--------------------------------------------------------------------------------

Exhibit 10.4

 

SECOND AMENDED AND RESTATED INTERCREDITOR AGREEMENT

 

SECOND AMENDED AND RESTATED INTERCREDITOR AGREEMENT (this “Agreement”) dated as
of September 18, 2019 by and among:

 

AEP Texas Inc. (in its individual capacity, the “Company”);

 

AEP Texas Central Transition Funding II LLC, a Delaware limited liability
company (the “First Additional Transition Bond Issuer”);

 

The Bank of New York Mellon, a New York banking corporation, in its capacity as
indenture trustee (including any successor in such capacity, the “First
Additional Transition Bond Trustee” and, together with the First Additional
Transition Bond Issuer, the “First Additional Secured Parties”) under the First
Additional Indenture referred to below;

 

AEP Texas Inc. (successor to AEP Texas Central Company), in its capacity as the
initial servicer of the First Additional Transition Property referred to below
(including any successor in such capacity, the “First Additional TC Servicer”
and, together with the First Additional Transition Bond Issuer and the First
Additional Transition Bond Trustee, the “First Additional Parties”);

 

AEP Texas Central Transition Funding III LLC, a Delaware limited liability
company (the “Second Additional Transition Bond Issuer”);

 

U.S. Bank National Association, a national banking association, in its capacity
as indenture trustee (including any successor in such capacity, the “Second
Additional Transition Bond Trustee” and, together with the Second Additional
Transition Bond Issuer, the “Second Additional Secured Parties”) under the
Second Additional Indenture referred to below;

 

AEP Texas Inc. (successor to AEP Texas Central Company), in its capacity as the
initial servicer of the Second Additional Transition Property referred to below
(including any successor in such capacity, the “Second Additional TC Servicer”
and, together with the Second Additional Transition Bond Issuer and the Second
Additional Transition Bond Trustee, the “Second Additional Parties”);

 

AEP Texas Restoration Funding LLC, a Delaware limited liability company (the
“System Restoration Bond Issuer”);

 

U.S. Bank National Association, a national banking association, in its capacity
as indenture trustee (including any successor in such capacity, the “System
Restoration Bond Trustee” and, together with the System Restoration Bond Issuer,
the “System Restoration Secured Parties”) under the System Restoration Indenture
referred to below;

 

AEP Texas Inc., in its capacity as the initial servicer of the System
Restoration Transition Property referred to below (including any successor in
such capacity, the “System Restoration Servicer” and, together with the System
Restoration Bond Issuer and the System Restoration Bond Trustee, the “System
Restoration Parties”); and

--------------------------------------------------------------------------------

The Company, in its capacity as collection agent for the benefit of the First
Additional TC Servicer, the Second Additional TC Servicer and the System
Restoration Servicer.

 

WHEREAS, pursuant to the terms of the Transition Property Purchase and Sale
Agreement dated as of October 11, 2006, between the First Additional Transition
Bond Issuer and AEP Texas Central Company, in its capacity as seller (as it may
hereafter from time to time be amended, restated or modified, the “First
Additional Sale Agreement”), AEP Texas Central Company has sold to the First
Additional Transition Bond Issuer certain assets known as “Transition Property”
which includes the “Transition Charges” (hereinafter, the “First Additional
Transition Property” and the “First Additional Transition Charges”);

 

WHEREAS, pursuant to the terms of the Indenture dated as of October 11, 2006,
among the First Additional Transition Bond Issuer and the First Additional
Transition Bond Trustee, in its capacity as indenture trustee and in its
separate capacity as a securities intermediary (as it may hereafter from time to
time be amended, restated or modified and as supplemented from time to time by
one or more Series Supplements, such Series Supplements and Indenture being
collectively referred to herein as the “First Additional Indenture”), the First
Additional Transition Bond Issuer, among other things, has granted to the First
Additional Transition Bond Trustee a security interest in certain of its assets,
including the First Additional Transition Property, to secure, among other
things, the transition bonds issued pursuant to the First Additional Indenture
(“First Additional Transition Bonds”);

 

WHEREAS, pursuant to the terms of the Transition Property Servicing Agreement
dated as of October 11, 2006, between the First Additional Transition Bond
Issuer and the First Additional TC Servicer (as it may hereafter from time to
time be amended, restated or modified, the “First Additional Servicing
Agreement”), the First Additional TC Servicer has agreed to provide for the
benefit of the First Additional Transition Bond Issuer servicing functions with
respect to the First Additional Transition Charges;

 

WHEREAS, pursuant to the terms of the Transition Property Purchase and Sale
Agreement dated as of March 14, 2012, between the Second Additional Transition
Bond Issuer and AEP Texas Central Company, in its capacity as seller (as it may
hereafter from time to time be amended, restated or modified, the “Second
Additional Sale Agreement”), AEP Texas Central Company has sold to the Second
Additional Transition Bond Issuer certain assets known as “Transition Property”
which includes the “Transition Charges” (hereinafter, the “Second Additional
Transition Property” and the “Second Additional Transition Charges”);

 

WHEREAS, pursuant to the terms of the Indenture dated as of March 14, 2012,
among the Second Additional Transition Bond Issuer and the Second Additional
Transition Bond Trustee, in its capacity as indenture trustee and in its
separate capacity as a securities intermediary (as it may hereafter from time to
time be amended, restated or modified and as supplemented by a Series
Supplement, such Series Supplement and Indenture being collectively referred to
herein as the “Second Additional Indenture”), the Second Additional Transition
Bond Issuer, among other things, has granted to the Second Additional Transition
Bond Trustee a security interest in certain of its assets, including the Second
Additional Transition Property, to secure, among other things, the transition
bonds issued pursuant to the Second Additional Indenture (“Second Additional
Transition Bonds”);

2

--------------------------------------------------------------------------------

WHEREAS, pursuant to the terms of the Transition Property Servicing Agreement
dated as of March 14, 2012, between the Second Additional Transition Bond Issuer
and the Second Additional TC Servicer (as it may hereafter from time to time be
amended, restated or modified, the “Second Additional Servicing Agreement”), the
Second Additional TC Servicer has agreed to provide for the benefit of the
Second Additional Transition Bond Issuer servicing functions with respect to the
Second Additional Transition Charges;

 

WHEREAS, pursuant to the terms of the Transition Property Purchase and Sale
Agreement dated as of September 18, 2019, between the System Restoration Bond
Issuer and the Company, in its capacity as seller (as it may hereafter from time
to time be amended, restated or modified, the “System Restoration Sale
Agreement”), the Company has sold to the System Restoration Bond Issuer certain
assets known as “Transition Property” which includes the “System Restoration
Charges” (hereinafter, the “System Restoration Transition Property” and the
“System Restoration Charges”);

 

WHEREAS, pursuant to the terms of the Indenture dated as of September 18, 2019,
among the System Restoration Bond Issuer and the System Restoration Bond
Trustee, in its capacity as indenture trustee and in its separate capacity as a
securities intermediary (as it may hereafter from time to time be amended,
restated or modified and as supplemented by a Series Supplement, such Series
Supplement and Indenture being collectively referred to herein as the “System
Restoration Indenture” and, together with the First Additional Indenture and the
Second Additional Indenture, the “Indentures”), the System Restoration Bond
Issuer, among other things, has granted to the System Restoration Bond Trustee a
security interest in certain of its assets, including the System Restoration
Transition Property, to secure, among other things, the system restoration bonds
issued pursuant to the System Restoration Indenture (“System Restoration Bonds”
and, together with the First Additional Transition Bonds and the Second
Additional Transition Bonds, the “Transition Bonds”);

 

WHEREAS, pursuant to the terms of the Transition Property Servicing Agreement
dated as of September 18, 2019, between the System Restoration Bond Issuer and
the System Restoration Servicer (as it may hereafter from time to time be
amended, restated or modified, the “System Restoration Servicing Agreement” and,
together with the First Additional Servicing Agreement and the Second Additional
Servicing Agreement, the “Servicing Agreements”), the System Restoration
Servicer has agreed to provide for the benefit of the System Restoration Bond
Issuer servicing functions with respect to the System Restoration Charges;

 

WHEREAS, pursuant to the terms of the Amended and Restated Intercreditor
Agreement dated as of March 14, 2012 (the “First Amended and Restated
Intercreditor Agreement”), by and among AEP Texas Central Company, AEP Texas
Central Transition Funding LLC (the “Initial Transition Bond Issuer”), U.S. Bank
National Association, as initial transition bond trustee (the “Initial
Transition Bond Trustee”), AEP Texas Central Company, as initial TC servicer
(the “Initial TC Servicer” and, together with the Initial Transition Bond Issuer
and the Initial Transition Bond Trustee, the “Initial Parties”), the First
Additional Parties, the Second Additional Parties, and AEP Texas Central Company
in its capacity as collection agent for the benefit of the Initial TC Servicer,
the First Additional TC Servicer and the Second Additional TC Servicer
(together, the “First Amended and Restated Intercreditor Parties”), the First
Amended and Restated Intercreditor Parties agreed upon their respective rights
relating to such collections and any bank accounts into which the same may be
deposited, as well as other matters of common interest to them which arise under
or result from the coexistence of the Initial Sale Agreement (as defined
therein), the Initial Indenture (as defined therein), the Initial Servicing
Agreement (as defined therein), the First Additional Sale Agreement, the First
Additional Indenture, the First Additional Servicing Agreement, the Second
Additional Sale Agreement, the Second Additional Indenture and the Second
Additional Servicing Agreement;

3

--------------------------------------------------------------------------------

WHEREAS, the transition bonds issued pursuant to the Indenture dated as of
February 7, 2002 among the Initial Transition Bond Issuer and the Initial
Transition Bond Trustee have been paid in full, and the First Amended and
Restated Intercreditor Agreement has terminated as to the Initial Parties
pursuant to Section 8 thereof; and

 

WHEREAS, the First Additional Parties, the Second Additional Parties, the System
Restoration Parties and the Company in its capacity as collection agent for the
benefit of the System Restoration Servicer now wish to amend and restate the
First Amended and Restated Intercreditor Agreement in its entirety to agree upon
their respective rights relating to such collections and any bank accounts into
which the same may be deposited, as well as other matters of common interest to
them which arise under or result from the coexistence of the First Additional
Sale Agreement, the First Additional Indenture, the First Additional Servicing
Agreement, the Second Additional Sale Agreement, the Second Additional
Indenture, the Second Additional Servicing Agreement, the System Restoration
Sale Agreement, the System Restoration Indenture and the System Restoration
Servicing Agreement;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:

 

SECTION 1. Acknowledgment of Ownership Interests and Security Interests. The
First Additional Parties, the Second Additional Parties and the System
Restoration Parties hereby acknowledge as follows:

 

(a)          the ownership interest of the System Restoration Bond Issuer in the
System Restoration Transition Property, including the System Restoration Charges
and the revenues, collections, claims, rights, payments, money and proceeds
arising therefrom, and the security interests in favor of the System Restoration
Bond Trustee for the benefit of itself, the holders of the System Restoration
Bonds and any credit enhancement provider (as defined in the System Restoration
Indenture) in the System Restoration Transition Property;

 

(b)          the ownership interest of the Second Additional Transition Bond
Issuer in the Second Additional Transition Property, including the Second
Additional Transition Charges and the revenues, collections, claims, rights,
payments, money and proceeds arising therefrom, and the security interests in
favor of the Second Additional Transition Bond Trustee for the benefit of
itself, the holders of the Second Additional Transition Bonds and any credit
enhancement provider (as defined in the Second Additional Indenture) in the
Second Additional Transition Property; and

4

--------------------------------------------------------------------------------

(c)          the ownership interest of the First Additional Transition Bond
Issuer in the First Additional Transition Property, including the First
Additional Transition Charges and the revenues, collections, claims, rights,
payments, money and proceeds arising therefrom, and the security interests in
favor of the First Additional Transition Bond Trustee for the benefit of itself,
the holders of the First Additional Transition Bonds and any credit enhancement
provider (as defined in the First Additional Indenture) in the First Additional
Transition Property.

 

SECTION 2. Deposit Accounts. The First Additional Parties, the Second Additional
Parties and the System Restoration Parties each acknowledge that collections
with respect to the First Additional Transition Property, the Second Additional
Transition Property and the System Restoration Transition Property may from time
to time be deposited into one or more designated accounts of the Company (the
“Deposit Accounts”). Subject to Section 4, the Company in its capacity as
collection agent agrees to:

 

(a)          maintain the Deposit Accounts for the benefit of the First
Additional Parties, the Second Additional Parties and the System Restoration
Parties as their respective interests may appear;

 

(b)          allocate and remit funds from the Deposit Accounts at the times
specified in the respective Indentures and Servicing Agreements to the First
Additional Transition Bond Trustee in the case of collections relating to the
First Additional Transition Property, to the Second Additional Transition Bond
Trustee in the case of collections relating to the Second Additional Transition
Property and to the System Restoration Bond Trustee in the case of collections
relating to the System Restoration Transition Property; provided that (i) to the
extent the combined amounts of remittance by a retail electric provider are
insufficient to satisfy amounts owed in respect of the First Additional
Transition Charges, the Second Additional Transition Charges, the System
Restoration Charges and the transmission and distribution charges (other than
late payment penalties), such allocation and remittances shall be made on a pro
rata basis among the First Additional Transition Charges, the Second Additional
Transition Charges and the System Restoration Charges based on the amounts of
such Transition Charges (other than late payment penalties) then due and owing;
and (ii) in the event a late-payment penalty is received, allocations and
remittances of such late payment penalties shall be made on a pro rata basis
among the First Additional Transition Charges, the Second Additional Transition
Charges and the System Restoration Charges based on the amounts of such
Transition Charges in respect of which such penalties were owed; and

 

(c)          maintain records as to the amounts deposited into the Deposit
Accounts, the amounts remitted therefrom and the allocation as provided in
subsection (b) above.

 

The First Additional Secured Parties, the Second Additional Secured Parties and
the System Restoration Secured Parties shall each have the right to require an
accounting from time to time of collections, allocations and remittances by the
Company in its capacity as collection agent relating to the Deposit Accounts.

 

Each of the parties hereto acknowledges the respective security interests of the
others in amounts on deposit in the Deposit Accounts to the extent of their
respective interests as described in this Agreement and the other Basic
Documents (as defined in the Indentures).

5

--------------------------------------------------------------------------------

SECTION 3. Time or Order of Attachment. The acknowledgments contained in
Sections 1 and 2 are applicable irrespective of the time or order of attachment
or perfection of security or ownership interests or the time or order of filing
or recording of financial statements or mortgages or filings under applicable
law.

 

SECTION 4. Servicing.

 

(a)          Pursuant to Section 2, the Company, in its role as First Additional
TC Servicer, Second Additional TC Servicer and System Restoration Servicer,
shall allocate and remit funds received from retail electric providers for the
First Additional Transition Bonds, the Second Additional Transition Bonds and
the System Restoration Bonds, respectively, and shall control the movement of
such funds out of the Deposit Accounts (such allocation, remittance and deposits
hereafter called the “Allocation Services”). The same entity must always act as
servicer in the performance of the Allocation Services as to the First
Additional Transition Bonds, the Second Additional Transition Bonds and the
System Restoration Bonds.

 

(i)           In the event that the First Additional Transition Bond Trustee,
the Second Additional Transition Bond Trustee or the System Restoration Bond
Trustee (each, so long as the related Transition Bonds are outstanding, a
“Trustee” and each such Trustee collectively, the “Trustees”) is entitled to and
desires to exercise its right, pursuant to the applicable Servicing Agreement
and Indenture, to replace the Company as First Additional TC Servicer, Second
Additional TC Servicer or System Restoration Servicer, respectively, in its role
as the provider of the Allocations Services in accordance with the applicable
Servicing Agreements, the party desiring to exercise such right shall promptly
give written notice to the others (the “Servicer Notice”) in accordance with the
notice provisions of this Agreement and consult with the others with respect to
the Person who would replace the Company in such capacities. Any successor in
such capacities shall be agreed to by all of the Trustees within ten (10)
Business Days of the date of the Servicer Notice, and such successor shall be
subject to satisfaction of the Rating Agency Condition (as defined below) and
the provisions of the applicable Servicing Agreements. “Business Day” means any
day other than a Saturday, Sunday, or any holiday for national banks or any New
York banking corporation in Dallas, Texas, Columbus, Ohio, Chicago, Illinois or
New York, New York. The Person named as replacement First Additional TC
Servicer, Second Additional TC Servicer and System Restoration Servicer in
accordance with this Section 4 is referred to herein as the “Replacement
Servicer.” The parties hereto agree that the Replacement Servicer for the First
Additional TC Servicer, the Second Additional TC Servicer and the System
Restoration Servicer shall be the same entity. In the event that the Trustees
cannot agree on a Replacement Servicer, any Trustee may petition a court of
competent jurisdiction for the appointment of a Replacement Servicer.

6

--------------------------------------------------------------------------------

(ii)          In the event that any Trustee is entitled to and desires to
exercise its right, pursuant to the applicable Servicing Agreement and
Indenture, to redirect collections relating to the First Additional Transition
Property, the Second Additional Transition Property or the System Restoration
Transition Property (as the case may be), any redirection of funds shall be
either to (A) the Replacement Servicer or (B) if there is no Replacement
Servicer, to the Designated Account with the Designated Account Holder chosen in
accordance with the provisions set forth below, on or before the tenth Business
Day occurring from and after the date of the Servicer Notice. The “Designated
Account” shall be an “Eligible Account” (as defined in the Indentures) and shall
be held for the benefit of the Trustees as their respective interests may
appear. The “Designated Account Holder” shall be a financial institution
selected by all of the Trustees, subject to satisfaction of the Rating Agency
Condition, to hold and allocate amounts in the Designated Account for the
benefit of the Trustees as their respective interests may appear as provided in
subsection (b) of this Section 4. In the event that the Trustees are unable to
agree upon a Designated Account Holder on or before the tenth Business Day
occurring from and after the date of the Servicer Notice, a Designated Account
Holder shall be promptly selected by the Trustee representing the holders of a
majority (by amount) of the aggregate Transition Bonds outstanding, subject to
the satisfaction of the Rating Agency Condition. None of the Trustees shall have
any liability for such selection of the Designated Account Holder. The parties
hereto agree that the Designated Account Holder for the Trustees shall be the
same entity.

 

(b)          Upon exercise by any Trustee of its rights to redirect collections
relating to the First Additional Transition Property, the Second Additional
Transition Property or the System Restoration Transition Property, respectively,
and in the absence of a Replacement Servicer, the parties agree that all
collections relating to the First Additional Transition Property, the Second
Additional Transition Property and the System Restoration Transition Property
shall be deposited into the Designated Account and that the Designated Account
Holder shall be instructed by the Company to (i) allocate and remit funds from
such Designated Account, in amounts calculated by the Company, with such
calculations provided to the Designated Account Holder on a daily basis to the
persons entitled thereto, being the First Additional Transition Bond Trustee in
the case of all collections relating to the First Additional Transition
Property, the Second Additional Transition Bond Trustee in the case of all
collections relating to the Second Additional Transition Property, and the
System Restoration Bond Trustee in the case of all collections relating to the
System Restoration Transition Property (in each instance, other than in the case
of late payment penalties, which shall be allocated and remitted as described in
Section 2(b)); and (ii) maintain records as to the amounts deposited into such
account, the amounts remitted therefrom and the allocation as provided in clause
(i). The fees and expenses of the Designated Account Holder shall be payable
from amounts deposited into the Designated Account on a pro rata basis as
between collections relating to the First Additional Transition Property, the
Second Additional Transition Property and the System Restoration Transition
Property; provided, that that portion of those fees and expenses allocable to
collections relating to the First Additional Transition Property, the Second
Additional Transition Property and the System Restoration Transition Property
shall be payable by the First Additional TC Servicer, the Second Additional TC
Servicer and the System Restoration Servicer, respectively, from the servicer
fees provided for in the First Additional Servicing Agreement, the Second
Additional Servicing Agreement and the System Restoration Servicing Agreement,
respectively. The First Additional Secured Parties, the Second Additional
Secured Parties and the System Restoration Secured Parties shall each have the
right to require an accounting from time to time of collections, allocations and
remittances by the Designated Account Holder.

7

--------------------------------------------------------------------------------

(c)          Anything in this Agreement to the contrary notwithstanding, any
action taken by any of the Trustees to appoint a Replacement Servicer or
designate the Designated Account pursuant to this Section 4 shall be subject to
the Rating Agency Condition and the consent, if required by law or any Financing
Order (as defined in the Indentures), of the Public Utility Commission of Texas.
For the purposes of this Agreement, the “Rating Agency Condition” means, with
respect to any such action, satisfaction of the “Rating Agency Condition” as
such term is defined in each Indenture under which any Transition Bonds remain
outstanding at the time of such action. The parties hereto acknowledge and agree
that the approval or the consent of the rating agencies which is required in
order to satisfy the Rating Agency Condition is not subject to any standard of
commercial reasonableness, and the parties are bound to satisfy this condition
whether or not the rating agencies are unreasonable or arbitrary.

 

SECTION 5. Sharing of Information. The parties hereto agree to cooperate with
each other and make available to each other or any Replacement Servicer any and
all records and other data relevant to the First Additional Transition Property,
the Second Additional Transition Property and the System Restoration Transition
Property which it may have in its possession or may from time to time receive
from the Company or any predecessor First Additional TC Servicer, the Second
Additional TC Servicer or the System Restoration Servicer or any successor
thereto, including, without limitation, any and all computer programs, data
files, documents, instruments, files and records and any receptacles and
cabinets containing the same. The Company hereby consents to the release of
information regarding the Company pursuant to this Section 5.

 

SECTION 6. No Joint Venture. Nothing herein contained shall be deemed as
effecting a joint venture among any of the First Additional Secured Parties, the
Second Additional Secured Parties, the System Restoration Secured Parties and
the Company.

 

SECTION 7. Method of Adjustment and Allocation. Each of the parties hereto
acknowledges that: (i) the First Additional TC Servicer will adjust, calculate
and allocate payments of First Additional Transition Charges in accordance with
Section 4.01 of the First Additional Servicing Agreement and Section 6 of Annex
1 of the First Additional Servicing Agreement in the form attached thereto, (ii)
the Second Additional TC Servicer will adjust, calculate and allocate payments
of Second Additional Transition Charges in accordance with Section 4.01 of the
Second Additional Servicing Agreement and Section 6 of Annex 1 of the Second
Additional Servicing Agreement in the form attached thereto, and (iii) the
System Restoration Servicer will adjust, calculate and allocate payments of
System Restoration Charges in accordance with Section 4.01 of the System
Restoration Servicing Agreement and Section 6 of Annex 1 of the System
Restoration Servicing Agreement in the form attached thereto. Each of the
parties hereto hereby acknowledges that (a) none of the First Additional Secured
Parties shall be deemed or required under this Agreement to have any knowledge
of or responsibility for the terms of the Second Additional Servicing Agreement
and Annex 1 thereto, or the System Restoration Servicing Agreement and Annex 1
thereto, or any adjustment, calculation and allocation thereunder, (b) none of
the Second Additional Secured Parties shall be deemed or required under this
Agreement to have any knowledge of or responsibility for the terms of the First
Additional Servicing Agreement and Annex 1 thereto, or the System Restoration
Servicing Agreement and Annex 1 thereto, or any adjustment, calculation and
allocation thereunder, and (c) none of the System Restoration Secured Parties
shall be deemed or required under this Agreement to have any knowledge of or
responsibility for the terms of the First Additional Servicing Agreement and
Annex 1 thereto, or the Second Additional Servicing Agreement and Annex 1
thereto, or any adjustment, calculation and allocation thereunder. Accordingly,
(A) each of the First Additional Secured Parties may, solely for the purpose of
this Agreement, conclusively rely on the accuracy of the calculations of the
Second Additional TC Servicer in making adjustments, calculations and
allocations under the Second Additional Servicing Agreement and Annex I thereto
and of the System Restoration Servicer in making adjustments, calculations and
allocations under the System Restoration Servicing Agreement and Annex I
thereto, (B) each of the Second Additional Secured Parties may, solely for the
purpose of this Agreement, conclusively rely on the accuracy of the calculations
of the First Additional TC Servicer in making adjustments, calculations and
allocations under the First Additional Servicing Agreement and Annex I thereto
and of the System Restoration Servicer in making adjustments, calculations and
allocations under the System Restoration Servicing Agreement and Annex I
thereto, and (C) each of the System Restoration Secured Parties may, solely for
the purpose of this Agreement, conclusively rely on the accuracy of the
calculations of the First Additional TC Servicer in making adjustments,
calculations and allocations under the First Additional Servicing Agreement and
Annex I thereto and of the Second Additional TC Servicer in making adjustments,
calculations and allocations under the Second Additional Servicing Agreement and
Annex I thereto. Such acknowledgement shall not relieve the Company of any of
its obligations to make payments in accordance with the terms of the First
Additional Sale Agreement, the Second Additional Sale Agreement and the System
Restoration Sale Agreement, nor shall it relieve the First Additional TC
Servicer, the Second Additional TC Servicer or the System Restoration Servicer
of their obligations under the First Additional Servicing Agreement, the Second
Additional Servicing Agreement and the System Restoration Servicing Agreement,
respectively.

8

--------------------------------------------------------------------------------

SECTION 8. Termination. This Agreement shall terminate at such time as there is
only one outstanding issue of Transition Bonds, except that the understandings
and acknowledgements contained in Sections 1, 2 and 3 shall survive the
termination of this Agreement. Upon the payment in full of the First Additional
Transition Bonds this Agreement shall terminate as to the First Additional
Parties but the parties hereto agree that the provisions hereof shall remain
enforceable as among the Second Additional Parties and the System Restoration
Parties.

 

SECTION 9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS, 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 10. Further Assurances. Each of the parties hereto agrees to execute any
and all agreements, instruments, financing statements, releases and any and all
other documents reasonably requested by any of the other parties hereto in order
to effectuate the intent of this Agreement. In each case where a release is to
be given pursuant to this Agreement, the term release shall include any
documents or instruments necessary to effect a release, as contemplated by this
Agreement. All releases, subordinations and other instruments submitted to the
executing party are to be prepared at no expense to such party. Notwithstanding
anything herein to the contrary, none of the First Additional Transition Bond
Trustee, the Second Additional Transition Bond Trustee nor the System
Restoration Bond Trustee shall be required to execute any such agreements,
instruments, releases or other documents unless directed to do so by an “Issuer
Order,” as such term is defined in the applicable Indenture.

9

--------------------------------------------------------------------------------

SECTION 11. Limitation on Rights of Others. This Agreement is solely for the
benefit of the First Additional Transition Bond Issuer, the First Additional
Transition Bond Trustee for the benefit of itself, the Second Additional
Transition Bond Issuer, the Second Additional Transition Bond Trustee for the
benefit of itself, the System Restoration Bond Issuer, the System Restoration
Bond Trustee for the benefit of itself, the holders of the Transition Bonds, and
the Company, and no other person or entity shall have any rights, benefits,
priority or interest under or because of the existence of this Agreement.

 

SECTION 12. Amendments. In the event that the Company hereafter causes
transition property to be created under any financing order and acts as servicer
for the transition bonds issued pursuant to such financing order, the parties
hereto agree that this Agreement may be amended and restated (i) to add as
parties hereto the relevant issuer of such transition bonds, the indenture
trustee therefor, and the servicer of such transition property and (ii) to
reflect the rights and obligations of such parties with respect to such
transition property on terms substantially similar to the rights and obligations
of the issuers, trustees and servicers currently party hereto; provided that no
such amendment shall be effective unless (x) evidenced by written instrument
signed by the parties hereto and such additional parties and (y) the Rating
Agency Condition shall have been satisfied with respect thereto and provided,
further, that no party hereto shall be required to execute any such amended
agreement on terms which are materially more disadvantageous to it or the
Holders (as defined in the respective Indenture) than those contained herein.
None of the First Additional Transition Bond Trustee, the Second Additional
Transition Bond Trustee nor the System Restoration Bond Trustee shall be
required to execute any such amendment unless directed to do so by an “Issuer
Order,” as such term is defined in the applicable Indenture.

 

SECTION 13. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (ii) the remainder of this Agreement and the application of such
provision to other Persons, or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.

 

SECTION 14. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.

10

--------------------------------------------------------------------------------

SECTION 15. Nonpetition Covenant. Notwithstanding any prior termination of this
Agreement or any of the Indentures, each of the parties covenants that it shall
not, prior to the date which is one year and one day after payment in full of
the last of the Transition Bonds, acquiesce, petition or otherwise invoke or
cause any of the First Additional Transition Bond Issuer, the Second Additional
Transition Bond Issuer or the System Restoration Bond Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the First Additional Transition Bond Issuer, the
Second Additional Transition Bond Issuer or the System Restoration Bond Issuer
under any federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the First Additional Transition Bond Issuer, the Second
Additional Transition Bond Issuer or the System Restoration Bond Issuer, or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the First Additional Transition Bond Issuer, the Second
Additional Transition Bond Issuer or the System Restoration Bond Issuer.

 

SECTION 16. Trustees. The Bank of New York Mellon, as First Additional
Transition Bond Trustee, in acting hereunder, is entitled to all rights,
benefits, protections, immunities and indemnities accorded to it under the First
Additional Indenture. U.S. Bank National Association, as Second Additional
Transition Bond Trustee, in acting hereunder, is entitled to all rights,
benefits, protections, immunities and indemnities accorded to it under the
Second Additional Indenture. U.S. Bank National Association, as System
Restoration Bond Trustee, in acting hereunder, is entitled to all rights,
benefits, protections, immunities and indemnities accorded to it under the
System Restoration Indenture.

 

SECTION 17. Notices, Etc. Any notice provided or permitted by this Agreement to
be made upon, given or furnished to or filed with any party hereto shall be
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 the applicable party at its address set forth on Exhibit A
hereto or, as to any party, at such other address as shall be designated by such
party by written notice to the other parties hereto.

 

SECTION 18. Restatement. This Agreement amends and restates in its entirety that
certain First Amended and Restated Intercreditor Agreement dated as of March 14,
2012, by and among AEP Texas Central Company, including in its capacity as
collection agent, the Initial Parties, the First Additional Parties and the
Second Additional Parties.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

11

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized, as of the date first above
written.

 

  AEP TEXAS INC., as Company, First Additional TC Servicer, Second Additional TC
Servicer, System Restoration Servicer and as collection agent         By: /s/
Renee V. Hawkins     Name: Renee V. Hawkins     Title: Assistant Treasurer

 

  AEP TEXAS CENTRAL TRANSITION FUNDING II LLC         By: /s/ Renee V. Hawkins  
  Name: Renee V. Hawkins     Title: Assistant Treasurer

 

  AEP TEXAS CENTRAL TRANSITION FUNDING III LLC         By: /s/ Renee V. Hawkins
    Name: Renee V. Hawkins     Title: Assistant Treasurer

 

  AEP TEXAS RESTORATION FUNDING LLC         By: /s/ Renee V. Hawkins     Name:
Renee V. Hawkins     Title: Assistant Treasurer

 

  THE BANK OF NEW YORK Mellon, as First Additional Transition Bond Trustee      
  By: /s/ Leslie Morales
    Name: Leslie Morales
    Title: Vice President

 

Signature Page to 

Intercreditor Agreement

--------------------------------------------------------------------------------

  U.S. BANK NATIONAL ASSOCIATION, as Second Additional Transition Bond Trustee
and System Restoration Bond Trustee         By: /s/ Nicholas C. Xeros     Name:
Nicholas C. Xeros     Title: Assistant Vice President

   

Signature Page to 

Intercreditor Agreement

--------------------------------------------------------------------------------

EXHIBIT A

 

Notice Addresses

 

AEP Texas Inc.

1 Riverside Plaza

Columbus, Ohio 43215

Attention: Treasurer

Telephone: (614) 716-1000

Facsimile: (614) 716-2807

 

AEP Texas Central Transition Funding II LLC

539 N. Carancahua Street, Suite 1700

Corpus Christi, Texas 78401

Attention: Manager

Telephone: (361) 881-5399

Facsimile: (361) 880-6128

 

AEP Texas Central Transition Funding III LLC

539 N. Carancahua Street, Suite 1700

Corpus Christi, Texas 78401

Attention: Manager

Telephone: (361) 881-5399

Facsimile: (361) 880-6128

 

AEP Texas Restoration Funding LLC

539 N. Carancahua Street, Suite 1700

Corpus Christi, Texas 78401

Attention: Manager

Telephone: (361) 881-5399

Facsimile: (361) 880-6128

 

The Bank of New York Mellon

240 Greenwich Street, Floor 7 East

New York, New York 10286

Attention: Henry Li, Vice President

Telephone: (212) 815-5754

Facsimile: (212) 815-2493

 

U.S Bank National Association

190 South LaSalle Street, 7th Floor

MK-IL-SL7R

Chicago, Illinois 60603

Attention: Global Structured Finance – AEP SRC 2019-1

Telephone: (312) 332-7464

Email: nicholos.xeros@usbank.com; melissa.rosal@usbank.com

--------------------------------------------------------------------------------