EXECUTION COPY
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC,
Issuer
and
THE BANK OF NEW YORK,
Trustee
------------------------------
2002-1 SERIES SUPPLEMENT
Dated as of December 19, 2002
------------------------------
2002-1 SERIES SUPPLEMENT dated as of December 19, 2002 (this "Supplement"),
by and between ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC, a Delaware limited
liability company (the "Issuer"), and The Bank of New York, a New York banking
corporation (the "Trustee"), as Trustee under the Indenture dated as of December
19, 2002, between the Issuer and the Trustee (the "Indenture").
PRELIMINARY STATEMENT
Section 9.01 of the Indenture provides, among other things, that the Issuer
and the Trustee may at any time and from time to time enter into one or more
indentures supplemental to the Indenture for the purposes of authorizing the
issuance by the Issuer of a Series of Transition Bonds and specifying the terms
thereof. The Issuer has duly authorized the execution and delivery of this
Supplement and the creation of a Series of Transition Bonds with an initial
aggregate principal amount of $440,000,000 to be known as the Issuer's
Transition Bonds, Series 2002-1 (the "Series 2002-1 Transition Bonds"). All acts
and all things necessary to make the Series 2002-1 Transition Bonds, when duly
executed by the Issuer and authenticated by the Trustee as provided in the
Indenture and this Supplement and issued by the Issuer, the valid, binding and
legal obligations of the Issuer and to make this Supplement a valid and
enforceable supplement to the Indenture have been done, performed and fulfilled,
and the execution and delivery hereof have been in all respects duly and
lawfully authorized. The Issuer and the Trustee are executing and delivering
this Supplement in order to provide for the Series 2002-1 Transition Bonds.
In order to secure the payment of principal of and interest on the Series
2002-1 Transition Bonds issued and to be issued under the Indenture and/or any
Series Supplement, the Issuer hereby confirms the Grant to the Trustee, for the
benefit of the Holders of the Series 2002-1 Transition Bonds from time to time
issued and Outstanding, of all of the Issuer's right, title and interest in, to
and under the Collateral, including without limitation the Bondable Transition
Property transferred by the Seller to the Issuer as of the Initial Transfer Date
pursuant to the Sale Agreement and all proceeds thereof.
The Trustee, on behalf of the Holders of the Series 2002-1 Transition
Bonds, acknowledges the confirmation of such Grant, accepts the trusts hereunder
in accordance with the provisions hereof and agrees to perform its duties
required in the Indenture and this Supplement.
SECTION 1. DEFINITIONS.
All terms used in this Supplement that are defined in the Indenture, either
directly or by reference therein, have the meanings assigned to them therein,
except to the extent such terms are defined or modified in this Supplement or
the context clearly requires otherwise.
SECTION 2. OTHER DEFINITIONAL PROVISIONS.
"Authorized Denominations" means $1,000 and integral multiples of $1.00
above that amount, provided, however, that one Series 2002-1 Transition Bond of
each Class may have a denomination of less than $1,000.
"Expected Amortization Schedule" means Schedule A to this Supplement.
"Expected Final Payment Date" means, with respect to any Class of the
Series 2002-1 Transition Bonds, the expected final Payment Date indicated for
such Class in Section 4 of this Supplement.
"Final Maturity Date" means, with respect to any Class of the Series 2002-1
Transition Bonds, the final maturity date indicated for such Class in Section 4
of this Supplement.
"Interest Rate" means, for any Class of the Series 2002-1 Transaction
Bonds, the percentage amount indicated for such Class in Section 4 of this
Supplement.
"Overcollateralization Amount" has the meaning set forth in Section 5(d) of
this Supplement.
"Record Date" means, with respect to any Payment Date, the Business Day
prior to such Payment Date or, with respect to any Definitive Transition Bonds,
the last Business Day of the month preceding such Payment Date.
"Required Capital Amount" has the meaning set forth in Section 5(e) of this
Supplement.
"Series Issuance Date" has the meaning set forth in Section 3(b) of this
Supplement.
SECTION 3. DESIGNATION; SERIES ISSUANCE DATES.
(a) Designation. The Series 2002-1 Transition Bonds shall be
designated generally as the Issuer's Transition Bonds, Series 2002-1, and
further denominated as Class A-1, Class A-2, Class A-3 and Class A-4.
(b) Series Issuance Date. The Series 2002-1 Transition Bonds that are
authenticated and delivered by the Trustee to or upon the order of the Issuer on
December 19, 2002 (the "Series Issuance Date") shall have as their date of
authentication December 19, 2002.
SECTION 4. INITIAL PRINCIPAL AMOUNT; INTEREST RATE; EXPECTED FINAL PAYMENT
DATE; FINAL MATURITY DATES.
The Transition Bonds of each Class of the Series 2002-1 Transition Bonds
shall have the initial principal amounts, bear interest at the respective
Interest Rates and have the respective Expected Final Payment Dates and Final
Maturity Dates set forth below:
Initial Principal Expected Final Final
Class Amount Interest Rate Payment Date Maturity Date
A-1 $109,000,000 2.890% 7/20/2008 7/20/2010
A-2 $66,000,000 4.210% 4/20/2011 4/20/2013
A-3 $118,000,000 4.910% 7/20/2015 7/20/2017
A-4 $147,000,000 5.550% 10/20/2021 10/20/2023
2
SECTION 5. PAYMENT DATES; EXPECTED AMORTIZATION SCHEDULE FOR PRINCIPAL;
INTEREST; OVERCOLLATERALIZATION AMOUNT; REQUIRED CAPITAL AMOUNT.
(a) Payment Dates. The Payment Dates for each Class of the Series
2002-1 Transition Bonds are January 20, April 20, July 20 and October 20 of each
year, or, if any such date is not a Business Day, the next succeeding Business
Day, commencing on October 20, 2003 and continuing until the earlier of
repayment of such Class in full and the applicable Final Maturity Date.
(b) Expected Amortization Schedule for Principal. Except in the case
of an optional redemption pursuant to Section 10.01 or 10.02 of the Indenture,
unless an acceleration upon an Event of Default has occurred and is continuing
and the unpaid principal amount of all Series of Transition Bonds has been
declared to be due and payable together with accrued and unpaid interest
thereon, on each Payment Date the Trustee shall distribute to the Series 2002-1
Transition Bondholders of record as of the related Record Date the amounts
payable as principal on the Series 2002-1 Transition Bonds in accordance with
the Expected Amortization Schedule; provided that if as of such Payment Date one
or more Classes of Series 2002-1 Transition Bonds did not receive a scheduled
payment of principal on a previous Payment Date and amounts are payable in
respect of more than one such Class in accordance with the Expected Amortization
Schedule, principal payments shall be allocated in a sequential manner as
follows: (i) to the holders of Series 2002-1 Transition Bonds, Class A-1, until
this Class is retired in full; (ii) to the holders of Series 2002-1 Transition
Bonds, Class A-2, until this Class is retired in full; (iii) to the holders of
Series 2002-1 Transition Bonds, Class A-3, until this Class is retired in full;
and (iv) to the holders of Series 2002-1 Transition Bonds, Class A-4, until this
Class is retired in full; provided, further, that no principal payment shall be
made on any Class of Series 2002-1 Transition Bonds in excess of the amount
necessary to reduce the Outstanding Amount of such Class to the amount specified
for such Class and such Payment Date in the Expected Amortization Schedule. In
the case of an optional redemption pursuant to Section 10.01 or 10.02 of the
Indenture or an acceleration upon an Event of Default pursuant to Section 5.02
of the Indenture, if the amounts available to make payments of principal on the
Series 2002-1 Transition Bonds are insufficient to make such payments in full,
the Trustee shall pay principal on each Class of the Series 2002-1 Transition
Bondholders pro rata based on the Outstanding Amount of each such Class as of
such date, if such date is a Payment Date, and otherwise as of the most recent
Payment Date after giving effect to all payments of principal made to the
Holders of Transition Bonds as of such most recent Payment Date.
(c) Interest. On the initial Payment Date, interest shall be payable,
on each Class of the Series 2002-1 Transition Bonds, in an amount equal to the
product of:
(1) the fraction (x) whose numerator is number of days (determined on
the basis of a 360-day year of twelve 30-day months) from and including the
Series Issuance Date to but excluding the initial Payment Date and (y)
whose denominator is 360, times
(2) the product of (x) the Interest Rate for such Class times (y) the
Outstanding Amount of such Class as of the Series Issuance Date.
3
On each succeeding Payment Date, interest shall be payable, on each Class of the
Series 2002-1 Transition Bonds, in an amount equal to the product of:
(1) the fraction (x) whose numerator is number of days (determined on
the basis of a 360-day year of twelve 30-day months) from and including the
preceding Payment Date to but excluding the current Payment Date and (y)
whose denominator is 360, times
(2) the product of (x) the Interest Rate for such Class times (y) the
Outstanding Amount of such Class as of the close of business on the
preceding Payment Date after giving effect to all payments of principal
made to the Holders of such Class on such preceding Payment Date.
If the amounts available to make payments of interest on the Series 2002-1
Transition Bonds are insufficient to make such payments in full, the Trustee
shall make payments of interest to each Class of such Transition Bonds pro rata
based on the respective amounts of interest payable on each such Class. Interest
on the Series 2002-1 Transition Bonds shall be calculated on the basis of a
360-day year of twelve 30-day months.
(d) Overcollateralization Amount. The Overcollateralization Amount for
the Series 2002-1 Transition Bonds with respect to each Payment Date shall be as
set forth in Schedule B hereto.
(e) Required Capital Amount; Series 2002-1 Capital Subaccount. The
Required Capital Amount for the Series 2002-1 Transition Bonds shall be
$2,200,000.
(f) No Premium. No premium shall be payable in connection with the
early redemption of the Series 2002-1 Transition Bonds.
SECTION 6. AUTHORIZED DENOMINATIONS. The Series 2002-1 Transition Bonds
shall be issuable in the Authorized Denominations.
SECTION 7. REDEMPTION.
(a) Mandatory Redemption. The Series 2002-1 Transition Bonds shall not
be subject to mandatory redemption.
(b) Optional Redemption. The Issuer may redeem the Series 2002-1
Transition Bonds at its option, on any Payment Date in accordance with Section
10.01 of the Indenture if, after giving effect to payments that would otherwise
be made on such Payment Date, the Outstanding Amount of such Series has been
reduced to less than five percent of the initial Outstanding Amount of such
Series.
SECTION 8. CREDIT ENHANCEMENT. No credit enhancement (other than the
Overcollateralization Amount, the Required Capital Amount and any adjustments to
the Transition Bond Charge approved by the BPU as contemplated in the Servicing
Agreement) is provided for the Series 2002-1 Transition Bonds.
4
SECTION 9. DELIVERY AND PAYMENT FOR THE SERIES 2002-1 TRANSITION BONDS;
FORM OF THE SERIES 2002-1 TRANSITION BONDS. The Trustee shall deliver the Series
2002-1 Transition Bonds to the Issuer when authenticated in accordance with
Section 2.02 of the Indenture. The Series 2002-1 Transition Bonds shall be in
the form of Exhibit A.
SECTION 10. LISTING AGENT, PAYING AGENT, TRANSFER AGENT. For so long as any
Series 2002-1 Transition Bonds are listed on the Luxembourg Stock Exchange and
the rules and regulations of such exchange so require, the Issuer shall retain a
listing agent, a transfer agent and a paying agent in Luxembourg appointed
pursuant to Section 3.02(b) of the Indenture.
SECTION 11. CONFIRMATION OF INDENTURE. As supplemented by this Supplement,
the Indenture is in all respects ratified and confirmed and the Indenture, as so
supplemented by this Supplement, shall be read, taken and construed as one and
the same instrument.
SECTION 12. COUNTERPARTS. This Supplement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.
SECTION 13. GOVERNING LAW. THIS SUPPLEMENT 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.
5
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Supplement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
ATLANTIC CITY ELECTRIC TRANSITION
FUNDING LLC,
as Issuer
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
---------------------------
Title: Manager
THE BANK OF NEW YORK, not in its
individual capacity but solely as
Trustee on behalf of the
Transition Bondholders,
By: /s/ Xxxxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxxxx Xxxxx
---------------------------
Title: Assistant Vice President
---------------------------
6
SCHEDULE A
Expected Amortization Schedule
Scheduled Amortization Requirement
All amounts are in United States Dollars
Payment Date Class A-1 Class A-2 Class A-3 Class A-4
Balance Balance Balance Balance
Closing $ 109,000,000 $ 66,000,000 $ 118,000,000 $ 147,000,000
10/20/2003 94,506,475 66,000,000 118,000,000 147,000,000
01/20/2004 89,083,098 66,000,000 118,000,000 147,000,000
04/20/2004 84,850,403 66,000,000 118,000,000 147,000,000
07/20/2004 80,822,308 66,000,000 118,000,000 147,000,000
10/20/2004 75,199,510 66,000,000 118,000,000 147,000,000
01/20/2005 70,395,013 66,000,000 118,000,000 147,000,000
04/20/2005 65,786,770 66,000,000 118,000,000 147,000,000
07/20/2005 61,332,279 66,000,000 118,000,000 147,000,000
10/20/2005 55,228,061 66,000,000 118,000,000 147,000,000
01/20/2006 50,160,529 66,000,000 118,000,000 147,000,000
04/20/2006 45,410,379 66,000,000 118,000,000 147,000,000
07/20/2006 40,810,223 66,000,000 118,000,000 147,000,000
10/20/2006 34,553,081 66,000,000 118,000,000 147,000,000
01/20/2007 29,314,188 66,000,000 118,000,000 147,000,000
04/20/2007 24,389,271 66,000,000 118,000,000 147,000,000
07/20/2007 19,608,191 66,000,000 118,000,000 147,000,000
10/20/2007 13,151,615 66,000,000 118,000,000 147,000,000
01/20/2008 7,723,572 66,000,000 118,000,000 147,000,000
04/20/2008 2,620,913 66,000,000 118,000,000 147,000,000
07/20/2008 0 63,653,120 118,000,000 147,000,000
10/20/2008 0 56,989,689 118,000,000 147,000,000
01/20/2009 0 51,335,945 118,000,000 147,000,000
04/20/2009 0 45,996,416 118,000,000 147,000,000
07/20/2009 0 40,764,622 118,000,000 147,000,000
10/20/2009 0 33,813,498 118,000,000 147,000,000
01/20/2010 0 27,875,006 118,000,000 147,000,000
04/20/2010 0 22,253,011 118,000,000 147,000,000
07/20/2010 0 16,734,980 118,000,000 147,000,000
10/20/2010 0 9,487,864 118,000,000 147,000,000
01/20/2011 0 3,253,344 118,000,000 147,000,000
04/20/2011 0 0 115,333,066 147,000,000
07/20/2011 0 0 109,509,581 147,000,000
10/20/2011 0 0 101,936,809 147,000,000
01/20/2012 0 0 95,363,846 147,000,000
04/20/2012 0 0 89,091,317 147,000,000
07/20/2012 0 0 82,906,232 147,000,000
10/20/2012 0 0 74,960,452 147,000,000
01/20/2013 0 0 68,013,126 147,000,000
04/20/2013 0 0 61,362,517 147,000,000
07/20/2013 0 0 54,795,395 147,000,000
10/20/2013 0 0 46,455,534 147,000,000
01/20/2014 0 0 39,112,651 147,000,000
04/20/2014 0 0 32,062,533 147,000,000
07/20/2014 0 0 25,091,722 147,000,000
10/20/2014 0 0 16,335,444 147,000,000
01/20/2015 0 0 8,574,749 147,000,000
04/20/2015 0 0 1,102,735 147,000,000
07/20/2015 0 0 0 140,705,612
10/20/2015 0 0 0 131,499,550
01/20/2016 0 0 0 123,274,970
Payment Date Class A-1 Class A-2 Class A-3 Class A-4
Balance Balance Balance Balance
04/20/2016 0 0 0 115,322,517
07/20/2016 0 0 0 107,427,133
10/20/2016 0 0 0 97,706,153
01/20/2017 0 0 0 91,349,967
04/20/2017 0 0 0 86,573,479
07/20/2017 0 0 0 81,894,976
10/20/2017 0 0 0 76,073,742
01/20/2018 0 0 0 71,546,056
04/20/2018 0 0 0 67,561,123
07/20/2018 0 0 0 63,625,424
10/20/2018 0 0 0 58,734,980
01/20/2019 0 0 0 54,286,881
04/20/2019 0 0 0 49,940,720
07/20/2019 0 0 0 45,622,602
10/20/2019 0 0 0 40,320,085
01/20/2020 0 0 0 35,551,619
04/20/2020 0 0 0 30,929,943
07/20/2020 0 0 0 26,334,739
10/20/2020 0 0 0 20,748,941
01/20/2021 0 0 0 15,692,991
04/20/2021 0 0 0 10,779,405
07/20/2021 0 0 0 5,888,475
10/20/2021 0 0 0 0
Schedule A-2
SCHEDULE B
Schedule of Overcollateralization Requirement
All amounts are in United States Dollars
-------------------------------------------- --------------------------------------------
Overcollaterization Overcollaterization
Payment Date Amount Payment Date Amount
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
Closing $0 10/20/2012 1,157,895
-------------------------------------------- --------------------------------------------
10/20/2003 115,789 01/20/2013 1,186,842
-------------------------------------------- --------------------------------------------
01/20/2004 144,737 04/20/2013 1,215,789
-------------------------------------------- --------------------------------------------
04/20/2004 173,684 07/20/2013 1,244,737
-------------------------------------------- --------------------------------------------
07/20/2004 202,632 10/20/2013 1,273,684
-------------------------------------------- --------------------------------------------
10/20/2004 231,579 01/20/2014 1,302,632
-------------------------------------------- --------------------------------------------
01/20/2005 260,526 04/20/2014 1,331,579
-------------------------------------------- --------------------------------------------
04/20/2005 289,474 07/20/2014 1,360,526
-------------------------------------------- --------------------------------------------
07/20/2005 318,421 10/20/2014 1,389,474
-------------------------------------------- --------------------------------------------
10/20/2005 347,368 01/20/2015 1,418,421
-------------------------------------------- --------------------------------------------
01/20/2006 376,316 04/20/2015 1,447,368
-------------------------------------------- --------------------------------------------
04/20/2006 405,263 07/20/2015 1,476,316
-------------------------------------------- --------------------------------------------
07/20/2006 434,211 10/20/2015 1,505,263
-------------------------------------------- --------------------------------------------
10/20/2006 463,158 01/20/2016 1,534,211
-------------------------------------------- --------------------------------------------
01/20/2007 492,105 04/20/2016 1,563,158
-------------------------------------------- --------------------------------------------
04/20/2007 521,053 07/20/2016 1,592,105
-------------------------------------------- --------------------------------------------
07/20/2007 550,000 10/20/2016 1,621,053
-------------------------------------------- --------------------------------------------
10/20/2007 578,947 01/20/2017 1,650,000
-------------------------------------------- --------------------------------------------
01/20/2008 607,895 04/20/2017 1,678,947
-------------------------------------------- --------------------------------------------
04/20/2008 636,842 07/20/2017 1,707,895
-------------------------------------------- --------------------------------------------
07/20/2008 665,789 10/20/2017 1,736,842
-------------------------------------------- --------------------------------------------
10/20/2008 694,737 01/20/2018 1,765,789
-------------------------------------------- --------------------------------------------
01/20/2009 723,684 04/20/2018 1,794,737
-------------------------------------------- --------------------------------------------
04/20/2009 752,632 07/20/2018 1,823,684
-------------------------------------------- --------------------------------------------
07/20/2009 781,579 10/20/2018 1,852,632
-------------------------------------------- --------------------------------------------
10/20/2009 810,526 01/20/2019 1,881,579
-------------------------------------------- --------------------------------------------
01/20/2010 839,474 04/20/2019 1,910,526
-------------------------------------------- --------------------------------------------
04/20/2010 868,421 07/20/2019 1,939,474
-------------------------------------------- --------------------------------------------
07/20/2010 897,368 10/20/2019 1,968,421
-------------------------------------------- --------------------------------------------
10/20/2010 926,316 01/20/2020 1,997,368
-------------------------------------------- --------------------------------------------
01/20/2011 955,263 04/20/2020 2,026,316
-------------------------------------------- --------------------------------------------
04/20/2011 984,211 07/20/2020 2,055,263
-------------------------------------------- --------------------------------------------
07/20/2011 1,013,158 10/20/2020 2,084,211
-------------------------------------------- --------------------------------------------
10/20/2011 1,042,105 01/20/2021 2,113,158
-------------------------------------------- --------------------------------------------
01/20/2012 1,071,053 04/20/2021 2,142,105
-------------------------------------------- --------------------------------------------
04/20/2012 1,100,000 07/20/2021 2,171,053
-------------------------------------------- --------------------------------------------
07/20/2012 1,128,947 10/20/2021 2,200,000
-------------------------------------------- --------------------------------------------
Exhibit A to Series Supplement
Form of Bond
REGISTERED $
No. R-__ CUSIP NO. ______
SEE REVERSE FOR CERTAIN DEFINITIONS
THE PRINCIPAL OF THIS CLASS A-[ ] TRANSITION BOND SHALL BE PAID IN
INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT
OF THIS CLASS A-[ ] TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF. THE HOLDER OF THIS CLASS A-[ ] TRANSITION BOND HEREBY
COVENANTS AND AGREES THAT, PRIOR TO THE DATE WHICH IS ONE (1) YEAR AND ONE (1)
DAY AFTER THE PAYMENT IN FULL OF THE CLASS A-[ ] TRANSITION BONDS, IT WILL NOT
INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST, THE ISSUER
ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION
PROCEEDINGS OR OTHER SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED STATES OR
ANY STATE OF THE UNITED STATES. TRANSFERS OF THIS GLOBAL TRANSITION BOND SHALL
BE LIMITED TO TRANSFERS IN THE CLEARING AGENCY OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL TRANSITION BOND
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE INDENTURE.
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC
TRANSITION BONDS, SERIES 2002-1, CLASS A-[ ].
Interest Original Principal Expected Final Maturity Date
Rate Amount Payment Date
ATLANTIC CITY ELECTRIC Transition Funding LLC, a limited liability company
formed and existing under the laws of the State of Delaware (herein referred to
as the "Issuer"), for value received, hereby promises to pay to the Registered
Holder hereof, or registered assigns, the principal amount shown above in
quarterly installments on the Payment Dates (as defined below) and in the
amounts determined as specified on the reverse hereof or, if less, the amounts
determined pursuant to Section 8.02(e) of the Indenture referred to on the
reverse hereof, in each year, commencing on October 20, 2003 and ending on or
before the Final Maturity Date, to pay the entire unpaid principal hereof on the
Final Maturity Date and to pay interest, at the Interest Rate shown above at a
fixed rate, on each January 20, April 20, July 20 and October 20, or, if any
such day is not a Business Day, the next succeeding Business Day, commencing on
October 20, 2003 and continuing until the earlier of the payment of the
principal hereof and the Final Maturity Date hereof (each a "Payment Date"), on
the principal amount of this Class A-[ ] Transition Bond outstanding from time
to time. Interest shall be computed (i) for the initial Payment Date, on the
basis of the number of days (determined on the basis of a 360-day year of twelve
30-day months) from and including the Series Issuance Date to but excluding the
initial Payment Date, divided by 360, multiplied by [ ]%, multiplied by the
Outstanding Amount of the Class A-[ ] Transition Bonds as of the Series Issuance
Date and (ii) for each succeeding Payment Date, on the basis of the number of
days (determined on the basis of a 360-day year of twelve 30-day months) from
and including the preceding Payment Date to but excluding the current Payment
Date, divided by 360, multiplied by [ ]%, multiplied by the Outstanding Amount
of the Class A-[ ] Transition Bonds as of the close of business on the preceding
Payment Date after giving effect to all payments of principal made to the
Holders of the Class A-[ ] Transition Bonds on such preceding Payment Date. Such
principal of and interest on this Class A-[ ] Transition Bond shall be paid in
the manner specified on the reverse hereof.
The principal of and interest on this Class A-[ ] Transition Bond are
payable in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts. All payments
made by the Issuer with respect to this Class A-[ ] Transition Bond shall be
applied first to interest due and payable on this Class A-[ ] Transition Bond as
provided above and then to the unpaid principal of this Class A-[ ] Transition
Bond, all in the manner set forth in Section 8.02 of the Indenture and the
Series Supplement referred to on the reverse hereof.
Reference is made to the further provisions of this Class A-[ ] Transition
Bond set forth on the reverse hereof, which shall have the same effect as though
fully set forth on the face of this Class A-[ ] Transition Bond.
Exhibit A-2
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Class A-[ ]
Transition Bond shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an authorized Manager of the Issuer.
Dated: , 2
--------------- -- ---
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC
By:
-------------------------------
Name:
--------------------------
Title: Manager
Exhibit A-3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
, 2
------------- -- ---
This is one of the Class A-[ ] Transition Bonds of the Series 2002-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK, not in its
individual capacity but solely as
Trustee on behalf of the
Transition Bondholders,
By:
-------------------------------
Name:
--------------------------
Title:
---------------------------
Exhibit A-4
REVERSE OF TRANSITION BOND
This Class A-[ ] Transition Bond is one of a duly authorized issue of
Transition Bonds of the Issuer, designated as its Transition Bonds (herein
called the "Transition Bonds"), issued and to be issued in one or more Series,
which Series are issuable in one or more Classes. The Series 2002-1 Transition
Bonds consist of four Classes, including the Class A-[ ] Transition Bonds
(herein called the "Class A-[ ] Transition Bonds"). The Class A-[ ] Transition
Bonds have been issued under an indenture dated as of December 19, 2002, and a
series supplement thereto dated as of December 19, 2002 (such series supplement,
as supplemented or amended, the "Series Supplement" and, collectively with such
indenture, as supplemented or amended, the "Indenture"), each between the Issuer
and The Bank of New York, a New York banking corporation, as Trustee (the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the Collateral pledged, the nature and extent of the
security, the respective rights, obligations and immunities thereunder of the
Issuer, the Trustee and the Holders of the Transition Bonds and the terms and
conditions under which additional Transition Bonds may be issued. All terms used
in this Class A-[ ] Transition Bond that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in the
Indenture.
The Class A-[ ] Transition Bonds, the other Classes of Series 2002-1
Transition Bonds and any other Series of Transition Bonds issued by the Issuer
are and will be equally and ratably secured by the Collateral pledged as
security therefor as provided in the Indenture.
The principal of this Class A-[ ] Transition Bond shall be payable on each
Payment Date only to the extent that amounts in the Collection Account are
available therefor, and only until the outstanding principal balance of the
Class A-[ ] Transition Bonds on such Payment Date (after giving effect to all
payments of principal made on such Payment Date) has been reduced to the
principal balance specified in the Expected Amortization Schedule attached to
the Series Supplement as Schedule A, unless payable earlier either because
(i) an Event of Default has occurred and is continuing and the Trustee
or the Holders of Transition Bonds representing not less than a majority of
the Outstanding Amount of the Transition Bonds of all Series have declared
the Transition Bonds to be immediately due and payable in accordance with
Section 5.02 of the Indenture, or
(ii) the Issuer, at its option, has called for the redemption of the
Series 2002-1 Transition Bonds in whole pursuant to Section 7(b) of the
Series Supplement and Section 10.01 of the Indenture.
However, actual principal payments may be made in lesser than expected amounts
and at later than expected times as determined pursuant to Section 8.02(e) of
the Indenture. The entire unpaid principal amount of this Class A-[ ] Transition
Bond shall be due and payable on the earlier of the Final Maturity Date hereof
and the Redemption Date, if any. Notwithstanding the foregoing, the entire
unpaid principal amount of the Transition Bonds shall be due and payable, if not
then previously paid, on the date on which an Event of Default shall have
occurred and be continuing and the Trustee or the Holders of the Transition
Bonds of all Series representing not less than a majority of the Outstanding
Amount of the Transition Bonds have declared the
Exhibit A-5
Transition Bonds to be immediately due and payable in accordance with Section
5.02 of the Indenture.
Except in the case of an optional redemption pursuant to Section 10.01 of the
Indenture, unless an acceleration upon an Event of Default has occurred and is
continuing and the unpaid principal amount of all Series of Transition Bonds has
been declared to be due and payable together with accrued and unpaid interest
thereon, on each Payment Date the Trustee shall distribute to the Series 2002-1
Transition Bondholders of record as of the related Record Date the amounts
payable as principal on the Series 2002-1 Transition Bonds in accordance with
the Expected Amortization Schedule; provided that if as of such Payment Date one
or more Classes of Series 2002-1 Transition Bonds did not receive a scheduled
payment of principal on a previous Payment Date and amounts are payable in
respect of more than one such Class in accordance with the Expected Amortization
Schedule, principal payments shall be allocated in a sequential manner as
specified in, and subject to the limitations set forth in, Section 5(b) of the
Series Supplement. In the case of an optional redemption pursuant to Section
10.01 of the Indenture or an acceleration upon an Event of Default pursuant to
Section 5.02 of the Indenture, if the amounts available to make payments of
principal on the Series 2002-1 Transition Bonds are insufficient to make such
payments in full, the Trustee shall pay principal on each Class of the Series
2002-1 Transition Bondholders pro rata based on the Outstanding Amount of each
such Class as of such date, if such date is a Payment Date, and otherwise as of
the most recent Payment Date after giving effect to all payments of principal
made to the Holders of Transition Bonds as of such most recent Payment Date.
Payments of interest on this Class A-[ ] Transition Bond due and payable on
each Payment Date, together with the installment of principal, if any, payable
on this Class A-[ ] Transition Bond on such Payment Date, shall be made by check
mailed first-class, postage prepaid, to the Person whose name appears as the
Registered Holder of this Class A-[ ] Transition Bond (or one or more
predecessors of such Transition Bond) in the Transition Bond Register as of the
close of business on the Record Date or in such other manner as may be provided
in the Series Supplement, except that with respect to Class A-[ ] Transition
Bonds registered on the Record Date in the name of a Clearing Agency, payments
shall be made by wire transfer in immediately available funds to the account
designated by such Clearing Agency and except for the final installment of
principal payable with respect to this Class A-[ ] Transition Bond on a Payment
Date which shall be payable as provided below. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears in the
Transition Bond Register as of the applicable Record Date without requiring that
this Class A-[ ] Transition Bond be submitted for notation of payment. Any
reduction in the principal amount of this Class A-[ ] Transition Bond (or any
one or more predecessors to such Transition Bond) effected by any payments made
on any Payment Date shall be binding upon all future Holders of this Class A-[ ]
Transition Bond and of any Class A-[ ] Transition Bond issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Class A-[ ] Transition Bond on a Payment Date, then the Trustee, in the
name of and on behalf of the Issuer, shall notify the Person who was the
Registered Holder hereof as of the second preceding Record Date to such Payment
Date by notice mailed no later than five days prior to such final Payment Date
and shall specify that such final installment will be payable to the Registered
Holder hereof as of the Record Date
Exhibit A-6
immediately preceding such final Payment Date and only upon presentation and
surrender of this Class A-[ ] Transition Bond and shall specify the place where
this Class A-[ ] Transition Bond may be presented and surrendered for payment of
such installment.
The Issuer shall pay interest on overdue installments of interest on this
Class A-[ ] Transition Bond at the Interest Rate for Class A-[ ] to the extent
lawful.
The Class A-[ ] Transition Bonds may be redeemed, in whole but not in part,
in certain circumstances as provided in Section 7(b) of the Series Supplement
and Section 10.01 of the Indenture.
This Class A-[ ] Transition Bond is a "transition bond" as such term is
defined in the Competition Act. Principal and interest due and payable on this
Transition Bond are payable from and secured primarily by bondable transition
property authorized by a bondable stranded costs rate order issued by the State
of New Jersey Board of Public Utilities pursuant to the Competition Act. The
bondable transition property securing the Transition Bonds includes the
irrevocable right to impose and collect a nonbypassable, usage-based charge
(defined in the Competition Act as a "transition bond charge") to be included in
electric utility bills of customers of Atlantic City Electric Company, a New
Jersey corporation.
The Competition Act provides that:
"The State of New Jersey does hereby pledge and agree with the holders
of any transition bonds issued under the authority of this act, with
the pledgee, owner or assignee of bondable transition property, with
any financing entity which has issued transition bonds with respect to
which a bondable stranded costs rate order has been issued and with
any person who may enter into agreements with an electric public
utility or an assignee or pledgee thereof or a financing entity
pursuant to this act, that the State will not limit, alter or impair
any bondable transition property or other rights vested in an electric
public utility or an assignee or pledgee thereof or a financing entity
or vested in the holders of any transition bonds pursuant to a
bondable stranded costs rate order until such transition bonds,
together with the interest and acquisition or redemption premium, if
any, thereon, are fully paid and discharged or until such agreements
are fully performed on the part of the electric public utility, any
assignee or pledgee thereof or the financing entity or in any way
limit, alter, impair or reduce the value or amount of the bondable
transition property approved by a bondable stranded costs rate order
...."
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Class A-[ ] Transition Bond may be registered in
the Transition Bond Register upon surrender of this Class A-[ ] Transition Bond
for registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder hereof or his attorney duly authorized in writing, with such signature
guaranteed by an Eligible
Exhibit A-7
Guarantor Institution, and thereupon one or more new Class A-[ ] Transition
Bonds of any Authorized Denominations and in the same aggregate initial
principal amount shall be issued to the designated transferee or transferees. No
service charge shall be charged for any registration of transfer or exchange of
this Class A-[ ] Transition Bond, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange.
Prior to the due presentment for registration of transfer of this Class A-[
] Transition Bond, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Class A-[ ] Transition Bond is
registered (as of the day of determination) as the owner hereof for the purpose
of receiving payments of principal of and interest on this Class A-[ ]
Transition Bond and for all other purposes whatsoever, whether or not this Class
A-[ ] Transition Bond may be overdue, and neither the Issuer, the Trustee nor
any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Transition Bonds under the Indenture
at any time by the Issuer with the consent of the Holders of Transition Bonds
representing a majority of the Outstanding Amount of all Transition Bonds at the
time Outstanding of each Series or Class to be affected and upon satisfaction of
the Rating Agency Condition. The Indenture also contains provisions permitting
the Holders of Transition Bonds representing specified percentages of the
Outstanding Amount of the Transition Bonds of all Series, on behalf of the
Holders of all the Transition Bonds, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Class A-[ ] Transition Bond (or any one of more predecessors of such
transition bonds) shall be conclusive and binding upon such Holder and upon all
future Holders of this Class A-[ ] Transition Bond and of any Class A-[ ]
Transition Bond issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Class A-[ ] Transition Bond. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Transition Bonds issued
thereunder.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge, consolidate or sell substantially all of its assets, subject to the
rights of the Trustee and the Holders of Transition Bonds under the Indenture.
The term "Issuer" as used in this Class A-[ ] Transition Bond includes any
successor to the Issuer under the Indenture.
The Class A-[ ] Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Series Supplement,
subject to certain limitations therein set forth.
This Class A-[ ] Transition Bond, the Indenture and the Series Supplement
shall be construed in accordance with the laws of the State of New Jersey,
without reference to its conflict of law provisions, and the obligations, rights
and remedies of the parties hereunder and thereunder shall be determined in
accordance with such laws.
Exhibit A-8
No reference herein to the Indenture, and no provision of this Class A-[ ]
Transition Bond or of the Indenture, shall alter or impair the right of the
Holder hereof, which is absolute and unconditional and which shall not be
impaired without the consent of such Holder: (a) to receive payment of (i) the
interest on this Transition Bond on or after the due dates thereof expressed in
this Transition Bond or in the Indenture, (ii) the unpaid principal of this
Transition Bond on or after the Final Maturity Date herefor and (iii) in the
case of redemption, the unpaid principal and interest on this Transition Bond on
or after the Redemption Date hereof; and (b) to institute suit for the
enforcement of any such payment.
Exhibit A-9
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto __
(name and address of assignee)
the within Class A-[ ] Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints
(name and address of appointee)
attorney, to transfer said Class A-[ ] Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
*
-------------- ----------------------------------
Signature Guaranteed:
-------------- -----------------------------------
* NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Class A-[ ]
Transition Bond in every particular, without alteration, enlargement or any
change whatsoever.
Exhibit A-10
