Exhibit 4.4
PSE&G TRANSITION FUNDING II LLC,
Issuer
and
THE BANK OF NEW YORK,
Trustee
---------------------
INDENTURE
Dated as of __________, 2005
---------------------
Securing BGS Transition Bonds
Issuable in Series
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions............................................................................2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act..................................2
SECTION 1.3. Rules of Construction..................................................................3
ARTICLE II
THE BGS TRANSITION BONDS
SECTION 2.1. Form...................................................................................3
SECTION 2.2. Execution, Authentication and Delivery.................................................4
SECTION 2.3. Denominations; BGS Transition Bonds Issuable in Series.................................4
SECTION 2.4. Temporary BGS Transition Bonds.........................................................5
SECTION 2.5. Registration; Registration of Transfer and Exchange....................................6
SECTION 2.6. Mutilated, Destroyed, Lost or Stolen BGS Transition Bonds..............................7
SECTION 2.7. Persons Deemed Owner...................................................................8
SECTION 2.8. Payment of Principal and Interest; Interest on Overdue Principal;
Principal and Interest Rights Preserved..............................................8
SECTION 2.9. Cancellation..........................................................................10
SECTION 2.10. Amount; Authentication and Delivery of BGS Transition Bonds..........................10
SECTION 2.11. Book-Entry BGS Transition Bonds......................................................15
SECTION 2.12. Notices to Clearing Agency...........................................................16
SECTION 2.13. Definitive BGS Transition Bonds......................................................16
ARTICLE III
COVENANTS
SECTION 3.1. Payment of Principal and Interest.....................................................17
SECTION 3.2. Maintenance of Office or Agency.......................................................17
SECTION 3.3. Money for Payments To Be Held in Trust................................................17
SECTION 3.4. Existence.............................................................................19
SECTION 3.5. Protection of Collateral..............................................................19
SECTION 3.6. Opinions as to Collateral.............................................................20
SECTION 3.7. Performance of Obligations............................................................20
SECTION 3.8. Negative Covenants....................................................................21
SECTION 3.9. Annual Statement as to Compliance.....................................................21
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms...................................21
SECTION 3.11. Successor or Transferee...............................................................22
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SECTION 3.12. No Other Business.....................................................................23
SECTION 3.13. No Borrowing..........................................................................23
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities.....................................23
SECTION 3.15. Capital Expenditures..................................................................23
SECTION 3.16. Restricted Payments...................................................................23
SECTION 3.17. Notice of Events of Default...........................................................24
SECTION 3.18. Inspection............................................................................24
SECTION 3.19. Adjusted Overcollateralization Balance Schedules......................................24
SECTION 3.20. Sale Agreement, Servicing Agreement and Swap Agreement Covenants......................24
SECTION 3.21. Taxes.................................................................................27
ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 4.1. Satisfaction and Discharge of Indenture; Defeasance...................................28
SECTION 4.2. Conditions to Defeasance..............................................................29
SECTION 4.3. Application of Trust Money............................................................30
SECTION 4.4. Repayment of Moneys Held by Paying Agent..............................................31
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.....................................................................31
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment....................................32
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.......................33
SECTION 5.4. Remedies..............................................................................35
SECTION 5.5. Optional Preservation of the Collateral...............................................36
SECTION 5.6. Limitation of Proceedings.............................................................37
SECTION 5.7. Unconditional Rights of BGS Transition Bondholders To Receive Principal and Interest..37
SECTION 5.8. Restoration of Rights and Remedies....................................................38
SECTION 5.9. Rights and Remedies Cumulative........................................................38
SECTION 5.10. Delay or Omission Not a Waiver........................................................38
SECTION 5.11. Control by BGS Transition Bondholders.................................................38
SECTION 5.12. Waiver of Past Defaults...............................................................39
SECTION 5.13. Undertaking for Costs.................................................................39
SECTION 5.14. Waiver of Stay or Extension Laws......................................................40
SECTION 5.15. Action on BGS Transition Bonds........................................................40
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ARTICLE VI
THE TRUSTEE
SECTION 6.1. Duties and Liabilities of Trustee.....................................................40
SECTION 6.2. Rights of Trustee.....................................................................41
SECTION 6.3. Individual Rights of Trustee..........................................................42
SECTION 6.4. Trustee's Disclaimer..................................................................42
SECTION 6.5. Notice of Defaults....................................................................43
SECTION 6.6. Reports by Trustee to Holders.........................................................43
SECTION 6.7. Compensation and Indemnity............................................................44
SECTION 6.8. Replacement of Trustee................................................................44
SECTION 6.9. Successor Trustee by Merger...........................................................45
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee.........................................46
SECTION 6.11. Eligibility; Disqualification.........................................................47
SECTION 6.12. Preferential Collection of Claims Against Issuer......................................47
SECTION 6.13. Representations and Warranties of the Trustee.........................................47
ARTICLE VII
BGS TRANSITION BONDHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer To Furnish Trustee Names and Addresses of BGS Transition Bondholders...........48
SECTION 7.2. Preservation of Information; Communications to BGS Transition Bondholders.............48
SECTION 7.3. Reports by Issuer.....................................................................48
SECTION 7.4. Reports by Trustee....................................................................49
SECTION 7.5. Provision of Servicer Reports.........................................................49
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money...................................................................49
SECTION 8.2. Collection Account....................................................................50
SECTION 8.3. Release of Collateral.................................................................56
SECTION 8.4. Issuer Opinion of Counsel.............................................................57
SECTION 8.5. Reports by Independent Accountants....................................................57
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of BGS Transition Bondholders.................58
SECTION 9.2. Supplemental Indentures with Consent of BGS Transition Bondholders....................59
SECTION 9.3. BPU Condition.........................................................................61
SECTION 9.4. Execution of Supplemental Indentures..................................................62
SECTION 9.5. Effect of Supplemental Indenture......................................................62
SECTION 9.6. Conformity with Trust Indenture Act...................................................62
SECTION 9.7. Reference in BGS Transition Bonds to Supplemental Indentures..........................62
ARTICLE X
[RESERVED]
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions, etc............................................63
SECTION 11.2. Form of Documents Delivered to Trustee...............................................64
SECTION 11.3. Acts of BGS Transition Bondholders...................................................64
SECTION 11.4. Notices, etc., to Trustee, Issuer and Rating Agencies................................65
SECTION 11.5. Notices to BGS Transition Bondholders; Waiver........................................66
SECTION 11.6. [Reserved]...........................................................................66
SECTION 11.7. Alternate Payment and Notice Provisions..............................................66
SECTION 11.8. Conflict with Trust Indenture Act....................................................67
SECTION 11.9. Effect of Headings and Table of Contents.............................................67
SECTION 11.10. Successors and Assigns...............................................................67
SECTION 11.11. Severability.........................................................................67
SECTION 11.12. Benefits of Indenture................................................................67
SECTION 11.13. Legal Holidays.......................................................................67
SECTION 11.14. GOVERNING LAW........................................................................67
SECTION 11.15. Counterparts.........................................................................68
SECTION 11.16. Issuer Obligation....................................................................68
SECTION 11.17. No Petition..........................................................................68
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APPENDIX A MASTER DEFINITIONS
SCHEDULE I SCHEDULED OVERCOLLATERALIZATION LEVELS
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INDENTURE, dated as of __________, 2005, by and between PSE&G TRANSITION
FUNDING II LLC, a Delaware limited liability company, as Issuer, and THE BANK
OF NEW YORK, a New York banking corporation, in its capacity as trustee for
the benefit of the Holders of the BGS Transition Bonds and as agent for itself
and any Swap Counterparty (collectively, the "Trustee").
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for one or more Series of BGS Transition Bonds, issuable
as provided in this Indenture. Each such Series of BGS Transition Bonds will
be issued only under a separate Series Supplement to this Indenture duly
executed and delivered by the Issuer and the Trustee. The Issuer is entering
into this Indenture, and the Trustee is accepting the trusts created hereby,
each for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and each intending to be legally bound hereby.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee for the benefit of (i) the
Holders of the BGS Transition Bonds from time to time issued and outstanding,
(ii) the Trustee and (iii) any Swap Counterparty, all of the Issuer's right,
title and interest whether now owned or hereafter acquired, in, to and under:
(a) all BGS Bondable Transition Property, including, without limitation, the
BGS Bondable Transition Property transferred by the Seller to the Issuer from
time to time pursuant to the Sale Agreement and all proceeds thereof; (b) the
Sale Agreement; (c) all Bills of Sale delivered by the Seller pursuant to the
Sale Agreement; (d) the Servicing Agreement; (e) the Administration Agreement;
(f) any Interest Rate Swap Agreement; (g) the Collection Account and all
sub-accounts thereof (including, without limitation, the General Subaccount,
each Series Overcollateralization Subaccount, each Series Capital Subaccount,
the Reserve Subaccount, each Series Subaccount, any Class Subaccount and any
Defeasance Subaccount, but excluding the Capital Reserve Subaccount) and all
cash, securities, instruments, investment property (including without
limitation all security entitlements) or other assets deposited in or credited
to the Collection Account or any subaccount thereof (other than the Capital
Reserve Subaccount) from time to time or purchased with funds therefrom; (h)
all investment property and all other property of whatever kind owned from
time to time by the Issuer other than: (w) any cash released to any Swap
Counterparty by the Trustee from the related Class Subaccount pursuant to
Section 8.2(f), (x) any cash released to the Issuer by the Trustee from any
Series Capital Subaccount pursuant to Section 8.2(g)(x) and (y) the proceeds
from the sale of the BGS Transition Bonds used to pay (1) the costs of
issuance of the BGS Transition Bonds and the Upfront Transaction Costs and
Capital Reduction Costs (as those terms are defined in the Financing Order)
and (2) the purchase price of the BGS Bondable Transition Property paid
pursuant to the Sale Agreement; (i) all present and future claims, demands,
causes and choses in action in respect of any or all of the foregoing; and (j)
all payments on or under and all proceeds of every kind and nature whatsoever
in respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid property, all
cash proceeds, accounts, accounts receivable, general intangibles, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and
other forms of obligations and receivables, instruments and other
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property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing (collectively, the "Collateral").
Such Grants are made to the Trustee to have and to hold in trust to
secure the payment of principal of, and interest on, and any other amounts
owing in respect of, the BGS Transition Bonds and all fees, expenses, counsel
fees and other amounts due and owing to the Trustee and, if and to the extent
provided in any Series Supplement, any amounts due and owing to any Swap
Counterparty (collectively, the "Secured Obligations"), equally and ratably
without prejudice, preference, priority or distinction, except as expressly
provided in this Indenture and to secure performance by the Issuer of all of
the Issuer's obligations under this Indenture with respect to the BGS
Transition Bonds, all as provided in this Indenture.
The Trustee, as trustee on behalf of the Holders of the BGS Transition
Bonds, acknowledges such Grant, accepts the trusts hereunder in accordance
with the provisions hereof and agrees to perform its duties herein required.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions. Capitalized terms used but not otherwise
defined in this Indenture have the respective meanings set forth in Appendix A
hereto unless the context otherwise requires. Non-capitalized terms used
herein which are defined in the New Jersey UCC, as the context requires, have
the meanings assigned to such terms in the New Jersey UCC, but without giving
effect to any amendments to the New Jersey UCC after the date hereof which
have a material adverse effect on the Issuer or the BGS Transition
Bondholders.
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. Each of the
following TIA terms used in this Indenture has the following meaning:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the BGS Transition Bonds.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
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SECTION 1.3. Rules of Construction.
(a) An accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles as in effect
from time to time;
(b) "including" means including without limitation;
(c) with respect to terms defined in Appendix A hereto, words in the
singular include the plural and words in the plural include the singular;
(d) unless otherwise specified, references herein to Sections or Articles
are to Sections or Articles of this Indenture; and
(e) the words "herein," "hereof," "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE II
THE BGS TRANSITION BONDS
SECTION 2.1. Form.
(a) The BGS Transition Bonds and the Trustee's certificate of
authentication shall be in substantially the forms set forth in Exhibit A to
the related Series Supplement, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture or by the related Series Supplement and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may, consistently herewith, be determined by the Managers of
the Issuer executing such BGS Transition Bonds, as evidenced by their
execution of such BGS Transition Bonds. Any portion of the text of any BGS
Transition Bond may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the BGS Transition Bond. Each BGS Transition
Bond shall be dated the date of its authentication.
(b) The BGS Transition Bonds shall be typewritten, printed, lithographed
or engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the Managers of the Issuer
executing such BGS Transition Bonds, as evidenced by their execution of such
BGS Transition Bonds.
(c) Each BGS Transition Bond shall bear upon its face the designation so
selected for the Series and Class, if any, to which it belongs. The terms of
all BGS Transition Bonds of the same Series shall be the same, unless such
Series is comprised of one or more Classes, in which case the terms of all BGS
Transition Bonds of the same Class shall be the same.
(d) Each BGS Transition Bond shall state that the Competition Act
provides that the State of New Jersey pledges and agrees with the holders of
the BGS Transition Bonds that "the State will not limit, alter or impair any
bondable transition property or other rights vested in an
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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 thereon, are fully paid and discharged or until such agreements are
fully performed on the part of the electric public utility, any assignee or
pledgee thereof or the financing entity or in any way limit, alter, impair or
reduce the value or amount of the bondable transition property approved by a
bondable stranded costs rate order."
SECTION 2.2. Execution, Authentication and Delivery.
(a) The BGS Transition Bonds shall be executed on behalf of the Issuer by
a Manager. The signature of any such Manager on the BGS Transition Bonds may
be manual or facsimile.
(b) BGS Transition Bonds bearing the manual or facsimile signature of
individuals who were at any time Managers shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such BGS Transition Bonds.
(c) At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver BGS Transition Bonds executed on behalf
of the Issuer to the Trustee pursuant to an Issuer Order for authentication;
and the Trustee shall authenticate and deliver such BGS Transition Bond as in
this Indenture provided and not otherwise.
(d) No BGS Transition Bond shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears on
such BGS Transition Bond a certificate of authentication substantially in the
form provided for herein executed by the Trustee by the manual signature of
one of its authorized signatories, and such certificate upon any BGS
Transition Bond shall be conclusive evidence, and the only evidence, that such
BGS Transition Bond has been duly authenticated and delivered hereunder.
SECTION 2.3. Denominations; BGS Transition Bonds Issuable in Series.
(a) The BGS Transition Bonds of each Series shall be issuable as
registered BGS Transition Bonds in the Authorized Denominations specified in
the Series Supplement therefor.
(b) The BGS Transition Bonds may, at the election of and as authorized by
a Manager and set forth in a Series Supplement, be issued in one or more
Series (each of which may be comprised of one or more Classes), and shall be
designated generally as the "BGS Transition Bonds" of the Issuer, with such
further particular designations added or incorporated in such title for the
BGS Transition Bonds of any particular Series or Class as a Manager of the
Issuer may determine and be set forth in the Series Supplement therefor.
(c) Each Series of BGS Transition Bonds shall be created by a Series
Supplement authorized by a Manager and establishing the terms and provisions
of such Series and, if
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applicable, any Classes thereof. The several Series and any Classes thereof
may differ as between Series and Classes, in respect of any of the following
matters:
(i) designation of the Series and each Class thereof;
(ii) the aggregate initial principal amount of the BGS Transition
Bonds of the Series and each Class thereof;
(iii) the Interest Rate of the Series and each Class thereof or the
formula, if any, used to calculate the applicable Interest Rate or
Interest Rates for the Series and each Class thereof;
(iv) the Payment Dates of the Series and each Class thereof;
(v) the Expected Final Payment Date of the Series and each Class
thereof;
(vi) the Final Maturity Date of the Series and each Class thereof;
(vii) the place or places for payments with respect to the Series
and each Class thereof;
(viii) the Authorized Denominations for the Series and each Class
thereof;
(ix) [reserved];
(x) the Expected Sinking Fund Amortization Schedule for the Series
and each Class thereof;
(xi) the Overcollateralization Amount with respect to the Series;
(xii) the Required Capital Amount with respect to the Series;
(xiii) the Calculation Dates and Adjustment Dates for the Series;
(xiv) the credit enhancement, if any, applicable to the Series and
each Class thereof; and
(xv) any other terms of the Series or each Class that are not
inconsistent with the provisions of this Indenture.
SECTION 2.4. Temporary BGS Transition Bonds.
(a) Pending the preparation of definitive BGS Transition Bonds pursuant
to Section 2.13 or, in the case of BGS Transition Bonds held in a book-entry
only system by a Clearing Agency, a Manager on behalf of the Issuer may
execute, and upon receipt of an Issuer Order the Trustee shall authenticate
and deliver, temporary BGS Transition Bonds which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the
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definitive BGS Transition Bonds in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the Manager
executing such BGS Transition Bonds may determine, as evidenced by their
execution of such BGS Transition Bonds.
(b) If temporary BGS Transition Bonds are issued, the Issuer will cause
definitive BGS Transition Bonds to be prepared without unreasonable delay
except where temporary BGS Transition Bonds are held by a Clearing Agency.
After the preparation of definitive BGS Transition Bonds, the temporary BGS
Transition Bonds shall be exchangeable for definitive BGS Transition Bonds
upon surrender of the temporary BGS Transition Bonds at the office or agency
of the Issuer to be maintained as provided in Section 3.2, without charge to
any Holder. Upon surrender for cancellation of any one or more temporary BGS
Transition Bonds, a Manager on behalf of the Issuer shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like Series (and
if applicable, Class) and aggregate initial principal amount of definitive BGS
Transition Bonds in Authorized Denominations. Until so exchanged, the
temporary BGS Transition Bonds shall in all respects be entitled to the same
benefits under this Indenture as definitive BGS Transition Bonds.
SECTION 2.5. Registration; Registration of Transfer and Exchange.
(a) The Issuer shall cause to be kept a register (the "BGS Transition
Bond Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of BGS Transition
Bonds and the registration of transfers of BGS Transition Bonds. The Trustee
shall be the registrar (the Trustee or any successor thereof in such capacity,
the "BGS Transition Bond Registrar") for the purpose of registering BGS
Transition Bonds and transfers of BGS Transition Bonds as herein provided.
Upon any resignation of any BGS Transition Bond Registrar, the Issuer shall
promptly appoint a successor or, if it elects not to make such an appointment,
assume the duties of BGS Transition Bond Registrar.
(b) If a Person other than the Trustee is appointed by the Issuer as BGS
Transition Bond Registrar, the Issuer shall give the Trustee and any transfer,
paying or listing agent of the Issuer appointed pursuant to Section 3.2(b)
prompt written notice of the appointment of such BGS Transition Bond Registrar
and of the location, and any change in the location, of the BGS Transition
Bond Register; the Trustee and any such agent shall have the right to inspect
the BGS Transition Bond Register at all reasonable times and to obtain copies
thereof; and the Trustee and any such agent shall have the right to rely upon
a certificate executed on behalf of the BGS Transition Bond Registrar by a
duly authorized officer thereof as to the names and addresses of the Holders
of the BGS Transition Bonds and the original and Outstanding principal amounts
and number of such BGS Transition Bonds (separately stated by Series and, if
applicable, Class).
(c) Upon surrender for registration of transfer of any BGS Transition
Bond at the office or agency of the Issuer to be maintained as provided in
Section 3.2, a Manager on behalf of the Issuer shall execute, and the Trustee
shall authenticate and the BGS Transition Bondholder shall obtain from the
Trustee, in the name of the designated transferee or transferees, one or more
new BGS Transition Bonds in any Authorized Denominations, of a like Series
(and, if applicable, Class) and aggregate initial principal amount.
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(d) At the option of the Holder, BGS Transition Bonds may be exchanged
for other BGS Transition Bonds of a like Series (and, if applicable, Class)
and aggregate initial principal amount in Authorized Denominations, upon
surrender of the BGS Transition Bonds to be exchanged at such office or agency
as provided in Section 3.2. Whenever any BGS Transition Bonds are so
surrendered for exchange, a Manager on behalf of the Issuer shall execute, and
the Trustee shall authenticate and the BGS Transition Bondholder shall obtain
from the Trustee, the BGS Transition Bonds which the BGS Transition Bondholder
making the exchange is entitled to receive.
(e) All BGS Transition Bonds issued upon any registration of transfer or
exchange of BGS Transition Bonds shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the BGS Transition Bonds surrendered upon such registration of
transfer or exchange.
(f) Every BGS Transition Bond presented or surrendered for registration
of transfer or exchange shall be duly endorsed by, or be accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly
executed by the Holder thereof or such Holder's attorney duly authorized in
writing, with such signature guaranteed by an Eligible Guarantor Institution
in the form set forth in such BGS Transition Bond.
(g) No service charge shall be made to a Holder for any registration of
transfer or exchange of BGS Transition Bonds, but, other than in respect of
exchanges pursuant to Sections 2.4 or 2.6 not involving any transfer, the
Issuer may require payment by such Holder of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of BGS Transition Bonds, including the
fees and expenses of the Trustee.
(h) The preceding provisions of this Section 2.5 notwithstanding, the
Issuer shall not be required to make, and the BGS Transition Bond Registrar
need not register, transfers or exchanges of BGS Transition Bonds selected for
transfers or exchanges of any BGS Transition Bond for a period of fifteen (15)
days preceding the date on which final payment of principal is to be made with
respect to such BGS Transition Bond.
SECTION 2.6. Mutilated, Destroyed, Lost or Stolen BGS Transition Bonds.
(a) If (i) any mutilated BGS Transition Bond is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any BGS Transition Bond, and (ii) there is
delivered to the Trustee such security or indemnity as may be required by it
to hold the Issuer and the Trustee harmless, then, in the absence of notice to
the Issuer, the BGS Transition Bond Registrar or the Trustee that such BGS
Transition Bond has been acquired by a protected purchaser, a Manager on
behalf of the Issuer shall execute, and upon a Manager's request the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen BGS Transition Bond, a replacement BGS
Transition Bond of like Series (and, if applicable, Class), tenor and initial
principal amount in Authorized Denominations, bearing a number not
contemporaneously outstanding; provided,
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however, that if any such destroyed, lost or stolen BGS Transition Bond, but
not a mutilated BGS Transition Bond, shall have become or within seven days
shall be due and payable, instead of issuing a replacement BGS Transition
Bond, the Issuer may pay such destroyed, lost or stolen BGS Transition Bond
when so due or payable without surrender thereof. If, after the delivery of
such replacement BGS Transition Bond or payment of a destroyed, lost or stolen
BGS Transition Bond pursuant to the proviso to the preceding sentence, a
protected purchaser of the original BGS Transition Bond in lieu of which such
replacement BGS Transition Bond was issued presents for payment such original
BGS Transition Bond, the Issuer and the Trustee shall be entitled to recover
such replacement BGS Transition Bond (or such payment) from the Person to whom
it was delivered or any Person taking such replacement BGS Transition Bond
from such Person to whom such replacement BGS Transition Bond was delivered or
any assignee of such Person, except a protected purchaser, and shall be
entitled to recover upon the security or indemnity provided therefor to the
extent of any loss, damage, cost or expense incurred by the Issuer or the
Trustee in connection therewith.
(b) Every replacement BGS Transition Bond issued pursuant to this Section
2.6 in replacement of any mutilated, destroyed, lost or stolen BGS Transition
Bond shall constitute an original additional contractual obligation of the
Issuer, whether or not the mutilated, destroyed, lost or stolen BGS Transition
Bond shall be at any time enforceable by anyone, and shall be entitled to all
the benefits of this Indenture equally and proportionately with any and all
other BGS Transition Bonds duly issued hereunder.
(c) The provisions of this Section 2.6 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen BGS Transition
Bonds.
SECTION 2.7. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any BGS Transition Bond, the Issuer, the Trustee
and any agent of the Issuer or the Trustee may treat the Person in whose name
any BGS Transition Bond is registered (as of the day of determination) as the
owner of such BGS Transition Bond for the purpose of receiving payments of
principal of and interest on such BGS Transition Bond and for all other
purposes whatsoever, whether or not such BGS Transition Bond be overdue, and
neither the Issuer, the Trustee nor any agent of the Issuer or the Trustee
shall be affected by notice to the contrary.
SECTION 2.8. Payment of Principal and Interest; Interest on Overdue
Principal; Principal and Interest Rights Preserved.
(a) The BGS Transition Bonds shall accrue interest as provided in the
form of BGS Transition Bond attached to the Series Supplement for such BGS
Transition Bonds, at the applicable Interest Rate specified therein, and such
interest shall be payable on each Payment Date as specified therein. Any
installment of interest or principal payable on any BGS Transition Bond which
is punctually paid or duly provided for by the Issuer on the applicable
Payment Date shall be paid to the Person in whose name such BGS Transition
Bond (or one or more Predecessor BGS Transition Bonds) is registered on the
Record Date for such Payment Date, in the manner specified in the related
Series Supplement, and if not specified therein, either
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(i) by check mailed first-class, postage prepaid to such Person's address as
it appears on the BGS Transition Bond Register on such Record Date or (ii)
with respect to BGS Transition Bonds registered on a Record Date in the name
of the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds to
the account designated by such nominee, except for the final installment of
principal payable with respect to such BGS Transition Bond on a Payment Date,
which shall be payable as provided in clause (b) below. The funds represented
by any such checks or other amounts returned undelivered shall be held in
accordance with Section 3.3.
(b) The principal of each BGS Transition Bond of each Series (and, if
applicable, Class) shall be payable in installments on each Payment Date
specified in the Expected Sinking Fund Amortization Schedule included in the
form of BGS Transition Bond attached to the Series Supplement for such BGS
Transition Bonds, but only to the extent that moneys are available for such
payment pursuant to Section 8.2; provided that installments of principal not
paid when scheduled to be paid shall be paid upon receipt of moneys available
for such purpose, in the sequential order set forth in the applicable Expected
Sinking Fund Amortization Schedule. Failure to pay in accordance with such
Expected Sinking Fund Amortization Schedule because moneys are not so
available pursuant to Section 8.2 to make such payments shall not constitute a
Default or Event of Default under this Indenture. Notwithstanding the
foregoing, the entire Outstanding principal amount of the BGS Transition Bonds
of any Series or Class shall be due and payable, if not previously paid,
either: (i) on the Final Maturity Date therefor, (ii) on the date on which the
BGS Transition Bonds of all Series have been declared immediately due and
payable in accordance with Section 5.2, if any, therefor. The Trustee shall
notify the Person in whose name a BGS Transition Bond is registered, and any
other Person required under the relevant Series Supplement, at the close of
business on the second Record Date preceding the Payment Date on which the
Issuer expects that the final installment of principal of and interest on such
BGS Transition Bond will be paid. Such notice shall be mailed no later than
five (5) days prior to such final Payment Date and shall specify that such
final installment of principal will be payable only upon presentation and
surrender of such BGS Transition Bond and shall specify the place where such
BGS Transition Bond may be presented and surrendered for payment of such
installment. The Trustee shall also arrange for such notice to be published in
an Authorized Newspaper, not later than the fifth day of the month of the
expected payment of such final installment.
(c) If the Issuer defaults in a payment of interest on the BGS Transition
Bonds of any Series, or in a default of any amount payable to any Swap
Counterparty, the Issuer shall pay defaulted interest, plus interest on such
defaulted interest at the applicable Interest Rate in any lawful manner
(subject to the availability of such amounts in the related Class Subaccount,
in the case of interest owed with respect to any BGS Transition Bonds which
have a floating rate of interest). The Issuer may pay such defaulted interest
to the Persons who are BGS Transition Bondholders and to any Swap
Counterparty, as applicable, at the rate specified in the related Series
Supplement or Interest Rate Swap Agreement, respectively, on a subsequent
special record date, which date shall be at least five Business Days prior to
the payment date. The Issuer shall fix or cause to be fixed any such special
record date and payment date, and, at least fifteen (15) days before any such
special record date, the Issuer shall mail to each affected BGS
9
Transition Bondholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
SECTION 2.9. Cancellation. All BGS Transition Bonds surrendered for
payment, registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be
promptly canceled by the Trustee. The Issuer may at any time deliver to the
Trustee for cancellation any BGS Transition Bonds previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner
whatsoever, and all BGS Transition Bonds so delivered shall be promptly
canceled by the Trustee. No BGS Transition Bonds shall be authenticated in
lieu of or in exchange for any BGS Transition Bonds canceled as provided in
this Section 2.9, except as expressly permitted by this Indenture. All
canceled BGS Transition Bonds may be held or disposed of by the Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed
or returned to it; provided that such Issuer Order is timely and the BGS
Transition Bonds have not been previously disposed of by the Trustee.
SECTION 2.10. Amount; Authentication and Delivery of BGS Transition
Bonds.
(a) The aggregate principal amount of BGS Transition Bonds that may be
authenticated and delivered under this Indenture shall not exceed
$102,700,000.
(b) BGS Transition Bonds of a new Series may from time to time be
executed by a Manager on behalf of the Issuer and delivered to the Trustee for
authentication and thereupon the same shall be authenticated and delivered by
the Trustee upon Issuer Request and upon delivery by the Issuer, at the
Issuer's expense, to the Trustee of the following:
(i) Trust Action. An Issuer Order authorizing and directing the
authentication and delivery of the BGS Transition Bonds by the Trustee
and specifying the principal amount of BGS Transition Bonds to be
authenticated.
(ii) Authorizing Certificate. A certified resolution of the Managers
authorizing the execution and delivery of the Series Supplement for the
BGS Transition Bonds applied for and the execution, authentication and
delivery of such BGS Transition Bonds.
(iii) Series Supplement. A Series Supplement for the Series of BGS
Transition Bonds being issued, which shall set forth the provisions and
form of the BGS Transition Bonds of such Series (and, if applicable, each
Class thereof).
(iv) Certificates of the Issuer and the Seller.
(A) An Issuer Officer's Certificate dated as of the Series
Issuance Date, stating:
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(1) that no Default has occurred and is continuing under
this Indenture and that the issuance of the BGS Transition
Bonds being issued will not result in any Default;
(2) that the Issuer has not assigned any interest or
participation in the Collateral except for the Grant contained
in this Indenture; that the Issuer has the power and authority
to Grant the Collateral to the Trustee as security hereunder;
and that the Issuer, subject to the terms of this Indenture,
has Granted to the Trustee a perfected security interest in all
right, title and interest in, to and under the Collateral free
and clear of any Lien, except the Lien of this Indenture;
(3) that the Issuer has appointed the firm of independent
certified public accountants as contemplated in Section 8.5;
(4) that attached thereto are duly executed, true and
complete copies of the Sale Agreement and the Servicing
Agreement;
(5) that all financing statements with respect to the
Collateral which are required to be filed under the New Jersey
UCC or the uniform commercial code of any other jurisdiction by
the terms of the Sale Agreement, the Servicing Agreement or
this Indenture will be filed as required; and
(6) that all conditions precedent provided in this
Indenture relating to the authentication and delivery of the
BGS Transition Bonds have been complied with.
(B) An Officer's Certificate from the Seller, dated as of the
Series Issuance Date, to the effect that, in the case of the BGS
Bondable Transition Property to be transferred to the Issuer on such
date, immediately prior to the conveyance thereof to the Issuer
pursuant to the Sale Agreement:
(1) the Seller was the sole owner of such BGS Bondable
Transition Property and such ownership interest was perfected;
such BGS Bondable Transition Property will be validly
transferred and sold to the Issuer free and clear of all Liens
(other than Liens created by the Issuer pursuant to this
Indenture) and such transfer will be perfected; the Seller has
the power and authority to own, sell and assign such BGS
Bondable Transition Property to the Issuer; the Seller has duly
authorized such sale and assignment to the Issuer; and the
Seller has its chief executive office in the State of New
Jersey; and
(2) the attached copy of the Financing Order creating such
BGS Bondable Transition Property is true and correct and is in
full force and effect; and
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(v) Issuer Opinion of Counsel. An Issuer Opinion of Counsel,
portions of which may be delivered by counsel for the Issuer and portions
of which may be delivered by counsel for the Seller and/or the Servicer,
dated as of the Series Issuance Date, subject to customary
qualifications, in the form set forth in the Underwriting Agreement to the
collective effect that:
(A) the Issuer has the power and authority to execute and
deliver the Series Supplement and this Indenture and to issue the
BGS Transition Bonds being issued, each of the Series Supplement and
this Indenture and such BGS Transition Bonds have been duly
authorized, executed and delivered, and the Issuer is duly
organized, is validly existing as a limited liability company and in
good standing under the laws of the jurisdiction of its organization
and is in good standing in any jurisdiction where it is required to
be qualified;
(B) no authorization, approval or consent of any governmental
body is required for the valid issuance, authentication or delivery
of such BGS Transition Bonds, except for any such authorization,
approval or consent as has already been obtained and such
registrations as are required under the Blue Sky and securities laws
of any State;
(C) the BGS Transition Bonds being issued, when executed and
authenticated in accordance with the provisions of this Indenture
and delivered, will constitute valid and binding obligations of the
Issuer entitled to the benefits of this Indenture and the related
Series Supplement;
(D) the Financing Order is final and non-appealable;
(E) this Indenture (including the related Series Supplement),
the Sale Agreement and the Servicing Agreement are valid and binding
agreements of the Issuer, enforceable against the Issuer in
accordance with their respective terms except as such enforceability
may be subject to bankruptcy, insolvency, reorganization and other
similar laws affecting the rights of creditors generally and general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(F) the Sale Agreement is a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its terms
except as such enforceability may be subject to bankruptcy,
insolvency, reorganization and other similar laws affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(G) the Servicing Agreement is a valid and binding agreement of
the Servicer, enforceable against the Servicer in accordance with
its terms except as such enforceability may be subject to
bankruptcy, insolvency, reorganization and
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other similar laws affecting the rights of creditors generally and
general principles of equity (regardless of whether such enforcement
is considered in a proceeding in equity or at law);
(H) upon giving value by the Issuer to the Seller with respect
to the BGS Bondable Transition Property;
(1) the provisions of the Sale Agreement together with the
Xxxx of Sale are effective to create, in favor of the Issuer, a
valid security interest (as such term is defined in Section
1-201 of the New Jersey UCC) in the Seller's rights in the BGS
Bondable Transition Property described in the Xxxx of Sale (the
"Transferred BGS Bondable Transition Property"), which security
interest if characterized as a transfer for security will
secure the amount paid by the Issuer for such Transferred BGS
Bondable Transition Property; it being noted that the term
"security interest" includes both a sale and a transfer for
security of an account and no opinion is expressed as to the
proper characterization of the transfer of the Transferred BGS
Bondable Transition Property by the Seller to the Issuer;
(2) the security interest in favor of the Issuer in the
Transferred BGS Bondable Transition Property has been
perfected; and
(3) no other security interest of any other creditor of
the Seller is equal or prior to the security interest of the
Issuer in the Transferred BGS Bondable Transition Property;
(I) upon the giving of value by the Trustee to the Issuer with
respect to the Collateral,
(1) this Indenture creates in favor of the Trustee, to
secure payment of the BGS Transition Bonds, a valid security
interest in the rights of the Issuer in, to and under that
portion of the Collateral subject to Article 9 of the New
Jersey UCC, including the BGS Bondable Transition Property (the
"Article 9 Collateral"),
(2) upon filing of the related financing statements in
accordance with the New Jersey UCC and Delaware UCC, such
security interest will be perfected, and
(3) based solely on a review of the UCC Search Reports, no
other security interest of any other creditor of the Issuer is
equal or prior to the security interest of the Trustee for the
benefit of the BGS Transition Bondholders in the Article 9
Collateral;
(J) this Indenture has been duly qualified under the Trust
Indenture Act and either the Series Supplement for the BGS
Transition Bonds applied for
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has been duly qualified under the Trust Indenture Act or no such
qualification of such Series Supplement is necessary;
(K) either
(1) the registration statement covering the BGS Transition
Bonds is effective under the Securities Act of 1933 and, to the
best of such counsel's knowledge and information, no stop order
suspending the effectiveness of such registration statement has
been issued under the Securities Act of 1933 nor have
proceedings therefor been instituted or threatened by the
Commission or
(2) the BGS Transition Bonds are exempt from the
registration requirements under the Securities Act of 1933;
(L) this Indenture (including the related Series Supplement)
has been duly authorized, executed and delivered by the Issuer and
constitutes the legal, valid and binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms;
(M) the Sale Agreement and the Servicing Agreement have been
duly authorized, executed and delivered by each of the parties
thereto; and
(N) the Issuer is not now and, following the issuance of the
BGS Transition Bonds will not be, required to be registered under
the Investment Company Act of 1940, as amended.
(vi) Accountant's Certificate or Opinion. A letter addressed to the
Issuer and the Trustee complying with the requirements of Section 11.1,
of a firm of Independent certified public accountants of recognized
national reputation to the effect that (A) such accountants are
Independent with respect to the Issuer within the meaning of this
Indenture, and are independent public accountants within the meaning of
the standards of The American Institute of Certified Public Accountants,
and (B) with respect to the Collateral, they have made certain specified
recalculations of calculations and information provided by the Issuer for
the purpose of determining that, based on certain specified assumptions
used in calculating the BGS Transition Bond Charge with respect to the
related Transferred BGS Bondable Transition Property, as of the Series
Issuance Date for such Series, the BGS Transition Bond Charge will be
sufficient to pay (1) assumed Operating Expenses when incurred, plus (2)
any amounts due under any
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Interest Rate Swap Agreement when due, plus (3) the Overcollateralization
Amount for such Series set forth in the Final Prospectus (as such term is
defined in the Series Supplement), plus (4) interest on the BGS
Transition Bonds at their respective Interest Rates when due as set forth
in the Final Prospectus, plus (5) principal of the BGS Transition Bonds
in accordance with the Expected Sinking Fund Amortization Schedule set
forth in the Final Prospectus, and found such calculations to be
mathematically correct.
(vii) Required Capital Amount. Evidence satisfactory to the Trustee
that the Required Capital Amount for such Series has been credited to the
Capital Subaccount for such Series, provided that in the case of the
initial Series of BGS Transition Bonds, $100,000 of the Required Capital
Amount for such Series shall have been deposited to the credit of the
Capital Reserve Subaccount.
(viii) Rating Agency Approval. Written notice from each Rating
Agency that such action will not result in a reduction or withdrawal of
the then current rating by such Rating Agency of any Outstanding Series
or Class of BGS Transition Bonds.
(ix) Xxxx of Sale. If the issuance of an additional Series of BGS
Transition Bonds is a Financing Issuance, the Xxxx of Sale delivered to
the Issuer under the Sale Agreement with respect to the BGS Bondable
Transition Property being purchased with the proceeds of such Financing
Issuance.
SECTION 2.11. Book-Entry BGS Transition Bonds. Unless otherwise specified
in the related Series Supplement, each Series of BGS Transition Bonds, upon
original issuance, will be issued in the form of a typewritten BGS Transition
Bond or BGS Transition Bonds representing the Book-Entry BGS Transition Bonds,
to be delivered to The Depository Trust Company, the initial Clearing Agency,
by, or on behalf of, the Issuer. Such BGS Transition Bond shall initially be
registered on the BGS Transition Bond Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no BGS Transition Bond Owner will
receive a definitive BGS Transition Bond representing such BGS Transition Bond
Owner's interest in such BGS Transition Bond, except as provided in Section
2.13. Unless and until definitive, fully registered BGS Transition Bonds (the
"Definitive Transition Bonds") have been issued to BGS Transition Bondholders
pursuant to Section 2.13:
(a) the provisions of this Section 2.11 shall be in full force and
effect;
(b) the BGS Transition Bond Registrar and the Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the BGS
Transition Bonds and the giving of instructions or directions hereunder)
as the sole Holder of the BGS Transition Bonds, and shall have no
obligation to the BGS Transition Bond Owners;
(c) to the extent that the provisions of this Section 2.11 conflict
with any other provisions of this Indenture, the provisions of this
Section shall control;
15
(d) the rights of BGS Transition Bond Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such BGS Transition Bond Owners and the
Clearing Agency or the Clearing Agency Participants. Pursuant to the DTC
Agreement, unless and until Definitive BGS Transition Bonds are issued
pursuant to Section 2.13, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit payments of principal of and interest on the BGS Transition
Bonds to such Clearing Agency Participants; and
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of BGS Transition Bonds
evidencing a specified percentage of the Outstanding Amount of the BGS
Transition Bonds or a Series or Class thereof, the Clearing Agency shall
be deemed to represent such percentage only to the extent that it has
received instructions to such effect from BGS Transition Bond Owners or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the BGS Transition
Bonds or such Series or Class and has delivered such instructions to the
Trustee.
SECTION 2.12. Notices to Clearing Agency. Whenever a notice or other
communication to the BGS Transition Bondholders is required under this
Indenture, unless and until Definitive BGS Transition Bonds shall have been
issued to BGS Transition Bond Owners pursuant to Section 2.13, the Trustee
shall give all such notices and communications specified herein to be given to
BGS Transition Bondholders to the Clearing Agency, and shall have no
obligation to the BGS Transition Bond Owners.
SECTION 2.13. Definitive BGS Transition Bonds.
(a) If (i) the Issuer advises the Trustee in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
as depository with respect to any Series or Class of BGS Transition Bonds and
the Issuer is unable to locate a qualified successor, (ii) the Issuer, at its
option, advises the Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency with respect to any Series or
Class of BGS Transition Bonds or (iii) after the occurrence of an Event of
Default, BGS Transition Bond Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the BGS
Transition Bonds of all Series advise the Trustee through the Clearing Agency
in writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interests of the BGS Transition Bond Owners,
then the Clearing Agency shall notify all affected BGS Transition Bond Owners
and the Trustee of the occurrence of any such event and of the availability of
Definitive BGS Transition Bonds to affected BGS Transition Bond Owners
requesting the same. Upon surrender to the Trustee of the typewritten BGS
Transition Bond or BGS Transition Bonds representing the Book-Entry BGS
Transition Bonds by the Clearing Agency, accompanied by registration
instructions, a Manager on behalf of the Issuer shall execute and the Trustee
shall authenticate the Definitive BGS Transition Bonds in accordance with the
instructions of the Clearing Agency. None of the Issuer, the BGS Transition
Bond Registrar or the Trustee shall be liable for any delay in delivery of
such instructions and may
16
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive BGS Transition Bonds, the Trustee shall
recognize the Holders of the Definitive BGS Transition Bonds as BGS Transition
Bondholders.
(b) Definitive BGS Transition Bonds will be transferable and exchangeable
at the offices of the BGS Transition Bond Registrar. With respect to any
transfer of such listed BGS Transition Bonds, the new Definitive BGS
Transition Bonds registered in the names specified by the transferee and the
original transferor shall be available at the offices of such transfer agent.
ARTICLE III
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer will duly and
punctually pay the principal of and interest on the BGS Transition Bonds in
accordance with the terms of the BGS Transition Bonds and this Indenture;
provided that except on the Final Maturity Date for a Series or Class of BGS
Transition Bonds or upon the acceleration of the BGS Transition Bonds pursuant
to Section 5.2, the Issuer shall only be obligated to pay the principal of
such BGS Transition Bonds on each Payment Date therefor to the extent moneys
are available for such payment pursuant to Section 8.2. Amounts properly
withheld under the Code by any Person from a payment to any BGS Transition
Bondholder of interest or principal shall be considered as having been paid by
the Issuer to such BGS Transition Bondholder for all purposes of this
Indenture.
SECTION 3.2. Maintenance of Office or Agency.
(a) The Issuer will maintain in the Borough of Manhattan, the City of New
York, an office or agency where BGS Transition Bonds may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the BGS Transition Bonds and this Indenture may be
served. The Issuer hereby initially appoints the Trustee to serve as its agent
for the foregoing purposes. The Issuer will give prompt written notice to the
Trustee and any agent appointed pursuant to clause (b) below of the location
and identity, and of any change in the location or identity, of any such
office or agency. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Trustee and each such agent with
the address thereof, such surrenders, notices and demands may be made or
served at the Corporate Trust Office, and the Issuer hereby appoints the
Trustee as its agent to receive all such surrenders, notices and demands.
(b) [reserved]
SECTION 3.3. Money for Payments To Be Held in Trust.
(a) As provided in Section 8.2(a), all payments of principal of and
interest on the BGS Transition Bonds that are to be made from amounts
withdrawn from the Collection Account pursuant to Section 8.2(g), or Section
4.3 shall be made on behalf of the Issuer by the Trustee or by another Paying
Agent, and no amounts so withdrawn from the Collection Account
17
for payments of BGS Transition Bonds shall be paid over to the Issuer except
as provided in this Section 3.3 and in Section 8.2.
(b) The Issuer shall cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it
hereby so agrees), subject to the provisions of this Section 3.3, that such
Paying Agent will:
(i) hold all sums held by it for the payment of principal of or
interest on the BGS Transition Bonds in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee and the BPU notice of any Default by the
Issuer (or any other obligor upon the BGS Transition Bonds) of which the
Paying Agent has actual knowledge in the making of any payment required
to be made with respect to the BGS Transition Bonds;
(iii) at any time during the continuance of any such Default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Trustee all sums held by the Paying Agent in trust for the payment of BGS
Transition Bonds if at any time the Paying Agent ceases to meet the
standards required to be met by a Paying Agent at the time of its
appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any BGS Transition Bonds of
any applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
(c) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which the sums were held by such Paying Agent; and upon
such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
(d) Subject to applicable laws with respect to escheat of funds, any
money held by the Trustee or any Paying Agent in trust for the payment of any
amount of principal of or interest on any BGS Transition Bond and remaining
unclaimed for two years after such amount has become due and payable shall be
discharged from such trust and be paid to the Issuer; and the Holder of such
BGS Transition Bond shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts
so paid to the Issuer), and all liability of the Trustee or such Paying Agent
with respect to such trust money shall thereupon
18
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuer cause to
be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in the
City of New York, and in an Authorized Newspaper, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than thirty (30) days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer. The Trustee
may also adopt and employ, at the expense of the Issuer, any other reasonable
means of notification of such repayment (including mailing notice of such
repayment to Holders whose BGS Transition Bonds have been called but have not
been surrendered for redemption or whose right to or interest in moneys due
and payable but not claimed is determinable from the records of the Trustee or
of any Paying Agent, at the last address of record for each such Holder).
SECTION 3.4. Existence. Subject to Section 3.10, the Issuer shall keep in
full effect its existence, rights and franchises as a statutory limited
liability company under the laws of the State of Delaware (unless it becomes,
or any successor Issuer hereunder is or becomes, organized under the laws of
any other State or of the United States of America, in which case the Issuer
will keep in full effect its existence, rights and franchises under the laws
of such other jurisdiction) and will obtain and preserve its qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
BGS Transition Bonds, the Collateral and each other instrument or agreement
included therein.
SECTION 3.5. Protection of Collateral.
(a) The Issuer shall from time to time execute and deliver all such
supplements and amendments hereto and all such filings, financing statements,
continuation statements, instruments of further assurance and other
instruments, and shall take such other action necessary or advisable to:
(i) maintain and preserve the Grant, Lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iii) enforce any of the Collateral, including any Interest Rate
Swap Agreement;
(iv) preserve and defend title to the Collateral and the rights of
the Trustee and the BGS Transition Bondholders in the Collateral against
the claims of all Persons and parties; or
(v) pay any and all taxes levied or assessed upon all or any part of
the Collateral.
19
(b) The Issuer hereby designates the Trustee its agent and
attorney-in-fact to execute any filing with the BPU, financing statement,
continuation statement or other instrument required by the Trustee pursuant to
this Section 3.5.
SECTION 3.6. Opinions as to Collateral.
(a) On or before March 31 in each calendar year, while any Series is
outstanding, commencing March 31, 2006, the Issuer shall furnish to the
Trustee an Issuer Opinion of Counsel either stating that, in the opinion of
such counsel, such action has been taken with respect to the execution and
filing of any filings pursuant to the New Jersey UCC and Delaware UCC of
financing statements and continuation statements as is necessary to maintain
the Lien and security interest, and the first priority thereof, created by
this Indenture and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain such Grant,
Lien and security interest, and the first priority thereof. Such Issuer
Opinion of Counsel shall also describe the execution and filing of any filings
pursuant to the New Jersey UCC and Delaware UCC of financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the Grant, Lien and security interest of this Indenture until
March 31 in the following calendar year.
(b) Prior to the effectiveness of any amendment to the Sale Agreement or
the Servicing Agreement, the Issuer shall furnish to the Trustee an Issuer
Opinion of Counsel either (i) stating that, in the opinion of such counsel,
all filings, including filings pursuant to the New Jersey UCC and Delaware
UCC, have been executed and filed that are necessary fully to preserve and
protect the interest of the Issuer and the Trustee in the Transferred BGS
Bondable Transition Property and the proceeds thereof, and reciting the
details of such filings or referring to prior Opinions of Counsel in which
such details are given, or (ii) stating that, in the opinion of such counsel,
no such action shall be necessary to preserve and protect such interest.
SECTION 3.7. Performance of Obligations.
(a) The Issuer (i) shall diligently pursue any and all actions to enforce
its rights under each instrument or agreement included in the Collateral and
(ii) shall not take any action and will use its best efforts not to permit any
action to be taken by others that would release any Person from any of such
Person's covenants or obligations under any such instrument or agreement or
that would result in the amendment, hypothecation, subordination, termination
or discharge of, or impair the validity or effectiveness of, any such
instrument or agreement, except, in each case, as expressly provided in this
Indenture, the Sale Agreement, the Servicing Agreement, any Interest Rate Swap
Agreement or any other Basic Document.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a
Person identified to the Trustee in an Issuer Officer's Certificate of the
Issuer shall be deemed to be action taken by the Issuer. Initially, the Issuer
has contracted with the Administrator to assist the Issuer in performing its
duties under this Indenture.
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(c) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in the Sale Agreement, the Servicing
Agreement, any Interest Rate Swap Agreement and in all other instruments and
agreements included in the Collateral.
SECTION 3.8. Negative Covenants. The Issuer shall not:
(a) except as expressly permitted by this Indenture, the Sale
Agreement, the Servicing Agreement, any Interest Rate Swap Agreement or
any other Basic Document, sell, transfer, exchange or otherwise dispose
of any of the Collateral, unless directed to do so by the Trustee in
accordance with Article V;
(b) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the BGS Transition Bonds (other than
amounts properly withheld from such payments under the Code or pursuant
to any Interest Rate Swap Agreement) or assert any claim against any
present or former BGS Transition Bondholder by reason of the payment of
taxes levied or assessed upon the Issuer or any part of the Collateral;
or
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the Lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect to
the BGS Transition Bonds under this Indenture except as may be expressly
permitted hereby, (ii) permit any Lien (other than the Lien created by
this Indenture) to be created on or extend to or otherwise arise upon or
burden the Collateral or any part thereof, any interest therein or the
proceeds thereof or (iii) permit the Lien of this Indenture not to
constitute a continuing valid first priority security interest in the
Collateral.
SECTION 3.9. Annual Statement as to Compliance.
(a) The Issuer will deliver to the Trustee and the BPU, within 120 days
after the end of each fiscal year of the Issuer (commencing with the fiscal
year 2005), an Issuer Officer's Certificate stating, as to the Manager signing
such Issuer Officer's Certificate, that a review of the activities of the
Issuer during such year (or relevant portion thereof) and of performance under
this Indenture has been made under such Manager's supervision; and
(b) to the best of such Manager's knowledge, based on such review, the
Issuer has complied with all conditions and covenants under this Indenture
throughout such calendar year (or relevant portion thereof), or, if there has
been a default in complying with any such condition or covenant, describing
each such default and the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms. The
Issuer shall not consolidate or merge with or into any other Person or sell
substantially all of its assets to any other Person or dissolve, unless:
(a) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger or to whom substantially all of such assets
are sold shall be a
21
Person organized and existing under the laws of the United States of
America or any State and shall expressly assume by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the
principal of and interest on all BGS Transition Bonds and the performance
or observance of every agreement and covenant of this Indenture on the
part of the Issuer to be performed or observed, all as provided herein
and in the applicable Series Supplement or Series Supplements;
(b) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger or to whom substantially all of such assets
are sold shall expressly assume all obligations and succeed to all rights
of the Issuer under the Sale Agreement, the Administration Agreement, the
Servicing Agreement and any Interest Rate Swap Agreement pursuant to an
assignment and assumption agreement executed and delivered to the
Trustee, in form satisfactory to the Trustee;
(c) immediately after giving effect to such consolidation, merger or
sale, no Default or Event of Default shall have occurred and be
continuing;
(d) the Rating Agency Condition shall have been satisfied with the
respect to such consolidation or merger or sale;
(e) the Issuer shall have received an Issuer Opinion of Counsel (and
shall have delivered copies thereof to the Trustee) to the effect that
such consolidation, merger or sale (i) will not have any material adverse
tax consequence to the Issuer or any BGS Transition Bondholder, (ii)
complies with this Indenture and all of the conditions precedent herein
relating to such transaction and (iii) will result in the Trustee
maintaining a continuing valid first priority perfected security interest
in the Collateral;
(f) neither the BGS Bondable Transition Property nor the Financing
Order nor the rights of the Seller, the Servicer or the Issuer under the
Competition Act or the Financing Order shall be impaired thereby; and
(g) any action as is necessary to maintain the Lien created by this
Indenture shall have been taken.
SECTION 3.11. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10, the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the
same effect as if such Person had been named as the Issuer herein.
(b) Upon any sale by the Issuer of substantially all of its assets in a
sale which complies with Section 3.10, PSE&G Transition Funding II LLC will be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of the Issuer with respect to the BGS Transition Bonds
and from every covenant and agreement of the Sale
22
Agreement, the Administration Agreement, the Servicing Agreement and any
Interest Rate Swap Agreement to be observed or performed on the part of the
Issuer.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than purchasing and owning BGS Bondable Transition Property,
issuing BGS Transition Bonds from time to time, pledging its interest in the
Collateral to the Trustee under this Indenture in order to secure the BGS
Transition Bonds, entering into the Basic Documents relating to the BGS
Transition Bonds and performing its obligations thereunder and performing
activities that are necessary, suitable or convenient to accomplish these
purposes or are incidental thereto and other than as contemplated by the Basic
Documents.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the BGS Transition Bonds and except as contemplated by
the Basic Documents.
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by the Basic Documents, Issuer shall not make any loan or
advance or credit to, or guarantee (directly or indirectly or by an instrument
having the effect of assuring another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise
become contingently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire
(or agree contingently to do so) any stock, obligations, assets or securities
of, or any other interest in, or make any capital contribution to, any other
Person, other than any Eligible Investments.
SECTION 3.15. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty) other than BGS Bondable Transition Property
purchased from the Seller pursuant to, and in accordance with, the Sale
Agreement.
SECTION 3.16. Restricted Payments. The Issuer shall not, directly or
indirectly, pay any dividend or make any distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination thereof,
to any owner of a beneficial interest in the Issuer or otherwise with respect
to any ownership or equity interest in, or ownership security of, the Issuer,
redeem, purchase, retire or otherwise acquire for value any such ownership or
equity interest or security or set aside or otherwise segregate any amounts
for any such purpose; provided, however, that if no Event of Default shall
have occurred and be continuing or would otherwise result from such payment,
the Issuer may make, or cause to be made, any such distributions to any owner
of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest or security in or of the Issuer using funds
either distributed to the Issuer pursuant to Section 8.2(g) or which are not
otherwise subject to the Lien of this Indenture, to the extent that such
distributions would not cause the book value of the remaining equity in the
Issuer to decline below [0.5]% of the original principal amount of all Series
of BGS Transition Bonds which remain outstanding. The Issuer will not,
directly or indirectly, make payments to or distributions from the Collection
Account except in accordance with this Indenture and the Basic Documents.
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SECTION 3.17. Notice of Events of Default. The Issuer agrees to deliver
to the Trustee, the BPU, and the Rating Agencies written notice in the form of
an Issuer Officer's Certificate of any Default or Event of Default hereunder
or under any of the Basic Documents, its status and what action the Issuer is
taking or proposes to take with respect thereto within five Business Days
after the occurrence thereof.
SECTION 3.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee and any
representative of the BPU, during the Issuer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Issuer, to make copies and extracts therefrom, to cause such books to be
audited annually by Independent certified public accountants, and to discuss
the Issuer's affairs, finances and accounts with the Issuer's officers,
employees and Independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Trustee and the BPU
shall and shall cause their respective representatives to hold in confidence
all such information except to the extent disclosure may be required by law
(and all reasonable applications for confidential treatment are unavailing)
and except to the extent that the Trustee and the BPU may reasonably determine
that such disclosure is consistent with its obligations hereunder.
SECTION 3.19. Adjusted Overcollateralization Balance Schedules. [Not
later than the date on which a new Series of BGS Transition Bonds is issued or
any outstanding Series of BGS Transition Bonds is defeased, the Issuer shall
deliver to the Trustee and to the BPU a replacement Schedule 1 hereto,
adjusted to reflect such issuance or defeasance and setting forth the
Scheduled Overcollateralization Level for each Payment Date with respect to
each Series.]
SECTION 3.20. Sale Agreement, Servicing Agreement and Swap Agreement
Covenants. The Issuer agrees to take all such lawful actions to enforce its
rights under the Sale Agreement, the Servicing Agreement and any Interest Rate
Swap Agreement and to compel or secure the performance and observance by the
Seller, the Servicer and any Swap Counterparty, of each of their obligations
to the Issuer under or in connection with the Sale Agreement, the Servicing
Agreement and any Interest Rate Swap Agreement, respectively, in accordance
with the terms thereof. So long as no Event of Default occurs and is
continuing, but subject to Section 3.20(f), the Issuer may exercise any and
all rights, remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Sale Agreement, the Servicing Agreement and
any Interest Rate Swap Agreement.
(i) If an Event of Default occurs and is continuing, the Trustee
may, and, at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of with respect to
the Sale Agreement or the Servicing Agreement, the Holders of a majority
of the Outstanding Amount of the BGS Transition Bonds of all Series or
with respect to any Interest Rate Swap Agreement, the Holders of that
percentage of the Outstanding Amount of the BGS Transition Bonds of the
related Class specified in the related Series Supplement, shall, exercise
all right, remedies, powers, privileges and claims of the Issuer against
the Seller, the Servicer or any Swap Counterparty under or in connection
with the Sale Agreement, the Servicing Agreement and any Interest Rate
Swap Agreement, respectively, including the right or power to take
24
any action to compel or secure performance or observance by the Seller,
the Servicer or any Swap Counterparty of each of their obligations to the
Issuer thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Sale Agreement, the Servicing
Agreement and any Interest Rate Swap Agreement, and any right of the
Issuer to take such action shall be suspended.
(b) With the consent of the Trustee, the Sale Agreement and the Servicing
Agreement may be amended in accordance with the terms thereof, so long as the
Rating Agency Condition is satisfied in connection therewith, at any time and
from time to time, without the consent of the BGS Transition Bondholders, or
the counterparty under or Interest Rate Swap Agreement. However, such
amendment may not adversely affect in any material respect the interest of any
BGS Transition Bondholder or any counterparty under any Interest Rate Swap
Agreement without the consent of the Holders of a majority of the Outstanding
Amount of the BGS Transition Bonds of each Series or Class, and each such
counterparty, materially and adversely affected thereby. Further, with the
consent of the Trustee and the related counterparty under any Interest Rate
Swap Agreement, any Interest Rate Swap Agreement may be amended, at any time
and from time to time, so long as the Rating Agency Condition is satisfied in
connection therewith. However, such amendment may not adversely affect in any
material respect the interest of any BGS Transition Bondholder or counterparty
under any Interest Rate Swap Agreement without the consent of sixty-six and
two-thirds percent (66 2/3%) of the Holders of the Outstanding Amount of the
BGS Transition Bonds of each Series or Class and each such other counterparty
materially and adversely affected thereby.
(c) If the Issuer, the Seller or the Servicer proposes to amend, modify,
waive, supplement, terminate or surrender, or agree to any amendment,
modification, waiver, supplement, termination, or surrender of, the terms of
the Sale Agreement, the Servicing Agreement or any Interest Rate Swap
Agreement, or waive timely performance or observance thereunder by the Seller,
the Servicer or any Swap Counterparty, respectively, in each case in such a
way as would materially and adversely affect the interests of any Class of any
Series of BGS Transition Bondholders or the counterparty under any Interest
Rate Swap Agreement, the Issuer shall first notify the Rating Agencies of the
proposed amendment, modification, termination or surrender. Upon receiving
notification regarding whether the Rating Agency Condition has been satisfied,
the Issuer shall notify the Trustee, and the Trustee shall notify the BGS
Transition Bondholders and each counterparty under any Interest Rate Swap
Agreement, of the proposal and whether the Rating Agency Condition has been
satisfied with respect thereto. With respect to any such proposed action
related to the Sale Agreement and the Servicing Agreement, the Trustee shall
consent to such proposed action only (i) with the consent of the Holders of a
majority of the Outstanding Amount of the BGS Transition Bonds of each Class
of each Series, and each counterparty under any Interest Rate Swap Agreement,
materially and adversely affected thereby and (ii) upon satisfaction of the
Rating Agency Condition. With respect to any such proposed action related to
any Interest Rate Swap Agreement, the Trustee shall consent to such proposed
action only (y) with the consent of the Holders representing sixty-six and
two-thirds percent (66 2/3%) of the Outstanding Amount of the BGS Transition
Bonds of the related Class, and each counterparty under any Interest Rate Swap
Agreement, materially and adversely affected thereby and (z) upon satisfaction
of the Rating Agency Condition. If any such
25
amendment, modification, supplement or waiver shall be so consented to by the
Trustee or such Holders, the Issuer agrees to execute and deliver, in its own
name and at its own expense, such agreements, instruments, consents and other
documents as shall be necessary or appropriate in the circumstances.
(d) If the Issuer or the Servicer proposes to amend, modify, waive,
supplement, terminate or surrender in any material respect, or to agree to any
material amendment, modification, waiver, supplement, termination or surrender
of, the BGS Transition Bond Charge Adjustment Process, the Issuer shall notify
the Trustee and the Trustee shall notify BGS Transition Bondholders of such
proposal and the Trustee shall consent thereto only with the consent of the
Holders a majority of the Outstanding Amount of the BGS Transition Bonds of
each Series materially and adversely affected thereby and only if the Rating
Agency Condition has been satisfied with respect thereto.
(e) Promptly following a default by either the Seller, the Servicer or
any Swap Counterparty under the Sale Agreement, the Servicing Agreement or any
Interest Rate Swap Agreement, respectively, and at the Issuer's expense, the
Issuer agrees to take all such lawful actions as the Trustee may request to
compel or secure the performance and observance by the Seller, the Servicer or
any Swap Counterparty, as applicable, of each of their obligations to the
Issuer under or in connection with the Sale Agreement, the Servicing Agreement
or any Interest Rate Swap Agreement in accordance with the terms thereof, and
to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale Agreement, the
Servicing Agreement or any Interest Rate Swap Agreement, respectively, to the
extent and in the manner directed by the Trustee, including the transmission
of notices of default on the part of the Seller, the Servicer or any Swap
Counterparty thereunder and the institution of legal or administrative actions
or proceedings to compel or secure performance by the Seller, the Servicer or
any Swap Counterparty of each of their respective obligations under the Sale
Agreement, the Servicing Agreement and any Interest Rate Swap Agreement.
(f) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Servicing Agreement or an event of default, termination
event or downgrade event under any Interest Rate Swap Agreement, the Issuer
shall promptly give written notice thereof to the Trustee and the Rating
Agencies, and shall specify in such notice the action, if any, the Issuer is
taking with respect to such default or event.
(g) If a Servicer Default shall arise from the failure of the Servicer to
perform any of its duties or obligations under the Servicing Agreement with
respect to the BGS Bondable Transition Property or the BGS Transition Bond
Charge, the Issuer shall take all reasonable steps available to it to remedy
such failure. The Issuer shall not take any action to terminate the Servicer's
rights and powers under the Servicing Agreement following a Servicer Default
without the prior written consent of the Trustee and of the Holders of a
majority of the Outstanding Amount of the BGS Transition Bonds of all Series.
(h) As promptly as possible after the giving of notice of termination to
the Servicer and the Rating Agencies of the Servicer's rights and powers
pursuant to Section 6.1 of the
26
Servicing Agreement, the Trustee, with the consent of the Holders of BGS
Transition Bonds evidencing not less than a majority of the Outstanding Amount
of the BGS Transition Bonds of all Series, may appoint a successor Servicer
(the "Successor Servicer"), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Issuer and the
Trustee. A person shall qualify as a Successor Servicer only if such Person
satisfies the requirements of Section 6.4 of the Servicing Agreement. In
connection with any such appointment, the Issuer may make such arrangements
for the compensation of such Successor Servicer as it and such Successor
Servicer shall agree, subject to the limitations set forth below and in the
Servicing Agreement, and in accordance with Section 6.4 of the Servicing
Agreement, the Issuer shall enter into an agreement with such Successor
Servicer for the servicing of the BGS Bondable Transition Property (such
agreement to be in form and substance satisfactory to the Trustee).
(i) Upon termination of the Servicer's rights and powers pursuant to the
Servicing Agreement, the Trustee shall promptly notify the Issuer, the BGS
Transition Bondholders and the Rating Agencies of such termination. As soon as
a Successor Servicer is appointed, the Issuer shall notify the Trustee, the
BGS Transition Bondholders and the Rating Agencies of such appointment,
specifying in such notice the name and address of such Successor Servicer.
(j) The Issuer shall not take any action to terminate or assign the Swap
Counterparty's rights and powers under any Interest Rate Swap Agreement or
replace any Swap Counterparty following an event of default, termination event
or downgrade event under any Interest Rate Swap Agreement without (i) the
prior written consent of the Trustee and of the Holders of that percentage of
the Outstanding Amount of the BGS Transition Bonds, if any such consent is
required under the related Series Supplement, of the related Series and Class,
if any, specified in the related Series Supplement, and (ii) satisfying any
other requirements set forth in the related Series Supplement and Interest
Rate Swap Agreement.
(k) Upon termination or assignment of any Swap Counterparty's rights and
powers, pursuant to any Interest Rate Swap Agreement, the Trustee shall
promptly inform the Issuer, the BPU, the BGS Transition Bondholders of the
related Class and the Rating Agencies of such termination or assignment. As
soon as a replacement Swap Counterparty is appointed, the Issuer shall notify
the Trustee, the BPU, the BGS Transition Bondholders of the related Class and
the Rating Agencies of such appointment, specifying in such notice the name
and address of such replacement Swap Counterparty.
SECTION 3.21. Taxes. So long as any of the BGS Transition Bonds are
outstanding, the Issuer shall pay all material taxes, assessments and
governmental charges imposed upon it or any of its properties or assets or
with respect to any of its franchises, business, income or property before any
penalty accrues thereon if the failure to pay any such taxes, assessments and
governmental charges would, after any applicable grace periods, notices or
other similar requirements, result in a Lien on the Collateral.
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ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 4.1. Satisfaction and Discharge of Indenture; Defeasance. The BGS
Transition Bonds of any Series, all moneys payable with respect thereto and
this Indenture as it applies to such Series shall cease to be of further
effect and the Lien hereunder shall be released with respect to such Series,
interest shall cease to accrue on the BGS Transition Bonds of such Series and
the Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to the BGS Transition Bonds of such Series, when
(i) either
(A) all BGS Transition Bonds of such Series theretofore
authenticated and delivered (other than (1) BGS Transition Bonds
that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.6 and (2) BGS Transition Bonds for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided in Section
3.3) have been delivered to the Trustee for cancellation; or
(B) the Expected Final Payment Date has occurred with respect
to all BGS Transition Bonds of such Series not theretofore delivered
to the Trustee for cancellation, and the Issuer has irrevocably
deposited or caused to be irrevocably deposited with the Trustee
cash, in trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such BGS Transition Bonds not
theretofore delivered to the Trustee on the Expected Final Payment
Date therefor;
(ii) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer with respect to such Series; and
(iii) the Issuer has delivered to the Trustee and to the BPU an
Issuer Officer's Certificate, an Issuer Opinion of Counsel and (if
required by the TIA or the Trustee) an Independent Certificate from a
firm of certified public accountants, each meeting the applicable
requirements of Section 11.1 and each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture with respect to BGS Transition Bonds of such Series
have been complied with.
(b) Subject to Sections 4.1(c) and 4.2, the Issuer at any time may
terminate (i) all its obligations under this Indenture with respect to the BGS
Transition Bonds of any Series ("Legal Defeasance Option") or (ii) its
obligations under Sections 3.4, 3.5, 3.6 (other than with respect to amounts
in the Defeasance Account), 3.7, 3.8, 3.9, 3.10, 3.12, 3.13, 3.14, 3.15, 3.16,
3.17, 3.18, 3.19 and 3.20 and the operation of Section 5.1(d) ("Covenant
Defeasance Option") with respect
28
to any Series of BGS Transition Bonds. The Issuer may exercise the Legal
Defeasance Option with respect to any Series of BGS Transition Bonds
notwithstanding its prior exercise of the Covenant Defeasance Option with
respect to such Series.
(c) If the Issuer exercises the Legal Defeasance Option with respect to
any Series, the maturity of the BGS Transition Bonds of such Series may not be
accelerated pursuant to Section 5.2. If the Issuer exercises the Covenant
Defeasance Option with respect to any Series, the maturity of the BGS
Transition Bonds of such Series may not be accelerated because of an Event of
Default specified in Section 5.1(d).
(d) Upon satisfaction of the conditions set forth herein to the exercise
of the Legal Defeasance Option or the Covenant Defeasance Option with respect
to any Series of BGS Transition Bonds, the Trustee, on demand of and at the
expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of the obligations that are terminated pursuant to
such exercise.
(e) Notwithstanding Sections 4.1(a) and 4.1(b) above, (i) rights of
registration of transfer and exchange, (ii) rights of substitution of
mutilated, destroyed, lost or stolen BGS Transition Bonds, (iii) rights of BGS
Transition Bondholders to receive payments of principal and interest, but only
from the amounts deposited with the Trustee for such payments, (iv) Sections
4.3 and 4.4, (v) the rights, obligations and immunities of the Trustee
hereunder (including the rights of the Trustee under Section 6.7 and the
obligations of the Trustee under Section 4.3) and (vi) the rights of BGS
Transition Bondholders under this Indenture with respect to the property
deposited with the Trustee payable to all or any of them, shall survive until
the BGS Transition Bonds of the Series as to which this Indenture or certain
obligations hereunder have been satisfied and discharged pursuant to Section
4.1(a) or 4.1(b) and have been paid in full. Thereafter, the obligations in
Sections 6.7 and 4.4 with respect to such Series shall survive.
SECTION 4.2. Conditions to Defeasance.
(a) The Issuer may exercise the Legal Defeasance Option or the Covenant
Defeasance Option with respect to any Series of BGS Transition Bonds only if:
(i) the Issuer irrevocably deposits or causes to be deposited in
trust with the Trustee cash or U.S. Government Obligations for the
payment of principal of and interest on such Series of BGS Transition
Bonds to the Expected Payment Date therefor, as applicable, such deposit
to be made in the Defeasance Subaccount for such Series of BGS Transition
Bonds;
(ii) the Issuer delivers to the Trustee a certificate from a
nationally recognized firm of Independent accountants expressing its
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited cash without investment will provide cash at such times and in
such amounts (but, in the case of the Legal Defeasance Option only, not
more than such amounts) as will be sufficient to pay in respect of the
BGS Transition Bonds of such
29
Series (A) subject to clause (B), principal in accordance with the
Expected Sinking Fund Amortization Schedule therefor and (B) interest
when due;
(iii) in the case of the Legal Defeasance Option, ninety-five (95)
days pass after the deposit is made and during such ninety-five (95) day
period no Default specified in Section 5.1(e) or 5.1(f) occurs which is
continuing at the end of the period; provided, however, that in
determining whether a default under Section 5.1(e) has occurred, the
requirement that the decree or order shall remain unstayed and in effect
for ninety (90) days shall be disregarded;
(iv) no Default has occurred and is continuing on the day of such
deposit and after giving effect thereto;
(v) in the case of the Legal Defeasance Option, the Issuer delivers
to the Trustee an Issuer Opinion of Counsel stating that (A) the Issuer
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (B) since the date of execution of this Indenture,
there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion shall
confirm that, the Holders of the BGS Transition Bonds of such Series will
not recognize income, gain or loss for federal income tax purposes as a
result of the exercise of such Legal Defeasance Option and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such legal defeasance
had not occurred;
(vi) in the case of the Covenant Defeasance Option, the Issuer
delivers to the Trustee an Issuer Opinion of Counsel to the effect that
the Holders of the BGS Transition Bonds of such Series will not recognize
income, gain or loss for federal income tax purposes as a result of the
exercise of such Covenant Defeasance Option and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant defeasance had
not occurred; and
(vii) the Issuer delivers to the Trustee an Issuer Officer's
Certificate and an Issuer Opinion of Counsel, each stating that all
conditions precedent to the satisfaction and discharge of the BGS
Transition Bonds of such Series to the extent contemplated by this
Article IV have been complied with.
(b) [Reserved.]
SECTION 4.3. Application of Trust Money. All moneys or U.S. Government
Obligations deposited with the Trustee pursuant to Sections 4.1 or 4.2 with
respect to any Series of BGS Transition Bonds shall be held in trust in the
Defeasance Subaccount for such Series and applied by it, in accordance with
the provisions of the BGS Transition Bonds and this Indenture, to the payment,
either directly or through any Paying Agent, as the Trustee may determine, to
the Holders of the particular BGS Transition Bonds for the payment or
redemption of which such moneys have been deposited with the Trustee, of all
sums due and to become due thereon for
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principal and interest. Such moneys shall be segregated and held apart solely
for paying such BGS Transition Bonds and such BGS Transition Bonds shall not
be entitled to any amounts on deposit in the Collection Account other than
amounts on deposit in the Defeasance Subaccount for such BGS Transition Bonds.
SECTION 4.4. Repayment of Moneys Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture or the Covenant Defeasance
Option or Legal Defeasance Option with respect to the BGS Transition Bonds of
any Series, all moneys then held by any Paying Agent other than the Trustee
under the provisions of this Indenture with respect to such BGS Transition
Bonds shall, upon demand of the Issuer, be paid to the Trustee to be held and
applied according to Section 3.3 and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default. "Event of Default" wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) any act or failure to act by the State of New Jersey or any of
its agencies (including the BPU), officers or employees that violates or
is not in accordance with the pledge and agreement of the State of New
Jersey in Section 17.a of the Competition Act;
(b) default in the payment of any interest on any BGS Transition
Bond when the same becomes due and payable and the continuation of such
default for five Business Days;
(c) default in the payment of the then unpaid principal of any BGS
Transition Bond of any Series or Class on the Final Maturity Date
therefor;
(d) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
specifically dealt with in clause (a), (b) or (c) above), or any
representation or warranty of the Issuer made in this Indenture or in any
certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of the
time when made, and any such default shall continue or not be cured, for
a period of thirty (30) days after the earliest of (i) there shall have
been given, by registered or certified mail, to the Issuer by the Trustee
or to the Issuer and the Trustee by the Holders of at least twenty-five
percent
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(25%) of the Outstanding Amount of the BGS Transition Bonds of any Series
or Class, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder or (ii) the date the
Issuer has knowledge of the default;
(e) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Collateral in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for the
Issuer or for any substantial part of the Collateral, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of ninety (90)
consecutive days; or
(f) the commencement by the Issuer of a voluntary case or proceeding
under any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by the Issuer to
the entry of an order for relief in an involuntary case under any such
law, or the consent by the Issuer to the appointment or taking possession
by a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for the Issuer or for any substantial part of the
Collateral, or the making by the Issuer of any assignment for the benefit
of creditors, or the failure by the Issuer generally to pay its debts as
such debts become due, or the taking of action by the Issuer in
furtherance of any of the foregoing.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default (other than an Event of Default under Section 5.1(g)) occurs
and is continuing, then and in every such case either the Trustee, or the
Holders of BGS Transition Bonds representing not less than a majority of the
Outstanding Amount of the BGS Transition Bonds of all Series may, but need
not, declare all the BGS Transition Bonds to be immediately due and payable,
by a notice in writing to the Issuer (and to the Trustee and to the BPU if
given by BGS Transition Bondholders), and upon any such declaration the unpaid
principal amount of the BGS Transition Bonds of all Series, together with
accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable.
(i) At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article V,
the Holders of BGS Transition Bonds representing a majority of the
Outstanding Amount of the BGS Transition Bonds of all Series, by written
notice to the Issuer, the BPU and the Trustee, may rescind and annul such
declaration and its consequences, provided that:
(ii) the Issuer has paid or deposited with the Trustee, for deposit
in the General Subaccount of the Collection Account, a sum sufficient to
pay
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(A) all payments of principal of and interest on all BGS
Transition Bonds of all Series and all other amounts that would then
be due hereunder or upon such BGS Transition Bonds if the Event of
Default giving rise to such acceleration had not occurred; and
(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel; and
(iii) all Events of Default, other than the nonpayment of the
principal of the BGS Transition Bonds of all Series that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.12.
(b) No such rescission shall affect any subsequent Default or impair any
right consequent thereto.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
(a) The Issuer covenants that if (i) Default is made in the payment of
any interest on any BGS Transition Bond when such interest becomes due and
payable and such Default continues for five Business Days or (ii) Default is
made in the payment of the then unpaid principal of any BGS Transition Bond on
the Final Maturity Date therefor (iii) the Issuer shall, upon demand of the
Trustee, pay to it, for the benefit of the Holders of the BGS Transition Bonds
of such Series, such amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel and the
whole amount then due and payable on such BGS Transition Bonds for principal
and interest, with interest upon the overdue principal and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest, at the respective Interest Rate of such Series or
the applicable Class of such Series.
(b) In case the Issuer shall fail forthwith to pay the amounts specified
in clause (a) above upon such demand, the Trustee, in its own name and as
trustee of an express trust, may institute a Proceeding for the collection of
the sums so due and unpaid, and may prosecute such Proceeding to judgment or
final decree, and may enforce the same against the Issuer or other obligor
upon such BGS Transition Bonds and collect in the manner provided by law out
of the property of the Issuer or other obligor upon such BGS Transition Bonds,
wherever situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Trustee may, as
more particularly provided in Section 5.4, in its discretion, proceed to
protect and enforce its rights and the rights of the BGS Transition
Bondholders, by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any
33
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Trustee by this Indenture or by law including
foreclosing or otherwise enforcing the Lien on the BGS Bondable Transition
Property securing the BGS Transition Bonds or applying to the BPU or a court
of competent jurisdiction for sequestration of revenues arising with respect
to such BGS Bondable Transition Property.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the BGS Transition Bonds or any Person having or claiming an
ownership interest in the Collateral, Proceedings under Title 11 of the United
States Code or any other applicable federal or state bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the BGS Transition Bonds, or to
the creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of any BGS Transition Bonds shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section 5.3, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the BGS Transition
Bonds and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for reimbursement
of all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence or
bad faith) and of the BGS Transition Bondholders allowed in such
Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of BGS Transition Bonds in any election of a
trustee, a standby trustee or Person performing similar functions in any
such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received
with respect to the claims of the BGS Transition Bondholders and of the
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
or the Holders of BGS Transition Bonds allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such BGS Transition
Bondholders to make payments to the Trustee, and, in the event that the
Trustee shall consent to the making of payments directly to such BGS
Transition Bondholders, to pay to the Trustee such amounts as shall be
sufficient to
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cover reasonable compensation to the Trustee, each predecessor Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any BGS
Transition Bondholder any plan of reorganization, arrangement, adjustment or
composition affecting the BGS Transition Bonds or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of any BGS
Transition Bondholder in any such proceeding except, as aforesaid, to vote for
the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the BGS Transition Bonds, may be enforced by the Trustee without
the possession of any of the BGS Transition Bonds or the production thereof in
any trial or other Proceedings relative thereto, and any such action or
proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be for
the ratable benefit of the Holders of the BGS Transition Bonds.
(g) In any Proceedings brought by the Trustee (and also any Proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the BGS Transition Bonds, and it shall not be necessary to make any
BGS Transition Bondholder a party to any such Proceedings.
SECTION 5.4. Remedies. If an Event of Default other than Section 5.1(g)
occurs and is continuing, the Trustee may do one or more of the following
(subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the BGS
Transition Bonds or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect from
the Issuer and any other obligor upon such BGS Transition Bonds moneys
adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the New Jersey
UCC and Delaware UCC or the Competition Act or any other applicable law
and take any other appropriate action to protect and enforce the rights
and remedies of the Trustee and the Holders of the BGS Transition Bonds
of such Series;
(iv) sell the Collateral or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; and
(v) exercise all rights, remedies, powers, privileges and claims of
the Issuer against the Seller, the Administrator, the Servicer or any
Swap Counterparty under or in
35
connection with the Sale Agreement, the Administration Agreement, the
Servicing Agreement or any Interest Rate Swap Agreement, respectively, as
provided in Section 3.20(b);
provided, however, that the Trustee may not sell or otherwise liquidate any
portion of the Collateral following an Event of Default, other than an Event
of Default described in Section 5.1(a), 5.1(b) or 5.1(c), with respect to any
Series unless (A) the Holders of one hundred percent (100%) of the Outstanding
Amount of the BGS Transition Bonds of all Series consent thereto, (B) the
proceeds of such sale or liquidation distributable to the BGS Transition
Bondholders of all Series are sufficient to discharge in full all amounts then
due and unpaid upon such BGS Transition Bonds for principal and interest, or
(C) the Trustee determines that the Collateral will not continue to provide
sufficient funds for all payments on the BGS Transition Bonds of all Series as
they would have become due if the BGS Transition Bonds had not been declared
due and payable and the Trustee obtains the consent of Holders of sixty-six
and two-thirds percent (66 2/3%) of the Outstanding Amount of the BGS
Transition Bonds of all Series. In determining such sufficiency or
insufficiency with respect to clause (B) and (C), the Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Collateral for such purpose.
(b) If an Event of Default under Section 5.1(g) occurs and is continuing,
the Trustee, for the benefit of the Holders, shall be entitled and empowered
to the extent permitted by applicable law to institute or participate in
Proceedings reasonably necessary to compel performance of or to enforce the
pledge and agreement of the State of New Jersey in Section 17.a of the
Competition Act and to collect any monetary damages incurred by the Holders or
the Trustee as a result of any such Event of Default, and may prosecute any
such Proceeding to final judgment or decree. Such remedy shall be the only
remedy that the Trustee may exercise if the only Event of Default that has
occurred and is continuing is an Event of Default under Section 5.1(g).
SECTION 5.5. Optional Preservation of the Collateral. If the BGS
Transition Bonds have been declared to be due and payable under Section 5.2
following an Event of Default and such declaration and its consequences have
not been rescinded and annulled, the Trustee may, but need not, elect, as
provided in Section 5.11(c), to maintain possession of the Collateral and not
sell or liquidate the same. It is the desire of the parties hereto and the BGS
Transition Bondholders that there be at all times sufficient funds for the
payment of principal of and interest on the BGS Transition Bonds, and the
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Collateral or sell or liquidate the same. In
determining whether to maintain possession of the Collateral or sell or
liquidate the same, the Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
36
SECTION 5.6. Limitation of Proceedings.
(a) No Holder of any BGS Transition Bond of any Series shall have any
right to institute any Proceeding, judicial or otherwise, or to avail itself
of any remedies provided in the Competition Act, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(ii) the Holders of not less than twenty-five percent (25%) of the
Outstanding Amount of the BGS Transition Bonds of all Series have made
written request to the Trustee to institute such Proceeding in respect of
such Event of Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee security or
indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in complying with such request;
(iv) the Trustee for sixty (60) days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has been
given to the Trustee during such sixty (60) day period by the Holders of
a majority of the Outstanding Amount of the BGS Transition Bonds of all
Series;
it being understood and intended that no one or more Holders of BGS Transition
Bonds shall have any right in any manner whatever by virtue of, or by availing
of, any provision of this Indenture to affect, disturb or prejudice the rights
of any other Holders of BGS Transition Bonds or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under
this Indenture, except in the manner herein provided.
(b) In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of BGS Transition
Bonds, each representing less than a majority of the Outstanding Amount of the
BGS Transition Bonds of all Series, the Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
SECTION 5.7. Unconditional Rights of BGS Transition Bondholders To
Receive Principal and Interest. Notwithstanding any other provisions in this
Indenture, the Holder of any BGS Transition Bond shall have the right, which
is absolute and unconditional, and shall not be impaired without the consent
of each such Holder, (a) to receive payment of (i) the interest, if any, on
such BGS Transition Bond on or after the due dates thereof expressed in such
BGS Transition Bond or in this Indenture or (ii) the unpaid principal, if any,
of such BGS Transition Bonds on or after the Final Maturity Date therefor
37
and (b) to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder.
SECTION 5.8. Restoration of Rights and Remedies. If the Trustee or any
BGS Transition Bondholder has instituted any Proceeding to enforce any right
or remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or to
such BGS Transition Bondholder, then and in every such case the Issuer, the
Trustee and the BGS Transition Bondholders shall, subject to any determination
in such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Trustee and
the BGS Transition Bondholders shall continue as though no such Proceeding had
been instituted.
SECTION 5.9. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Trustee or to the BGS Transition Bondholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10. Delay or Omission Not a Waiver. No delay or omission of the
Trustee or any BGS Transition Bondholder to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the BGS Transition Bondholders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the BGS
Transition Bondholders, as the case may be.
SECTION 5.11. Control by BGS Transition Bondholders. The Holders of a
majority of the Outstanding Amount of the BGS Transition Bonds of all Series
(or, if less than all Series or Classes are affected, the affected Series or
Class or Classes) shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Trustee with respect
to the BGS Transition Bonds of such Series or Class or Classes or exercising
any trust or power conferred on the Trustee with respect to such Series or
Class or Classes; provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to the express terms of Section 5.4, any direction to
the Trustee to sell or liquidate the Collateral shall be by the Holders
of BGS Transition Bonds representing not less than one hundred percent
(100%) of the Outstanding Amount of the BGS Transition Bonds of all
Series;
38
(c) if the conditions set forth in Section 5.5 have been satisfied
and the Trustee elects to retain the Collateral pursuant to such Section
and elects not to sell or liquidate the same, then any direction to the
Trustee by Holders of BGS Transition Bonds representing less than one
hundred percent (100%) of the Outstanding Amount of the BGS Transition
Bonds of all Series to sell or liquidate the Collateral shall be of no
force and effect; and
(d) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Trustee need not take any
action that it determines might involve it in liability for which it
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities which might be incurred by it in complying with this
request. The Trustee also need not take any action that it determines might
materially and adversely affect the rights of any BGS Transition Bondholders
not consenting to such action.
SECTION 5.12. Waiver of Past Defaults.
(a) Prior to the declaration of the acceleration of the maturity of the
BGS Transition Bonds of all Series as provided in Section 5.2, the Holders of
not less than a majority of the Outstanding Amount of the BGS Transition Bonds
of all Series, with the written consent of the BPU, together may waive any
past Default or Event of Default and its consequences except a Default (i) in
payment of principal of or interest on any of the BGS Transition Bonds or (ii)
in respect of a covenant or provision hereof which cannot be modified or
amended without the consent of the Holder of each BGS Transition Bond of all
Series or Classes affected. In the case of any such waiver, the Issuer, the
Trustee and the Holders of the BGS Transition Bonds shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.
(b) Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
SECTION 5.13. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any BGS Transition Bond by such Holder's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require,
in any suit for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken, suffered or omitted
by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit instituted by
the Trustee, (b) any
39
suit instituted by any BGS Transition Bondholder, or group of BGS Transition
Bondholders, in each case holding in the aggregate more than ten percent (10%)
of the Outstanding Amount of the BGS Transition Bonds of a Series or (c) any
suit instituted by any BGS Transition Bondholder for the enforcement of the
payment of (i) interest on any BGS Transition Bond on or after the due dates
expressed in such BGS Transition Bond and in this Indenture or (ii) the unpaid
principal, if any, of any BGS Transition Bond on or after the Final Maturity
Date therefor.
SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
SECTION 5.15. Action on BGS Transition Bonds. The Trustee's right to seek
and recover judgment on the BGS Transition Bonds or under this Indenture shall
not be affected by the seeking, obtaining or application of any other relief
under or with respect to this Indenture. Neither the Lien of this Indenture
nor any rights or remedies of the Trustee or the BGS Transition Bondholders
shall be impaired by the recovery of any judgment by the Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion of
the Collateral or upon any of the assets of the Issuer.
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Duties and Liabilities of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use
the same degree of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein,
40
upon certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) this clause (c) does not limit the effect of clause (b) of this
Section 6.1;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to clauses (a), (b) and (c) of this Section 6.1.
(e) The Trustee shall not be liable for interest on any money received by
it except as provided in this Indenture or as the Trustee may agree in writing
with the Issuer.
(f) Money held in trust by the Trustee need not be segregated from other
funds held by the Trustee except to the extent required by law or the terms of
this Indenture, the Sale Agreement, the Servicing Agreement or any Interest
Rate Swap Agreement.
(g) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayments of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 6.1 and to the provisions of the
TIA.
(i) Under no circumstances shall the Trustee be liable for any
indebtedness of the Issuer, the Servicer or the Seller evidenced by or arising
under the BGS Transition Bonds or any Basic Document.
SECTION 6.2. Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
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(b) Before the Trustee acts or refrains from acting, it may require an
Issuer Officer's Certificate or an Issuer Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Issuer Officer's Certificate or an Issuer Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of,
any such agent attorney, custodian, or nominee appointed with due care by it
thereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the BGS
Transition Bonds shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
SECTION 6.3. Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of BGS Transition Bonds
and may otherwise deal with the Issuer or its affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, BGS Transition Bond
Registrar, co-registrar or co-paying agent, or agent appointed pursuant to
Section 3.2(b) may do the same with like rights. However, the Trustee must
comply with Sections 6.11 and 6.12.
SECTION 6.4. Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this
Indenture or the BGS Transition Bonds. The Trustee shall not be accountable
for the Issuer's use of the proceeds from the BGS Transition Bonds, and the
Trustee shall not be responsible for any statement of the Issuer in this
Indenture or in any document issued in connection with the sale of the BGS
Transition Bonds or in the BGS Transition Bonds other than the Trustee's
certificate of authentication. The Trustee shall not be responsible for the
form, character, genuineness, sufficiency, value or validity of any of the
Collateral, or for or in respect of the validity or sufficiency of the BGS
Transition Bonds (other than the certificate of authentication for the BGS
Transition Bonds) or the Basic Documents and the Trustee shall in no event
assume or incur any liability, duty or obligation to any Holder of a BGS
Transition Bond, other than as expressly provided for in this Indenture. The
Trustee shall not be liable for the default or misconduct of the Issuer, the
Seller, the Servicer or the Member or any Manager of the Issuer under any
Basic Document or otherwise, or the default or misconduct of any counterparty
under any Interest Rate Swap Agreement, and the Trustee shall have no
obligation or liability to perform the obligations of the Issuer.
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SECTION 6.5. Notice of Defaults. If a Default occurs and is continuing
with respect to any Class or Series and if it is known to a Responsible
Officer of the Trustee, the Trustee shall mail to each Rating Agency, to the
BPU and to each Holder of BGS Transition Bonds of all Series notice of the
Default within ninety (90) days after it occurs. Except in the case of a
Default in payment of principal of or interest on any BGS Transition Bond, the
Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is
in the interests of BGS Transition Bondholders.
SECTION 6.6. Reports by Trustee to Holders.
(a) The Trustee shall deliver to each Holder of BGS Transition Bonds such
information as may be required to enable such Holder to prepare its federal
and state income tax returns.
(b) With respect to each Series and Class of BGS Transition Bonds, on or
prior to each Payment Date therefor, the Trustee shall deliver a statement
prepared by the Trustee to each Holder of BGS Transition Bonds of such Series
and Class and to the BPU which shall include (to the extent applicable) the
following information (and any other information so specified in the Series
Supplement for such Series) as to the BGS Transition Bonds of such Series and
Class with respect to such Payment Date or the period since the previous
Payment Date, as applicable:
(i) the amount paid to Holders of the BGS Transition Bonds of such
Series and Class in respect of principal; such amount to be expressed as
a dollar amount per thousand;
(ii) the amount paid to Holders of the BGS Transition Bonds of such
Series and Class in respect of interest; such amount to be expressed as a
dollar amount per thousand;
(iii) the BGS Transition Bond Balance, after giving effect to the
payments to be made on such Payment Date, and the Projected BGS
Transition Bond Balance, in each case for such Series and Class and as of
such Payment Date;
(iv) the amount on deposit in the Overcollateralization Subaccount
for such Series and the Scheduled Overcollateralization Level for such
Series as of such Payment Date;
(v) the amount on deposit in the Capital Subaccount for such Series
as of such Payment Date;
(vi) the amount, if any, on deposit in the Reserve Subaccount as of
such Payment Date;
(vii) the amount to be paid to any Swap Counterparty;
(viii) the amounts to be paid to the Trustee since the preceding
Payment Date;
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(ix) the amounts paid to the Servicer since the preceding Payment
Date; and
(x) any other transfers and payments made pursuant to this
Indenture.
(c) The Trustee's responsibility for disbursing the information described
in clause (b) above to Holders of BGS Transition Bonds and to the BPU is
limited to the availability, timeliness and accuracy of the information
provided by the Servicer pursuant to Section 3.5 and Annex 1 of the Servicing
Agreement.
SECTION 6.7. Compensation and Indemnity.
(a) The Issuer shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Issuer shall
reimburse the Trustee for all reasonable out-of-pocket expenses, disbursements
and advances incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Issuer shall indemnify
and hold harmless the Trustee from and against any and all costs, damages,
expenses, losses, liabilities or other amounts whatsoever (including counsel
fees) incurred by the Trustee in connection with the administration of this
trust, the enforcement of this trust and all of the Trustee's rights, powers
and duties under this Indenture and the performance by the Trustee of the
duties and obligations of the Trustee under or pursuant to this Indenture. The
Trustee shall notify the Issuer promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Issuer shall not relieve
the Issuer of its obligations hereunder.
(b) The Issuer shall defend the claim and the Trustee may have separate
counsel and the Issuer shall pay the fees and expenses of such counsel. The
Issuer need not reimburse any expense or indemnify against any loss, liability
or expense incurred by the Trustee (i) through the Trustee's own willful
misconduct, negligence or bad faith or (ii) to the extent the Trustee was
reimbursed for or indemnified against any such loss, liability or expense by
the Seller pursuant to the Sale Agreement or by the Servicer pursuant to the
Servicing Agreement.
(c) When the Trustee incurs expenses after the occurrence of a Default
specified in Section 5.1(e) or 5.1(f) with respect to the Issuer, the expenses
are intended to constitute expenses of administration under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
SECTION 6.8. Replacement of Trustee.
(a) The Trustee may resign at any time upon thirty (30) days' prior
written notice by so notifying the Issuer. The Issuer may remove the Trustee
with or without cause at any time, with prior notice to the Rating Agencies,
upon thirty (30) days' prior written notice, and shall remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
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(ii) the Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Trustee
or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
(b) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the "Retiring Trustee"), the Issuer shall promptly appoint a
successor Trustee.
(c) In addition, the Holders of a majority in Outstanding Amount of the
BGS Transition Bonds of all Series may remove the Trustee by so notifying the
Issuer and the Trustee and such Holders may appoint a successor Trustee.
(d) A successor Trustee shall deliver a written acceptance of its
appointment to the Retiring Trustee and to the Issuer. Thereupon the
resignation or removal of the Retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. No resignation or removal of the Trustee shall become
effective until the acceptance of the appointment by a successor Trustee. The
successor Trustee shall mail a notice of its succession to BGS Transition
Bondholders. The Retiring Trustee shall promptly transfer all property held by
it as Trustee to the successor Trustee.
(e) If a successor Trustee does not take office within sixty (60) days
after the Retiring Trustee resigns or is removed, the Retiring Trustee, the
Issuer or the Holders of a majority in Outstanding Amount of the BGS
Transition Bonds of all Series may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) If the Trustee fails to comply with Section 6.11, any BGS Transition
Bondholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(g) Notwithstanding the replacement of the Trustee pursuant to this
Section 6.8, the Issuer's obligations under Section 6.7 shall continue for the
benefit of the Retiring Trustee.
SECTION 6.9. Successor Trustee by Merger.
(a) If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation or banking association shall, without any further act
be the successor Trustee. Notice of any such event shall be promptly given to
each Rating Agency by the successor Trustee.
(b) In case at the time such successor or successors by merger,
conversion, consolidation or transfer shall succeed to the trusts created by
this Indenture any of the BGS Transition Bonds shall have been authenticated
but not delivered, any such successor to the
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Trustee may adopt the certificate of authentication of any Retiring Trustee,
and deliver such BGS Transition Bonds so authenticated; and in case at that
time any of the BGS Transition Bonds shall not have been authenticated, any
successor to the Trustee may authenticate such BGS Transition Bonds either in
the name of any Retiring Trustee hereunder or in the name of the successor to
the Trustee; and in all such cases such certificates shall have the full force
and effect granted by the BGS Transition Bonds or by this Indenture and this
force and effect shall be equal to any certificate issued by the Trustee.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Trustee shall have
the power and may execute and deliver all instruments to appoint one or more
Persons to act as a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Collateral, and to vest in such Person or
Persons, in such capacity and for the benefit of the BGS Transition
Bondholders, such title to the Collateral, or any part hereof, and, subject to
the other provisions of this Section 6.10, such powers, duties, obligations,
rights and trusts as the Trustee may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 6.11 and no notice to BGS
Transition Bondholders of the appointment of any co-trustee or separate
trustee shall be required under Section 6.8. Notice of any such appointment
shall be promptly given to each Rating Agency and to the BPU by the Trustee.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Collateral or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
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(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture
and the conditions of this Article VI. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a) and Section 26(a)(i) of
the Investment Company Act of 1940. The Trustee shall have a combined capital
and surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition and it shall have a long term debt rating of "BBB-"
or better by Standard & Xxxx'x, "Xxx0" or better by Moody's and "BBB-" or
better by Fitch. The Trustee shall comply with TIA Section 310(b), including
the optional provision permitted by the second sentence of TIA Section
310(b)(9); provided, however, that there shall be excluded from the operation
of TIA Section 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13. Representations and Warranties of the Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee is a banking corporation validly existing in good
standing under the laws of the State of New York; and
(b) the Trustee has full power, authority and legal right to execute,
deliver and perform this Indenture and the Basic Documents to which the
Trustee is a party and has taken all necessary action to authorize the
execution, delivery and performance by it of this Indenture and such Basic
Documents.
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ARTICLE VII
BGS TRANSITION BONDHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer To Furnish Trustee Names and Addresses of BGS
Transition Bondholders. The Issuer shall furnish or cause to be furnished to
the Trustee (a) not more than five days after the earlier of (i) each Record
Date with respect to each Series and (ii) three months after the last Record
Date with respect to each Series, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of BGS
Transition Bonds of such Series as of such Record Date, (b) at such other
times as the Trustee may request in writing, within thirty (30) days after
receipt by the Issuer of any such request, a list of similar form and content
as of a date not more than ten (10) days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the BGS
Transition Bond Registrar, no such list shall be required to be furnished.
SECTION 7.2. Preservation of Information; Communications to BGS
Transition Bondholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of BGS Transition Bonds
contained in the most recent list furnished to the Trustee as provided in
Section 7.1 and the names and addresses of Holders of BGS Transition Bonds
received by the Trustee in its capacity as BGS Transition Bond Registrar. The
Trustee may destroy any list furnished to it as provided in such Section 7.1
upon receipt of a new list so furnished.
(b) BGS Transition Bondholders may communicate with other BGS Transition
Bondholders pursuant to Section 312(b) of the TIA, with respect to their
rights under this Indenture or under the BGS Transition Bonds.
(c) The Issuer, the Trustee and the BGS Transition Bond Registrar shall
have the protection of Section 312(c) of the TIA.
SECTION 7.3. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Trustee and with the BPU, within fifteen (15) days
after the Issuer is required to file the same with the Commission, copies
of the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the Issuer
may be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act;
(ii) file with the Trustee, the BPU and the Commission, such
additional information, documents and reports with respect to compliance
by the Issuer with the
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conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations; and
(iii) supply to the Trustee and the BPU (and the Trustee shall
transmit by mail to all BGS Transition Bondholders described in TIA
Section 313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of
this Section 7.3(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
SECTION 7.4. Reports by Trustee.
(a) If required by TIA Section 313(a), within sixty (60) days after the
end of each fiscal year of the Issuer, commencing with the year after the
issuance of the BGS Transition Bonds of any Series, the Trustee shall mail to
each Holder of BGS Transition Bonds of such Series as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Section 313(b); provided,
however, that the initial report so issued shall be delivered not more than
twelve (12) months after the initial issuance of each Series.
(b) A copy of each report at the time of its mailing to BGS Transition
Bondholders shall be filed by the Trustee with the Commission and each stock
exchange, if any, on which the BGS Transition Bonds are listed (to the extent
required by the rules of such exchange). The Issuer shall notify the Trustee
if and when the BGS Transition Bonds are listed on any stock exchange.
SECTION 7.5. Provision of Servicer Reports. Upon the written request of
any BGS Transition Bondholder to the Trustee addressed to the Corporate Trust
Office, the Trustee shall provide such BGS Transition Bondholder with a copy
of the Issuer Officer's Certificate referred to in Section 3.5 of the
Servicing Agreement and the Annual Accountant's Report referred to in Section
3.6 of the Servicing Agreement.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent
or other intermediary, all money and other property payable to or receivable
by the Trustee pursuant to this Indenture. The Trustee shall apply all such
money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of
any payment or performance under any agreement or instrument that is part of
the Collateral, the Trustee may take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of
49
appropriate Proceedings. Any such action shall be without prejudice to any
right to claim a Default or Event of Default under this Indenture and any
right to proceed thereafter as provided in Article V.
SECTION 8.2. Collection Account.
(i) On or prior to the Series Issuance Date for the first Series
issued hereunder, the Issuer shall open, at the Trustee's Corporate Trust
Office, or at another Eligible Institution, one or more segregated trust
accounts in the Trustee's name for the benefit of the Holders
(collectively, the "Collection Account"). The Collection Account shall
initially be divided into subaccounts, which need not be separate bank
accounts: a general subaccount (the "General Subaccount"), an
overcollateralization subaccount for each Series of BGS Transition Bonds
(each, an "Overcollateralization Subaccount" or the "Series
Overcollateralization Subaccount"), a capital subaccount for each Series
of BGS Transition Bonds (each, a "Capital Subaccount" or the "Series
Capital Subaccount"), a capital reserve subaccount (the "Capital Reserve
Subaccount"), a reserve subaccount (the "Reserve Subaccount"), a series
subaccount for each Series of BGS Transition Bonds (each, a "Series
Subaccount") and a class subaccount for any Class of any Series of BGS
Transition Bonds which has a floating rate of interest as specified in
any Series Supplement (each, a "Class Subaccount"). If so provided in any
Series Supplement, the Series Capital Subaccount for the related Series
may be divided into separate subaccounts bearing the designations
specified in such Series Supplement for the purpose of tracing deposits
to and withdrawals from such Series Capital Subaccount, provided that in
such case the terms Series Capital Subaccount and Capital Subaccount with
respect to such Series shall refer collectively to all such subaccounts
except as specified in such Series Supplement for purposes of such
tracing. On or prior to the Series Issuance Date for each Series issued
after the Series Issuance Date for the first Series issued hereunder, the
Issuer shall establish an additional Series Subaccount therefor and a
Class Subaccount for any Class of such Series which has a floating rate
of interest and in respect of which the Issuer has entered into an
Interest Rate Swap Agreement, as Subaccounts of the Collection Account.
Prior to depositing funds or U.S. Government Obligations in the
Collection Account pursuant to Sections 4.1 or 4.2, the Issuer shall
establish defeasance subaccounts (each, a "Defeasance Subaccount") for
each Series for which funds shall be deposited, as subaccounts of the
Collection Account. All amounts in the Collection Account not allocated
to any other Subaccount shall be allocated to the General Subaccount.
Prior to the Initial Payment Date, all amounts in the Collection Account
(other than funds deposited into the Capital Subaccount, up to the
Required Capital Amount) shall be allocated to the General Subaccount.
All payments received by the Trustee from any Swap Counterparty at any
time shall be deposited in the related Class Subaccount. All references
to the Collection Account shall be deemed to include reference to all
subaccounts contained therein. Withdrawals from and deposits to each of
the foregoing subaccounts of the Collection Account shall be made as set
forth in Sections 4.1, 4.2, 4.3 and 8.2(d) through (o). The Collection
Account shall at all times be maintained in an Eligible Securities
Account and only the Trustee shall have access to the Collection Account
for the purpose of making deposits in and withdrawals from the
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Collection Account in accordance with this Indenture. Funds in the
Collection Account shall not be commingled by the Issuer with any other
moneys, and shall not be commingled by the Trustee. All moneys deposited
from time to time in the Collection Account, all deposits therein
pursuant to this Indenture, and all investments made in Eligible
Investments with such moneys, including all income or other gain from
such investments, shall be held by the Trustee in the Collection Account
as part of the Collateral as herein provided, with the exception of any
amount up to $100,000 held at any time in the Capital Reserve Subaccount.
The Capital Reserve Subaccount shall be funded with $100,000 from amounts
contributed to the Capital Subaccount for the initial Series of BGS
Transition Bonds. Amounts on deposit in the Capital Reserve Subaccount
shall be available, upon request of the Issuer, to pay any expenses of
the Issuer.
(ii) Notwithstanding any other provision of this Indenture, the
Collection Account shall be a securities account and shall be established
only with a securities intermediary (as defined in Section 8-102(a)(13)
of the New Jersey UCC) that agrees with the Trustee that (A) the
Collection Account shall be a securities account of the Trustee, (B) all
property credited to the Collection Account shall be treated as a
financial asset, (C) such securities intermediary shall treat the Trustee
as entitled to exercise the rights that comprise each financial asset
credited to the Collection Account, (D) such securities intermediary
shall comply with entitlement orders originated by the Trustee without
the further consent of any other person or entity, (E) such securities
intermediary shall not agree with any person other than the Trustee to
comply with entitlement orders originated by such other person, (F) the
Collection Account and all property credited to it shall not be subject
to any Lien, security interest, right of set-off in favor of such
securities intermediary or anyone claiming through it (other than the
Trustee), and (G) such agreement shall be governed by the laws of the
State of New Jersey. The Collection Account shall be under the control
(within the meaning of Section 8-106 of the New Jersey UCC) of the
Trustee. If at any time the Collection Account ceases to be an Eligible
Securities Account, the Trustee shall, within ten (10) days, establish a
new Collection Account as an Eligible Securities Account.
(b) All or a portion of the funds in the Collection Account shall be
invested in Eligible Investments and reinvested by the Trustee upon Issuer
Order; provided, however, that no funds in the Defeasance Subaccount for any
Series of BGS Transition Bonds shall be invested in Eligible Investments or
otherwise, except that U.S. Government Obligations deposited by the Issuer
with the Trustee pursuant to Sections 4.1 or 4.2 shall remain as such. Except
as provided in Section 8.2(g)(x), all income or other gain from investments of
moneys deposited in the Collection Account shall be deposited by the Trustee
in the Collection Account, and any loss resulting from such investments shall
be charged to the Collection Account. The Issuer shall not direct the Trustee
to make any investment of any funds or to sell any investment held in the
Collection Account unless the security interest granted and perfected in such
account will continue to be perfected in such investment or the proceeds of
such sale, in either case without any further action by any Person, and, in
connection with any direction to the Trustee to make any such investment or
sale, if requested by the Trustee, the Issuer shall deliver to the Trustee an
Issuer Opinion of Counsel, acceptable to the Trustee, to such effect. Subject
to Section 6.1(c),
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the Trustee shall not in any way be held liable for the selection of Eligible
Investments or for investment losses incurred thereon except for losses
attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as Trustee, in accordance with their terms. The Trustee shall
have no liability in respect of losses incurred as a result of the liquidation
of any Eligible Investment prior to its stated maturity or the failure of the
Issuer to provide timely written investment direction. The Trustee shall have
no obligation to invest or reinvest any amounts held hereunder in the absence
of written investment direction pursuant to an Issuer Order; provided,
however, that if (i) the Issuer shall have failed to give investment
directions for any funds on deposit in the Collection Account to the Trustee
by 11:00 a.m. (prevailing New York City time) (or such other time as may be
agreed by the Issuer and Trustee) on any Business Day, or (ii) a Default or
Event of Default shall have occurred and be continuing but the BGS Transition
Bonds shall not have been declared due and payable pursuant to Section 5.2,
then the Trustee shall, to the fullest extent practicable, invest and reinvest
funds in the Collection Account in one or more Eligible Investments of the
kind described in clause (e) of the definition thereof.
(c) Any TBC Collections remitted by the Servicer to the Trustee, any
Indemnity Amounts remitted to the Trustee by the Seller or the Servicer or
otherwise received by the Trustee or the Issuer, any other proceeds of
Collateral received by the Servicer, the Issuer or the Trustee, and any
amounts paid by any counterparty under any Interest Rate Swap Agreement
received by the Servicer, the Issuer or the Trustee, shall be deposited in the
General Subaccount.
(d) Monthly, on the 13th day of each calendar month, or if such day is
not a Business Day, the preceding Business Day, beginning ______ 2005, the fee
owed to the Trustee in an amount equal to $_______ for such month, plus any
expenses, including legal fees and expenses, Indemnity Amounts (up to a
maximum of $_________ in the aggregate for the then current and all prior
Payment Dates and for all Series unless the Issuer has received confirmation
from S&P that a further amount will not result in a reduction or withdrawal of
the then current rating of the Outstanding BGS Transition Bonds) and any other
amounts due and owing to the Trustee pursuant to the Basic Documents for such
month so long as no Event of Default would result from the payment of such
Indemnity Amounts (as limited above) or such other amounts, shall, at the
direction of the Servicer, be paid to the Trustee.
(e) After the distribution made pursuant to clause (d) above, monthly,
13th day of each calendar month, or if such day is not a Business Day, the
preceding Business Day, beginning _______ 2005, the Monthly Servicing Fee and
any unpaid Monthly Servicing Fees shall, at the direction of the Servicer, be
paid to the Servicer to the extent that such amounts have not been withheld by
the Servicer from TBC Collections pursuant to Section 5.7 of the Servicing
Agreement.
(f) On each Payment Date, or such other date related to such Payment Date
as may be specified in the related Series Supplement, the Trustee, at the
direction of the Servicer, shall allocate to each Class Subaccount from the
related Series Subaccount the amounts specified in the related Series
Supplement. Such amounts shall be so allocated after taking into account all
allocations required in connection with such Payment Date under clauses (d)
and (e) above and
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(g)(i) through (iii) below; provided that in the event of any shortfall of
amounts to be allocated pursuant to clause (g)(iii) among more than one Class
of the applicable Series, amounts shall be allocated to such Class Subaccount
on a Pro Rata basis with all other Classes of the relevant Series. Amounts in
each Class Subaccount shall be applied as provided in the related Series
Supplement.
(g) Except as otherwise provided in any Series Supplement with respect to
any floating rate Class, on each Payment Date, by 12:00 noon (prevailing New
York City time), or if such day is not a Business Day, on the following
Business Day, the Trustee shall, at the direction of the Servicer, apply all
amounts on deposit in the General Subaccount of the Collection Account and any
investment earnings on the subaccounts in the Collection Account, after
distribution in accordance with clauses (d) and (e) above, and, subject to the
qualifications therein, after allocation to any Class Subaccount and payment
to any related Swap Counterparty in accordance with clause (f) above, in the
following priority:
(i) the administration fee payable under the Administration
Agreement, as specified in the related Series Supplement, shall be paid
to the Administrator; and fees payable to the Independent Managers in an
amount equal to $________ for such Payment Date, shall be paid to the
Independent Managers;
(ii) so long as no Event of Default has occurred and is continuing
or would be caused by such payment, all Operating Expenses other than
distributions in accordance with clauses (d), (e) and (g)(i) above shall
be paid to the Persons entitled thereto, pro rata based on the relative
amount of Operating Expenses remaining payable to each such Person,
provided that the amount paid on such Payment Date pursuant to this
clause (g)(ii) may not exceed $100,000 in the aggregate for all Series;
(iii) an amount equal to Interest payable on each Class of each
Series of BGS Transition Bonds on such Payment Date shall be allocated to
the corresponding Series Subaccount, (provided, that, to the extent
provided in any Series Supplement with respect to interest on any
floating rate Class, such amount shall be equal to the applicable amount
specified in the related Series Supplement payable with respect to that
Class) and if there are insufficient funds to make such allocation in
full, amounts will be allocated Pro Rata to the corresponding Class
Subaccount;
(iv) an amount equal to any Principal of each Class of each Series
of BGS Transition Bonds payable as a result of acceleration pursuant to
Section 5.2 and any Principal of any Series or Class of BGS Transition
Bonds payable on the Final Maturity Date of such Series or Class be
allocated to the corresponding Series Subaccount and, if there are
insufficient funds to make such allocation in full, amounts shall be
allocated on a Pro Rata basis;
(v) an amount equal to Principal scheduled to be paid on each Class
of each Series of BGS Transition Bonds on such Payment Date according to
the Expected
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Sinking Fund Amortization Schedule, excluding any amounts provided for
pursuant to clause (g)(iv) above, shall be allocated to the corresponding
Series Subaccount and, if there are insufficient funds for such Principal
payment, shall be allocated on a Pro Rata basis;
(vi) all remaining unpaid Operating Expenses and Indemnity Amounts
shall be paid to the Persons entitled thereto, pro rata based on the
relative amount of Operating Expenses and Indemnity Amounts remaining
payable to each such Person;
(vii) any amount necessary to replenish any shortfalls in the
Capital Subaccount for each Series below the Required Capital Amount for
such Series shall be allocated to the Capital Subaccount for such Series,
Pro Rata, based on the Outstanding principal balance of each Series;
(viii) an amount shall be allocated to the Overcollateralization
Subaccount for each Series sufficient to cause the amount in the
Overcollateralization Subaccount for such Series to equal the Scheduled
Overcollateralization Level for such Series as of that Payment Date, Pro
Rata, based on the Outstanding principal balance of each Series;
(ix) so long as no Event of Default has occurred and is continuing,
an amount equal to investment earnings on amounts in the Capital
Subaccount shall be released to the Issuer;
(x) the balance, if any, shall be allocated to the Reserve
Subaccount; and
(xi) following repayment of all outstanding Series of BGS Transition
Bonds, the balance, if any, shall be released to the Issuer free from the
Lien of this Indenture.
(h) For purposes of allocations among Series prior to an acceleration of
the BGS Transition Bonds pursuant to Section 5.2, except as otherwise provided
in any Series Supplement, "Pro Rata" means with respect to any Series a ratio,
(i) in the case of a payment of Interest on any Payment Date, the numerator of
which is the amount of Interest payable on such Series on such Payment Date
and, with respect to any Class of such Series of floating rate BGS Transition
Bonds, the Gross Fixed Amount for that class (as such term is defined by the
related Series Supplement) on such Payment Date and the denominator of which
is the aggregate amount of Interest payable on all Series on such Payment
Date; (ii) in the case of a payment of Principal on any Payment Date, the
numerator of which is the aggregate amount of Principal scheduled to be paid
or payable, as the case may be, on such Payment Date with respect to such
Series and the denominator of which is the sum of the aggregate amounts of
Principal scheduled to be paid or payable, as the case may be, with respect to
all Outstanding Series on such Payment Date; and (iii) in the case of a
payment or allocation on any Payment Date other than of Interest or Principal,
the numerator of which is the Outstanding principal amount of such Series
immediately prior such Payment Date and the denominator of which is the
aggregate Outstanding principal amount of all Series immediately prior such
Payment Date.
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(i) If, on any Payment Date, funds on deposit in the General Subaccount
are insufficient to make the payments and allocations contemplated by
subclauses (d), (e), (f) and (g)(i) through (v), (vii) and (viii) above for
all Series, the Trustee shall, at the direction of the Servicer, draw from
amounts on deposit in the following subaccounts in the following order up to
the amount of such shortfall, in order to make such payments and allocations:
(i) from the Reserve Subaccount for all Series, Pro Rata, for
payments and allocations contemplated by subclauses (d), (e), (f) and
(g)(i) through (v), (vii) and (viii),
(ii) from the Overcollateralization Subaccount for such Series, Pro
Rata, for payments and allocations contemplated by subclauses (d), (e),
(f) and (g)(i) through (v), and
(iii) from the Capital Subaccount for such Series, Pro Rata, for
payments and allocations contemplated by subclauses (d), (e), (f) and
(g)(i) through (v);
provided that no amounts from the Reserve Subaccount, the Overcollateralization
Subaccount for such Series or the Capital Subaccount for such Series shall by
allocated to any Class Subaccount pursuant to subclause (g)(iii) to the extent
a shortfall in amounts available to pay interest due on the related Class of
BGS Transition Bonds is due solely to any failure by a Swap Counterparty to
make payments due under the related Interest Rate Swap Agreement.
(j) On each Payment Date for any Series prior to an acceleration of the
BGS Transition Bonds pursuant to Section 5.2, the amounts on deposit in the
Series Subaccount shall be allocated, at the direction of the Servicer, in the
following order of priority: (i) to pay Interest due and payable on the BGS
Transition Bonds of such Series with respect to such Payment Date to the
Holders of BGS Transition Bonds of such Series, and (ii) the balance, if any,
up to the amount of Principal scheduled to be paid or payable on the BGS
Transition Bonds of such Series on such Payment Date, to pay such Principal to
the Holders of BGS Transition Bonds of such Series.
(k) Prior to an acceleration of the BGS Transition Bonds pursuant to
Section 5.2, all allocations of Principal and Interest with respect to any
Series comprised of two or more Classes shall be allocated among the Classes
within such Series on a Pro Rata basis. All payments of Principal shall be
made in the order set forth in the Expected Sinking Fund Amortization Schedule
established with respect to each Series and within such Series, in order of
Class, and any payments of Principal that were not made on the scheduled
Payment Date therefor shall be made in the order that they were scheduled for
payment.
(l) For purposes of allocations among Classes within a single Series
prior to an acceleration of the BGS Transition Bonds pursuant to Section 5.2,
except as otherwise provided in any Series Supplement, "Pro Rata" means with
respect to any Class a ratio, (i) in the case of a payment of Interest with
respect to any Payment Date, the numerator of which is the amount of interest
payable to such Class on such Payment Date, or in the case of any Class of
floating rate BGS Transition Bonds, the Gross Fixed Amount for that class (as
such term is defined by the
55
related Series Supplement) on such Payment Date, and the denominator of which
is the aggregate amount of interest payable on all Classes within such Series
on such Payment Date; and (ii) in the case of a payment of Principal on any
Payment Date, the numerator of which is the aggregate amount of Principal
scheduled to be paid or payable, as the case may be, on such Payment Date with
respect to such Class and the denominator of which is the sum of the aggregate
amounts of Principal scheduled to be paid or payable, as the case may be, with
respect to all Outstanding Classes within such Series on such Payment Date.
(m) Prior to an acceleration of the BGS Transition Bonds pursuant to
Section 5.2, all payments of Principal and Interest to Holders of BGS
Transition Bonds of a single Class, or of a single Series without Classes,
shall be made on a proportionate basis based on the respective principal
amounts of such BGS Transition Bonds held by such Holders.
(n) Upon an acceleration of the maturity of the BGS Transition Bonds
pursuant to Section 5.2, the aggregate amount of principal of and interest
accrued on each BGS Transition Bond shall be payable, without priority of
interest over principal or of principal over interest and without regard to
Series or Class, in the proportion that the aggregate amount of principal of
and interest accrued on such BGS Transition Bond bears to the aggregate amount
of principal of and interest accrued on all BGS Transition Bonds.
(o) Notwithstanding any other provision in this Indenture to the
contrary, in the event of an acceleration of the BGS Transition Bonds and a
subsequent liquidation of the Collateral in accordance with Section 5.4(a), if
so provided in any Interest Rate Swap Agreement, the proceeds of such
liquidation allocated to the related Class of floating rate BGS Transition
Bonds in accordance with this Section 8.3 shall be deposited in the related
Class Subaccount and allocated between and paid to the holders of such
floating rate Class, on the one hand, and the related Swap Counterparty, on
the other hand, pro rata based on the aggregate amount of principal and
interest due and payable on such floating rate Class and the aggregate amount
payable to the related Swap Counterparty in accordance with such Interest Rate
Swap Agreement.
SECTION 8.3. Release of Collateral.
(a) All money and other property withdrawn from the Collection Account by
the Trustee for payment to the Issuer as provided in this Indenture in
accordance with Section 8.2 shall be deemed released from this Indenture when
so withdrawn and applied in accordance with the provisions of Article VIII,
without further notice to, or release or consent by, the Trustee.
(b) Other than as provided for in clause (a) above, the Trustee shall
release property from the Lien of this Indenture only as and to the extent
permitted by the Basic Documents and only upon receipt of an Issuer Request
accompanied by an Issuer Officer's Certificate, an Issuer Opinion of Counsel
and Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.1 or an Issuer
Opinion of Counsel in lieu of such Independent Certificates to the effect that
the TIA does not require any such Independent Certificate.
56
(c) Subject to the payment of its fees and expenses pursuant to Section
6.7, the Trustee may, and when required by the provisions of this Indenture
shall, execute instruments to release property from the Lien of this
Indenture, or convey the Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Trustee as provided in
this Article VIII shall be bound to ascertain the Trustee's authority, inquire
into the satisfaction of any conditions precedent or see to the application of
any moneys.
(d) Subject to Section 8.3(b), the Trustee shall, at such time as there
are no BGS Transition Bonds Outstanding and all sums due the Trustee pursuant
to Section 6.7 have been paid, release any remaining portion of the Collateral
that secured the BGS Transition Bonds from the Lien of this Indenture and
release to the Issuer or any other Person entitled thereto any funds or
investments then on deposit in or credited to the Collection Account.
SECTION 8.4. Issuer Opinion of Counsel. The Trustee shall receive at
least five days notice when requested by the Issuer to take any action
pursuant to Section 8.3, accompanied by copies of any instruments involved,
and the Trustee shall also require, as a condition to such action, an Issuer
Opinion of Counsel, in form and substance satisfactory to the Trustee, stating
the legal effect of any such action, outlining the steps required to complete
the same, and concluding that all conditions precedent to the taking of such
action have been complied with and such action will not materially and
adversely impair the security for the BGS Transition Bonds or the rights of
the BGS Transition Bondholders in contravention of the provisions of this
Indenture; provided, however, that such Issuer Opinion of Counsel shall not be
required to express an opinion as to the fair value of the Collateral. Counsel
rendering any such opinion may rely, without independent investigation, on the
accuracy and validity of any certificate or other instrument delivered to the
Trustee in connection with any such action.
SECTION 8.5. Reports by Independent Accountants. The Issuer shall appoint
a firm of Independent certified public accountants of recognized national
reputation for purposes of preparing and delivering the reports or
certificates of such accountants required by this Indenture and the related
Series Supplements. Upon any resignation by such firm, the Issuer shall
promptly appoint a successor thereto that shall also be a firm of Independent
certified public accountants of recognized national reputation. If the Issuer
shall fail to appoint a successor to a firm of Independent certified public
accountants that has resigned within fifteen (15) days after such resignation,
the Trustee shall promptly notify the Issuer of such failure in writing. If
the Issuer shall not have appointed a successor within ten (10) days
thereafter, the Trustee shall promptly appoint a successor firm of Independent
certified public accountants of recognized national reputation. The fees of
such firm of Independent certified public accountants and its successor shall
be payable by the Issuer.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of BGS Transition
Bondholders.
(a) Without the consent of the Holders of any BGS Transition Bonds or the
counterparty under any Interest Rate Swap Agreement but with prior notice to
the Rating Agencies, the Issuer and the Trustee, when authorized by an Issuer
Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Trustee, for any of the following purposes:
(i) to correct or amplify the description of the Collateral, or
better to assure, convey and confirm unto the Trustee the Collateral, or
to subject to the Lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any applicable successor of the covenants of the Issuer contained herein
and in the BGS Transition Bonds;
(iii) to add to the covenants of the Issuer, for the benefit of the
BGS Transition Bondholders, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
the Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any Supplemental Indenture which may be inconsistent with
any other provision herein or in any Supplemental Indenture or to make
any other provisions with respect to matters or questions arising under
this Indenture or in any Supplemental Indenture; provided, however, that
(i) such action shall not, as evidenced by an Issuer Opinion of Counsel,
adversely affect in any material respect the interests of any BGS
Transition Bondholder or any counterparty under any Interest Rate Swap
Agreement and (ii) the Rating Agency Condition shall have been satisfied
with respect thereto;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor Trustee with respect to the BGS Transition Bonds
and to add to or change any of the provisions of this Indenture as shall
be necessary to facilitate the administration of the trusts hereunder by
more than one Trustee, pursuant to the requirements of Article VI;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or
58
under any similar federal statute hereafter enacted and to add to this
Indenture such other provisions as may be expressly required by the TIA;
(viii) to set forth the terms of any Series that has not theretofore
been authorized by a Supplemental Indenture, provided that the Rating
Agency Condition has been satisfied; or
(ix) to provide for any Interest Rate Swap Agreements with respect
to any Series or Class of BGS Transition Bonds which bears a floating
rate of interest or any Series or Class with specified credit
enhancement; provided, however, that:
(A) such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of
any BGS Transition Bondholder or any counterparty under any Interest
Rate Swap Agreement and
(B) the Rating Agency Condition shall have been satisfied with
respect thereto.
(b) The Trustee is hereby authorized to join in the execution of any such
Supplemental Indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
SECTION 9.2. Supplemental Indentures with Consent of BGS Transition
Bondholders.
(a) The Issuer and the Trustee, when authorized by an Issuer Order, also
may, upon satisfaction of the Rating Agency Condition (in each case,
accompanied by the form of the proposed supplemental indenture) and with the
consent of the Holders of not less than a majority of the Outstanding Amount
of the BGS Transition Bonds of each Series or Class to be affected, by Act of
such Holders delivered to the Issuer and the Trustee, enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Holders of the BGS
Transition Bonds under this Indenture; provided, however, that no such
Supplemental Indenture shall, without the consent of the Holder of each
Outstanding BGS Transition Bond of each Series or Class and each counterparty
under any Interest Rate Swap affected thereby:
(i) change the date of payment of any installment of principal of or
interest on any BGS Transition Bond, or reduce the principal amount
thereof, the interest rate thereon, change the provisions of the Interest
Rate Swap Agreement relating to the amount, calculation or timing of
payments, change the provisions of this Indenture and the related
applicable Supplemental Indenture or Series Supplement relating to the
application of collections on, or the proceeds of the sale of, the
Collateral to payment of principal of or interest on the BGS Transition
Bonds, or change the currency in which, any BGS Transition Bond or the
interest thereon is payable;
59
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due
on the BGS Transition Bonds on or after the respective due dates thereof;
(iii) reduce the percentage of the Outstanding Amount of the BGS
Transition Bonds or of a Series or Class thereof, the consent of the
Holders of which is required for any such Supplemental Indenture, or the
consent of the Holders of which is required for any waiver of compliance
with provisions of this Indenture or defaults hereunder and their
consequences provided for in this Indenture or modify or alter the
provisions of the proviso to the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the BGS
Transition Bonds required to direct the Trustee to direct the Issuer to
sell or liquidate the Collateral pursuant to Section 5.4 or to preserve
the Collateral pursuant to Section 5.5;
(v) reduce the percentage of the Outstanding Amount of a Series or
Class of BGS Transition Bonds, the consent of the Holders of which is
required for any amendments to the Sale Agreement, the Administration
Agreement, the Servicing Agreement or any Interest Rate Swap Agreement;
(vi) modify any of the provisions of this Indenture in such manner
so as to affect the amount of any payment of interest or principal
payable on any BGS Transition Bond on any Payment Date or change the
Expected Sinking Fund Amortization Schedules or Final Maturity Date of
any Series or Class of BGS Transition Bonds, or the method of calculation
of interest on any floating rate BGS Transition Bond;
(vii) decrease the Overcollateralization Amount or Required Capital
Amount with respect to any Series or the Scheduled Overcollateralization
Level with respect to any Payment Date;
(viii) modify or alter the provisions of this Indenture regarding
the voting of BGS Transition Bonds held by the Issuer, the Seller, an
Affiliate of either of them or any obligor on the BGS Transition Bonds;
(ix) decrease the percentage of the aggregate principal amount of
BGS Transition Bonds required to amend the sections of this Indenture
which specify the applicable percentage of the aggregate principal amount
of the BGS Transition Bonds necessary to amend this Indenture or any
other Basic Documents; or
(x) permit the creation of any Lien ranking prior to or on a parity
with the Lien of this Indenture with respect to any part of the
Collateral or, except as otherwise permitted or contemplated herein,
terminate the Lien of this Indenture on any property at any time subject
hereto or deprive the Holder of any BGS Transition Bond of the security
provided by the Lien of this Indenture.
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(b) It shall not be necessary for any Act of BGS Transition Bondholders
under this Section 9.2 to approve the particular form of any proposed
Supplemental Indenture, but it shall be sufficient if such Act shall approve
the substance thereof.
(c) Promptly after the execution by the Issuer and the Trustee of any
Supplemental Indenture pursuant to this Section 9.2, the Trustee shall mail to
the Holders of the BGS Transition Bonds to which such amendment or
Supplemental Indenture relates a notice setting forth in general terms the
substance of such Supplemental Indenture. Any failure of the Trustee to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such Supplemental Indenture.
SECTION 9.3. BPU Condition. Notwithstanding anything to the contrary in
Section 9.1 or 9.2, no Supplemental Indenture shall be effective except upon
satisfaction of the conditions precedent in this Section 9.3.
(a) At least fifteen days prior to the effectiveness of any such
Supplemental Indenture and after obtaining the other necessary approvals set
forth in Section 9.1 or 9.2, as applicable, except for the consent of the
Trustee and the Holders of the BGS Transition Bonds if the consent of the
Holders is required or sought by the Trustee in connection with such
supplemental indenture, the Seller shall have delivered to the BPU's executive
director and general counsel written notification of any proposed Supplemental
Indenture, which notification shall contain:
(i) a reference to Docket No. EF3070532;
(ii) an Officer's Certificate stating that the proposed Supplemental
Indenture has been approved by all parties to this Agreement or, if the
consent of the Holders of the BGS Transition Bonds is required or being
sought by the Trustee, that the Supplemental Indenture has been approved
by all parties to this agreement other than the Holders, subject to the
consent of the Holders; and
(iii) a statement identifying the person to whom the BPU or its
staff is to address any response to the proposed Supplemental Indenture
or to request additional time;
(b) If the BPU or its staff, within fifteen days (subject to extension as
provided in Section 9.3(c) below) of receiving a notification complying with
Section 9.3(a) above, shall have delivered to the office of the person
specified in Section 9.3(a)(iii) above a written statement that the BPU might
object to the proposed Supplemental Indenture, then such proposed Supplemental
Indenture shall not be effective unless and until the BPU subsequently
delivers a written statement in writing that it does not object to such
proposed Supplemental Indenture.
(c) If the BPU or its staff, within fifteen days of receiving a
notification complying with Section 9.3(a) above, shall have delivered to the
office of the person specified in Section 9.3(a)(iii) above a written
statement requesting an additional amount of time not to exceed thirty days in
which to consider such Supplemental Indenture, then such proposed Supplemental
Indenture shall not be effective if, within such extended period, the BPU
shall
61
have delivered to the office of the person specified in Section 9.3(a)(iii)
above a written statement as described in Section 9.3(b) above, unless and
until the BPU subsequently delivers a written statement in writing that it
does not object to such proposed Supplemental Indenture.
(d) If the BPU or its staff shall not have delivered written notice that
the BPU might object to such proposed Supplemental Indenture within the time
periods described in Section 9.3(b) or Section 9.3(c) above, whichever is
applicable, then the BPU shall be conclusively deemed not to have any
objection to the proposed Supplemental Indenture and such Supplemental
Indenture may subsequently become effective upon satisfaction of the other
conditions specified in Section 9.1 or 9.2.
(e) Following the delivery of a notice to the BPU by the Seller under
Section 9.3(a) above, the Seller and the Issuer shall have the right at any
time to withdraw from the BPU further consideration of a proposed Supplemental
Indenture.
SECTION 9.4. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any Supplemental Indenture
permitted by this Article IX or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Issuer Opinion of Counsel stating that the execution of such Supplemental
Indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such Supplemental Indenture that
affects the Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.5. Effect of Supplemental Indenture. Upon the execution of any
Supplemental Indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with
respect to each Series or Class of BGS Transition Bonds affected thereby, and
the respective rights, limitations of rights, obligations, duties, liabilities
and immunities under this Indenture of the Trustee, the Issuer, the Holders of
the BGS Transition Bonds and any counterparty under any Interest Rate Swap
Agreement shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the
terms and conditions of any such Supplemental Indenture shall be and be deemed
to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 9.6. Conformity with Trust Indenture Act. Every amendment of this
Indenture and every Supplemental Indenture executed pursuant to this Article
IX shall conform to the requirements of the TIA as then in effect so long as
this Indenture shall then be qualified under the TIA.
SECTION 9.7. Reference in BGS Transition Bonds to Supplemental
Indentures. BGS Transition Bonds authenticated and delivered after the
execution of any Supplemental Indenture pursuant to this Article IX may, and
if required by the Trustee shall, bear a notation in form approved by the
Trustee as to any matter provided for in such Supplemental Indenture. If the
Issuer or the Trustee shall so determine, new BGS Transition Bonds so modified
as to conform,
62
in the opinion of the Trustee and the Issuer, to any such Supplemental
Indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Trustee in exchange for Outstanding BGS Transition Bonds.
ARTICLE X
[RESERVED]
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Trustee (i) an Issuer Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Issuer Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have
been complied with and (iii) (if required by the TIA) an Independent
Certificate from a firm of certified public accountants meeting the applicable
requirements of this Section 11.1, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
(b) Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
63
SECTION 11.2. Form of Documents Delivered to Trustee.
(a) In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer
or Issuer Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer
or officers of the Servicer, the Seller or the Issuer, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Seller or the Issuer, unless such Authorized Officer or counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
(d) Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to
the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.3. Acts of BGS Transition Bondholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by BGS
Transition Bondholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such BGS Transition
Bondholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the BGS Transition Bondholders signing such
64
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and
the Issuer, if made in the manner provided in this Section 11.3.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of BGS Transition Bonds shall be proved by the BGS
Transition Bond Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any BGS Transition Bonds shall bind
the Holder of every BGS Transition Bond issued upon the registration thereof
or in exchange therefor or in lieu thereof, in respect of anything done,
omitted or suffered to be done by the Trustee or the Issuer in reliance
thereon, whether or not notation of such action is made upon such BGS
Transition Bond.
SECTION 11.4. Notices, etc., to Trustee, Issuer and Rating Agencies.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or Act of BGS Transition Bondholders or other documents provided or
permitted by this Indenture to be made upon, given or furnished to or filed
with:
(i) the Trustee by any BGS Transition Bondholder or by the Issuer,
or
(ii) the Issuer by the Trustee or by any BGS Transition Bondholder,
or
(iii) the BPU by the Seller, the Issuer or the Trustee,
shall be sufficient for every purpose hereunder if in English and in writing,
and sent by United States first-class mail, reputable overnight courier
service, facsimile transmission or electronic mail (confirmed by telephone,
United States first-class mail or reputable overnight courier service in the
case of notice by facsimile transmission or electronic mail) or any other
customary means of communication, and any such request, demand, authorization,
direction, notice, consent, waiver or Act shall be effective when delivered or
transmitted, or if mailed, five days after deposit in the United States
first-class mail with proper postage for first-class mail prepaid, in the case
of the Trustee, addressed to the Trustee at its Corporate Trust Office, and in
the case of the Issuer, addressed to: PSE&G Transition Funding II LLC, 00 Xxxx
Xxxxx, X-0X, Xxxxxx, Xxx Xxxxxx, 00000, Attention: Managers, and in the case
of the BPU, [To Come] or at any other address previously furnished in writing
to the Trustee by the Issuer or the BPU. The Issuer shall promptly transmit
any notice received by it from the BGS Transition Bondholders to the Trustee.
(b) Notices required to be given to the Rating Agencies by the Issuer,
the Trustee or a Manager shall be in writing, delivered personally, via
facsimile transmission, by reputable overnight courier or by first-class mail,
postage prepaid, to: (i) in the case of Moody's: Xxxxx'x Investors Service,
Inc., Attention: ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx,
00
Xxx Xxxx 00000; (ii) in the case of Standard & Poor's: Standard & Poor's
Corporation, 00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Asset Backed
Surveillance Department and (iii) in the case of Fitch: Fitch, Inc., 0 Xxxxx
Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ABS Surveillance.
SECTION 11.5. Notices to BGS Transition Bondholders; Waiver.
(a) Where this Indenture provides for notice to BGS Transition
Bondholders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and delivered by
first-class mail, postage prepaid, to each BGS Transition Bondholder affected
by such event, at the address of such BGS Transition Bondholder as it appears
on the BGS Transition Bond Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to BGS Transition Bondholders is given by mail, neither
the failure to mail such notice nor any defect in any notice so mailed to any
particular BGS Transition Bondholder shall affect the sufficiency of such
notice with respect to other BGS Transition Bondholders, and any notice that
is mailed in the manner herein provided shall conclusively be presumed to have
been duly given.
(b) Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by BGS Transition Bondholders shall be filed with
the Trustee but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such a waiver.
(c) In case it shall be impractical to deliver notice in accordance with
clause (a) of this Section 11.5 to the Holders of BGS Transition Bonds when
such notice is required to be given pursuant to any provision of this
Indenture, then any manner of giving such notice as shall be satisfactory to
the Trustee shall be deemed to be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default
or Event of Default.
SECTION 11.6. [Reserved].
SECTION 11.7. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the BGS Transition Bonds to the
contrary, the Issuer may enter into any agreement with any Holder of a BGS
Transition Bond providing for a method of payment, or notice by the Trustee or
any Paying Agent to such Holder, that is different from the methods provided
for in this Indenture for such payments or notices. The Issuer will furnish to
the Trustee a copy of each such agreement and the Trustee will cause payments
to be made and notices to be given in accordance with such agreements.
66
SECTION 11.8. Conflict with Trust Indenture Act.
(a) If any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this Indenture by any of
the provisions of the TIA, such required provision shall control.
(b) The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
SECTION 11.9. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.10. Successors and Assigns.
(a) All covenants and agreements in this Indenture and the BGS Transition
Bonds by the Issuer shall bind its successors and permitted assigns, whether
so expressed or not.
(b) All agreements of the Trustee in this Indenture shall bind its
successors.
(c) The Trustee shall provide prior notice to the Rating Agencies of any
assignment of the obligations under this Agreement.
SECTION 11.11. Severability. In case any provision in this Indenture or
in the BGS Transition Bonds shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 11.12. Benefits of Indenture. Nothing in this Indenture or in the
BGS Transition Bonds, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, and the BGS Transition
Bondholders, and any other party secured hereunder, and any other Person with
an ownership interest in any part of the Collateral, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 11.13. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the BGS Transition Bonds or this Indenture) payment need not be
made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the date on which nominally due, and
no interest shall accrue for the period from and after any such nominal date.
SECTION 11.14. GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
67
SECTION 11.15. Counterparts. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 11.16. Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Trustee on
the BGS Transition Bonds or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Member
or any Manager, employee or agent of the Issuer or (ii) any stockholder,
officer, director, employee or agent of the Trustee (it being understood that
none of the Trustee's obligations are in its individual capacity).
SECTION 11.17. No Petition. The Trustee, by entering into this Indenture,
and each BGS Transition Bondholder, by accepting a BGS Transition Bond, hereby
covenants and agrees (or shall be deemed to have covenanted and agreed) that
it shall not at any time institute against the Issuer, or join in the
institution against the Issuer of, or acquiesce, petition or otherwise invoke
or cause the Issuer to invoke the process of any court or 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.
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Indenture
to be duly executed and delivered by a Manager and an officer, respectively,
thereof, each thereunto duly authorized, all as of the day and year first
above written.
PSE&G TRANSITION FUNDING II LLC,
as Issuer
By: ________________________________________
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By: ________________________________________
Name:
Title:
68
APPENDIX A
MASTER DEFINITIONS
A-1
SCHEDULE I
SCHEDULED XXXXXXXXXXXXXXXXXXXXX XXXXXX
X-0
APPENDIX B
PSE&G TRANSITION FUNDING II LLC,
Issuer
and
THE BANK OF NEW YORK,
Trustee
--------------------------
2005-1 SERIES SUPPLEMENT
Dated as of _________, 2005
--------------------------
2005-1 SERIES SUPPLEMENT dated as of _________, 2005 (this "Supplement"),
by and between PSE&G TRANSITION Funding II 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
_________, 2005, 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 BGS 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 BGS Transition Bonds with
an initial aggregate principal amount of $[o ] to be known as the Issuer's BGS
Transition Bonds, Series 2005-1 (the "Series 2005-1 BGS Transition Bonds").
All acts and all things necessary to make the Series 2005-1 BGS 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 2005-1 BGS
Transition Bonds.
In order to secure the payment of principal of and interest on the Series
2005-1 BGS 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 2005-1 BGS 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
BGS 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 2005-1 BGS 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" shall mean $1,000 and integral multiples of
$1.00 above that amount, provided, however, that one BGS Transition Bond of
each Class may have a denomination of less than $1,000.
"Calculation Period" means, with respect to a Payment Date, the period
from and including the preceding Payment Date to but excluding such Payment
Date, or in the case of the first Calculation Period, from and including the
Series Issuance Date to but excluding the initial Payment Date.
"Expected Sinking Fund Amortization Schedule" means Schedule A to this
Supplement.
"Expected Final Payment Date" means, with respect to any Class of the
Series 2005-1 BGS Transition Bonds, the expected final Payment Date therefor,
as specified in Section 4 of this Supplement.
"Final Maturity Date" means, with respect to any Class of the Series
2005-1 BGS Transition Bonds, the final Payment Date thereof, as specified in
Section 4 of this Supplement.
"Interest Rate" has the meaning set forth in Section 4 of this
Supplement.
"Overcollateralization Amount" has the meaning set forth in Section 5(d)
of this Supplement.
"Payment Date" has the meaning set forth in Section 5(a) of this
Supplement.
"Rating Agency" means any Rating Agency (as defined in the Indenture)
rating the Series 2005-1 BGS Transition Bonds as of the Series Issuance Date.
"Record Date" shall mean, with respect to any Payment Date, the Business
Day prior to such Payment Date or, with respect to any Definitive BGS
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 2005-1 BGS Transition Bonds shall be
designated generally as the Issuer's BGS Transition Bonds, Series 2005-1, and
further denominated as [Class A-1, Class A-2 and Class A-3].
(b) Series Issuance Date. The Series 2005-1 BGS Transition Bonds that are
authenticated and delivered by the Trustee to or upon the order of the Issuer
on _________, 2005 (the "Series Issuance Date") shall have as their date of
authentication _________, 2005.
SECTION 4. Initial Principal Amount; Interest Rate; Expected Final
Payment Date; Final Maturity Dates.
The BGS Transition Bonds of each Class of the Series 2005-1 BGS
Transition Bonds shall have the initial principal amounts, bear interest at
the Interest Rates and have Expected Final Payment Dates and Final Maturity
Dates as set forth below:
2
Initial Expected Final Final
Class Principal Amount Interest Rate Payment Date Maturity Date
--------- ----------------- --------------- -------------- -------------
A-1 $ %
A-2 $ %
A-3 $ %
SECTION 5. Payment Dates; Expected Sinking Fund Amortization Schedule for
Principal; Interest; Overcollateralization Amount; Required Capital Amount.
(a) Payment Dates. The Payment Dates for each Class of the Series 2005-1
BGS Transition Bonds are ____________ 15 and ____________ 15 of each year or,
if any such date is not a Business Day, the next succeeding Business Day,
commencing on _____________ 15, 2005 and continuing until the earlier of
repayment of such Class in full and the applicable Final Maturity Date.
(b) Expected Sinking Fund Amortization Schedule for Principal. Unless an
Event of Default has occurred and is continuing and the unpaid principal
amount of all Series of BGS 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 2005-1 BGS Transition
Bondholders of record as of the related Record Date amounts payable in respect
of the Series 2005-1 BGS Transition Bonds pursuant to Section 8.02(g) of the
Indenture as principal, in accordance with the Expected Sinking Fund
Amortization Schedule. Notwithstanding the foregoing, if one or more Classes
did not receive principal on any prior Payment Date in accordance with the
Expected Sinking Fund Amortization Schedule, such shortfalls of principal
shall be paid prior to the payment of principal scheduled to be paid on the
current Payment Date and shall be paid in the order in which such amounts were
scheduled to be paid previously pursuant to the Expected Sinking Fund
Amortization Schedule; provided, however, that in no event shall a principal
payment pursuant to this Section 5(b) on any Class on a Payment Date be
greater than the amount that reduces the Outstanding Amount of such Class of
Series 2005-1 BGS Transition Bonds to the amount specified in the Expected
Sinking Fund Amortization Schedule for such Class and Payment Date.
(c) Interest. On each Payment Date after the initial Payment Date,
interest will be payable on the Series 2005-1 BGS Transition Bonds in an
amount equal to, with respect to the Series 2005-1 BGS Transition Bonds, Class
A-1, Class A-2 and Class A-3, the number of days (determined on the basis of a
360-day year of twelve 30-day months and assuming that the 15th day is also a
Business Day) from and including the preceding Payment Date to, but excluding,
the current Payment Date, divided by 360, times the product of:
(i) the applicable Interest Rate times
(ii) the Outstanding Amount of the related Class of Series 2005-1 BGS
Transition Bonds as of the close of business on the preceding Payment Date
after giving effect to all payments
3
of principal made to the Holders of the related Class of Series 2005-1
BGS Transition Bonds on such preceding Payment Date.
With respect to the initial Payment Date, interest will be payable in an
amount equal to, with respect to the Series 2005-1 BGS Transition Bonds, Class
A-1, Class A-2 and Class A-3 the number of days (determined on the basis of a
360-day year of twelve 30-day months) from and including the Series Issuance
Date to, but excluding, the initial Payment Date, divided by 360, times the
product of:
(i) the applicable Interest Rate for such Class times
(ii) the original principal amount of such Class of Series 2005-1 BGS
Transition Bonds as of the Series Issuance Date.
(d) Overcollateralization Amount. The Overcollateralization Amount for
the Series 2005-1 BGS Transition Bonds shall be as set forth in Schedule B
hereto.
(e) Required Capital Amount; Series 2005-1 Capital Subaccount. (i) The
Required Capital Amount for the Series 2005-1 BGS Transition Bonds shall be
$_____________.
(ii) Solely for tracing deposits to and withdrawals from the Series
2005-1 Capital Subaccount, the Series 2005-1 Capital Subaccount shall
comprise two sub-subaccounts, designated "Capital Subaccount - A" and
"Capital Subaccount - B". The original deposit to the Series 2005-1
Capital Subaccount in the amount of $___________ shall be deposited to
Capital Subaccount - A. No additional deposits shall be made to Capital
Subaccount - A. Any additional deposits to the Series 2005-1 Capital
Subaccount shall be made to Capital Subaccount - B. Any withdrawals from
the Series 2005-1 Capital Subaccount shall be made from Capital
Subaccount - B until no funds remain in Capital Subaccount - B and
thereafter shall be made from Capital Subaccount - A.
SECTION 6. Authorized Denominations. The Series 2005-1 BGS Transition
Bonds shall be issuable in the Authorized Denominations.
SECTION 7. Redemption. The Series 2005-1 BGS Transition Bonds shall not
be subject to mandatory or optional redemption.
SECTION 8. Credit Enhancement. No credit enhancement (other than the
Overcollateralization Amount, the Required Capital Amount and any adjustments
to the BGS Transition Bond Charge approved by the BPU as contemplated in the
Servicing Agreement) is provided for the Series 2005-1 BGS Transition Bonds.
SECTION 9. Trustee Policies. If at any time withdrawals from Capital
Subaccount - A of the Series 2005-1 Capital Subaccount exceed in the aggregate
$_________, the Issuer shall, upon the written request of the Trustee, within
thirty days after the date of such request, deliver to the Trustee and keep in
force until this Indenture ceases to be of any further effect, one or more
policies of insurance, surety bonds and/or letters of credit in the aggregate
face amount of $5,000,000, which policies, surety bonds and/or letters of
credit are sufficient to provide coverage for, and to ensure to the Trustee
the payment of, all amounts due and owing to the
4
Trustee under this Indenture (collectively, the "Trustee Policies"), subject
to reasonable commercial availability and provided that the premiums or fees
for the Trustee Policies shall not exceed $50,000 during any calendar year.
The terms and conditions of the Trustee Policies shall be in form and
substance reasonably acceptable to the Trustee and shall be issued by one or
more carriers or issuers reasonably acceptable to the Trustee.
SECTION 10. Delivery and Payment for the Series 2005-1 BGS Transition
Bonds; Form of the Series 2005-1 BGS Transition Bonds. The Trustee shall
deliver the Series 2005-1 BGS Transition Bonds to the Issuer when
authenticated in accordance with Section 2.02 of the Indenture. The Series
2005-1 BGS Transition Bonds of Class A-1, Class A-2 and Class A-3 shall be in
the form of Exhibit A hereto.
SECTION 11. Administration Fee. The Administrator shall be paid by the
Issuer a fee of $___________ on each Payment Date with respect to the Series
2005-1 BGS Transition Bonds.
SECTION 12. 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 13. 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 14. Governing Law. This 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 shall be determined in accordance with such laws.
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.
PSE&G TRANSITION FUNDING II LLC, as Issuer
By:
-----------------------------------------
Name:
Title: Manager
0
XXX XXXX XX XXX XXXX, not in its individual
capacity but solely as Trustee on behalf of
the BGS Transition Bondholders,
By:________________________________________
Name:
Title: Assistant Vice President
6
SCHEDULE A
Expected Sinking Fund Amortization Schedule
Scheduled Amortization Requirement
All amounts are in United States Dollars
Class A-1 Class A-2 Class A-3
Payment Date Balance Balance Balance
------------------ -------------- ----------------- ----------------
Closing
Schedule A-1
SCHEDULE B
Schedule of Overcollateralization Requirement
Overcollateralization Overcollateralization
Date Account Balance Date Account Balance
---------------- ---------------------- ------------- ----------------------
Schedule B-1
