EXHIBIT 10.2
SERVICING AGREEMENT
BONDABLE TRANSITION PROPERTY SERVICING AGREEMENT
between
PSE&G TRANSITION FUNDING LLC
Issuer
and
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
Servicer
Dated as of January 31, 2001
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions
SECTION 1.01 Definitions....................................................1
SECTION 1.02 Other Definitional Provisions..................................1
ARTICLE II
Appointment and Authorization of Servicer
SECTION 2.01 Appointment of Servicer; Acceptance of Appointment.............2
SECTION 2.02 Authorization..................................................2
SECTION 2.03 Dominion and Control over Transferred Bondable
Transition Property............................................2
ARTICLE III
Billing Services
SECTION 3.01 Duties of Servicer.............................................3
SECTION 3.02 Collection and Allocation of the Transition Bond Charge........4
SECTION 3.03 Payment of TBC Collections.....................................5
SECTION 3.04 Servicing and Maintenance Standards............................7
SECTION 3.05 Servicer's Certificates........................................7
SECTION 3.06 Annual Statement as to Compliance..............................7
SECTION 3.07 Annual Independent Certified Public Accountants' Report........8
SECTION 3.08 Bondable Transition Property Documentation.....................8
SECTION 3.09 Computer Records; Audits of Documentation......................8
SECTION 3.10 Defending Transferred Bondable Transition Property
Against Claims.................................................9
SECTION 3.11 Opinions of Counsel............................................9
ARTICLE IV
Services Related to Transition Bond Charge Adjustments
SECTION 4.01 Transition Bond Charge Adjustments............................10
ARTICLE V
The Servicer
SECTION 5.01 Representations and Warranties of Servicer....................11
SECTION 5.02 Indemnities of Servicer; Release of Claims....................13
SECTION 5.03 Merger or Consolidation of, or Assumption of
the Obligations of, Servicer..................................14
SECTION 5.04 Assignment of Servicer's Obligations..........................16
SECTION 5.05 Limitation on Liability of Servicer and Others................16
SECTION 5.06 PSE&G Not To Resign as Servicer...............................16
SECTION 5.07 Monthly Servicing Fee.........................................16
SECTION 5.08 Servicer Expenses.............................................17
SECTION 5.09 Subservicing..................................................17
SECTION 5.10 No Servicer Advances..........................................17
SECTION 5.11 Remittances...................................................17
SECTION 5.12 Protection of Title...........................................18
ARTICLE VI
Servicer Default
SECTION 6.01 Servicer Default..............................................18
SECTION 6.02 Notice of Servicer Default....................................20
SECTION 6.03 Waiver of Past Defaults.......................................20
SECTION 6.04 Appointment of Successor......................................20
SECTION 6.05 Cooperation with Successor....................................21
ARTICLE VII
Miscellaneous Provisions
SECTION 7.01 Amendment.....................................................21
SECTION 7.02 Notices.......................................................21
SECTION 7.03 Limitations on Rights of Others...............................22
SECTION 7.04 Severability..................................................22
SECTION 7.05 Separate Counterparts.........................................22
SECTION 7.06 Headings......................................................22
SECTION 7.07 GOVERNING LAW.................................................22
SECTION 7.08 Assignment to the Trustee.....................................23
SECTION 7.09 Nonpetition Covenants.........................................23
SECTION 7.10 Termination...................................................23
ANNEX 1 TBC Adjustment Process and Reports--PSE&G Transition Funding LLC
APPENDIX A Master Definitions
EXHIBIT A Servicing Procedures
BONDABLE TRANSITION PROPERTY SERVICING AGREEMENT, dated as of
January 31, 2001, by and between PSE&G TRANSITION FUNDING LLC, a Delaware
limited liability company, as issuer (the "Issuer"), and PUBLIC SERVICE
ELECTRIC AND GAS COMPANY, a New Jersey corporation ("PSE&G"), as the
servicer of the Bondable Transition Property hereunder (together with each
successor to PSE&G (in the same capacity) pursuant to Section 5.03, 5.04 or
6.04, the "Servicer").
W I T N E S S E T H:
WHEREAS the Servicer is willing to service the Transferred
Bondable Transition Property purchased from the Seller by the Issuer; and
WHEREAS the Issuer, in connection with ownership of Transferred
Bondable Transition Property, desires to engage the Servicer to carry out
the functions described herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. Capitalized terms used but not
otherwise defined herein have the meanings assigned to them in Appendix A
hereto.
SECTION 1.02 OTHER DEFINITIONAL PROVISIONS.
(a) "Agreement" means this Bondable Transition Property
Servicing Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.
(b) Non-capitalized terms used herein which are defined in the
Competition Act, as the context requires, have the meanings assigned to
such terms in the Competition Act, but without giving effect to amendments
to the Competition Act after the date hereof which have a material adverse
effect on the Issuer or the Transition Bondholders.
(c) All terms defined in this Agreement have the defined
meanings 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,
Annex, Schedule and Exhibit references contained in this Agreement are
references to Sections, Annexes, 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.
ARTICLE II
APPOINTMENT AND AUTHORIZATION OF SERVICER
SECTION 2.01 APPOINTMENT OF SERVICER; ACCEPTANCE OF
APPOINTMENT. Subject to Section 5.06 and Article VI, the Issuer hereby
appoints the Servicer, and the Servicer hereby accepts such appointment, to
perform the Servicer's obligations pursuant to this Agreement on behalf of
and for the benefit of the Issuer in accordance with the terms of this
Agreement. This appointment and the Servicer's acceptance thereof may not
be revoked except in accordance with the express terms of this Agreement.
SECTION 2.02 AUTHORIZATION. With respect to all or any portion
of the Transferred Bondable Transition Property, the Servicer shall be, and
hereby is, authorized and empowered by the Issuer to:
(a) execute and deliver, on behalf of itself, the Issuer, or
both, as the case may be, any and all instruments, documents or notices,
and
(b) on behalf of itself, the Issuer, or both, as the case may
be, make any filing and participate in proceedings of any kind with any
governmental authorities, including with the BPU.
The Issuer shall furnish the Servicer with such documents as
have been prepared by the Servicer for execution by the Issuer, and with
such other documents as may be in the Issuer's possession, as necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. Upon the written request of the Servicer,
the Issuer shall furnish the Servicer with any powers of attorney or other
documents necessary or appropriate to enable the Servicer to carry out its
duties hereunder.
SECTION 2.03 DOMINION AND CONTROL OVER TRANSFERRED BONDABLE
TRANSITION PROPERTY. Notwithstanding any other provision herein, the
Servicer and the Issuer agree that the Issuer shall have dominion and
control over the Transferred Bondable Transition Property, and the
Servicer, in accordance with the terms hereof, is acting solely as the
servicing agent of the Issuer with respect to the Transferred Bondable
Transition Property. The Servicer hereby agrees that it shall not take any
action that is not authorized by this Agreement, the Competition Act or the
Financing Order, that is not consistent with its customary procedures and
practices, or that shall impair the rights of the Issuer with respect to
the Transferred Bondable Transition Property, in each case unless such
action is required by law or court or regulatory order.
ARTICLE III
BILLING SERVICES
SECTION 3.01 DUTIES OF SERVICER. The Servicer, as agent for the
Issuer (to the extent provided herein), shall have the following duties:
(a) Duties of Servicer Generally. The Servicer will manage,
service, administer and make collections in respect of the Transition Bond
Charge. The Servicer's duties will include:
(i) obtaining meter reads, calculating and billing the
Transition Bond Charge in accordance with the Financing Order and
collecting (from Customers and Third Parties, as applicable) all TBC
Collections;
(ii) responding to inquiries by Customers, Third Parties,
the BPU, or any federal, local or other State governmental authority
with respect to the Transition Bond Charge;
(iii) delivering bills to customers and Third Parties,
accounting for TBC Collections, investigating and resolving
delinquencies, processing and depositing collections, making periodic
remittances and furnishing periodic reports to the Issuer, the
Trustee and the Rating Agencies;
(iv) selling, as the agent for the Issuer, as its
interest may appear, defaulted or written off accounts in accordance
with the Servicer's usual and customary practices for accounts of its
own electric service customers; and
(v) taking action in connection with Transition Bond
Charge Adjustments as is set forth herein.
Anything to the contrary notwithstanding, the duties of the
Servicer set forth in this Agreement shall be qualified in their entirety
by the Competition Act, the Financing Order and any BPU Regulations, as in
effect at the time such duties are to be performed. Without limiting the
generality of this Section 3.01(a), in furtherance of the foregoing, the
Servicer hereby agrees that it shall also have, and shall comply with, the
duties and responsibilities set forth in Annex 1 which, among other things,
relate to data acquisition, usage and xxxx calculation, billing, customer
service functions, collections, payment processing and remittance.
(b) Notification of Laws and Regulations. The Servicer shall
immediately notify the Issuer, the Trustee and the Rating Agencies in
writing of any laws or BPU Regulations hereafter promulgated that have a
material adverse effect on the Servicer's ability to perform its duties
under this Agreement.
(c) Other Information. Upon the reasonable request of the
Issuer, the Trustee or any Rating Agency, the Servicer shall provide to the
Issuer, the Trustee or the Rating Agencies, as the case may be, any public
financial information in respect of the Servicer, or any material
information regarding the Transferred Bondable Transition Property to the
extent it is reasonably available to the Servicer, that may be reasonably
necessary and permitted by law for the Issuer, the Trustee or the Rating
Agencies to monitor the performance by the Servicer hereunder. In addition,
so long as any of the Transition Bonds of any Series are outstanding, the
Servicer shall provide to the Issuer and to the Trustee, within a
reasonable time after written request therefor, any information available
to the Servicer or reasonably obtainable by it that is necessary to
calculate the Transition Bond Charge.
SECTION 3.02 COLLECTION AND ALLOCATION OF THE TRANSITION BOND
CHARGE.
(a) The Servicer shall use all reasonable efforts, consistent
with its customary servicing procedures, to collect all amounts owed in
respect of the Transition Bond Charge as and when the same shall become due
and shall follow such collection procedures as it follows with respect to
collection activities that the Servicer conducts for itself or others. The
Servicer shall not change the amount of or reschedule the due date of any
scheduled payment of the Transition Bond Charge, except as contemplated in
this Agreement or as required by law or court or BPU Regulations; provided,
however, that the Servicer may take any of the foregoing actions to the
extent that such action would be in accordance with customary billing and
collection practices of the Servicer with respect to billing and collection
activities that it conducts for itself. The Servicer shall enforce the
obligations of any Third Parties providing billing and collection services
with respect to the Transition Bond Charge.
(b) As specified in the Petition and the Financing Order, any
amounts received by the Servicer from a Customer that represent a partial
payment toward an outstanding balance will be applied in the following
manner:
(i) to sales taxes (which the Servicer collects as
trustee for the State of New Jersey and not for its own account or
for that of the Issuer);
(ii) pro rata to the Transition Bond Charge and the
Servicer's other charges and taxes, where any of such charges are in
arrears, based on their proportion to the Servicer's total charges in
arrears for that period; and
(iii) pro rata to the Transition Bond Charge and the
Servicer's other charges and taxes, where any of such charges are
current charges, based on their proportion to the Servicer's total
current charges assessed for that period.
PSE&G's other charges may include gas charges which may be billed together
with electric charges, the market transition charge, the MTC-Tax and all
other charges which PSE&G and any Third Party may be authorized to xxxx and
collect from Customers on account of electric and gas service. If there is
more than one Series of Transition Bonds, the Servicer shall allocate
partial payments among such Series, pro rata, based on the respective
outstanding amounts payable with respect to such Series.
SECTION 3.03 PAYMENT OF TBC COLLECTIONS. (a) The Servicer shall
prepare annually a Collections Curve for each Billing Month, based on
statistically significant random sampling of actual TBC Collections. With
the exception of the Monthly Servicing Fee, which the Servicer is entitled
to withhold from TBC Collections pursuant to Section 5.07 hereof, the
Servicer agrees to remit TBC Collections for each Billing Month to the
Trustee for deposit in the Collection Account not later than the
corresponding Reconciliation Date or Dates following such Billing Month. In
addition, the Servicer agrees to make periodic payments on account of TBC
Collections to the Trustee for deposit in the Collection Account as
follows:
(i) on each Monthly Remittance Date, for so long as the Servicer
has satisfied the conditions of Section 5.11(b), the Servicer
shall remit to the Trustee for each of the seven preceding
Billing Months an amount equal to the amount of TBC Collections
estimated to have been received during the preceding calendar
month, based on the applicable Collections Curve then in effect
for those seven preceding Billing Months, and
(ii) on each Daily Remittance Date, for so long as the Servicer has
not satisfied the conditions of Section 5.11(b), the Servicer
shall remit to the Trustee for the Billing Month in which such
Daily Remittance Date occurs and for each of the six preceding
Billing Months an amount equal to the amount of TBC Collections
estimated to have been received during the Business Day which
is two Business Days preceding such Daily Remittance Date for
those seven Billing Months (including the Billing Month in
which such Daily Remittance Date occurs), including (for the
first Daily Remittance Date following a period when the
Servicer had been remitting on a monthly Remittance Date) any
amounts on deposit with the Servicer (for the Billing Month and
any prior Billing Month) prior to such Daily Remittance Date
during a period when the Servicer had been remitting on a
Monthly Remittance Date, provided that,
(x) in the case of each such Billing Month other than the
Billing Month in which such Daily Remittance Date occurs,
such estimate shall be made by dividing (1) the amount of
TBC Collections estimated to be received during the
calendar month in which such Daily Remittance Date occurs
("the current remittance month"), based on the applicable
Collections Curve then in effect, for each of those six
preceding Billing Months, divided by (2) the number of
Business Days in the current remittance month,
(y) in the case of the Billing Month in which such Daily
Remittance Date occurs, such estimate shall be made, by
first, determining the amount of TBC Collections
estimated to be received during that Billing Month, based
on the applicable Collections Curve then in effect, for
each day on which bills are sent in such Billing Month
(each, a "Billing Day"; such estimated TBC Collections
during such Billing Month for each Billing Day being the
"Billing Month Estimated Collections" for such Billing
Day), second, dividing the amount of the Billing Month
Estimated Collections for such Billing Day by the number
of Business Days remaining in such Billing Month (for
each Billing Day, the "Daily Billing Month Estimated
Collections" for such Billing Month), third, for each
Daily Remittance Date during such Billing Month, summing
the amount of the Daily Billing Month Estimated
Collections for each Billing Day in such Billing Month
through the Business Day which is two Business Days
preceding such Daily Remittance Date, and
(z) for each Daily Remittance Date, any unremitted Daily
Billing Month Estimated Collections received in the
preceding Billing Month on a Business Day that is two
Business Days preceding such Daily Remittance Date in
accordance with subclause (y) above shall be remitted on
such Daily Remittance Date.
(b) On or before each Reconciliation Date, the Servicer shall
determine whether there exists a Curve Payment Shortfall or an Excess Curve
Payment by comparing the actual TBC Collections to the Collection Curve
Payments previously made to the Trustee in respect of (i) for each Annual
Reconciliation Date, each of the twelve Billing Months beginning 19 months
before the month in which such Reconciliation Date occurs (or from the
first Series Issuance Date, if less than 19 months have elapsed), and (ii)
for each Monthly Reconciliation Date, the Billing Month that is eight
months prior to the Billing Month in which such Reconciliation Date occurs.
In the event that there is a Curve Payment Shortfall with respect to the
applicable Billing Months or Billing Month, as the case may be, the
Servicer shall pay the Curve Payment Shortfall to the Trustee for deposit
into the Collection Account on that Reconciliation Date. In the event that
there is an Excess Curve Payment for the applicable Billing Months or
Billing Month, as the case may be, the Servicer may either (A) reduce the
amount that the Servicer is required to remit to the Trustee for deposit in
the Collection Account on the following Remittance Date (and, if necessary,
succeeding Remittance Dates) by the amount of the Excess Curve Payment, or
(B) require the Trustee to pay to the Servicer from the General Subaccount
the amount of the Excess Curve Payment, which upon payment shall become the
property of the Servicer.
(c) The Servicer agrees and acknowledges that it holds all TBC
Collections collected by it for the benefit of the Issuer and that all
amounts will be remitted by the Servicer in accordance with this Agreement
without any surcharge, fee, offset, charge or other deduction and without
making any claim to reduce its obligation to remit all TBC Collections
collected by it, except (i) as set forth in clause (b) above, (ii) the
Monthly Servicing Fee which it may withhold pursuant to Section 5.07 hereof
and (iii) late fees permitted by Section 5.07.
SECTION 3.04 SERVICING AND MAINTENANCE STANDARDS. The Servicer
shall, on behalf of the Issuer:
(a) manage, service, administer and make collections in respect
of the Transferred Bondable Transition Property with reasonable care and in
material compliance with applicable law, including all applicable BPU
Regulations, using the same degree of care and diligence that the Servicer
exercises with respect to billing and collection activities that the
Servicer conducts for itself and others;
(b) follow standards, policies and procedures in performing its
duties as Servicer that are customary in the electric distribution
industry;
(c) use all reasonable efforts, consistent with its customary
servicing procedures, to enforce and maintain the Issuer's and the
Trustee's rights in respect of the Transferred Bondable Transition
Property; and
(d) calculate the Transition Bond Charge in compliance with the
Competition Act, the Financing Order and any applicable tariffs;
except where the failure to comply with any of the foregoing would not
materially and adversely affect the Issuer's or the Trustee's interest in
the Transferred Bondable Transition Property. The Servicer shall follow
such customary and usual practices and procedures as it shall deem
necessary or advisable in its servicing of the Transferred Bondable
Transition Property, which, in the Servicer's judgment, may include the
taking of legal action pursuant to Section 3.10 or otherwise.
Notwithstanding the foregoing, the Servicer shall not change its customary
and usual practices and procedures in any manner that would materially and
adversely affect the Issuer's or the Trustee's interest in the Transferred
Bondable Transition Property unless it shall have provided the Rating
Agencies with prior written notice.
SECTION 3.05 SERVICER'S CERTIFICATES. The Servicer will provide
to the Issuer and to the Trustee the statements and certificates specified
in Annex 1.
SECTION 3.06 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer shall deliver to the Issuer, the Trustee and each
Rating Agency, on or before March 31 of each year beginning March 31, 2002
to and including March 31 succeeding the retiring of the Transition Bonds,
an Officers' Certificate, stating that:
(a) a review of the activities of the Servicer during the
preceding calendar year (or relevant portion thereof in the case of
the first such Officer's Certificate) and of its performance under
this Agreement has been made under such officers' supervision, and
(b) to the best of such officers' knowledge, based on
such review, the Servicer has fulfilled all its obligations under
this Agreement throughout such period or, if there has been a default
in the fulfillment of any such obligation, describing each such
default and its status.
SECTION 3.07 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORT.
(a) The Servicer shall cause a firm of independent certified
public accountants (which may also provide other services to the Servicer
or the Seller) to prepare, and the Servicer shall deliver to the Issuer, to
the Trustee and to each Rating Agency, on or before March 31 of each year,
beginning March 31, 2002 to and including the March 31 succeeding the
retirement of all Transition Bonds, a report addressed to the Servicer (the
"Annual Accountant's Report"), which may be included as part of the
Servicer's customary auditing activities, to the effect that such firm has
performed certain procedures in connection with the Servicer's compliance
with its obligations under this Agreement during the preceding calendar
year (or, in the case of the first Annual Accountant's Report, the period
of time from the Initial Transfer Date until December 31, 2001),
identifying the results of such procedures and including any exceptions
noted. In the event such accounting firm requires the Trustee or the Issuer
to agree or consent to the procedures performed by such firm, the Issuer
shall direct the Trustee in writing to so agree; it being understood and
agreed that the Trustee will deliver such letter of agreement or consent in
conclusive reliance upon the direction of the Issuer, and the Trustee will
not make any independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
(b) The Annual Accountant's Report shall also indicate that the
accounting firm providing such report is independent of the Servicer within
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
SECTION 3.08 BONDABLE TRANSITION PROPERTY DOCUMENTATION. To
assure uniform quality in servicing the Transferred Bondable Transition
Property and to reduce administrative costs, the Servicer shall keep on
file, in accordance with its customary procedures, all Bondable Transition
Property Documentation, it being understood that the Servicer is acting
solely as the servicing agent and custodian for the Issuer with respect to
the Bondable Transition Property Documentation.
SECTION 3.09 COMPUTER RECORDS; AUDITS OF DOCUMENTATION.
(a) Safekeeping. The Servicer shall maintain accurate and
complete accounts, records and computer systems pertaining to the
Transferred Bondable Transition Property and the Bondable Transition
Property Documentation in accordance with its standard accounting
procedures and in sufficient detail to permit reconciliation between
payments or recoveries on (or with respect to) the Transition Bond Charge
and the TBC Collections from time to time remitted to the Trustee pursuant
to Section 3.03 and to enable the Issuer to comply with this Agreement and
the Indenture. The Servicer shall conduct, or cause to be conducted,
periodic audits of the Bondable Transition Property Documentation held by
it under this Agreement and of the related accounts, records and computer
systems, in such a manner as shall enable the Issuer and the Trustee, as
pledgee of the Issuer, to verify the accuracy of the Servicer's record
keeping. The Servicer shall promptly report to the Issuer and to the
Trustee any failure on the Servicer's part to hold the Bondable Transition
Property Documentation and maintain its accounts, records and computer
systems as herein provided and promptly take appropriate action to remedy
any such failure. Nothing herein shall be deemed to require an initial
review or any periodic review by the Issuer or the Trustee of the Bondable
Transition Property Documentation. The Servicer's duties to hold the
Bondable Transition Property Documentation on behalf of the Issuer set
forth in this Section 3.09, to the extent such Bondable Transition Property
Documentation has not been previously transferred to a successor Servicer,
shall terminate three years after the earlier of the date on which (i) the
Servicer is succeeded by a successor Servicer pursuant to the provisions of
this Agreement or (ii) no Transition Bonds of any Series are outstanding.
(b) Maintenance of and Access to Records. The Servicer shall
maintain the Bondable Transition Property Documentation at 00 Xxxx Xxxxx,
Xxxxxx, Xxx Xxxxxx or at such other office as shall be specified to the
Issuer and to the Trustee by written notice not later than 30 days prior to
any change in location. The Servicer shall permit the Issuer and the
Trustee or their respective duly authorized representatives, attorneys,
agents or auditors at any time during normal business hours to inspect,
audit and make copies of and abstracts from the Servicer's records
regarding the Transferred Bondable Transition Property, the Transition Bond
Charge and the Bondable Transition Property Documentation. The failure of
the Servicer to provide access to such information as a result of an
obligation or applicable law (including BPU Regulations) prohibiting
disclosure of information regarding customers shall not constitute a breach
of this Section 3.09(b).
SECTION 3.10 DEFENDING TRANSFERRED BONDABLE TRANSITION PROPERTY
AGAINST CLAIMS. The Servicer shall institute and maintain any action or
proceeding necessary to compel performance by the BPU or the State of New
Jersey of any of their obligations or duties under the Competition Act or
the Financing Order with respect to the Transferred Bondable Transition
Property, and the Servicer 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 block or overturn any attempts to cause a
repeal of, modification of or supplement to the Competition Act or the
Financing Order, as the case may be, or the rights of holders of
Transferred Bondable Transition Property that would be adverse to
Transition Bondholders. The costs of any such action reasonably allocated
by the Servicer to the Transferred Bondable Transition Property shall be
payable from TBC Collections as an Operating Expense in accordance with the
Indenture. The Servicer's obligations pursuant to this Section 3.10 shall
survive and continue notwithstanding the fact that the payment of Operating
Expenses pursuant to the Indenture may be delayed (it being understood that
the Servicer may be required to advance its own funds to satisfy its
obligations under this Section 3.10).
SECTION 3.11 OPINIONS OF COUNSEL. The Servicer shall deliver to
the Issuer and to the Trustee:
(a) promptly after the execution and delivery of this Agreement
and of the Sale Agreement and of each amendment hereto or thereto, and on
each Transfer Date, an Opinion of Counsel either:
(i) to the effect that, in the opinion of such counsel,
all UCC filings that are necessary to fully preserve and protect the
interests of the Trustee in the Transferred Bondable Transition
Property have been executed and will be filed as required, and
reciting the details of such filings or referring to prior Opinions
of Counsel in which such details are given, or
(ii) to the effect that, in the opinion of such counsel,
no such action is necessary to preserve and protect such interest;
and
(b) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three full
calendar months after the Initial Transfer Date, an Opinion of Counsel,
dated as of a date during such 90-day period, either:
(i) to the effect that, in the opinion of such counsel,
all UCC filings have been executed and filed that are necessary to
preserve fully and protect fully the interest of the Trustee in the
Transferred Bondable Transition Property, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such
details are given, or
(ii) to the effect that, in the opinion of such counsel,
no such action is necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (a) or (b) above shall
specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
ARTICLE IV
SERVICES RELATED TO TRANSITION BOND CHARGE ADJUSTMENTS
SECTION 4.01 TRANSITION BOND CHARGE ADJUSTMENTS. The Servicer
shall perform the calculations and take the actions relating to adjusting
the Transition Bond Charge, as set forth in Annex 1.
ARTICLE V
THE SERVICER
SECTION 5.01 REPRESENTATIONS AND WARRANTIES OF SERVICER. The
Servicer makes the following representations and warranties as of each
Transfer Date, on which the Issuer has relied and will rely in acquiring
Transferred Bondable Transition Property and in entering into this
Agreement. The representations and warranties shall survive the execution
and delivery of this Agreement, the sale of the Transferred Bondable
Transition Property to the Issuer and the pledge thereof to the Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is a
corporation duly organized and in good standing under the laws of the State
of its incorporation, with the corporate 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 to execute, deliver and
carry out the terms of this Agreement, and has the power, authority and
legal right to service the Transferred Bondable Transition Property.
(b) Due Qualification. The Servicer is duly qualified to do
business as a foreign 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 (including
the servicing of the Transferred Bondable Transition Property as required
by this Agreement) requires such qualifications, licenses or approvals
(except where the failure to so qualify would not be reasonably likely to
have a material adverse effect on the Servicer's business, operations,
assets, revenues, properties or prospects or adversely affect the servicing
of the Transferred Bondable Transition Property).
(c) Power and Authority. The Servicer has the corporate 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 the Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Servicer enforceable against the
Servicer in accordance with its terms subject to bankruptcy, receivership,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity (regardless of whether considered in a proceeding in equity or at
law).
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof will
not 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 the Servicer, or any
indenture, agreement or other instrument to which the Servicer is a party
or by which it is bound; or 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 violate any law or any order,
rule or regulation applicable to the Servicer of any court or of any
federal or State regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties.
(f) Approvals. Except for filings with the BPU for adjusting
the Transition Bond Charge pursuant to Section 4.01 and Annex 1, filing of
financing statements under the UCC and UCC continuation filings, 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 the execution
and delivery by the Servicer of this Agreement, the performance by the
Servicer of the transactions contemplated hereby or the fulfillment by the
Servicer of the terms hereof, except those that have been obtained or made.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's best knowledge, threatened before any court,
federal or State regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties:
(i) seeking to prevent the issuance of the Transition
Bonds or the consummation of any of the transactions contemplated by
this Agreement or any of the other Basic Documents;
(ii) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of
its obligations under, or the validity or enforceability against the
Servicer of, this Agreement or any of the other Basic Documents; or
(iii) relating to the Servicer and which might materially
and adversely affect the federal or State income, gross receipts or
franchise tax attributes of the Transition Bonds.
(h) Reports and Certificates. Each report and certificate
delivered in connection with any filing made to the BPU by the Servicer on
behalf of the Issuer with respect to the Transition Bond Charge or
Transition Bond Charge Adjustments will constitute a representation and
warranty by the Servicer that each such report or certificate, as the case
may be, is true and correct in all material respects; provided, however,
that to the extent any such report or certificate is based in part upon or
contains assumptions, forecasts or other predictions of future events, the
representation and warranty of the Servicer with respect thereto will be
limited to the representation and warranty that such assumptions, forecasts
or other predictions of future events are reasonable based upon historical
performance.
SECTION 5.02 INDEMNITIES OF SERVICER; RELEASE OF CLAIMS.
(a) The Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Servicer under
this Agreement.
(b) The Servicer shall indemnify the Issuer and the Trustee
(for itself and on behalf of the Transition Bondholders) and each of their
respective trustees, members, managers, officers, directors, employees and
agents for, and defend and hold harmless each such Person from and against,
any and all Losses that may be imposed upon, incurred by or asserted
against any such Person as a result of:
(i) the Servicer's wilful misconduct, bad faith or gross
negligence in the performance of its duties or observance of its
covenants under this Agreement or the Servicer's reckless disregard
of its obligations and duties under this Agreement;
(ii) the Servicer's breach of any of its representations
or warranties in this Agreement; and
(iii) litigation and related expenses relating to its
status and obligations as Servicer,
provided, however, that the Servicer shall not be liable for any Losses
resulting from the willful misconduct or gross negligence of any Person
indemnified pursuant to this Section 5.02 (each, an "Indemnified Person")
or resulting from a breach of a representation or warranty made by such
Indemnified Person in any of the Basic Documents that gives rise to the
Servicer's breach.
Promptly after receipt by an Indemnified Person of notice of its
involvement in any action, proceeding or investigation, such Indemnified
Person shall, if a claim for indemnification in respect thereof is to be
made against the Servicer under this Section 5.02, notify the Servicer in
writing of such involvement. Failure by an Indemnified Person to so notify
the Servicer shall relieve the Servicer from the obligation to indemnify
and hold harmless such Indemnified Person under this Section 5.02 only to
the extent that the Servicer suffers actual prejudice as a result of such
failure. With respect to any action, proceeding or investigation brought by
a third party for which indemnification may be sought under this Section
5.02, the Servicer shall be entitled to assume the defense of any such
action, proceeding or investigation. Upon assumption by the Servicer of the
defense of any such action, proceeding or investigation, the Indemnified
Person shall have the right to participate in such action or proceeding and
to retain its own counsel (including local counsel), and the Servicer shall
bear the reasonable fees, costs and expenses of such separate counsel. The
Indemnified Person shall not settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought under
this Section 5.02 (whether or not the Servicer is an actual or potential
party to such claim or action) unless the Servicer agrees in writing to
such settlement, compromise or consent and such settlement, compromise or
consent includes an unconditional release of the Servicer from all
liability arising out of such claim, action, suit or proceeding.
(c) The Servicer shall indemnify the Trustee and its respective
officers, directors and agents for, and defend and hold harmless each such
Person from and against, any and all Losses that may be imposed upon,
incurred by or asserted against any such Person as a result of the
acceptance or performance of the trusts and duties contained herein and in
the Indenture, except to the extent that any such Loss is due to the wilful
misconduct, bad faith or gross negligence of the Trustee; provided,
however, that the foregoing indemnity is extended to the Trustee solely in
its individual capacity and not for the benefit of the Transition
Bondholders or any other Person. Such amounts with respect to the Trustee
shall be deposited and distributed in accordance with the Indenture.
(d) The Servicer's indemnification obligations under Section
5.02(b) and (c) for events occurring prior to the removal or resignation of
the Trustee or the termination of this Agreement shall survive the
resignation or removal of the Trustee or the termination of this Agreement
and shall include reasonable costs, fees and expenses of investigation and
litigation (including the Issuer's and the Trustee's reasonable attorneys'
fees and expenses).
(e) Except to the extent expressly provided for in the Basic
Documents (including the Servicer's claims with respect to the Monthly
Servicing Fees and the Seller's claim for payment of the purchase price of
the Transferred Bondable Transition Property), the Servicer hereby releases
and discharges the Issuer (including its Member, Managers, officers,
employees and agents, if any), and the Trustee (including its respective
officers, directors and agents) (collectively, the "Released Parties") from
any and all actions, claims and demands whatsoever, which the Servicer
shall or may have against any such Person relating to the Transferred
Bondable Transition Property or the Servicer's activities with respect
thereto other than any actions, claims and demands arising out of the
wilful misconduct, bad faith or gross negligence of the Released Parties.
SECTION 5.03 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER. Any Person:
(a) into which the Servicer may be merged or consolidated and
which succeeds to all or the major part of the electric distribution
business of the Servicer,
(b) which results from the division of the Servicer into two or
more Persons and which succeeds to all or the major part of the electric
distribution business of the Servicer,
(c) which may result from any merger or consolidation to which
the Servicer shall be a party and which succeeds to all or the major part
of the electric distribution business of the Servicer,
(d) which may succeed to the properties and assets of the
Servicer substantially as a whole and which succeeds to all or the major
part of the electric distribution business of the Servicer, or
(e) which may otherwise succeed to all or the major part of the
electric distribution business of the Servicer,
which Person in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Servicer under this
Agreement, shall be the successor to the Servicer hereunder without the
execution or filing of any document or any further act by 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 Section 5.01 shall
have been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default,
shall have occurred and be continuing;
(ii) the Servicer shall have delivered to the Issuer and
the 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 5.03 and that all
conditions precedent, if any, provided for in this Agreement relating
to such transaction have been complied with;
(iii) the Servicer shall have delivered to the Issuer and
to the Trustee an Opinion of Counsel either:
(A) stating that, in the opinion of such counsel, all
filings to be made by the Servicer, including UCC
filings, that are necessary fully to preserve and
protect the interests of the Trustee in the
Transferred Bondable Transition Property have been
executed and filed and reciting the details of such
filings, or
(B) stating that, in the opinion of such counsel, no
such action is necessary to preserve and protect
such interests;
(iv) the Rating Agencies shall have received prior
written notice of such transaction; and
(v) the Servicer shall have delivered to the Issuer and
the Trustee an opinion of independent tax counsel (as selected by,
and in form and substance reasonably satisfactory to, the Servicer,
and which may be based on a ruling from the Internal Revenue Service)
to the effect that, for federal income tax purposes, such
consolidation or merger will not result in a material adverse federal
income tax consequence to the Servicer, the Issuer, the Trustee or
the then existing Transition Bondholders.
The Servicer shall not consummate any transaction referred to in subclauses
(a), (b), (c), (d) or (e) above except upon execution of the above
described agreement of assumption and compliance with subclauses (i), (ii),
(iii), (iv) and (v) above. When any Person acquires the properties and
assets of the Servicer substantially as a whole and becomes the successor
to the Servicer in accordance with the terms of this Section 5.03, then
upon the satisfaction of all of the other conditions of this Section 5.03,
the Servicer shall automatically and without further notice be released
from its obligations hereunder.
SECTION 5.04 ASSIGNMENT OF SERVICER'S OBLIGATIONS. The Servicer
may assign any or all of its obligations hereunder to any successor if
either (i) the Rating Agency Condition and any other condition specified in
the Financing Order have been satisfied, or (ii) the Servicer is replaced
by a successor pursuant to Section 5.03 hereof.
SECTION 5.05 LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
The Servicer shall not be liable to the Issuer or the Trustee, except as
provided under this Agreement, for any action taken or for refraining from
the taking of any action pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall not protect the
Servicer against any liability that would otherwise be imposed by reason of
wilful misconduct, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of obligations and duties under
this Agreement. The Servicer and any director, officer, employee or agent
of the Servicer may rely in good faith on the advice of counsel reasonably
acceptable to the Trustee or on any document of any kind, prima facie
properly executed and submitted by any Person, respecting any matters
arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action
that is not incidental to its duties to service the Transferred Bondable
Transition Property in accordance with this Agreement or related to its
obligation to pay indemnification, and that in its reasonable opinion may
cause it to incur any expense or liability.
SECTION 5.06 PSE&G NOT TO RESIGN AS SERVICER. Subject to the
provisions of Sections 5.03 and 5.04, PSE&G shall not resign from the
obligations and duties imposed on it as Servicer under this Agreement
except upon a determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law. Notice of
any such determination permitting the resignation of PSE&G shall be
communicated to the Issuer, the Trustee and each Rating Agency at the
earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time), and any
such determination shall be evidenced by an Opinion of Counsel to such
effect delivered to the Issuer and the Trustee concurrently with or
promptly after such notice. No such resignation shall become effective
until a successor Servicer has assumed the servicing obligations and duties
hereunder of the Servicer in accordance with Section 6.04.
SECTION 5.07 MONTHLY SERVICING FEE. The Issuer agrees to pay
the Servicer the Monthly Servicing Fee with respect to all Series of
Transition Bonds. On any Monthly Remittance Date, the Servicer shall be
entitled to withhold the amount of the Monthly Servicing Fee from TBC
Collections as compensation under this Agreement unless the Trustee has
notified the Servicer in writing that the Issuer does not hold sufficient
funds to pay amounts owed in such month to the Trustee. For so long as
PSE&G is the Servicer, the Monthly Servicing Fee shall be $105,208. The
Servicer shall be entitled to retain as additional compensation net
investment income on TBC Collections related to the Transferred Bondable
Transition Property received by the Servicer during any Collection Period
prior to remittance to the Collection Account and the late fees, if any,
paid by Customers to the Servicer. The foregoing fees constitute a fair and
reasonable price for the obligations to be performed by the Servicer.
SECTION 5.08 SERVICER EXPENSES. Except as otherwise expressly
provided herein, the Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder, including fees
and disbursements of independent accountants and counsel, taxes imposed on
the Servicer and expenses incurred in connection with reports to Transition
Bondholders and shall not be entitled to any additional payment or
reimbursement therefor.
SECTION 5.09 SUBSERVICING. The Servicer may at any time appoint
a subservicer to perform all or any portion of its obligations as Servicer
hereunder; provided, however, the Rating Agency Condition shall have been
satisfied in connection therewith; and provided further that the Servicer
shall remain obligated and be liable to the Issuer, the Trustee and the
Transition Bondholders for the servicing and administering of the
Transferred Bondable Transition Property in accordance with the provisions
hereof without diminution of such obligation and liability by virtue of the
appointment of such subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and
administering the Transferred Bondable Transition Property. The fees and
expenses of the subservicer shall be as agreed between the Servicer and its
subservicer from time to time, and none of the Issuer, the Trustee or the
Transition Bondholders shall have any responsibility therefor. Any such
appointment shall not constitute a Servicer resignation under Section 5.06.
SECTION 5.10 NO SERVICER ADVANCES. The Servicer shall not make
any advances of interest on or principal of the Transition Bonds.
SECTION 5.11 REMITTANCES.
(a) The Servicer shall remit TBC Collections (from whatever
source) in accordance with Section 3.03(a)(ii), and all proceeds of other
Collateral of the Issuer, if any, received by the Servicer, to the Trustee
for deposit pursuant to the Indenture, not later than each Daily Remittance
Date. The Servicer shall promptly remit any Indemnity Amounts paid or
received by it immediately to the Trustee for deposit pursuant to the
Indenture.
(b) Notwithstanding the foregoing clause (a), as long as:
(i) PSE&G or any successor to PSE&G's electric
distribution business remains the Servicer,
(ii) no Servicer Default has occurred and is continuing,
and,
(iii) with respect to Xxxxx'x and Fitch only, PSE&G
maintains a long-term rating on its senior, unsecured debt of "Baa2"
by Xxxxx'x and "BBB" by Fitch, or better, or, if the senior,
unsecured debt of PSE&G is downgraded to "Baa3" by Xxxxx'x or "BBB-"
by Fitch, PSE&G shall received within 30 days of such downgrading,
confirmation from Xxxxx'x and Fitch that remittances in accordance
with Section 3.03(a)(i) will not adversely affect their respective
ratings on the Transition Bonds, or if the long-term, unsecured debt
of PSE&G is downgraded below "Baa3" by Xxxxx'x or "BBB-" by Fitch,
PSE&G shall have received within 48 hours of such downgrading,
confirmation from Xxxxx'x and Fitch that remittances in accordance
with Section 3.03(a)(i) will not adversely affect their respective
ratings on the Transition Bonds,
the Servicer need not make the daily remittances required by clause (a),
but in lieu thereof, shall remit all TBC Collections (from whatever source)
in accordance with Section 3.03(a)(i), and all proceeds of other Collateral
of the Issuer, if any, received by the Servicer during any Collection
Period, to the Trustee for deposit pursuant to the Indenture, not later
than the corresponding Monthly Remittance Date.
SECTION 5.12 PROTECTION OF TITLE. The Servicer shall execute
and file such filings 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 Trustee in the
Transferred Bondable Transition Property, including all filings required
under the UCC relating to the transfer of ownership of or a security
interest in the Transferred Bondable Transition Property by the Seller to
the Issuer or the security interest granted by the Issuer to the Trustee in
the Transferred Bondable Transition Property. The Servicer shall deliver
(or cause to be delivered) to the Issuer and the Trustee file-stamped
copies of, or filing receipts for, any document filed as provided above, as
soon as available following such filing.
ARTICLE VI
SERVICER DEFAULT
SECTION 6.01 SERVICER DEFAULT. If any one of the following
events (a "Servicer Default") occurs and is continuing:
(a) any failure by the Servicer to remit to the Trustee, on
behalf of the Issuer, any required remittance that continues unremedied for
a period of five Business Days after written notice of such failure is
received by the Servicer from the Issuer or the Trustee; or
(b) any failure by the Servicer duly to observe or perform in
any material respect any other covenant or agreement of the Servicer set
forth in this Agreement, which failure:
(i) materially and adversely affects the Transferred
Bondable Transition Property or the rights of the Transition
Bondholders, and
(ii) continues unremedied for a period of 60 days after
written notice of such failure has been given to the Servicer by the
Issuer or by the Trustee or after discovery of such failure by an
officer of the Servicer; or
(c) any representation or warranty made by the Servicer in this
Agreement proves to have been incorrect when made, which has a material
adverse effect on the Issuer or the Transition Bondholders and which
material adverse effect continues unremedied for a period of 60 days after
the date on which written notice thereof has been given to the Servicer by
the Issuer or the Trustee or after discovery of such failure by an officer
of the Servicer, as the case may be; or
(d) an Insolvency Event occurs with respect to the Servicer;
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, the Trustee, with the consent of the Holders of a
majority of the outstanding principal amount of the Transition Bonds of all
Series, by notice then given in writing to the Servicer (a "Termination
Notice") may terminate all the rights and obligations (other than the
indemnification obligations set forth in Section 5.02 hereof and the
obligation under Section 6.04 to continue performing its functions as
Servicer until a successor Servicer is appointed) of the Servicer under
this Agreement. In addition, upon a Servicer Default, the Issuer and the
Trustee shall be entitled to apply to the BPU or any court of competent
jurisdiction for sequestration and payment to the Trustee of revenues
arising with respect to the Transferred Bondable Transition Property.
On or after the receipt by the Servicer of a Termination
Notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Transferred Bondable Transition Property, the
related Transition Bond Charge or otherwise, shall, upon appointment of a
successor Servicer pursuant to Section 6.04, without further action, pass
to and be vested in such successor Servicer and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such
Termination Notice, whether to complete the transfer of the Bondable
Transition Property Documentation and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer, the
Trustee and the Issuer in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including the
transfer to the successor Servicer for administration by it of all cash
amounts that shall at the time be held by the predecessor Servicer for
remittance, or shall thereafter be received by it with respect to the
Transferred Bondable Transition Property or the related Transition Bond
Charge. As soon as practicable after receipt by the Servicer of such
Termination Notice, the Servicer shall deliver the Bondable Transition
Property Documentation to the successor Servicer. All reasonable costs and
expenses (including attorneys fees and expenses) incurred in connection
with transferring the Bondable Transition Property Documentation to the
successor Servicer and amending this Agreement to reflect such succession
as Servicer pursuant to this Section 6.01 shall be paid by the predecessor
Servicer upon presentation of reasonable documentation of such costs and
expenses. Termination of PSE&G as Servicer shall not terminate PSE&G's
rights or obligations under the Sale Agreement.
SECTION 6.02 NOTICE OF SERVICER DEFAULT. The Servicer shall
deliver to the Issuer, the Trustee and each Rating Agency promptly after
having obtained knowledge thereof, but in no event later than five Business
Days thereafter, written notice in an Officer's Certificate of any event or
circumstance which, with the giving of notice or the passage of time, would
become a Servicer Default under Section 6.01.
SECTION 6.03 WAIVER OF PAST DEFAULTS. The Trustee, with the
consent of Holders of the majority of the outstanding principal amount of
the Transition Bonds of all Series, may waive in writing any default by the
Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required remittances to the
Trustee of TBC Collections in accordance with Section 3.03. Upon any such
waiver of a past default, such default shall cease to exist, and any
Servicer Default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto.
SECTION 6.04 APPOINTMENT OF SUCCESSOR.
(a) Upon the Servicer's receipt of a Termination Notice
pursuant to Section 6.01 or the Servicer's resignation in accordance with
the terms of this Agreement, the predecessor Servicer shall continue to
perform its functions as Servicer under this Agreement and shall be
entitled to receive the requisite portion of the Monthly Servicing Fees,
until a successor Servicer has assumed in writing the obligations of the
Servicer hereunder as described below. In the event of the Servicer's
removal or resignation hereunder, the Trustee, as assignee of the Issuer,
may appoint a successor Servicer, with the consent of the Holders of a
majority of the outstanding principal amount of the Transition Bonds of all
Series, and the successor Servicer shall accept its appointment by a
written assumption in form acceptable to the Issuer and the Trustee. If,
within 30 days after the delivery of the Termination Notice, a new Servicer
has not been appointed and accepted such appointment, the Trustee may
petition the BPU or a court of competent jurisdiction to appoint a
successor Servicer under this Agreement. A Person shall qualify as a
successor Servicer only if:
(i) such Person is permitted to perform the duties of the
Servicer pursuant to the Competition Act, the BPU Regulations, the
Financing Order and this Agreement;
(ii) the Rating Agency Condition has been satisfied; and
(iii) such Person enters into a servicing agreement with
the Issuer having substantially the same provisions as this
Agreement.
(b) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer under this Agreement
and shall be subject to all the responsibilities, duties and liabilities
arising thereafter relating thereto placed on the predecessor Servicer and
shall be entitled to the Monthly Servicing Fee and all the rights granted
to the predecessor Servicer by the terms and provisions of this Agreement.
(c) The successor Servicer may resign only if it is prohibited
from serving as such by applicable law.
SECTION 6.05 COOPERATION WITH SUCCESSOR. The Servicer covenants
and agrees with the Issuer that it will, on an ongoing basis, cooperate
with the successor Servicer and provide whatever information is, and take
whatever actions are, reasonably necessary to assist the successor Servicer
in performing its obligations hereunder.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01 AMENDMENT. This Agreement may be amended by the
Servicer and the Issuer, with the consent of the Trustee and the
satisfaction of the Rating Agency Condition. Promptly after the execution
of any such amendment or consent, the Issuer shall furnish written
notification of the substance of such amendment or consent to each of the
Rating Agencies.
Prior to the execution of any amendment to this Agreement, the
Issuer and the Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel
referred to in Section 3.11. The Issuer and the Trustee may, but shall not
be obligated to, enter into any such amendment which affects their own
rights, duties or immunities under this Agreement or otherwise.
SECTION 7.02 NOTICES. Unless otherwise specifically provided
herein, all notices, directions, consents and waivers required under the
terms and provisions of this Agreement shall be in English and in writing,
and any such notice, direction, consent or waiver may be given by United
States first-class mail, reputable overnight courier service, facsimile
transmission or electronic mail (confirmed by telephone, United States
first-class mail or reputable overnight courier service in the case of
notice by facsimile transmission or electronic mail) or any other customary
means of communication, and any such notice, direction, consent or waiver
shall be effective when delivered or transmitted, or if mailed, five days
after deposit in the United States first-class mail with proper postage for
first-class mail prepaid,
(a) in the case of the Servicer, at PSE&G, 00 Xxxx Xxxxx,
Xxxxxx, Xxx Xxxxxx 00000;
(b) in the case of the Issuer, at PSE&G Transition Funding LLC,
00 Xxxx Xxxxx, X-0X, Xxxxxx, Xxx Xxxxxx 00000;
(c) in the case of the Trustee, at the address provided for
notices or communications to the Trustee in the Indenture;
(d) in the case of Moody's, at Xxxxx'x Investors Service, Inc.,
ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000;
(e) in the case of Standard & Poor's, at Standard & Poor's
Ratings Group, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset
Backed Surveillance Department; and
(f) in the case of Fitch, at Fitch, Inc., 0 Xxxxx Xxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: ABS Surveillance; or, as to each of
the foregoing, at such other address as shall be designated by written
notice to the other parties.
SECTION 7.03 LIMITATIONS ON RIGHTS OF OTHERS. The provisions of
this Agreement are solely for the benefit of the Servicer, the Issuer and
the Trustee, on behalf of itself and the Transition Bondholders, 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 any Collateral or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 7.04 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 7.05 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 7.06 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.
SECTION 7.07 GOVERNING LAW. THIS AGREEMENT 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 SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 7.08 ASSIGNMENT TO THE TRUSTEE. (a) The Servicer hereby
acknowledges and consents to any pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the
benefit of the Transition Bondholders of all right, title and interest of
the Issuer in, to and under the Transferred Bondable Transition Property
owned by the Issuer and the proceeds thereof and the assignment of any or
all of the Issuer's rights hereunder to the Trustee.
(b) In no event shall the Trustee have any liability for the
representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely
to the assets of the Issuer.
SECTION 7.09 NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Indenture, the Servicer hereby
covenants and agrees that it shall not, prior to the date which is one year
and one day after the termination of the Indenture and the payment in full
of the Transition Bonds, any other amounts owed under the Indenture,
including, without limitation, any amounts owed to third-party credit
enhancers, and any amounts owed by the Issuer under the Hedge Agreement or
the Interest Rate Swap Agreement, acquiesce in, petition or otherwise
invoke or cause the Issuer to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
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 Issuer or any substantial
part of the property of the Issuer, or ordering the winding up or
liquidation of the affairs of the Issuer.
SECTION 7.10 TERMINATION. This Agreement shall terminate when
all Transition Bonds have been retired, redeemed or defeased in full.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective duly
authorized officers as of the date and year first above written.
PSE&G TRANSITION FUNDING LLC,
as Issuer
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Manager
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY, as Servicer
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Title: General Corporate Counsel
Acknowledged and Accepted:
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf of the
Holders of the Transition Bonds
By: /s/ Xxxxxxxxx Xxxxx
-------------------------------
Name: Xxxxxxxxx Xxxxx
Title: Assistant Vice President
ANNEX 1
TO
SERVICING AGREEMENT
The Servicer agrees to comply with the following with respect
to PSE&G Transition Funding LLC (the "Issuer"):
SECTION 1. DEFINITIONS. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in Appendix A to the
Servicing Agreement dated as of January 31, 2001, between the Issuer and
PSE&G, as Servicer.
SECTION 2. TRUSTEE AND SERVICER PAYMENT DATE STATEMENTS. At
least one Business Day before each date on which distributions to the
Trustee and Servicer are to be made pursuant to Sections 8.02(d) and (e) of
the Indenture, the Servicer shall provide the Trustee with a statement
setting forth the amounts to be distributed to each of the Trustee and
Servicer pursuant to such Sections.
SECTION 3. PAYMENT DATE STATEMENTS. At least one Business Day
before each Payment Date, the Servicer shall provide to the Issuer, the
Trustee, each Rating Agency and for so long as any Transition Bonds are
listed on the Luxembourg Stock Exchange, any listing agent in Luxembourg, a
statement indicating:
1. the amount to be paid to Transition Bondholders of each
Series and Class in respect of principal on such Payment
Date in accordance with Section 8.02 of the Indenture and
each Series Supplement thereto;
2. the amount to be paid to Transition Bondholders of each
Series and Class in respect of interest on such Payment
Date in accordance with Section 8.02 of the Indenture and
each Series Supplement thereto;
3. the Projected Transition Bond Balance and the Transition
Bond Balance for each Series and Class as of that Payment
Date (after giving effect to the payments on such Payment
Date);
4. the amount on deposit in the Overcollateralization
Subaccount for each Series and the Scheduled
Overcollateralization Level for each Series, as of that
Payment Date (after giving effect to the transfers to be
made from or into the Overcollateralization Subaccount on
such Payment Date);
5. the amount on deposit in the Capital Subaccount for each
Series as of that Payment Date (after giving effect to
the transfers to be made from or into the Capital
Subaccount on such Payment Date);
6. the amount, if any, on deposit in the Reserve Subaccount
as of that Payment Date (after giving effect to the
transfers to be made from or into the Reserve Subaccount
on such Payment Date);
7. the amount to be paid to any counterparty under any Hedge
Agreement on such Payment Date;
8. the amount to be paid to any Swap Counterparty (on a
gross and a net basis, separately stated) under any
Interest Rate Swap Agreement on or before such Payment
Date;
9. the amounts paid to the Trustee since the preceding
Payment Date pursuant to Sections 8.02(d) of the
Indenture;
10. the amounts paid to or withheld by the Servicer since the
preceding Payment Date pursuant to Sections 8.02(e) of
the Indenture; and
11. the amount of any other transfers and payments to be made
on such Payment Date pursuant to Sections 8.02(d), (e),
(f), (g) and (i) of the Indenture.
SECTION 4. REMITTANCE DATE STATEMENTS. At least one Business
Day before each Remittance Date, and in the case of Daily Remittances, on
the last Remittance Date of such month, the Servicer shall prepare and
furnish to the Issuer and the Trustee a statement setting forth the
aggregate amount to be remitted by the Servicer to the Trustee (net of any
unreimbursed Excess Curve Payments) for deposit on such Remittance Date
pursuant to the Indenture.
SECTION 5. TRANSITION BOND CHARGE ADJUSTMENTS.
(a) Prior to each Calculation Date, the Servicer shall calculate
(i) the Transition Bond Balance as of such Calculation
Date (a written copy of which shall be delivered by the Servicer to
the Trustee within five Business Days following such Calculation
Date), and
(ii) the revised Transition Bond Charge with respect to
the Transferred Bondable Transition Property in respect of each
Adjustment Date such that the Servicer projects that TBC Collections
therefrom allocable to the Issuer will be sufficient so that:
(A) the Transition Bond Balance on the Payment Date
immediately preceding the next Adjustment Date will
equal the Projected Transition Bond Balance as of
such date or, if earlier with respect to any Series
or Class of Transition Bonds, as of the Payment
Date immediately preceding the Expected Final
Payment Date therefor,
(B) the amount on deposit in the Overcollateralization
Subaccount on the Payment Date immediately
preceding the next Adjustment Date, or if earlier
with respect to any Series or Class of Transition
Bonds, as of the Payment Date immediately preceding
the Expected Final Payment Date therefor, will
equal the Scheduled Overcollateralization Level for
such date,
(C) the amount on deposit in the Capital Subaccount on
the Payment Date immediately preceding the next
Adjustment Date, or if earlier with respect to any
Series or Class of Transition Bonds, as of the
Payment Date immediately preceding the Expected
Final Payment Date therefor, will equal its
required level for such date,
(D) the amount on deposit in the Reserve Subaccount on
the Payment Date immediately preceding the next
January 1 Adjustment Date, will equal zero, and
(E) the TBC Collections will provide for (i)
amortization of the remaining outstanding principal
amount of each Series in accordance with the
Expected Amortization Schedule therefor, (ii)
payment of interest on each Series when due,
payment of any hedge payments due under the Hedge
Agreement, and payment of any amounts (other than
termination or breakage amounts) under any Interest
Rate Swap Agreement, (iii) payment of all Operating
Expenses of the Issuer when due in accordance with
the Indenture, and (iv) deposits to the
Overcollateralization Subaccount such that the
balance therein will equal the Calculated
Overcollateralization Level on each Payment Date.
(b) On each Calculation Date, the Servicer shall file an
Adjustment Request with the BPU. This filing shall include the data
specified in the Petition and the Financing Order.
(c) On each Adjustment Date, the Servicer shall
(i) take all reasonable actions and make all reasonable
efforts to effectuate all adjustments to the Transition Bond Charge
either approved by the BPU or effective on an interim basis pending
final approval, and
(ii) promptly send to the Trustee copies of all material
notices and documents relating to such adjustments.
(d) On each Adjustment Date, the Servicer shall provide Moody's
with a schedule indicating any changes to the Transition Bond Charge.
(e) If deemed appropriate by the Servicer to protect Transition
Bondholders to remedy a significant and recurring variance between actual
and expected TBC Collections, as authorized by the Financing Order, the
Servicer shall make "non-routine" filings with the BPU for adjustments to
the formula described in Exhibit A to the Petition to assure timely payment
of the Total Payment Requirements (as defined in the Financing Order). Such
filings shall be made at least 90 days prior to the proposed effective date
of the proposed adjustments.
APPENDIX A
MASTER DEFINITIONS
The definitions contained in this Appendix A are applicable to the singular
as well as the plural forms of such terms.
Act has the meaning specified in Section 11.03 of the Indenture.
Adjustment Date means (a) January 1 of each year through January 1,
2015, (b) as long as the Transition Bonds are outstanding, October 1,
January 1, April 1 and July 1 of each year, beginning April 1, 2015,
and (c) any other date which is thirty days after a Calculation Date.
Adjustment Request means an application filed by the Servicer with
the BPU for a Transition Bond Charge Adjustment pursuant to Section
4(b) of the Issuer Annex.
Administration Agreement means the Administration Agreement dated as
of January 31, 2001, between PSE&G, as administrator, and the Issuer,
as the same may be amended or supplemented from time to time.
Administrator means PSE&G, as administrator under the Administration
Agreement, and each successor to PSE&G, in the same capacity,
pursuant to Section 14 of the Administration Agreement.
Advice Letter means, with respect to any Series of Transition Bonds,
the Issuance Advice Letter, in the form attached as Appendix B to the
Financing Order, filed with the BPU at the time of the issuance of
such Series.
Affiliate means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, control when
used with respect to any specified Person means the power to direct
the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms controlling and controlled have meanings
correlative to the foregoing.
Annual Accountant's Report has the meaning assigned to that term in
Section 3.07 of the Servicing Agreement.
Annual Reconciliation Date means the last Business Day of October of
each year, commencing with October 2001 and continuing through
October 2014 (or such earlier month as the Servicer shall have
specified to the Issuer and the Trustee by not less than 30 days
prior written notice).
Authorized Denominations means, with respect to any Series or Class
of Transition Bonds, $1,000 and integral multiples of $1.00 above
that amount, provided, however, that one bond of each Class may have
denomination of less than $1,000, or such other denominations as may
be specified in the Series Supplement therefor.
Authorized Newspaper means the Luxemburger Wort or any other
newspaper published in Luxembourg on a daily basis.
Authorized Officer means, with respect to the Issuer, (a) any Manager
and, (b) any person designated as an "Officer" under the Issuer LLC
Agreement and authorized thereby to act on behalf of the Issuer.
Basic Documents means the Formation Documents, the Sale Agreement,
any Bills of Sale, the Servicing Agreement, the Administration
Agreement, the Indenture, the Underwriting Agreement, the Hedge
Agreement, the Interest Rate Swap Agreement and the Securities
Account Control Agreement, as each may be amended or supplemented
from time to time.
Billing Month means a calendar month during which the Transition Bond
Charge is billed to Customers.
Xxxx of Sale means any xxxx of sale issued by the Seller to the
Issuer pursuant to the Sale Agreement evidencing the sale of Bondable
Transition Property by the Seller to the Issuer.
Bondable Stranded Costs means those bondable stranded costs, within
the meaning specified in the Competition Act, approved for recovery
in the Financing Order.
Bondable Transition Property has the meaning assigned to that term in
the Competition Act and the Financing Order.
Bondable Transition Property Documentation means all documents
relating to the Transferred Bondable Transition Property, including
copies of the Petition and the Financing Order and all documents
filed with the BPU in connection with any Transition Bond Charge
Adjustment.
Book-Entry Transition Bonds means beneficial interests in the
Transition Bonds, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section
2.11 of the Indenture.
BPU means the State of New Jersey Board of Public Utilities or its
successor.
BPU Regulations means any regulations, orders, guidelines or
directives promulgated, issued or adopted by the BPU.
Business Day means any day other than a Saturday or Sunday or a day
on which banking institutions in the City of Newark, New Jersey, or
in the City of New York, New York or, with respect to any Transition
Bonds listed on the Luxembourg Stock Exchange, in Luxembourg, are
required or authorized by law or executive order to remain closed.
Calculation Date means (a) December 1 of each year until December 1,
2014, (b) September 1, December 1, March 1 and June 1 of each year
beginning March 1, 2015 and for so long as the Transition Bonds are
outstanding, and (c) any other day on which the Servicer files an
Adjustment Request.
Capital Reserve Subaccount has the meaning specified in Section
8.02(a) of the Indenture.
Capital Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
Class means, with respect to any Series, any one of the classes of
Transition Bonds of that Series, as specified in the Series
Supplement for that Series.
Class Final Maturity Date means the Final Maturity Date of a Class,
as specified in the Series Supplement for the related Series.
Class Subaccount has the meaning specified in Section 8.02(a) of the
Indenture.
Clearing Agency means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
Clearing Agency Participant means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency.
Code means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
Collateral has the meaning specified in the Granting Clause of the
Indenture.
Collection Account has the meaning specified in Section 8.02(a) of
the Indenture.
Collection Period means the period from and including the first day
of a calendar month to but excluding the first day of the next
calendar month.
Collections Curve means a forecast prepared by the Servicer of the
percentages of amounts billed in a Billing Month that are expected to
be received during each of the following seven months.
Collections Curve Payment means, with respect to a Billing Month, the
sum of the amounts paid to the Trustee over a seven-month period
following that Billing Month based on the Collections Curve for that
Billing Month.
Commission means the U.S. Securities and Exchange Commission, and any
successor thereof.
Competition Act means the Electric Discount and Energy Competition
Act, New Jersey Statutes Annotated, title 48, chapter 3, article 7.
Corporate Trust Office means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at date of the execution of this Indenture
is located at 000 Xxxxxxx Xxxxxx, Xxxxx 12 East, New York, New York
10286, Attention: CDO Unit, or at such other address as the Trustee
may designate from time to time by notice to the Transition
Bondholders and the Issuer, or the principal corporate trust office
of any successor Trustee (the address of which the successor Trustee
will notify the Transition Bondholders and the Issuer in writing).
Covenant Defeasance Option has the meaning specified in Section
4.01(b) of the Indenture.
Curve Payment Shortfall means: (a) with respect to each Annual
Reconciliation Date, the excess of actual TBC Collections in respect
of each of the 12 Billing Months beginning 19 Billing Months (or from
the first Series Issuance Date, if less than 19 months have elapsed)
before the Billing Month in which such Reconcilation Date occurs,
over the actual Collection Curve Payments made to the Trustee in
respect of those Billing Months; and (b) with respect to each Monthly
Reconciliation Date, the excess of actual TBC Collections in respect
of the Billing Month that is 8 months prior to the Billing Month in
which such Reconciliation Date occurs, over the actual Collection
Curve Payments made to the Trustee in respect of that prior Billing
Month.
Customer means each person who is a retail consumer of electricity
and who accesses PSE&G's transmission and distribution system,
regardless of whether such consumer elects to purchase electricity
from a Third Party.
Daily Remittance Date means, if the Servicer has not satisfied the
conditions of Section 5.11(b) of the Servicing Agreement, each
Business Day commencing on the second Business Day following the date
on which the Servicer begins remittance procedures under Section
3.03(a)(ii)(y) of the Servicing Agreement.
Default means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
Defeasance Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
Definitive Transition Bonds has the meaning specified in Section 2.11
of the Indenture.
DTC Agreement means the agreement between the Issuer, the Trustee and
The Depository Trust Company, as the initial Clearing Agency, dated
on or about January 31, 2001, relating to the Transition Bonds, as
the same may be amended or supplemented from time to time.
Eligible Guarantor Institution means a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as "an eligible
guarantor institution," including (as such terms are defined
therein):
(a) a bank;
(b) a broker, dealer, municipal securities broker or dealer
or government securities broker or dealer;
(c) a credit union;
(d) a national securities exchange, registered securities
association or clearing agency; or
(e) a savings association that is a participant in a
securities transfer association.
Eligible Institution means:
(a) the corporate trust department of the Trustee, so long as
any of the securities of the Trustee have a credit rating
from each Rating Agency in one of its generic rating
categories which signifies investment grade, or
(b) a depositary institution organized under the laws of the
United States of America or any State (or any domestic
branch of a foreign bank), which
(i) has either
(A) with respect to any Eligible Investment
having a maturity of greater than one month,
a long-term unsecured debt rating of "AAA" by
Standard & Poor's and Fitch and "Aaa" by
Moody's, or
(B) with respect to any Eligible Investment
having a maturity one month or less, a
certificate of deposit rating of "A-1+" by
Standard & Poor's and "P-1" by Moody's, or
any other long-term, short-term or
certificate of deposit rating acceptable to
the Rating Agencies, and
(ii) whose deposits are insured by the FDIC.
Eligible Investments mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or
registered form which evidence:
(a) direct obligations of, and obligations fully and
unconditionally guaranteed as to timely payment by, the
United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company (any
depositary institution or trust company being referred to
in this definition as a "financial institution")
incorporated under the laws of the United States of
America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination
by Federal or State banking or depositary institution
authorities; provided, however, that at the time of the
investment or contractual commitment to invest therein,
the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of
which is based on the credit of a Person other than such
depositary institution or trust company) thereof shall
have a credit rating from each of the Rating Agencies in
the highest investment category granted thereby;
(c) commercial paper or other short term obligations of any
corporation organized under the laws of the United States
of America (other than PSE&G) whose ratings, at the time
of the investment or contractual commitment to invest
therein, from each of the Rating Agencies are in the
highest investment category granted thereby;
(d) demand deposits, time deposits and certificates of
deposit which are fully insured by the Federal Deposit
Insurance Corporation;
(e) investments in money market funds having a rating from
each of the Rating Agencies in the highest investment
category granted thereby (including funds for which the
Trustee or any of its Affiliates act as investment
manager or advisor);
(f) bankers' acceptances issued by any depositary institution
or trust company referred to in clause (b) above;
(g) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the
United States of America or any agency or instrumentality
thereof the obligations of which are backed by the full
faith and credit of the United States of America, in
either case entered into with a depositary institution or
trust company (acting as principal) described in clause
(b) above;
(h) repurchase obligations with respect to any security or
whole loan entered into with
(i) a financial institution (acting as principal)
described in clause (b) above,
(ii) a broker/dealer (acting as principal) registered as
a broker or dealer under Section 15 of the Exchange
Act (any broker/dealer being referred to in this
definition as a "broker/dealer"), the unsecured
short-term debt obligations of which are rated P-1
by Moody's and A-1+ by Standard & Poor's at the
time of entering into this repurchase obligation,
or
(iii) an unrated broker/dealer, acting as principal, that
is a wholly-owned subsidiary of a non-bank or bank
holding company the unsecured short-term debt
obligations of which are rated P-1 by Moody's and
A-1+ by Standard & Poor's at the time of purchase;
or
(i) any other investment permitted by each Rating Agency;
provided, however, that, with respect to Moody's only, the obligor
related to clauses (b), (c), (d), (f), (g) and (h) above must have
both a long term rating of at least A1 and a short term rating of at
least P1, and provided further, that, unless otherwise permitted by
each Rating Agency, upon the failure of any Eligible Institution to
maintain any applicable rating set forth in this definition or the
definition of Eligible Institution, the related investments at such
institution shall be reinvested in Eligible Investments at a
successor Eligible Institution within 10 days, and provided, further,
that, any Eligible Investment must not:
(a) be sold, liquidated or otherwise disposed of at a loss,
prior to the maturity thereof, or
(b) mature later than (i) the date on which the proceeds of
such Eligible Investment will be required to be on
deposit in the Collection Account in order for the
Trustee to make all required and scheduled payments and
deposits into Subaccounts under the Indenture, if such
Eligible Investment is held by an Affiliate of the
Trustee, or (ii) the Business Day prior to the date on
which the proceeds of such Eligible Investment will be
required to be on deposit in the Collection Account in
order for the Trustee to make all required and scheduled
payments and deposits into Subaccounts under the
Indenture, if such Eligible Investment is not held by an
Affiliate of the Trustee.
Eligible Securities Account means either:
(a) a segregated trust account with an Eligible Institution or
(b) a segregated trust account with the corporate trust
department of a depositary institution organized under
the laws of the United States of America or any State (or
any domestic branch of a foreign bank), having corporate
trust powers and acting as trustee for funds deposited in
such account, so long as any of the securities of such
depositary institution shall have a credit rating from
each Rating Agency in one of its generic rating
categories which signifies investment grade.
Event of Default has the meaning specified in Section 5.01 of the
Indenture.
Excess Curve Payment means, (a) with respect to each Annual
Reconciliation Date, the excess of the Collections Curve Payments
made to the Trustee in respect of each of the 12 Billing Months
beginning 19 Billing Months (or from the first Series Issuance Date,
if less than 19 months have elapsed) before the Billing Month in
which the Reconciliation Date occurs, over the actual TBC Collections
in respect of those Billing Months; and (b) with respect to each
Monthly Reconciliation Date, the excess of the Collections Curve
Payments made to the Trustee in respect of the Billing Month that is
8 months prior to the Billing Month in which such Reconciliation Date
occurs, over the actual TBC Collections in respect of that prior
Billing Month.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Executive Officer means, with respect to any corporation, the chief
executive officer, chief operating officer, chief financial officer,
chief information officer, president, executive vice president, any
vice president, the secretary or the treasurer of such corporation;
and with respect to any limited liability company, any manager
thereof.
Expected Amortization Schedule means, with respect to each Series or,
if applicable, each Class of Transition Bonds, the expected
amortization schedule for principal thereof, as specified in the
Series Supplement therefor.
Expected Final Payment Date means, with respect to each Series or, if
applicable, each Class of Transition Bonds, the Payment Date related
to the date when all interest and principal is scheduled to be paid
with respect to that Series or Class in accordance with the Expected
Amortization Schedule, as specified in the Series Supplement
therefor.
FDIC means the Federal Deposit Insurance Corporation or its
successor.
Final Maturity Date means, for each Series or, if applicable, each
Class of Transition Bonds, the Payment Date related to the date by
which all principal of and interest on such Series or Class of
Transition Bonds is required to be paid, as specified in the Series
Supplement therefor.
Financing Issuance means an issuance of a new Series of Transition
Bonds under the Indenture to provide funds to finance the purchase by
the Issuer of Bondable Transition Property.
Financing Order means the bondable stranded cost rate order issued by
the BPU on September 17, 1999 pursuant to the Competition Act.
Fitch means Fitch, Inc., or its successor.
Formation Documents means, collectively, the Issuer LLC Agreement,
the Issuer Certificate of Formation and any other document pursuant
to which the Issuer is formed or governed, as each may be amended or
supplemented from time to time.
General Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
Grant means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and xxxxx x xxxx
upon and a security interest in and right of set-off against,
deposit, set over and confirm. A Grant of the Collateral or of any
other agreement or instrument shall include all rights, powers and
options (but none of the obligations) of the Granting party
thereunder, including the immediate and continuing right to claim
for, collect, receive and give receipt for principal, interest and
other payments in respect of the Collateral and all other moneys
payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all
rights and options, to bring Proceedings in the name of the Granting
party or otherwise and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or
with respect thereto.
Hedge Counterparty means PSE&G as hedge counterparty under the Hedge
Agreement.
Hedge Agreement means the ISDA Master Agreement and the related
Schedule and Confirmations, each dated January 5, 2001 between PSE&G
and the Issuer, as same may be amended or supplemented from time to
time.
Holder or Transition Bondholder means the Person in whose name a
Transition Bond of any Series or Class is registered in the
Transition Bond Register.
Indemnification Event means an event which triggers PSE&G's
obligation to indemnify the Issuer and the Trustee, for itself and on
behalf of the Transition Bondholders, and each of their respective
managers, officers, directors and agents, pursuant to Section 5.01 of
the Sale Agreement.
Indemnity Amount means the amount of any indemnification obligation
payable under the Basic Documents.
Indenture means the Indenture dated as of January 31, 2001, between
the Issuer and the Trustee, as the same may be amended and
supplemented from time to time by one or more Supplemental
Indentures, and shall include each Series Supplement and the forms
and terms of the Transition Bonds established thereunder.
Independent means, when used with respect to any specified Person,
that the Person
(a) is in fact independent of the Issuer, any other obligor
upon the Transition Bonds, PSE&G and any Affiliate of any
of the foregoing Persons,
(b) does not have any direct financial interest or any
material indirect financial interest in the Issuer, any
such other obligor, PSE&G or any Affiliate of any of the
foregoing Persons, and
(c) is not connected with the Issuer, any such other obligor,
PSE&G or any Affiliate of any of the foregoing Persons as
an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
Independent Certificate means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section
11.01 of the Indenture, made by an Independent appraiser or other
expert appointed by an Issuer Order and approved by the Trustee in
the exercise of reasonable care, and such opinion or certificate
shall state that the signer has read the definition of "Independent"
in this Appendix A and that the signer is Independent within the
meaning thereof.
Independent Manager has the meaning set forth in the Issuer LLC
Agreement.
Initial Purchase Price has the meaning set forth in Section 2.01 of
the Sale Agreement.
Initial Transfer Date means the Series Issuance Date for the first
Series of Transition Bonds.
Initial Transferred Bondable Transition Property means the Bondable
Transition Property sold by the Seller to the Issuer as of the
Initial Transfer Date pursuant to the Sale Agreement and the Xxxx of
Sale delivered on or prior to the Initial Transfer Date as identified
in such Xxxx of Sale.
Insolvency Event means, with respect to a specified Person,
(a) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of such
Person or any substantial part of its property in an
involuntary case under any applicable Federal or State
bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial
part of its property, or ordering the winding-up or
liquidation of such Person's affairs, and such decree or
order shall remain unstayed and in effect for a period of
90 consecutive days or
(b) the commencement by such Person of a voluntary case under
any applicable Federal or State bankruptcy, insolvency or
other similar law now or hereafter in effect, or the
consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property,
or the making by such Person of any general assignment
for the benefit of creditors, or the failure by such
Person generally to pay its debts as such debts become
due, or the taking of action by such Person in
furtherance of any of the foregoing.
Interest means, for any Payment Date for any Series or Class of
Transition Bonds, the sum, without duplication, of:
(a) an amount equal to the amount of interest accrued at the
applicable Interest Rate from the prior Payment Date with
respect to that Series or Class;
(b) any unpaid interest, to the extent permitted by law, plus
any interest accrued on this unpaid interest at the
applicable Interest Rate, to the extent permitted by
applicable law;
(c) if the Transition Bonds have been declared due and
payable, all accrued and unpaid interest thereon; and
(d) with respect to a Series or Class to be redeemed prior to
the next Payment Date, the amount of interest that will
be payable as interest on such Series or Class upon such
redemption.
Interest Rate means, with respect to each Series or Class of
Transition Bonds, the rate at which interest accrues on the principal
balance of Transition Bonds of such Series or Class, as specified in
the Series Supplement therefor.
Interest Rate Swap Agreement means any ISDA Master Agreement,
together with the related Schedule and Confirmation, between the
Issuer and a Swap Counterparty, as same may be amended or
supplemented from time to time, with respect to any Series or Class
of Transition Bonds.
Issuer means PSE&G Transition Funding LLC, a Delaware limited
liability company, or its successor under the Indenture or the party
named as such in the Indenture until a successor replaces it and,
thereafter, means the successor.
Issuer Annex means Annex 1 of the Servicing Agreement.
Issuer Certificate of Formation means the Amended and Restated
Certificate of Formation of the Issuer, dated January 25, 2001, which
was filed with the Delaware Secretary of State's Office on January
26, 2001, as the same may be amended or supplemented from time to
time.
Issuer LLC Agreement means the Amended and Restated Limited Liability
Company Agreement between the Issuer and PSE&G, as sole Member, dated
as of January 31, 2001, as the same may be amended or supplemented
from time to time.
Issuer Officer's Certificate means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described
in, and otherwise complying with, the applicable requirements of
Section 11.01 of the Indenture, and delivered to the Trustee. Unless
otherwise specified, any reference in the Indenture to an Officer's
Certificate shall be to an Officer's Certificate of any Authorized
Officer of the Issuer.
Issuer Opinion of Counsel means one or more written opinions of
counsel who may, except as otherwise expressly provided in the
Indenture, be employees of or counsel to the Issuer or the Seller and
who shall be reasonably satisfactory to the Trustee, and which
opinion or opinions shall be addressed to the Trustee, and shall be
in a form reasonably satisfactory to the Trustee.
Issuer Order or Issuer Request means a written order or request,
respectively, signed in the name of the Issuer by any one of its
Authorized Officers and delivered to the Trustee.
Legal Defeasance Option has the meaning specified in Section 4.01(b)
of the Indenture.
Lien means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.
Losses means collectively, any and all liabilities, obligations,
losses, damages, payments, costs or expenses of any kind whatsoever.
Manager has the meaning set forth in the Issuer LLC Agreement.
Market Transition Charge means the market transition charge that
PSE&G may impose on Customers pursuant to the Competition Act and the
Restructuring Order.
Member means PSE&G, as the sole member of the Issuer, in its capacity
as such member under the Issuer LLC Agreement.
Monthly Reconciliation Date means the last Business Day of each month
commencing with November 2014 (or such earlier month as the Servicer
shall have specified to the Issuer and the Trustee by not less than
30 days prior written notice).
Monthly Remittance Date means the 13th day of each calendar month (or
if such day is not a Business Day, the preceding Business Day)
beginning in March 2001.
Monthly Servicing Fee means the fee payable to the Servicer on a
monthly basis for services rendered, in accordance with Section 5.07
of the Servicing Agreement.
Moody's means Xxxxx'x Investors Service, Inc., or its successor.
MTC-Tax means the tax which PSE&G is entitled to impose under the
Restructuring Order.
New Jersey UCC means the Uniform Commercial Code, as in effect in the
State of New Jersey, as amended from time to time.
Officers' Certificate means a certificate signed by
(a) the chairman of the board, the president, the vice
chairman of the board, any executive vice president or
any vice president; and
(b) the treasurer, any assistant treasurer, the secretary or
any assistant secretary of PSE&G.
Operating Expenses means, with respect to the Issuer, all fees,
costs, expenses and indemnity payments owed by the Issuer, including,
without limitation, all amounts owed by the Issuer to the Trustee,
the Monthly Servicing Fee, the fees and expenses payable by the
Issuer to the Administrator under the Administration Agreement, the
fees and expenses payable by the Issuer to the Independent Managers
and Special Members of the Issuer, fees of the Rating Agencies, legal
fees and expenses of the Servicer pursuant to Section 3.10 of the
Servicing Agreement, legal and accounting fees, costs and expenses of
the Issuer, and legal, accounting or other fees, costs and expenses
of the Seller (including, without limitation, any costs and expenses
incurred by the Seller pursuant to Section 4.08 of the Sale
Agreement) under or in connection with the Basic Documents or the
Financing Order.
Opinion of Counsel means one or more written opinions of counsel who
may be an employee of or counsel to PSE&G, the Issuer or any other
Person (as the context may require), which counsel shall be
reasonably acceptable to the Trustee, the Issuer or the Rating
Agencies, as applicable, and which shall be in form reasonably
satisfactory to the Trustee, if applicable.
Outstanding with respect to Transition Bonds means, as of the date of
determination, all Transition Bonds theretofore authenticated and
delivered under the Indenture except:
(a) Transition Bonds theretofore canceled by the Transition
Bond Registrar or delivered to the Transition Bond
Registrar for cancellation;
(b) Transition Bonds or portions thereof the payment for
which money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent in trust
for the Holders of such Transition Bonds; provided,
however, that if such Transition Bonds are to be
redeemed, notice of such redemption has been duly given
pursuant to the Indenture or provision therefor,
satisfactory to the Trustee, made; and
(c) Transition Bonds in exchange for or in lieu of other
Transition Bonds which have been authenticated and
delivered pursuant to the Indenture unless proof
satisfactory to the Trustee is presented that any such
Transition Bonds are held by a protected purchaser;
provided that in determining whether the Holders of the requisite
Outstanding Amount of the Transition Bonds or any Series or Class
thereof have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document,
Transition Bonds owned by the Issuer, any other obligor upon the
Transition Bonds, PSE&G or any Affiliate of any of the foregoing
Persons shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Transition Bonds that the Trustee
knows to be so owned shall be so disregarded. Transition Bonds so
owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Transition
Bonds and that the pledgee is not the Issuer, any other obligor upon
the Transition Bonds, PSE&G or any Affiliate of any of the foregoing
Persons.
Outstanding Amount means the aggregate principal amount of all
Outstanding Transition Bonds or, if the context requires, all
Outstanding Transition Bonds of a Series or Class Outstanding at the
date of determination.
Overcollateralization means, with respect to any Payment Date, an
amount that, if deposited to the Overcollateralization Subaccount,
would cause the balance in such subaccount to equal the Scheduled
Overcollateralization Level for such Payment Date.
Overcollateralization Amount means, with respect to any Series of
Transition Bonds, the amount specified as such in the Series
Supplement therefor.
Overcollateralization Subaccount has the meaning specified in Section
8.02(a) of the Indenture.
Paying Agent means the Trustee or any other Person, including any
Person appointed pursuant to Section 3.02(b) of the Indenture, that
meets the eligibility standards for the Trustee specified in Section
6.11 of the Indenture and is authorized by the Issuer to make the
payments of principal of or premium, if any, or interest on the
Transition Bonds on behalf of the Issuer.
Payment Date means, with respect to each Series or Class of
Transition Bonds, each date or dates respectively specified as
Payment Dates for such Series or Class in the Series Supplement
therefor.
Person means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any
beneficiary thereof), business trust, limited liability company,
unincorporated organization or government or any agency or political
subdivision thereof.
Petition means the petition filed by PSE&G with the BPU, dated June
8, 1999.
Predecessor Transition Bond means, with respect to any particular
Transition Bond, every previous Transition Bond evidencing all or a
portion of the same debt as that evidenced by such particular
Transition Bond; and, for the purpose of this definition, any
Transition Bond authenticated and delivered under Section 2.06 of the
Indenture in lieu of a mutilated, lost, destroyed or stolen
Transition Bond shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Transition Bond.
Principal means, with respect to any Payment Date and each Series or
Class of Transition Bonds:
(a) the amount of principal scheduled to be paid on such
Payment Date in accordance with the Expected Amortization
Schedule;
(b) the amount of principal due on the Final Maturity Date of
any Series or Class on such Payment Date;
(c) the amount of principal due as a result of the occurrence
and continuance of an Event of Default and acceleration
of the Transition Bonds;
(d) the amount of principal and premium, if any, due as a
result of a redemption of Transition Bonds on such
Payment Date; and
(e) any overdue payments of principal.
Proceeding means any suit in equity, action at law or other judicial
or administrative proceeding.
Projected Transition Bond Balance means, as of any date, the sum of
the amounts provided for in the Expected Amortization Schedules for
each outstanding Series of Transition Bonds as of such date.
PSE&G means Public Service Electric and Gas Company, a New Jersey
corporation, or its successor.
Rating Agency means, as of any date, any rating agency rating the
Transition Bonds of any Class or Series at the time of issuance
thereof at the request of the Issuer. If no such organization or
successor is any longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization or other
comparable Person designated by the Issuer, notice of which
designation shall be given to the Trustee, the Member and the
Servicer.
Rating Agency Condition means, with respect to any action, the
notification by the Trustee to each Rating Agency of such action and
the notification from each of Fitch and S&P to the Trustee and the
Issuer that such action will not result in a reduction or withdrawal
of the then current rating by such Rating Agency of any Outstanding
Series or Class of Transition Bonds.
Reconciliation Date means an Annual Reconciliation Date or a Monthly
Reconciliation Date, as appropriate.
Record Date has the meaning set forth in each Supplemental Indenture.
Redemption Date means, with respect to each Series or Class of
Transition Bonds, the date for the redemption of the Transition Bonds
of such Series or Class pursuant to Sections 10.01 or 10.02 of the
Indenture or the Series Supplement for such Series or Class, which in
each case shall be a Payment Date.
Redemption Price has the meaning set forth in Section 10.01 of the
Indenture.
Refunding Issuance means an issuance of a new Series of Transition
Bonds under the Indenture to pay the cost of refunding, through
redemption or payment on the Expected Final Payment Date for a Series
or Class of Transition Bonds, all or part of the Transition Bonds of
such Series or Class to the extent permitted by the terms thereof.
Registered Holder means, as of any date, the Person in whose name a
Transition Bond is registered in the Transition Bond Register on such
date.
Released Parties has the meaning specified in Section 5.02(f) of the
Servicing Agreement.
Remittance Date means a Daily Remittance Date or a Monthly Remittance
Date, as applicable.
Required Capital Amount means with respect to any Series, the amount
required to be deposited in the Capital Subaccount on the Series
Issuance Date of such Series, as specified in the related Series
Supplement.
Reserve Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.
Responsible Officer means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any vice
president, assistant vice president, secretary, assistant secretary,
or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers
and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
Restructuring Order means the order of the BPU issued on August 24,
1999 pursuant to Section 13 of the Competition Act.
Retiring Trustee means a Trustee that resigns or vacates the office
of Trustee for any reason.
Sale Agreement means the Bondable Transition Property Sale Agreement
dated January 31, 2001 between the Seller and the Issuer, as the same
may be amended or supplemented from time to time.
Scheduled Overcollateralization Level means, with respect to each
Series and any Payment Date, the amount with respect to such Series
set forth as such in Schedule 1 of the Indenture, as such Schedule
has been adjusted in accordance with Section 3.19 of the Indenture to
reflect redemptions or defeasances of Transition Bonds and issuances
of additional Series of Transition Bonds.
Securities Account Control Agreement means the securities account
control agreement by and between PSE&G Transition Funding LLC, as
debtor, the Trustee as the Secured Party and The Bank of New York, in
its capacity as securities intermediary thereunder.
Seller means PSE&G, in its capacity as seller of the Bondable
Transition Property to the Issuer pursuant to the Sale Agreement.
Series means any series of Transition Bonds issued by the Issuer and
authenticated by the Trustee pursuant to the Indenture, as specified
in the Series Supplement therefor.
Series Capital Subaccount has the meaning specified in Section
8.02(a) of the Indenture.
Series Final Maturity Date means the Final Maturity Date for a Series.
Series Issuance Date means, with respect to any Series, the date on
which the Transition Bonds of such Series are to be originally issued
in accordance with Section 2.10 of the Indenture and the Series
Supplement for such Series.
Series Overcollateralization Subaccount has the meaning specified in
Section 8.02(a) of the Indenture.
Series Subaccount has the meaning specified in Section 8.02(a) of the
Indenture.
Series Supplement means an indenture supplemental to the Indenture
that authorizes a particular Series of Transition Bonds, as the same
may be amended or supplemented from time to time.
Servicer means PSE&G, as the servicer of the Bondable Transition
Property, and each successor to PSE&G (in the same capacity) pursuant
to Section 5.03 or 6.04 of the Servicing Agreement.
Servicer Default means an event specified in Section 6.01 of the
Servicing Agreement.
Servicing Agreement means the Servicing Agreement dated as of January
31, 2001, between the Issuer and the Servicer, as the same may be
amended and supplemented from time to time.
Special Member has the meaning set forth in the Issuer LLC Agreement.
Standard & Poor's, or S&P, means Standard & Poor's Ratings Group, a
division of The XxXxxx-Xxxx Companies, or its successor.
State means any one of the 50 states of the United States of America
or the District of Columbia.
Subaccount means any of the subaccounts of the Collection Account
specified in Section 8.02 of the Indenture.
Subsequent Sale means the sale of additional Bondable Transition
Property by the Seller to the Issuer after the Initial Transfer Date,
subject to the satisfaction of the conditions specified in the Sale
Agreement and the Indenture.
Subsequent Transfer Date means the date that a sale of Subsequent
Transferred Bondable Transition Property will be effective, as
specified in a written notice provided by the Seller to the Issuer
pursuant to the Sale Agreement.
Subsequent Transferred Bondable Transition Property means Bondable
Transition Property sold by the Seller to the Issuer as of a
Subsequent Transfer Date pursuant to the Sale Agreement and the Xxxx
of Sale delivered on or prior to the Subsequent Transfer Date as
identified in such Xxxx of Sale.
Successor Servicer means a successor Servicer appointed by the
Trustee pursuant to Section 6.04 of the Servicing Agreement which
succeeds to all the rights and duties of the Servicer under the
Servicing Agreement.
Supplemental Indenture means a supplemental indenture entered into by
the Issuer and the Trustee pursuant to Article IX of the Indenture.
Swap Counterparty means, with respect to any Interest Rate Swap
Agreement, the swap counterparty under that Interest Rate Swap
Agreement.
TBC Collections means amounts received by the Servicer in respect of
the Transition Bond Charge.
Termination Notice has the meaning specified in Section 6.01 of the
Servicing Agreement.
Third Party means any third party, including any electric generation
supplier, providing billing or metering services, licensed by the BPU
pursuant to relevant provisions of the Competition Act, the BPU
Regulations and the Financing Order.
Transfer Date means the Initial Transfer Date or any Subsequent
Transfer Date, as applicable.
Transferred Bondable Transition Property means Bondable Transition
Property which has been sold, assigned and transferred to the Issuer
pursuant to the Sale Agreement.
Transition Bond means any of the transition bonds (as defined in the
Competition Act) issued by the Issuer pursuant to the Indenture.
Transition Bond Balance means, as of any date, the aggregate
Outstanding Amount of all Series of Transition Bonds on such date.
Transition Bond Charge means the Transition Bond Charge authorized by
the BPU to be imposed on all Customers by PSE&G or its successor to
recover Bondable Stranded Costs pursuant to the Competition Act and
the Financing Order.
Transition Bond Charge Adjustment means each adjustment to the
Transition Bond Charge related to the Transferred Bondable Transition
Property made in accordance with Section 4.01 of the Servicing
Agreement and the Issuer Annex.
Transition Bond Charge Adjustment Process means the process by which
the Transition Bond Charge is adjusted pursuant to the Servicing
Agreement, the Competition Act, the Petition and the Financing Order.
Transition Bond Owner means, with respect to a Book-Entry Transition
Bond, the Person who is the beneficial owner of such Book-Entry
Transition Bond, as reflected on the books of the Clearing Agency, or
on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such
Clearing Agency).
Transition Bond Register has the meaning specified in Section 2.05(a)
of the Indenture.
Transition Bond Registrar has the meaning specified in Section
2.05(a) of the Indenture.
Trust Indenture Act or TIA means the Trust Indenture Act of 1939, as
in force on the date hereof, unless otherwise specifically provided.
Trustee means The Bank of New York, a New York banking corporation,
or its successor, as trustee under the Indenture and in the capacity
specified in the first paragraph of the Indenture, or any successor
Trustee under the Indenture.
Underwriting Agreement means the Underwriting Agreement dated as of
January 25, 2001, among the Seller, the Issuer and Xxxxxx Brothers,
Inc., on behalf of itself and as the representative of the several
underwriters named therein.
U.S. Government Obligations means direct obligations (or certificates
representing an ownership interest in such obligations) of the United
States of America (including any agency or instrumentality thereof)
for the payment of which the full faith and credit of the United
States of America is pledged and which are not callable at the
issuer's option.
EXHIBIT A
SERVICING PROCEDURES
The Servicer agrees to comply with the following servicing
procedures:
SECTION 1. Definitions.
(a) Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Servicing Agreement dated as of
January 31, 2001, between the Issuer and PSE&G, as Servicer (the
"Servicing Agreement").
(b) Whenever used in this Exhibit A, the following words and phrases
shall have the following meanings:
Adjustment Request has, with respect to the Issuer, the meaning
given to such term in Appendix A.
Applicable MDMA means with respect to each Customer, the meter
data management agent or Third Party providing meter reading
services for that Customer's account.
Applicable Third Party means, with respect to each Customer, the
Third Party, if any, providing billing or metering services to
that Customer.
Billed Transition Bond Charges means the amounts billed to
Customers pursuant to the Transition Bond Charge, whether billed
directly to such Customers by the Servicer or indirectly through a
Third Party pursuant to Consolidated Third Party Billing.
Bills means each of the regular monthly bills, the summary bills,
the opening bills and the Closing Bills issued to Customers or
Third Parties by PSE&G.
Budget Payment Plan means a levelized payment plan offered by
PSE&G, which, if elected by a Customer, provides for level monthly
Xxxx charges to such Customer. For residential Customers, this
charge is calculated by calculating actual electricity charges for
the previous year and dividing this amount by twelve. The number
which results from this calculation is charged to the residential
Customer each month. In the twelfth month, PSE&G bills the
residential Customer for actual use in that month, adjusted for
any excess or deficit the Customer has paid PSE&G over the prior
eleven months. If the Customer owes PSE&G $4 or more over the
normal budget amount, that Customer has the option repaying the
full amount in the twelfth month, or spreading the amount of this
deficit in equal installments over the first four months of the
Customer's next budget year. The procedure is similar for small
industrial and commercial Customers.
Closing Xxxx means the final xxxx issued to a Customer at the time
service is terminated.
Consolidated Third Party Billing means the billing option
available to Customers served by a Third Party pursuant to which
such Third Party will be responsible for billing and collecting
all charges to Customers electing such billing option, including
the Transition Bond Charge, and will become obligated to the
Servicer for the Billed Transition Bond Charges, all in accordance
with applicable BPU Regulations and the Financing Order.
Net Write-Off Percent means the number (expressed as a percent)
equal to:
(i) the amount by which Write-Offs attributable to a particular
Billing Period exceed Write-Off recoveries attributable to such
Billing Period, divided by
(ii) the total billed revenue attributable to such Billing Period.
Servicer Policies and Practices means, with respect to the
Servicer's duties under this Exhibit A, the policies and practices
of the Servicer applicable to such duties that the Servicer
follows with respect to comparable assets that it services for
itself.
Transition Bond Charge Effective Date means the date on which the
initial Transition Bond Charge goes into effect pursuant to the
Financing Order.
Variables includes the following variables used in calculating
Adjustment Requests:
(i) the 30-day outstanding billed revenue;
(ii) the 60-day outstanding billed revenue;
(iii) the 90-day outstanding billed revenue;
(iv) the 120-day outstanding billed revenue;
(v) the 150-day outstanding billed revenue;
(vi) the 180-day outstanding billed revenue;
(vii) the estimated Net Write-Off percentage; and
(viii) the projected billed consumption to which the
Transaction Bond Charge applies.
Write-Offs means write-offs of the Billed Transition Bond Charge
that remain unpaid by Customers or Third Parties as of 50-80 days
after the issuance of the Closing Bills containing such charges.
SECTION 2. Data Acquisition.
(a) Installation and Maintenance of Meters. Except to the extent that
a Third Party is responsible for such services, the Servicer shall
use its best efforts to cause to be installed, replaced and
maintained meters in such places and in such condition as will enable
the Servicer to obtain usage measurements for each Customer
approximately every 30 days or as provided in the applicable tariff.
(b) Meter Reading. At least once each calendar month, the Servicer
shall obtain usage measurements from the Applicable MDMA for each
Customer; provided, however, that the Servicer may determine any
Customer's usage on the basis of estimates in accordance with
applicable BPU Regulations.
(c) Cost of Metering. The Issuer shall not be obligated to pay any
costs associated with the metering duties set forth in this Section
2, including, but not limited to, the costs of installing, replacing
and maintaining meters, nor shall the Issuer be entitled to any
credit against the Servicing Fee for any cost savings realized by the
Servicer or any Third Party as a result of new metering and/or
billing technologies.
SECTION 3. Usage and Xxxx Calculation.
The Servicer shall obtain a calculation of each Customer's usage
(which may be based on data obtained from such Customer's meter read or on
usage estimates determined in accordance with applicable BPU Regulations)
at least once each calendar month and shall determine therefrom each
Customer's individual charge relating to the Transition Bond Charge to be
included on such Customer's Xxxx pursuant to the Financing Order and BPU
Regulations.
SECTION 4. Billing.
The Servicer shall implement the Transition Bond Charge as of the
Transition Bond Charge Effective Date and shall thereafter xxxx each
Customer or the Applicable Third Party for the respective Customer's
outstanding current and past due charges relating to the Transition Bond
Charge, accruing until all payments of principal and interest on each
Series of Transition Bonds and all other costs and expenses related to such
Series have been paid in accordance with the Indenture, all in accordance
with the following:
(a) Frequency of Bills; Billing Practices. In accordance with the
Servicer's then-existing Servicer Policies and Practices, as such
Servicer Policies and Practices may be modified from time to time,
the Servicer shall generate and issue a Xxxx to each Customer, or, in
the case of a Customer who has elected Consolidated Third Party
Billing, to an Applicable Third Party, for such Customer's respective
Transition Bond Charge as a general practice once approximately every
30 days or such other time period as allowed by the BPU, at the same
time, with the same frequency and on the same Xxxx as that containing
the Servicer's own charges to such Customer or Third Party, as the
case may be. In the event that the Servicer makes any material
modification to these practices, it shall notify the Issuer, the
Trustee and the Rating Agencies as soon as practicable, and in no
event later than 60 Business Days after such modification goes into
effect; provided, however, that
(i) the Servicer may not make any modification that will
materially adversely affect the Transition Bondholders, and
(ii) the Rating Agencies shall receive prior notice of any
modification that would change the frequency with which Bills
are issued or would change any tariff charged.
(b) Format.
(i) Each Xxxx to a Customer shall contain the charge corresponding
to the Transition Bond Charge owed by such Customer for the
Billing Period. The Customer's Xxxx will contain in text or in a
footnote, text substantially to the effect that a portion of the
monthly charge representing that Bondable Transition Property is
being collected on behalf of the Issuer as owner of the Bondable
Transition Property.
(ii) In the case of each Customer that has elected Consolidated
Third Party Billing, the Servicer shall deliver to the Applicable
Third Party itemized charges for such Customer including the
amount of such Customer's Transition Bond Charge to be remitted by
the Servicer to the Issuer.
(iii) The Servicer shall conform to such requirements in respect
of the format, structure and text of Bills delivered to Customers
and Third Parties as applicable BPU Regulations shall from time to
time prescribe. To the extent that Xxxx format, structure and text
are not prescribed by the Competition Act, other applicable law or
BPU Regulations, the Servicer shall, subject to clauses (i) and
(ii) above, determine the format, structure and text of all Bills
in accordance with its reasonable business judgment, its Servicer
Policies and Practices with respect to its own charges and
prevailing industry standards.
(c) Delivery. The Servicer shall deliver all Bills to Customers
(i) by United States mail in such class or classes as are
consistent with the Servicer Policies and Practices followed by
the Servicer with respect to its own charges or
(ii) by any other means, whether electronic or otherwise, that the
Servicer may from time to time use to present its own charges to
its Customers.
In the case of Customers that have elected Consolidated Third Party
Billing, the Servicer shall deliver all Bills to the Applicable Third
Parties by such means as are prescribed by applicable BPU
Regulations, or if not prescribed by applicable BPU Regulations, by
such means as are mutually agreed upon by the Servicer and the
Applicable Third Party and are consistent with BPU Regulations. The
Servicer or a Third Party, as applicable, shall pay from its own
funds all costs of issuance and delivery of all Bills, including but
not limited to printing and postage costs as the same may increase or
decrease from time to time.
SECTION 5. Customer Service Functions.
The Servicer shall handle all Customer inquiries and other Customer
service matters according to the same procedures it uses to service
Customers with respect to its own charges.
SECTION 6. Collections; Payment Processing; Remittance.
(a) Collection Efforts, Policies, Procedures.
(i) The Servicer shall use reasonable efforts to collect all
Billed Transition Bond Charges from Customers and Third Parties as
and when the same become due and shall follow such collection
procedures as it follows with respect to comparable assets that it
services for itself or others, including, as follows:
(A) The Servicer shall prepare and deliver overdue notices to
Customers and Third Parties in accordance with applicable BPU
Regulations and the Servicer Policies and Practices.
(B) The Servicer shall apply late payment charges to
outstanding Customer and Third Party balances in accordance
with applicable BPU Regulations. All late payment charges and
interest collected shall be payable to and retained by the
Servicer as a component of its compensation under the Servicing
Agreement, and the Issuer shall not have any right to share in
the same.
(C) The Servicer shall deliver verbal and written final call
notices in accordance with applicable BPU Regulations and
Servicer Policies and Practices.
(D) The Servicer shall adhere and carry out disconnection
policies in accordance with the Competition Act, other
applicable law and BPU Regulations and Servicer Policies and
Practices.
(E) The Servicer may employ the assistance of collections
agents in accordance with applicable BPU Regulations and
Servicer Policies and Practices.
(F) The Servicer shall apply Customer and Third Party deposits,
Customers' letters of credit and Customer posted surety bonds
to the payment of delinquent accounts in accordance with
applicable BPU Regulations and Servicer Policies and Practices
and according to the priorities set forth in Section 6(b)(ii),
(iii) and (iv) of this Exhibit A.
(G) The Servicer shall promptly take all necessary action in
accordance with applicable BPU Regulation to terminate billing
of Transition Bond Charges by Third Parties whose payments are
22 or more days delinquent and to collect the Billed Transition
Bond Charges directly from the applicable Customers.
(ii) The Servicer shall not waive any late payment charge or any
other fee or charge relating to delinquent payments, if any, or
waive, vary or modify any terms of payment of any amounts payable
by a Customer, in each case unless such waiver or action:
(A) would be in accordance with the Servicer's customary
practices or those of any successor Servicer with respect to
comparable assets that it services for itself and for others;
(B) would not materially adversely affect the rights of the
Transition Bondholders; and
(C) would comply with applicable law; provided, however, that
notwithstanding anything in the Servicing Agreement or this
Exhibit A to the contrary, the Servicer is authorized to write
off any Billed Transition Bond Charges, in accordance with its
Servicer Policies and Practices, that remain outstanding for
50-80 days.
(iii) The Servicer shall accept payment from Customers in respect
of Billed Transition Bond Charges in such forms and methods and at
such times and places as it accepts for payment of its own
charges. The Servicer shall accept payment from Third Parties in
respect of Billed Transition Bond Charges in such forms and
methods and at such times and places as the Servicer and each
Third Party shall mutually agree in accordance with applicable BPU
Regulations.
(b) Payment Processing; Allocation; Priority of Payments.
(i) The Servicer shall post all payments received to Customer
accounts as promptly as practicable, and, in any event,
substantially all payments shall be posted no later than two
Business Days after receipt.
(ii) Subject to clause (iii) below, the Servicer shall apply
payments received to each Customer's or Third Party's account in
proportion to the charges contained on the outstanding Xxxx to
such Customer or Third Party.
(iii) Any amounts collected by the Servicer that represent partial
payments of the total Xxxx to a Customer or Third Party shall be
allocated in accordance with the priorities set forth in Section
3.02(b) of the Servicing Agreement.
(iv) The Servicer shall hold all over-payments for the benefit of
the Issuer and shall apply such funds to future Xxxx charges in
accordance with clauses (ii) and (iii) above as such charges
become due.
(v) For Customers on a Budget Payment Plan, the Servicer shall
treat TBC Collections received from such Customers as if such
Customers had been billed for the Transition Bond Charge in the
absence of the Budget Payment Plan. Partial payment of a Budget
Payment Plan payment shall be allocated according to clause (iii)
above, and overpayment of a Budget Payment Plan payment shall be
allocated according to clause (iv) above.
(c) Accounts; Records.
(i) The Servicer shall maintain accounts and records as to the
Transferred Bondable Transition Property accurately and in
accordance with its standard accounting procedures and in
sufficient detail to permit reconciliation between payments or
recoveries with respect to the Transferred Bondable Transition
Property and the amounts from time to time remitted to the
Collection Account in respect of the Transferred Bondable
Transition Property.
(ii) The Servicer shall maintain accounts and records as to Third
Parties performing Consolidated Third Party Billing for Customers
accurately and in accordance with its standard accounting
procedures and in sufficient detail to permit reconciliation
between payments or recoveries with respect to the Transferred
Bondable Transition Property and amounts owed by such Customers in
respect of the Transition Bond Charge.
(d) Investment of TBC Collections. Prior to remittance on the
applicable Remittance Date, the Servicer may invest TBC Collections
received at its own risk and for its own benefit, and such
investments and funds shall not be required to be segregated from the
other investments and funds of the Servicer.
(e) Calculation of Collections; Determination of Aggregate Remittance
Amount.
(i) On or before each Remittance Date, the Servicer shall
calculate the total TBC Collections received by the Servicer from
or on behalf of Customers during prior Collection Periods in
respect of all previously Billed Transition Bond Charges.
(ii) In accordance with Section 4.01 of the Servicing Agreement
and Annex I, the Servicer shall update the Variables and shall
prepare Adjustment Requests to reflect the updated Variables when
required to do so pursuant to Annex I.
(f) Remittances.
(i) The Servicer shall make remittances to the Issuer in
accordance with Section 5.11 of the Servicing Agreement.
(ii) In the event of any change of account or change of
institution affecting the remittances, the Issuer shall provide
written notice thereof to the Servicer by the earlier of:
(A) five Business Days from the effective date of such change, or
(B) five Business Days prior to the next applicable Remittance
Date.
