delaware Trustee and
Independent Trustee
by
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Name:
Title:
THE BANK OF NEW YORK, not in
its individual capacity but
solely as Bond Trustee on
behalf of the Transition
Bondholders,
by
----------------------------
Name:
Title:
SCHEDULE A
Expected Amortization Schedule
Outstanding Principal Balance
- ---------------------- -------------- -------------- -----------------
Payment Date Class A-1 Class A-2 Series 2000-A
- ---------------------- -------------- -------------- -----------------
Series Issuance Date..
September 1, 2001.....
March 1, 2002.........
September 1, 2002.....
March 1, 2003.........
September 1, 2003.....
March 1, 2004.........
September 1, 2004.....
March 1, 2005.........
September 1, 2005.....
March 1, 2006.........
September 1, 2006.....
March 1, 2007.........
September 1, 2007.....
March 1, 2008.........
September 1, 2008.....
March 1, 2009.........
September 1, 2009.....
March 1, 2010.........
September 1, 2010.....
SCHEDULE B
Monthly Allocated Balances
Monthly Allocated Monthly Allocated
Monthly Allocation Date Interest Balance Principal Balance
- ----------------------- ---------------- -----------------
April 1, 2001...............
May 1, 2001.................
June 1, 2001................
July 1, 2001................
August 1, 2001..............
September 1, 2001...........
October 1, 2001.............
November 1, 2001............
December 1, 2001............
January 1, 2002.............
February 1, 2002............
March 1, 2002...............
April 1, 2002...............
May 1, 2002.................
June 1, 2002................
July 1, 2002................
August 1, 2002..............
September 1, 2002...........
October 1, 2002.............
November 1, 2002............
December 1, 2002............
January 1, 2003.............
February 1, 2003............
March 1, 2003...............
April 1, 2003...............
May 1, 2003.................
June 1, 2003................
July 1, 2003................
August 1, 2003..............
September 1, 2003...........
October 1, 2003.............
November 1, 2003............
December 1, 2003............
January 1, 2004.............
February 1, 2004............
March 1, 2004...............
April 1, 2004...............
May 1, 2004.................
June 1, 2004................
July 1, 2004................
Monthly Allocated Monthly Allocated
Monthly Allocation Date Interest Balance Principal Balance
- ----------------------- ---------------- -----------------
August 1, 2004..............
September 1, 2004...........
October 1, 2004.............
November 1, 2004............
December 1, 2004............
January 1, 2005.............
February 1, 2005............
March 1, 2005...............
April 1, 2005...............
May 1, 2005.................
June 1, 2005................
July 1, 2005................
August 1, 2005..............
September 1, 2005...........
October 1, 2005.............
November 1, 2005............
December 1, 2005............
January 1, 2006.............
February 1, 2006............
March 1, 2006...............
April 1, 2006...............
May 1, 2006.................
June 1, 2006................
July 1, 2006................
August 1, 2006..............
September 1, 2006...........
October 1, 2006.............
November 1, 2006............
December 1, 2006............
January 1, 2007.............
February 1, 2007............
March 1, 2007...............
April 1, 2007...............
May 1, 2007.................
June 1, 2007................
July 1, 2007................
August 1, 2007..............
September 1, 2007...........
October 1, 2007.............
November 1, 2007............
December 1, 2007............
Monthly Allocated Monthly Allocated
Monthly Allocation Date Interest Balance Principal Balance
- ----------------------- ---------------- -----------------
January 1, 2008.............
February 1, 2008............
March 1, 2008...............
April 1, 2008...............
May 1, 2008.................
June 1, 2008................
July 1, 2008................
August 1, 2008..............
September 1, 2008...........
October 1, 2008.............
November 1, 2008............
December 1, 2008............
January 1, 2009.............
February 1, 2009............
March 1, 2009...............
April 1, 2009...............
May 1, 2009.................
June 1, 2009................
July 1, 2009................
August 1, 2009..............
September 1, 2009...........
October 1, 2009.............
November 1, 2009............
December 1, 2009............
January 1, 2010.............
February 1,2010.............
March 1, 2010...............
April 1, 2010...............
May 1, 2010.................
June 1, 2010................
July 1, 2010................
August 1, 2010..............
September 1, 2010...........
EXHIBIT A
Form of Transition Bond