EXHIBIT 10.2
FORM OF GRANT AGREEMENT
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AGREEMENT RELATING TO GRANT OF INTANGIBLE TRANSITION PROPERTY
between
ILLINOIS POWER COMPANY
and
ILLINOIS POWER SECURITIZATION LIMITED LIABILITY COMPANY
Dated as of December ___, 1998
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TABLE OF CONTENTS
ARTICLE I
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.02. Other Definitional Provisions . . . . . . . . . . . . . . .2
ARTICLE II
Grant of Transition Property . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.01. Grant of Transition Property. . . . . . . . . . . . . . . .3
ARTICLE III
Representations and Warranties of Illinois Power. . . . . . . . . . . . . . . .4
SECTION 3.01. Organization and Good Standing. . . . . . . . . . . . . . .5
SECTION 3.02. Due Qualification . . . . . . . . . . . . . . . . . . . . .5
SECTION 3.03. Power and Authority . . . . . . . . . . . . . . . . . . . .5
SECTION 3.04. Binding Obligation. . . . . . . . . . . . . . . . . . . . .5
SECTION 3.05. No Violation. . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 3.06. No Proceedings. . . . . . . . . . . . . . . . . . . . . . .6
SECTION 3.07. Approvals . . . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 3.08. The 1998 Transition Property. . . . . . . . . . . . . . . .7
ARTICLE IV
Covenants of Illinois Power . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.01. Corporate Existence . . . . . . . . . . . . . . . . . . . 12
SECTION 4.02. No Liens. . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.03. Delivery of Collections . . . . . . . . . . . . . . . . . 13
SECTION 4.04. Notice of Liens . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.05. Compliance with Law . . . . . . . . . . . . . . . . . . . 14
SECTION 4.06. Covenants Related to the 1998 Transition Property
and the Notes . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.07. Protection of Title . . . . . . . . . . . . . . . . . . . 16
SECTION 4.08. Nonpetition Covenants . . . . . . . . . . . . . . . . . . 17
SECTION 4.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.10. Contracts for Non-Tariffed Services . . . . . . . . . . . 18
SECTION 4.11. Preservation of Right of Noteholders to Receive
Payment . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
Illinois Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5.01. Liability of Illinois Power; Indemnities. . . . . . . . . 19
SECTION 5.02. Merger or Consolidation of or Assumption of the
Obligations of Illinois Power . . . . . . . . . . . . . . 21
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SECTION 5.03. Limitation on Liability of Illinois Power and Others. . . 22
ARTICLE VI
Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.02. Notices.. . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.03. Assignment. . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.04. Limitations on Rights of Others . . . . . . . . . . . . . 25
SECTION 6.05. Severability. . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.06. Separate Counterparts . . . . . . . . . . . . . . . . . . 25
SECTION 6.07. Headings. . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.09. Assignments to Note Issuer and Indenture Trustee. . . . . 26
SECTION 6.10. Holders as Third-Party Beneficiaries. . . . . . . . . . . 26
SECTION 6.11. Representations and Indemnities to Survive. . . . . . . . 27
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AGREEMENT RELATING TO GRANT OF INTANGIBLE TRANSITION PROPERTY (as the same
may be hereafter amended, supplemented or otherwise modified from time to time,
this "Agreement") dated as of December __, 1998, between ILLINOIS POWER COMPANY,
an Illinois corporation ("Illinois Power"), and ILLINOIS POWER SECURITIZATION
LIMITED LIABILITY COMPANY, a Delaware limited liability company (the "Grantee").
WHEREAS, Illinois Power filed the Application with the ICC pursuant to
Section 18-103 of the Funding Law requesting the issuance of a transitional
funding order;
WHEREAS, Illinois Power requested in the Application that the transitional
funding order (i) establish, create and grant rights, in favor of the Grantee,
in and to "intangible transition property" (as defined in Section 18-102 of the
Funding Law) in the aggregate amount of $1,634,000,000; and (ii) establish and
create "instrument funding charges" as defined in Section 18-102 of the Funding
Law, granting the right to impose and receive certain non-bypassable charges
expressed in cents per kilowatt hour from and after the effective date of the
associated tariff;
WHEREAS, the ICC issued the 1998 Funding Order on September 10, 1998, which
created and established the intangible transition property requested by Illinois
Power in the Application;
WHEREAS, the 1998 Funding Order granted to and vested in the Grantee, as
current and original property rights, and not by assignment from Illinois Power,
all right, title and interest to impose and receive the IFCs authorized by and
under the 1998 Funding Order and all related revenues, collections, claims,
payments, money or proceeds thereof, including all right, title and interest of
the Grantee in, to and under the 1998 Funding Order; and
WHEREAS, the Grantee has agreed (i) to transfer the 1998 Transition
Property to the Note Issuer pursuant to the Sale Agreement, and (ii) to pay
Illinois Power the net proceeds received by the Grantee from the Note Issuer in
connection with such transfer;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in that certain
Indenture (including Appendix A thereto) dated as of the date hereof, between
Illinois Power Special Purpose Trust, as the Note Issuer, and Xxxxxx Trust and
Savings Bank, as the Indenture Trustee, as the same may be amended, supplemented
or otherwise modified from time to time.
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) "AGREEMENT" shall have the meaning set forth in the preamble hereto.
(b) Non-capitalized terms used herein which are defined in the Public
Utilities Act shall, as the context requires, have the meanings assigned to such
terms in the Public Utilities Act, but without giving effect to amendments to
the Public Utilities Act after the date hereof which have a material adverse
effect on the Note Issuer or the Holders.
(c) All terms defined in this Agreement shall have the defined meaning
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(d) The words "hereof" "herein," "hereunder" and words of similar import,
when used in this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to
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Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter forms of such terms.
ARTICLE II
GRANT OF TRANSITION PROPERTY
SECTION 2.01. GRANT OF TRANSITION PROPERTY. In consideration of Illinois
Power's actions in requesting that the 1998 Transition Property be created and
vested in the Grantee, the Grantee agrees to remit to Illinois Power the net
proceeds remitted to it by the Note Issuer from the sale of the Notes. To the
extent that, notwithstanding the Funding Law, the Application and the 1998
Funding Order, applicable law provides that Illinois Power has any interest in
the 1998 Transition Property or any part thereof, Illinois Power hereby,
effective upon the effectiveness of the 1998 Initial Tariff, sells, transfers,
assigns, sets over and otherwise conveys to the Grantee without recourse
(subject to the obligations herein) all of Illinois Power's right, title and
interest, if any, in, to and under the 1998 Transition Property, whether such
1998 Transition Property is fixed, contingent, liquidated, unliquidated,
material or immaterial and such sale, transfer, assignment, set over and
conveyance shall include, to the fullest extent permitted by the Funding Law,
the assignment of all revenues, collections, claims, rights, payments, money or
proceeds of or arising from the IFCs pursuant to the 1998 Funding Order and the
1998 Initial Tariff, including, without limitation, any Allocable IFC Revenue
Amounts). Such sale, transfer, assignment, set over and
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conveyance by Illinois Power is expressly stated to be a present absolute
transfer, and pursuant to Section 18-108 of the Funding Law, shall be treated
as a present absolute transfer (as in a true sale), and not as a pledge or
other financing, of the 1998 Transition Property. The previous sentence is
the express statement referred to in Section 18-108 of the Funding Law. To
the extent that, notwithstanding the Funding Law, the Application and the
0000 Xxxxxxx Xxxxx, Xxxxxxxx Power is deemed to have any interest in the 1998
Transition Property or any part thereof under applicable law, and if the
foregoing sale, transfer, assignment, set over and conveyance is held not to
be an absolute transfer (as in a true sale) as contemplated under Section
18-108 of the Funding Law, then such sale, transfer, assignment, set over and
conveyance shall be treated as a pledge of the 1998 Transition Property and
Illinois Power shall be deemed to have granted a security interest to the
Grantee in the 1998 Transition Property and the proceeds thereof. Illinois
Power takes the position that it has no rights in the 1998 Transition
Property to which such a security interest could attach.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ILLINOIS POWER
Illinois Power makes the following representations and warranties, as of
the Closing Date, on which the Grantee has relied in selling the 1998 Transition
Property to the Note Issuer. These representations and warranties shall survive
(i) the grant of the 1998 Transition Property to the Grantee pursuant to the
1998 Funding Order and the 1998 Initial Tariff, (ii) to the extent that Illinois
Power has any interest in the 1998 Transition Property or any part thereof, the
sale, transfer, assignment, set over and conveyance by Illinois Power
contemplated hereby, (iii) the sale, transfer, assignment, set over and
conveyance of the 1998 Transition Property and Related Assets to the Note
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Issuer and (iv) the pledge thereof to the Indenture Trustee pursuant to the
Indenture and (v) the issuance of the Notes.
SECTION 3.01. ORGANIZATION AND GOOD STANDING. Illinois Power is duly
organized and validly existing as a corporation in good standing under the laws
of the State of Illinois, with the power and authority to own its properties and
to conduct its business as such properties are currently owned and such business
is presently conducted, and had at all relevant times, and has the requisite
power, authority and legal right to request that the ICC issue the 1998 Funding
Order. Illinois Power is engaged in the generation, transmission, distribution
and sale of electricity to the public in Illinois, is a public utility within
the meaning of Section 3-105 of the Public Utilities Act and is an electric
utility within the meaning of the Funding Law and Article XVI of the Public
Utilities Act.
SECTION 3.02. DUE QUALIFICATION. Illinois Power is duly qualified to do
business as a corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such qualifications,
licenses or approvals (except where the failure to so qualify would not be
reasonably likely to have a material adverse effect on Illinois Power's
business, operations, assets, revenues or properties).
SECTION 3.03. POWER AND AUTHORITY. Illinois Power has the requisite power
and authority to execute and deliver this Agreement and to carry out its terms;
and the execution, delivery and performance of this Agreement have been duly
authorized by Illinois Power by all necessary corporate action.
SECTION 3.04. BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of Illinois Power enforceable against Illinois
Power in accordance with its terms,
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subject to applicable insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws relating to or affecting creditors' rights
generally from time to time in effect and to general principles of equity
(including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a proceeding in
equity or at law.
SECTION 3.05. NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
(i) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under, the
Articles of Incorporation or by-laws of Illinois Power, or any indenture,
agreement or other instrument to which Illinois Power is a party or by which it
shall be bound; (ii) result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument; or (iii) violate any law or any order, rule or regulation
applicable to Illinois Power of any court or of any Federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over Illinois Power or its properties.
SECTION 3.06. NO PROCEEDINGS. There are no proceedings or investigations
pending or, to Illinois Power's knowledge, threatened, before any court, Federal
or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Illinois Power or its properties
involving or relating to Illinois Power or the Grantee or to Illinois Power's
knowledge, any other Person: (i) asserting the invalidity of the Funding Law,
this Agreement, any of the other Basic Documents or the Notes, (ii) seeking to
prevent the grant of the 1998 Transition Property to the Grantee or the
consummation of any of the transactions contemplated by this Agreement or any of
the other Basic Documents, (iii) seeking any determination or ruling that could
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reasonably be expected to materially and adversely affect Illinois Power's
performance of its obligations under, or the validity or enforceability of, this
Agreement, any of the other Basic Documents or the Notes, or (iv) which could
reasonably be expected to adversely affect the Federal or state income tax
attributes of the Notes.
SECTION 3.07. APPROVALS. No approval, authorization, consent, order or
other action of, or filing with, any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with Illinois Power's execution and delivery of this Agreement,
Illinois Power's performance of the transactions contemplated hereby or Illinois
Power's fulfillment of the terms hereof, except those that have been obtained or
made (it being understood that Illinois Power nonetheless has ongoing legal
obligations to make future filings with the ICC relating to Illinois Power's use
of proceeds from the transactions contemplated hereby and the final terms of
each Series of Notes issued pursuant to the Indenture).
SECTION 3.08. THE 1998 TRANSITION PROPERTY.
(a) INFORMATION. All information provided by Illinois Power to the
Grantee with respect to the 1998 Transition Property (including the 1998 Funding
Order and the 1998 Initial Tariff) is correct in all material respects.
(b) TITLE. It is the intention of the parties hereto that the vesting of
the 1998 Transition Property in the Grantee as contemplated by the 1998 Funding
Order shall be irrevocable and enforceable against Illinois Power and its
successors and that no interest in or title to the 1998 Transition Property
shall be part of Illinois Power's estate in the event of the filing of a
bankruptcy petition by or against Illinois Power under any bankruptcy law.
Accordingly, Illinois Power reaffirms that it has no right, title or interest in
and to the 1998 Transition Property and any sale,
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transfer, assignment, set over and conveyance which may nonetheless be
contemplated by Section 2.01 hereof shall constitute an absolute transfer to
the Grantee, within the meaning of Section 18-108 of the Funding Law, of any
right, title and interest Illinois Power may otherwise have had in the 1998
Transition Property (or any part thereof) created by, under and pursuant to
the 1998 Funding Order, such transfer is irrevocable and enforceable against
Illinois Power and its successors, and no interest in or title to the 1998
Transition Property shall be part of Illinois Power's estate in the event of
the filing of a bankruptcy petition by or against Illinois Power under any
bankruptcy law. No portion of the 1998 Transition Property has been sold,
transferred, assigned, pledged or otherwise conveyed by Illinois Power to any
Person other than the Grantee. Immediately prior to the transactions
contemplated hereunder, Illinois Power's right, title and interest in and to
all of its rights to payment under Applicable Rates is free and clear of all
Liens and rights of any other Person, and no offsets, defenses or
counterclaims exist or have been asserted with respect thereto.
(c) TRANSFER FILINGS. The 1998 Transition Property has been validly
granted and vested in the Grantee pursuant to the 1998 Funding Order and, to the
extent applicable, this Agreement, and the Grantee owns all right, title and
interest to the 1998 Transition Property, free and clear of all Liens and rights
of any other Person (other than Liens created pursuant to the Sale Agreement and
the Indenture), and all filings to be made by Illinois Power (including filings
with the ICC under the Funding Law) necessary in any jurisdiction to give the
Grantee a first priority perfected ownership interest in the 1998 Transition
Property, free and clear of all Liens, have been made. No further action is
required under Illinois law to maintain such ownership interest in the 1998
Transition Property. No further action, other than any filings or other steps
required to be taken with respect to proceeds or on account of events occurring
after the date hereof by Sections 9-103, 9-304, 9-306,
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9-402(7) or 9-403(2)-(3) of the UCC, is required to maintain such first
priority perfected ownership interest in the Related Assets.
(d) STATE PLEDGE. The State of Illinois has agreed with the Holders,
pursuant to Section 18-105(b) of the Funding Law, as follows:
"(b) The State pledges to and agrees with the holders of any
transitional funding instruments who may enter into contracts with an
electric utility, grantee, assignee or issuer pursuant to this Article
XVIII that the State will not in any way limit, alter, impair or reduce the
value of intangible transition property created by, or instrument funding
charges approved by, a transitional funding order so as to impair the terms
of any contract made by such electric utility, grantee, assignee or issuer
with such holders or in any way impair the rights and remedies of such
holders until the pertinent grantee instruments or, if the related
transitional funding order does not provide for the issuance of grantee
instruments, the pertinent transitional funding instruments and interest,
premium and other fees, costs and charges related thereto, as the case may
be, are fully paid and discharged. Electric utilities, grantees and
issuers are authorized to include these pledges and agreements of the State
in any contract with the holders of transitional funding instruments or
with any assignees pursuant to this Article XVIII and any assignees are
similarly authorized to include these pledges and agreements of the State
in any contract with any issuer, holder or any other assignee. Nothing in
this Article XVIII shall preclude the State of Illinois from requiring
adjustments as may otherwise be allowed by law to the electric utility's
base rates, transition charges, delivery services charges, or other charges
for tariffed services, so long as any such adjustment does not directly
affect or impair any instrument funding charges previously authorized by a
transitional funding order issued by the [ICC]."
As a result of the foregoing pledge, the State of Illinois may not, except as
provided in the succeeding sentence, in any way reduce, postpone, impair or
terminate the 1998 Transition Property in a manner substantially impairing the
Indenture or the rights and remedies of the Holders (and consequently, may not
revoke, reduce, postpone or terminate the 1998 Funding Order or the rights of
the Holders to receive IFC Payments and all other proceeds of the 1998
Transition Property), until the Notes, together with interest thereon, are fully
paid and discharged. Notwithstanding the immediately preceding sentence, the
State would be allowed to effect a temporary impairment of the
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Holders' rights if it could be shown that a temporary impairment was
necessary to advance a significant and legitimate public purpose.
(e) 1998 FUNDING ORDER AND TARIFFS; OTHER APPROVALS. (i) Illinois Power
was authorized to file the Application, (ii) Illinois Power filed the
Application with the ICC on June 24, 1998, in proper form, requesting the
issuance of a transitional funding order; (iii) the 1998 Funding Order and 1998
Initial Tariff established, created and granted rights in and to intangible
transition property in an aggregate amount of $1.634 billion, and the 1998
Transition Property and the right to impose and collect IFCs constitute current
and original property rights vested in the Grantee to the fullest extent
permitted by law; (iv) the 1998 Funding Order has been duly entered by the ICC,
is valid and binding, is Final and is in full force and effect; (v) the 1998
Initial Tariff is in full force and effect, is valid and binding, and is not
subject to modification by the ICC except as provided under the Funding Law;
(vi) as of the issuance of the Notes, the Notes are entitled to the protections
provided in Section 18-104(c) of the Funding Law and, accordingly, the 1998
Funding Order, the 1998 Transition Property and the IFCs are not revocable by
the ICC; (vii) the ICC may not reduce, postpone, impair or terminate the 1998
Transition Property, the 1998 Funding Order or the IFCs; (viii) the process by
which the 1998 Funding Order was adopted and approved and the 1998 Initial
Tariff was filed, and the 1998 Funding Order and the 1998 Initial Tariff
themselves, comply with all applicable laws, rules and regulations and the ICC
may not revoke, amend or otherwise change the 1998 Initial Tariff in any manner
which would defeat the expectations of the Holders to receive IFC Payments on a
timely basis; and (ix) no other approval, authorization, consent, order or other
action of, or filing with, any court, Federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with the creation and grant of the 1998
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Transition Property, except those that have been obtained or made and those
filings described in Section 3.07.
(f) ASSUMPTIONS. The assumptions used in calculating the IFCs are
reasonable and made in good faith.
(g) CREATION OF 1998 TRANSITION PROPERTY. Upon the effectiveness of the
1998 Initial Tariff: (i) all of the 1998 Transition Property constitutes a
current property right vested in the Grantee; (ii) the 1998 Transition Property
includes, without limitation, (A) the right, title and interest in the IFCs
authorized under the 1998 Funding Order, as adjusted from time to time, (B) the
right, title and interest in all revenues, collections, claims, payments, money
or proceeds of or arising from the IFCs set forth in the 1998 Initial Tariff,
and (C) all rights to compel Illinois Power, as Servicer (or any successor), to
file for and obtain adjustments to the IFCs pursuant to the 1998 Funding Order;
and (iii) the Grantee is entitled to impose and collect the IFCs described in
the 1998 Funding Order and the 1998 Initial Tariff in an aggregate amount equal
to the principal amount of the Notes, all interest thereon, all amounts required
to be deposited in the Reserve Subaccount, the Over-collateralization Subaccount
and the Capital Subaccount, and all related fees, costs and expenses in respect
of the Notes until they have been paid in full, subject only to the $1.634
billion limitation set forth in the 1998 Funding Order as to the maximum dollar
amount of 1998 Transition Property created thereunder.
(h) PROPERTY OF GRANTEE. To the fullest extent permitted by the Funding
Law and all other applicable law, the 1998 Transition Property and the right to
impose and collect IFCs contemplated thereunder constitute current property
rights of the Grantee and its assigns, including the Note Issuer and its assigns
(including the Indenture Trustee on behalf of the Holders), which property has
been
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placed beyond the reach of Illinois Power and its creditors, as in a true
sale, and which property rights may not be limited, altered, impaired,
reduced or otherwise terminated by any subsequent actions of Illinois Power
or any third party and which shall, to the full extent permitted by law, be
enforceable against Illinois Power, its successors and assigns, and all other
third parties (including judicial lien creditors) claiming an interest
therein by or through Illinois Power or its successors and assigns.
(i) NATURE OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in this SECTION 3.08, insofar as they involve conclusions
of law, are made not on the basis that Illinois Power purports to be a legal
expert or to be rendering legal advice, but rather to reflect the parties' good
faith understanding of the legal basis on which the parties are entering into
this Agreement and the other Basic Documents and the basis on which the Holders
are purchasing the Notes, and to reflect the parties' agreement that, if such
understanding turns out to be incorrect or inaccurate, Illinois Power will be
obligated to indemnify the Grantee and its permitted assigns, and that the
Grantee and its permitted assigns will be entitled to enforce any rights and
remedies under the documents, on account of such inaccuracy to the same extent
as if Illinois Power had breached any other representations or warranties
hereunder.
ARTICLE IV
COVENANTS OF ILLINOIS POWER
SECTION 4.01. CORPORATE EXISTENCE. So long as any of the Notes are
outstanding, Illinois Power (a) will keep in full force and effect its
existence, rights and franchises as a corporation under the laws of the State of
Illinois (unless it becomes, or any successor to Illinois
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Power hereunder is or becomes, organized under the laws of any other State or
of the United States of America, in which case Illinois Power will keep in
full effect its existence, rights and franchises under the laws of such other
jurisdiction), (b) will obtain and preserve its qualification to do business,
in each case to the extent that in each such jurisdiction such existence or
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, and any of the other Basic Documents to
which Illinois Power is a party and each other instrument or agreement
necessary or appropriate to the proper administration of this Agreement and
the transactions contemplated hereby and (c) at all times hereafter, neither
Illinois Power nor any successor will cause or permit the Grantee or the Note
Issuer to elect to be classified as an association taxable as a corporation
for federal income tax purposes.
SECTION 4.02. NO LIENS. Except for the conveyances hereunder, Illinois
Power (i) will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume, suffer to exist or otherwise assert any Lien on,
any of the 1998 Transition Property or any interest therein, (ii) will not at
any time assert any Lien against or with respect to any of the 1998 Transition
Property in its capacity as Servicer or otherwise, (iii) will not seek to limit,
alter, impair, reduce or otherwise terminate the property rights of the Grantee
or any assignee of the Grantee, and (iv) shall defend the right, title and
interest of the Grantee or the Note Issuer in, to and under the 1998 Transition
Property against all claims of third parties claiming through or under Illinois
Power.
SECTION 4.03. DELIVERY OF COLLECTIONS. If Illinois Power receives
collections in respect of the IFCs or the proceeds thereof, or in replacement
therefor, including, without limitation, any Allocable IFC Revenue Amounts,
Illinois Power agrees to hold such payments in trust for the Servicer and to pay
the Servicer all payments received by Illinois Power in respect thereof as soon
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as practicable after receipt thereof by Illinois Power, but in no event later
than two Business Days after such receipt.
SECTION 4.04. NOTICE OF LIENS. Illinois Power shall notify the Grantee,
the Note Issuer and the Indenture Trustee in writing promptly after becoming
aware of any Lien on any of the 1998 Transition Property other than the
conveyances hereunder, under the Sale Agreement and under the Indenture.
SECTION 4.05. COMPLIANCE WITH LAW. Illinois Power shall comply with its
organizational or governing documents and all laws, treaties, rules, regulations
and determinations of any governmental instrumentality applicable to it, to the
extent that failure to so comply would materially adversely affect the Note
Issuer's or the Indenture Trustee's interests in the 1998 Transition Property or
under any of the Basic Documents, or Illinois Power's performance of its
obligations hereunder or under any of the other Basic Documents to which it is
party. Without limiting the foregoing, Illinois Power shall comply with
applicable laws and regulations regarding its use of proceeds received
hereunder, including all applicable provisions of the Funding Law and the 1998
Funding Order.
SECTION 4.06. COVENANTS RELATED TO THE 1998 TRANSITION PROPERTY AND THE
NOTES.
(a) So long as any of the Notes are outstanding, Illinois Power shall
indicate in its financial statements that it is not the owner of the 1998
Transition Property.
(b) So long as any of the Notes are outstanding, Illinois Power shall not
own or purchase any Notes.
(c) Illinois Power agrees that upon the creation and grant of the 1998
Transition Property to the Grantee pursuant to the 1998 Funding Order and, to
the extent applicable, this Agreement, (i)
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to the fullest extent permitted by law, including applicable ICC Regulations,
the Grantee shall have all of the rights of the owner of the 1998 Transition
Property (including all of the rights originally held by Illinois Power, if
any, with respect to the 1998 Transition Property), including the right
(subject to the terms of the Servicing Agreement) to exercise any and all
rights and remedies to collect any amounts payable by any Customer or third
party collection agent, including any ARES, in respect of the 1998 Transition
Property, notwithstanding any objection or direction to the contrary by
Illinois Power and (ii) any payment by any Customer or third party collection
agent, including any ARES, to the Grantee (or to the Servicer for the benefit
of the Grantee) shall discharge such Customer's or third party's obligations
in respect of the 1998 Transition Property to the extent of such payment,
notwithstanding any objection or direction to the contrary by Illinois Power.
(d) So long as any of the Notes are outstanding, (i) except with respect
to federal and other applicable taxes, Illinois Power shall not make any
statement or reference in respect of the 1998 Transition Property that is
inconsistent with the ownership interest of the Grantee, and (ii) Illinois Power
shall not take any action in respect of the 1998 Transition Property except
solely in its capacity as the Servicer under the Servicing Agreement or as
otherwise contemplated by the Basic Documents.
(e) So long as any of the Notes are outstanding, Illinois Power shall not,
except as required by applicable law, initiate any material changes to its
policies and procedures pertaining to credit (including requirements for
deposits from Customers), billing, collections (including procedures for
disconnection of service for non-payment) and restoration of service after
disconnection, and shall not initiate any changes in any ICC tariffs relating to
the foregoing matters
15
which are likely to materially and adversely affect Illinois Power's ability
to make timely recovery of amounts billed to Customers.
(f) If Illinois Power determines that the aggregate dollar amount of IFCs
to be imposed and collected is reasonably likely to exceed the maximum dollar
amount of Intangible Transition Property authorized by the 1998 Funding Order
and any Subsequent Funding Orders and any Notes remain outstanding, Illinois
Power shall make a good faith effort to take any and all subsequent regulatory
action with the ICC reasonably necessary to obtain an order permitting the
creation of additional Intangible Transition Property in an amount sufficient to
pay such Notes in full.
SECTION 4.07. PROTECTION OF TITLE. Illinois Power shall execute and file
such filings, including filings with the ICC pursuant to the Funding Law, and
cause to be executed and filed such filings, all in such manner and in such
places as may be required by law fully to preserve, maintain, and protect the
interests of the Grantee or the Note Issuer in the 1998 Transition Property,
including all filings required under the Funding Law relating to the grant of
the 1998 Transition Property to the Grantee. Illinois Power shall deliver (or
cause to be delivered) to the Grantee file-stamped copies of, or filing receipts
for, any document filed as provided above, promptly following such filing.
Illinois Power shall institute any action or proceeding necessary to compel
performance by the ICC or the State of Illinois of any of their obligations or
duties under the Funding Law, the 1998 Funding Order, the 1998 Initial Tariff or
any amendatory tariff filed pursuant to Section 18-104(k) of the Funding Law,
and Illinois Power agrees to take such legal or administrative actions,
including defending against or instituting and pursuing legal actions and
appearing or testifying at hearings or similar proceedings, as may be reasonably
necessary to protect the Grantee or the Note Issuer from claims, state actions
or other actions or proceedings of third parties which, if successfully
16
pursued, would result in a breach of any representation set forth in Article
III hereof. The costs of any such actions or proceedings will be payable by
Illinois Power. Illinois Power designates the Grantee as its agent and
attorney-in-fact to execute any filings with the ICC or other instruments
required by the Grantee pursuant to this Section, it being understood that
the Grantee shall have no obligation to execute any such instruments.
SECTION 4.08. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the ICC's
right to order the sequestration and payment of revenues arising with respect
to the 1998 Transition Property notwithstanding any bankruptcy,
reorganization or other insolvency proceedings with respect to Illinois
Power, the Grantee or any other grantee or assignee of the 1998 Transition
Property pursuant to Section 18-107(c)(4) of the Funding Law, Illinois Power
shall not, prior to the date which is one year and one day after the
termination of the Indenture, acquiesce, petition or otherwise invoke or
cause or join with any other Person to invoke the process of any court or
governmental authority for the purpose of commencing or sustaining a case
against the Grantee or the Note Issuer under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of or for the
Grantee or the Note Issuer or any substantial part of the property of the
Grantee or the Note Issuer, or ordering the winding up or liquidation of the
affairs of the Grantee or the Note Issuer.
SECTION 4.09. TAXES. So long as any of the Notes are outstanding,
Illinois Power shall, and shall cause each of its subsidiaries to, pay all
material taxes, assessments and governmental charges imposed upon it or any of
its properties or assets or with respect to any of its franchises, business,
income or property before any penalty accrues thereon if the failure to pay any
17
such taxes, assessments and governmental charges would, after any applicable
grace periods, notices or other similar requirements, result in a lien on the
1998 Transition Property; PROVIDED that no such tax need be paid if Illinois
Power or one of its subsidiaries is contesting the same in good faith by
appropriate proceedings promptly instituted and diligently conducted and if
Illinois Power or such subsidiary has established appropriate reserves as
shall be required in conformity with generally accepted accounting principles.
SECTION 4.10. CONTRACTS FOR NON-TARIFFED SERVICES. Neither Illinois Power
nor any successor thereto shall enter into any contract with any Customer
obligated (or who would, but for such contract, be obligated) to pay IFCs if,
as a result thereof, such Customer would not receive tariffed services, unless
the contract provides that the Customer will pay an amount to the Grantee or its
assigns or to Illinois Power, as Servicer, as applicable, equal to the amount
such Customer would pay in IFCs if the services provided under such contract
were tariffed services. Any revenues received by Illinois Power or such
successor from any such contract services shall, to the extent of the authorized
amount of the IFCs included therein (or deemed included therein pursuant to the
1998 Funding Order and this Section), be deemed to be proceeds of, and included
in, the 1998 Transition Property.
SECTION 4.11. PRESERVATION OF RIGHT OF NOTEHOLDERS TO RECEIVE PAYMENT. In
addition to any obligations of Illinois Power under the Servicing Agreement,
Illinois Power recognizes and agrees that any impairment of the rights of
Holders with respect to the collection of IFCs and payments on the Notes,
arising from a declaration of invalidity of the Amendatory Act and/or the
Funding Law occurring after Illinois Power and its Affiliates received the
proceeds of such Notes, would not be equitable. Illinois Power agrees, in
consideration of the receipt of such proceeds, to
18
take any and all actions reasonably necessary to preserve the rights of
Holders with respect to payments on the Notes out of the payments represented
by IFCs or their equivalent, including, but not limited to, (i) making
appropriate filings with the State of Illinois, the ICC or other regulatory
bodies to defend, preserve and create on behalf of Holders the right to
receive payments as provided in the Notes, (ii) defending against or
instituting and pursuing legal actions and appearing or testifying at
hearings or similar proceedings, as may be necessary to block or overturn any
attempts to cause a repeal of, modification of or supplement to or judicial
invalidation of the Amendatory Act or any Funding Order or the rights of
holders of Intangible Transition Property by legislative enactment or
otherwise that would be adverse to the Grantee, the Note Issuer or any
Holders, and (iii) unless otherwise expressly prohibited by applicable law or
judicial or regulatory order in effect at such time, continuing to deduct and
pay over to the Servicer for the benefit of the Note Issuer all IFCs and IFC
Payments or equivalent revenues received by Illinois Power notwithstanding
any declaration of invalidity of the Amendatory Act, the Funding Law and/or
the Funding Order.
ARTICLE V
ILLINOIS POWER
SECTION 5.01. LIABILITY OF ILLINOIS POWER; INDEMNITIES.
(a) Illinois Power shall indemnify the Grantee, the Note Issuer, the
Indenture Trustee and the Delaware Trustee and each of their respective
officers, directors, employees and agents for, and defend and hold harmless each
such Person from and against, any and all taxes (i) that may at any time be
imposed on or asserted against any such Person as a result of the grant of the
1998 Transition Property to the Grantee, or (ii) that may be imposed on or
asserted against any such Person under
19
existing law as of the Series Issuance Date as a result of the Grantee's
ownership and assignment of the 1998 Transition Property, the Note Issuer's
issuance and sale of the Notes, or the other transactions contemplated
herein, including, in each case, any sales, gross receipt, general
corporation, tangible personal property, privilege or license taxes (but
excluding any taxes imposed as a result of a failure of such Person to
properly withhold or remit taxes imposed with respect to payments on any
Notes).
(b) Illinois Power shall indemnify the Grantee, the Note Issuer, the
Indenture Trustee, the Delaware Trustee and the Holders and each of their
respective officers, directors, employees and agents for, and defend and hold
harmless each such Person from and against, any and all amounts of principal and
interest on the Notes not paid when due in accordance with their terms and the
amount of any deposits to the Note Issuer required to have been made in
accordance with the terms of the Basic Documents which are not made when so
required and any and all liabilities, obligations, claims, actions, suits or
payments, of any kind whatsoever that may be imposed on or asserted against any
such Person, together with any reasonable costs and expenses incurred by such
Person (collectively, "Losses"), as a result of Illinois Power's breach of any
of its representations, warranties or covenants contained in this Agreement.
(c) Illinois Power shall pay any and all taxes levied or assessed upon all
or any part of the Grantee's property or assets based on existing law as of the
Closing Date.
(d) Indemnification under Sections 5.01(a) through 5.01(c) shall survive
the termination of this Agreement and shall include reasonable fees and expenses
of investigation and litigation (including reasonable attorneys' fees and
expenses).
20
SECTION 5.02. MERGER OR CONSOLIDATION OF OR ASSUMPTION OF THE OBLIGATIONS
OF ILLINOIS POWER. Any Person (a) into which Illinois Power may be merged or
consolidated, (b) which may result from any merger or consolidation to which
Illinois Power shall be a party or (c) which may succeed to the properties and
assets of Illinois Power substantially as a whole, which Person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of Illinois Power hereunder, shall be the successor to Illinois Power under this
Agreement without further act on the part of any of the parties to this
Agreement; PROVIDED, HOWEVER, that (i) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Article III shall
have been breached and (if Illinois Power is the Servicer) no Servicer Default,
and no event which, after notice or lapse of time, or both, would become a
Servicer Default shall have occurred and be continuing, (ii) Illinois Power
shall have delivered to the Grantee, the Note Issuer, the Delaware Trustee and
the Indenture Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, (iii) Illinois Power shall have delivered to the Grantee, the Note Issuer
and the Indenture Trustee an Opinion of Counsel either (x) stating that, in the
opinion of such counsel, all filings to be made by Illinois Power, including
filings with the ICC pursuant to the Funding Law, have been executed and filed
that are necessary to fully preserve and protect the interest of the Grantee in
the 1998 Transition Property and reciting the details of such filings, or (y)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interests, (iv) the Rating Agencies shall have
received prior written notice of such transaction and (v) Illinois Power shall
have delivered to the Grantee, the Note Issuer, the Delaware Trustee and
21
the Indenture Trustee an opinion of independent tax counsel (as selected by,
and in form and substance reasonably satisfactory to, Illinois Power and
which may be based on a ruling from the Internal Revenue Service) to the
effect that such consolidation or merger will not result in a material
adverse federal income tax consequence to Illinois Power, the Grantee, the
Note Issuer, the Delaware Trustee, the Indenture Trustee or the then existing
Holders. Notwithstanding anything herein to the contrary, the execution of
the foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii), (iv) and (v) above shall be conditions to the consummation of any
transaction referred to in clauses (a), (b) or (c) above. When any Person
acquires the properties and assets of Illinois Power substantially as a whole
and becomes the successor to Illinois Power in accordance with the terms of
this Section 5.02, then upon the satisfaction of all of the other conditions
of this Section 5.02, Illinois Power shall automatically and without further
notice be released from its obligations hereunder.
SECTION 5.03. LIMITATION ON LIABILITY OF ILLINOIS POWER AND OTHERS.
Illinois Power and any director or officer or employee or agent of Illinois
Power may rely in good faith on the advice of counsel or on any document of any
kind, PRIMA FACIE properly executed and submitted by any Person, respecting any
matters arising hereunder. Subject to Sections 4.07 and 4.11, Illinois Power
shall not be under any obligation to appear in, prosecute or defend any legal
action that shall not be incidental to its obligations under this Agreement, and
that in its opinion may involve it in any expense or liability.
22
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. AMENDMENT. The Agreement may be amended by Illinois Power
and the Grantee, with prior written notice given to the Rating Agencies and the
prior written consent of the Note Issuer, but without the consent of any of the
Holders, to cure any ambiguity, to correct or supplement any provisions in this
Agreement or for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions in this Agreement or of modifying in
any manner the rights of the Holders; PROVIDED, HOWEVER, that such action shall
not, as evidenced by a Illinois Power Officer's Certificate delivered to the
Note Issuer, adversely affect in any material respect the interests of any
Holder.
This Agreement may also be amended from time to time by Illinois Power and
the Grantee, with prior written notice given to the Rating Agencies and the
prior written consent of the Note Issuer, the Indenture Trustee and Holders
holding not less than a majority of the Outstanding Amount of the Notes of all
Series affected thereby, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders; PROVIDED, HOWEVER, that no
such amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, IFC Collections or (b) reduce the aforesaid
percentage of the Outstanding Amount of the Notes, the Holders of which are
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes.
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Promptly after the execution of any such amendment or consent, the Grantee
shall furnish a copy of such amendment or consent to the Note Issuer, the
Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Holders pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof.
SECTION 6.02. NOTICES. All demands, notices and communications upon or to
the Grantee, the Note Issuer, the Indenture Trustee or the Rating Agencies under
this Agreement shall be in writing, personally delivered, mailed or sent by
telecopy or other similar form of rapid transmission, and shall be deemed to
have been duly given upon receipt (a) in the case of Illinois Power, to Illinois
Power Company, 000 Xxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000; (b) in the case
of the Grantee, to Illinois Power Securitization Limited Liability Company, c/o
Illinois Power Company, 000 Xxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000; (c) in
the case of the Note Issuer, to Transitional Funding Trust, c/o First Union
Trust Company, National Association, One Xxxxxx Square, 000 Xxxx Xxxxxx, 0xx
Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Administration;
(d) in the case of the Indenture Trustee, at the Corporate Trust Office; (e) in
the case of Moody's, to Xxxxx'x Investors Service, Inc., ABS Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; (f) in the case of
Standard & Poor's, to Standard & Poor's Corporation, 00 Xxxxxxxx (00xx Xxxxx),
Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed Surveillance Department; (g)
in the case of Fitch IBCA, to Fitch IBCA, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: ABS Surveillance; or (h) in the case of Duff &
Xxxxxx, to Xxxx & Xxxxxx Credit Rating Co., 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Asset
24
Based Monitoring Group; or as to each of the foregoing, at such other address
as shall be designated by written notice to the other parties.
SECTION 6.03. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 5.02, this Agreement may not be
assigned by Illinois Power.
SECTION 6.04. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of Illinois Power, the Grantee, the Note
Issuer, the Indenture Trustee, the Delaware Trustee and the Holders, and nothing
in this Agreement, whether express or implied, shall be construed to give to any
other Person any legal or equitable right, remedy or claim in the 1998
Transition Property or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 6.05. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 6.06. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 6.07. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
25
SECTION 6.08. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 6.09. ASSIGNMENTS TO NOTE ISSUER AND INDENTURE TRUSTEE. Illinois
Power acknowledges and consents to any transfer, pledge, assignment or grant of
a security interest by the Grantee to the Note Issuer pursuant to the Sale
Agreement, and by the Note Issuer to the Indenture Trustee for the benefit of
the Holders pursuant to the Indenture, of all right, title and interest of the
Grantee in, to and under the 1998 Transition Property and the proceeds thereof,
and the assignment of any or all of the Grantee's rights and obligations
hereunder to the Note Issuer and the Indenture Trustee. Illinois Power agrees
that the Note Issuer and the Indenture Trustee, as assignees, shall, subject to
the terms of the Basic Documents, have the right to enforce this Agreement and
to exercise directly all of the Grantee's rights and remedies under this
Agreement (including without limitation, the right to give or withhold any
consents or approvals of the Grantee to be given or withheld hereunder), and
acknowledges that with respect to the sale, transfer, assignment, set over and
conveyance of the 1998 Transition Property and Related Assets to the Note Issuer
and the pledge thereof to the Indenture Trustee pursuant to the Indenture, the
Note Issuer and the Indenture Trustee have relied on the representations and
warranties made by Illinois Power herein.
SECTION 6.10. HOLDERS AS THIRD-PARTY BENEFICIARIES. Illinois Power and
the Grantee agree that the Holders and the Indenture Trustee are express
third-party beneficiaries of the provisions of this Agreement and that the
Indenture Trustee, on behalf of the Holders, shall have the right to enforce
the terms hereof as provided in Section 6.09 hereof. Illinois Power will
take all
26
appropriate actions to perfect and maintain the perfection of the Grantee's
and the Note Issuer's ownership interest in any of the 1998 Transition
Property and to perfect and maintain the perfection of the Indenture
Trustee's security interest in such 1998 Transition Property and all other
Note Collateral.
SECTION 6.11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. In addition to
the survival of representations and warranties as set forth in Article III, (a)
the agreements, representations, warranties, indemnities and other statements of
Illinois Power or its officers set forth in or made pursuant to this Agreement
will remain in full force and effect and will survive the grant of the 1998
Transition Property and the issuance and delivery of the Notes and (b) to the
fullest extent permitted by applicable law, the provisions of Articles III, IV
and V hereof shall survive the termination, cancellation or invalidity of this
Agreement.
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
ILLINOIS POWER COMPANY
By:
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Name:
------------------------------------
Title:
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ILLINOIS POWER SECURITIZATION LIMITED
LIABILITY COMPANY, Grantee
By:
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Name:
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Title:
-----------------------------------
