EXHIBIT 10.1
FORM OF SALE AGREEMENT
BONDABLE TRANSITION PROPERTY SALE AGREEMENT
between
PSE&G TRANSITION FUNDING LLC
Issuer
and
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
Seller
Dated as of [January] , 2001
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01 Definitions......................................................1
SECTION 1.02 Other Definitional Provisions....................................1
ARTICLE II
Conveyance of Transferred Bondable Transition Property
SECTION 2.01 Conveyance of Initial Transferred Bondable
Transition Property............................................2
SECTION 2.02 Conditions to Conveyance of Bondable Transition Property.........3
ARTICLE III
Representations and Warranties of Seller
SECTION 3.01 Organization and Good Standing...................................5
SECTION 3.02 Due Qualification................................................5
SECTION 3.03 Power and Authority..............................................5
SECTION 3.04 Binding Obligation...............................................5
SECTION 3.05 No Violation.....................................................5
SECTION 3.06 No Proceedings...................................................6
SECTION 3.07 Approvals........................................................6
SECTION 3.08 The Transferred Bondable Transition Property.....................6
SECTION 3.09 Solvency.........................................................9
ARTICLE IV
Covenants of the Seller
SECTION 4.01 Seller's Existence...............................................9
SECTION 4.02 No Liens or Conveyances..........................................9
SECTION 4.03 Use of Proceeds.................................................10
SECTION 4.04 Delivery of Collections.........................................10
SECTION 4.05 Notice of Liens.................................................10
SECTION 4.06 Compliance with Law.............................................10
SECTION 4.07 Covenants Related to Transferred Bondable
Transition Property...........................................10
SECTION 4.08 Protection of Title.............................................11
SECTION 4.09 Taxes...........................................................12
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ARTICLE V
Additional Undertakings of the Seller
SECTION 5.01 Liability of the Seller; Indemnities............................13
SECTION 5.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller....................................14
SECTION 5.03 Limitation on Liability of the Seller and Others................15
ARTICLE VI
Miscellaneous Provisions
SECTION 6.01 Amendment.......................................................15
SECTION 6.02 Notices.........................................................16
SECTION 6.03 Assignment by Seller............................................16
SECTION 6.04 Assignment to Trustee...........................................17
SECTION 6.05 Limitations on Rights of Others.................................17
SECTION 6.06 Severability....................................................17
SECTION 6.07 Separate Counterparts...........................................17
SECTION 6.08 Headings........................................................17
SECTION 6.09 Governing Law...................................................17
SECTION 6.10 Nonpetition Covenant............................................18
EXHIBIT A - Xxxx of Sale.....................................................A-1
EXHIBIT B - Opinion of Counsel...............................................B-1
EXHIBIT C - Opinion of Counsel...............................................C-1
APPENDIX A - Master Definitions
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BONDABLE TRANSITION PROPERTY SALE AGREEMENT, dated as of [January] , 2001,
by and between PSE&G TRANSITION FUNDING LLC, a Delaware limited liability
company, as issuer (the "Issuer"), and PUBLIC SERVICE ELECTRIC AND GAS COMPANY,
a New Jersey corporation, as seller hereunder (in such capacity, the "Seller").
W I T N E S S E T H:
WHEREAS the Issuer desires to purchase from time to time Bondable
Transition Property created pursuant to the Competition Act and the Financing
Order;
WHEREAS the Seller is willing to sell Bondable Transition Property to the
Issuer;
WHEREAS the Issuer, in order to finance the purchase of the Transferred
Bondable Transition Property, will from time to time issue Transition Bonds
under the Indenture; and
WHEREAS the Issuer, to secure its obligations under the Transition Bonds
and the Indenture, will pledge its right, title and interest in, to and under
the Transferred Bondable Transition Property to the Trustee for the benefit of
the Transition Bondholders.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Definitions. Capitalized terms used herein and not otherwise
defined herein have the meanings assigned to them in Appendix A hereto.
SECTION 1.02 Other Definitional Provisions.
(a) "Agreement" means this Bondable Transition Property Sale Agreement, as
the same may be amended, supplemented or otherwise modified from time to time.
(b) Non-capitalized terms used herein which are defined in the Competition
Act, as the context requires, have the meanings assigned to such terms in the
Competition Act, but without giving effect to amendments to the Competition Act
after the date hereof which have a material adverse effect on the Issuer or the
Transition Bondholders.
(c) All terms defined in this Agreement have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(d) The words "hereof", "herein", "hereunder" and words of similar import
when used in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement; Section, Schedule and Exhibit references
contained in this Agreement are references to Sections, Schedules and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
means "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms.
ARTICLE II
Conveyance of Transferred Bondable Transition Property
SECTION 2.01 Conveyance of Initial Transferred Bondable Transition
Property.
(a) In consideration of the Issuer's payment to or upon the order of the
Seller of $[_______________] (the "Initial Purchase Price") by wire transfer of
funds immediately available on the date hereof to Seller's account no.
[_______________] at [______________________], routing transit #
[_______________], subject to the conditions specified in Section 2.02, the
Seller does hereby irrevocably sell, transfer, assign and otherwise convey to
the Issuer, without recourse (subject to the obligations of the Seller herein),
all right, title and interest of the Seller in, to and under the Initial
Transferred Bondable Transition Property identified in the Xxxx of Sale
delivered pursuant to Section 2.02(a) on or prior to the Initial Transfer Date
(such sale, transfer, assignment and conveyance of the Initial Transferred
Bondable Transition Property to include, to the fullest extent permitted by the
Competition Act and the New Jersey UCC, the assignment of all revenues,
collections, claims, rights, payments, money or proceeds of or arising from the
Transition Bond Charges related to the Initial Transferred Bondable Transition
Property, as the same may be adjusted from time to time). Such sale, transfer,
assignment and conveyance of the Initial Transferred Bondable Transition
Property is hereby expressly stated to be a sale or other absolute transfer and,
pursuant to Section 23.a. of the Competition Act, shall constitute a sale or
other absolute transfer of all of the Seller's right, title and interest, in, to
and under and not a borrowing secured by, the Initial Transferred Bondable
Transition Property. The preceding sentence is the statement referred to in
Section 23.a. of the Competition Act. The Seller agrees and confirms that upon
payment of the Initial Purchase Price and the execution and delivery of this
Agreement and the related Xxxx of Sale, the Seller shall have no right, title or
interest in, to or under the Initial Transferred Bondable Transition Property.
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(b) Subject to the conditions specified in Section 2.02, the Issuer does
hereby purchase the Initial Transferred Bondable Transition Property from the
Seller for the consideration set forth in paragraph (a) above.
(c) The Seller and the Issuer each acknowledge and agree that the purchase
price for the Initial Transferred Bondable Transition Property sold pursuant to
this Agreement is equal to its fair market value at the time of sale.
(d) The Seller and the Issuer further agree that from time to time the
Seller may offer to sell, and the Issuer may purchase, Subsequent Transferred
Bondable Transition Property as of Subsequent Transfer Dates, subject to the
conditions specified in Section 2.02, in exchange for consideration to be agreed
upon (the "Subsequent Purchase Price"). The Seller and the Issuer hereby agree
that each such sale, transfer, assignment and conveyance of any Subsequent
Transferred Bondable Transition Property shall include, to the fullest extent
permitted by the Competition Act and the New Jersey UCC, the assignment of all
revenues, collections, claims, rights, payments, money or proceeds of or arising
from the Transition Bond Charges related to the Subsequent Transferred Bondable
Transition Property, as the same may be adjusted from time to time. Such sale,
transfer, assignment and conveyance of the Subsequent Transferred Bondable
Transition Property is hereby expressly stated to be a sale or other absolute
transfer and, pursuant to Section 23.a. of the Competition Act, shall constitute
a sale or other absolute transfer of all of the Seller's right, title and
interest, in, to and under and not a borrowing secured by, the Subsequent
Transferred Bondable Transition Property. The preceding sentence is the
statement referred to in Section 23.a. of the Competition Act. The Seller agrees
and confirms that after giving effect to any sale contemplated by this paragraph
(d) and the execution and delivery of the related Xxxx of Sale, it shall have no
right, title or interest in, to or under the Subsequent Transferred Bondable
Transition Property.
(e) Notwithstanding the foregoing, in the event that any sale, transfer,
assignment and conveyance of any Transferred Bondable Transition Property is
determined by a court of competent jurisdiction not to be a true and absolute
sale as contemplated by the parties hereto and by the Competition Act, then such
sale, transfer, assignment and conveyance shall be treated as a pledge of such
Transferred Bondable Transition Property and the Seller shall be deemed to have
granted, and does hereby grant, as of the date hereof a security interest to the
Issuer in such Transferred Bondable Transition Property to secure a payment
obligation incurred by the Seller in the amount paid by the Issuer for the
Transferred Bondable Transition Property.
SECTION 2.02 Conditions to Conveyance of Bondable Transition Property. The
obligation of the Seller to sell, and the obligation of the Issuer to purchase
Bondable Transition Property upon any Transfer Date shall be subject to and
conditioned upon the satisfaction or waiver of each of the following conditions:
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(a) on or prior to the Transfer Date, the Seller shall deliver to the
Issuer a duly executed Xxxx of Sale identifying the Bondable Transition Property
to be conveyed as of that date, substantially in the form of Exhibit A hereto;
(b) as of the Transfer Date, no breach by the Seller of its
representations, warranties or covenants in this Agreement shall exist and the
Seller shall have delivered to the Issuer and the Trustee an Officers'
Certificate to such effect and no Servicer Default shall have occurred and be
continuing;
(c) as of the Transfer Date:
(i) the Issuer shall have sufficient funds available to pay the
purchase price for the Transferred Bondable Transition Property to be
conveyed on such date, and
(ii) all conditions set forth in the Indenture to the issuance of
one or more Series of Transition Bonds intended to provide such funds
shall have been satisfied or waived;
(d) on or prior to the Transfer Date, the Seller shall have taken all
actions required under the Competition Act, the Financing Order and the New
Jersey UCC, including, without limitation, filings under the New Jersey UCC, to
transfer to the Issuer ownership of the Transferred Bondable Transition Property
to be conveyed on such date, free and clear of all Liens other than Liens
created by the Issuer pursuant to the Indenture and the Issuer shall have taken
any action required for the Issuer to grant to the Trustee a first priority
perfected security interest in the Collateral and maintain such security
interest as of such date;
(e) in the case of any sale of Subsequent Transferred Bondable Transition
Property only, the Seller shall have provided the Issuer and each Rating Agency
with a notice specifying the Subsequent Transfer Date for the Subsequent
Transferred Bondable Transition Property not later than 10 days prior to the
Subsequent Transfer Date;
(f) the Seller shall have delivered to each Rating Agency and to the
Issuer:
(i) an Opinion of Counsel to the Seller with respect to the transfer
of the Transferred Bondable Transition Property then being conveyed to the
Issuer substantially in the form of Exhibit B hereto, and
(ii) an Opinion of Counsel to the Seller, substantially in the form
of Exhibit C hereto;
(g) the Seller shall have delivered to the Trustee and the Issuer an
Officers' Certificate confirming the satisfaction of each condition precedent
specified in this Section 2.02;
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(h) with respect to any Subsequent Sale, the Seller shall have taken any
action necessary in order for the Rating Agency Condition to have been
satisfied; and
(i) the Seller shall have received the Initial Purchase Price or the
Subsequent Purchase Price, as applicable, in funds immediately available on the
applicable Transfer Date.
ARTICLE III
Representations and Warranties of Seller
As of the Transfer Date, the Seller makes the following representations
and warranties on which the Issuer has relied and will rely in acquiring
Transferred Bondable Transition Property. The following representations and
warranties are made under existing law as in effect as of the Transfer Date. The
Seller shall not be in breach of any representation or warranty herein as a
result of a change in law occurring after the Transfer Date. The representations
and warranties shall survive the sale of Transferred Bondable Transition
Property to the Issuer and the pledge thereof to the Trustee pursuant to the
Indenture.
SECTION 3.01 Organization and Good Standing. The Seller is a corporation
duly organized and in good standing under the laws of the State of New Jersey,
with corporate power and authority to own its properties and conduct its
business as currently owned or conducted.
SECTION 3.02 Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such qualifications,
licenses or approvals (except where the failure to so qualify and to obtain such
licenses and approvals would not be reasonably likely to have a material adverse
effect on the Seller's business, operations, assets, revenues, properties or
prospects).
SECTION 3.03 Power and Authority. The Seller has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms; the
Seller has full corporate power and authority to own the Bondable Transition
Property and sell and assign the Transferred Bondable Transition Property to the
Issuer, and the Seller has duly authorized such sale and assignment to the
Issuer by all necessary corporate action; and the execution, delivery and
performance of this Agreement has been duly authorized by the Seller by all
necessary corporate action.
SECTION 3.04 Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Seller enforceable against the Seller in
accordance with its terms subject to bankruptcy, receivership, insolvency,
reorganization, moratorium or other laws
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affecting creditors' rights generally from time to time in effect and to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
SECTION 3.05 No Violation. The consummation of the transactions
contemtions plated by this Agreement and the fulfillment of the terms hereof do
not conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the Seller, or any indenture, agreement
or other instrument to which the Seller is a party or by which it is bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(except as contemplated in the Indenture and as set forth in Section 2.01(e)
hereof); nor violate any law or any order, rule or regulation applicable to the
Seller of any court or of any federal or State regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the Seller
or its properties.
SECTION 3.06 No Proceedings. Except as disclosed in writing by the Seller
to the Issuer, there are no proceedings or investigations pending or, to the
Seller's best knowledge, threatened, before any court, federal or State
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller or its properties:
(a) asserting the invalidity of the Basic Documents, the Transition Bonds,
the Competition Act, the Restructuring Order (insofar as it relates to the
transactions contemplated hereby) or the Financing Order;
(b) seeking to prevent the issuance of the Transition Bonds or the
consummation of any of the transactions contemplated by the Basic Documents or
the Transition Bonds;
(c) challenging the Seller's treatment of the Transition Bonds as debt of
the Seller for federal and State income, gross receipts or franchise tax
purposes; or
(d) seeking any determination or ruling that could reasonably be expected
to materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, the Basic Documents or
the Transition Bonds.
SECTION 3.07 Approvals. Except for the filing of financing statements and
continuation statements under the New Jersey UCC, no approval, authorization,
consent, order or other action of, or filing with, any court, federal or State
regulatory body, administrative agency or other governmental instrumentality is
required in connection with the execution and delivery by the Seller of this
Agreement, the performance by the Seller of the transactions contemplated hereby
or the fulfillment by the Seller of the terms hereof, except those that have
been obtained or made. The Pricing Advice Letter has been filed in accordance
with the Financing Order.
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SECTION 3.08 The Transferred Bondable Transition Property.
(a) Information. All information provided by the Seller to the Issuer with
respect to the Transferred Bondable Transition Property is correct in all
material respects.
(b) Effect of Transfer. Each sale, transfer, assignment and conveyance
herein contemplated constitutes a sale or other absolute transfer, of all right,
title and interest of the Seller in, to and under the Transferred Bondable
Transition Property from the Seller to the Issuer; upon execution and delivery
of this Agreement and the related Xxxx of Sale, the Seller will have no right,
title or interest in, to or under the Transferred Bondable Transition Property;
and the Transferred Bondable Transition Property would not be part of the estate
of the Seller as debtor in the event of the filing of a bankruptcy petition by
or against the Seller under any bankruptcy law.
(c) Transfer Filings. The Seller is the sole owner of the Transferred
Bondable Transition Property sold to the Issuer on the Transfer Date; and the
Transferred Bondable Transition Property will have been validly sold, assigned,
transferred and conveyed to the Issuer free and clear of all Liens other than
Liens created by the Issuer pursuant to the Indenture. All actions or filings,
including filings with the New Jersey Secretary of State under the New Jersey
UCC, necessary in any jurisdiction to give the Issuer a valid first priority
perfected ownership interest in the Transferred Bondable Transition Property and
to grant to the Trustee a first priority perfected security interest in the
Transferred Bondable Transition Property, free and clear of all Liens of the
Seller or anyone else have been taken or made.
(d) Financing Order Irrevocable; Process Valid; No Litigation; Etc.
(i) The Financing Order as issued on September 17, 1999 has been
issued by the BPU in accordance with the Competition Act, and such order
and the process by which it was issued comply with all applicable laws,
rules and regulations, including but not limited to the due process
requirements of the United States Constitution and the New Jersey
Constitution. The Financing Order has become effective pursuant to the
Competition Act and is and as of the date of issuance of any Transition
Bonds will be in full force and effect and final and non-appealable.
(ii) As of the Series Issuance Date, the Transition Bonds of the
related Series will be entitled to the protections provided by the
Competition Act and, in accordance with the Competition Act, the Financing
Order and the Transition Bond Charge authorized therein have become
irrevocable and each Advice Letter is final and uncontestable.
(iii) (A) Under the Competition Act, the State of New Jersey may not
limit, alter or impair the Transferred Bondable Transition Property
or other rights vested in the Seller, the Issuer, the Trustee or the
Transition Bondholders
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pursuant to the Financing Order until the Transition Bonds are fully
paid and discharged, or in any way limit, alter, impair or reduce
the value or amount of the Transferred Bondable Transition Property;
and
(B) under the Contract Clauses of the United States
Constitutions and the New Jersey Constitution, the State of New
Jersey, including the BPU, could not constitutionally take any
action of a legislative character, including the repeal or amendment
of the Competition Act, which would substantially limit, alter or
impair the Bondable Transition Property or other rights vested in
the Transition Bondholders pursuant to the Financing Order, or
substantially limit, alter, impair or reduce the value or amount of
the Bondable Transition Property, unless such action is a reasonable
exercise of the State of New Jersey's sovereign powers and of a
character reasonable and appropriate to the public purpose
justifying such action and under the Takings Clauses of the United
States and New Jersey Constitutions, the State of New Jersey could
not repeal or amend the Competition Act or take any other action in
contravention of its pledge and agreement quoted above without
paying just compensation to the Transition Bondholders, as
determined by a court of competent jurisdiction, if doing so would
constitute a permanent appropriation of a substantial property
interest of the Transition Bondholders in the Bondable Transition
Property and deprive the Transition Bondholders of their reasonable
expectations arising from their investments in the Transition Bonds.
There is no assurance, however, that, even if a court were to award
just compensation, it would be sufficient to pay the full amount of
principal of and interest on the Transition Bonds.
(iv) There is no order by any court providing for the revocation,
alteration, limitation or other impairment of the Competition Act, the
Financing Order, the Restructuring Order (insofar as it relates to the
sale of the Transferred Bondable Transition Property), any Advice Letter,
the Transferred Bondable Transition Property or the Transition Bond Charge
or any rights arising under any of them or to enjoin the performance of
any obligations under the Financing Order.
(v) No other approval, authorization, consent, order or other action
of, or filing with, any court, federal or State regulatory body,
administrative agency or other governmental instrumentality is required in
connection with the creation or transfer of the Transferred Bondable
Transition Property, except those that have been obtained or made.
(vi) Except as disclosed in writing by the Seller to the Issuer,
there are no proceedings or investigations pending, or to the best of the
Seller's knowledge, threatened before any court, federal or State
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or the Issuer or their
respective properties challenging the Competition Act, the Financing Order
or the
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Restructuring Order (insofar as it relates to the sale of the Transferred
Bondable Transition Property).
(e) Assumptions. The assumptions used in calculating the Transition Bond
Charge in any Advice Letter delivered by the Issuer to the BPU pursuant to the
Financing Order are reasonable and made in good faith.
(f) Creation of Transferred Bondable Transition Property.
(i) For purposes of the Competition Act and the UCC, the Transferred
Bondable Transition Property constitutes presently existing property;
(ii) the Bondable Transition Property consists of (A) the
irrevocable right of the Seller to charge, collect and receive, and be
paid from collections of, the Transition Bond Charge in the amount
necessary to provide for the full recovery of the Bondable Stranded Costs
which have been determined to be recoverable in the Financing Order and
(B) all rights of the Seller under the Financing Order, including, without
limitation, all rights to obtain periodic adjustments of the Transition
Bond Charge pursuant to the Competition Act, and all revenues,
collections, payments, money and proceeds arising under, or with respect
to, all of the foregoing; and
(iii) the Financing Order, including the right to collect the
Transition Bond Charge, has become irrevocable.
(g) Prospectus. As of the date hereof, the information describing the
Seller under the caption "The Seller and Servicer of the Bondable Transition
Property" in the prospectus dated January [ ], 2001 relating to the Transition
Bonds is correct in all material respects.
SECTION 3.09 Solvency. After giving effect to the sale of any Transferred
Bondable Transition Property hereunder, the Seller:
(a) is solvent and expects to remain solvent;
(b) is adequately capitalized to conduct its business and affairs
considering its size and the nature of its business and intended purposes;
(c) is not engaged in nor does it expect to engage in a business for which
its remaining property represents an unreasonably small capital;
(d) reasonably believes that it will be able to pay its debts as they come
due; and
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(e) is able to pay its debts as they mature and does not intend to incur,
or believes that it will incur, indebtedness that it will not be able to repay
at its maturity.
ARTICLE IV
Covenants of the Seller
SECTION 4.01 Seller's Existence. So long as any of the Transition Bonds
are outstanding, the Seller shall keep in full force and effect its existence as
a corporation and remain in good standing under the laws of the jurisdiction of
its organization, and shall obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or will be necessary to
protect the validity and enforceability of this Agreement and each other
instrument or agreement to which the Seller is a party necessary to the proper
administration of this Agreement and the transactions contemplated hereby.
SECTION 4.02 No Liens or Conveyances. Except for the conveyances
hereunder, the Seller shall not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on, any of
the Transferred Bondable Transition Property, whether now existing or hereafter
created, or any interest therein. The Seller shall not at any time assert any
Lien against or with respect to any Transferred Bondable Transition Property,
and shall defend the right, title and interest of the Issuer and the Trustee, as
assignee of the Issuer, in, to and under the Transferred Bondable Transition
Property, whether now existing or hereafter created, against all claims of third
parties claiming through or under the Seller.
SECTION 4.03 Use of Proceeds. The Seller shall use proceeds from the sale
of the Bondable Transition Property in accordance with the Financing Order and
the Competition Act.
SECTION 4.04 Delivery of Collections. If the Seller receives collections
of the Transition Bond Charge with respect to the Transferred Bondable
Transition Property or the proceeds thereof, the Seller shall pay the Servicer
all payments received by the Seller in respect thereof as soon as practicable
after receipt thereof by the Seller, but in no event later than two Business
Days after such receipt.
SECTION 4.05 Notice of Liens. The Seller shall notify the Issuer and the
Trustee promptly after becoming aware of any Lien on any Transferred Bondable
Transition Property other than the conveyances hereunder or under the Indenture.
SECTION 4.06 Compliance with Law. The Seller shall comply with its
organizational or governing documents and all laws, treaties, rules, regulations
and determinations of any governmental instrumentality applicable to the
Seller, except to the extent that failure to so comply would not adversely
affect the Issuer's or the Trustee's interests in the
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Transferred Bondable Transition Property or under any of the Basic Documents or
the Seller's performance of its obligations hereunder.
SECTION 4.07 Covenants Related to Transferred Bondable Transition
Property.
(a) So long as any of the Transition Bonds are outstanding, the Seller
shall:
(i) treat the Transition Bonds as debt of the Issuer and not of the
Seller, except for financial accounting or tax reporting purposes;
(ii) disclose in its financial statements that it is not the owner
of the Transferred Bondable Transition Property and that the assets of the
Issuer are not available to pay creditors of the Seller or any of its
Affiliates (other than the Issuer);
(iii) disclose the effects of all transactions between the Seller
and the Issuer in accordance with generally accepted accounting
principles; and
(iv) not own or purchase any Transition Bonds.
(b) The Seller agrees that upon the sale by the Seller of the Transferred
Bondable Transition Property to the Issuer pursuant to this Agreement:
(i) to the fullest extent permitted by law, including the
Competition Act and applicable BPU Regulations, the Issuer shall have all
of the rights originally held by the Seller with respect to the
Transferred Bondable Transition Property, including the right to collect
any amounts payable by any Customer or Third Party in respect of such
Transferred Bondable Transition Property, notwithstanding any objection or
direction to the contrary by the Seller; and
(ii) any payment by any Customer or Third Party to the Issuer shall
discharge such Customer's or such Third Party's obligations in respect of
such Transferred Bondable Transition Property to the extent of such
payment, notwithstanding any objection or direction to the contrary by the
Seller.
(c) So long as any of the Transition Bonds are Outstanding,
(i) the Seller shall not make any statement or reference in respect
of the Transferred Bondable Transition Property that is inconsistent with
the ownership thereof by the Issuer (other than for financial accounting
or tax reporting purposes); and
(ii) the Seller shall not take any action in respect of the
Transferred Bondable Transition Property except as contemplated by the
Basic Documents.
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SECTION 4.08 Protection of Title. The Seller shall execute and file such
filings, and cause to be executed and filed such filings, and take all such
actions, all in such manner and in such places as may be required by law fully
to preserve, maintain, and protect the interests of the Issuer and the Trustee
in the Transferred Bondable Transition Property, including all filings required
under the New Jersey UCC relating to the transfer of the ownership of the
Transferred Bondable Transition Property by the Seller to the Issuer and the
pledge of the Transferred Bondable Transition Property by the Issuer to the
Trustee. The Seller shall deliver (or cause to be delivered) to the Issuer and
the Trustee file-stamped copies of, or filing receipts for, any document filed
as provided above, as soon as available following such filing. The Seller shall
institute any action or proceeding necessary to compel the performance by the
BPU or the State of New Jersey of any of their obligations or duties under the
Competition Act or the Financing Order, and the Seller agrees to take such legal
or administrative actions, including defending against or instituting and
pursuing legal actions and appearing or testifying at hearings or similar
proceedings, as may be reasonably necessary:
(a) to protect the Issuer and the Transition Bondholders from claims,
State actions or other actions or proceedings of third parties
which, if successfully pursued, would result in a breach of any
representation set forth in Article III; or
(b) to block or overturn any attempts to cause a repeal of, modification
of or supplement to the Competition Act, the Financing Order, any
Advice Letter, the Restructuring Order (to the extent it affects
the rights of Transition Bondholders or the validity or value of the
Bondable Transition Property) or the rights of Transition
Bondholders by legislative enactment or constitutional amendment
that would be adverse to the Issuer, the Trustee or the Transition
Bondholders.
The costs of any such actions or proceedings shall be reimbursed by the Issuer
to the Seller from amounts on deposit in the Collection Account as an Operating
Expense. The Seller's obligations pursuant to this Section 4.08 shall survive
and continue notwithstanding that the payment of Operating Expenses pursuant to
the Indenture may be delayed (it being understood that the Seller may be
required to advance its own funds to satisfy its obligation hereunder). The
Seller designates the Issuer as its agent and attorney-in-fact to execute any
filings of financing statements, continuation statements or other instruments
required of the Issuer pursuant to this Section, it being understood that the
Issuer shall have no obligation to execute any such instruments.
SECTION 4.09 Taxes. So long as any of the Transition Bonds are
outstanding, the Seller shall, and shall cause each of its subsidiaries to, pay
all material taxes, assessments and governmental charges imposed upon it or any
of its properties or assets or with respect to any of its franchises, business,
income or property before any penalty accrues thereon if the failure to pay any
such taxes, assessments and governmental charges would, after any applicable
grace periods, notices or other similar requirements, result in a Lien on the
Transferred Bondable
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Transition Property; provided that no such tax need be paid if the Seller or one
of its Affiliates is contesting the same in good faith by appropriate
proceedings promptly instituted and diligently conducted and if the Seller or
such Affiliate has established appropriate reserves as shall be required in
conformity with generally accepted accounting principles.
ARTICLE V
Additional Undertakings of the Seller
The Seller hereby undertakes the obligations contained in this Article V
and agrees that the Issuer shall have the right to assign its rights with
respect to such obligations to the Trustee for the benefit of the Transition
Bondholders.
SECTION 5.01 Liability of the Seller; Indemnities.
(a) The Seller shall be liable in accordance herewith only to the extent
of the obligations specifically undertaken by the Seller under this Agreement.
(b) The Seller shall indemnify the Issuer and the Trustee, for itself and
on behalf of the Transition Bondholders, and each of their respective officers,
directors, managers, employees and agents for, and defend and hold harmless each
such Person from and against, any and all taxes (other than any taxes imposed on
Transition Bondholders solely as a result of their ownership of Transition
Bonds) that may at any time be imposed on or asserted against any such Person
under existing law as of any Transfer Date as a result of the sale and
assignment of the Transferred Bondable Transition Property by the Seller to the
Issuer, the acquisition or holding of the Transferred Bondable Transition
Property by the Issuer or the issuance and sale by the Issuer of the Transition
Bonds, including any sales, gross receipts, general corporation, personal
property, privilege, franchise or license taxes, but excluding any taxes imposed
as a result of a failure of such person to properly withhold or remit taxes
imposed with respect to payments on any Transition Bond, it being understood
that the Transition Bondholders shall be entitled to enforce their rights
against the Seller under this Section 5.01(b) solely through a cause of action
brought for their benefit by the Trustee.
(c) The Seller shall indemnify the Issuer and the Trustee, for itself and
on behalf of the Transition Bondholders, and each of their respective officers,
directors, managers, employees and agents for, and defend and hold harmless each
such Person from and against, (i) any and all amounts of principal of and
interest on the Transition Bonds (including amounts owed to Holders of any
floating rate Transition Bonds at the Gross Fixed Rate) not paid when due or
when scheduled to be paid in accordance with their terms and the amount of any
deposits to the Issuer required to have been made in accordance with the terms
of the Basic Documents which are not made when so required, in each case as a
result of the Seller's breach of any of its representations, warranties or
covenants contained in this Agreement, and (ii) any and all
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liabilities, obligations, claims, actions, suits or payments of any kind
whatsoever that may be imposed on or asserted against any such Person, other
than any liabilities, obligations or claims for or payments of principal of or
interest on the Transition Bonds, together with any reasonable costs and
expenses incurred by such Person, as a result of the Seller's breach of any of
its representations, warranties or covenants contained in this Agreement.
(d) The Seller shall pay any and all taxes levied or assessed upon all or
any part of the Issuer's property or assets based on existing law as of the
Transfer Date.
(e) Indemnification under this Section 5.01 shall survive the resignation
or removal of the Trustee and the termination of this Agreement and shall
include reasonable fees and expenses of investigation and litigation (including
reasonable attorneys' fees and expenses). The Seller shall not indemnify any
party under this Section 5.01 for any changes in law after the Transfer Date.
(f) The indemnification obligation of the Seller under this Section 5.01
shall be pari passu with all other general unsecured obligations of the Seller.
SECTION 5.02 Merger or Consolidation of, or Assumption of the Obligations
of, the Seller. Any Person:
(a) into which the Seller may be merged or consolidated and which
succeeds to all or the major part of the electric distribution
business of the Seller,
(b) which results from the division of the Seller into two or more
Persons and which succeeds to all or the major part of the electric
distribution business of the Seller,
(c) which may result from any merger or consolidation to which the
Seller shall be a party and which succeeds to all or the major part
of the electric distribution business of the Seller,
(d) which may succeed to the properties and assets of the Seller
substantially as a whole and which succeeds to all or the major part
of the electric distribution business of the Seller, or
(e) which may otherwise succeed to all or the major part of the electric
distribution business of the Seller,
which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Seller under this Agreement, shall be the
successor to the Seller hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement; provided,
however, that
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(i) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Article III shall have
been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default,
shall have occurred and be continuing,
(ii) the Seller shall have delivered to the Issuer and the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of
assumption comply with this Section 5.02 and that all conditions
precedent, if any, provided for in this Agreement relating to such
transaction have been complied with,
(iii) the Seller shall have delivered to the Issuer and the Trustee an
Opinion of Counsel either
(A) stating that, in the opinion of such counsel, all filings to
be made by the Seller, including New Jersey UCC filings, that
are necessary fully to preserve and protect fully the
respective interests of the Issuer and the Trustee in the
Transferred Bondable Transition Property have been executed
and filed, and reciting the details of such filings, or
(B) stating that, in the opinion of such counsel, no such action
is necessary to preserve and protect such interests,
(iv) the Rating Agencies shall have received prior written notice of such
transaction; and
(v) the Seller shall have delivered to the Issuer and the Trustee an
opinion of independent tax counsel (as selected by, and in form and
substance reasonably satisfactory to, the Seller, and which may be
based on a ruling from the Internal Revenue Service) to the effect
that, for federal income tax purposes, such consolidation or merger
will not result in a material adverse federal income tax consequence
to the Seller, the Issuer, the Trustee or the holders of the
Outstanding Transition Bonds.
The Seller shall not consummate any transaction referred to in clauses (a), (b),
(c), (d) or (e) above except upon execution of the above described agreement of
assumption and compliance with clauses (i), (ii), (iii), (iv) and (v) above.
When any Person acquires the properties and assets of the Seller substantially
as a whole and becomes the successor to the Seller in accordance with the terms
of this Section 5.02, then upon the satisfaction of all of the other conditions
of this Section 5.02, the Seller shall automatically and without further notice
be released from its obligations hereunder.
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SECTION 5.03 Limitation on Liability of the Seller and Others. The Seller
and any director, officer, employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person, respecting any matters arising
hereunder. Subject to Section 4.08, the Seller shall not be under any obligation
to appear in, prosecute or defend any legal action that is not incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
ARTICLE VI
Miscellaneous Provisions
SECTION 6.01 Amendment. (a) This Agreement may be amended by the Seller
and the Issuer, with the consent of the Trustee and the satisfaction of the
Rating Agency Condition. Promptly after the execution of any such amendment or
consent, the Issuer shall furnish written notification of the substance of such
amendment or consent to each of the Rating Agencies.
(b) Prior to the execution of any amendment to this Agreement, the Issuer
and the Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement. The Issuer and the Trustee may, but shall not be obligated to, enter
into any such amendment which affects their own rights, duties or immunities
under this Agreement or otherwise.
SECTION 6.02 Notices. Unless otherwise specifically provided herein, all
notices, directions, consents and waivers required under the terms and
provisions of this Agreement shall be in English and in writing, and any such
notice, direction, consent or waiver may be given by United States first-class
mail, reputable overnight courier service, facsimile transmission or electronic
mail (confirmed by telephone, United States first-class mail or reputable
overnight courier service in the case of notice by facsimile transmission or
electronic mail) or any other customary means of communication, and any such
notice, direction, consent or waiver shall be effective when delivered or
transmitted, or if mailed, five days after deposit in the United States
first-class mail with proper postage for first-class mail prepaid:
(a) in the case of the Seller, at Public Service Electric and Gas
Company, 00 Xxxx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000, Attention:
Treasurer,
(b) in the case of the Issuer, at PSE&G Transition Funding LLC, 00 Xxxx
Xxxxx, X-0X, Xxxxxx, Xxx Xxxxxx 00000, Attention: Managers,
(c) in the case of Moody's, at Xxxxx'x Investors Service, Inc., ABS
Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
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(d) in the case of Standard & Poor's, at Standard & Poor's Ratings
Group, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset
Backed Surveillance Department, and
(e) in the case of Fitch, at Fitch, Inc., 0 Xxxxx Xxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: ABS Surveillance,
(f) in the case the Trustee, at the address provided for notices or
communications to the Trustee in the Indenture;
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 6.03 Assignment by Seller. Subject to Section 5.02, this Agreement
may not be assigned by the Seller.
SECTION 6.04 Assignment to Trustee. The Seller hereby acknowledges and
consents to any pledge, assignment and grant of a security interest by the
Issuer to the Trustee pursuant to the Indenture for the benefit of the
Transition Bondholders of all right, title and interest of the Issuer in, to and
under the Transferred Bondable Transition Property and the proceeds thereof and
the assignment of any or all of the Issuer's rights hereunder to the Trustee.
SECTION 6.05 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Issuer and the Trustee,
on behalf of itself and the Transition Bondholders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Collateral or under
or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 6.06 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 6.07 Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
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SECTION 6.08 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 6.09 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 6.10 Nonpetition Covenant. Notwithstanding any prior termination
of this Agreement or the Indenture, the Seller hereby covenants and agrees that
it shall not, prior to the date which is one year and one day after the
termination of the Indenture and the payment in full of the Transition Bonds,
any other amounts owed under the Indenture, including, without limitation, any
amounts owed to third-party credit enhancers, and any amounts owed under the
Hedge Agreement or the Interest Rate Swap Agreement, acquiesce, petition or
otherwise invoke or cause the Issuer to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Issuer under any federal or State bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Issuer or any substantial part of the property of
the Issuer, or ordering the winding up or liquidation of the affairs of the
Issuer.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the date and year first above written.
PSE&G TRANSITION FUNDING LLC,
as Issuer
By:______________________________________
Name:
Title: Manager
PUBLIC SERVICE ELECTRIC
AND GAS COMPANY,
as Seller
By:______________________________________
Name:
Title:
19
EXHIBIT A
XXXX OF SALE
For good and valuable consideration the receipt of which is hereby
acknowledged, PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a New Jersey corporation
(the "Seller"), does hereby sell, assign, transfer and convey to PSE&G
TRANSITION FUNDING LLC, a Delaware limited liability company (the "Issuer"),
without recourse except as provided in the Sale Agreement referred to below, all
of the Seller's right, title and interest in, to and under [the Bondable
Transition Property] [the Bondable Transition Property identified as follows:
______], which sale, assignment, transfer and conveyance of such Bondable
Transition Property shall include, as provided in the Competition Act, the sale,
assignment, transfer and conveyance of all of the Seller's right, title and
interest in, to and under all revenues, collections, payments, money or proceeds
arising under or with respect to the Transition Bond Charge related to such
Bondable Transition Property, as the same may be adjusted from time to time in
accordance with the Competition Act and the Financing Order, to have and to hold
the same unto the Issuer and to the successors and assigns of the Issuer,
forever.
Capitalized terms used herein and not defined shall have the meanings set
forth in the Bondable Transition Property Sale Agreement dated [January] , 2001
(the "Sale Agreement") between the Issuer and the Seller.
IN WITNESS WHEREOF, the Seller has duly executed and delivered this Xxxx
of Sale this [ ]th day of [January], 2001.
PUBLIC SERVICE ELECTRIC
AND GAS COMPANY, as Seller
By:______________________________________
Name:____________________________________
Title:___________________________________
Accepted this [ ]th day of [January], 2001.
PSE&G TRANSITION FUNDING LLC
By:______________________________________
Name:____________________________________
Title:___________________________________
A-1
