EXHIBIT 4.1
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC,
Issuer
and
-----------------------
Trustee
---------------------
INDENTURE
Dated as of , 2002
---------------------
Securing Transition Bonds
Issuable in Series
TABLE OF CONTENTS
Article I DEFINITIONS AND INCORPORATION BY REFERENCE.......................................................... 2
Section 1.01. DEFINITIONS ................................................................................ 2
Section 1.02. INCORPORATION BY REFERENCE OF THE TRUST INDENTURE ACT....................................... 2
Section 1.03. RULES OF CONSTRUCTION....................................................................... 2
Article II THE TRANSITION BONDS............................................................................... 3
Section 2.01. FORM ....................................................................................... 3
Section 2.02. EXECUTION, AUTHENTICATION AND DELIVERY...................................................... 3
Section 2.03. DENOMINATIONS; TRANSITION BONDS ISSUABLE IN SERIES.......................................... 4
Section 2.04. TEMPORARY TRANSITION BONDS.................................................................. 5
Section 2.05. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE......................................... 6
Section 2.06. MUTILATED, DESTROYED, LOST OR STOLEN TRANSITION BONDS....................................... 7
Section 2.07. PERSONS DEEMED OWNER........................................................................ 8
Section 2.08. PAYMENT OF PRINCIPAL AND INTEREST; INTEREST ON OVERDUE PRINCIPAL;
PRINCIPAL AND INTEREST RIGHTS PRESERVED..................................................... 8
Section 2.09. CANCELLATION................................................................................ 9
Section 2.10. AMOUNT; AUTHENTICATION AND DELIVERY OF TRANSITION BONDS..................................... 9
Section 2.11. BOOK-ENTRY TRANSITION BONDS................................................................. 14
Section 2.12. NOTICES TO CLEARING AGENCY.................................................................. 15
Section 2.13. DEFINITIVE TRANSITION BONDS................................................................. 15
Article III COVENANTS......................................................................................... 16
Section 3.01. PAYMENT OF PRINCIPAL AND INTEREST........................................................... 16
Section 3.02. MAINTENANCE OF OFFICE OR AGENCY............................................................. 16
Section 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST...................................................... 16
Section 3.04. EXISTENCE .................................................................................. 18
Section 3.05. PROTECTION OF COLLATERAL.................................................................... 18
Section 3.06. OPINIONS AS TO COLLATERAL................................................................... 18
Section 3.07. PERFORMANCE OF OBLIGATIONS.................................................................. 19
Section 3.08. NEGATIVE COVENANTS.......................................................................... 19
Section 3.09. ANNUAL STATEMENT AS TO COMPLIANCE........................................................... 20
Section 3.10. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS......................................... 20
Section 3.11. SUCCESSOR OR TRANSFEREE..................................................................... 21
Section 3.12. NO OTHER BUSINESS........................................................................... 21
Section 3.13. NO BORROWING................................................................................ 21
Section 3.14. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES........................................... 21
Section 3.15. CAPITAL EXPENDITURES........................................................................ 22
Section 3.16. RESTRICTED PAYMENTS......................................................................... 22
Section 3.17. NOTICE OF EVENTS OF DEFAULT................................................................. 22
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Section 3.18. INSPECTION ................................................................................. 22
Section 3.19. ADJUSTED OVERCOLLATERALIZATION BALANCE SCHEDULES............................................ 23
Section 3.20. SALE AGREEMENT, SERVICING AGREEMENT, ADMINISTRATION AGREEMENT,
HEDGE AGREEMENT AND INTEREST RATE SWAP AGREEMENT COVENANTS.................................. 23
Section 3.21. TAXES ...................................................................................... 26
Section 3.22. SEPARATE ENTITY............................................................................. 26
Article IV SATISFACTION AND DISCHARGE; DEFEASANCE............................................................. 26
Section 4.01. SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE......................................... 26
Section 4.02. CONDITIONS TO DEFEASANCE.................................................................... 28
Section 4.03. APPLICATION OF TRUST MONEY.................................................................. 29
Section 4.04. REPAYMENT OF MONEYS HELD BY PAYING AGENT.................................................... 29
Article V REMEDIES............................................................................................ 29
Section 5.01. EVENTS OF DEFAULT........................................................................... 29
Section 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.......................................... 30
Section 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE............................. 31
Section 5.04. REMEDIES ................................................................................... 33
Section 5.05. OPTIONAL PRESERVATION OF THE COLLATERAL..................................................... 34
Section 5.06. LIMITATION OF PROCEEDINGS................................................................... 34
Section 5.07. UNCONDITIONAL RIGHTS OF TRANSITION BONDHOLDERS TO RECEIVE PRINCIPAL AND INTEREST............ 35
Section 5.08. RESTORATION OF RIGHTS AND REMEDIES.......................................................... 35
Section 5.09. RIGHTS AND REMEDIES CUMULATIVE.............................................................. 36
Section 5.10. DELAY OR OMISSION NOT A WAIVER.............................................................. 36
Section 5.11. CONTROL BY TRANSITION BONDHOLDERS........................................................... 36
Section 5.12. WAIVER OF PAST DEFAULTS..................................................................... 37
Section 5.13. UNDERTAKING FOR COSTS....................................................................... 37
Section 5.14. WAIVER OF STAY OR EXTENSION LAWS............................................................ 37
Section 5.15. ACTION ON TRANSITION BONDS.................................................................. 38
Article VI THE TRUSTEE........................................................................................ 38
Section 6.01. DUTIES AND LIABILITIES OF TRUSTEE........................................................... 38
Section 6.02. RIGHTS OF TRUSTEE........................................................................... 39
Section 6.03. INDIVIDUAL RIGHTS OF TRUSTEE................................................................ 39
Section 6.04. TRUSTEE'S DISCLAIMER........................................................................ 40
Section 6.05. NOTICE OF DEFAULTS.......................................................................... 40
Section 6.06. REPORTS BY TRUSTEE TO HOLDERS............................................................... 40
Section 6.07. COMPENSATION AND INDEMNITY.................................................................. 42
Section 6.08. REPLACEMENT OF TRUSTEE...................................................................... 42
Section 6.09. SUCCESSOR TRUSTEE BY MERGER................................................................. 43
Section 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE............................................... 43
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Section 6.11. ELIGIBILITY; DISQUALIFICATION............................................................... 44
Section 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER............................................ 45
Section 6.13. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE............................................... 45
Article VII TRANSITION BONDHOLDERS' LISTS AND REPORTS......................................................... 45
Section 7.01. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF TRANSITION BONDHOLDERS..................... 45
Section 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO TRANSITION BONDHOLDERS....................... 45
Section 7.03. REPORTS BY ISSUER........................................................................... 46
Section 7.04. REPORTS BY TRUSTEE.......................................................................... 46
Section 7.05. PROVISION OF SERVICER REPORTS............................................................... 47
Article VIII ACCOUNTS, DISBURSEMENTS AND RELEASES............................................................. 47
Section 8.01. COLLECTION OF MONEY......................................................................... 47
Section 8.02. COLLECTION ACCOUNT.......................................................................... 47
Section 8.03. RELEASE OF COLLATERAL....................................................................... 53
Section 8.04. ISSUER OPINION OF COUNSEL................................................................... 54
Section 8.05. REPORTS BY INDEPENDENT ACCOUNTANTS.......................................................... 54
Article IX SUPPLEMENTAL INDENTURES............................................................................ 55
Section 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF TRANSITION BONDHOLDERS........................... 55
Section 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF TRANSITION BONDHOLDERS.............................. 56
Section 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES........................................................ 58
Section 9.04. EFFECT OF SUPPLEMENTAL INDENTURE............................................................ 58
Section 9.05. CONFORMITY WITH TRUST INDENTURE ACT......................................................... 59
Section 9.06. REFERENCE IN TRANSITION BONDS TO SUPPLEMENTAL INDENTURES.................................... 59
Article X REDEMPTION OF TRANSITION BONDS...................................................................... 59
Section 10.01. OPTIONAL REDEMPTION BY ISSUER.............................................................. 59
Section 10.02. MANDATORY REDEMPTION BY ISSUER............................................................. 59
Section 10.03. FORM OF REDEMPTION NOTICE.................................................................. 60
Section 10.04. PAYMENT OF REDEMPTION PRICE................................................................ 60
Article XI MISCELLANEOUS...................................................................................... 61
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.................................................. 61
Section 11.02. FORM OF DOCUMENTS DELIVERED TO TRUSTEE..................................................... 61
Section 11.03. ACTS OF TRANSITION BONDHOLDERS............................................................. 62
Section 11.04. NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING AGENCIES...................................... 62
Section 11.05. NOTICES TO TRANSITION BONDHOLDERS; WAIVER.................................................. 63
Section 11.06. NOTICES TO LUXEMBOURG STOCK EXCHANGE....................................................... 64
Section 11.07. ALTERNATE PAYMENT AND NOTICE PROVISIONS.................................................... 64
Section 11.08. CONFLICT WITH TRUST INDENTURE ACT.......................................................... 64
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Section 11.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS................................................... 64
Section 11.10. SUCCESSORS AND ASSIGNS..................................................................... 65
Section 11.11. SEVERABILITY............................................................................... 65
Section 11.12. BENEFITS OF INDENTURE...................................................................... 65
Section 11.13. LEGAL HOLIDAYS............................................................................. 65
Section 11.14. GOVERNING LAW.............................................................................. 65
Section 11.15. COUNTERPARTS............................................................................... 65
Section 11.16. ISSUER OBLIGATION.......................................................................... 65
Section 11.17. NO PETITION................................................................................ 66
Section 11.18. PREFUNDING ................................................................................ 66
APPENDIX A ............MASTER DEFINITIONS
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INDENTURE, dated as of _____________, 2002, by and between ATLANTIC
CITY ELECTRIC TRANSITION FUNDING LLC, a Delaware limited liability company, as
Issuer, and ____________________, a ______________, in its capacity as trustee
for the benefit of the Holders of the Transition Bonds and as agent for itself
and any counterparty under any Interest Rate Swap Agreement (the "Trustee").
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for one or more Series of Transition Bonds, issuable as
provided in this Indenture. Each such Series of Transition Bonds will be issued
only under a separate Series Supplement to this Indenture duly executed and
delivered by the Issuer and the Trustee. The Issuer and the Trustee are entering
into this Indenture, and the Trustee is accepting the trusts created hereby,
each for good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, and each intends to be legally bound hereby.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee as trustee for the benefit
of (i) the Holders of the Transition Bonds from time to time issued and
outstanding, (ii) the Trustee and (iii) any counterparty under any Interest Rate
Swap Agreement, a security interest in all of the Issuer's right, title and
interest whether now owned or hereafter acquired, in, to and under: (a) all
Bondable Transition Property, including without limitation the Bondable
Transition Property transferred by the Seller to the Issuer from time to time
pursuant to the Sale Agreement and all proceeds thereof; (b) the Sale Agreement;
(c) all Bills of Sale delivered by the Seller pursuant to the Sale Agreement;
(d) the Servicing Agreement; (e) the Administration Agreement; (f) any Interest
Rate Swap Agreement; (g) the Collection Account and all subaccounts thereof
(including without limitation the General Subaccount, each Series
Overcollateralization Subaccount, each Series Capital Subaccount, each Series
Reserve Subaccount, each Series Subaccount, any Class Subaccount and any
Defeasance Subaccount), and all cash, securities, instruments, investment
property or other assets deposited in or credited to the Collection Account or
any Subaccount from time to time or purchased with funds therefrom; (h) all
investment property and all other property of whatever kind owned from time to
time by the Issuer other than: (w) any cash released to any counterparty under
any Interest Rate Swap Agreement by the Trustee from any related Class
Subaccount pursuant to the provisions of this Indenture or any Series
Supplement, (x) any cash or other property released to the Issuer by the Trustee
from the Collection Account and any Subaccount, (y) any payment received by the
Issuer pursuant to any Hedge Agreement and (z) the proceeds from the sale of the
Transition Bonds used to pay (1) the costs of issuance of the Transition Bonds
and the Upfront Transaction Costs and Capital Reduction Costs (as such terms are
defined in the BPU Financing Orders), (2) any amount payable by the Issuer
pursuant to any Hedge Agreement and (3) the purchase price of the Bondable
Transition Property paid pursuant to the Sale Agreement; (i) all present and
future claims, demands, causes and choses in action in respect of any or all of
the foregoing; and (j) all payments on or under and all proceeds of every kind
and nature whatsoever in respect of any or all of the foregoing, including all
proceeds of its conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, general intangibles,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and other
forms of obligations and receivables, instruments and other property that at any
time constitute all or part of or are included in the proceeds of any of the
foregoing (collectively, the "Collateral"); provided that any Collateral in the
Collection Account applied in favor of or released to the Issuer in accordance
with Section 8.02 or any other provision of this
Indenture or any Series Supplement shall not be subject to the lien of this
Indenture.
Such Grants are made to the Trustee to have and to hold in trust to
secure the payment of principal of, and interest on, and any other amounts owing
in respect of, the Transition Bonds and all fees, expenses, counsel fees and
other amounts due and owing to the Trustee and, if and to the extent provided in
any Series Supplement, any amounts due and owing to any counterparty under any
Interest Rate Swap Agreement (collectively, the "Secured Obligations"), equally
and ratably without prejudice, preference, priority or distinction, except as
expressly provided in this Indenture and to secure performance by the Issuer of
all of the Issuer's obligations under this Indenture with respect to the
Transition Bonds, all as provided in this Indenture.
The Trustee, as trustee on behalf of the Holders of the Transition
Bonds, and acting on behalf of itself and any counterparty under any Interest
Rate Swap Agreement acknowledges such Grant, accepts the trusts hereunder in
accordance with the provisions hereof and agrees to perform its duties herein
required.
Article I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. DEFINITIONS.
Capitalized terms used but not otherwise defined in this Indenture
have the respective meanings set forth in Appendix A hereto unless the context
otherwise requires.
Section 1.02. INCORPORATION BY REFERENCE OF THE TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
Each of the following TIA terms used in this Indenture has the following
meaning:
"Commission" means the U.S. Securities and Exchange Commission, and
any successor thereof.
"indenture securities" means the Transition Bonds.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule have the
meanings assigned to them by such definitions.
Section 1.03. RULES OF CONSTRUCTION.
(a) An accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles as in
effect from time to time;
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(b) "including" means including without limitation, and "or" is used
in the inclusive sense;
(c) with respect to terms defined in Appendix A hereto, words in the
singular include the plural and words in the plural include the singular, and
personal pronouns refer to all persons regardless of gender;
(d) unless otherwise specified, references herein to sections or
articles are to the sections or articles of this Indenture; and
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Article II
THE TRANSITION BONDS
Section 2.01. FORM
(a) The Transition Bonds and the Trustee's certificate of
authentication shall be in substantially the forms set forth in Exhibit A to the
related Series Supplement, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture or by the related Series Supplement and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the Managers of the Issuer
executing such Transition Bonds, as evidenced by their execution of such
Transition Bonds. Any portion of the text of any Transition Bond may be set
forth on the reverse thereof, with an appropriate reference thereto on the face
of the Transition Bond. Each Transition Bond shall be dated the date of its
authentication.
(b) The Transition Bonds shall be typewritten, printed, lithographed
or engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the Manager executing such
Transition Bonds, as evidenced by such Manager's execution of such Transition
Bonds.
(c) Each Transition Bond shall bear upon its face the designation so
selected for the Series and Class, if any, to which it belongs. The terms of all
Transition Bonds of the same Series shall be identical, unless such Series is
made up of more than one Class, in which case the terms of all Transition Bonds
of the same Class shall be identical.
(d) Each Transition Bond shall state that the Competition Act
provides that the State of New Jersey pledges and agrees with the holders of the
Transition Bonds that "the State will not limit, alter or impair any bondable
transition property or other rights vested in an electric public utility or an
assignee or pledgee thereof or a financing entity or vested in the holders of
any transition bonds pursuant to a bondable stranded costs rate order until such
transition bonds, together with the interest and acquisition or redemption
premium, if any, thereon, are fully paid and discharged or until such agreements
are fully performed on the part of the electric public utility, any assignee or
pledgee thereof or the financing entity or in any way limit, alter, impair or
reduce the value or amount of the bondable transition property approved by a
bondable stranded costs rate order".
Section 2.02. EXECUTION, AUTHENTICATION AND DELIVERY.
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(a) The Transition Bonds shall be executed on behalf of the
Issuer by a Manager. The signature of any such Manager on the Transition Bonds
may be manual or facsimile.
(b) Transition Bonds bearing the manual or facsimile signature of
individuals who were at any time Managers shall bind the Issuer, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Transition Bonds.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver Transition Bonds executed on
behalf of the Issuer to the Trustee pursuant to an Issuer Order for
authentication; and the Trustee shall authenticate and deliver such Transition
Bond as in this Indenture provided and not otherwise.
(d) No Transition Bond shall be entitled to any benefit under this
Indenture, or be valid or obligatory for any purpose, unless there appears on
such Transition Bond a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Transition Bond shall
be conclusive evidence, and the only evidence, that such Transition Bond has
been duly authenticated and delivered hereunder.
(e) To the extent any of the Transition Bonds are listed on the
Luxembourg Stock Exchange and the rules and regulations of such exchange so
require, a transfer or other agent appointed pursuant to Section 3.02(b) shall
be authorized on behalf of the Trustee to execute and deliver such certificate
of authentication.
Section 2.03. DENOMINATIONS; TRANSITION BONDS ISSUABLE IN SERIES.
(a) The Transition Bonds of each Series shall be issuable as
registered Transition Bonds in the Authorized Denominations specified in the
Series Supplement therefor.
(b) The Transition Bonds may, at the election of and as
authorized by a Manager and set forth in a Series Supplement, be issued in one
or more Series (each of which may be comprised of one or more Classes), and
shall be designated generally as the "Transition Bonds" of the Issuer, with such
further particular designations added or incorporated in such title for the
Transition Bonds of any particular Series or Class as a Manager may determine,
as set forth in the Series Supplement therefor.
(c) Each Series of Transition Bonds shall be created by a
Series Supplement authorized by a Manager and establishing the terms and
provisions of such Series and, if applicable, any Classes thereof. All Series
and all Classes of each Series shall have the same Payment Dates and Adjustment
Dates. The several Series and any Classes thereof may differ as between Series
and Classes, in respect of any of the following matters:
(i) designation of the Series and each Class thereof;
(ii) the aggregate initial principal amount of the
Transition Bonds of the Series and each Class thereof;
(iii) the Interest Rate of the Series and each Class
thereof or the formula, if any,
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used to calculate the applicable Interest Rate or Interest Rates for
the Series and each Class thereof;
(iv) the Expected Final Payment Date of the Series and
each Class thereof;
(v) the Final Maturity Date of the Series and each Class
thereof;
(vi) the Series Issuance Date of the Series;
(vii) the place or places for payments with respect to
the Series and each Class thereof;
(viii) the Authorized Denominations for the Series and
each Class thereof;
(ix) the provisions, if any, for redemption by the
Issuer of the Series and each Class thereof;
(x) the Expected Amortization Schedule for the Series
and each Class thereof;
(xi) the Overcollateralization Amount with respect to
the Series for each Payment Date through the Final Maturity Date
thereof;
(xii) the Required Capital Amount with respect to the
Series;
(xiii) the Calculation Dates;
(xiv) the credit enhancement, if any, applicable to the
Series and each Class thereof; and
(xv) any other terms of the Series or each Class that
are not inconsistent with the provisions of this Indenture.
Section 2.04. TEMPORARY TRANSITION BONDS.
(a) Pending the preparation of definitive Transition Bonds
pursuant to Section 2.13, or in the case of Transition Bonds held in a
book-entry only system by a Clearing Agency, a Manager may execute, and upon
receipt of an Issuer Order the Trustee shall authenticate and deliver, temporary
Transition Bonds that are printed, lithographed, typewritten, mimeographed or
otherwise produced, of the tenor of the definitive Transition Bonds in lieu of
which they are issued and with such variations not inconsistent with the terms
of this Indenture as the Manager executing such Transition Bonds may determine,
as evidenced by such Manager's execution of such Transition Bonds.
(b) If temporary Transition Bonds are issued, the Issuer shall cause
definitive Transition Bonds to be prepared without unreasonable delay except
where temporary Transition Bonds are held by a Clearing Agency. After the
preparation of definitive Transition Bonds, the temporary Transition Bonds shall
be exchangeable for definitive Transition Bonds upon surrender of the temporary
Transition Bonds at the office or agency of the Issuer to be maintained as
provided in
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Section 3.02, without charge to any Holder. Upon surrender for cancellation of
any one or more temporary Transition Bonds, a Manager shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like Series (and
if applicable, Class) and aggregate initial principal amount of definitive
Transition Bonds in Authorized Denominations. Until so exchanged, the temporary
Transition Bonds shall in all respects be entitled to the same benefits under
this Indenture as definitive Transition Bonds.
Section 2.05. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Issuer shall cause to be kept a register (the
"Transition Bond Register") in which, subject to such reasonable regulations as
it may prescribe, the Issuer shall provide for the registration of Transition
Bonds and the registration of transfers of Transition Bonds. The Trustee shall
be the registrar (the Trustee or any successor thereof in such capacity, the
"Transition Bond Registrar") for the purpose of registering Transition Bonds and
transfers of Transition Bonds as herein provided. Upon any resignation of any
Transition Bond Registrar, the Issuer shall promptly appoint a successor or, if
it elects not to make such an appointment, assume the duties of Transition Bond
Registrar.
(b) If a Person other than the Trustee is appointed by the
Issuer as Transition Bond Registrar, the Issuer shall give the Trustee and any
transfer, paying or listing agent of the Issuer appointed pursuant to Section
3.02(b) prompt written notice of the appointment of such Transition Bond
Registrar and of the location, and any change in the location, of the Transition
Bond Register; the Trustee and any such agent shall have the right to inspect
the Transition Bond Register at all reasonable times and to obtain copies
thereof; and the Trustee and any such agent shall have the right to rely upon a
certificate executed on behalf of the Transition Bond Registrar by a duly
authorized officer thereof as to the names and addresses of the Holders of the
Transition Bonds and the original and Outstanding principal amounts and number
of such Transition Bonds (separately stated by Series and, if applicable,
Class).
(c) Upon surrender for registration of transfer of any
Transition Bond at the office or agency of the Issuer to be maintained as
provided in Section 3.02, a Manager on behalf of the Issuer shall execute, and
the Trustee shall authenticate and the Transition Bondholder shall obtain from
the Trustee, in the name of the designated transferee or transferees, one or
more new Transition Bonds in any Authorized Denominations, of a like Series
(and, if applicable, Class) and aggregate initial principal amount.
(d) At the option of the Holder, Transition Bonds may be
exchanged for other Transition Bonds of a like Series (and, if applicable,
Class) and aggregate initial principal amount in Authorized Denominations, upon
surrender of the Transition Bonds to be exchanged at the office or agency of the
Issuer to be maintained as provided in Section 3.02. Whenever any Transition
Bonds are so surrendered for exchange, a Manager on behalf of the Issuer shall
execute, and the Trustee shall authenticate and the Transition Bondholder shall
obtain from the Trustee, the Transition Bonds that the Transition Bondholder
making the exchange is entitled to receive.
(e) All Transition Bonds issued upon any registration of
transfer or exchange of Transition Bonds shall be the valid obligations of the
Issuer, evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Transition Bonds surrendered upon such registration of
transfer or exchange.
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(f) Every Transition Bond presented or surrendered for registration
of transfer or exchange shall be duly endorsed by, or be accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing,
with such signature guaranteed by an Eligible Guarantor Institution in the form
set forth in such Transition Bond.
(g) No service charge shall be made to a Holder for any registration
of transfer or exchange of Transition Bonds (except as may be required by the
rules and regulations of the Luxembourg Stock Exchange with respect to any
Transition Bonds listed thereon), but, other than in respect of exchanges
pursuant to Sections 2.04 or 9.06 not involving any transfer, the Issuer may
require payment by such Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Transition Bonds, including the fees and expenses of the
Trustee.
(h) The preceding provisions of this Section 2.05 notwithstanding,
except to the extent otherwise required by the rules and regulations of the
Luxembourg Stock Exchange with respect to any Transition Bonds listed thereon,
the Issuer shall not be required to make, and the Transition Bond Registrar need
not register, transfers or exchanges of Transition Bonds selected for redemption
or transfers or exchanges of any Transition Bond for a period of 15 days
preceding the date on which final payment of principal is to be made with
respect to such Transition Bond.
Section 2.06. MUTILATED, DESTROYED, LOST OR STOLEN TRANSITION BONDS.
(a) If (i) any mutilated Transition Bond is surrendered to
the Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Transition Bond, and (ii) there is delivered
to the Trustee such security or indemnity as may be required by it to hold the
Issuer and the Trustee harmless, then, in the absence of notice to the Issuer,
the Transition Bond Registrar or the Trustee that such Transition Bond has been
acquired by a protected purchaser, a Manager on behalf of the Issuer shall
execute, and upon a Manager's request the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Transition Bond, a replacement Transition Bond of like Series (and, if
applicable, Class), tenor and initial principal amount in Authorized
Denominations, bearing a number not contemporaneously outstanding; provided,
however, that if any such destroyed, lost or stolen Transition Bond, but not a
mutilated Transition Bond, shall have become or within seven days shall be due
and payable, or shall have been called for redemption, instead of issuing a
replacement Transition Bond, the Issuer may pay such destroyed, lost or stolen
Transition Bond when so due or payable or upon the Redemption Date without
surrender thereof. If, after the delivery of such replacement Transition Bond or
payment of a destroyed, lost or stolen Transition Bond pursuant to the proviso
to the preceding sentence, a protected purchaser of the original Transition Bond
in lieu of which such replacement Transition Bond was issued presents for
payment such original Transition Bond, the Issuer and the Trustee shall be
entitled to recover such replacement Transition Bond (or such payment) from the
Person to whom it was delivered or any Person taking such replacement Transition
Bond from such Person to whom such replacement Transition Bond was delivered or
any assignee of such Person, except a protected purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Issuer or the Trustee in
connection therewith.
(b) Every replacement Transition Bond issued pursuant to this
Section 2.06 in replacement
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of any mutilated, destroyed, lost or stolen Transition Bond shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Transition Bond shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Transition Bonds
duly issued hereunder.
(c) The provisions of this Section 2.06 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Transition
Bonds.
Section 2.07. PERSONS DEEMED OWNER.
Prior to due presentment for registration of transfer of any
Transition Bond, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name any Transition Bond is registered (as
of the day of determination) as the owner of such Transition Bond for the
purpose of receiving payments of principal of and interest on such Transition
Bond and for all other purposes whatsoever, whether or not such Transition Bond
be overdue, and neither the Issuer or the Trustee nor any agent of the Issuer or
the Trustee shall be affected by notice to the contrary.
Section 2.08. PAYMENT OF PRINCIPAL AND INTEREST; INTEREST ON OVERDUE
PRINCIPAL; PRINCIPAL AND INTEREST RIGHTS PRESERVED.
(a) The Transition Bonds shall accrue interest as provided
in the form of Transition Bond attached to the Series Supplement for such
Transition Bonds, at the applicable Interest Rate specified therein, and such
interest shall be payable on each Payment Date as specified therein. Any
installment of interest or principal payable on any Transition Bond that is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Transition Bond (or one or
more Predecessor Transition Bonds) is registered on the Record Date for such
Payment Date, in the manner specified in the related Series Supplement, and if
not specified therein, either (i) by check mailed first-class, postage prepaid
to such Person's address as it appears on the Transition Bond Register on such
Record Date or (ii) with respect to Transition Bonds registered on a Record Date
in the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments shall be made by wire transfer in immediately available
funds to the account designated by such nominee, except for the final
installment of principal payable with respect to such Transition Bond on a
Payment Date, which shall be payable as provided in clause (b) below. The funds
represented by any such checks or other amounts returned undelivered shall be
held in accordance with Section 3.03.
(b) The principal of each Transition Bond of each Series (and, if
applicable, Class) shall be payable in installments on each Payment Date
specified in the Expected Amortization Schedule included in the form of
Transition Bond attached to the Series Supplement for such Transition Bonds, but
only to the extent that moneys are available for such payment pursuant to
Section 8.02. Failure to pay in accordance with such Expected Amortization
Schedule because moneys are not so available pursuant to Section 8.02 to make
such payments shall not constitute a Default or Event of Default under this
Indenture. Notwithstanding the foregoing, the entire Outstanding principal
amount of the Transition Bonds of any Series or Class shall be due and payable,
if not previously paid, either: (i) on the Final Maturity Date therefor, (ii) on
the date on which the Transition Bonds of all Series have been declared
immediately due and payable in accordance with Section 5.02 or (iii) on the
Redemption Date, if any, therefor. The Trustee shall notify the Person in whose
name a
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Transition Bond is registered, at the close of business on the second Record
Date preceding the Payment Date on which the Issuer expects the final
installment of principal of and interest on such Transition Bond to be paid.
Such notice shall be mailed no later than five days prior to such final Payment
Date, shall specify that such final installment of principal will be payable
only upon presentation and surrender of such Transition Bond and shall specify
the place where such Transition Bond may be presented and surrendered for
payment of such installment, which, so long as any Transition Bonds are listed
on the Luxembourg Stock Exchange, shall include the office of the paying agent
in Luxembourg appointed pursuant to Section 3.02(b). The Trustee shall also
arrange for such notice to be published in an Authorized Newspaper not later
than the fifth day of the month of the expected payment of such final
installment. Notices in connection with redemptions of Transition Bonds shall
also be mailed to Transition Bondholders as provided in Section 10.03.
(c) If the Issuer defaults in a payment of interest on the
Transition Bonds of any Series or in the payment of any amount payable to any
counterparty under any Interest Rate Swap Agreement, the Issuer shall pay
defaulted interest, plus interest on such defaulted interest at the applicable
Interest Rate in any lawful manner. The Issuer may pay such defaulted interest
to the Persons who, on a subsequent special record date (which date shall be at
least five Business Days prior to the payment date), are Transition Bondholders
at the rate specified in the related Series Supplement. In addition, the Issuer
may pay amounts to any counterparty under any Interest Rate Swap Agreement, at
the rate specified in the related Interest Rate Swap Agreement. In the case of a
default in a payment of interest on the Transition Bonds of any Series, the
Issuer shall fix or cause to be fixed any such special record date and payment
date, and, at least 15 days before any such special record date, the Issuer
shall mail to each affected Transition Bondholder a notice that states the
special record date, the payment date and the amount of defaulted interest to be
paid.
Section 2.09. CANCELLATION.
All Transition Bonds surrendered for payment, registration of
transfer, exchange or redemption shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee and shall be promptly canceled by the
Trustee. The Issuer may at any time deliver to the Trustee for cancellation any
Transition Bonds previously authenticated and delivered hereunder that the
Issuer may have acquired in any manner whatsoever, and all Transition Bonds so
delivered shall be promptly canceled by the Trustee. No Transition Bonds shall
be authenticated in lieu of or in exchange for any Transition Bonds canceled
pursuant to this Section 2.09, except as expressly permitted by this Indenture.
All canceled Transition Bonds may be held or disposed of by the Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it; provided that such Issuer Order is timely and the Transition
Bonds have not been previously disposed of by the Trustee.
Section 2.10. AMOUNT; AUTHENTICATION AND DELIVERY OF TRANSITION
BONDS.
(a) The Issuer may at any time and from time to time issue
hereunder Transition Bonds of a new Series either as a Financing Issuance or a
Refunding Issuance.
(b) Transition Bonds of a new Series may from time to time
be executed by a Manager on behalf of the Issuer and delivered to the Trustee
for authentication, and thereupon the same shall be authenticated and delivered
by the Trustee upon Issuer Request and upon delivery by the Issuer, at
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the Issuer's expense, to the Trustee of the following:
(i) Issuer Action. An Issuer Order authorizing and directing the
authentication and delivery of the Transition Bonds by the Trustee and
specifying the principal amount of Transition Bonds to be authenticated.
(ii) Authorizing Certificate. A certified resolution of the
Managers authorizing the execution and delivery of the Series Supplement
for the Transition Bonds applied for and the execution, authentication
and delivery of such Transition Bonds.
(iii) Series Supplement. A Series Supplement for the Series of
Transition Bonds being issued, which shall set forth the provisions and
form of the Transition Bonds of such Series (and, if applicable, each
Class thereof).
(iv) Certificates of the Issuer and the Seller.
(A) An Issuer Officer's Certificate dated as of the Series
Issuance Date, stating:
(1) that no Default has occurred and is continuing
under this Indenture and that the issuance of the
Transition Bonds being issued will not result in any
Default;
(2) that the Issuer has not assigned any interest or
participation in the Collateral except for the Grant
contained in this Indenture; that the Issuer has the power
and authority to Grant the Collateral to the Trustee as
security hereunder; and that the Issuer, subject to the
terms of this Indenture, has Granted to the Trustee a
security interest in all right, title and interest in, to
and under the Collateral free and clear of any Lien except
the Lien of this Indenture;
(3) that the Issuer has appointed the firm of
Independent certified public accountants as contemplated in
Section 8.05;
(4) that attached thereto are duly executed, true
and complete copies of the Sale Agreement and the Servicing
Agreement;
(5) that all financing statements with respect to
the Collateral which are required to be filed under the New
Jersey UCC or the uniform commercial code of any other
jurisdiction by the terms of the Sale Agreement, the
Servicing Agreement or this Indenture will be filed as
required; and
(6) that all conditions precedent provided in this
Indenture relating to the authentication and delivery of
the Transition Bonds have been complied with.
(B) An Officer's Certificate from the Seller, dated as of
the Series Issuance
15
Date, to the effect that, with respect to the Bondable Transition
Property to be transferred to the Issuer on such date, immediately
prior to the conveyance thereof to the Issuer pursuant to the Sale
Agreement:
(1) the Seller was the sole owner of such Bondable
Transition Property and such ownership interest was
perfected; such Bondable Transition Property will be
validly transferred and sold to the Issuer free and clear
of all Liens (other than Liens created by the Issuer in
favor of the Trustee pursuant to this Indenture or by the
Seller in favor of the Issuer pursuant to the Sale
Agreement) and such transfer will be perfected; the Seller
has the power and authority to own, sell and assign such
Bondable Transition Property to the Issuer; the Seller has
duly authorized such sale and assignment to the Issuer; and
the Seller has its chief executive office in the State of
New Jersey; and
(2) the attached copy of the BPU Financing Order
creating such Bondable Transition Property is true and
correct and is in full force and effect; and
(v) Issuer Opinion of Counsel. An Issuer Opinion of Counsel,
portions of which may be delivered by counsel for the Issuer and portions
of which may be delivered by counsel for the Seller and/or the Servicer,
dated as of the Series Issuance Date, subject to customary
qualifications, to the collective effect that:
(A) the Issuer has the power and authority to execute and
deliver the Series Supplement and this Indenture and to issue the
Transition Bonds being issued, each of the Series Supplement and
this Indenture and such Transition Bonds have been duly
authorized, executed and delivered, and the Issuer is duly
organized, is validly existing as a limited liability company and
in good standing under the laws of the jurisdiction of its
organization and is qualified to do business in any jurisdiction
wherein it is required to be so qualified;
(B) no authorization, approval or consent of any
governmental body is required for the valid issuance,
authentication or delivery of the Transition Bonds being issued,
except for any such authorization, approval or consent as has
already been obtained and as may be required under the blue sky
and other securities laws of any state;
(C) the Transition Bonds being issued, when executed and
authenticated in accordance with the provisions of this Indenture
and delivered, will constitute valid and binding obligations of
the Issuer entitled to the benefits of this Indenture and the
related Series Supplement;
(D) the BPU Financing Order authorizing the issuance of the
Transition Bonds being issued is final and nonappealable;
(E) this Indenture (including the related Series
Supplement), has been duly authorized, executed and delivered and
is a valid and binding agreement of the
16
Issuer, enforceable against the Issuer in accordance with its
terms except as such enforceability may be subject to bankruptcy,
insolvency, reorganization and other similar laws affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(F) the Sale Agreement and Xxxx of Sale relating to such
issuance have been duly authorized, executed and delivered and is
a valid and binding agreement of the Seller, enforceable against
the Seller in accordance with its terms except as such
enforceability may be subject to bankruptcy, insolvency,
reorganization and other similar laws affecting the rights of
creditors generally and general principles of equity (regardless
of whether such enforcement is considered in a proceeding in
equity or at law);
(G) the Servicing Agreement has been duly authorized,
executed and delivered and is a valid and binding agreement of the
Servicer, enforceable against the Servicer in accordance with its
terms except as such enforceability may be subject to bankruptcy,
insolvency, reorganization and other similar laws affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(H) each of the following is the case:
(1) the provisions of the Sale Agreement together
with the related Xxxx of Sale are effective to create, in
favor of the Issuer, a valid security interest (as such
term is defined in Section 1-201 of the New Jersey UCC) in
the Seller's rights in the Bondable Transition Property
described in the Xxxx of Sale, which security interest if
characterized as a transfer for security will secure the
amount paid by the Issuer for such Bondable Transition
Property, it being noted that the term "security interest"
includes both a sale and a transfer for security of an
account and no opinion need be expressed as to the proper
characterization of the transfer of such Bondable
Transition Property by the Seller to the Issuer,
(2) the security interest in favor of the Issuer in
such Bondable Transition Property has been perfected, and
(3) no other security interest of any other creditor
of the Seller (other than the Lien created by the Seller in
favor of the Issuer pursuant to the Sale Agreement) is
equal or prior to the security interest of the Issuer in
such Bondable Transition Property;
(I) upon the giving of value by the Trustee to the Issuer
with respect to the Collateral,
(1) this Indenture creates in favor of the Trustee,
to secure payment of the Transition Bonds being issued, a
valid security interest in the rights of the Issuer in, to
and under that portion of the Collateral subject to Article
9 of
17
the New Jersey UCC, including the Transferred Bondable Transition
Property (the "Article 9 Collateral"),
(2) upon filing of the related financing statement
in accordance with the New Jersey UCC, such security
interest will be perfected, and
(3) based solely on a review of the UCC Search
Reports, no other security interest of any other creditor
of the Issuer is equal or prior to the security interest of
the Trustee for the benefit of the Transition Bondholders
in the Article 9 Collateral;
(J) this Indenture has been duly qualified under the Trust
Indenture Act and either the Series Supplement for the Transition
Bonds being issued, has been duly qualified under the Trust
Indenture Act or no such qualification of such Series Supplement
is necessary;
(K) all instruments furnished to the Trustee conform to the
requirements of this Indenture and constitute all of the documents
required to be delivered hereunder for the Trustee to authenticate
and deliver such Transition Bonds being issued, and all conditions
precedent provided for in this Indenture relating to the
authentication and delivery of the Transition Bonds have been
complied with;
(L) either
(1) the registration statement covering the
Transition Bonds being issued is effective under the
Securities Act of 1933 and, to the best of such counsel's
knowledge and information, no stop order suspending the
effectiveness of such registration statement has been
issued under the Securities Act of 1933 nor have
proceedings therefor been instituted or threatened by the
Commission or
(2) the Transition Bonds being issued are exempt
from the registration requirements under the Securities Act
of 1933; and
(M) the Issuer is not now and, following the issuance of
the Transition Bonds will not be, required to be registered under
the Investment Company Act of 1940.
(vi) Accountant's Certificate or Opinion. A letter addressed to
the Issuer and the Trustee, complying with the requirements of Section
11.01, of a firm of Independent certified public accountants of
recognized national reputation to the effect that (A) such accountants
are Independent with respect to the Issuer within the meaning of this
Indenture and are independent public accountants within the meaning of
the standards of The American Institute of Certified Public Accountants,
and (B) with respect to the Collateral, they have made such
recalculations of calculations and information provided by the Issuer as
they have deemed necessary for the purpose of determining, and have
determined, that, based on the assumptions used in calculating the
Transition Bond Charge with respect to the related Transferred Bondable
Transition Property, and taking into account amounts available as of
18
the Series Issuance Date in the Subaccounts for each Series (after giving
effect to the issuance of such new Series and the application of the
proceeds therefrom), the Transition Bond Charge will be sufficient to pay
(1) assumed Operating Expenses when incurred, plus (2) any amounts due
under any Hedge Agreement or any Interest Rate Swap Agreement when due,
plus (3) any deposits required to be made of Overcollateralization
Amounts into the Overcollateralization Subaccount for such new Series as
set forth in the related Series Supplement and any deposits required to
be made of Overcollateralization Amounts for then outstanding Series of
Transition Bonds, if any, as set forth in their respective
overcollateralization schedules, plus (4) interest on the Transition
Bonds of such new Series at their respective Interest Rates when due as
set forth in the related Series Supplement and on all then outstanding
Series of Transition Bonds, if any, when due, plus (5) principal of the
Transition Bonds of such new Series in accordance with the Expected
Amortization Schedule set forth in the related Series Supplement and of
all then outstanding Series of Transition Bonds, if any, in accordance
with their respective Expected Amortization Schedules, plus (6) any
deposits required to be made in the Capital Subaccounts on all then
outstanding Series of Transition Bonds, if any, and found such
calculations to be mathematically correct.
(vii) Required Capital Amount. Evidence satisfactory to the
Trustee that the Required Capital Amount for such Series has been
credited to the Capital Subaccount for such Series.
(viii) Rating Agency Approval. Written notice from each Rating
Agency 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.
(ix) Xxxx of Sale. If the issuance of an additional Series of
Transition Bonds is a Financing Issuance, the Xxxx of Sale delivered to
the Issuer under the Sale Agreement with respect to the Bondable
Transition Property being purchased with the proceeds of such Financing
Issuance.
(x) Moneys for Refunding. If the issuance of a Series of
Transition Bonds is a Refunding Issuance, the amount of money necessary
to pay the outstanding principal balance of and interest on the
Transition Bonds being refunded to the Redemption Date for the Transition
Bonds being refunded upon redemption, such money to be deposited into a
separate account with the Trustee.
Section 2.11. BOOK-ENTRY TRANSITION BONDS.
Unless otherwise specified in the related Series Supplement, each Series
of Transition Bonds, upon original issuance, shall be issued in the form of a
typewritten Transition Bond or Transition Bonds representing the Book-Entry
Transition Bonds, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer. Such Transition Bond shall
initially be registered on the Transition Bond Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Transition Bond Owner
shall receive a definitive Transition Bond representing such Transition Bond
Owner's interest in such Transition Bond except as provided in Section 2.13.
Unless and until definitive, fully registered Transition Bonds (the "Definitive
Transition Bonds") have been issued to Transition Bondholders pursuant to
Section 2.13:
19
(a) the provisions of this Section 2.11 shall be in full force and
effect;
(b) the Transition Bond Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture (including the
payment of principal of and interest on the Transition Bonds and the giving of
instructions or directions hereunder) as the sole Holder of the Transition
Bonds, and shall have no obligation to the Transition Bond Owners;
(c) to the extent that the provisions of this Section 2.11 conflict with
any other provisions of this Indenture, the provisions of this Section shall
control;
(d) the rights of Transition Bond Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Transition Bond Owners and the Clearing Agency or the
Clearing Agency Participants. Pursuant to the DTC Agreement, unless and until
Definitive Transition Bonds are issued pursuant to Section 2.13, the initial
Clearing Agency shall make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and interest on
the Transition Bonds to such Clearing Agency Participants; and
(e) whenever this Indenture requires or permits actions to be taken based
upon instructions or directions of Holders of Transition Bonds evidencing a
specified percentage of the Outstanding Amount of the Transition Bonds or a
Series or Class thereof, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to such effect
from Transition Bond Owners or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial interest
in the Transition Bonds or such Series or Class and has delivered such
instructions to the Trustee.
Section 2.12. NOTICES TO CLEARING AGENCY.
Whenever a notice or other communication to the Transition Bondholders is
required under this Indenture, unless and until Definitive Transition Bonds
shall have been issued to Transition Bond Owners pursuant to Section 2.13, the
Trustee shall give all such notices and communications specified herein to be
given to Transition Bondholders to the Clearing Agency and shall have no
obligation to the Transition Bond Owners.
Section 2.13. DEFINITIVE TRANSITION BONDS.
(a) If (i) the Issuer advises the Trustee in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
as depository with respect to any Series or Class of Transition Bonds and the
Issuer is unable to locate a qualified successor, (ii) the Issuer, at its
option, advises the Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency with respect to any Series or
Class of Transition Bonds or (iii) after the occurrence of an Event of Default,
Transition Bond Owners representing beneficial interests aggregating at least a
majority of the Outstanding Amount of the Transition Bonds of all Series advise
the Trustee through the Clearing Agency in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Transition Bond Owners, then the Clearing Agency shall notify all
affected Transition Bond Owners and the Trustee of the occurrence of any such
event and of the availability of Definitive Transition Bonds to affected
Transition Bond Owners requesting the same. Upon surrender to the Trustee of the
typewritten Transition Bond or Transition
20
Bonds representing the Book-Entry Transition Bonds by the Clearing Agency,
accompanied by registration instructions, a Manager on behalf of the Issuer
shall execute and the Trustee shall authenticate the Definitive Transition Bonds
in accordance with the instructions of the Clearing Agency. None of the Issuer,
the Transition Bond Registrar or the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Any Definitive Transition Bonds
listed on the Luxembourg Stock Exchange shall be made available to the
Transition Bond Owners through the office of the transfer agent appointed
pursuant to Section 3.02(b). Upon the issuance of Definitive Transition Bonds,
the Trustee shall recognize the Holders of the Definitive Transition Bonds as
Transition Bondholders.
(b) Definitive Transition Bonds shall be transferable and exchangeable at
the offices of the Transition Bond Registrar or, with respect to any Transition
Bonds listed on the Luxembourg Stock Exchange, at the offices of the transfer
agent appointed pursuant to Section 3.02(b). With respect to any transfer of
such listed Transition Bonds, the new Definitive Transition Bonds registered in
the names specified by the transferee and the original transferor shall be
available at the offices of such transfer agent.
Article III
COVENANTS
Section 3.01. PAYMENT OF PRINCIPAL AND INTEREST.
The Issuer shall duly and punctually pay the principal of and interest on
the Transition Bonds in accordance with the terms of the Transition Bonds and
this Indenture; provided that except on the Final Maturity Date or the
Redemption Date for a Series or Class of Transition Bonds or upon the
acceleration of the Transition Bonds pursuant to Section 5.02, the Issuer shall
be obligated to pay the principal of such Transition Bonds on each Payment Date
therefor only to the extent moneys are available for such payment pursuant to
Section 8.02. Amounts properly withheld under the Code by any Person from a
payment to any Transition Bondholder of interest or principal shall be
considered as having been paid by the Issuer to such Transition Bondholder for
all purposes of this Indenture.
Section 3.02. MAINTENANCE OF OFFICE OR AGENCY.
(a) The Issuer shall maintain in the Borough of Manhattan, the City of
New York, an office or agency where Transition Bonds may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Transition Bonds and this Indenture may be served.
The Issuer hereby initially appoints the Trustee to serve as its agent for the
foregoing purposes. The Issuer shall give prompt written notice to the Trustee
and any agent appointed pursuant to clause (b) below of the location and
identity, and of any change in the location or identity, of any such office or
agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Trustee and each such agent with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Trustee as its agent
to receive all such surrenders, notices and demands.
(b) To the extent any of the Transition Bonds are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require, (i) the
Issuer shall maintain in Luxembourg (A) an office and a transfer agent where
Transition Bonds may be surrendered for registration of transfer or exchange,
(B) an office and a listing agent where notices and demands to or upon the
Issuer in
21
respect of the Transition Bonds and this Indenture may be served, and (C) an
office and a paying agent where payments in respect of the Transition Bonds may
be made and (ii) any reference in this Indenture to the office or agency of the
Issuer referenced in Section 3.02(a) or this Section 3.02(b) shall also refer to
such offices, and the transfer, listing and paying agents, of the Issuer in
Luxembourg, as applicable. The Issuer shall give the Trustee and any other agent
appointed under this Section 3.02(b) prompt written notice of the location and
identity, and of any change in the location or identity, of any such office or
agency.
Section 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST.
(a) As provided in Section 8.02(a), all payments of principal of and
interest on the Transition Bonds that are to be made from amounts withdrawn from
the Collection Account pursuant to Section 8.02(e) or Section 4.03 shall be made
on behalf of the Issuer by the Trustee or by another Paying Agent, and no
amounts so withdrawn from the Collection Account for payments of Transition
Bonds shall be paid over to the Issuer except as provided in this Section 3.03
and in Section 8.02.
(b) The Issuer shall cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section 3.03, that such Paying
Agent will:
(i) hold all sums held by it for the payment of principal of or
interest on the Transition Bonds in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee notice of any Default by the Issuer (or any
other obligor upon the Transition Bonds) of which such Paying Agent has
actual knowledge in the making of any payment required to be made with
respect to the Transition Bonds;
(iii) at any time during the continuance of any such Default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Trustee all sums held by such Paying Agent in trust for the payment of
Transition Bonds if at any time such Paying Agent ceases to meet the
standards required to be met by a Paying Agent at the time of its
appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Transition Bonds of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
(c) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts
22
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
(d) Subject to applicable laws with respect to escheat of funds, any
money held by the Trustee or any Paying Agent in trust for the payment of any
amount of principal of or interest on any Transition Bond and remaining
unclaimed for two years after such amount has become due and payable shall be
discharged from such trust and be paid to the Issuer; and the Holder of such
Transition Bond shall thereafter, as an unsecured general creditor, look only to
the Issuer for payment thereof (but only to the extent of the amounts so paid to
the Issuer), and all liability of the Trustee or such Paying Agent with respect
to such trust money shall thereupon cease; provided, however, that the Trustee
or such Paying Agent, before being required to make any such repayment, may at
the expense of the Issuer cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in the City of New York, and in an Authorized Newspaper,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining shall be repaid to the
Issuer. The Trustee may also adopt and employ, at the expense of the Issuer, any
other reasonable means of notification of such repayment (including mailing
notice of such repayment to Holders whose Transition Bonds have been called but
have not been surrendered for redemption or whose right to or interest in moneys
due and payable but not claimed is determinable from the records of the Trustee
or of any Paying Agent, at the last address of record for each such Holder).
Section 3.04. EXISTENCE.
Subject to Section 3.10, the Issuer shall keep in full effect its
existence, rights and franchises as a limited liability company under the laws
of the State of Delaware (unless it becomes, or any successor Issuer hereunder
is or becomes, organized under the laws of the United States of America or any
state thereof, in which case the Issuer shall keep in full effect its existence,
rights and franchises under the laws of such jurisdiction) and shall obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Transition Bonds, the Collateral and each
other instrument or agreement included therein.
Section 3.05. PROTECTION OF COLLATERAL.
(a) The Issuer shall from time to time execute and deliver all such
supplements and amendments hereto and all such filings, financing statements,
continuation statements, instruments of further assurance and other instruments,
and shall take such other action as may be necessary or advisable to:
(i) maintain and preserve the Grant, Lien and security interest
(and the priority thereof) of this Indenture or carry out more
effectively the purposes hereof;.
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral, including any Interest Rate
Swap Agreement;
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(iv) preserve and defend title to the Collateral and the rights of
the Trustee and the Transition Bondholders in the Collateral against the
claims of all Persons and parties; or
(v) pay any and all taxes levied or assessed upon all or any part
of the Collateral.
(b) The Issuer hereby designates the Trustee its agent and
attorney-in-fact to execute any filing with the BPU, financing statement,
continuation statement or other instrument required by the Trustee pursuant to
this Section 3.05.
Section 3.06. OPINIONS AS TO COLLATERAL.
(a) On or before March 31 in each calendar year, while any Series is
outstanding, commencing March 31, 2003, the Issuer shall furnish to the Trustee
an Issuer Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the execution and filing of
any filings pursuant to the New Jersey UCC of financing statements and
continuation statements as is necessary to maintain the Lien and security
interest, and the priority thereof, created by this Indenture and reciting the
details of such action or stating that in the opinion of such counsel no such
action is necessary to maintain such Grant, Lien and security interest, and the
priority thereof. Such Issuer Opinion of Counsel shall also describe the
execution and filing of any filings pursuant to the New Jersey UCC of financing
statements and continuation statements that will, in the opinion of such
counsel, be required to maintain the Grant, Lien and security interest of this
Indenture until March 31 in the following calendar year.
(b) Prior to the effectiveness of any amendment to the Sale Agreement or
the Servicing Agreement, the Issuer shall furnish to the Trustee an Issuer
Opinion of Counsel either (i) stating that, in the opinion of such counsel, all
filings, including filings pursuant to the New Jersey UCC, have been executed
and filed that are necessary fully to preserve and protect the interest of the
Issuer and the Trustee in the Transferred Bondable Transition Property and the
proceeds thereof, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (ii) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interest.
Section 3.07. PERFORMANCE OF OBLIGATIONS.
(a) The Issuer (i) shall diligently pursue any and all actions to enforce
its rights under each instrument or agreement included in the Collateral and
(ii) shall not take any action and shall use its best efforts not to permit any
action to be taken by others that would release any Person from any of such
Person's covenants or obligations under any such instrument or agreement or that
would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument or
agreement, except, in each case, as expressly provided in this Indenture, the
Sale Agreement, the Servicing Agreement, any Hedge Agreement, any Interest Rate
Swap Agreement or any other Basic Document.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to the Trustee in an Issuer Officer's Certificate shall be deemed to
be action taken by the Issuer. Initially, the Issuer has contracted with the
Administrator to assist the Issuer in performing its duties under this
Indenture.
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(c) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in the Sale Agreement, the Servicing
Agreement, any Hedge Agreement, any Interest Rate Swap Agreement and in all
other instruments and agreements included in the Collateral.
Section 3.08. NEGATIVE COVENANTS.
The Issuer shall not:
(a) except as expressly permitted by this Indenture, any other Basic
Document or any Hedge Agreement or Interest Rate Swap Agreement, add, sell,
transfer, exchange or otherwise dispose of any of the Collateral, unless
directed to do so by the Trustee in accordance with Article V;
(b) claim any credit on, or make any deduction from the principal,
interest or premium, if any, payable in respect of, the Transition Bonds (other
than amounts properly withheld from such payments under the Code or pursuant to
any Interest Rate Swap Agreement) or assert any claim against any present or
former Transition Bondholder by reason of the payment of taxes levied or
assessed upon the Issuer; or
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the Lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenants or obligations with respect to the Transition Bonds under this
Indenture except as may be expressly permitted hereby, (ii) permit any Lien
(other than the Lien created by this Indenture) to be created on or extend to or
otherwise arise upon or burden the Collateral or any part thereof, any interest
therein or the proceeds thereof or (iii) permit the Lien of this Indenture not
to constitute a continuing valid first priority security interest in the
Collateral.
Section 3.09. ANNUAL STATEMENT AS TO COMPLIANCE.
The Issuer shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Issuer (commencing with the fiscal year 2002), an Issuer
Officer's Certificate stating, as to the Manager signing such Issuer Officer's
Certificate, that
(a) a review of the activities of the Issuer during such fiscal year (or
relevant portion thereof) and of performance under this Indenture has been made
under such Manager's supervision; and
(b) to the best of such Manager's knowledge, based on such review, the
Issuer has complied with all conditions and covenants under this Indenture
throughout such fiscal year (or relevant portion thereof), or, if there has been
a default in complying with any such condition or covenant, describing each such
default and the nature and status thereof.
Section 3.10. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Issuer shall not consolidate or merge with or into any other Person
or sell substantially all of its assets to any other Person or dissolve, unless:
(a) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger or to whom substantially all of such assets are sold
shall be a Person organized and existing under the laws of the United States of
America or any state thereof and shall expressly assume by an
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indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of,
and interest and premium if any on, all Transition Bonds and the performance or
observance of every agreement and covenant of this Indenture on the part of the
Issuer to be performed or observed, all as provided herein and in the applicable
Series Supplement or Series Supplements;
(b) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger or to whom substantially all of such assets are sold
shall expressly assume all obligations and succeed to all rights of the Issuer
under the Sale Agreement, the Administration Agreement, the Servicing Agreement,
any Hedge Agreement and any Interest Rate Swap Agreement pursuant to an
assignment and assumption agreement executed and delivered to the Trustee, in
form satisfactory to the Trustee;
(c) immediately after giving effect to such consolidation, merger or
sale, no Default or Event of Default shall have occurred and be continuing;
(d) the Rating Agency Condition shall have been satisfied with respect to
such consolidation, merger or sale;
(e) the Issuer shall have received an Issuer Opinion of Counsel (and
shall have delivered copies thereof to the Trustee) to the effect that such
consolidation, merger or sale will not have any material adverse tax consequence
to the Issuer or any Transition Bondholder, complies with this Indenture and all
of the conditions precedent herein relating to such transaction and will result
in the Trustee maintaining a continuing valid first priority security interest
in the Collateral;
(f) neither the Bondable Transition Property nor any of the BPU Financing
Orders nor the rights of the Seller, the Servicer or the Issuer under the
Competition Act or under any BPU Financing Order shall be impaired thereby; and
(g) any action as is necessary to maintain the Lien and security interest
created by this Indenture shall have been taken.
Section 3.11. SUCCESSOR OR TRANSFEREE.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10, the Person formed by or surviving such consolidation or merger (if
other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon any sale by the Issuer of substantially all of its assets in a
sale that complies with Section 3.10, such party shall be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of such party with respect to the Transition Bonds and from every covenant and
agreement of the Sale Agreement, the Administration Agreement, the Servicing
Agreement, any Hedge Agreement and any Interest Rate Swap Agreement to be
observed or performed on the part of the Issuer.
Section 3.12. NO OTHER BUSINESS.
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The Issuer shall not engage in any business other than purchasing and
owning Bondable Transition Property, issuing Transition Bonds from time to time,
pledging its interest in the Collateral to the Trustee under this Indenture in
order to secure the Transition Bonds, entering into the Basic Documents and
performing its obligations hereunder and thereunder and performing activities
that are necessary, suitable or convenient to accomplish these purposes or are
incidental thereto.
Section 3.13. NO BORROWING.
The Issuer shall not issue, incur, assume, guarantee or otherwise become
liable, directly or indirectly, for any indebtedness except for the Transition
Bonds, obligations under any Hedge Agreement, any Interest Rate Swap Agreement
or any other credit enhancement agreements, and except as otherwise contemplated
by the Basic Documents.
Section 3.14. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.
Except as contemplated by the Basic Documents, the Issuer shall not make
any loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person, other
than any Eligible Investments.
Section 3.15. CAPITAL EXPENDITURES.
The Issuer shall not make any expenditure (by long-term or operating
lease or otherwise) for capital assets (either realty or personalty) other than
Bondable Transition Property purchased from the Seller pursuant to, and in
accordance with, the Sale Agreement.
Section 3.16. RESTRICTED PAYMENTS.
The Issuer shall not, directly or indirectly, (a) pay any dividend or
make any distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to any owner of a beneficial
interest in the Issuer or otherwise with respect to any ownership or equity
interest in, or ownership security of, the Issuer, (b) redeem, purchase, retire
or otherwise acquire for value any such ownership or equity interest or security
or (c) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that if no Event of Default shall have occurred and be
continuing or would otherwise result from such payment, the Issuer may make, or
cause to be made, any such dividends or distributions to any owner of a
beneficial interest in the Issuer or otherwise with respect to any ownership or
equity interest or security in or of the Issuer using funds that either have
been applied in favor of or released to the Issuer in accordance with Section
8.02 or any other provision of this Indenture or any Series Supplement or are
otherwise not subject to the Lien of this Indenture, to the extent that such
dividends or distributions would not cause amounts on deposit in the Capital
Subaccount for any then outstanding Series of Transition Bonds to fall below the
Required Capital Amount with respect to such Series. The Issuer shall not,
directly or indirectly, make payments to or distributions from the Collection
Account except in accordance with this Indenture and the Basic Documents.
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Section 3.17. NOTICE OF EVENTS OF DEFAULT.
The Issuer shall deliver to the Trustee, the Rating Agencies and (to the
extent the rules and regulations of the Luxembourg Stock Exchange so require)
any agent in Luxembourg appointed pursuant to Section 3.02(b) written notice in
the form of an Issuer Officer's Certificate of any Default or Event of Default,
its status and what action the Issuer is taking or proposes to take with respect
thereto within five Business Days after the occurrence thereof.
Section 3.18. INSPECTION.
The Issuer shall, on reasonable prior notice, permit any representative
of the Trustee, during the Issuer's normal business hours, to examine all the
books of account, records, reports and other papers of the Issuer, to make
copies and extracts therefrom, to cause such books to be audited annually by
Independent certified public accountants, and to discuss the Issuer's affairs,
finances and accounts with the Issuer's officers, employees and Independent
certified public accountants, all at such reasonable times and as often as may
be reasonably requested. The Trustee shall, and shall cause its representatives
to, hold in confidence all such information except, upon notice to the Issuer,
to the extent that (i) disclosure of such information may be required by law and
all reasonable applications for confidential treatment are unavailing or (ii)
the Trustee may reasonably determine that disclosure of such information is
consistent with its obligations hereunder.
Section 3.19. ADJUSTED OVERCOLLATERALIZATION BALANCE SCHEDULES.
Not later than the date on which a new Series of Transition Bonds is
issued or any outstanding Series of Transition Bonds is redeemed or defeased,
the Issuer shall deliver to the Trustee a replacement Schedule 1 to the related
Series Supplement, adjusted to reflect such issuance, redemption or defeasance
and setting forth the Scheduled Overcollateralization Level for each Payment
Date with respect to each Series.
Section 3.20. SALE AGREEMENT, SERVICING AGREEMENT, ADMINISTRATION
AGREEMENT, HEDGE AGREEMENT AND INTEREST RATE SWAP AGREEMENT COVENANTS.
(a) The Issuer shall take all lawful action to enforce its rights under
the Sale Agreement, the Servicing Agreement, the Administration Agreement, any
Hedge Agreement and any Interest Rate Swap Agreement and to compel or secure the
performance and observance by the Seller and the Servicer and any counterparty
under any Hedge Agreement and any Swap Agreement, of their respective
obligations to the Issuer under or in connection therewith in accordance with
the terms thereof. So long as no Event of Default occurs and is continuing, but
subject to Section 3.20(f), the Issuer may exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer under or in
connection with the Sale Agreement, the Servicing Agreement, the Administration
Agreement, any Hedge Agreement and any Interest Rate Swap Agreement.
(b) If an Event of Default occurs and is continuing, the Trustee may,
and, at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of (i) with respect to the Sale
Agreement, the Servicing Agreement the Administration Agreement or any Hedge
Agreement, the Holders of a majority of the Outstanding Amount of the Transition
Bonds of all Series or (ii) with respect to any Interest Rate Swap Agreement,
the Holders of that percentage
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of the Outstanding Amount of the Transition Bonds of the related Class specified
in the related Series Supplement, shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Seller, the Servicer, the
Administrator or any counterparty under any Hedge Agreement or Interest Rate
Swap Agreement in connection with the Sale Agreement, the Servicing Agreement,
the Administration Agreement, such Hedge Agreement or such Interest Rate Swap
Agreement, as the case may be, including the right or power to take any action
to compel or secure performance or observance by, as the case may be, the
Seller, the Servicer, the Administrator, or such counterparty of each of their
respective obligations to the Issuer thereunder, and to give any consent,
request, notice, direction, approval, extension or waiver thereunder, and any
right of the Issuer to take any such action shall be suspended.
(c) With the consent of the Trustee, the Sale Agreement, the Servicing
Agreement and the Administration Agreement may be amended at any time and from
time to time, so long as the Rating Agency Condition is satisfied with respect
to such amendment, without the consent of the Transition Bondholders or the
counterparty under any Hedge Agreement or any Interest Rate Swap Agreement.
However, such amendment may not adversely affect in any material respect (i) the
interest of any Transition Bondholder without the consent of the Holders of a
majority of the Outstanding Amount of the Transition Bonds of each Series or
Class materially and adversely affected thereby, or (ii) the interest of any
counterparty under any Interest Rate Swap Agreement without the consent of each
such counterparty materially and adversely affected thereby. Further, with the
consent of the Trustee and the counterparty under any Hedge Agreement or
Interest Rate Swap Agreement, such Hedge Agreement or Interest Rate Swap
Agreement, as the case may be, may be amended at any time and from time to time,
so long as the Rating Agency Condition is satisfied with respect to such
amendment; provided, however, that no such amendment may adversely affect in any
material respect the interest of any Transition Bondholder or any counterparty
under any Hedge Agreement or Interest Rate Swap Agreement without the consent of
66 2/3% of the Holders of the Outstanding Amount of the Transition Bonds of each
Series or Class and each such counterparty materially and adversely affected
thereby.
(d) If the Issuer, the Seller or the Servicer proposes to amend, modify,
waive, supplement, terminate or surrender, or agree to any amendment,
modification, waiver, supplement, termination, or surrender of, the terms of the
Sale Agreement, the Servicing Agreement, the Administration Agreement or any
Hedge Agreement or Interest Rate Swap Agreement, or waive timely performance or
observance thereunder by the Seller, the Servicer or the relevant counterparty,
respectively, in each case in such a way as would materially and adversely
affect the interests of any Class of any Series of Transition Bondholders or the
counterparty under any Hedge Agreement or Interest Rate Swap Agreement, the
Issuer shall first notify the Rating Agencies of the proposed amendment,
modification, waiver, supplement, termination or surrender. Upon receiving
notification regarding whether the Rating Agency Condition has been satisfied
with respect to such proposed action, the Issuer shall notify the Trustee, and
the Trustee shall notify the Transition Bondholders and each counterparty under
such Hedge Agreement or Interest Rate Swap Agreement, if applicable, of such
proposed action and whether the Rating Agency Condition has been satisfied with
respect thereto. With respect to any such proposed action related to the Sale
Agreement, the Servicing Agreement or the Administration Agreement, the Trustee
shall consent to such proposed action only (i) with the consent of the Holders
of a majority of the Outstanding Amount of the Transition Bonds of each Class of
each Series, and each counterparty under any Hedge Agreement or Interest Rate
Swap Agreement, in each case if such counterparty is materially and adversely
affected thereby and
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(ii) upon satisfaction of the Rating Agency Condition. With respect to any such
proposed action related to any Hedge Agreement or Interest Rate Swap Agreement,
the Trustee shall consent to such proposed action only (x) with the consent of
the Holders representing 66 2/3% of the Outstanding Amount of the Transition
Bonds of the related Series or Class, as the case may be, and each counterparty
under such Hedge Agreement or Interest Rate Swap Agreement, as the case may be,
materially and adversely affected thereby and (y) upon satisfaction of the
Rating Agency Condition with respect to such action. If any such amendment,
modification, supplement or waiver shall be so consented to by the Trustee or
such Holders, the Issuer shall execute and deliver, in its own name and at its
own expense, such agreements, instruments, consents and other documents as may
be necessary or appropriate in the circumstances. For so long as any of the
Transition Bonds are listed on the Luxembourg Stock Exchange and the rules of
that exchange so require, notice of such proposed action shall be published by
an agent to be appointed by the Issuer in an Authorized Newspaper promptly
following its effectiveness.
(e) If the Issuer or the Servicer proposes to amend, modify, waive,
supplement, terminate or surrender in any material respect, or to agree to any
material amendment, modification, waiver, supplement, termination or surrender
of, the Transition Bond Charge Adjustment Process, the Issuer shall notify the
Trustee and the Trustee shall notify Transition Bondholders of such proposal,
and the Trustee shall consent thereto only with the consent of the Holders a
majority of the Outstanding Amount of the Transition Bonds of each Series
materially and adversely affected thereby and only if the Rating Agency
Condition has been satisfied with respect thereto.
(f) Promptly following a default by, as applicable, the Seller, the
Servicer or a counterparty under the Sale Agreement, the Servicing Agreement,
any Hedge Agreement or any Interest Rate Swap Agreement, and at the Issuer's
expense, the Issuer shall take all such lawful actions as the Trustee may
request to compel or secure the performance and observance by the Seller, the
Servicer or such counterparty, as the case may be, of its obligations to the
Issuer thereunder or in connection therewith in accordance with the terms
thereof, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer thereunder or in connection therewith, to the
extent and in the manner directed by the Trustee, including the transmission of
notices of default on the part of the Seller, the Servicer or such counterparty,
as the case may be, thereunder and the institution of legal or administrative
actions or proceedings to compel or secure its performance of its obligations
thereunder.
(g) If the Issuer shall have actual knowledge of the occurrence of a
Servicer Default under the Servicing Agreement or an event of default,
termination event or downgrade event under any Hedge Agreement or Interest Rate
Swap Agreement, the Issuer shall promptly give written notice thereof to the
Trustee and the Rating Agencies, and shall specify in such notice what action,
if any, the Issuer is taking with respect to such default or event.
(h) If a Servicer Default shall arise from the failure of the Servicer to
perform any of its duties or obligations under the Servicing Agreement with
respect to the Bondable Transition Property or the Transition Bond Charge, the
Issuer shall take all reasonable steps available to it to remedy such failure.
The Issuer shall not take any action to terminate the Servicer's rights and
powers under the Servicing Agreement following a Servicer Default without the
prior written consent of the Trustee and of the Holders of a majority of the
Outstanding Amount of the Transition Bonds of all Series.
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(i) As promptly as possible after the giving of notice of termination to
the Servicer and the Rating Agencies of the Servicer's rights and powers
pursuant to Section 6.01 of the Servicing Agreement, the Trustee, with the
consent of the Holders of Transition Bonds evidencing not less than a majority
of the Outstanding Amount of the Transition Bonds of all Series, may appoint a
successor Servicer (the "Successor Servicer"), and such Successor Servicer shall
accept its appointment by a written assumption in a form acceptable to the
Issuer and the Trustee. A person shall qualify as a Successor Servicer only if
such Person satisfies the requirements of Section 6.04 of the Servicing
Agreement. In connection with any such appointment, the Issuer may make such
arrangements for the compensation of such Successor Servicer as it and such
Successor Servicer shall agree, subject to the limitations set forth below and
in the Servicing Agreement, and in accordance with Section 6.04 of the Servicing
Agreement, the Issuer shall enter into an agreement with such Successor Servicer
for the servicing of the Bondable Transition Property (such agreement to be in
form and substance satisfactory to the Trustee).
(j) Upon termination of the Servicer's rights and powers pursuant to the
Servicing Agreement, the Trustee shall promptly notify the Issuer, the
Transition Bondholders and the Rating Agencies of such termination. As soon as a
Successor Servicer is appointed, the Issuer shall notify the Trustee, the
Transition Bondholders and the Rating Agencies of such appointment, specifying
in such notice the name and address of such Successor Servicer.
(k) The Issuer shall not take any action to terminate or assign the
rights and powers of any counterparty under any Interest Rate Swap Agreement or
replace any such counterparty following an event of default, termination event
or downgrade event under such Interest Rate Swap Agreement without (i) the prior
written consent of the Trustee and of any Holders of Transition Bonds whose
consent is required under the Series Supplement for the related Series and
Class, and (ii) satisfying any other requirements set forth in such Series
Supplement and Interest Rate Swap Agreement.
(l) Upon termination or assignment of the rights and powers of any
counterparty under any Interest Rate Swap Agreement pursuant to such Interest
Rate Swap Agreement, the Trustee shall promptly inform the Issuer, the
Transition Bondholders of the related Class and the Rating Agencies of such
termination or assignment. As soon as a replacement counterparty is appointed,
the Issuer shall notify the Trustee, the Transition Bondholders of the related
Class and the Rating Agencies of such appointment, specifying in such notice the
name and address of such replacement counterparty.
Section 3.21. TAXES.
So long as any of the Transition Bonds are outstanding, the Issuer shall
pay all material taxes, assessments and governmental charges imposed upon it or
any of its properties or assets or with respect to any of its franchises,
business, income or property before any penalty accrues thereon if the failure
to pay any such taxes, assessments and governmental charges would, after any
applicable grace periods, notices or other similar requirements, result in a
Lien on the Collateral.
Section 3.22. SEPARATE ENTITY.
The Issuer shall take all reasonable steps to continue its identity as a
separate legal entity and to make it apparent to third persons that it is an
entity with assets and liabilities distinct from those of the Seller, other
Affiliates or any other Persons.
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Article IV
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 4.01. SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE.
(a) The Transition Bonds of any Series, all payment obligations with
respect thereto and this Indenture as it applies to such Series shall cease to
be of further effect and the Lien hereunder shall be released with respect to
such Series, interest shall cease to accrue on the Transition Bonds of such
Series and the Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Transition Bonds of such Series, when:
(i) either
(A) all Transition Bonds of such Series theretofore
authenticated and delivered (other than (1) Transition Bonds that
have been destroyed, lost or stolen and that have been replaced or
paid as provided in Section 2.06 and (2) Transition Bonds for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid
to the Issuer or discharged from such trust, as provided in
Section 3.03) have been delivered to the Trustee for cancellation;
or
(B) the Expected Final Payment Date or Redemption Date has
occurred with respect to all Transition Bonds of such Series not
theretofore delivered to the Trustee for cancellation, and the
Issuer has irrevocably deposited or caused to be irrevocably
deposited with the Trustee cash, in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on
such Transition Bonds not theretofore delivered to the Trustee on
the Expected Final Payment Date or Redemption Date, as applicable,
therefor;
(ii) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer with respect to such Series; and
(iii) the Issuer has delivered to the Trustee an Issuer Officer's
Certificate, an Issuer Opinion of Counsel and (if required by the TIA or
the Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.01
and each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture with respect
to Transition Bonds of such Series have been complied with.
(b) Subject to Sections 4.01(c) and 4.02, the Issuer at any time may
terminate (i) all its obligations under this Indenture with respect to the
Transition Bonds of any Series ("Legal Defeasance Option") or (ii) its
obligations under Sections 3.04, 3.05, 3.06 (other than with respect to amounts
in the Defeasance Account), 3.07, 3.08, 3.09, 3.10, 3.12, 3.13, 3.14, 3.15,
3.16, 3.17, 3.18, 3.19 and 3.20 and the operation of Section 5.01(d) ("Covenant
Defeasance Option") with respect to any Series of Transition Bonds. The Issuer
may exercise the Legal Defeasance Option with respect to any Series of
Transition Bonds notwithstanding its prior exercise of the Covenant Defeasance
Option with respect to such Series.
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(c) If the Issuer exercises the Legal Defeasance Option with respect to
any Series, the maturity of the Transition Bonds of such Series may not be (i)
accelerated pursuant to Section 5.02 or (ii) except as provided in Section 4.02,
redeemed. If the Issuer exercises the Covenant Defeasance Option with respect to
any Series, the maturity of the Transition Bonds of such Series may not be
accelerated because of an Event of Default specified in Section 5.01(d).
(d) Upon satisfaction of the conditions set forth herein to the exercise
of the Legal Defeasance Option or the Covenant Defeasance Option with respect to
any Series of Transition Bonds, the Trustee, on demand of and at the expense of
the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of the obligations that are terminated pursuant to such exercise.
(e) Notwithstanding Sections 4.01(a) and 4.01(b), (i) rights of
registration of transfer and exchange, (ii) rights of substitution of mutilated,
destroyed, lost or stolen Transition Bonds, (iii) rights of Transition
Bondholders to receive payments of principal and interest, but only from the
amounts deposited with the Trustee for such payments, (iv) Sections 4.03 and
4.04, (v) the rights, obligations and immunities of the Trustee hereunder
(including the rights of the Trustee under Section 6.07 and the obligations of
the Trustee under Section 4.03) and (vi) the rights of Transition Bondholders
under this Indenture with respect to the property deposited with the Trustee
payable to all or any of them, shall survive until the Transition Bonds of the
Series as to which this Indenture or certain obligations hereunder have been
satisfied and discharged pursuant to Section 4.01(a) or 4.01(b) and have been
paid in full. Thereafter, the obligations in Sections 6.07 and 4.04 with respect
to such Series shall survive.
Section 4.02. CONDITIONS TO DEFEASANCE.
(a) The Issuer may exercise the Legal Defeasance Option or the Covenant
Defeasance Option with respect to any Series of Transition Bonds only if:
(i) the Issuer irrevocably deposits or causes to be deposited in
trust with the Trustee cash or U.S. Government Obligations for the
payment of principal of and interest and premium, if any, on such Series
of Transition Bonds to the Expected Final Payment Date or Redemption Date
therefor, as applicable, such deposit to be made in the Defeasance
Subaccount for such Series of Transition Bonds;
(ii) the Issuer delivers to the Trustee a certificate from a
nationally recognized firm of Independent accountants expressing its
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited cash without investment will provide cash at such times and in
such amounts (but, in the case of the Legal Defeasance Option only, not
more than such amounts) as will be sufficient to pay in respect of the
Transition Bonds of such Series (A) subject to clause (B), principal in
accordance with the Expected Amortization Schedule therefor, (B) if such
Series is to be redeemed, the Redemption Price therefor on the Redemption
Date therefor and (C) interest when due;
(iii) in the case of the Legal Defeasance Option, 95 days pass
after the deposit is made and during such 95 day period no Default
specified in Section 5.01(e) or 5.01(f) occurs that is continuing at the
end of such period; provided, however, that in determining whether a
33
default under Section 5.01(e) has occurred, the requirement that the
decree or order shall remain unstayed and in effect for 90 days shall be
disregarded;
(iv) no Default has occurred and is continuing on the day of such
deposit and after giving effect thereto;
(v) in the case of the Legal Defeasance Option, the Issuer
delivers to the Trustee an Issuer Opinion of Counsel stating that (A) the
Issuer has received from, or there has been published by, the Internal
Revenue Service a ruling, or (B) since the date of execution of this
Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of the Transition Bonds of such Series
will not recognize income, gain or loss for federal income tax purposes
as a result of the exercise of such Legal Defeasance Option and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such legal defeasance
had not occurred;
(vi) in the case of the Covenant Defeasance Option, the Issuer
delivers to the Trustee an Issuer Opinion of Counsel to the effect that
the Holders of the Transition Bonds of such Series will not recognize
income, gain or loss for federal income tax purposes as a result of the
exercise of such Covenant Defeasance Option and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant defeasance had
not occurred; and
(vii) the Issuer delivers to the Trustee an Issuer Officer's
Certificate and an Issuer Opinion of Counsel, each stating that all
conditions precedent to the satisfaction and discharge of the Transition
Bonds of such Series to the extent contemplated by this Article IV have
been complied with.
(b) Notwithstanding any other provision of this Section 4.02 to the
contrary, no delivery of cash or U.S. Government Obligations to the Trustee
under this Section 4.02 shall terminate any obligations of the Issuer under this
Indenture with respect to any Transition Bonds that are to be redeemed prior to
the Expected Final Payment Date therefor until such Transition Bonds shall have
been irrevocably called or designated for redemption on a date thereafter on
which such Transition Bonds may be redeemed in accordance with the provisions of
this Indenture and either (i) proper notice of such redemption shall have been
given in accordance with the provisions of this Indenture or (ii) the Issuer
shall have given the Trustee, in form satisfactory to the Trustee, irrevocable
instructions to give, in the manner and at the times prescribed herein, notice
of redemption of such Series.
Section 4.03. APPLICATION OF TRUST MONEY.
All moneys or U.S. Government Obligations deposited with the Trustee
pursuant to Sections 4.01 or 4.02 with respect to any Series of Transition Bonds
shall be held in trust in the Defeasance Subaccount for such Series and applied
by it, in accordance with the provisions of the Transition Bonds and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Trustee may determine, to the Holders of the particular Transition Bonds for the
payment or redemption of which such moneys or obligations, as the case may be,
have been deposited with the Trustee, of all sums due and to become due thereon
for principal and interest. Such moneys or
34
obligations, as the case may be, shall be segregated and held apart solely for
paying such Transition Bonds, and such Transition Bonds shall not be entitled to
any amounts on deposit in the Collection Account other than amounts on deposit
in the Defeasance Subaccount for such Transition Bonds.
Section 4.04. REPAYMENT OF MONEYS HELD BY PAYING AGENT.
In connection with the satisfaction and discharge of this Indenture or
the Covenant Defeasance Option or Legal Defeasance Option with respect to the
Transition Bonds of any Series, all moneys then held by any Paying Agent other
than the Trustee under the provisions of this Indenture with respect to such
Transition Bonds shall, upon demand of the Issuer, be paid to the Trustee to be
held and applied according to Section 3.03 and thereupon such Paying Agent shall
be released from all further liability with respect to such moneys.
Article V
REMEDIES
Section 5.01. EVENTS OF DEFAULT.
"Event of Default" wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest on any Transition Bond when
the same becomes due and payable and the continuation of such default for five
Business Days;
(b) default in the payment of the then unpaid principal of any Transition
Bond of any Series or Class on the Final Maturity Date therefor;
(c) default in the payment of the Redemption Price for any Transition
Bond on the Redemption Date therefor;
(d) default in the observance or performance of any covenant or agreement
of the Issuer made in this Indenture (other than a covenant or agreement, a
default in the observance or performance of which is specifically dealt with in
clause (a), (b) or (c) above), or any representation or warranty of the Issuer
made in this Indenture or in any certificate or other writing delivered pursuant
hereto or in connection herewith proving to have been incorrect in any material
respect as of the time when made, and any such default or materially incorrect
representation or warranty, as the case may be, shall continue or not be cured,
for a period of 30 days after the earlier of (i) the date on which there shall
have been given, by registered or certified mail, to the Issuer and the Trustee
by the Holders of at least 25% of the Outstanding Amount of the Transition Bonds
of any Series or Class, a written notice specifying such default or materially
incorrect representation or warranty, as the case may be, and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder and
(ii) the date on which an officer of the Issuer has acquired actual knowledge of
the default;
(e) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of
the Collateral in an involuntary case or proceeding
35
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 the Issuer or for any
substantial part of the Collateral, or ordering the winding-up or liquidation of
the Issuer's affairs, and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days;
(f) the commencement by the Issuer of a voluntary case or proceeding
under any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent by
the Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for the Issuer or
for any substantial part of the Collateral, or the making by the Issuer of any
assignment for the benefit of creditors, or the failure by the Issuer generally
to pay its debts as such debts become due, or the taking of action by the Issuer
in furtherance of any of the foregoing; or
(g) any act or failure to act by the State of New Jersey or any of its
agencies (including the BPU), officers or employees that violates or is not in
accordance with the pledge and agreement of the State of New Jersey in Section
17.a. of the Competition Act.
Section 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
(a) If an Event of Default (other than an Event of Default under Section
5.01(g)) occurs and is continuing, then and in every such case either the
Trustee or the Holders of Transition Bonds representing not less than a majority
of the Outstanding Amount of the Transition Bonds of all Series may, but need
not, declare all the Transition Bonds to be immediately due and payable, by a
notice in writing to the Issuer (and to the Trustee if given by Transition
Bondholders), and upon any such declaration the unpaid principal amount of the
Transition Bonds of all Series, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
(b) At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as contemplated hereafter in this Article V, the Holders
of Transition Bonds representing a majority of the Outstanding Amount of the
Transition Bonds of all Series, by written notice to the Issuer and the Trustee,
may rescind and annul such declaration and its consequences, provided that:
(i) the Issuer has paid or deposited with the Trustee, for deposit
in the General Subaccount of the Collection Account, a sum sufficient to
pay
(A) all of the principal of, and interest and premium, if
any, on all Transition Bonds of all Series and all other amounts
that would then be due hereunder and under such Transition Bonds
if the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances
of the Trustee and its agents and counsel; and
36
(ii) all Events of Default, other than the nonpayment of the
principal of the Transition Bonds of all Series that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.12.
(c) No such rescission shall affect any subsequent Default or impair any
right consequent thereto.
Section 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
(a) The Issuer covenants that if (i) Default is made in the payment of
any interest on any Transition Bond when such interest becomes due and payable
and such Default continues for five Business Days, (ii) Default is made in the
payment of the then unpaid principal of any Transition Bond on the Final
Maturity Date therefor or (iii) Default is made in the payment of the Redemption
Price for any Transition Bond on the Redemption Date therefor, the Issuer shall,
upon demand of the Trustee, pay to it, for the benefit of the Holders of the
Transition Bonds of such Series, such amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee and its agents and counsel
and the whole amount then due and payable on such Transition Bonds for principal
and interest, with interest upon the overdue principal and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest, at the respective Interest Rate of such Series or the
applicable Class of such Series.
(b) In case the Issuer shall fail forthwith to pay the amounts specified
in clause (a) above upon such demand, the Trustee, in its own name and as
trustee of an express trust, may institute a Proceeding for the collection of
the sums so due and unpaid, and may prosecute such Proceeding to judgment or
final decree, and may enforce the same against the Issuer or other obligor upon
such Transition Bonds and collect in the manner provided by law out of the
property of the Issuer or other obligor upon such Transition Bonds, wherever
situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Trustee may, as
more particularly provided in Section 5.04, in its discretion, proceed to
protect and enforce its rights and the rights of the Transition Bondholders, by
such appropriate Proceedings as the Trustee shall deem most effective to protect
and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Trustee by this Indenture or by law including foreclosing or
otherwise enforcing the Lien on the Bondable Transition Property securing the
Transition Bonds or applying to the BPU or a court of competent jurisdiction for
sequestration of revenues arising with respect to such Bondable Transition
Property.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Transition Bonds or any Person having or claiming an ownership
interest in the Collateral, Proceedings under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Transition Bonds, or
37
to the creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of any Transition Bonds shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand pursuant to the provisions of
this Section 5.03, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Transition
Bonds and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for reimbursement
of all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence or
bad faith) and of the Transition Bondholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of Transition Bonds in any election of a
trustee, a standby trustee or Person performing similar functions in any
such Proceedings;
(iii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Transition Bondholders and of the
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
or the Holders of Transition Bonds allowed in any judicial proceedings
relative to the Issuer, its creditors and its property; and any trustee,
receiver, liquidator, custodian or other similar official in any such
Proceeding is hereby authorized by each of such Transition Bondholders to
make payments to the Trustee, and, in the event that the Trustee shall
consent to the making of payments directly to such Transition
Bondholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee
and their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee except as a result of negligence or bad
faith.
(e) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Transition Bondholder any plan of reorganization, arrangement, adjustment or
composition affecting the Transition Bonds or the rights of any Holder thereof
or to authorize the Trustee to vote in respect of the claim of any Transition
Bondholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Transition Bonds, may be enforced by the Trustee without the
possession of any of the Transition Bonds or the production thereof in any trial
or other Proceedings relative thereto, and any Proceedings instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys,
38
shall be for the ratable benefit of the Holders of the Transition Bonds.
(g) In any Proceedings brought by the Trustee (and also any Proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Transition Bonds, and it shall not be necessary to make any
Transition Bondholder a party to any such Proceedings.
Section 5.04. REMEDIES.
(a) If an Event of Default other than Section 5.01(g) occurs and is
continuing, the Trustee may do one or more of the following (subject to Section
5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Transition Bonds or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect from
the Issuer and any other obligor upon such Transition Bonds moneys
adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the New
Jersey UCC or the Competition Act or any other applicable law and take
any other appropriate action to protect and enforce the rights and
remedies of the Trustee and the Holders of the Transition Bonds;
(iv) sell the Collateral or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; and
(v) exercise all rights, remedies, powers, privileges and claims
of the Issuer against, as applicable, the Seller, the Servicer, the
Administrator or any counterparty under, as the case may be, the Sale
Agreement, the Servicing Agreement, the Administration Agreement, any
Hedge Agreement or any Interest Rate Swap Agreement, as provided in
Section 3.20(b);
provided, however, that the Trustee may not sell or otherwise liquidate any
portion of the Collateral following an Event of Default, other than an Event of
Default described in Section 5.01(a), 5.01(b) or 5.01(c), with respect to any
Series unless (A) the Holders of 100% of the Outstanding Amount of the
Transition Bonds of all Series consent thereto, (B) the proceeds of such sale or
liquidation distributable to the Transition Bondholders of all Series are
sufficient to discharge in full all amounts then due and unpaid upon such
Transition Bonds for principal, interest and premium, if any, or (C) the Trustee
determines that the Collateral will not continue to provide sufficient funds for
all payments on the Transition Bonds of all Series as they would have become due
if the Transition Bonds had not been declared due and payable and the Trustee
obtains the consent of Holders of 66 2/3% of the Outstanding Amount of the
Transition Bonds of all Series. In determining such sufficiency or insufficiency
with respect to clause (B) and (C), the Trustee may, but need not, obtain and
rely upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose. Upon any sale or other
liquidation of the Collateral or any portion thereof, the Trustee
39
shall apply the net proceeds of such sale or liquidation in accordance with
Section 8.02(e).
(b) If an Event of Default under Section 5.01(g) occurs and is
continuing, the Trustee, for the benefit of the Holders, shall be entitled and
empowered to the extent permitted by applicable law to institute or participate
in Proceedings reasonably necessary to compel performance of or to enforce the
pledge and agreement of the State of New Jersey in Section 17.a of the
Competition Act and to collect any monetary damages incurred by the Holders or
the Trustee as a result of any such Event of Default, and may prosecute any such
Proceeding to final judgment or decree. Such remedy shall be the only remedy
that the Trustee may exercise if the only Event of Default that has occurred and
is continuing is an Event of Default under Section 5.01(g).
Section 5.05. OPTIONAL PRESERVATION OF THE COLLATERAL.
If the Transition Bonds have been declared to be due and payable under
Section 5.02 following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, the Trustee may, but need
not, elect, as provided in Section 5.11(c), to maintain possession of the
Collateral and not sell or liquidate the same. It is the desire of the parties
hereto and the Transition Bondholders that there be at all times sufficient
funds for the payment of principal of and interest on the Transition Bonds, and
the Trustee shall take such desire into account when determining whether or not
to maintain possession of the Collateral or sell or liquidate the same. In
determining whether to maintain possession of the Collateral or sell or
liquidate the same, the Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
Section 5.06. LIMITATION OF PROCEEDINGS.
(a) No Holder of any Transition Bond of any Series shall have any right
to institute any Proceeding, judicial or otherwise, or to avail itself of any
remedies provided in the Competition Act, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(i) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount of
the Transition Bonds of all Series have made written request to the
Trustee to institute such Proceeding in respect of such Event of Default
in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee security
or indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceedings;
and
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60 day period by the Holders of a
majority of the Outstanding Amount
40
of the Transition Bonds of all Series;
it being understood and intended that no one or more Holders of Transition Bonds
shall have any right in any manner whatever by virtue of, or by availing
themselves of, any provision of this Indenture to affect, disturb or prejudice
the rights of any other Holders of Transition Bonds or to obtain or to seek to
obtain priority or preference over any other Holders or to enforce any right
under this Indenture, except in the manner herein provided.
(b) In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of
Transition Bonds, each representing less than a majority of the Outstanding
Amount of the Transition Bonds of all Series, the Trustee in its sole discretion
may determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
Section 5.07. UNCONDITIONAL RIGHTS OF TRANSITION BONDHOLDERS TO
RECEIVE PRINCIPAL AND INTEREST.
Notwithstanding any other provisions in this Indenture, the Holder of any
Transition Bond shall have the right, which is absolute and unconditional, and
shall not be impaired without the consent of each such Holder, (a) to receive
payment of (i) the interest, if any, on such Transition Bond on or after the due
dates thereof expressed in such Transition Bond or in this Indenture, (ii) the
unpaid principal, if any, of such Transition Bonds on or after the Final
Maturity Date therefor or (iii) in the case of redemption, receive payment of
the unpaid principal, if any, and interest, if any, on such Transition Bond on
or after the Redemption Date therefor and (b) to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
Section 5.08. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Transition Bondholder has instituted any Proceeding
to enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to the
Trustee or to such Transition Bondholder, then and in every such case the
Issuer, the Trustee and the Transition Bondholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Transition Bondholders shall continue as though no such
Proceeding had been instituted.
Section 5.09. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to the Trustee or to
the Transition Bondholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 5.10. DELAY OR OMISSION NOT A WAIVER.
No delay or omission of the Trustee or any Transition Bondholder to
exercise any right or
41
remedy accruing upon any Default or Event of Default shall impair any such right
or remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Transition Bondholders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the
Transition Bondholders, as the case may be.
Section 5.11. CONTROL BY TRANSITION BONDHOLDERS.
The Holders of a majority of the Outstanding Amount of the Transition
Bonds of all Series (or, if less than all Series or Classes are affected, of the
affected Series or Class or Classes) shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Trustee with respect to the Transition Bonds of such Series or Class or Classes
or exercising any trust or power conferred on the Trustee with respect to such
Series or Class or Classes; provided that:
(a) such direction shall not be in conflict with any rule of law or with
this Indenture;
(b) subject to the express terms of Section 5.04, any direction to the
Trustee to sell or liquidate the Collateral shall be by the Holders of
Transition Bonds representing not less than 100% of the Outstanding Amount of
the Transition Bonds of all Series;
(c) if the conditions set forth in Section 5.05 have been satisfied and
the Trustee elects to retain the Collateral pursuant to such Section and elects
not to sell or liquidate the same, then any direction to the Trustee by Holders
of Transition Bonds representing less than 100% of the Outstanding Amount of the
Transition Bonds of all Series to sell or liquidate the Collateral shall be of
no force and effect; and
(d) the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction;
provided, further, that, subject to Section 6.01, the Trustee need not take any
action that it determines might involve it in liability for which it reasonably
believes it will not be adequately indemnified against the costs, expenses and
liabilities that might be incurred by it in complying with this request. The
Trustee also need not take any action that it determines might materially and
adversely affect the rights of any Transition Bondholders not consenting to such
action.
Section 5.12. WAIVER OF PAST DEFAULTS.
(a) Prior to the declaration of the acceleration of the maturity
of the Transition Bonds of all Series as provided in Section 5.02, the Holders
of not less than a majority of the Outstanding Amount of the Transition Bonds of
all Series may waive any past Default or Event of Default and its consequences
except a Default (i) in payment of principal of, or interest or any premium on,
any of the Transition Bonds or (ii) in respect of a covenant or provision hereof
that cannot be modified or amended without the consent of all Holders of
Transition Bonds of all Series or Classes affected. In the case of any such
waiver, the Issuer, the Trustee and the Holders of the Transition Bonds shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereto.
42
(b) Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
Section 5.13. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Transition
Bond by such Holder's acceptance thereof shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.13 shall not apply to (a) any suit
instituted by the Trustee, (b) any suit instituted by any Transition Bondholder,
or group of Transition Bondholders, in each case holding in the aggregate more
than 10% of the Outstanding Amount of the Transition Bonds of a Series or (c)
any suit instituted by any Transition Bondholder for the enforcement of the
payment of (i) interest on any Transition Bond on or after the due dates
expressed in such Transition Bond and in this Indenture, (ii) the unpaid
principal, if any, of any Transition Bond on or after the Final Maturity Date
therefor or (iii) in the case of redemption, the unpaid principal of and
interest on any Transition Bond on or after the Redemption Date therefor.
Section 5.14. WAIVER OF STAY OR EXTENSION LAWS.
The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead or in any manner whatsoever, claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 5.15. ACTION ON TRANSITION BONDS.
The Trustee's right to seek and recover judgment on the Transition Bonds
or under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture. Neither
the Lien of this Indenture nor any rights or remedies of the Trustee or the
Transition Bondholders shall be impaired by the recovery of any judgment by the
Trustee against the Issuer or by the levy of any execution under such judgment
upon any portion of the Collateral or upon any of the assets of the Issuer.
Article VI
THE TRUSTEE
Section 6.01. DUTIES AND LIABILITIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the
43
rights and powers vested in it by this Indenture and use the same degree of care
and skill in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) this clause (c) does not limit the effect of clause (b) of
this Section 6.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to clauses (a), (b) and (c) of this Section 6.01.
(e) The Trustee shall not be liable for interest on any money received by
it except as provided in this Indenture or as the Trustee may agree in writing
with the Issuer.
(f) Money held in trust by the Trustee need not be segregated from other
funds held by the Trustee except to the extent required by law or the terms of
this Indenture, the Sale Agreement, the Servicing Agreement, any Hedge Agreement
or any Interest Rate Swap Agreement.
(g) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers,
if it shall have reasonable grounds to believe that repayments of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 6.01 and to the provisions of the TIA.
(i) Under no circumstances shall the Trustee be liable for any
indebtedness of the Issuer, the Servicer or the Seller evidenced by or arising
under the Transition Bonds or any Basic Document.
44
Section 6.02. RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Issuer Officer's Certificate or an Issuer Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on an Issuer Officer's Certificate or an Issuer Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent attorney, custodian, or nominee appointed with due care by it
thereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Transition Bonds shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
Section 6.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Transition Bonds and may otherwise deal with the Issuer or its
affiliates with the same rights it would have if it were not Trustee. Any Paying
Agent, Transition Bond Registrar, co-registrar or co-paying agent, or agent
appointed pursuant to Section 3.02(b) may do the same with like rights. However,
the Trustee must comply with Sections 6.11 and 6.12.
Section 6.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Transition Bonds. The
Trustee shall not be accountable for the Issuer's use of the proceeds from the
Transition Bonds, and the Trustee shall not be responsible for any statement of
the Issuer in this Indenture or in any document issued in connection with the
sale of the Transition Bonds or in the Transition Bonds other than the Trustee's
certificate of authentication. The Trustee shall not be responsible for the
form, character, genuineness, sufficiency, value or validity of any of the
Collateral or for or in respect of the validity or sufficiency of the Transition
Bonds (other than the certificate of authentication for the Transition Bonds) or
the Basic Documents, and the Trustee shall in no event assume or incur any
liability, duty or obligation to any Holder of a Transition Bond, in each case
other than as expressly provided for in this Indenture. The Trustee shall not be
liable for the default or misconduct of the Issuer, the Seller, the Servicer or
the Member or any Manager under any Basic Document or otherwise, or the default
or misconduct of any
45
counterparty under any Hedge Agreement or Interest Rate Swap Agreement, and the
Trustee shall have no obligation or liability to perform the obligations of the
Issuer.
Section 6.05. NOTICE OF DEFAULTS.
If a Default occurs and is continuing with respect to any Class or Series
and if it is actually known to a Responsible Officer of the Trustee, the Trustee
shall mail to each Rating Agency and to each Holder of Transition Bonds of all
Series notice of the Default within 90 days after it occurs or, in the case of a
Default that becomes an Event of Default before the lapse of 90 days, as soon as
practicable after such Default becomes an Event of Default and is actually known
by a Responsible Officer of the Trustee. Except in the case of a Default in
payment of principal of or interest on any Transition Bond and subject to the
requirements of the preceding sentence, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of Transition Bondholders.
Section 6.06. REPORTS BY TRUSTEE TO HOLDERS.
(a) The Trustee shall deliver to each Holder of Transition Bonds
such information as may be required to enable such Holder to prepare its federal
and state income tax returns.
(b) With respect to each outstanding Series and Class of Transition
Bonds, on or prior to each Payment Date therefor, the Trustee shall prepare and
deliver a statement prepared by the Trustee to each Holder of Transition Bonds
of such Series and Class which shall include (to the extent applicable)
information with respect to total receipts for Transition Bond Charges, expenses
paid, allocation of net Transition Bond Charges among all Series and the
following additional information (and any other information so specified in the
Series Supplement for such Series) as to the Transition Bonds of each
outstanding Series and Class as of such Payment Date or the period since the
previous Payment Date, as specified:
(i) the amount paid to Holders of the Transition Bonds of such
Series and Class in respect of principal on such Payment Date; such
amount to be expressed as a dollar amount per thousand;
(ii) the amount paid to Holders of the Transition Bonds of such
Series and Class in respect of interest on such Payment Date; such amount
to be expressed as a dollar amount per thousand;
(iii) the Transition Bond Balance for such Series and Class as of
such Payment Date, after giving effect to the payments and deposits to be
made on such Payment Date and the projected Transition Bond Balance for
such Series and Class as of such Payment Date;
(iv) the amount on deposit in the Overcollateralization Subaccount
for such Series and the Scheduled Overcollateralization Level for such
Series as of such Payment Date, after giving effect to the payments and
deposits to be made on such Payment Date;
(v) the amount on deposit in the Capital Subaccount for such
Series as of such Payment Date, after giving effect to the payments and
deposits to be made on such Payment Date, and the required capital amount
for such Series;
46
(vi) the amount, if any, on deposit in the Reserve Subaccount for
such Series as of such Payment Date, after giving effect to the payments
and deposits to be made on such Payment Date and any amounts transferred
from the Reserve Subaccount of such Series to make payments on other
Series since the previous Payment Date;
(vii) the amount to be paid to each counterparty under any Hedge
Agreement or Interest Rate Swap Agreement on such Payment Date;
(viii) the amount paid to the Trustee since the previous Payment
Date to and including such Payment Date;
(ix) the amount paid to the Issuer since the previous Payment Date
to and including such Payment Date;
(x) the amount paid to the Servicer since the previous Payment
Date to and including such Payment Date;
(xi) the amount paid to the Administrator since the previous
Payment Date to and including such Payment Date;
(xii) the amount paid to the Independent Managers since the
previous Payment Date to and including such Payment Date; and
(xiii) any other transfers and payments made pursuant to this
Indenture since the previous Payment Date.
(c) If any Transition Bonds are listed on the Luxembourg Stock Exchange
and rules of such exchange so require, the Trustee shall arrange for publication
in an Authorized Newspaper that such statement shall be available with the
Issuer's listing agent in Luxembourg appointed pursuant to Section 3.02(b).
(d) The Trustee's responsibility for disbursing the information described
in clause (b) above to Holders of Transition Bonds is limited to the
availability, timeliness and accuracy of the information provided by the
Servicer pursuant to Section 3.05 and Annex 1 of the Servicing Agreement.
Section 6.07. COMPENSATION AND INDEMNITY.
(a) The Issuer shall pay to the Trustee from time to time
reasonable compensation for its services. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Issuer shall reimburse the Trustee for all reasonable out-of-pocket expenses,
disbursements and advances incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Issuer
shall indemnify and hold harmless the Trustee from and against any and all
costs, damages, expenses, losses, liabilities or other amounts whatsoever
(including counsel fees) incurred by the Trustee in connection with the
administration of this trust, the enforcement of this trust and all of the
Trustee's rights, powers and duties under this Indenture and
47
the performance by the Trustee of the duties and obligations of the Trustee
under or pursuant to this Indenture. The Trustee shall notify the Issuer
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Issuer shall not relieve the Issuer of its obligations hereunder.
(b) The Issuer shall defend the claim and the Trustee may have separate
counsel and the Issuer shall pay the fees and expenses of such counsel. The
Issuer need not reimburse any expense or indemnify against any loss, liability
or expense incurred by the Trustee (i) through the Trustee's own willful
misconduct, negligence or bad faith or (ii) to the extent the Trustee was
reimbursed for or indemnified against any such loss, liability or expense by the
Seller pursuant to the Sale Agreement or by the Servicer pursuant to the
Servicing Agreement.
(c) When the Trustee incurs expenses after the occurrence of a Default
specified in Section 5.01(e) or 5.01(f) with respect to the Issuer, the expenses
are intended to constitute expenses of administration under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
Section 6.08. REPLACEMENT OF TRUSTEE.
(a) The Trustee may resign at any time upon 30 days' prior written
notice by so notifying the Issuer. The Issuer may remove the Trustee with or
without cause at any time, with prior notice to the Rating Agencies, upon 30
days' prior written notice, and shall remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) the Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Trustee or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
(b) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
hereinafter as the "Retiring Trustee"), the Issuer shall promptly appoint a
successor Trustee.
(c) In addition, the Holders of a majority in Outstanding Amount of the
Transition Bonds of all Series may remove the Trustee by so notifying the Issuer
and the Trustee and such Holders may appoint a successor Trustee.
(d) A successor Trustee shall deliver a written acceptance of its
appointment to the Retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the Retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. No resignation or removal of the Trustee shall become effective until
the acceptance of the appointment by a successor Trustee. The successor Trustee
shall mail a notice of its succession to Transition Bondholders. The Retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee.
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(e) If a successor Trustee does not take office within 60 days after the
Retiring Trustee resigns or is removed, the Retiring Trustee, the Issuer or the
Holders of a majority in Outstanding Amount of the Transition Bonds of all
Series may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(f) If the Trustee fails to comply with Section 6.11, any Transition
Bondholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(g) Notwithstanding the replacement of the Trustee pursuant to this
Section 6.08, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the Retiring Trustee.
Section 6.09. SUCCESSOR TRUSTEE BY MERGER.
(a) If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation or banking association shall, without any further act be
the successor Trustee. Notice of any such event shall be promptly given to each
Rating Agency by the successor Trustee and any agent in Luxembourg appointed
pursuant to Section 3.02(b).
(b) In case at the time such successor or successors by merger,
conversion, consolidation or transfer shall succeed to the trusts created by
this Indenture any of the Transition Bonds shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any Retiring Trustee, and deliver such Transition Bonds so
authenticated; and in case at that time any of the Transition Bonds shall not
have been authenticated, any successor to the Trustee may authenticate such
Transition Bonds either in the name of any Retiring Trustee hereunder or in the
name of the successor to the Trustee; and in all such cases such certificates
shall have the full force and effect granted by the Transition Bonds or by this
Indenture and this force and effect shall be equal to any certificate issued by
the Trustee.
Section 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint one or
more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Collateral, and to vest in such
Person or Persons, in such capacity and for the benefit of the Transition
Bondholders, such title to the Collateral, or any part hereof, and, subject to
the other provisions of this Section 6.10, such powers, duties, obligations,
rights and trusts as the Trustee may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 6.11 and no notice to
Transition Bondholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.08. Notice of any such appointment shall be
promptly given to each Rating Agency by the Trustee.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
49
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is
not authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Collateral or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Indenture and the conditions
of this Article VI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 6.11. ELIGIBILITY; DISQUALIFICATION.
The Trustee shall at all times satisfy the requirements of TIA Section
310(a) and Section 26(a)(i) of the Investment Company Act of 1940. The Trustee
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition and it shall have a long
term debt rating of "BBB-" or better by Standard & Xxxx'x, "Xxx0" or better by
Xxxxx'x and "BBB-" or better by Fitch. The Trustee shall comply with TIA Section
310(b), including the optional provision permitted by the second sentence of TIA
Section 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA Section 310(b)(1) are met.
Section 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship
50
listed in TIA Section 311(b). A Trustee that has resigned or been removed shall
be subject to TIA Section 311(a) to the extent indicated.
Section 6.13. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE.
The Trustee hereby represents and warrants that:
(a) the Trustee is a _______________ validly existing in good standing
under the laws of the State of _______________; and
(b) the Trustee has full power, authority and legal right to execute,
deliver and perform this Indenture and the Basic Documents to which the Trustee
is a party and has taken all necessary action to authorize the execution,
delivery and performance by it of this Indenture and such Basic Documents.
Article VII
TRANSITION BONDHOLDERS' LISTS AND REPORTS
Section 7.01. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF TRANSITION
BONDHOLDERS.
The Issuer shall furnish or cause to be furnished to the Trustee (a) not
more than five days after the earlier of (i) each Record Date with respect to
each Series and (ii) three months after the last Record Date with respect to
each Series, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of Transition Bonds of such Series as of such
Record Date, (b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the Trustee is the
Transition Bond Registrar, no such list shall be required to be furnished. In
addition, the Issuer shall furnish such list to any listing, transfer or paying
agent appointed under Section 3.02(b) to the extent such information is required
by the rules and regulations of the Luxembourg Stock Exchange.
Section 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO TRANSITION
BONDHOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Transition
Bonds contained in the most recent list furnished to the Trustee as provided in
Section 7.01 and the names and addresses of Holders of Transition Bonds received
by the Trustee in its capacity as Transition Bond Registrar. The Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Transition Bondholders may communicate with other Transition
Bondholders pursuant to Section 312(b) of the TIA with respect to their rights
under this Indenture or under the Transition Bonds.
(c) The Issuer, the Trustee and the Transition Bond Registrar shall have
the protection of Section 312(c) of the TIA.
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Section 7.03. REPORTS BY ISSUER.
(a) The Issuer shall:
(i) file with the Trustee and, so long as any Transition Bonds are
listed on the Luxembourg Stock Exchange and its rules so require, with
the listing agent of the Issuer in Luxembourg appointed pursuant to
Section 3.02(b), within 15 days after the Issuer is required to file the
same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) that the Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee, the Commission and, so long as any
Transition Bonds are listed on the Luxembourg Stock Exchange, the listing
agent in Luxembourg appointed pursuant to Section 3.02(b), in accordance
with rules and regulations prescribed from time to time by the Commission
or the Luxembourg Stock Exchange, respectively, such additional
information, documents and reports with respect to compliance by the
Issuer with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by
mail to all Transition Bondholders described in TIA Section 313(c)) and,
so long as any Transition Bonds are listed on the Luxembourg Stock
Exchange and its rules so require, to the listing agent of the Issuer in
Luxembourg appointed pursuant to Section 3.02(b), such summaries of any
information, documents and reports required to be filed by the Issuer
pursuant to clauses (i) and (ii) of this Section 7.03(a) as may be
required by rules and regulations prescribed from time to time by the
Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
Section 7.04. REPORTS BY TRUSTEE.
(a) If required by TIA Section 313(a), within 60 days after the end
of each fiscal year of the Issuer, commencing with the year after the issuance
of the Transition Bonds of any Series, the Trustee shall mail to each Holder of
Transition Bonds of such Series as required by TIA Section 313(c) a brief report
dated as of such date that complies with TIA Section 313(a). The Trustee also
shall comply with TIA Section 313(b); provided, however, that the initial report
so issued shall be delivered not more than 12 months after the initial issuance
of each Series.
(b) A copy of each report at the time of its mailing to Transition
Bondholders shall be filed by the Trustee with the Commission and each stock
exchange, if any, on which the Transition Bonds are listed (to the extent
required by the rules of such exchange). The Issuer shall notify the Trustee if
and when the Transition Bonds are listed on any stock exchange.
Section 7.05. PROVISION OF SERVICER REPORTS.
52
Upon the written request of any Transition Bondholder to the Trustee
addressed to the Corporate Trust Office, the Trustee shall provide such
Transition Bondholder with a copy of the Issuer Officer's Certificate referred
to in Section 3.05 of the Servicing Agreement and the Annual Accountant's Report
referred to in Section 3.06 of the Servicing Agreement. If any Transition Bonds
are listed on the Luxembourg Stock Exchange and rules of such exchange so
require, the Trustee shall also arrange for publication in an Authorized
Newspaper that a copy of such Issuer Officer's Certificate and such Annual
Accountant's Report shall be available with the Issuer's listing agent in
Luxembourg appointed pursuant to Section 3.02(b).
Article VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. COLLECTION OF MONEY.
Except as otherwise expressly provided herein, the Trustee may demand
payment or delivery of, and shall receive and collect, directly and without
intervention or assistance of any fiscal agent or other intermediary, all money
and other property payable to or receivable by the Trustee pursuant to this
Indenture. The Trustee shall apply all such money received by it as provided in
this Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Collateral, the Trustee may take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
Section 8.02. COLLECTION ACCOUNT.
(a)
(i)
(i) On or prior to the Series Issuance Date for the first Series issued
hereunder, the Issuer shall open, at the Trustee's Corporate Trust Office, or at
another Eligible Institution, one or more segregated trust accounts in the
Trustee's name for the benefit of the Holders (collectively, the "Collection
Account"). The Collection Account shall initially be divided into subaccounts,
which need not be separate bank accounts: a general subaccount (the "General
Subaccount"), an overcollateralization subaccount for each Series of Transition
Bonds (each, an "Overcollateralization Subaccount" or "Series
Overcollateralization Subaccount"), a capital subaccount for each Series of
Transition Bonds (each, a "Capital Subaccount" or "Series Capital Subaccount"),
a reserve subaccount for each Series of Transition Bonds (each, a "Reserve
Subaccount" or "Series Reserve Subaccount"), a series subaccount for each Series
of Transition Bonds (each, a "Series Subaccount") and a class subaccount for any
Class of any Series of Transition Bonds that has a floating rate of interest if
and as specified in the related Series Supplement (each, a "Class Subaccount").
On or prior to the Series Issuance Date for each Series issued after the Series
Issuance Date for the first Series issued hereunder, the Issuer shall establish
for such Series an additional Series Subaccount, a Series Overcollateralization
Subaccount, a Series Capital Subaccount, a Series Reserve Subaccount and, if and
as specified in the related Series Supplement, a Class Subaccount for any Class
of such Series that has a floating rate of interest, each as Subaccounts of the
Collection Account. Prior to
53
depositing funds or U.S. Government Obligations in the Collection Account
pursuant to Sections 4.01 or 4.02, the Issuer shall establish defeasance
subaccounts (each, a "Defeasance Subaccount") for each Series for which funds
shall be deposited, as subaccounts of the Collection Account. All amounts in the
Collection Account not allocated to any other Subaccount shall be allocated to
the General Subaccount. Prior to the Payment Date for the initial Series of
Transition Bonds, all amounts in the Collection Account (other than funds
deposited into the Capital Subaccount for such Series, up to the Required
Capital Amount) shall be allocated to the General Subaccount. All payments
received by the Trustee from any counterparty under any Interest Rate Swap
Agreement with respect to any Class of floating rate Transition Bonds shall be
deposited in the Class Subaccount, if any, for such Class unless otherwise
specified in the related Series Supplement. All references to the Collection
Account shall be deemed to include reference to all subaccounts contained
therein. Withdrawals from and deposits to each of the foregoing subaccounts of
the Collection Account shall be made as set forth in Sections 4.01, 4.02, 4.03
and this Section 8.02. The Collection Account shall at all times be an Eligible
Securities Account and only the Trustee shall have access to the Collection
Account for the purpose of making deposits in and withdrawals from the
Collection Account in accordance with this Indenture. Funds in the Collection
Account shall not be commingled by the Issuer with any other moneys, and shall
not be commingled by the Trustee. All moneys deposited from time to time in the
Collection Account, all deposits therein pursuant to this Indenture, and all
investments made in Eligible Investments with such moneys, including all income
or other gain from such investments, shall be held by the Trustee in the
Collection Account as part of the Collateral as herein provided.
(ii) Notwithstanding any other provision of this Indenture, the
Collection Account shall be a securities account and shall be established
only with a securities intermediary (as defined in Section 8-102(a)(14)
of the New Jersey UCC) that agrees with the Trustee that (A) the
Collection Account shall be a securities account of the Trustee, (B) all
property credited to the Collection Account and each Subaccount
thereunder shall be treated as a financial asset, (C) such securities
intermediary shall treat the Trustee as entitled to exercise the rights
that comprise each financial asset credited to the Collection Account and
each Subaccount thereunder, (D) such securities intermediary shall comply
with entitlement orders originated by the Trustee without the further
consent of any other person or entity, (E) such securities intermediary
shall not agree with any person other than the Trustee to comply with
entitlement orders originated by such other person, (F) the Collection
Account, each Subaccount thereunder and all property credited to any of
them shall not be subject to any Lien, security interest, right of
set-off in favor of such securities intermediary or anyone claiming
through it (other than the Trustee), and (G) such agreement shall be
governed by the laws of the State of New Jersey. The Collection Account
and each Subaccount thereunder shall be under the control (within the
meaning of Section 8-106 of the New Jersey UCC) of the Trustee. If at any
time the Collection Account or any Subaccount thereunder ceases to be an
Eligible Securities Account, the Trustee shall, within ten (10) days,
establish a new Collection Account or Subaccount, as the case may be, as
an Eligible Securities Account.
(b) All or a portion of the funds in the Collection Account shall be
invested in Eligible Investments and, so long as no Default or Event of Default
has occurred and is continuing, shall be reinvested by the Trustee upon Issuer
Order; provided, however, that no funds in the Defeasance Subaccount for any
Series of Transition Bonds shall be invested in Eligible Investments or
54
otherwise, except that U.S. Government Obligations deposited by the Issuer with
the Trustee pursuant to Sections 4.01 or 4.02 shall remain as such. Except as
provided in Section 8.02(e)(xii), all income or other gain from investments of
moneys deposited in the Collection Account shall be deposited by the Trustee in
the Collection Account, and any loss resulting from such investments shall be
charged to the Collection Account. The Issuer shall not direct the Trustee to
make any investment of any funds or to sell any investment held in the
Collection Account unless the security interest granted and perfected in such
account will continue to be perfected in such investment or the proceeds of such
sale, in either case without any further action by any Person, and, in
connection with any direction to the Trustee to make any such investment or
sale, if requested by the Trustee, the Issuer shall deliver to the Trustee an
Issuer Opinion of Counsel, acceptable to the Trustee, to such effect. Subject to
Section 6.01(c), the Trustee shall not in any way be held liable for the
selection of Eligible Investments or for investment losses incurred thereon
except for losses attributable to the Trustee's failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial capacity as
principal obligor and not as Trustee, in accordance with their terms. The
Trustee shall have no liability in respect of losses incurred as a result of the
liquidation of any Eligible Investment prior to its stated maturity or the
failure of the Issuer to provide timely written investment directions. The
Trustee shall have no obligation to invest or reinvest any amounts held
hereunder in the absence of written investment direction pursuant to an Issuer
Order; provided, however, that if (i) the Issuer shall have failed to give
investment directions for any funds on deposit in the Collection Account to the
Trustee by 11:00 a.m. (prevailing New York City time) (or such other time as may
be agreed by the Issuer and Trustee) on any Business Day, or (ii) a Default or
Event of Default shall have occurred and be continuing but the Transition Bonds
shall not have been declared due and payable pursuant to Section 5.02, then the
Trustee shall, to the fullest extent practicable, invest and reinvest funds in
the Collection Account in one or more Eligible Investments of the kind described
in clause (d) of the definition thereof.
(c) Any TBC Collections remitted by the Servicer to the Trustee, any
Indemnity Amounts remitted to the Trustee by the Seller or the Servicer or
otherwise received by the Trustee or the Issuer, any other proceeds of
Collateral received by the Servicer, the Issuer or the Trustee, and any amounts
paid by any counterparty under any Hedge Agreement or Interest Rate Swap
Agreement received by the Servicer, the Issuer or the Trustee, shall be
deposited in the General Subaccount.
(d) Monthly, by 12:00 noon (prevailing New York City time) on the [xth]
day of each calendar month (other than a month in which a Payment Date occurs),
or if such day is not a Business Day, the next Business Day thereafter,
beginning ______ 2002 (each, a "Monthly Fee Disbursement Date"), the Trustee
shall, at the direction of the Servicer, apply all amounts on deposit into the
General Subaccount and, if and to the extent necessary and available, any
investment earnings on the subaccounts in the Collection Account (other than the
Capital Subaccounts) in the following priority:
(i) to the Trustee, the fee owed to the Trustee for all Series for
such month and any unpaid monthly trustee fees for prior months, plus any
expenses, including legal fees and expenses, Indemnity Amounts (up to a
maximum of $______ per calendar year in the aggregate for all Series
(including all current and past due amounts), unless the Issuer has
received confirmation from S&P, Xxxxx'x and Fitch that a further amount
will not result in a reduction or withdrawal of the then current rating
of the Outstanding Transition Bonds), and any other amounts due and owing
to the Trustee pursuant to the Basic Documents for such month;
55
(ii) to the Issuer, the monthly fees for the Independent Managers
and any unpaid monthly Independent Manager fees for prior months;
(iii) to the Servicer, the Monthly Servicing Fee and any unpaid
Monthly Servicing Fees for prior months;
(iv) to the Administrator, the monthly administration fee payable
under the Administration Agreement and any unpaid monthly Administrator
fees for prior months;
(v) to the Persons entitled thereto (or, to the extent such
Persons have already been paid by the Issuer, to the Issuer), so long as
no Event of Default has occurred and is continuing or would be caused by
such payment, all Operating Expenses other than those described in
clauses (i) through (iv) above up to an aggregate amount for all Series
(including all current and past due amounts) equal to $[[100,000] divided
by the number of months between Payment Dates].
Of the total amount applied on any Monthly Fee Disbursement Date pursuant to
each of clauses (i) through (v) of this Section 8.02(d), each outstanding Series
of Transition Bonds shall be deemed to have paid, pursuant to each such clause,
a portion of such total amount equal to the product of (A) the total amount
applied pursuant to such clause on such date times (B) the fraction (x) whose
numerator is the principal amount of Transition Bonds of such Series as of the
immediately preceding Payment Date and (y) whose denominator is the aggregate
principal amount of Transition Bonds of all Series as of the immediately
preceding Payment Date. In addition, if on any Monthly Fee Disbursement Date
amounts available in the general subaccount of the Collection Account (including
available investment earnings in the subaccounts (other than the Capital
Subaccounts) of the Collection Account) are insufficient to pay a Series' share
of the monthly fees and expenses listed in clauses (i) through (v) of this
Section 8.02(d), the Trustee shall, at the direction of the Servicer, draw from
funds on deposit in the Reserve Subaccount for such Series up to the amount
necessary to make such payments.
(e) On the Business Day preceding each Payment Date, the Trustee, at the
direction of the Servicer, shall deposit into the General Subaccount any
investment earnings on the subaccounts in the Collection Account (including
without limitation the Capital Subaccounts) and, after taking into account such
deposits and the amounts remitted on such Business Day by the Servicer pursuant
to Section 3.03 of the Servicing Agreement, shall allocate to the Series
Subaccount for each outstanding Series of Transition Bonds an amount equal to
(x) the amount of funds on deposit in the General Subaccount times (y) the
fraction whose numerator is the amount of Revenue Requirements for such Series
as of such Business Day and whose denominator is the Total Revenue Requirement
as of such Business Day. By 12:00 noon (prevailing New York City time) on the
Payment Date immediately following such Business Day, the Trustee shall, at the
direction of the Servicer, apply the amount so allocated to each Series
Subaccount in the following priority:
(i) to the Trustee, such Series' share of the fee owed to the
Trustee for the month in which such Payment Date occurs, plus any unpaid
Trustee fees, plus such Series' share of any expenses, including legal
fees and expenses, Indemnity Amounts (up to a maximum of $______ per
calendar year in the aggregate for all Series (including all current and
past due amounts) unless the Issuer has received confirmation from S&P,
Xxxxx'x and Fitch that a further amount will not result in a reduction or
withdrawal of the then current rating of the
56
Outstanding Transition Bonds), and any other amounts due and owing to the
Trustee pursuant to the Basic Documents for such month so long as no
Event of Default would result from the payment of such Indemnity Amounts
(as limited above) or such other amounts;
(ii) to the Issuer, such Series' share of the monthly fees for the
Independent Managers and any unpaid Independent Manager fees;
(iii) to the Servicer, such Series' share of the Monthly Servicing
Fee and any unpaid servicing fees;
(iv) to the Administrator, such Series' share of the monthly
administration fee payable under the Administration Agreement and any
unpaid Administrator fees, plus reimbursement of the Administrator's fees
and expenses;
(v) to the Persons entitled thereto (or, to the extent such
Persons have already been paid by the Issuer, to the Issuer), so long as
no Event of Default has occurred and is continuing or would be caused by
such payment, such Series' share of all Operating Expenses other than
those described in clauses (i) through (iv) above up to an aggregate
amount for all Series (including all current and past due amounts) equal
to $[[100,000] divided by the number of months between Payment Dates];
(vi) to the Transition Bondholders of such Series, the Interest
payable on each Class of such Series on such Payment Date plus any
previously accrued and unpaid interest on each such Class (provided that,
in the case of any floating rate Class for which an Interest Rate Swap
Agreement is in effect, such amount shall equal the amount specified, and
the payee of such amount shall be the payee specified, in the related
Series Supplement as payable on such Payment Date);
(vii) to the Transition Bondholders of such Series, the Principal
of each Class of such Series of Transition Bonds payable as a result of
acceleration pursuant to Section 5.02, any Principal of any Class of such
Series of Transition Bonds payable on the Final Maturity Date of such
Class, and any Principal of any Class of such Series of Transition Bonds
payable on the Redemption Date for such Class;
(viii) to the Transition Bondholders of such Series, the Principal
scheduled to be paid on each Class of such Series of Transition Bonds on
such Payment Date according to the related Expected Amortization
Schedules, excluding any amounts provided for pursuant to Section
8.02(e)(vii);
(ix) to the Persons entitled thereto (or, to the extent such
Persons have already been paid by the Issuer, to the Issuer), such
Series' share (as determined below) of any remaining unpaid Operating
Expenses;
(x) to the Capital Subaccount for such Series, the amounts, if
any, necessary to restore the balance in such account to its Required
Capital Amount;
(xi) to the Overcollateralization Subaccount for such Series, the
amount, if any, necessary to bring the balance in such account to such
Series' Scheduled
57
Overcollateralization Level;
(xii) to the Issuer, free and clear of the Lien of this Indenture,
so long as no Event of Default has occurred and is continuing, an amount
equal to investment earnings on amounts in the Capital Subaccount of such
Series;
(xiii) to the Reserve Subaccount for such Series, any remaining
amounts; provided that such amounts shall be subject to reallocation on
such Payment Date to another Series as may be necessary to prevent or
mitigate a Default pursuant to Section 5.01(a) or (b) on such Payment
Date (such funds to be drawn pro rata, in the case of an aggregate
surplus of such funds in the Reserve Subaccounts, based on the amount of
funds on deposit in the Reserve Subaccounts for each Series in respect of
whose payment obligations no such Default or Event of Default exists or
needs prevention); and
(xiv) in the event such Series of Transition Bonds shall have been
paid in full on such Payment Date, the balance, if any, in the Series
Subaccount, Capital Subaccount, Overcollateralization Subaccount and
Reserve Subaccount of such Series shall be released on such Payment Date
to the Issuer free and clear of the Lien of this Indenture or, to the
extent, if any, specified in the Series Supplements for one or more
Series, shall be allocated on such Payment Date to the Series Subaccounts
of one or more other Series.
Of the total amount applied on any Payment Date (for all Series of
Transition Bonds) pursuant to each of clauses (i) through (v) and clauses (ix)
and (x) of this Section 8.02(e), the portion of such total amount representing
the share of each outstanding Series of Transition Bonds for purposes of this
Section 8.02(e) shall be an amount equal to the product of (A) the total amount
applied pursuant to such clause (for all Series of Transition Bonds) on such
date times (B) the fraction (x) whose numerator is the principal amount of
Transition Bonds of such Series as of the immediately preceding Payment Date and
(y) whose denominator is the aggregate principal amount of Transition Bonds as
of the immediately preceding Payment Date.
(f) If, on any Payment Date, funds on deposit in any Series Subaccount
for any Series for which the allocation made on such Payment Date pursuant to
Section 8.02(e) are insufficient to make the payments and allocations
contemplated by Section 8.02(e)(i) through (xiii) with respect to such Series,
the Trustee shall, at the direction of the Servicer, draw from amounts on
deposit in the following subaccounts for such Series in the following order up
to the amount of such shortfall in order to make such payments and allocations:
(i) from the Reserve Subaccount for such Series, for payments and
allocations contemplated by Section 8.02(e)(i) through (xiii), with
respect to such Series,
(ii) from the Overcollateralization Subaccount for such Series,
for payments and allocations contemplated by Section 8.02(e)(i) through
(viii) and 8.02(e)(x), with respect to such Series, and
(iii) from the Capital Subaccount for such Series, for payments
and allocations contemplated by Section 8.02(e)(i) through (viii), with
respect to such Series.
In addition, if on any Payment Date the funds available for allocations
and payments with
58
respect to one or more Series of Transition Bonds are insufficient to prevent or
cure a Default or Event of Default pursuant to Section 5.01(a) or (b)
notwithstanding the aforementioned allocations pursuant to this Section 8.02(f)
and any reallocations pursuant to the proviso to Section 8.02(e)(xiii), the
Trustee shall, at the direction of the Servicer, draw from funds on deposit in
the Reserve Subaccount for each other Series of Transition Bonds in respect of
whose payment obligations no such Default or Event of Default exists or requires
prevention (or which, if it exists or requires prevention, can be cured or
prevented using less than all of the funds on deposit in such Series' Reserve
Subaccount) up to the amount necessary to make such payments. In the event that
funds in more than one other Series' Reserve Subaccounts are available for such
an allocation, such funds shall be drawn pro rata from those Reserve Subaccounts
based on the amount of funds that remain in each such Reserve Subaccount after
allocations have been made to cure or prevent a Default or Event of Default in
respect of the payment obligations of the Series to which such Reserve
Subaccount relates.
(g) Notwithstanding any provision of this Section 8.02, if any Class of
any Series of Transition Bonds has a floating rate of interest, then the Series
Supplement relating to such Series shall specify the priority and other terms
governing the basis, if any, on which (i) amounts in the Series Subaccount for
such Series shall be allocable to a Class Subaccount, if any, for such Class on
each Payment Date and (ii) amounts in the Overcollateralization Subaccount and
Capital Subaccount for such Series shall be allocable to the Class Subaccount,
if any, for such Series (it being understood that such Series Supplement shall
provide that amounts in the Reserve Subaccount for such Series shall be so
allocable to such counterparty).
(h) Notwithstanding any provision of this Section 8.02, if a Hedge
Agreement is entered into with respect to any Series, then the Series Supplement
relating to such Series shall specify the priority and other terms governing the
basis, if any, on which (i) amounts in the Series Subaccount for such Series
shall be allocable to the counterparty under such Hedge Agreement and (ii)
amounts in the Overcollateralization Subaccount and Capital Subaccount for such
Series shall be allocable to the counterparty under such Hedge Agreement (it
being understood that such Series Supplement shall provide that amounts in the
Reserve Subaccount for such Series shall be so allocable).
Section 8.03. RELEASE OF COLLATERAL.
(a) All money and other property withdrawn from the Collection
Account by the Trustee for payment to the Issuer as provided in this Indenture
in accordance with Section 8.02 shall be deemed released from this Indenture
when so withdrawn and applied in accordance with the provisions of Article VIII,
without further notice to, or release or consent by, the Trustee.
(b) Other than as provided for in clause (a) above, the Trustee shall
release property from the Lien of this Indenture only as and to the extent
permitted by the Basic Documents and only upon receipt of an Issuer Request
accompanied by an Issuer Officer's Certificate, an Issuer Opinion of Counsel and
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1)
meeting the applicable requirements of Section 11.01 or an Issuer Opinion of
Counsel in lieu of such Independent Certificates to the effect that the TIA does
not require any such Independent Certificate.
(c) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Trustee may, and when required by the provisions of this Indenture
shall, execute instruments to release property from the Lien of this Indenture,
or convey the Trustee's interest in the same, in a manner
59
and under circumstances that are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Trustee as
provided in this Article VIII shall be bound to ascertain the Trustee's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any moneys.
(d) Subject to Section 8.03(b), the Trustee shall, at such time as there
are no Transition Bonds Outstanding and all sums due the Trustee pursuant to
Section 6.07 have been paid, release any remaining portion of the Collateral
that secured the Transition Bonds from the Lien of this Indenture and release to
the Issuer or any other Person entitled thereto any funds or investments then on
deposit in or credited to the Collection Account.
Section 8.04. ISSUER OPINION OF COUNSEL.
The Trustee shall receive at least five days' notice when requested by
the Issuer to take any action pursuant to Section 8.03, accompanied by copies of
any instruments involved, and the Trustee shall also require, as a condition to
such action, an Issuer Opinion of Counsel, in form and substance satisfactory to
the Trustee, stating the legal effect of any such action, outlining the steps
required to complete the same, and concluding that all conditions precedent to
the taking of such action have been complied with and such action will not
materially and adversely impair the security for the Transition Bonds or the
rights of the Transition Bondholders in contravention of the provisions of this
Indenture; provided, however, that such Issuer Opinion of Counsel shall not be
required to express an opinion as to the fair value of the Collateral. Counsel
rendering any such opinion may rely, without independent investigation, on the
accuracy and validity of any certificate or other instrument delivered to the
Trustee in connection with any such action.
Section 8.05. REPORTS BY INDEPENDENT ACCOUNTANTS.
The Issuer shall appoint a firm of Independent certified public
accountants of recognized national reputation for purposes of preparing and
delivering the reports or certificates of such accountants required by this
Indenture and the related Series Supplements. Upon any resignation by such firm,
the Issuer shall promptly appoint a successor thereto that shall also be a firm
of Independent certified public accountants of recognized national reputation.
If the Issuer shall fail to appoint a successor to a firm of Independent
certified public accountants that has resigned within 15 days after such
resignation, the Trustee shall promptly notify the Issuer of such failure in
writing. If the Issuer shall not have appointed a successor within ten days
thereafter, the Trustee shall promptly appoint a successor firm of Independent
certified public accountants of recognized national reputation. The fees of such
firm of Independent certified public accountants and its successor shall be
payable by the Issuer.
Article IX
SUPPLEMENTAL INDENTURES
Section 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF TRANSITION
BONDHOLDERS.
(a) Without the consent of the Holders of any Transition Bonds or
the counterparty under any Hedge Agreement or Interest Rate Swap Agreement but
with prior notice to the Rating Agencies, the Issuer and the Trustee, when
authorized by an Issuer Order, at any time and from time
60
to time, may enter into one or more indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as in force at the date of
the execution thereof), in form satisfactory to the Trustee, for any of the
following purposes:
(i) to correct or amplify the description of the Collateral, or to
better assure, convey and confirm unto the Trustee the Collateral, or to
subject to the Lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any applicable successor of the covenants of the Issuer contained herein
and in the Transition Bonds;
(iii) to add to the covenants of the Issuer, for the benefit of
the Transition Bondholders, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to the Trustee for the benefit of the Transition Bondholders, the Trustee
and any counterparty under any Interest Rate Swap Agreement;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any Supplemental Indenture that may be inconsistent with any
other provision herein or in any Supplemental Indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any Supplemental Indenture; provided, however, that (i)
such action shall not, as evidenced by an Issuer Opinion of Counsel,
adversely affect in any material respect the interests of any Transition
Bondholder or any counterparty under any Hedge Agreement or Interest Rate
Swap Agreement and (ii) the Rating Agency Condition shall have been
satisfied with respect to such action;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor Trustee with respect to the Transition Bonds and
to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by
more than one Trustee, pursuant to the requirements of Article VI;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such other
provisions as may be expressly required by the TIA;
(viii) to set forth the terms of any Series that has not
theretofore been authorized by a Supplemental Indenture, provided that
the Rating Agency Condition shall have been satisfied with respect to
such action;
(ix) to provide for any Interest Rate Swap Agreements with respect
to any Series or Class of Transition Bonds that bears a floating rate of
interest or any Series or Class with specified credit enhancement;
provided, however, that:
(A) such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of
any Transition Bondholder or any
61
counterparty under any Hedge Agreement or any Interest Rate Swap
Agreement and
(B) the Rating Agency Condition shall have been satisfied
with respect thereto; or
(x) to authorize the appointment of any listing agent, transfer
agent or paying agent or additional registrar for any Class of any Series
of Transition Bonds required or advisable in connection with the listing
of any Class or any Series of Transition Bonds on the Luxembourg Stock
Exchange in accordance with Section 3.02(b) or on any other stock
exchange, and otherwise to amend this Indenture to incorporate any
changes requested or required by any governmental authority, stock
exchange authority, listing agent, transfer agent or paying agent or
additional registrar for any Class or any Series of Transition Bonds in
connection with that listing.
(b) Subject to 9.02(a), the Issuer and the Trustee may enter into one or
more indentures supplemental hereto, without the consent of the Holders of any
Transition Bonds, to add provisions to or change in any manner or eliminate any
provisions hereof, or to modify, in any manner the rights of Transition
Bondholders hereunder; provided, however, that: (1) such action shall not, as
evidenced by an Opinion of Counsel, in any manner adversely affect in any
material respect the interests of any Transition Bondholder and (2) the Rating
Agency Condition shall have been satisfied with respect to such action.
(c) The Trustee is hereby authorized to join in the execution of any such
Supplemental Indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
Section 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF TRANSITION
BONDHOLDERS.
(a) The Issuer and the Trustee, when authorized by an Issuer Order,
also may, upon satisfaction of the Rating Agency Condition (in each case,
accompanied by the form of the proposed supplemental indenture) and with the
consent of the Holders of not less than a majority of the Outstanding Amount of
the Transition Bonds of each Series or Class to be affected, by Act of such
Holders delivered to the Issuer and the Trustee, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Transition Bonds
under this Indenture; provided, however, that no such Supplemental Indenture
shall, without the consent of the Holder of each Outstanding Transition Bond of
each Series or Class affected thereby and each counterparty under any Hedge
Agreement or Interest Rate Swap Agreement affected thereby:
(i) change the date of payment of any installment of principal of,
or interest or premium, if any, on any Transition Bond, or reduce the
principal amount thereof, the interest rate thereon or the redemption
price or the premium with respect thereto, change the provisions of this
Indenture and the related applicable Supplemental Indenture or Series
Supplement relating to the application of collections on, or the proceeds
of the sale of, the Collateral to payment of principal of, or interest or
premium, if any, on the Transition Bonds, change the coin or currency in
which, any Transition Bond or the interest thereon is payable
62
or change the provisions of any Interest Rate Swap Agreement relating to
the amount, calculation or timing of payments;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due
on the Transition Bonds on or after the respective due dates thereof (or,
in the case of redemption, on or after the Redemption Date);
(iii) reduce the percentage of the Outstanding Amount of the
Transition Bonds or of a Series or Class thereof, the consent of the
Holders of which is required for any such Supplemental Indenture, or the
consent of the Holders of which is required for any waiver of compliance
with provisions of this Indenture or defaults hereunder and their
consequences provided for in this Indenture or modify or alter the
provisions of the proviso to the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Transition Bonds required to direct the Trustee to direct the Issuer to
sell or liquidate the Collateral pursuant to Section 5.04 or to preserve
the Collateral pursuant to Section 5.05;
(v) reduce the percentage of the Outstanding Amount of a Series or
Class of Transition Bonds, the consent of the Holders of which is
required for any amendments to the Sale Agreement, the Administration
Agreement, the Servicing Agreement, any Hedge Agreement or any Interest
Rate Swap Agreement;
(vi) modify any of the provisions of this Indenture in such manner
so as to affect the amount of any payment of interest or principal
payable on any Transition Bond on any Payment Date or change the
Redemption Dates, Expected Amortization Schedules or Final Maturity Date
of any Series or Class of Transition Bonds, or the method of calculation
of interest on any floating rate Transition Bond;
(vii) decrease the Overcollateralization Amount or Required
Capital Amount with respect to any Series or the Scheduled
Overcollateralization Level with respect to any Payment Date;
(viii) modify the provisions of this Indenture regarding the
voting of Transition Bonds held by the Issuer, the Seller, any Affiliate
of either of them or any obligor on the Transition Bonds;
(ix) decrease the percentage of the aggregate principal amount of
Transition Bonds required to amend the provisions of this Indenture that
specify the applicable percentage of the aggregate principal amount of
the Transition Bonds necessary to amend this Indenture or any other Basic
Documents;
(x) permit the creation of any Lien ranking prior to or on a
parity with the Lien of this Indenture with respect to any part of the
Collateral or, except as otherwise permitted or contemplated herein,
terminate the Lien of this Indenture on any property at any time subject
hereto or deprive the Holder of any Transition Bond of the security
provided by the Lien of this Indenture; or
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(xi) alter any of the allocations of revenues, indemnity payments,
fees or similar amounts among Series.
(b) It shall not be necessary for any Act of Transition Bondholders under
this Section 9.02 to approve the particular form of any proposed Supplemental
Indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
(c) Promptly after the execution by the Issuer and the Trustee of any
Supplemental Indenture pursuant to this Section 9.02, the Trustee shall mail to
the Holders of the Transition Bonds to which such amendment or Supplemental
Indenture relates a notice setting forth in general terms the substance of such
Supplemental Indenture. Any failure of the Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such Supplemental Indenture. If any Transition Bonds are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require, the Trustee
shall arrange for publication in an Authorized Newspaper that such notice shall
be available with the Issuer's listing agent in Luxembourg appointed pursuant to
Section 3.02(b).
Section 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or permitting the additional trusts created by, any
Supplemental Indenture permitted by this Article IX or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and subject to Sections 6.01 and 6.02 shall be fully protected in
relying upon, an Issuer Opinion of Counsel stating that the execution of such
Supplemental Indenture is authorized or permitted by this Indenture. The Trustee
may, but shall not be obligated to, enter into any such Supplemental Indenture
that affects the Trustee's own rights, duties, liabilities or immunities under
this Indenture or otherwise.
Section 9.04. EFFECT OF SUPPLEMENTAL INDENTURE.
Upon the execution of any Supplemental Indenture pursuant to the
provisions hereof, this Indenture shall be and be deemed to be modified and
amended in accordance therewith with respect to each Series or Class of
Transition Bonds affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Trustee, the Issuer, the Holders of the Transition Bonds and any
counterparty under any Hedge Agreement or Interest Rate Swap Agreement shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such Supplemental Indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
Section 9.05. CONFORMITY WITH TRUST INDENTURE ACT.
Every amendment of this Indenture and every Supplemental Indenture
executed pursuant to this Article IX shall conform to the requirements of the
TIA as then in effect so long as this Indenture shall then be qualified under
the TIA.
Section 9.06. REFERENCE IN TRANSITION BONDS TO SUPPLEMENTAL INDENTURES.
64
Transition Bonds authenticated and delivered after the execution of any
Supplemental Indenture pursuant to this Article IX may, and if required by the
Trustee shall, bear a notation in form approved by the Trustee as to any matter
provided for in such Supplemental Indenture. If the Issuer or the Trustee shall
so determine, new Transition Bonds so modified as to conform, in the opinion of
the Trustee and the Issuer, to any such Supplemental Indenture may be prepared
and executed by the Issuer and authenticated and delivered by the Trustee in
exchange for Outstanding Transition Bonds.
Article X
REDEMPTION OF TRANSITION BONDS
Section 10.01. OPTIONAL REDEMPTION BY ISSUER.
If and to the extent provided in the related Series Supplement, and if no
Interest Rate Swap Agreement with respect to any Class of that Series is in
effect, the Issuer may, at its option, redeem all, but not less than all, of the
Transition Bonds of a Series on any Payment Date if, after giving effect to
payments that would otherwise be made on such Payment Date, the Outstanding
Amount of any such Series of Transition Bonds has been reduced to a percentage
of the initial principal balance of such Series below the percentage specified
in such Series Supplement. The redemption price in any case shall be equal to
the outstanding principal amount of the Bonds to be redeemed plus accrued and
unpaid interest thereon at the Interest Rate to the Redemption Date (the
"Redemption Price"). If the Issuer elects to redeem the Transition Bonds of a
Series pursuant to this Section 10.01, it shall furnish notice of such election
to (a) the Trustee, not later than 25 days prior to the Redemption Date for such
redemption and (b) to the Rating Agencies, not later than 10 days prior to such
Redemption Date, whereupon all such Transition Bonds shall be due and payable on
such Redemption Date upon the furnishing of a notice complying with Section
10.03 to each Holder of the Transition Bonds of such Series pursuant to this
Section 10.01.
Section 10.02. MANDATORY REDEMPTION BY ISSUER.
The Issuer shall redeem the Transition Bonds of a Series on the
Redemption Date or Dates, if any, in the amounts required, if any, and at the
redemption price specified in the Series Supplement for such Series, which in
any case shall be not less than the outstanding principal amount of the Bonds to
be redeemed, plus accrued interest thereon to such Redemption Date. If the
Issuer is required to redeem the Transition Bonds of a Series pursuant to this
Section 10.02, it shall furnish notice of such requirement to the Trustee not
later than 25 days prior to the Redemption Date for such redemption whereupon
all such Transition Bonds shall be due and payable on the Redemption Date upon
the furnishing of a notice complying with Section 10.03 to each Holder of the
Transition Bonds of such Series pursuant to this Section 10.02.
Section 10.03. FORM OF REDEMPTION NOTICE.
(a) Unless otherwise specified in the Series Supplement relating to
a Series of Transition Bonds, notice of redemption under Sections 10.01 or 10.02
shall be given by the Trustee by first-class mail, postage prepaid, mailed not
less than five days nor more than 45 days prior to the applicable Redemption
Date to each Holder of Transition Bonds to be redeemed, as of the close of
business on the Record Date preceding the applicable Redemption Date at such
Holder's address appearing in the Transition Bond Register.
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(b) All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Series and amount of the Transition Bonds to be
redeemed;
(iii) the Redemption Price; and
(iv) the place where Transition Bonds to be redeemed are
to be surrendered for payment of the Redemption Price and accrued
interest (which shall be the office or agency of the Issuer to be
maintained as provided in Section 3.02).
(c) Notice of redemption of the Transition Bonds to be redeemed shall
be given by the Trustee in the name and at the expense of the Issuer. For so
long as any Transition Bonds are listed on the Luxembourg Stock Exchange and the
rules of such exchange so require, the Trustee shall arrange that such notice
will also be given by publication in an Authorized Newspaper at least ten days
prior to the Redemption Date. Failure to give notice of redemption, or any
defect therein, to any Holder of any Transition Bond selected for redemption
shall not impair or affect the validity of the redemption of any other
Transition Bond. Notice of optional redemption shall be irrevocable once given.
Section 10.04. PAYMENT OF REDEMPTION PRICE.
If notice of redemption has been duly mailed or duly waived by the
Holders of all Transition Bonds called for redemption, then the Transition Bonds
called for redemption shall be payable on the applicable Redemption Date at the
applicable Redemption Price. No further interest shall accrue on the principal
amount of any Transition Bonds called for redemption after the Redemption Date,
and the Holders of such Transition Bonds shall have no rights with respect
thereto, if payment of the Redemption Price has been duly provided for on or
before the Redemption Date declared therefor. Notwithstanding the foregoing, the
Holders of the Transition Bonds shall be entitled to payment of interest on the
Redemption Price accrued at the related Interest Rates to the extent the Issuer
fails to pay the Redemption Price on the Redemption Date. Payment of the
Redemption Price shall be made by the Trustee to or upon the order of the
Holders of the Transition Bonds called for redemption upon surrender of such
Transition Bonds, and the Transition Bonds so redeemed shall cease to be of
further effect and the Lien hereunder shall be released with respect to such
Transition Bonds.
Article XI
MISCELLANEOUS
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon any application or request by the Issuer to the Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Trustee (i) an Issuer Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Issuer Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with and (iii) (if required by the TIA) an Independent
Certificate from a firm of certified public accountants meeting
66
the applicable requirements of this Section 11.01, except that, in the case of
any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
(b) Every certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(i) statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or investigation as
is necessary to enable such signatory to express an informed opinion as
to whether or not such covenant or condition has been complied with;
and
(iv) a statement as to whether, in the opinion of each
such signatory, such covenant or condition has been complied with.
Section 11.02. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
(a) In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.
(b) Any certificate or opinion of an Authorized Officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Issuer Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Servicer or the Seller or a Manager or Managers, stating that
the information with respect to such factual matters is in the possession of the
Servicer, the Seller or the Issuer, unless such Authorized Officer or counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
(d) Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of
67
such application, or as evidence of the Issuer's compliance with any term
hereof, it is intended that the truth and accuracy, at the time of the granting
of such application or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Issuer to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Trustee's right to rely
upon the truth and accuracy of any statement or opinion contained in any such
document as provided in Article VI.
Section 11.03. ACTS OF TRANSITION BONDHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Transition Bondholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Transition Bondholders
in person or by agents duly appointed in writing; and except as herein otherwise
expressly provided such action shall become effective when such instrument or
instruments are delivered to the Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Transition Bondholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section 11.03.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Transition Bonds shall be proved by the Transition
Bond Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Transition Bonds shall bind the
Holder of every Transition Bond issued upon the registration thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Issuer in reliance thereon, whether or
not notation of such action is made upon such Transition Bond.
Section 11.04. NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING AGENCIES.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or Act of Transition Bondholders or other documents provided or
permitted by this Indenture to be made upon, given or furnished to or filed
with:
(i) the Trustee by any Transition Bondholder or by the
Issuer, or
(ii) the Issuer by the Trustee or by any Transition
Bondholder,
shall be sufficient for every purpose hereunder if in English and in writing,
and sent 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 request, demand, authorization, direction, notice,
consent, waiver or
68
Act 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, in the case of the Trustee, addressed to the Trustee
at its Corporate Trust Office, and in the case of the Issuer, addressed to:
Atlantic City Electric Transition Funding LLC, 000 Xxxx Xxxxxx, X.X. Xxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Managers, or at any other address
previously furnished in writing to the Trustee by the Issuer. The Issuer shall
promptly transmit any notice received by it from the Transition Bondholders to
the Trustee.
(b) Notices required to be given to the Rating Agencies by the Issuer,
the Trustee or a Manager shall be in writing, delivered personally, via
facsimile transmission, by reputable overnight courier or by first-class mail,
postage prepaid, to (until notice of a different address is received from the
relevant Rating Agency in writing by the Trustee and the Issuer): (i) in the
case of Moody's: Xxxxx'x Investors Service, Inc., Attention: ABS Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; (ii) in the case of
Standard & Poor's: Standard & Poor's Corporation, 00 Xxxxx Xxxxxx, Xxx Xxxx, XX
00000, Attention: Asset Backed Surveillance Department and (iii) in the case of
Fitch: Fitch, Inc., 0 Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
ABS Surveillance.
Section 11.05. NOTICES TO TRANSITION BONDHOLDERS; WAIVER.
(a) Where this Indenture provides for notice to Transition
Bondholders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and delivered by first-class
mail, postage prepaid, to each Transition Bondholder affected by such event, at
the address of such Transition Bondholder as it appears on the Transition Bond
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Transition Bondholders is given by mail, neither the failure to mail such notice
nor any defect in any notice so mailed to any particular Transition Bondholder
shall affect the sufficiency of such notice with respect to other Transition
Bondholders, and any notice that is mailed in the manner herein provided shall
conclusively be presumed to have been duly given.
(b) Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Transition Bondholders shall be filed with the
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
(c) In case it shall be impractical to deliver notice in accordance
with clause (a) of this Section 11.05 to the Holders of Transition Bonds when
such notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be satisfactory to the Trustee
shall be deemed to be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
Section 11.06. NOTICES TO LUXEMBOURG STOCK EXCHANGE.
(a) For so long as any Transition Bonds are listed on the
Luxembourg Stock Exchange
69
and to the extent the rules of such exchange so require, the Issuer shall notify
the Luxembourg Stock Exchange and any agent appointed pursuant to Section
3.02(b) if any rating assigned to such Transition Bonds is reduced or withdrawn
and shall arrange for such notice to be published in an Authorized Newspaper.
(b) For so long as any Transition Bonds are listed on the Luxembourg
Stock Exchange and the rules of such exchange so require, the Trustee shall make
available to the Holders of such Transition Bonds and shall deposit on file with
the Issuer's listing agent in Luxembourg appointed pursuant to Section 3.02(b),
copies of the Basic Documents, all reports provided to Transition Bondholders
pursuant to this Indenture, the prospectus related to such Transition Bonds, the
reports of independent certified public accountants obtained with respect to the
Issuer pursuant to this Indenture, the financial information regarding ACE (and,
to the extent required as aforesaid, any direct or indirect parent company of
ACE) in its annual report on Form 10-K for the fiscal year ended December 31,
2001 and copies of each annual report of ACE (and any such parent) on Form 10-K
for subsequent fiscal years. The Trustee shall deposit with the Chief Registrar
of the District Court of Luxembourg prior to listing on the Luxembourg Stock
Exchange a copy of the Issuer Certificate of Formation, the Issuer LLC Agreement
and any legal notices relating to the issuance of such Transition Bonds.
Section 11.07. ALTERNATE PAYMENT AND NOTICE PROVISIONS.
Notwithstanding any provision of this Indenture or any of the
Transition Bonds to the contrary, the Issuer may enter into any agreement with
any Holder of a Transition Bond providing for a method of payment, or notice by
the Trustee or any Paying Agent to such Holder, that is different from the
methods provided for in this Indenture for such payments or notices. The Issuer
shall furnish to the Trustee a copy of each such agreement and the Trustee shall
cause payments to be made and notices to be given in accordance with such
agreements.
Section 11.08. CONFLICT WITH TRUST INDENTURE ACT.
(a) If any provision hereof limits, qualifies or conflicts with
another provision hereof that is required to be included in this Indenture by
any of the provisions of the TIA, such required provision shall control.
(b) The provisions of TIA Sections 310 through 317 that impose duties
on any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
Section 11.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 11.10. SUCCESSORS AND ASSIGNS.
(a) All covenants and agreements in this Indenture and the
Transition Bonds by the Issuer shall bind its successors and permitted assigns,
whether so expressed or not.
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(b) All agreements of the Trustee in this Indenture shall bind its
successors.
(c) The Trustee shall provide prior notice to the Rating Agencies of
any assignment of its obligations under this Agreement.
Section 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Transition Bonds
shall be invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 11.12. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Transition Bonds, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Transition Bondholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Collateral, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 11.13. LEGAL HOLIDAYS.
In any case where the date on which any payment is due shall not be a
Business Day, then (notwithstanding any other provision of the Transition Bonds
or this Indenture) payment need not be made on such date, but may be made on the
next succeeding Business Day with the same force and effect as if made on the
date on which nominally due, and no interest shall accrue for the period from
and after any such nominal date.
Section 11.14. GOVERNING LAW.
THIS INDENTURE SHALL BE GOVERNED BY AND 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 11.15. COUNTERPARTS.
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.16. ISSUER OBLIGATION.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer or the Trustee on the Transition Bonds or under this
Indenture or any certificate or other writing delivered in connection herewith
or therewith, against (i) the Member or any Manager, employee or agent of the
Issuer or (ii) any stockholder, officer, director, employee or agent of the
Trustee (it being understood that none of the Trustee's obligations are in its
individual capacity).
Section 11.17. NO PETITION.
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The Trustee, by entering into this Indenture, and each Transition
Bondholder, by accepting a Transition Bond, hereby covenants and agrees (or
shall be deemed to have covenanted and agreed) that it shall not at any time
institute against the Issuer, or join in the institution against the Issuer of,
or acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or governmental 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 11.18. PREFUNDING.
If and to the extent specified in a Series Supplement, the Issuer may
elect to issue Transition Bonds in a principal amount that, on the date of
issuance, exceeds the aggregate amount of Bondable Transition Property created
under the related BPU Financing Order or other such orders then in effect. The
incremental amount of Transition Bonds issued over the amount of Bondable
Transition Property then created would be issued in anticipation of a subsequent
authorization by the BPU, within a period of time specified in the related
Series Supplement, of additional Bondable Transition Property in the same
incremental amount. In the event of such an incremental issuance, the Issuer
would immediately deposit the bond proceeds from the sale of such incremental
issuance into a separate prefunding account (the "Prefunding Account") to be
owned by the Issuer and administered by the Trustee. ACE may in its discretion
provide additional credit enhancement for the incremental principal amount of
such Transition Bonds. Amounts in the Prefunding Account would be used, to the
extent necessary, to meet obligations on the Transition Bonds of such Series in
the manner set forth in the related Series Supplement. If following such an
issuance but within the time period specified in the related Series Supplement,
the BPU approves the creation of additional Bondable Transition Property in an
amount equal to the incremental amount of Transition Bonds issued, ACE shall
sell such additional Bondable Transition Property to the Issuer pursuant to the
Sale Agreement and a Xxxx of Sale, and ACE shall receive in consideration
thereof all amounts in the Prefunding Account. If, however, the BPU shall not
have approved the creation of additional Bondable Transition Property in the
incremental amount within such time period, then at the end of such time period
all amounts in the Prefunding Account shall be applied to redeem the incremental
principal amount of Transition Bonds of such Series and pay accrued interest
thereon on the terms set forth in the related Series Supplement.
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed and delivered by a Manager and an officer,
respectively, thereof, each thereunto duly authorized, all as of the day and
year first above written.
ATLANTIC CITY ELECTRIC TRANSITION
FUNDING LLC,
as Issuer
By: ___________________
Name: ___________________
Title: _________________
_________________________________
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as Trustee
By: ____________________
Name: ___________________
Title: _________________
73
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.
"ACE" means Atlantic City Electric Company, a New Jersey corporation,
and its permitted successors and assigns.
"Act" has the meaning specified in Section 11.03(a) of the Indenture.
"Adjustment Date" means (a) [January 1] of each year, (b) quarterly if
determined by the Servicer, 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 _________, 2002, between the Issuer and Conectiv Resource Partners, Inc., as
administrator, as the same may be amended or supplemented from time to time.
"Administrator" means Conectiv Resource Partners, Inc., as
administrator under the Administration Agreement, and each successor to Conectiv
Resource Partners, Inc., in the same capacity, pursuant to Section 5.08 of the
Administration Agreement.
"Advice Letter" means, with respect to any Series of Transition Bonds,
the Issuance Advice Letter, in the form specified in the BPU Financing Order
authorizing the issuance of Transition Bonds of such Series, 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.
"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 a 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
A-1
of the Issuer.
"Basic Documents" means the Formation Documents, the Sale Agreement,
any Bills of Sale, the Servicing Agreement, the Administration Agreement, the
Indenture, 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" has the meaning assigned to that term in the
Competition Act and the BPU Financing Orders.
"Bondable Transition Property" has the meaning assigned to that term in
the Competition Act and the BPU Financing Orders.
"Bondable Transition Property Documentation" means all documents
relating to the Transferred Bondable Transition Property, including copies of
the Petition and the BPU Financing Orders 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 Financing Orders" means the bondable stranded costs rate order
issued by the BPU in favor of ACE on ___________, 2002 pursuant to the
Competition Act, any subsequent bondable stranded costs rate orders issued by
the BPU in favor of ACE pursuant to the Competition Act, and any order
supplemental to any of the foregoing.
"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, Sunday or a day on
which banking institutions 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, (b) if
applicable, [quarterly dates] of each year and for so long as the Transition
Bonds are outstanding, and (c) any other day on which the Servicer files an
Adjustment Request.
"Capital Subaccount" with respect to any Series has the meaning
specified in Section 8.02(a) of the Indenture.
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"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," with respect to a Class within a Series, has the
meaning specified in Section 8.02(a) of the Indenture and, if established for
such Series and Class, in the Series Supplement for such Series.
"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 an annually prepared forecast, with respect
to each Billing Month, of the percentages of amounts billed in such Billing
Month that are expected to be received during such Billing Month and each of the
following six months.
"Collections Curve Payment" means, with respect to any Billing Month,
the sum of the amounts paid to the Trustee during such Billing Month and each of
the following six months based on the Collections Curve then in effect.
"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, as in effect
from time to time.
"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
[ ], 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
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Indenture.
"Curve Payment Shortfall" means, for a particular Billing Month, the
amount, if any, by which the actual TBC Collections in respect of a Billing
Month exceed the Collections Curve Payments made to the Trustee in respect of
that Billing Month, as determined on the Reconciliation Date for that Billing
Month.
"Customer" means each person who is a retail consumer of electricity
and who accesses ACE'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 5.10(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
___________, 2002, 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
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(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 "AA-" by
Standard & Poor's and Fitch and
"Aa3" 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, "F1+" by Fitch
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:
(c) direct obligations of, and obligations fully and
unconditionally guaranteed as to timely payment by,
the United States of America;
(d) 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 of such financial institution (other than
such obligations the rating of which is based on the
credit of a Person other than such financial
institution) shall have a credit rating from each of
the Rating Agencies in the highest investment
category granted thereby;
(e) commercial paper or other short-term unsecured debt
obligations of any corporation organized under the
laws of the United States of America (other than ACE)
whose ratings, at the time of the investment or
contractual commitment to invest therein, from each
of the Rating Agencies are in the highest rating
category granted thereby;
(f) investments in money market funds having a rating
from each of the Rating Agencies in the highest
rating category granted thereby (including funds for
which the Trustee or any of its Affiliates act as
investment manager or advisor);
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(g) bankers' acceptances issued by any depositary
institution or trust company referred to in clause
(b) above;
(h) 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
financial institution (acting as principal)
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 of such
financial institution (other than such obligations
the rating of which is based on the credit of a
Person other than such financial institution) shall
have a credit rating from each of the Rating Agencies
in the highest investment category granted thereby;
(i) 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 the 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 and F1+ by Fitch at the
time of purchase; or
(j) any other investment permitted by each Rating Agency;
(i) 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 P-1, 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
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must not:
(ii) be sold, liquidated or otherwise disposed of
at a loss, prior to the maturity thereof, or
(iii) 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, for a particular Billing Month, the
amount, if any, by which the Collections Curve Payments made to the Trustee in
respect of that Billing Month exceed the actual TBC Collections in respect of
that Billing Month, as determined on the Reconciliation Date for that 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
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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.
"Fitch" means Fitch, Inc. or its successor.
"Formation Document" means 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 Agreement" means, with respect to any Series, the document or
documents, if any, identified as a "Hedge Agreement" in the Series Supplement
for such Series.
"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 ACE'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 ___________, 2002, 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
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(a) is in fact independent of the Issuer, any other
obligor upon the Transition Bonds, ACE 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, ACE or any Affiliate of any
of the foregoing Persons, and
(c) is not connected with the Issuer, any such other
obligor, ACE or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or other
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, i.e., ______ __, 2002.
"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
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(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
applicable 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 the
counterparty thereunder, as same may be amended or supplemented from time to
time, with respect to any Series or Class of Transition Bonds as provided in the
Series Supplement for such Series or Class, as the case may be.
"Issuer" means Atlantic City Electric 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 Certificate of Formation of
the Issuer, which was filed with the Delaware Secretary of State's Office on
March 28, 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 ACE, as sole Member, dated as of
_______, 2002, 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
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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 ACE
may impose on Customers pursuant to the Competition Act and the Restructuring
Order.
"Member" means ACE, as the sole member of the Issuer, in its capacity
as such member under the Issuer LLC Agreement.
"Monthly Remittance Date" means the [15th] day of each calendar month
(or if such day is not a Business Day, the next Business Day) beginning in _____
2002.
"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 ACE 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) a treasurer, assistant treasurer,
secretary or assistant secretary, in each case of the Servicer.
"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 BPU Financing Orders.
"Opinion of Counsel" means one or more written opinions of counsel who
may be an employee of or counsel to ACE or the Issuer, 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.
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"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, ACE 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, ACE or
any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means, with respect to one or more Classes or
Series, the aggregate principal amount of, as the context requires, all
Outstanding Transition Bonds of such Class or Classes or of such Series or group
of Series.
"Overcollateralization" means, with respect to any Payment Date and any
Series, the amount, if any, that, if deposited to the Overcollateralization
Subaccount for such Series on such Payment Date, would cause the balance in such
subaccount on such Payment Date to equal the Scheduled Overcollateralization
Level for such Series on such Payment Date.
"Overcollateralization Amount" means, with respect to any Series, the
amount specified as such in the Series Supplement therefor.
"Overcollateralization Subaccount" with 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
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principal of or premium, if any, or interest on the Transition Bonds on behalf
of the Issuer.
"Payment Date" means _____________, _____________, _____________ and
_____________.
"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 ACE with the BPU, dated June 25,
2001.
"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.
"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 in writing by the Trustee to each Rating Agency of such action and
the notification by each Rating Agency 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.
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"Reconciliation Date" for a particular Billing Month means the
fifteenth day (or if that day is not a Business Day, the next succeeding
Business Day) of the calendar month that is seven months after such Billing
Month.
"Record Date" has, with respect to any Series, the meaning set forth in
the related Series Supplement.
"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.
"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 decision and order of the BPU issued on
March 30, 2001 pursuant to Section 13 of the Competition Act.
"Retiring Trustee" means a Trustee that resigns or vacates the office
of Trustee for any reason.
"Revenue Requirements" means with respect to any Series as of any date
of determination, the amounts estimated in good faith by the Servicer to be
payable in respect of such Series pursuant to Section 8.02(d) and clauses (i)
through (xiii) of Section 8.02(e) during the period commencing on the preceding
Adjustment Date (or on such date of determination if it is an Adjustment Date)
and ending on the day immediately preceding the first Adjustment Date scheduled
to follow such
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determination date.
"Sale Agreement" means the Bondable Transition Property Sale Agreement
dated as of ___________, 2002, 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 to the Series Supplement for such Series, as such Schedule 1
shall have 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.
"Scheduled 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.
"Securities Account Control Agreement" means the securities account
control agreement by and between Atlantic City Electric Transition Funding LLC,
as debtor, the Trustee as the Secured Party and ______________, in its capacity
as securities intermediary thereunder.
"Seller" means ACE, in its capacity as seller of the Bondable
Transition Property to the Issuer pursuant to the Sale Agreement.
"Series" means the Series 2002-1 Transition Bonds and any subsequent
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" with respect to each Series has the meaning
specified in Section 8.02(a) of the Indenture and in the related Series
Supplement.
"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" with respect to each Series
has the meaning specified in Section 8.02(a) of the Indenture and in the related
Series Supplement.
"Series Reserve Subaccount" with respect to each Series has the meaning
specified in Section 8.02(a) of the Indenture and in the related Series
Supplement.
"Series Subaccount" with respect to each Series has the meaning
specified in Section 8.02(a) of the Indenture and in the related Series
Supplement.
"Series Supplement" means any Supplemental Indenture that authorizes a
particular Series of Transition Bonds, as the same may be amended or
supplemented from time to time.
"Servicer" means ACE, as the servicer of the Bondable Transition
Property, and each
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successor to ACE (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
________, 2002, 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 Rating Group, a
division of The XxXxxx-Xxxx Companies, or its successor.
"state" in the jurisdictional sense 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 Purchase Price" means, in relation to a Subsequent Sale,
the price specified in the related Xxxx of Sale, to be paid by the Issuer for
the Subsequent Transferred Bondable Transition Property purchased and sold in
such Subsequent Sale.
"Subsequent Sale" means any sale of Bondable Transition Property by the
Seller to the Issuer after the Initial Transfer Date.
"Subsequent Transfer Date" means a date on which a sale of Subsequent
Transferred Bondable Transition Property is effective, as specified in the
written notice relating to such sale contemplated in Section 2.02(e) of 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 a Xxxx of Sale delivered on or prior to
the related 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.
"Target Payment Date" has the meaning specified in Section 5(a) of
Annex 1 to the Servicing Agreement.
"TBC Collections" means amounts received by the Servicer in respect of
the Transition Bond Charge.
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"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 BPU
Financing Orders.
"Total Revenue Requirement" means, as of any date of determination, the
sum of the Revenue Requirements for all Series outstanding as of such date.
"Transfer Date" means the Initial Transfer Date or any Subsequent
Transfer Date, as applicable.
"Transferred Bondable Transition Property" means, collectively, all
Bondable Transition Property that 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 ACE or its successor to recover
Bondable Stranded Costs pursuant to the Competition Act and the BPU Financing
Orders.
"Transition Bond Charge Adjustment" means each adjustment to Transition
Bond Charge related to the Transferred Bondable Transition Property made in
accordance with Section 4.01 and Annex 1 of the Servicing Agreement and the
Issuer Annex.
"Transition Bond Charge Adjustment Process" means the process by which
adjustments are made to the Transition Bond Charge or to the formula governing
such adjustments, in either case pursuant to Section 4.01 and Annex 1 of the
Servicing Agreement, the Competition Act, the Petition and the BPU Financing
Orders.
"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 _________________________, a ___________, or its
successor, as trustee under the Indenture and in the capacity specified in the
first paragraph of the Indenture, or any
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successor Trustee under the Indenture.
"Underwriting Agreement" means the Underwriting Agreement dated as of
________, 2002, among the Seller, the Issuer and Xxxxxx Xxxxxxx & Co.,
Incorporated, 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.
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SCHEDULE I
SCHEDULED OVERCOLLATERALIZATION LEVELS
