EXECUTION COPY
SERIES SUPPLEMENT
JCP&L TRANSITION FUNDING LLC,
AS ISSUER
AND
THE BANK OF NEW YORK
AS TRUSTEE
---------------------------------------------
2002-A SERIES SUPPLEMENT
DATED AS OF JUNE 11, 2002
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2002-A SERIES SUPPLEMENT, dated as of June 11, 2002 (this "Supplement"), by
and between JCP&L TRANSITION FUNDING LLC, a Delaware limited liability company
(the "Issuer"), and The Bank of New York, a New York banking corporation (the
"Trustee"), as Trustee under the Indenture dated as of June 11, 2002, between
the Issuer and the Trustee (the "Indenture").
PRELIMINARY STATEMENT
Section 9.01 of the Indenture provides, among other things, that the Issuer
and the Trustee may at any time and from time to time enter into one or more
indentures supplemental to the Indenture for the purposes of authorizing the
issuance by the Issuer of a Series of Transition Bonds and specifying the terms
thereof. The Issuer has duly authorized the execution and delivery of this
Supplement and the creation of a Series of Transition Bonds with an initial
aggregate principal amount of $320,000,000 to be known as the Issuer's
Transition Bonds, Series 2002-A (the "Series 2002-A Transition Bonds"). All acts
and all things necessary to make the Series 2002-A Transition Bonds, when duly
executed by the Issuer and authenticated by the Trustee as provided in the
Indenture and this Supplement and issued by the Issuer, the valid, legal and
binding obligations of the Issuer and to make this Supplement a valid and
enforceable supplement to the Indenture have been done, performed and fulfilled
and the execution and delivery hereof have been in all respects duly and
lawfully authorized. The Issuer and the Trustee are executing and delivering
this Supplement in order to provide for the issuance of the Series 2002-A
Transition Bonds.
In order to secure the payment of principal of and interest on the Series
2002-A Transition Bonds issued and to be issued under the Indenture and/or any
Series Supplement, the Issuer hereby confirms the Grant to the Trustee, for the
benefit of the Holders of the Series 2002-A Transition Bonds from time to time
issued and Outstanding, of all of the Issuer's right, title and interest in, to
and under the Collateral, including, without limitation, the Bondable Transition
Property transferred by the Seller to the Issuer as of the Initial Transfer Date
pursuant to the Sale Agreement and all proceeds thereof.
The Trustee, on behalf of the Holders of the Series 2002-A Transition
Bonds, acknowledges the confirmation of such Xxxxx, accepts the trusts hereunder
in accordance with the provisions hereof and agrees to perform its duties
required in the Indenture and this Supplement.
SECTION 1. DEFINITIONS.
All terms used in this Supplement that are defined in the Indenture, either
directly or by reference therein, have the meanings assigned to them therein,
except to the extent such terms are defined or modified in this Supplement or
the context clearly requires otherwise.
SECTION 2. OTHER DEFINITIONAL PROVISIONS.
AUTHORIZED DENOMINATIONS shall mean $1,000 and integral multiples of $1,000
above that amount, provided, however, that one Transition Bond of each Class may
have a denomination of less than $1,000.
EXPECTED AMORTIZATION SCHEDULE means Schedule A to this Supplement.
EXPECTED FINAL PAYMENT DATE means, with respect to any Class of the Series
2002-A Transition Bonds, the expected final Payment Date therefor, as specified
in Section 4 of this Supplement.
FINAL MATURITY DATE means, with respect to any Class of the Series 2002-A
Transition Bonds, the final Payment Date thereof, as specified in Section 4 of
this Supplement.
INTEREST RATE has the meaning set forth in Section 4 of this Supplement.
OVERCOLLATERALIZATION AMOUNT has the meaning set forth in Section 5(d) of
this Supplement.
PAYMENT DATES has the meaning set forth in Section 5(a) of this Supplement.
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RECORD DATE shall mean, with respect to any Payment Date, the Business Day
prior to such Payment Date or, with respect to any Definitive Transition Bonds,
the last Business Day of the month preceding such Payment Date.
REQUIRED CAPITAL AMOUNT has the meaning set forth in Section 5(e) of this
Supplement.
SERIES ISSUANCE DATE has the meaning set forth in Section 3(b) of this
Supplement.
SERIES 2002-A TRANSITION BONDS has the meaning set forth in the Preliminary
Statement of this Supplement.
TRUSTEE POLICIES has the meaning set forth in Section 9 of this Supplement.
SECTION 3. DESIGNATION; SERIES ISSUANCE DATES.
(a) Designation. The Series 2002-A Transition Bonds shall be designated
generally as the Issuer's Transition Bonds, Series 2002-A, and further
denominated as Class A-1, Class A-2, Class A-3 and Class A-4.
(b) Series Issuance Date. The Series 2002-A Transition Bonds that are
authenticated and delivered by the Trustee to or upon the order of the Issuer on
June 11, 2002 (the "Series Issuance Date") shall have as their date of
authentication June 11, 2002.
SECTION 4. INITIAL PRINCIPAL AMOUNT; INTEREST RATE; EXPECTED FINAL PAYMENT
DATE; FINAL MATURITY DATES.
The Transition Bonds of each Class of the Series 2002-A Transition Bonds
shall have the aggregate initial principal amounts, bear interest at the
Interest Rates and have Expected Final Payment Dates and Final Maturity Dates as
set forth below:
Expected Final Final
Class Initial Principal Amount Interest Rate Payment Date Maturity Date
----- ------------------------ ------------- ------------ -------------
A-1 $ 91,111,000 4.19% December 5, 2007 December 5, 2009
A-2 $ 52,297,000 5.39% September 5, 2010 September 5, 2012
A-3 $ 77,075,000 5.81% December 5, 2013 December 5, 2015
A-4 $ 99,517,000 6.16% June 5, 2017 June 5, 2019
SECTION 5. PAYMENT DATES; EXPECTED AMORTIZATION SCHEDULE FOR PRINCIPAL;
INTEREST; OVERCOLLATERALIZATION AMOUNT; REQUIRED CAPITAL AMOUNT; SERIES 2002-A
CAPITAL SUBACCOUNT; NO PREMIUM.
(a) Payment Dates. The Payment Dates for each Class of the Series
2002-A Transition Bonds ("Payment Dates") are March 5, June 5, September 5 and
December 5 of each year or, if any such date is not a Business Day, the next
succeeding Business Day, commencing on March 5, 2003 and continuing until the
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earlier of repayment of such Class in full and the applicable Final Maturity
Date.
(b) Expected Amortization Schedule for Principal. Except in the case of
an optional redemption pursuant to Section 10.01 of the Indenture, unless an
Event of Default has occurred and is continuing and the unpaid principal amount
of all Series of Transition Bonds has been declared to be due and payable
together with accrued and unpaid interest thereon, on each Payment Date the
Trustee shall distribute to the Holders of the Series 2002-A Transition Bonds of
record as of the related Record Date amounts payable in respect of the Series
2002-A Transition Bonds pursuant to Section 8.02(g) of the Indenture as
principal, in accordance with the Expected Amortization Schedule.
Notwithstanding the foregoing, if one or more Classes did not receive principal
on any prior Payment Date in accordance with the Expected Amortization Schedule,
such shortfalls of principal shall be paid prior to the payment of principal
scheduled to be paid on the current Payment Date and shall be paid in the order
in which such amounts were scheduled to be paid previously pursuant to the
Expected Amortization Schedule; provided, however, that in no event shall a
principal payment pursuant to this Section 5(b) on any Class on a Payment Date
be greater than the amount that reduces the Outstanding Amount of such Class of
Series 2002-A Transition Bonds to the amount specified in the Expected
Amortization Schedule for such Class and Payment Date.
(c) Interest. On each Payment Date after the initial Payment Date,
interest will be payable on the Series 2002-A Transition Bonds in an amount
equal to the number of days (determined on the basis of a 360-day year of twelve
30-day months) from and including the preceding Payment Date to, but excluding,
the current Payment Date, divided by 360, times in each case the product of
(i) the applicable Interest Rate times
(ii) the Outstanding Amount of the related Class of Transition
Bonds as of the close of business on the preceding Payment Date after giving
effect to all payments of principal made to the Holders of the related Class of
Series 2002-A Transition Bonds on such preceding Payment Date.
With respect to the initial Payment Date, interest will be payable in an
amount equal to the number of days (determined on the basis of a 360-day year of
twelve 30-day months) from and including the Series Issuance Date to, but
excluding, the initial Payment Date, divided by 360, times the product of:
(1) the applicable Interest Rate for such Class times
(2) the original principal amount of such Class of Transition Bonds as
of the Series Issuance Date.
(d) Overcollateralization Amount. The Overcollateralization Amount for
the Series 2002-A Transition Bonds (the "Overcollateralization Amount") shall be
as set forth in Schedule B hereto.
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(e) Required Capital Amount; Series 2002-A Capital Subaccount. The
Required Capital Amount for the Series 2002-A Transition Bonds (the "Required
Capital Amount") shall be $1,600,000.
(f) No Premium. No premium will be payable in connection with the early
redemption of the Series 2002-A Transition Bonds.
SECTION 6. AUTHORIZED DENOMINATIONS. The Series 2002-A Transition Bonds
shall be issuable in the Authorized Denominations.
SECTION 7. REDEMPTION.
(a) Mandatory Redemption. The Series 2002-A Transition Bonds shall not
be subject to mandatory redemption.
(b) Optional Redemption. The Issuer may redeem the Transition Bonds of
Series 2002-A, at its option, on any Payment Date in accordance with Section
10.01 of the Indenture if after giving effect to payments that would otherwise
be made on such Payment Date, the Outstanding Amount of such Series has been
reduced to less than five percent of the initial principal balance of such
Series.
SECTION 8. CREDIT ENHANCEMENT. No credit enhancement (other than the
Overcollateralization Amount, the Required Capital Amount and any adjustments to
the Transition Bond Charge approved by the BPU as contemplated in the Servicing
Agreement) is provided for the Series 2002-A Transition Bonds.
SECTION 9. TRUSTEE POLICIES. If at any time withdrawals from the Series
2002-A Capital Subaccount exceed in the aggregate $640,000, the Issuer shall
within thirty days, deliver to the Trustee and keep in force until the Indenture
ceases to be of any further effect, one or more policies of insurance, surety
bonds and/or letters of credit in the aggregate face amount of $960,000, which
policies, surety bonds and/or letters of credit are sufficient to provide
coverage for, and to ensure to the Trustee the payment of, all amounts due and
owing to the Trustee under the Indenture (collectively, the "Trustee Policies"),
subject to reasonable commercial availability and provided that the premiums or
fees for the Trustee Policies shall not exceed $6,000 during any calendar year.
The terms and conditions of the Trustee Policies shall be in form and substance
reasonably acceptable to the Trustee and shall be issued by one or more carriers
or issuers reasonably acceptable to the Trustee.
SECTION 10. DELIVERY OF THE SERIES 2002-A TRANSITION BONDS; FORM OF THE
SERIES 2002-A TRANSITION BONDS. The Trustee shall deliver the Series 2002-A
Transition Bonds to the Issuer when authenticated in accordance with Section
2.02 of the Indenture. The Series 2002-A Transition Bonds of Class A-1, Class
A-2, Class A-3, and Class A-4 shall be in the form of Exhibit A hereto.
SECTION 11. ADMINISTRATION FEE. The Administrator shall be paid in
accordance with Section 8.02(g)(i) of the Indenture by the Issuer a fee as
determined in accordance with the Administration Agreement on each Payment Date
with respect to the Series 2002-A Transition Bonds.
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SECTION 12. SECURITY INTERESTS. The Issuer hereby makes the following
representations and warranties:
(a) the Indenture creates a valid and continuing security interest (as
defined in the New Jersey UCC) in the Transferred Bondable Transition Property
in favor of the Trustee, which security interest is prior to all other liens,
and is enforceable as such against creditors of and purchasers from the Issuer;
(b) the Transferred Bondable Transition Property constitutes an
"account" within the meaning of the New Jersey UCC;
(c) the Issuer owns and has good and marketable title to the
Transferred Bondable Transition Property free and clear of any Lien;
(d) the Issuer has caused or will have caused, within ten days of the
date hereof, the filing of all appropriate financing statements in the proper
filing office in the appropriate jurisdiction under applicable law in order to
perfect the security interest in the Transferred Bondable Transition Property
granted to the Trustee hereunder; and
(e) other than the security interest granted to the Trustee pursuant to
this Indenture, the Issuer has not pledged, assigned, sold, granted a security
interest in or otherwise conveyed any of the Transferred Bondable Transition
Property; the Issuer has not authorized the filing of and is not aware of any
financing statements against the Issuer that include a description of the
collateral covering the Transferred Bondable Transition Property other than any
financing statement relating to the security interest granted to the Trustee
hereunder or that has been terminated; and the Issuer is not aware of any
judgment or tax lien filing against the Issuer.
SECTION 13. CONFIRMATION OF INDENTURE. As supplemented by this Supplement,
the Indenture is in all respects ratified and confirmed and the Indenture, as so
supplemented by this Supplement, shall be read, taken and construed as one and
the same instrument.
SECTION 14. COUNTERPARTS. This Supplement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.
SECTION 15. GOVERNING LAW. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT REFERENCE TO ITS CONFLICT OF
LAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Supplement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
JCP&L TRANSITION FUNDING LLC,
as Issuer
By:
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Name: Xxxxxxx X. Xxxxx
Title: Manager, Senior Vice President
and Chief Financial Officer
THE BANK OF NEW YORK,
not in its individual capacity but solely as Trustee
on behalf of the Transition Bondholders,
By:
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Name: Xxxxxxxxx Xxxxx
Title: Assistant Vice President
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SCHEDULE A
Expected Amortization Schedule
Scheduled Amortization Requirement
(All amounts are in United States Dollars)
CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4
Payment Date BALANCE BALANCE BALANCE BALANCE
------------ ----------------------------------------------------------------------------
Closing Date $ 91,111,000 $ 52,297,000 $ 77,075,000 $ 99,517,000
3/5/03 81,020,670 52,297,000 77,075,000 99,517,000
6/5/03 76,085,370 52,297,000 77,075,000 99,517,000
9/5/03 71,712,829 52,297,000 77,075,000 99,517,000
12/5/03 67,311,898 52,297,000 77,075,000 99,517,000
3/5/04 64,036,448 52,297,000 77,075,000 99,517,000
6/5/04 60,559,357 52,297,000 77,075,000 99,517,000
9/5/04 56,445,090 52,297,000 77,075,000 99,517,000
12/5/04 51,723,005 52,297,000 77,075,000 99,517,000
3/5/05 48,155,059 52,297,000 77,075,000 99,517,000
6/5/05 44,381,128 52,297,000 77,075,000 99,517,000
9/5/05 40,060,086 52,297,000 77,075,000 99,517,000
12/5/05 35,172,118 52,297,000 77,075,000 99,517,000
3/5/06 31,444,442 52,297,000 77,075,000 99,517,000
6/5/06 27,513,385 52,297,000 77,075,000 99,517,000
9/5/06 23,015,488 52,297,000 77,075,000 99,517,000
12/5/06 17,941,438 52,297,000 77,075,000 99,517,000
3/5/07 14,036,302 52,297,000 77,075,000 99,517,000
6/5/07 9,927,568 52,297,000 77,075,000 99,517,000
9/5/07 5,242,481 52,297,000 77,075,000 99,517,000
12/5/07 - 52,273,041 77,075,000 99,517,000
3/5/08 - 48,182,907 77,075,000 99,517,000
6/5/08 - 43,877,640 77,075,000 99,517,000
9/5/08 - 38,974,557 77,075,000 99,517,000
12/5/08 - 33,469,193 77,075,000 99,517,000
3/5/09 - 29,127,452 77,075,000 99,517,000
6/5/09 - 24,568,682 77,075,000 99,517,000
9/5/09 - 19,402,605 77,075,000 99,517,000
12/5/09 - 13,629,341 77,075,000 99,517,000
3/5/10 - 9,024,534 77,075,000 99,517,000
6/5/10 - 4,197,574 77,075,000 99,517,000
9/5/10 - - 75,829,178 99,517,000
12/5/10 - - 69,771,653 99,517,000
3/5/11 - - 64,878,949 99,517,000
6/5/11 - - 59,758,930 99,517,000
9/5/11 - - 54,007,195 99,517,000
12/5/11 - - 47,626,619 99,517,000
3/5/12 - - 42,415,448 99,517,000
6/5/12 - - 36,972,305 99,517,000
9/5/12 - - 30,891,365 99,517,000
12/5/12 - - 24,174,264 99,517,000
3/5/13 - - 18,622,474 99,517,000
6/5/13 - - 12,832,708 99,517,000
9/5/13 - - 6,400,074 99,517,000
12/5/13 - - - 98,841,235
3/5/14 - - - 92,928,140
6/5/14 - - - 86,770,250
9/5/14 - - - 79,956,722
12/5/14 - - - 72,485,803
3/5/15 - - - 66,166,756
6/5/15 - - - 59,595,908
9/5/15 - - - 52,362,850
12/5/15 - - - 44,464,078
3/5/16 - - - 37,713,654
6/5/16 - - - 30,708,424
9/5/16 - - - 23,032,290
12/5/16 - - - 14,681,081
3/5/17 - - - 7,471,877
6/5/17 - - - -
SCHEDULE B
Schedule of Overcollateralization Amount
Required Required
Over- Over-
collateralization collateralization
Payment Date Level Payment Date Level
------------ ----------------- ------------ -----------------
3/5/03 $ 80,000 6/5/10 $ 853,333
6/5/03 $106,667 9/5/10 $ 880,000
9/5/03 $133,333 12/5/10 $ 906,667
12/5/03 $160,000 3/5/11 $ 933,333
3/5/04 $186,667 6/5/11 $ 960,000
6/5/04 $213,333 9/5/11 $ 986,667
9/5/04 $240,000 12/5/11 $1,013,333
12/5/04 $266,667 3/5/12 $1,040,000
3/5/05 $293,333 6/5/12 $1,066,667
6/5/05 $320,000 9/5/12 $1,093,333
9/5/05 $346,667 12/5/12 $1,120,000
12/5/05 $373,333 3/5/13 $1,146,667
3/5/06 $400,000 6/5/13 $1,173,333
6/5/06 $426,667 9/5/13 $1,200,000
9/5/06 $453,333 12/5/13 $1,226,667
12/5/06 $480,000 3/5/14 $1,253,333
3/5/07 $506,667 6/5/14 $1,280,000
6/5/07 $533,333 9/5/14 $1,306,667
9/5/07 $560,000 12/5/14 $1,333,333
12/5/07 $586,667 3/5/15 $1,360,000
3/5/08 $613,333 6/5/15 $1,386,667
6/5/08 $640,000 9/5/15 $1,413,333
9/5/08 $666,667 12/5/15 $1,440,000
12/5/08 $693,333 3/5/16 $1,466,667
3/5/09 $720,000 6/5/16 $1,493,333
6/5/09 $746,667 9/5/16 $1,520,000
9/5/09 $773,333 12/5/16 $1,546,667
12/5/09 $800,000 3/5/17 $1,573,333
3/5/10 $826,667 6/5/17 $1,600,000
EXHIBIT A TO 2002-A SERIES SUPPLEMENT
Form of Transition Bond
REGISTERED $_____________
No. R-1 CUSIP NO. ____
SEE REVERSE FOR CERTAIN DEFINITIONS AND OTHER PROVISIONS
THE PRINCIPAL OF THIS CLASS A-[ ] TRANSITION BOND WILL BE PAID IN INSTALLMENTS
AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS
A-[ ] TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF. THE HOLDER OF THIS CLASS A-[ ] TRANSITION BOND HEREBY COVENANTS AND
AGREES THAT PRIOR TO THE DATE WHICH IS ONE (1) YEAR AND ONE (1) DAY AFTER THE
PAYMENT IN FULL OF THE CLASS A-[ ] TRANSITION BONDS, IT WILL NOT INSTITUTE
AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST, THE ISSUER ANY
BANKRUPTCY, REORGANIZATION, MORATORIUM, ARRANGEMENT, INSOLVENCY OR LIQUIDATION
PROCEEDINGS OR OTHER SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED STATES OR
ANY STATE OF THE UNITED STATES. TRANSFERS OF THIS GLOBAL TRANSITION BOND SHALL
BE LIMITED TO TRANSFERS IN THE CLEARING AGENCY OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL TRANSITION BOND
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE INDENTURE.
JCP&L TRANSITION FUNDING LLC
TRANSITION BONDS, SERIES 2002-A, CLASS A-[ ].
Original Principal Expected Final Final
Interest Rate Amount Payment Date Maturity Date
JCP&L Transition Funding LLC, a limited liability company formed and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to the Registered Holder
hereof, or registered assigns, the Original Principal Amount shown above in
quarterly installments on the Payment Dates (as defined below) and in the
amounts determined as specified on the reverse hereof or, if less, the amounts
determined pursuant to Section 8.02(g) of the Indenture, in each year,
commencing on March 5, 2003 and ending on or before the Final Maturity Date, to
pay the entire unpaid principal hereof on the Final Maturity Date and to pay
interest, at the Interest Rate shown above at a fixed rate, on each ________,
_______, ____________ and ___________, and if any such day is not a Business
Day, the next succeeding Business Day, commencing on ____________, 20__ and
continuing until the earlier of the payment of the principal hereof and the
Final Maturity Date (each a "Payment Date"), on the principal amount of this
Class A-[ ] Transition Bond outstanding from time to time. Interest will be
computed (i) for the first Payment Date, on the basis of the number of days
(determined on the basis of a 360-day year of twelve 30-day months) from and
including the Series Issuance Date, to but excluding the initial Payment Date,
divided by 360, multiplied by the product of the Interest Rate shown above times
the Original Principal Amount of the Class A-[ ] Transition Bonds, and (ii) for
each succeeding Payment Date, the number of days (determined on the basis of a
360-day year of twelve 30-day months) from and including the preceding Payment
Date to, but excluding, the current Payment Date, divided by 360, multiplied by
the product of the Interest Rate shown above times the Outstanding Amount of the
Class A-[ ] Transition Bonds as of the close of business on the preceding
Payment Date after giving effect to all payments of principal made to the
Holders of the Class A-[ ] Transition Bonds on such preceding Payment Date. Such
principal of and interest on this Class A-[ ] Transition Bond shall be paid in
the manner specified on the reverse hereof.
The principal of and interest on this Class A-[ ] Transition Bond are
payable in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts. All payments
made by the Issuer with respect to this Class A-[ ] Transition Bond shall be
applied first to interest due and payable on this Class A-[ ] Transition Bond as
provided above and then to the unpaid principal of this Class A-[ ] Transition
Bond, all in the manner set forth in Section 8.02(g) of the Indenture.
Reference is made to the further provisions of this Class A-[ ] Transition
Bond set forth on the reverse hereof, which shall have the same effect as though
fully set forth on the face of this Class A-[ ] Transition Bond.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Class A-[ ]
Transition Bond shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an authorized Manager of the Issuer.
Dated: [ ], 2002
JCP&L TRANSITION FUNDING LLC
By:
-----------------------------------------------
Name:
Title: Manager
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: [ ], 2002
This is one of the Class A-[ ] Transition Bonds of the Series 2002-A
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK, not in its
individual capacity but solely as Trustee on
behalf of the Transition Bondholders,
By:
-----------------------------------
Name:
Title:
REVERSE OF TRANSITION BOND
This Class A-[ ] Transition Bond is one of a duly authorized issue of
Transition Bonds of the Issuer, designated as its Transition Bonds (herein
called the "Transition Bonds"), issued and to be issued in one or more Series,
which Series are issuable in one or more Classes. The Series 2002-A Transition
Bonds consist of four Classes, including the Class A-[ ] Transition Bonds
(herein called the "Class A-[ ] Transition Bonds"). The Class A-[ ] Transition
Bonds have been issued under an indenture dated as of June 11, 2002, and a
series supplement thereto dated as of June 11, 2002 (such series supplement, as
supplemented or amended, the "Series Supplement" and, collectively with such
indenture, as supplemented or amended, the "Indenture"), each between the Issuer
and The Bank of New York, as Trustee (the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the Collateral
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the Holders
of the Transition Bonds and the terms and conditions under which additional
Transition Bonds may be issued. All capitalized terms used in this Class A-[ ]
Transition Bond that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in the Indenture.
The Class A-[ ] Transition Bonds, the other Classes of Series 2002-A
Transition Bonds and any other Series of Transition Bonds issued by the Issuer
are and will be equally and ratably secured by the Collateral pledged as
security therefor as provided in the Indenture.
The principal of this Class A-[ ] Transition Bond shall be payable on each
Payment Date only to the extent that amounts in the Collection Account are
available therefor, and only until the outstanding principal balance of the
Class A-[ ] Transition Bonds on such Payment Date (after giving effect to all
payments of principal, if any, made on such Payment Date) has been reduced to
the principal balance specified in the Expected Amortization Schedule which is
attached to the Series Supplement as Schedule A, unless payable earlier either
because
(i) an Event of Default has occurred and is continuing and the Trustee
or the Holders of Transition Bonds representing not less than a majority of the
Outstanding Amount of the Transition Bonds of all Series have declared the
Transition Bonds to be immediately due and payable in accordance with Section
5.02 of the Indenture or
(ii) the Issuer, at its option, has called for the redemption of the
Series 2002-A Transition Bonds in whole pursuant to Section 7(b) of the Series
Supplement and Section 10.01 of the Indenture.
However, actual principal payments may be made in lesser than expected
amounts and at later than expected times as determined pursuant to Section
8.02(g) of the Indenture. The entire unpaid principal amount of this Class A-[ ]
Transition Bond shall be due and payable on the earlier of the Final Maturity
Date hereof and the Redemption Date, if any. Notwithstanding the foregoing, the
entire unpaid principal amount of the Transition Bonds shall be due and payable,
if not then previously paid, on the date on which an Event of Default shall have
occurred and be continuing and the Trustee or the Holders of the Transition
Bonds of all Series representing not less than a majority of the Outstanding
Amount of the Transition Bonds have declared the Transition Bonds to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Class A-[ ] Transition Bonds shall be
made pro rata to the Holders of the Class A-[ ] Transition Bonds entitled
thereto based on the respective principal amounts of the Class A-[ ] Transition
Bonds held by them.
Payments of interest on this Class A-[ ] Transition Bond due and payable on
each Payment Date, together with the installment of principal payable on this
Class A-[ ] Transition Bond on such Payment Date, shall be made by check mailed
first-class, postage prepaid, to the Person whose name appears as the Registered
Holder of this Class A-[ ] Transition Bond (or one or more predecessors of such
Transition Bond) in the Transition Bond Register as of the close of business on
the Record Date or in such other manner as may be provided in the Series
Supplement, except that with respect to Class A-[ ] Transition Bonds registered
on the Record Date in the name of a Clearing Agency, payments will be made by
wire transfer in immediately available funds to the account designated by such
Clearing Agency and except for the final installment of principal payable with
respect to this Class A-[ ] Transition Bond on a Payment Date which shall be
payable as provided below. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears in the Transition Bond
Register as of the applicable Record Date without requiring that this Class A-[
] Transition Bond be submitted for notation of payment. Any reduction in the
principal amount of this Class A-[ ] Transition Bond (or any one or more
predecessors to such Transition Bond) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Class A-[ ]
Transition Bond and of any Class A-[ ] Transition Bond issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Class A-[ ] Transition Bond on a Payment Date, then the Trustee, in the
name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the second preceding Record Date to such Payment
Date by notice mailed no later than five days prior to such final Payment Date
and shall specify that such final installment will be payable to the Registered
Holder hereof as of the Record Date immediately preceding such final Payment
Date and only upon presentation and surrender of this Class A-[ ] Transition
Bond and shall specify the place where this Class A-[ ] Transition Bond may be
presented and surrendered for payment of such installment.
The Issuer shall pay interest on overdue installments of interest on this
Class A-[ ] Transition Bond at the Interest Rate for Class A-[ ] Transition
Bonds to the extent lawful.
As provided in the Indenture, the Class A-[ ] Transition Bonds may be
redeemed, in whole, but not in part, in certain circumstances as provided in
Section 7(b) of the Series Supplement and Section 10.01 of the Indenture.
This Class A-[ ] Transition Bond is a Transition Bond as such term is
defined in the Competition Act. Principal and interest due and payable on this
Transition Bond are payable from and secured primarily by bondable transition
property authorized by a bondable stranded cost rate order issued by the BPU
pursuant to the Competition Act. Bondable transition property includes the
irrevocable right to impose and collect certain non-bypassable charges (defined
in the Competition Act as "transition bond charges") to be included in electric
2
utility bills of all electric service retail customers of Jersey Central Power &
Light Company, a New Jersey electric utility.
The Competition Act provides that:
"The State of New Jersey does hereby pledge and agree with the holders of
any transition bonds issued under the authority of this act, with the pledgee,
owner or assignee of bondable transition property, with any financing entity
which has issued transition bonds with respect to which a bondable stranded
costs rate order has been issued and with any person who may enter into
agreements with an electric public utility or an assignee or pledgee thereof or
a financing entity pursuant to this act, that the State will not limit, alter or
impair any bondable transition property or other rights vested in an electric
public utility or an assignee or pledgee thereof or a financing entity or vested
in the holders of any transition bonds pursuant to a bondable stranded costs
rate order until such transition bonds, together with the interest and
acquisition or redemption premium, if any, thereon, are fully paid and
discharged or until such agreements are fully performed on the part of the
electric public utility, any assignee or pledgee thereof or the financing entity
or in any way limit, alter, impair or reduce the value or amount of the bondable
transition property approved by a bondable stranded costs rate order . . . ."
The issuance of this Class A-[ ]Transition Bond under the Competition Act
does not, directly, indirectly or contingently, obligate the State of New Jersey
or any political subdivision thereof to levy or pledge any form of taxation
therefor or to make an appropriation for its payment. This Class A-[ ]
Transition Bond will be payable solely from Bondable Transition Property and
such other proceeds or property as may be pledged therefor.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Class A-[ ] Transition Bond may be registered in
the Transition Bond Register upon surrender of this Class A-[ ] Transition Bond
for registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
Holder hereof or his attorney duly authorized in writing, with such signature
guaranteed by an Eligible Guarantor Institution, and thereupon one or more new
Class A-[ ] Transition Bonds of any Authorized Denominations and in the same
aggregate initial principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Class A-[ ] Transition Bond, but the transferor may
be required to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange.
Prior to the due presentment for registration of transfer of this Class A-[
] Transition Bond, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Class A-[ ] Transition Bond is
registered (as of the day of determination) as the owner hereof for the purpose
of receiving payments of principal of and interest on this Class A-[ ]
Transition Bond and for all other purposes whatsoever, whether or not this Class
A-[ ] Transition Bond may be overdue, and neither the Issuer, the Trustee nor
any such agent shall be affected by notice to the contrary.
3
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Transition Bonds under the Indenture
at any time by the Issuer with the consent of the Holders of Transition Bonds
representing a majority of the Outstanding Amount of all Transition Bonds at the
time Outstanding of each Series or Class to be affected. The Indenture also
contains provisions permitting the Holders of Transition Bonds representing
specified percentages of the Outstanding Amount of the Transition Bonds of all
Series, on behalf of the Holders of all the Transition Bonds, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Class A-[ ] Transition Bond (or any one of more
predecessors of such transition bonds) shall be conclusive and binding upon such
Holder and upon all future Holders of this Class A-[ ] Transition Bond and of
any Class A-[ ] Transition Bond issued upon the registration of transfer hereof
or in exchange hereof or in lieu hereof whether or not notation of such consent
or waiver is made upon this Class A-[ ] Transition Bond. The Indenture also
permits the Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Transition Bonds issued
thereunder.
The term "Issuer" as used in this Class A-[ ] Transition Bond includes any
successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Trustee and the Holders of
Transition Bonds under the Indenture.
The Class A-[ ] Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Series Supplement,
subject to certain limitations therein set forth.
This Class A-[ ] Transition Bond and the Indenture shall be construed in
accordance with the laws of the State of New Jersey, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Class A-[ ]
Transition Bond or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Class A-[ ] Transition Bond at the times and rate and in the
currency herein prescribed.
4
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
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(Name and Address of Assignee)
the within Class A-[ ] Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
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(Name and Address of Appointee)
attorney, to transfer said Class A-[ ] Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
*By: *By:
-------------------------------- --------------------------------
Name Name
*NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Class A-[ ] Transition
Bond in every particular, without alteration, enlargement or any change
whatsoever.
