EXECUTION COPY
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC,
Issuer
and
THE BANK OF NEW YORK,
Trustee
---------------------
INDENTURE
Dated as of December 19, 2002
---------------------
Securing Transition Bonds
Issuable in Series
TABLE OF CONTENTS
Article I DEFINITIONS AND INCORPORATION BY REFERENCE...........................2
Section 1.01. DEFINITIONS...................................................2
Section 1.02. INCORPORATION BY REFERENCE OF THE TRUST INDENTURE ACT.........2
Section 1.03. RULES OF CONSTRUCTION.........................................2
Article II THE TRANSITION BONDS................................................3
Section 2.01. FORM 3
Section 2.02. EXECUTION, AUTHENTICATION AND DELIVERY........................4
Section 2.03. DENOMINATIONS; TRANSITION BONDS ISSUABLE IN SERIES............4
Section 2.04. TEMPORARY TRANSITION BONDS....................................5
Section 2.05. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE...........6
Section 2.06. MUTILATED, DESTROYED, LOST OR STOLEN TRANSITION BONDS.........7
Section 2.07. PERSONS DEEMED OWNER..........................................8
Section 2.08. PAYMENT OF PRINCIPAL AND INTEREST; INTEREST ON OVERDUE
PRINCIPAL; PRINCIPAL AND INTEREST RIGHTS PRESERVED..........8
Section 2.09. CANCELLATION..................................................9
Section 2.10. AMOUNT; AUTHENTICATION AND DELIVERY OF TRANSITION BONDS.......9
Section 2.11. BOOK-ENTRY TRANSITION BONDS..................................14
Section 2.12. NOTICES TO CLEARING AGENCY...................................15
Section 2.13. DEFINITIVE TRANSITION BONDS..................................15
Article III COVENANTS.........................................................16
Section 3.01. PAYMENT OF PRINCIPAL AND INTEREST............................16
Section 3.02. MAINTENANCE OF OFFICE OR AGENCY..............................16
Section 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST.......................17
Section 3.04. EXISTENCE....................................................18
Section 3.05. PROTECTION OF COLLATERAL.....................................18
Section 3.06. OPINIONS AS TO COLLATERAL....................................18
Section 3.07. PERFORMANCE OF OBLIGATIONS...................................19
Section 3.08. NEGATIVE COVENANTS...........................................19
Section 3.09. ANNUAL STATEMENT AS TO COMPLIANCE............................20
Section 3.10. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS..........20
Section 3.11. SUCCESSOR OR TRANSFEREE......................................21
Section 3.12. NO OTHER BUSINESS............................................22
Section 3.13. NO BORROWING.................................................22
Section 3.14. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES............22
Section 3.15. CAPITAL EXPENDITURES.........................................22
Section 3.16. RESTRICTED PAYMENTS..........................................22
Section 3.17. NOTICE OF EVENTS OF DEFAULT..................................22
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Section 3.18. INSPECTION...................................................23
Section 3.19. [RESERVED]...................................................23
Section 3.20. SALE AGREEMENT, SERVICING AGREEMENT, ADMINISTRATION
AGREEMENT, HEDGE AGREEMENT AND INTEREST RATE SWAP
AGREEMENT COVENANTS........................................23
Section 3.21. TAXES........................................................26
Section 3.22. SEPARATE ENTITY..............................................26
Article IV SATISFACTION AND DISCHARGE; DEFEASANCE.............................26
Section 4.01. SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE..........26
Section 4.02. CONDITIONS TO DEFEASANCE.....................................28
Section 4.03. APPLICATION OF TRUST MONEY...................................30
Section 4.04. REPAYMENT OF MONEYS HELD BY PAYING AGENT.....................30
Article V REMEDIES............................................................30
Section 5.01. EVENTS OF DEFAULT............................................30
Section 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT...........31
Section 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE....................................................32
Section 5.04. REMEDIES.....................................................34
Section 5.05. OPTIONAL PRESERVATION OF THE COLLATERAL......................35
Section 5.06. LIMITATION OF PROCEEDINGS....................................35
Section 5.07. UNCONDITIONAL RIGHTS OF TRANSITION BONDHOLDERS TO RECEIVE
PRINCIPAL AND INTEREST.....................................36
Section 5.08. RESTORATION OF RIGHTS AND REMEDIES...........................36
Section 5.09. RIGHTS AND REMEDIES CUMULATIVE...............................36
Section 5.10. DELAY OR OMISSION NOT A WAIVER...............................36
Section 5.11. CONTROL BY TRANSITION BONDHOLDERS............................36
Section 5.12. WAIVER OF PAST DEFAULTS......................................37
Section 5.13. UNDERTAKING FOR COSTS........................................37
Section 5.14. WAIVER OF STAY OR EXTENSION LAWS.............................38
Section 5.15. ACTION ON TRANSITION BONDS...................................38
Article VI THE TRUSTEE........................................................38
Section 6.01. DUTIES AND LIABILITIES OF TRUSTEE............................38
Section 6.02. RIGHTS OF TRUSTEE............................................39
Section 6.03. INDIVIDUAL RIGHTS OF TRUSTEE.................................40
Section 6.04. TRUSTEE'S DISCLAIMER.........................................40
Section 6.05. NOTICE OF DEFAULTS...........................................40
Section 6.06. REPORTS BY TRUSTEE TO HOLDERS................................40
Section 6.07. COMPENSATION AND INDEMNITY...................................42
Section 6.08. REPLACEMENT OF TRUSTEE.......................................42
Section 6.09. SUCCESSOR TRUSTEE BY MERGER..................................43
Section 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE................44
Section 6.11. ELIGIBILITY; DISQUALIFICATION................................45
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Section 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE ISSUER.........45
Section 6.13. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE................45
Section 6.14. TRUSTEE ACTIONS IN CAPACITY OF REGISTRAR OR PAYING AGENT.....45
Article VII TRANSITION BONDHOLDERS' LISTS AND REPORTS.........................45
Section 7.01. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF TRANSITION
BONDHOLDERS................................................45
Section 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO TRANSITION
BONDHOLDERS................................................46
Section 7.03. REPORTS BY ISSUER............................................46
Section 7.04. REPORTS BY TRUSTEE...........................................47
Section 7.05. PROVISION OF SERVICER REPORTS................................47
Article VIII ACCOUNTS, DISBURSEMENTS AND RELEASES.............................47
Section 8.01. COLLECTION OF MONEY..........................................47
Section 8.02. COLLECTION ACCOUNT...........................................47
Section 8.03. RELEASE OF COLLATERAL........................................54
Section 8.04. ISSUER OPINION OF COUNSEL....................................54
Section 8.05. REPORTS BY INDEPENDENT ACCOUNTANTS...........................55
Article IX SUPPLEMENTAL INDENTURES............................................55
Section 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF TRANSITION
BONDHOLDERS................................................55
Section 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF TRANSITION
BONDHOLDERS................................................57
Section 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES.........................58
Section 9.04. EFFECT OF SUPPLEMENTAL INDENTURE.............................59
Section 9.05. CONFORMITY WITH TRUST INDENTURE ACT..........................59
Section 9.06. REFERENCE IN TRANSITION BONDS TO SUPPLEMENTAL INDENTURES.....60
Article X REDEMPTION OF TRANSITION BONDS......................................60
Section 10.01. OPTIONAL REDEMPTION BY ISSUER...............................60
Section 10.02. MANDATORY REDEMPTION BY ISSUER..............................60
Section 10.03. FORM OF REDEMPTION NOTICE...................................60
Section 10.04. PAYMENT OF REDEMPTION PRICE.................................61
Article XI MISCELLANEOUS......................................................61
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC...................61
Section 11.02. FORM OF DOCUMENTS DELIVERED TO TRUSTEE......................62
Section 11.03. ACTS OF TRANSITION BONDHOLDERS..............................63
Section 11.04. NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING AGENCIES.......63
Section 11.05. NOTICES TO TRANSITION BONDHOLDERS; WAIVER...................64
Section 11.06. NOTICES TO LUXEMBOURG STOCK EXCHANGE........................64
Section 11.07. ALTERNATE PAYMENT AND NOTICE PROVISIONS.....................65
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Section 11.08. CONFLICT WITH TRUST INDENTURE ACT...........................65
Section 11.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS....................65
Section 11.10. SUCCESSORS AND ASSIGNS......................................65
Section 11.11. SEVERABILITY................................................66
Section 11.12. BENEFITS OF INDENTURE.......................................66
Section 11.13. LEGAL HOLIDAYS..............................................66
Section 11.14. GOVERNING LAW...............................................66
Section 11.15. COUNTERPARTS................................................66
Section 11.16. ISSUER OBLIGATION...........................................66
Section 11.17. NO PETITION.................................................66
Section 11.18. PREFUNDING..................................................66
APPENDIX A MASTER DEFINITIONS
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INDENTURE, dated as of December 19, 2002, by and between ATLANTIC CITY
ELECTRIC TRANSITION FUNDING 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 Transition Bonds and
as agent for itself and any counterparty under any Interest Rate Swap Agreement
(the "Trustee").
The Issuer has duly authorized the execution and delivery of this Indenture
to provide for one or more Series of Transition Bonds, issuable as provided in
this Indenture. Each such Series of Transition Bonds will be issued only under a
separate Series Supplement to this Indenture duly executed and delivered by the
Issuer and the Trustee. The Issuer and the Trustee are entering into this
Indenture, and the Trustee is accepting the trusts created hereby, each for good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, and each intends to be legally bound hereby.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee as trustee for the benefit of (i)
the Holders of the Transition Bonds from time to time issued and outstanding,
(ii) the Trustee and (iii) any counterparty under any Interest Rate Swap
Agreement, a security interest in all of the Issuer's right, title and interest
whether now owned or hereafter acquired, in, to and under: (a) all Bondable
Transition Property, including without limitation the Bondable Transition
Property transferred by the Seller to the Issuer from time to time pursuant to
the Sale Agreement and all proceeds thereof; (b) the Sale Agreement; (c) all
Bills of Sale delivered by the Seller pursuant to the Sale Agreement; (d) the
Servicing Agreement; (e) the Administration Agreement; (f) any Interest Rate
Swap Agreement; (g) the Collection Account and all subaccounts thereof
(including without limitation the General Subaccount, each Series
Overcollateralization Subaccount, each Series Capital Subaccount, each Series
Reserve Subaccount, each Series Subaccount, any Class Subaccount and any
Defeasance Subaccount), and all cash, securities, instruments, investment
property or other assets deposited in or credited to the Collection Account or
any Subaccount from time to time or purchased with funds therefrom; (h) all
investment property and all other property of whatever kind owned from time to
time by the Issuer other than: (w) any cash released to any counterparty under
any Interest Rate Swap Agreement by the Trustee from any related Class
Subaccount pursuant to the provisions of this Indenture or any Series
Supplement, (x) any cash or other property released to the Issuer by the Trustee
from the Collection Account and any Subaccount, (y) any payment received by the
Issuer pursuant to any Hedge Agreement and (z) the proceeds from the sale of the
Transition Bonds used to pay (1) the costs of issuance of the Transition Bonds
and the Upfront Transaction Costs and Capital Reduction Costs (as such terms are
defined in the BPU Financing Orders), (2) any amount payable by the Issuer
pursuant to any Hedge Agreement and (3) the purchase price of the Bondable
Transition Property paid pursuant to the Sale Agreement; (i) all present and
future claims, demands, causes and choses in action in respect of any or all of
the foregoing; and (j) all payments on or under and all proceeds of every kind
and nature whatsoever in respect of any or all of the foregoing, including all
proceeds of its conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, general intangibles,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and other
forms of obligations and receivables, instruments and other property that at any
time constitute all or part of or are included in the proceeds of any of the
foregoing (collectively, the "Collateral"); provided that any Collateral in the
Collection Account applied in favor of or released to the Issuer in accordance
with Section 8.02 or any other provision of this Indenture or any Series
Supplement shall not be subject to the lien of this Indenture.
Such Grants are made to the Trustee to have and to hold in trust to secure
the payment of principal of, and interest on, and any other amounts owing in
respect of, the Transition Bonds and all fees, expenses, counsel fees and other
amounts due and owing to the Trustee and, if and to the extent provided in any
Series Supplement, any amounts due and owing to any counterparty under any
Interest Rate Swap Agreement (collectively, the "Secured Obligations"), equally
and ratably without prejudice, preference, priority or distinction, except as
expressly provided in this Indenture and to secure performance by the Issuer of
all of the Issuer's obligations under this Indenture with respect to the
Transition Bonds, all as provided in this Indenture.
The Trustee, as trustee on behalf of the Holders of the Transition Bonds,
and acting on behalf of itself and any counterparty under any Interest Rate Swap
Agreement acknowledges such Grant, accepts the trusts hereunder in accordance
with the provisions hereof and agrees to perform its duties herein required.
Article I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. DEFINITIONS. Capitalized terms used but not otherwise defined
in this Indenture have the respective meanings set forth in Appendix A hereto
unless the context otherwise requires.
Section 1.02. INCORPORATION BY REFERENCE OF THE TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. Each of the
following TIA terms used in this Indenture has the following meaning:
"Commission" means the U.S. Securities and Exchange Commission, and any
successor thereof.
"indenture securities" means the Transition Bonds.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule have the
meanings assigned to them by such definitions.
Section 1.03. RULES OF CONSTRUCTION.
(a) An accounting term not otherwise defined has the meaning assigned to it
in accordance with generally accepted accounting principles as in effect from
time to time;
(b) "including" means including without limitation, and "or" is used in the
inclusive sense;
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(c) with respect to terms defined in Appendix A hereto, words in the
singular include the plural and words in the plural include the singular, and
personal pronouns refer to all persons regardless of gender;
(d) unless otherwise specified, references herein to sections or articles
are to the sections or articles of this Indenture; and
(e) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
Article II
THE TRANSITION BONDS
Section 2.01. FORM. (a) The Transition Bonds and the Trustee's certificate
of authentication shall be in substantially the forms set forth in Exhibit A to
the related Series Supplement, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture or by the related Series Supplement and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the Manager of the Issuer
executing such Transition Bonds, as evidenced by such Manager's execution of
such Transition Bonds. Any portion of the text of any Transition Bond may be set
forth on the reverse thereof, with an appropriate reference thereto on the face
of the Transition Bond. Each Transition Bond shall be dated the date of its
authentication.
(b) The Transition Bonds shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the Manager executing such Transition
Bonds, as evidenced by such Manager's execution of such Transition Bonds.
(c) Each Transition Bond shall bear upon its face the designation so
selected for the Series and Class, if any, to which it belongs. The terms of all
Transition Bonds of the same Series shall be identical, unless such Series is
made up of more than one Class, in which case the terms of all Transition Bonds
of the same Class shall be identical.
(d) Each Transition Bond shall state that the Competition Act provides that
the State of New Jersey pledges and agrees with the holders of the Transition
Bonds that "the State will not limit, alter or impair any bondable transition
property or other rights vested in an electric public utility or an assignee or
pledgee thereof or a financing entity or vested in the holders of any transition
bonds pursuant to a bondable stranded costs rate order until such transition
bonds, together with the interest and acquisition or redemption premium, if any,
thereon, are fully paid and discharged or until such agreements are fully
performed on the part of the electric public utility, any assignee or pledgee
thereof or the financing entity or in any way limit, alter, impair or reduce the
value or amount of the bondable transition property approved by a bondable
stranded costs rate order".
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Section 2.02. EXECUTION, AUTHENTICATION AND DELIVERY. (a) The Transition
Bonds shall be executed on behalf of the Issuer by a Manager. The signature of
any such Manager on the Transition Bonds may be manual or facsimile.
(b) Transition Bonds bearing the manual or facsimile signature of
individuals who were at any time Managers shall bind the Issuer, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Transition Bonds.
(c) At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Transition Bonds executed on behalf of
the Issuer to the Trustee pursuant to an Issuer Order for authentication; and
the Trustee shall authenticate and deliver such Transition Bonds as in this
Indenture and such Issuer Order provided and not otherwise.
(d) No Transition Bond shall be entitled to any benefit under this
Indenture, or be valid or obligatory for any purpose, unless there appears on
such Transition Bond a certificate of authentication substantially in the form
provided for in the related Series Supplement executed by the Trustee by the
manual signature of one of its authorized signatories, and such certificate upon
any Transition Bond shall be conclusive evidence, and the only evidence, that
such Transition Bond has been duly authenticated and delivered hereunder.
(e) In the event that either (i) any of the Transition Bonds are listed on
the Luxembourg Stock Exchange and the rules and regulations of such exchange so
require or (ii) the Trustee no longer maintains an office in the Borough of
Manhattan, The City of New York, another Person may be appointed (in the case of
clause (i) pursuant to Section 3.02(b) and in the case of clause (ii) by the
Trustee with the consent of the Issuer) as authenticating agent, and upon such
appointment any such other Person shall be authorized hereunder on behalf of the
Trustee to authenticate and deliver Transition Bonds in accordance with the
terms hereof. Each reference in this Indenture to authentication by the Trustee
includes authentication by any such other Person, and each such agent shall have
the same rights as the Paying Agent and Transition Bond Registrar to deal with
the Issuer or any Affiliate thereof.
Section 2.03. DENOMINATIONS; TRANSITION BONDS ISSUABLE IN SERIES. (a) The
Transition Bonds of each Series shall be issuable as registered Transition Bonds
in the Authorized Denominations specified in the Series Supplement therefor.
(b) The Transition Bonds may, at the election of and as authorized by a
Manager and set forth in a Series Supplement, be issued in one or more Series
(each of which may be comprised of one or more Classes), and shall be designated
generally as the "Transition Bonds" of the Issuer, with such further particular
designations added or incorporated in such title for the Transition Bonds of any
particular Series or Class as a Manager may determine, as set forth in the
Series Supplement therefor.
(c) Each Series of Transition Bonds shall be created by a Series Supplement
authorized by a Manager and establishing the terms and provisions of such Series
and, if applicable, any Classes thereof. All Series and all Classes of each
Series shall have the same Payment Dates and Adjustment Dates. The several
Series and any Classes thereof may differ as between Series and Classes, in
respect of any of the following matters:
(i) designation of the Series and each Class thereof;
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(ii) the aggregate initial principal amount of the Transition Bonds of
the Series and each Class thereof;
(iii) the Interest Rate of the Series and each Class thereof or the
formula, if any, used to calculate the applicable Interest Rate or Interest
Rates for the Series and each Class thereof;
(iv) the Expected Final Payment Date of the Series and each Class
thereof;
(v) the Final Maturity Date of the Series and each Class thereof;
(vi) the Series Issuance Date of the Series;
(vii) the place or places for payments with respect to the Series and
each Class thereof;
(viii) the Authorized Denominations for the Series and each Class
thereof;
(ix) the provisions, if any, for redemption by the Issuer of the
Series and each Class thereof;
(x) the Expected Amortization Schedule for the Series and each Class
thereof;
(xi) the Overcollateralization Amount with respect to the Series for
each Payment Date through the Final Maturity Date thereof;
(xii) the Required Capital Amount with respect to the Series;
(xiii) the Calculation Dates;
(xiv) the credit enhancement, if any, applicable to the Series and
each Class thereof; and
(xv) any other terms of the Series or each Class that are not
inconsistent with the provisions of this Indenture.
Section 2.04. TEMPORARY TRANSITION BONDS. (a) Pending the preparation of
definitive Transition Bonds pursuant to Section 2.13, or in the case of
Transition Bonds held in a book-entry only system by a Clearing Agency, a
Manager may execute, and upon receipt of an Issuer Order the Trustee shall
authenticate and deliver, temporary Transition Bonds that are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the definitive Transition Bonds in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the Manager
executing such Transition Bonds may determine, as evidenced by such Manager's
execution of such Transition Bonds.
(b) If temporary Transition Bonds are issued, the Issuer shall cause
definitive Transition Bonds to be prepared without unreasonable delay except
where temporary Transition Bonds are held by a Clearing Agency. After the
preparation of definitive Transition Bonds, the temporary
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Transition Bonds shall be exchangeable for definitive Transition Bonds upon
surrender of the temporary Transition Bonds at the office or agency of the
Issuer to be maintained as provided in Section 3.02, without charge to any
Holder. Upon surrender for cancellation of any one or more temporary Transition
Bonds, a Manager shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like Series (and if applicable, Class) and aggregate initial
principal amount of definitive Transition Bonds in Authorized Denominations.
Until so exchanged, the temporary Transition Bonds shall in all respects be
entitled to the same benefits under this Indenture as definitive Transition
Bonds.
Section 2.05. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. (a)
The Issuer shall cause to be kept a register (the "Transition Bond Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Transition Bonds and the registration of
transfers of Transition Bonds. The Trustee shall be the registrar (the Trustee
or any successor thereof in such capacity, the "Transition Bond Registrar") for
the purpose of registering Transition Bonds and transfers of Transition Bonds as
herein provided. Upon any resignation of any Transition Bond Registrar, the
Issuer shall promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of Transition Bond Registrar.
(b) If a Person other than the Trustee is appointed by the Issuer as
Transition Bond Registrar, the Issuer shall give the Trustee and any transfer,
paying or listing agent of the Issuer appointed pursuant to Section 3.02(b)
prompt written notice of the appointment of such Transition Bond Registrar and
of the location, and any change in the location, of the Transition Bond
Register; the Trustee and any such agent shall have the right to inspect the
Transition Bond Register at all reasonable times and to obtain copies thereof;
and the Trustee and any such agent shall have the right conclusively to rely
upon a certificate executed on behalf of the Transition Bond Registrar by a duly
authorized officer thereof as to the names and addresses of the Holders of the
Transition Bonds and the original and Outstanding principal amounts and number
of such Transition Bonds (separately stated by Series and, if applicable,
Class).
(c) Upon surrender for registration of transfer of any Transition Bond at
the office or agency of the Issuer to be maintained as provided in Section 3.02,
a Manager on behalf of the Issuer shall execute, and the Trustee shall
authenticate and the Transition Bondholder shall obtain from the Trustee, in the
name of the designated transferee or transferees, one or more new Transition
Bonds in any Authorized Denominations, of a like Series (and, if applicable,
Class) and aggregate initial principal amount.
(d) At the option of the Holder, Transition Bonds may be exchanged for
other Transition Bonds of a like Series (and, if applicable, Class) and
aggregate initial principal amount in Authorized Denominations, upon surrender
of the Transition Bonds to be exchanged at the office or agency of the Issuer to
be maintained as provided in Section 3.02. Whenever any Transition Bonds are so
surrendered for exchange, a Manager on behalf of the Issuer shall execute, and
the Trustee shall authenticate and the Transition Bondholder shall obtain from
the Trustee, the Transition Bonds that the Transition Bondholder making the
exchange is entitled to receive.
(e) All Transition Bonds issued upon any registration of transfer or
exchange of Transition Bonds shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Transition Bonds surrendered upon such registration of
transfer or exchange.
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(f) Every Transition Bond presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an Eligible Guarantor Institution in the form set forth
in such Transition Bond.
(g) No service charge shall be made to a Holder for any registration of
transfer or exchange of Transition Bonds (except as may be required by the rules
and regulations of the Luxembourg Stock Exchange with respect to any Transition
Bonds listed thereon), but, other than in respect of exchanges pursuant to
Section 2.04 or 9.06 not involving any transfer, the Issuer may require payment
by such Holder of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or exchange
of Transition Bonds, including the fees and expenses of the Trustee.
(h) The preceding provisions of this Section 2.05 notwithstanding, except
to the extent otherwise required by the rules and regulations of the Luxembourg
Stock Exchange with respect to any Transition Bonds listed thereon, the Issuer
shall not be required to make, and the Transition Bond Registrar need not
register, transfers or exchanges of Transition Bonds selected for redemption or
transfers or exchanges of any Transition Bond for a period of 15 days preceding
the date on which final payment of principal is to be made with respect to such
Transition Bond.
Section 2.06. MUTILATED, DESTROYED, LOST OR STOLEN TRANSITION BONDS. (a) If
(i) any mutilated Transition Bond is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Transition Bond, and (ii) there is delivered to the Trustee such security or
indemnity as may be required by it to hold the Issuer and the Trustee harmless,
then, in the absence of notice to the Issuer, the Transition Bond Registrar or
the Trustee that such Transition Bond has been acquired by a protected
purchaser, a Manager on behalf of the Issuer shall execute, and upon a Manager's
written request the Trustee shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Transition Bond, a
replacement Transition Bond of like Series (and, if applicable, Class), tenor
and initial principal amount in Authorized Denominations, bearing a number not
contemporaneously outstanding; provided, however, that if any such destroyed,
lost or stolen Transition Bond, but not a mutilated Transition Bond, shall have
become or within seven days shall be due and payable, or shall have been called
for redemption, instead of issuing a replacement Transition Bond, the Issuer may
pay such destroyed, lost or stolen Transition Bond when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Transition Bond or payment of a destroyed, lost or stolen
Transition Bond pursuant to the proviso to the preceding sentence, a protected
purchaser of the original Transition Bond in lieu of which such replacement
Transition Bond was issued presents for payment such original Transition Bond,
the Issuer and the Trustee shall be entitled to recover such replacement
Transition Bond (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Transition Bond from such Person to whom such
replacement Transition Bond was delivered or any assignee of such Person, except
a protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer or the Trustee in connection therewith.
(b) Every replacement Transition Bond issued pursuant to this Section 2.06
in replacement of any mutilated, destroyed, lost or stolen Transition Bond shall
constitute an original additional contractual obligation of the Issuer, whether
or not the mutilated, destroyed, lost or stolen
7
Transition Bond shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Transition Bonds duly issued hereunder.
(c) The provisions of this Section 2.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Transition Bonds.
Section 2.07. PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Transition Bond, the Issuer, the Trustee and any
agent of the Issuer or the Trustee may treat the Person in whose name any
Transition Bond is registered (as of the day of determination) as the owner of
such Transition Bond for the purpose of receiving payments of principal of and
interest on such Transition Bond and for all other purposes whatsoever, whether
or not such Transition Bond be overdue, and neither the Issuer or the Trustee
nor any agent of the Issuer or the Trustee shall be affected by notice to the
contrary.
Section 2.08. PAYMENT OF PRINCIPAL AND INTEREST; INTEREST ON OVERDUE
PRINCIPAL; PRINCIPAL AND INTEREST RIGHTS PRESERVED. (a) The Transition Bonds
shall accrue interest as provided in the form of Transition Bond attached to the
Series Supplement for such Transition Bonds, at the applicable Interest Rate
specified therein, and such interest shall be payable on each Payment Date as
specified therein. Any installment of interest or principal payable on any
Transition Bond that is punctually paid or duly provided for by the Issuer on
the applicable Payment Date shall be paid to the Person in whose name such
Transition Bond (or one or more Predecessor Transition Bonds) is registered on
the Record Date for such Payment Date, in the manner specified in the related
Series Supplement, and if not specified therein, either (i) by check mailed
first-class, postage prepaid to such Person's address as it appears on the
Transition Bond Register on such Record Date or (ii) with respect to Transition
Bonds registered on such Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee to be Cede & Co.), payments shall be made by
wire transfer in immediately available funds to the account designated by such
nominee, except for the final installment of principal payable with respect to
such Transition Bond on a Payment Date, which shall be payable as provided in
clause (b) below. The funds represented by any such checks or other amounts
returned undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Transition Bond of each Series (and, if
applicable, Class) shall be payable in installments on each Payment Date
specified in the Expected Amortization Schedule included in the form of
Transition Bond attached to the Series Supplement for such Transition Bonds, but
only to the extent that moneys are available for such payment pursuant to
Section 8.02. Failure to pay in accordance with such Expected Amortization
Schedule because moneys are not so available pursuant to Section 8.02 to make
such payments shall not constitute a Default or Event of Default under this
Indenture. Notwithstanding the foregoing, the entire Outstanding principal
amount of the Transition Bonds of any Series or Class shall be due and payable,
if not previously paid, either: (i) on the Final Maturity Date therefor, (ii) on
the date on which the Transition Bonds of all Series have been declared
immediately due and payable in accordance with Section 5.02 or (iii) on the
Redemption Date, if any, therefor. The Trustee shall notify in writing the
Person in whose name a Transition Bond is registered, at the close of business
on the second Record Date preceding the Payment Date on which the Issuer expects
the final installment of principal of and interest on such Transition Bond to be
paid. Such notice shall be mailed no later than five days prior to such final
Payment Date, shall specify that such final installment of principal will be
payable only
8
upon presentation and surrender of such Transition Bond and shall specify the
place where such Transition Bond may be presented and surrendered for payment of
such installment, which, so long as any Transition Bonds are listed on the
Luxembourg Stock Exchange, shall include the office of the paying agent in
Luxembourg appointed pursuant to Section 3.02(b). The listing agent appointed
pursuant to Section 3.02(b) shall also arrange for such notice to be published
in an Authorized Newspaper not later than the fifth day of the month of the
expected payment of such final installment. Notices in connection with
redemptions of Transition Bonds shall also be mailed to Transition Bondholders
as provided in Section 10.03.
(c) If the Issuer defaults in a payment of interest on the Transition Bonds
of any Series or in the payment of any amount payable to any counterparty under
any Interest Rate Swap Agreement, the Issuer shall pay defaulted interest, plus
interest on such defaulted interest at the applicable Interest Rate in any
lawful manner. The Issuer may pay such defaulted interest to the Persons who, on
a subsequent special record date (which date shall be at least five Business
Days prior to the payment date), are Transition Bondholders at the rate
specified in the related Series Supplement. In addition, the Issuer may pay
amounts to any counterparty under any Interest Rate Swap Agreement, at the rate
specified in the related Interest Rate Swap Agreement. In the case of a default
in a payment of interest on the Transition Bonds of any Series, the Issuer shall
fix or cause to be fixed any such special record date and payment date, and, at
least 15 days before any such special record date, the Issuer shall mail to the
Trustee and to each affected Transition Bondholder a notice that states the
special record date, the payment date and the amount of defaulted interest to be
paid.
Section 2.09. CANCELLATION. All Transition Bonds surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver to the Trustee for
cancellation any Transition Bonds previously authenticated and delivered
hereunder that the Issuer may have acquired in any manner whatsoever, and all
Transition Bonds so delivered shall be promptly canceled by the Trustee. No
Transition Bonds shall be authenticated in lieu of or in exchange for any
Transition Bonds canceled pursuant to this Section 2.09, except as expressly
permitted by this Indenture. All canceled Transition Bonds may be held or
disposed of by the Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it; provided that such Issuer Order
is timely and the Transition Bonds have not been previously disposed of by the
Trustee.
Section 2.10. AMOUNT; AUTHENTICATION AND DELIVERY OF TRANSITION BONDS. (a)
The Issuer may at any time and from time to time issue hereunder Transition
Bonds of a new Series either as a Financing Issuance or a Refunding Issuance.
(b) Transition Bonds of a new Series may from time to time be executed by a
Manager on behalf of the Issuer and delivered to the Trustee for authentication,
and thereupon the same shall be authenticated and delivered by the Trustee upon
Issuer Request and upon delivery by the Issuer, at the Issuer's expense, to the
Trustee of the following:
(i) Issuer Action. An Issuer Order authorizing and directing the
authentication and delivery of the Transition Bonds by the Trustee and
specifying the principal amount of Transition Bonds to be authenticated.
9
(ii) Authorizing Certificate. A certified resolution of the Managers
authorizing the execution and delivery of the Series Supplement for the
Transition Bonds applied for and the execution, authentication and delivery
of such Transition Bonds.
(iii) Series Supplement. A Series Supplement for the Series of
Transition Bonds being issued, which shall set forth the provisions and
form of the Transition Bonds of such Series (and, if applicable, each Class
thereof).
(iv) Certificates of the Issuer and the Seller.
(A) An Issuer Officer's Certificate dated as of the Series
Issuance Date, stating:
(1) that no Default has occurred and is continuing under
this Indenture and that the issuance of the Transition Bonds
being issued will not result in any Default;
(2) that the Issuer has not assigned any interest or
participation in the Collateral except for the Grant contained in
this Indenture; that the Issuer has the power and authority to
Grant the Collateral to the Trustee as security hereunder; and
that the Issuer, subject to the terms of this Indenture, has
Granted to the Trustee a security interest in all right, title
and interest in, to and under the Collateral free and clear of
any Lien except the Lien of this Indenture;
(3) that the Issuer has appointed the firm of Independent
certified public accountants as contemplated in Section 8.05;
(4) that attached thereto are duly executed, true and
complete copies of the Sale Agreement and the Servicing
Agreement;
(5) that all financing statements with respect to the
Collateral which are required to be filed under the New Jersey
UCC, the Delaware UCC and the uniform commercial code of any
other jurisdiction by the terms of the Sale Agreement, the
Servicing Agreement or this Indenture have been or will be filed
as required; and
(6) that all conditions precedent provided in this Indenture
relating to the authentication and delivery of the Transition
Bonds have been complied with.
(B) An Officer's Certificate from the Seller, dated as of the
Series Issuance Date, to the effect that, with respect to the Bondable
Transition Property to be transferred to the Issuer on such date,
immediately prior to the conveyance thereof to the Issuer pursuant to
the Sale Agreement:
(1) the Seller was the sole owner of such Bondable
Transition Property and such ownership interest was perfected;
such Bondable Transition Property will be validly transferred and
sold to the Issuer free and
10
clear of all Liens (other than Liens created by the Issuer in
favor of the Trustee pursuant to this Indenture or by the Seller
in favor of the Issuer pursuant to the Sale Agreement) and such
transfer will be perfected; the Seller has the power and
authority to own, sell and assign such Bondable Transition
Property to the Issuer; the Seller has duly authorized such sale
and assignment to the Issuer; and the Seller's state of
incorporation is the State of New Jersey;
(2) the attached copy of the BPU Financing Order creating
such Bondable Transition Property is true and correct and such
order is in full force and effect; and
(3) the representations and warranties contained in Sections
3.08(b), (d)(iv), (d)(v) and (f)(i)-(iii) of the Sale Agreement
are true as if made on the date of conveyance of such Bondable
Transition Property.
(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,
substantially to the collective effect that:
(A) the Issuer has the power and authority to execute and deliver
the related Series Supplement and this Indenture and to issue the
Transition Bonds being issued, each of the related Series Supplement
and this Indenture and each of such Transition Bonds has been duly
authorized, executed and delivered, and the Issuer is duly organized,
is validly existing as a limited liability company and in good
standing under the laws of the jurisdiction of its organization and is
qualified to do business in any jurisdiction wherein it is required to
be so qualified;
(B) no authorization, approval or consent of any governmental
body is required for the valid issuance, authentication or delivery of
the Transition Bonds being issued, except for any such authorization,
approval or consent as has already been obtained and as may be
required under the blue sky and other securities laws of any state;
(C) the Transition Bonds being issued, when executed and
authenticated in accordance with the provisions of this Indenture and
delivered, will constitute valid and binding obligations of the Issuer
entitled to the benefits of this Indenture and the related Series
Supplement;
(D) the BPU Financing Order authorizing the issuance of the
Transition Bonds being issued is final and nonappealable;
(E) this Indenture (including the related Series Supplement) has
been duly authorized, executed and delivered and is a valid and
binding agreement of the Issuer, enforceable against the Issuer in
accordance with its terms except as such enforceability may be subject
to bankruptcy, insolvency, reorganization and other similar laws
affecting the rights of creditors generally and general principles of
equity
11
(regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(F) the Sale Agreement and Xxxx of Sale relating to such issuance
have been duly authorized, executed and delivered and is a valid and
binding agreement of the Seller, enforceable against the Seller in
accordance with its terms except as such enforceability may be subject
to bankruptcy, insolvency, reorganization and other similar laws
affecting the rights of creditors generally and general principles of
equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(G) the Servicing Agreement has been duly authorized, executed
and delivered and is a valid and binding agreement of the Servicer,
enforceable against the Servicer in accordance with its terms except
as such enforceability may be subject to bankruptcy, insolvency,
reorganization and other similar laws affecting the rights of
creditors generally and general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);
(H) each of the following is the case:
(1) the provisions of the Sale Agreement together with the
related Xxxx of Sale are effective to create, in favor of the
Issuer, a valid security interest (as such term is defined in
Section 1-201 of the New Jersey UCC) in the Seller's rights in
the Bondable Transition Property described in the Xxxx of Sale,
which security interest if characterized as a transfer for
security will secure the amount paid by the Issuer for such
Bondable Transition Property, it being noted that the term
"security interest" for purposes of this clause (H) includes both
a sale and a transfer for security of an account and no opinion
need be expressed as to the proper characterization of the
transfer of such Bondable Transition Property by the Seller to
the Issuer,
(2) the security interest in favor of the Issuer in such
Bondable Transition Property has been perfected, and
(3) no other security interest of any other creditor of the
Seller (other than the Lien created by the Seller in favor of the
Issuer pursuant to the Sale Agreement) is equal or prior to the
security interest of the Issuer in such Bondable Transition
Property;
(I) upon the giving of value by the Trustee to the Issuer with
respect to the Collateral,
(1) this Indenture creates in favor of the Trustee, to
secure payment of the Transition Bonds being issued, a valid
security interest in the rights of the Issuer in, to and under
that portion of the Collateral subject to Article 9 of the New
Jersey UCC or Article 9 of the Delaware UCC, including the
Transferred Bondable Transition Property (collectively, the
"Article 9 Collateral"),
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(2) upon filing of the related financing statements in
accordance with the New Jersey UCC and the Delaware UCC, such
security interest in the Article 9 Collateral will be perfected,
and
(3) based solely on a review of search reports under the New
Jersey UCC and the Delaware UCC and factual certificates of
officers of the Issuer and of ACE, no other security interest of
any other creditor of the Issuer is equal or prior to the
security interest of the Trustee for the benefit of the
Transition Bondholders in the Article 9 Collateral;
(J) this Indenture has been duly qualified under the Trust
Indenture Act and either the Series Supplement for the Transition
Bonds being issued, has been duly qualified under the Trust Indenture
Act or no such qualification of such Series Supplement is necessary;
(K) all instruments furnished to the Trustee hereunder conform to
the requirements of this Indenture and constitute all of the documents
required to be delivered hereunder for the Trustee to authenticate and
deliver such Transition Bonds being issued, and all conditions
precedent provided for in this Indenture relating to the
authentication and delivery of the Transition Bonds have been complied
with;
(L) either
(1) the registration statement covering the Transition Bonds
being issued is effective under the Securities Act of 1933 and,
to the best of such counsel's knowledge and information, no stop
order suspending the effectiveness of such registration statement
has been issued under the Securities Act of 1933 nor have
proceedings therefor been instituted or threatened by the
Commission or
(2) the Transition Bonds being issued are exempt from the
registration requirements under the Securities Act of 1933; and
(M) the Issuer is not now and, following the issuance of the
Transition Bonds will not be, required to be registered under the
Investment Company Act of 1940.
(vi) Accountant's Certificate or Opinion. A letter addressed to the
Issuer and the Trustee, complying with the requirements of Section 11.01,
of a firm of Independent certified public accountants of recognized
national reputation to the effect that (A) such accountants are Independent
with respect to the Issuer within the meaning of this Indenture and are
independent public accountants within the meaning of the standards of The
American Institute of Certified Public Accountants, and (B) with respect to
the Collateral, they have made such recalculations of calculations and
information provided by the Issuer as they have deemed necessary for the
purpose of determining, and have determined, that, based on the assumptions
used in calculating the Transition Bond Charge with respect to the related
Transferred Bondable Transition Property, and taking into account amounts
available as of the Series Issuance Date in the Subaccounts for each Series
(after giving effect to the issuance of such new Series and the application
of the proceeds therefrom), the Transition
13
Bond Charge will be sufficient to pay (1) assumed Operating Expenses when
incurred, plus (2) any amounts due under any Hedge Agreement, if any, or
any Interest Rate Swap Agreement, if any, when due, plus (3) any deposits
required to be made of Overcollateralization Amounts into the
Overcollateralization Subaccount for such new Series as set forth in the
related Series Supplement and any deposits required to be made of
Overcollateralization Amounts for then outstanding Series of Transition
Bonds, if any, as set forth in their respective overcollateralization
schedules, plus (4) interest on the Transition Bonds of such new Series at
their respective Interest Rates when due as set forth in the related Series
Supplement and on all then outstanding Series of Transition Bonds, if any,
when due, plus (5) principal of the Transition Bonds of such new Series in
accordance with the Expected Amortization Schedule set forth in the related
Series Supplement and of all then outstanding Series of Transition Bonds,
if any, in accordance with their respective Expected Amortization
Schedules, plus (6) any deposits required to be made in the Capital
Subaccounts for all then outstanding Series of Transition Bonds, if any,
and found such calculations to be mathematically correct.
(vii) Required Capital Amount. Evidence satisfactory to the Trustee
that the Required Capital Amount for such Series has been credited to the
Capital Subaccount for such Series.
(viii) Rating Agency Approval. Written notice from each Rating Agency
that such action will not result in a reduction or withdrawal of the then
current rating by such Rating Agency of any Outstanding Series or Class of
Transition Bonds.
(ix) Xxxx of Sale. If the issuance of an additional Series of
Transition Bonds is a Financing Issuance, the Xxxx of Sale delivered to the
Issuer under the Sale Agreement with respect to the Bondable Transition
Property being purchased with the proceeds of such Financing Issuance.
(x) Moneys for Refunding. If the issuance of a Series of Transition
Bonds is a Refunding Issuance, the amount of money necessary to pay the
outstanding principal balance of and interest on the Transition Bonds being
refunded to the Redemption Date for the Transition Bonds being refunded
upon redemption, such money to be deposited into a separate account with
the Trustee.
Section 2.11. BOOK-ENTRY TRANSITION BONDS. Unless otherwise specified in
the related Series Supplement, each Series of Transition Bonds, upon original
issuance, shall be issued in the form of a typewritten Transition Bond or
Transition Bonds representing the Book-Entry Transition Bonds, to be held by the
Trustee as custodian for The Depository Trust Company, the initial Clearing
Agency, except as otherwise provided in the DTC Agreement. Such Transition Bond
shall initially be registered on the Transition Bond Register in the name of
Cede & Co., the nominee of the initial Clearing Agency, and no Transition Bond
Owner shall receive a definitive Transition Bond representing such Transition
Bond Owner's interest in such Transition Bond except as provided in Section
2.13. Unless and until definitive, fully registered Transition Bonds (the
"Definitive Transition Bonds") have been issued to Transition Bondholders
pursuant to Section 2.13:
(a) the provisions of this Section 2.11 shall be in full force and effect;
14
(b) the Transition Bond Registrar and the Trustee shall be entitled to deal
with the Clearing Agency for all purposes of this Indenture (including the
payment of principal of and interest on the Transition Bonds and the giving of
instructions or directions hereunder) as the sole Holder of the Transition
Bonds, and shall have no obligation to the Transition Bond Owners;
(c) to the extent that the provisions of this Section 2.11 conflict with
any other provisions of this Indenture, the provisions of this Section 2.11
shall control;
(d) the rights of Transition Bond Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Transition Bond Owners and the Clearing Agency or the
Clearing Agency Participants. Pursuant to the DTC Agreement, unless and until
Definitive Transition Bonds are issued pursuant to Section 2.13, the initial
Clearing Agency shall make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and interest on
the Transition Bonds to such Clearing Agency Participants; and
(e) whenever this Indenture requires or permits actions to be taken based
upon instructions or directions of Holders of Transition Bonds evidencing a
specified percentage of the Outstanding Amount of the Transition Bonds or a
Series or Class thereof, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to such effect
from Transition Bond Owners or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial interest
in the Transition Bonds or such Series or Class and has delivered such
instructions to the Trustee.
Section 2.12. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Transition Bondholders is required under this Indenture,
unless and until Definitive Transition Bonds shall have been issued to
Transition Bond Owners pursuant to Section 2.13, the Trustee shall give all such
notices and communications specified herein to be given to Transition
Bondholders to the Clearing Agency and shall have no obligation to the
Transition Bond Owners.
Section 2.13. DEFINITIVE TRANSITION BONDS. (a) If (i) the Issuer advises
the Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities as depository with respect to any Series
or Class of Transition Bonds and the Issuer is unable to locate a qualified
successor, (ii) the Issuer, at its option, advises the Trustee in writing that
it elects to terminate the book-entry system through the Clearing Agency with
respect to any Series or Class of Transition Bonds or (iii) after the occurrence
of an Event of Default, Transition Bond Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the Transition
Bonds of all Series advise the Trustee through the Clearing Agency in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Transition Bond Owners, then the Clearing
Agency shall notify all affected Transition Bond Owners and the Trustee of the
occurrence of any such event and of the availability of Definitive Transition
Bonds to affected Transition Bond Owners requesting the same. Upon surrender to
the Trustee of the typewritten Transition Bond or Transition Bonds representing
the Book-Entry Transition Bonds by the Clearing Agency, accompanied by
registration instructions, a Manager on behalf of the Issuer shall execute and
the Trustee shall authenticate the Definitive Transition Bonds in accordance
with the instructions of the Clearing Agency. None of the Issuer, the Transition
Bond Registrar or the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Any Definitive
15
Transition Bonds listed on the Luxembourg Stock Exchange shall be made available
to the Transition Bond Owners through the office of the transfer agent appointed
pursuant to Section 3.02(b). Upon the issuance of Definitive Transition Bonds,
the Trustee shall recognize the Holders of the Definitive Transition Bonds as
Transition Bondholders.
(b) Definitive Transition Bonds shall be transferable and exchangeable at
the offices of the Transition Bond Registrar or, with respect to any Transition
Bonds listed on the Luxembourg Stock Exchange, at the offices of the transfer
agent appointed pursuant to Section 3.02(b). With respect to any transfer of
such listed Transition Bonds, the new Definitive Transition Bonds registered in
the names specified by the transferee and the original transferor shall be
available at the offices of such transfer agent.
Article III
COVENANTS
Section 3.01. PAYMENT OF PRINCIPAL AND INTEREST. The Issuer shall duly and
punctually pay the principal of and interest on the Transition Bonds in
accordance with the terms of the Transition Bonds and this Indenture; provided
that except on the Final Maturity Date or the Redemption Date for a Series or
Class of Transition Bonds or upon the acceleration of the Transition Bonds
pursuant to Section 5.02, the Issuer shall be obligated to pay the principal of
such Transition Bonds on each Payment Date therefor only to the extent moneys
are available for such payment pursuant to Section 8.02. Amounts properly
withheld under the Code by any Person from a payment to any Transition
Bondholder of interest or principal shall be considered as having been paid by
the Issuer to such Transition Bondholder for all purposes of this Indenture.
Section 3.02. MAINTENANCE OF OFFICE OR AGENCY. (a) The Issuer shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Transition Bonds may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Issuer in respect of the
Transition Bonds and this Indenture may be served. The Issuer hereby initially
appoints the Trustee to serve as its agent for the foregoing purposes. The
Issuer shall give prompt written notice to the Trustee and any agent appointed
pursuant to clause (b) below of the location and identity, and of any change in
the location or identity, of any such office or agency. If at any time the
Issuer shall fail to maintain any such office or agency or shall fail to furnish
the Trustee and each such agent with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office, and the
Issuer hereby appoints the Trustee as its agent to receive all such surrenders,
notices and demands.
(b) To the extent any of the Transition Bonds are listed on the Luxembourg
Stock Exchange and the rules of such exchange so require, (i) the Issuer shall
maintain in Luxembourg (A) an office and a transfer agent where Transition Bonds
may be surrendered for registration of transfer or exchange, (B) an office and a
listing agent where notices and demands to or upon the Issuer in respect of the
Transition Bonds and this Indenture may be served, and (C) an office and a
paying agent where payments in respect of the Transition Bonds may be made and
(ii) any reference in this Indenture to the office or agency of the Issuer
referenced in Section 3.02(a) or this Section 3.02(b) shall also refer to such
offices, and the transfer, listing and paying agents, of the Issuer in
Luxembourg, as applicable. The Issuer shall give the Trustee and any other agent
appointed under this Section 3.02(b) prompt written notice of the location and
identity, and of any change in the location or identity, of any such office or
agency.
16
Section 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST. (a) As provided in
Section 8.02(a), all payments of principal of and interest on the Transition
Bonds that are to be made from amounts withdrawn from the Collection Account
pursuant to Section 8.02(e) or Section 4.03 shall be made on behalf of the
Issuer by the Trustee or by another Paying Agent, and no amounts so withdrawn
from the Collection Account for payments of Transition Bonds shall be paid over
to the Issuer except as provided in this Section 3.03 and in Section 8.02.
(b) The Issuer shall cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section 3.03, that such Paying
Agent will:
(i) hold all sums held by it for the payment of principal of or
interest on the Transition Bonds in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided;
(ii) give the Trustee written notice of any Default by the Issuer (or
any other obligor upon the Transition Bonds) of which such Paying Agent has
actual knowledge in the making of any payment required to be made with
respect to the Transition Bonds;
(iii) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Trustee all sums held by such Paying Agent in trust for the payment of
Transition Bonds if at any time such Paying Agent ceases to meet the
standards required to be met by a Paying Agent at the time of its
appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Transition Bonds of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
(c) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such payment
by any Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
(d) Subject to applicable laws with respect to escheat of funds, any money
held by the Trustee or any Paying Agent in trust for the payment of any amount
of principal of or interest on any Transition Bond and remaining unclaimed for
two years after such amount has become due and payable shall be discharged from
such trust and be paid to the Issuer upon Issuer Order; and the Holder of such
Transition Bond shall thereafter, as an unsecured general creditor, look only to
the Issuer for payment thereof (but only to the extent of the amounts so paid to
the Issuer), and all liability of the Trustee or such Paying Agent with respect
to such trust money shall thereupon cease;
17
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 (if any Transition Bonds are listed on the Luxembourg Stock Exchange)
in an Authorized Newspaper, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
shall be repaid to the Issuer. The Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including mailing notice of such repayment to Holders whose
Transition Bonds have been called but have not been surrendered for redemption
or whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Trustee or of any Paying Agent, at the last
address of record for each such Holder).
Section 3.04. EXISTENCE. Subject to Section 3.10, the Issuer shall keep in
full effect its existence, rights and franchises as a limited liability company
under the laws of the State of Delaware (unless it becomes, or any successor
Issuer hereunder is or becomes, organized under the laws of the United States of
America or any state thereof, in which case the Issuer shall keep in full effect
its existence, rights and franchises under the laws of such jurisdiction) and
shall obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Transition Bonds, the Collateral and each
other instrument or agreement included herein or therein.
Section 3.05. PROTECTION OF COLLATERAL. (a) The Issuer shall from time to
time execute and deliver all such supplements and amendments hereto and all such
filings, financing statements, continuation statements, instruments of further
assurance and other instruments, and shall take such other action as may be
necessary or advisable to:
(i) maintain and preserve the Grant, Lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively the
purposes hereof;.
(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iii) enforce any of the Collateral, including any Interest Rate Swap
Agreement;
(iv) preserve and defend title to the Collateral and the rights of the
Trustee and the Transition Bondholders in the Collateral against the claims
of all Persons and parties; or
(v) pay any and all taxes levied or assessed upon all or any part of
the Collateral.
(b) The Issuer hereby designates the Trustee its agent and attorney-in-fact
to execute any filing with the BPU, financing statement, continuation statement
or other instrument required by the Trustee pursuant to this Section 3.05.
Section 3.06. OPINIONS AS TO COLLATERAL. (a) On or before March 31 in
each calendar year, while any Series is outstanding, commencing March 31, 2003,
the Issuer shall furnish to the Trustee an Issuer Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the execution and filing of any filings pursuant to the New Jersey
UCC and the Delaware UCC of financing statements and continuation statements as
is
18
necessary to maintain the Lien and security interest, and the priority thereof,
created by this Indenture and reciting the details of such action or stating
that in the opinion of such counsel no such action is necessary to maintain such
Lien and security interest, and the priority thereof. Such Issuer Opinion of
Counsel shall also describe the execution and filing of any filings pursuant to
the New Jersey UCC and Delaware UCC of financing statements and continuation
statements that will, in the opinion of such counsel, be required to maintain
the 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 the 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 Bondable
Transition Property and the proceeds thereof, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest.
Section 3.07. PERFORMANCE OF OBLIGATIONS. (a) The Issuer (i) shall
diligently pursue any and all actions to enforce its rights under each
instrument or agreement included in the Collateral and (ii) shall not take any
action and shall use its best efforts not to permit any action to be taken by
others that would release any Person from any of such Person's covenants or
obligations under any such instrument or agreement or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except, in
each case, as expressly provided in this Indenture, the Sale Agreement, the
Servicing Agreement, any other Basic Document, or any Hedge Agreement or
Interest Rate Swap Agreement.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to the Trustee in an Issuer Officer's Certificate shall be deemed to
be action taken by the Issuer. Initially, the Issuer has contracted with the
Administrator to assist the Issuer in performing its duties under this
Indenture.
(c) The Issuer shall punctually perform and observe all of its obligations
and agreements contained in the Sale Agreement, the Servicing Agreement, any
Hedge Agreement, any Interest Rate Swap Agreement and in all other instruments
and agreements included in the Collateral.
Section 3.08. NEGATIVE COVENANTS. The Issuer shall not:
(a) except as expressly permitted by this Indenture, any other Basic
Document or any Hedge Agreement or Interest Rate Swap Agreement, add, sell,
transfer, exchange or otherwise dispose of any of the Collateral, unless
directed to do so by the Trustee in accordance with Article V;
(b) claim any credit on, or make any deduction from the principal, interest
or premium, if any, payable in respect of, the Transition Bonds (other than
amounts properly withheld from such payments under the Code or pursuant to any
Interest Rate Swap Agreement) or assert any claim against any present or former
Transition Bondholder by reason of the payment of taxes levied or assessed upon
the Issuer; or
19
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the Lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenants or obligations with respect to the Transition Bonds under this
Indenture except as may be expressly permitted hereby, (ii) permit any Lien
(other than the Lien created by this Indenture) to be created on or extend to or
otherwise arise upon or burden the Collateral or any part thereof, any interest
therein or the proceeds thereof or (iii) permit the Lien of this Indenture not
to constitute a continuing valid first priority security interest in the
Collateral.
Section 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer shall deliver
to the Trustee, within 120 days after the end of each fiscal year of the Issuer
(commencing with the fiscal year 2002), an Issuer Officer's Certificate stating,
as to the Manager signing such Issuer Officer's Certificate, that
(a) a review of the activities of the Issuer during such fiscal year (or
relevant portion thereof) and of performance under this Indenture has been made
under such Manager's supervision; and
(b) to the best of such Manager's knowledge, based on such review, the
Issuer has complied with all conditions and covenants under this Indenture
throughout such fiscal year (or relevant portion thereof), or, if there has been
a default in complying with any such condition or covenant, describing each such
default and the nature and status thereof.
Section 3.10. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The
Issuer shall not consolidate or merge with or into any other Person or sell
substantially all of its assets to any other Person or dissolve, unless:
(a) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger or to whom substantially all of such assets are sold
shall be a Person organized and existing under the laws of the United States of
America or any state thereof and shall expressly assume by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the principal of, and interest
and premium if any on, all Transition Bonds and the performance or observance of
every agreement and covenant of this Indenture on the part of the Issuer to be
performed or observed, all as provided herein and in the applicable Series
Supplement or Series Supplements;
(b) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger or to whom substantially all of such assets are sold
shall expressly assume all obligations and succeed to all rights of the Issuer
under the Sale Agreement, the Administration Agreement, the Servicing Agreement,
any Hedge Agreement and any Interest Rate Swap Agreement pursuant to an
assignment and assumption agreement executed and delivered to the Trustee, in
form satisfactory to the Trustee;
(c) immediately after giving effect to such consolidation, merger or sale,
no Default or Event of Default shall have occurred and be continuing;
(d) the Rating Agency Condition shall have been satisfied with respect to
such consolidation, merger or sale;
20
(e) the Issuer shall have received an Issuer Opinion of Counsel (and shall
have delivered copies thereof to the Trustee) to the effect that such
consolidation, merger or sale will not have any material adverse tax consequence
to the Issuer or any Transition Bondholder, complies with this Indenture and all
of the conditions precedent herein relating to such transaction and will result
in the Trustee maintaining a continuing valid first priority security interest
in the Collateral;
(f) neither the Bondable Transition Property nor any of the BPU Financing
Orders nor the rights of the Seller, the Servicer or the Issuer under the
Competition Act or under any BPU Financing Order shall be impaired thereby; and
(g) any action as is necessary to maintain the Lien and security interest
created by this Indenture shall have been taken.
Section 3.11. SUCCESSOR OR TRANSFEREE. (a) Upon any consolidation or merger
of the Issuer in accordance with Section 3.10, the Person formed by or surviving
such consolidation or merger (if other than the Issuer) shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Person had been named as the
Issuer herein.
(b) Upon any sale by the Issuer of substantially all of its assets in a
sale that complies with Section 3.10, such party shall be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of such party with respect to the Transition Bonds and from every covenant and
agreement of the Sale Agreement, the Administration Agreement, the Servicing
Agreement, any other Basic Document, and any Hedge Agreement or Interest Rate
Swap Agreement to be observed or performed on the part of the Issuer.
21
Section 3.12. NO OTHER BUSINESS. The Issuer shall not engage in any
business other than purchasing and owning Bondable Transition Property, issuing
Transition Bonds from time to time, pledging its interest in the Collateral to
the Trustee under this Indenture in order to secure the Transition Bonds,
entering into the Basic Documents, any Hedge Agreement or Interest Rate Swap
Agreement and any other agreements relating to the Transition Bonds, performing
its obligations hereunder and thereunder and performing any other activities
that are necessary, suitable or convenient to accomplish these purposes or are
incidental thereto.
Section 3.13. NO BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Transition Bonds, obligations under any Hedge
Agreement or Interest Rate Swap Agreement or under any other credit enhancement
agreements, and except as otherwise contemplated by the Basic Documents.
Section 3.14. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except as
contemplated by the Basic Documents or any Hedge Agreement or Interest Rate Swap
Agreement, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person, other than any Eligible Investments.
Section 3.15. CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty) other than Bondable Transition Property purchased
from the Seller pursuant to, and in accordance with, the Sale Agreement.
Section 3.16. RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (a) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest in, or ownership security of, the
Issuer, (b) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or security or (c) set aside or otherwise segregate
any amounts for any such purpose; provided, however, that if no Event of Default
shall have occurred and be continuing or would otherwise result from such
payment, the Issuer may make, or cause to be made, any such dividends or
distributions to any owner of a beneficial interest in the Issuer or otherwise
with respect to any ownership or equity interest or security in or of the Issuer
using funds that either have been applied in favor of or released to the Issuer
in accordance with Section 8.02 or any other provision of this Indenture or any
Series Supplement or are otherwise not subject to the Lien of this Indenture, to
the extent that such dividends or distributions would not cause amounts on
deposit in the Capital Subaccount for any then outstanding Series of Transition
Bonds to fall below the Required Capital Amount with respect to such Series. The
Issuer shall not, directly or indirectly, make payments to or distributions from
the Collection Account except in accordance with this Indenture, the other Basic
Documents or any Hedge Agreement or Interest Rate Swap Agreement.
Section 3.17. NOTICE OF EVENTS OF DEFAULT. The Issuer shall deliver to the
Trustee, the Rating Agencies and (to the extent the rules and regulations of the
Luxembourg Stock Exchange so require) any agent in Luxembourg appointed pursuant
to Section 3.02(b) written notice
22
in the form of an Issuer Officer's Certificate of any Default or Event of
Default, its status and what action the Issuer is taking or proposes to take
with respect thereto within five Business Days after the occurrence thereof.
Section 3.18. INSPECTION. The Issuer shall, on reasonable prior notice,
permit any representative of the Trustee, during the Issuer's normal business
hours, to examine all the books of account, records, reports and other papers of
the Issuer, to make copies and extracts therefrom, to cause such books to be
audited annually by Independent certified public accountants, and to discuss the
Issuer's affairs, finances and accounts with the Issuer's officers, employees
and Independent certified public accountants, all at such reasonable times and
as often as may be reasonably requested. The Trustee shall, and shall cause its
representatives to, hold in confidence all such information except, upon notice
to the Issuer, to the extent that (i) disclosure of such information may be
required by law and all reasonable applications for confidential treatment are
unavailing or (ii) the Trustee may reasonably determine that disclosure of such
information is consistent with its obligations hereunder.
Section 3.19. [RESERVED].
Section 3.20. SALE AGREEMENT, SERVICING AGREEMENT, ADMINISTRATION
AGREEMENT, HEDGE AGREEMENT AND INTEREST RATE SWAP AGREEMENT COVENANTS. (a) The
Issuer shall take all lawful action to enforce its rights under the Sale
Agreement, the Servicing Agreement, the Administration Agreement, any Hedge
Agreement and any Interest Rate Swap Agreement and to compel or secure the
performance and observance by the Seller and the Servicer and any counterparty
under any Hedge Agreement and any Swap Agreement, of their respective
obligations to the Issuer under or in connection therewith in accordance with
the terms thereof. So long as no Event of Default occurs and is continuing, but
subject to Section 3.20(f), the Issuer may exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer under or in
connection with the Sale Agreement, the Servicing Agreement, the Administration
Agreement, any Hedge Agreement and any Interest Rate Swap Agreement.
(b) If an Event of Default occurs and is continuing, the Trustee may, and,
at the written direction of (i) with respect to the Sale Agreement, the
Servicing Agreement the Administration Agreement or any Hedge Agreement, the
Holders of a majority of the Outstanding Amount of the Transition Bonds of all
Series or (ii) with respect to any Interest Rate Swap Agreement, the Holders of
that percentage of the Outstanding Amount of the Transition Bonds of the related
Class specified in the related Series Supplement, shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller, the
Servicer, the Administrator or any counterparty under any Hedge Agreement or
Interest Rate Swap Agreement in connection with the Sale Agreement, the
Servicing Agreement, the Administration Agreement, such Hedge Agreement or such
Interest Rate Swap Agreement, as the case may be, including the right or power
to take any action to compel or secure performance or observance by, as the case
may be, the Seller, the Servicer, the Administrator, or such counterparty of
each of their respective obligations to the Issuer thereunder, and to give any
consent, request, notice, direction, approval, extension or waiver thereunder,
and any right of the Issuer to take any such action shall be suspended.
(c) With the consent of the Trustee, the Sale Agreement, the Servicing
Agreement and the Administration Agreement may be amended at any time and from
time to time, so long as the Rating Agency Condition is satisfied with respect
to such amendment, without the consent of the
23
Transition Bondholders or the counterparty under any Hedge Agreement or any
Interest Rate Swap Agreement. However, such amendment may not adversely affect
in any material respect (i) the interest of any Transition Bondholder without
the consent of the Holders of a majority of the Outstanding Amount of the
Transition Bonds of each Series or Class materially and adversely affected
thereby, or (ii) the interest of any counterparty under any Interest Rate Swap
Agreement without the consent of each such counterparty materially and adversely
affected thereby. Further, with the consent of the Trustee and the counterparty
under any Hedge Agreement or Interest Rate Swap Agreement, such Hedge Agreement
or Interest Rate Swap Agreement, as the case may be, may be amended at any time
and from time to time, so long as the Rating Agency Condition is satisfied with
respect to such amendment; provided, however, that no such amendment may
adversely affect in any material respect the interest of any Transition
Bondholder or any counterparty under any Hedge Agreement or Interest Rate Swap
Agreement without the consent of 66-2/3% of the Holders of the Outstanding
Amount of the Transition Bonds of each Series or Class and each such
counterparty materially and adversely affected thereby.
(d) If the Issuer, the Seller or the Servicer proposes to amend, modify,
waive, supplement, terminate or surrender, or agree to any amendment,
modification, waiver, supplement, termination, or surrender of, the terms of the
Sale Agreement, the Servicing Agreement, the Administration Agreement or any
Hedge Agreement or Interest Rate Swap Agreement, or propose to waive timely
performance or observance thereunder by the Seller, the Servicer or the relevant
counterparty, respectively, in each case in such a way as would materially and
adversely affect the interests of any Class of any Series of Transition
Bondholders or the counterparty under any Hedge Agreement or Interest Rate Swap
Agreement, the Issuer shall first notify the Rating Agencies of the proposed
amendment, modification, waiver, supplement, termination or surrender. Upon
satisfaction of the Rating Agency Condition with respect to such proposed
action, the Issuer shall notify the Trustee in writing, and the Trustee shall
notify the Transition Bondholders and each counterparty under such Hedge
Agreement or Interest Rate Swap Agreement, if applicable, in writing, of such
proposed action and that the Rating Agency Condition has been satisfied with
respect thereto. With respect to any such proposed action related to the Sale
Agreement, the Servicing Agreement or the Administration Agreement, the Trustee
shall consent to such proposed action only (i) with the written consent of the
Holders of a majority of the Outstanding Amount of the Transition Bonds of each
Class of each Series, and each counterparty under any Hedge Agreement or
Interest Rate Swap Agreement, in each case if such counterparty is materially
and adversely affected thereby and (ii) upon satisfaction of the Rating Agency
Condition. With respect to any such proposed action related to any Hedge
Agreement or Interest Rate Swap Agreement, the Trustee shall consent to such
proposed action only (x) with the written consent of the Holders representing
66-2/3% of the Outstanding Amount of the Transition Bonds of the related Series
or Class, as the case may be, and each counterparty under such Hedge Agreement
or Interest Rate Swap Agreement, as the case may be, materially and adversely
affected thereby and (y) upon satisfaction of the Rating Agency Condition with
respect to such action. If any such amendment, modification, supplement, waiver,
termination or surrender shall be so consented to by the Trustee or such
Holders, the Issuer shall execute and deliver, in its own name and at its own
expense, such agreements, instruments, consents and other documents as may be
necessary or appropriate in the circumstances. For so long as any of the
Transition Bonds are listed on the Luxembourg Stock Exchange and the rules of
that exchange so require, notice of such proposed action shall be published by
an agent to be appointed by the Issuer in an Authorized Newspaper promptly
following its effectiveness.
(e) If the Issuer or the Servicer proposes to amend, modify, waive,
supplement, terminate or surrender in any material respect, or to agree to any
material amendment, modification, waiver,
24
supplement, termination or surrender of, the Transition Bond Charge Adjustment
Process, the Issuer shall notify the Trustee in writing, and the Trustee shall
notify the Transition Bondholders in writing, of such proposal, and the Trustee
shall consent thereto only with the written consent of the Holders of a majority
of the Outstanding Amount of the Transition Bonds of each Series materially and
adversely affected thereby and only if the Rating Agency Condition has been
satisfied with respect thereto.
(f) Promptly following a default by, as applicable, the Seller, the
Servicer or a counterparty under the Sale Agreement, the Servicing Agreement,
any Hedge Agreement or any Interest Rate Swap Agreement, and at the Issuer's
expense, the Issuer shall take all such lawful actions as the Trustee may
request to compel or secure the performance and observance by the Seller, the
Servicer or such counterparty, as the case may be, of its obligations to the
Issuer thereunder or in connection therewith in accordance with the terms
thereof, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer thereunder or in connection therewith, to the
extent and in the manner directed by the Trustee, including the transmission of
notices of default on the part of the Seller, the Servicer or such counterparty,
as the case may be, thereunder and the institution of legal or administrative
actions or proceedings to compel or secure its performance of its obligations
thereunder.
(g) If the Issuer shall have actual knowledge of the occurrence of a
Servicer Default under the Servicing Agreement or an event of default,
termination event or downgrade event under any Hedge Agreement or Interest Rate
Swap Agreement, the Issuer shall promptly give written notice thereof to the
Trustee and the Rating Agencies, and shall specify in such notice what action,
if any, the Issuer is taking with respect to such default or other event.
(h) If a Servicer Default shall arise from the failure of the Servicer to
perform any of its duties or obligations under the Servicing Agreement with
respect to the Bondable Transition Property or the Transition Bond Charge, the
Issuer shall take all reasonable steps available to it to remedy such failure.
The Issuer shall not take any action to terminate the Servicer's rights and
powers under the Servicing Agreement following a Servicer Default without the
prior written consent of the Trustee and of the Holders of a majority of the
Outstanding Amount of the Transition Bonds of all Series.
(i) As promptly as possible after the giving of notice of termination to
the Servicer and the Rating Agencies of the Servicer's rights and powers
pursuant to Section 6.01 of the Servicing Agreement, the Trustee, with the
written consent of the Holders of Transition Bonds evidencing not less than a
majority of the Outstanding Amount of the Transition Bonds of all Series, may
appoint a successor Servicer (the "Successor Servicer"), and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Issuer and the Trustee. A person shall qualify as a Successor
Servicer only if such Person satisfies the requirements of Section 6.04 of the
Servicing Agreement. In connection with any such appointment, the Issuer may
make such arrangements for the compensation of such Successor Servicer as it and
such Successor Servicer shall agree, subject to the limitations set forth below
and in the Servicing Agreement, and in accordance with Section 6.04 of the
Servicing Agreement, the Issuer shall enter into an agreement with such
Successor Servicer for the servicing of the Bondable Transition Property (such
agreement to be in form and substance satisfactory to the Trustee).
(j) Upon termination of the Servicer's rights and powers pursuant to the
Servicing Agreement, the Trustee shall promptly notify the Issuer, the
Transition Bondholders and the Rating
25
Agencies of such termination. As soon as a Successor Servicer is appointed, the
Issuer shall notify the Trustee, the Transition Bondholders and the Rating
Agencies in writing of such appointment, specifying in such notice the name and
address of such Successor Servicer.
(k) The Issuer shall not take any action to terminate or assign the rights
and powers of any counterparty under any Interest Rate Swap Agreement or replace
any such counterparty following an event of default, termination event or
downgrade event under such Interest Rate Swap Agreement without (i) the prior
written consent of the Trustee and of any Holders of Transition Bonds whose
consent is required under the Series Supplement for the related Series and
Class, and (ii) satisfying any other requirements set forth in such Series
Supplement and Interest Rate Swap Agreement.
(l) Upon termination or assignment of the rights and powers of any
counterparty under any Interest Rate Swap Agreement pursuant to such Interest
Rate Swap Agreement, the Trustee shall promptly inform the Issuer, the
Transition Bondholders of the related Class and the Rating Agencies in writing
of such termination or assignment. As soon as a replacement counterparty is
appointed, the Issuer shall notify the Trustee, the Transition Bondholders of
the related Class and the Rating Agencies in writing of such appointment,
specifying in such notice the name and address of such replacement counterparty.
Section 3.21. TAXES. So long as any of the Transition Bonds are
outstanding, the Issuer shall pay all material taxes, assessments and
governmental charges imposed upon it or any of its properties or assets or with
respect to any of its franchises, business, income or property before any
penalty accrues thereon if the failure to pay any such taxes, assessments and
governmental charges would, after any applicable grace periods, notices or other
similar requirements, result in a Lien on the Collateral.
Section 3.22. SEPARATE ENTITY. The Issuer shall take all reasonable steps
to continue its identity as a separate legal entity and to make it apparent to
third persons that it is an entity with assets and liabilities distinct from
those of the Seller, other Affiliates or any other Persons.
Article IV
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 4.01. SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE. (a) The
Transition Bonds of any Series, all payment obligations with respect thereto and
this Indenture as it applies to such Series shall cease to be of further effect
and the Lien hereunder shall be released with respect to such Series, interest
shall cease to accrue on the Transition Bonds of such Series and the Trustee, on
written demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Transition Bonds of such Series, when:
(i) either
(A) all Transition Bonds of such Series theretofore authenticated
and delivered (other than (1) Transition Bonds that have been
destroyed, lost or stolen and that have been replaced or paid as
provided in Section 2.06 and (2) Transition Bonds for whose payment
money has theretofore been deposited in trust or
26
segregated and held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided in Section
3.03(d)) have been delivered to the Trustee for cancellation; or
(B) the Expected Final Payment Date or Redemption Date has
occurred with respect to all Transition Bonds of such Series not
theretofore delivered to the Trustee for cancellation, and the Issuer
has irrevocably deposited or caused to be irrevocably deposited with
the Trustee cash, in trust for such purpose, in an amount sufficient
to pay and discharge the entire indebtedness on such Transition Bonds
not theretofore delivered to the Trustee on the Expected Final Payment
Date or Redemption Date, as applicable, therefor;
(ii) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer with respect to such Series; and
(iii) the Issuer has delivered to the Trustee an Issuer Officer's
Certificate, an Issuer Opinion of Counsel and (if required by the TIA or
the Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.01 and
each stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture with respect to Transition
Bonds of such Series have been complied with.
(b) Subject to Sections 4.01(c) and 4.02, the Issuer at any time may
terminate (i) all its obligations under this Indenture with respect to the
Transition Bonds of any Series ("Legal Defeasance Option") or (ii) its
obligations under Sections 3.04, 3.05, 3.06 (other than with respect to amounts
in the Defeasance Subaccount), 3.07, 3.08, 3.09, 3.10, 3.12, 3.13, 3.14, 3.15,
3.16, 3.17, 3.18 and 3.20 and the operation of Section 5.01(d) ("Covenant
Defeasance Option") with respect to any Series of Transition Bonds. The Issuer
may exercise the Legal Defeasance Option with respect to any Series of
Transition Bonds notwithstanding its prior exercise of the Covenant Defeasance
Option with respect to such Series.
(c) If the Issuer exercises the Legal Defeasance Option with respect to any
Series, the maturity of the Transition Bonds of such Series may not be (i)
accelerated pursuant to Section 5.02 or (ii) except as provided in Section 4.02,
redeemed. If the Issuer exercises the Covenant Defeasance Option with respect to
any Series, the maturity of the Transition Bonds of such Series may not be
accelerated because of an Event of Default specified in Section 5.01(d).
(d) Upon satisfaction of the conditions set forth herein to the exercise of
the Legal Defeasance Option or the Covenant Defeasance Option with respect to
any Series of Transition Bonds, the Trustee, on written demand of and at the
expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of the obligations that are terminated pursuant to
such exercise.
(e) Notwithstanding Sections 4.01(a) and 4.01(b), (i) the rights of
registration of transfer and exchange, (ii) the rights of substitution of
mutilated, destroyed, lost or stolen Transition Bonds, (iii) the rights of
Transition Bondholders to receive payments of principal and interest, but only
from the amounts deposited with the Trustee for such payments, (iv) Sections
4.03 and 4.04, (v) the rights, obligations and immunities of the Trustee
hereunder (including the rights of the Trustee under Section 6.07 and the
obligations of the Trustee under Section 4.03) and (vi) the rights of Transition
27
Bondholders under this Indenture with respect to the property deposited with the
Trustee payable to all or any of them, shall survive until the Transition Bonds
of the Series as to which this Indenture or certain obligations hereunder have
been satisfied and discharged pursuant to Section 4.01(a) or 4.01(b) and have
been paid in full. Thereafter, the obligations in Sections 6.07 and 4.04 with
respect to such Series shall survive.
Section 4.02. CONDITIONS TO DEFEASANCE. (a) The Issuer may exercise the
Legal Defeasance Option or the Covenant Defeasance Option with respect to any
Series of Transition Bonds only if:
(i) the Issuer irrevocably deposits or causes to be deposited in trust
with the Trustee cash or U.S. Government Obligations for the payment of
principal of and interest and premium, if any, on such Series of Transition
Bonds to the Expected Final Payment Date or Redemption Date therefor, as
applicable, such deposit to be made in the Defeasance Subaccount for such
Series of Transition Bonds;
(ii) the Issuer delivers to the Trustee a certificate from a
nationally recognized firm of Independent accountants expressing its
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited cash without investment will provide cash at such times and in
such amounts (but, in the case of the Legal Defeasance Option only, not
more than such amounts) as will be sufficient to pay in respect of the
Transition Bonds of such Series (A) subject to clause (B), principal in
accordance with the Expected Amortization Schedule therefor, (B) if such
Series is to be redeemed, the Redemption Price therefor on the Redemption
Date therefor and (C) interest when due;
(iii) in the case of the Legal Defeasance Option, 95 days pass after
the deposit is made and during such 95 day period no Default specified in
Section 5.01(e) or 5.01(f) occurs that is continuing at the end of such
period; provided, however, that in determining whether a default under
Section 5.01(e) has occurred, the requirement that the decree or order
shall remain unstayed and in effect for 90 days shall be disregarded;
(iv) no Default has occurred and is continuing on the day of such
deposit and after giving effect thereto;
(v) in the case of the Legal Defeasance Option, the Issuer delivers to
the Trustee an Issuer Opinion of Counsel stating that (A) the Issuer has
received from, or there has been published by, the Internal Revenue Service
a ruling, or (B) since the date of execution of this Indenture, there has
been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the
Holders of the Transition Bonds of such Series will not recognize income,
gain or loss for federal income tax purposes as a result of the exercise of
such Legal Defeasance Option and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such legal defeasance had not occurred;
(vi) in the case of the Covenant Defeasance Option, the Issuer
delivers to the Trustee an Issuer Opinion of Counsel to the effect that the
Holders of the Transition Bonds of such Series will not recognize income,
gain or loss for federal income tax purposes as a result of the exercise of
such Covenant Defeasance Option and will be subject to federal income tax
28
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;
(vii) the Issuer delivers to the Trustee an Issuer Officer's
Certificate and an Issuer Opinion of Counsel, each stating that all
conditions precedent to the satisfaction and discharge of the Transition
Bonds of such Series to the extent contemplated by this Article IV have
been complied with; and
(viii) the Issuer has given ten Business Days' prior written notice to
the Rating Agencies.
(b) Notwithstanding any other provision of this Section 4.02 to the
contrary, no delivery of cash or U.S. Government Obligations to the Trustee
under this Section 4.02 shall terminate any obligations of the Issuer under this
Indenture with respect to any Transition Bonds that are to be redeemed prior to
the Expected Final Payment Date therefor until such Transition Bonds shall have
been irrevocably called or designated for redemption on a date thereafter on
which such Transition Bonds may be redeemed in accordance with the provisions of
this Indenture and either (i) proper notice of such redemption shall have been
given in accordance with the provisions of this Indenture or (ii) the Issuer
shall have given the Trustee, in form satisfactory to the Trustee, irrevocable
instructions to give, in the manner and at the times prescribed herein, notice
of redemption of such Series.
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Section 4.03. APPLICATION OF TRUST MONEY. All moneys or U.S. Government
Obligations deposited with the Trustee pursuant to Section 4.01 or 4.02 with
respect to any Series of Transition Bonds shall be held in trust in the
Defeasance Subaccount for such Series and applied by the Trustee, in accordance
with the provisions of the Transition Bonds and this Indenture, to the payment,
either directly or through any Paying Agent, as the Trustee may determine, to
the Holders of the particular Transition Bonds for the payment or redemption of
which such moneys or obligations, as the case may be, have been deposited with
the Trustee, of all sums due and to become due thereon for principal and
interest. Such moneys or obligations, as the case may be, shall be segregated
and held apart solely for paying such Transition Bonds, and such Transition
Bonds shall not be entitled to any amounts on deposit in the Collection Account
other than amounts on deposit in the Defeasance Subaccount for such Transition
Bonds.
Section 4.04. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection with
the satisfaction and discharge of this Indenture or the Covenant Defeasance
Option or Legal Defeasance Option with respect to the Transition Bonds of any
Series, all moneys then held by any Paying Agent other than the Trustee under
the provisions of this Indenture with respect to such Transition Bonds shall,
upon demand of the Issuer, be paid to the Trustee to be held and applied
according to Section 3.03 and thereupon such Paying Agent shall be released from
all further liability with respect to such moneys.
Article V
REMEDIES
Section 5.01. EVENTS OF DEFAULT. "Event of Default" wherever used herein
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest on any Transition Bond when the
same becomes due and payable and the continuation of such default for five
Business Days;
(b) default in the payment of the then unpaid principal of any Transition
Bond of any Series or Class on the Final Maturity Date therefor;
(c) default in the payment of the Redemption Price for any Transition Bond
on the Redemption Date therefor;
(d) default in the observance or performance of any covenant or agreement
of the Issuer made in this Indenture (other than a covenant or agreement, a
default in the observance or performance of which is specifically dealt with in
clause (a), (b) or (c) above), or any representation or warranty of the Issuer
made in this Indenture or in any certificate or other writing delivered pursuant
hereto or in connection herewith proving to have been incorrect in any material
respect as of the time when made, and any such default or materially incorrect
representation or warranty, as the case may be, shall continue or not be cured,
for a period of 30 days after the earlier of (i) the date on which there shall
have been given, by registered or certified mail, to the Issuer and the Trustee
by the Holders of at least 25% of the Outstanding Amount of the Transition Bonds
of any Series or Class, a written notice specifying such default or materially
incorrect representation or warranty, as the case may be, and requiring it to be
remedied and stating that such notice is a "Notice of Default"
30
hereunder and (ii) the date on which an officer of the Issuer has acquired
actual knowledge of the default;
(e) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of
the Collateral in an involuntary case or proceeding under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for the Issuer or for any substantial part of the
Collateral, or ordering the winding-up or liquidation of the Issuer's affairs,
and such decree or order shall remain unstayed and in effect for a period of 90
consecutive days;
(f) the commencement by the Issuer of a voluntary case or proceeding under
any applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Issuer to the entry of an order
for relief in an involuntary case under any such law, or the consent by the
Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for the Issuer or
for any substantial part of the Collateral, or the making by the Issuer of any
assignment for the benefit of creditors, or the failure by the Issuer generally
to pay its debts as such debts become due, or the taking of action by the Issuer
in furtherance of any of the foregoing; or
(g) any act or failure to act by the State of New Jersey or any of its
agencies (including the BPU), officers or employees that violates or is not in
accordance with the pledge and agreement of the State of New Jersey in Section
17.a. of the Competition Act.
Section 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. (a) If an
Event of Default (other than an Event of Default under Section 5.01(g)) occurs
and is continuing, then and in every such case either the Trustee or the Holders
of Transition Bonds representing not less than a majority of the Outstanding
Amount of the Transition Bonds of all Series may, but need not, declare all the
Transition Bonds to be immediately due and payable, by a notice in writing to
the Issuer (and to the Trustee if given by Transition Bondholders), and upon any
such declaration the unpaid principal amount of the Transition Bonds of all
Series, together with accrued and unpaid interest thereon through the date of
acceleration, shall become immediately due and payable.
(b) At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as contemplated hereafter in this Article V, the Holders
of Transition Bonds representing a majority of the Outstanding Amount of the
Transition Bonds of all Series, by written notice to the Issuer and the Trustee,
may rescind and annul such declaration and its consequences, provided that:
(i) the Issuer has paid or deposited with the Trustee, for deposit in
the General Subaccount of the Collection Account, a sum sufficient to pay
(A) all of the principal of, and interest and premium, if any, on
all Transition Bonds of all Series and all other amounts that would
then be due hereunder and under such Transition Bonds if the Event of
Default giving rise to such acceleration had not occurred; and
31
(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
(ii) all Events of Default, other than the nonpayment of the principal
of the Transition Bonds of all Series that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.12.
(c) No such rescission shall affect any subsequent Default or impair any
right consequent thereto.
Section 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. (a) The Issuer covenants that if (i) Default is made in the payment of
any interest on any Transition Bond when such interest becomes due and payable
and such Default continues for five Business Days, (ii) Default is made in the
payment of the then unpaid principal of any Transition Bond on the Final
Maturity Date therefor or (iii) Default is made in the payment of the Redemption
Price for any Transition Bond on the Redemption Date therefor, the Issuer shall,
upon demand of the Trustee, pay to it, for the benefit of the Holders of the
Transition Bonds of such Series, such amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee and its agents and counsel
and the whole amount then due and payable on such Transition Bonds for principal
and interest, with interest upon the overdue principal and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest, at the respective Interest Rate of such Series or the
applicable Class of such Series.
(b) In case the Issuer shall fail forthwith to pay the amounts specified in
clause (a) above upon such demand, the Trustee, in its own name and as trustee
of an express trust, may institute a Proceeding for the collection of the sums
so due and unpaid, and may prosecute such Proceeding to final judgment or
decree, and may enforce the same against the Issuer or other obligor upon such
Transition Bonds and collect in the manner provided by law out of the property
of the Issuer or other obligor upon such Transition Bonds, wherever situated,
the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Trustee may, as
more particularly provided in Section 5.04, in its discretion, proceed to
protect and enforce its rights and the rights of the Transition Bondholders, by
such appropriate Proceedings as the Trustee shall deem most effective to protect
and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Trustee by this Indenture or by law including foreclosing or
otherwise enforcing the Lien on the Bondable Transition Property securing the
Transition Bonds or applying to the BPU or a court of competent jurisdiction for
sequestration of revenues arising with respect to such Bondable Transition
Property.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Transition Bonds or any Person having or claiming an ownership
interest in the Collateral, Proceedings under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other
32
comparable judicial Proceedings relative to the Issuer or other obligor upon the
Transition Bonds, or to the creditors or property of the Issuer or such other
obligor, the Trustee, irrespective of whether the principal of any Transition
Bonds shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 5.03, shall be entitled and
empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Transition Bonds
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and
their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence or
bad faith) and of the Transition Bondholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Transition Bonds in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Transition Bondholders and of the Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee or the
Holders of Transition Bonds allowed in any judicial proceedings relative to
the Issuer, its creditors and its property; and any trustee, receiver,
liquidator, custodian or other similar official in any such Proceeding is
hereby authorized by each of such Transition Bondholders to make payments
to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Transition Bondholders, to pay to the
Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Trustee, each predecessor Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor
Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Transition Bondholder any plan of reorganization, arrangement, adjustment or
composition affecting the Transition Bonds or the rights of any Holder thereof
or to authorize the Trustee to vote in respect of the claim of any Transition
Bondholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Transition Bonds, may be enforced by the Trustee without the
possession of any of the Transition Bonds or the production thereof in any trial
or other Proceedings relative thereto, and any Proceedings instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
33
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Transition Bonds.
(g) In any Proceedings brought by the Trustee (and also any Proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Transition Bonds, and it shall not be necessary to make any
Transition Bondholder a party to any such Proceedings.
Section 5.04. REMEDIES. (a) If an Event of Default other than Section
5.01(g) occurs and is continuing, the Trustee may do one or more of the
following (subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on the Transition
Bonds or under this Indenture with respect thereto, whether by declaration
or otherwise, enforce any judgment obtained, and collect from the Issuer
and any other obligor upon such Transition Bonds moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the New Jersey
UCC, the Delaware UCC, the Competition Act or any other applicable law and
take any other appropriate action to protect and enforce the rights and
remedies of the Trustee and the Holders of the Transition Bonds;
(iv) sell the Collateral or any portion thereof or rights or interest
therein, at one or more public or private sales called and conducted in any
manner permitted by law; and
(v) exercise all rights, remedies, powers, privileges and claims of
the Issuer against, as applicable, the Seller, the Servicer, the
Administrator or any counterparty under, as the case may be, the Sale
Agreement, the Servicing Agreement, the Administration Agreement, any Hedge
Agreement or any Interest Rate Swap Agreement, as provided in Section
3.20(b);
provided, however, that the Trustee may not sell or otherwise liquidate any
portion of the Collateral following an Event of Default, other than an Event of
Default described in Section 5.01(a), 5.01(b) or 5.01(c), with respect to any
Series unless (A) the Holders of 100% of the Outstanding Amount of the
Transition Bonds of all Series consent in writing thereto, (B) the proceeds of
such sale or liquidation distributable to the Transition Bondholders of all
Series are sufficient to discharge in full all amounts then due and unpaid upon
such Transition Bonds for principal, interest and premium, if any, or (C) the
Trustee determines that the Collateral will not continue to provide sufficient
funds for all payments on the Transition Bonds of all Series as they would have
become due if the Transition Bonds had not been declared due and payable and the
Trustee obtains the consent of Holders of 66-2/3% of the Outstanding Amount of
the Transition Bonds of all Series. In determining such sufficiency or
insufficiency with respect to clauses (B) and (C) of this proviso, the Trustee
may, but need not, obtain and conclusively rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the
Collateral for such purpose. Upon any sale or other liquidation of the
Collateral or
34
any portion thereof, the Trustee shall apply the net proceeds of such sale or
liquidation in accordance with Section 8.02(e).
(b) If an Event of Default under Section 5.01(g) occurs and is continuing,
the Trustee, for the benefit of the Holders, shall be entitled and empowered to
the extent permitted by applicable law to institute or participate in
Proceedings reasonably necessary to compel performance of or to enforce the
pledge and agreement of the State of New Jersey in Section 17.a of the
Competition Act and to collect any monetary damages incurred by the Holders or
the Trustee as a result of any such Event of Default, and may prosecute any such
Proceeding to final judgment or decree. Such remedy shall be the only remedy
that the Trustee may exercise if the only Event of Default that has occurred and
is continuing is an Event of Default under Section 5.01(g).
Section 5.05. OPTIONAL PRESERVATION OF THE COLLATERAL. If the Transition
Bonds have been declared to be due and payable under Section 5.02 following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Trustee may, but need not, elect, as provided in
Section 5.11(c), to maintain possession of the Collateral and not sell or
liquidate the same. It is the desire of the parties hereto and the Transition
Bondholders that there be at all times sufficient funds for the payment of
principal of and interest on the Transition Bonds, and the Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Collateral or sell or liquidate the same. In determining whether to
maintain possession of the Collateral or sell or liquidate the same, the Trustee
may, but need not, obtain and conclusively rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the
Collateral for such purpose.
Section 5.06. LIMITATION OF PROCEEDINGS. No Holder of any Transition Bond
of any Series or Class shall have any right to institute any Proceeding,
judicial or otherwise, with respect to this Indenture (including under the
Competition Act or for the appointment of a receiver or trustee), or to
foreclose on the Bondable Transition Property or otherwise enforce the Lien on
the Collateral, or for any other remedy under this Indenture, unless:
(i) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount of the
Transition Bonds of all Series have made written request to the Trustee to
institute such Proceeding in respect of such Event of Default in its own
name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee security or
indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such Proceeding; and
(v) no direction inconsistent with such written request has been given
to the Trustee during such 60 day period by the Holders of a majority of
the Outstanding Amount of the Transition Bonds of all Series;
35
it being understood and intended that no one or more Holders of Transition Bonds
shall have any right in any manner whatever by virtue of, or by availing
themselves of, any provision of this Indenture to affect, disturb or prejudice
the rights of any other Holders of Transition Bonds or to obtain or to seek to
obtain priority or preference over any other Holders or to enforce any right
under this Indenture, except in the manner herein provided.
(b) In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Transition Bonds,
each representing less than a majority of the Outstanding Amount of the
Transition Bonds of all Series, the Trustee in its sole discretion may determine
what action, if any, shall be taken, notwithstanding any other provisions of
this Indenture.
Section 5.07. UNCONDITIONAL RIGHTS OF TRANSITION BONDHOLDERS TO RECEIVE
PRINCIPAL AND INTEREST. Notwithstanding any other provisions in this Indenture,
the Holder of any Transition Bond shall have the right, which is absolute and
unconditional and which shall not be impaired without the consent of such
Holder: (a) to receive payment of (i) the interest, if any, on such Transition
Bond on or after the due dates thereof expressed in such Transition Bond or in
this Indenture, (ii) the unpaid principal, if any, of such Transition Bonds on
or after the Final Maturity Date therefor and (iii) in the case of redemption,
the unpaid principal, if any, and interest, if any, on such Transition Bond on
or after the Redemption Date therefor; and (b) to institute suit for the
enforcement of any such payment.
Section 5.08. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Transition Bondholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or to
such Transition Bondholder, then and in every such case the Issuer, the Trustee
and the Transition Bondholders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the
Transition Bondholders shall continue as though no such Proceeding had been
instituted.
Section 5.09. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Trustee or to the Transition Bondholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.10. DELAY OR OMISSION NOT A WAIVER. No delay or omission of the
Trustee or any Transition Bondholder to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the Trustee
or to the Transition Bondholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Transition
Bondholders, as the case may be.
Section 5.11. CONTROL BY TRANSITION BONDHOLDERS. The Holders of a majority
of the Outstanding Amount of the Transition Bonds of all Series (or, if less
than all Series or Classes are affected, of the affected Series or Class or
Classes) shall have the right to direct the time,
36
method and place of conducting any Proceeding for any remedy available to the
Trustee with respect to the Transition Bonds of such Series or Class or Classes
or exercising any trust or power conferred on the Trustee with respect to such
Series or Class or Classes; provided that:
(a) such direction shall not be in conflict with any rule of law or with
this Indenture;
(b) subject to the express terms of Section 5.04, any direction to the
Trustee to sell or liquidate the Collateral shall be by the Holders of
Transition Bonds representing not less than 100% of the Outstanding Amount of
the Transition Bonds of all Series;
(c) if the conditions set forth in Section 5.05 have been satisfied and the
Trustee elects to retain the Collateral pursuant to such Section 5.05 and elects
not to sell or liquidate the same, then any direction to the Trustee by Holders
of Transition Bonds representing less than 100% of the Outstanding Amount of the
Transition Bonds of all Series to sell or liquidate the Collateral shall be of
no force and effect; and
(d) the Trustee may take any other action deemed proper by the Trustee that
is not inconsistent with such direction;
provided, further, that, subject to Section 6.01, the Trustee need not take any
action that it determines might involve it in liability for which it reasonably
believes it will not be reasonably satisfactorily indemnified against the costs,
expenses and liabilities that might be incurred by it in complying with this
request. The Trustee also need not take any action that it determines might
materially and adversely affect the rights of any Transition Bondholders not
consenting to such action.
Section 5.12. WAIVER OF PAST DEFAULTS. (a) Prior to the declaration of the
acceleration of the maturity of the Transition Bonds of all Series as provided
in Section 5.02, the Holders of not less than a majority of the Outstanding
Amount of the Transition Bonds of all Series may waive (by written notice to the
Issuer with a copy to the Trustee) any past Default or Event of Default and its
consequences except a Default (i) in payment of principal of, or interest or any
premium on, any of the Transition Bonds or (ii) in respect of a covenant or
provision hereof that cannot be modified or amended without the consent of all
Holders of Transition Bonds of all Series or Classes affected. In the case of
any such waiver, the Issuer, the Trustee and the Holders of the Transition Bonds
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other Default or impair any
right consequent thereto.
(b) Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
Section 5.13. UNDERTAKING FOR COSTS. All parties to this Indenture agree,
and each Holder of any Transition Bond by such Holder's acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 5.13 shall not
37
apply to (a) any suit instituted by the Trustee, (b) any suit instituted by any
Transition Bondholder, or group of Transition Bondholders, in each case holding
in the aggregate more than 10% of the Outstanding Amount of the Transition Bonds
of a Series or (c) any suit instituted by any Transition Bondholder for the
enforcement of the payment of (i) interest on any Transition Bond on or after
the due dates expressed in such Transition Bond and in this Indenture, (ii) the
unpaid principal, if any, of any Transition Bond on or after the Final Maturity
Date therefor or (iii) in the case of redemption, the unpaid principal of and
interest on any Transition Bond on or after the Redemption Date therefor.
Section 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
Section 5.15. ACTION ON TRANSITION BONDS. The Trustee's right to seek and
recover judgment on the Transition Bonds or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the Lien of this Indenture nor any
rights or remedies of the Trustee or the Transition Bondholders shall be
impaired by the recovery of any judgment by the Trustee against the Issuer or by
the levy of any execution under such judgment upon any portion of the Collateral
or upon any of the assets of the Issuer.
Article VI
THE TRUSTEE
Section 6.01. DUTIES AND LIABILITIES OF TRUSTEE. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) this clause (c) does not limit the effect of clause (b) of this
Section 6.01;
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(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to clauses (a), (b) and (c) of this Section 6.01.
(e) The Trustee shall not be liable for interest on any money received by
it except as provided in this Indenture or as the Trustee may agree in writing
with the Issuer.
(f) Money held in trust by the Trustee need not be segregated from other
funds held by the Trustee except to the extent required by law or the terms of
this Indenture, the Sale Agreement, the Servicing Agreement, any Hedge Agreement
or any Interest Rate Swap Agreement.
(g) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers,
if it shall have reasonable grounds to believe that repayments of such funds or
reasonably satisfactorily indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section 6.01 and to the provisions of the TIA.
(i) Under no circumstances shall the Trustee be liable for any indebtedness
of the Issuer, the Servicer or the Seller evidenced by or arising under the
Transition Bonds, any Basic Document or any Hedge Agreement or Interest Rate
Swap Agreement.
Section 6.02. RIGHTS OF TRUSTEE. (a) The Trustee may conclusively 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 any such document.
(b) Before the Trustee acts or refrains from acting, it may require an
Issuer Officer's Certificate or an Issuer Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on an Issuer Officer's Certificate or an Issuer Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent attorney, custodian, or nominee appointed with due care by it
thereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
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(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Transition Bonds shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
Section 6.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual
or any other capacity may become the owner or pledgee of Transition Bonds and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any agent in Luxembourg appointed pursuant to
Section 3.02(b) may do the same with like rights. However, the Trustee must
comply with Sections 6.11 and 6.12.
Section 6.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this Indenture
or the Transition Bonds. The Trustee shall not be accountable for the Issuer's
use of the proceeds from the Transition Bonds, and the Trustee shall not be
responsible for any statement of the Issuer in this Indenture or in any document
issued in connection with the sale of the Transition Bonds or in the Transition
Bonds other than the Trustee's certificate of authentication. The Trustee shall
not be responsible for the form, character, genuineness, sufficiency, value or
validity of any of the Collateral or for or in respect of the validity or
sufficiency of the Transition Bonds (other than the certificate of
authentication for the Transition Bonds), the Basic Documents or any Hedge
Agreement or Interest Rate Swap Agreement, and the Trustee shall in no event
assume or incur any liability, duty or obligation to any Holder of a Transition
Bond, in each case other than as expressly provided for in this Indenture. The
Trustee shall not be liable for the default or misconduct of the Issuer, the
Seller, the Servicer or the Member or any Manager under any Basic Document, any
Hedge Agreement or Interest Rate Swap Agreement or otherwise, or for the default
or misconduct of any counterparty under any Hedge Agreement or Interest Rate
Swap Agreement, and the Trustee shall have no obligation or liability to perform
the obligations of the Issuer.
Section 6.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing
with respect to any Class or Series and if it is actually known to a Responsible
Officer of the Trustee, the Trustee shall mail to each Rating Agency and to each
Holder of Transition Bonds of all Series notice of the Default within 90 days
after it occurs or, in the case of a Default that becomes an Event of Default
before the lapse of 90 days, as soon as practicable after such Default becomes
an Event of Default and is actually known by a Responsible Officer of the
Trustee. Except in the case of a Default in payment of principal of or interest
on any Transition Bond and subject to the requirements of the preceding
sentence, the Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that withholding the notice is
in the interests of Transition Bondholders.
Section 6.06. REPORTS BY TRUSTEE TO HOLDERS. (a) The Trustee shall deliver
to each Holder of Transition Bonds such information as may be required to enable
such Holder to prepare its federal and state income tax returns.
(b) With respect to each outstanding Series and Class of Transition Bonds,
on or prior to each Payment Date therefor, the Trustee shall prepare and deliver
a statement prepared by the Trustee to each Holder of Transition Bonds of such
Series and Class which shall include (to the extent applicable) information with
respect to total receipts for Transition Bond Charges, expenses paid, allocation
of net Transition Bond Charges among all Series and the following additional
information (and any other information so specified in the Series Supplement for
such Series) as to
40
the Transition Bonds of each outstanding Series and Class as of such Payment
Date or the period since the previous Payment Date, as specified:
(i) the amount paid to Holders of the Transition Bonds of such Series
and Class in respect of principal on such Payment Date; such amount to be
expressed as a dollar amount per thousand;
(ii) the amount paid to Holders of the Transition Bonds of such Series
and Class in respect of interest on such Payment Date; such amount to be
expressed as a dollar amount per thousand;
(iii) the Transition Bond Balance for such Series and Class as of such
Payment Date, after giving effect to the payments and deposits to be made
on such Payment Date and the projected Transition Bond Balance for such
Series and Class as of such Payment Date;
(iv) the amount on deposit in the Overcollateralization Subaccount for
such Series and the Scheduled Overcollateralization Level for such Series
as of such Payment Date, after giving effect to the payments and deposits
to be made on such Payment Date;
(v) the amount on deposit in the Capital Subaccount for such Series as
of such Payment Date, after giving effect to the payments and deposits to
be made on such Payment Date, and the required capital amount for such
Series;
(vi) the amount, if any, on deposit in the Reserve Subaccount for such
Series as of such Payment Date, after giving effect to the payments and
deposits to be made on such Payment Date and any amounts transferred from
the Reserve Subaccount of such Series to make payments on other Series
since the previous Payment Date;
(vii) the amount to be paid to each counterparty under any Hedge
Agreement or Interest Rate Swap Agreement on such Payment Date;
(viii) the amount paid to the Trustee since the previous Payment Date
to and including such Payment Date;
(ix) the amount paid to the Issuer since the previous Payment Date to
and including such Payment Date;
(x) the amount paid to the Servicer since the previous Payment Date to
and including such Payment Date;
(xi) the amount paid to the Administrator since the previous Payment
Date to and including such Payment Date;
(xii) the amount paid to the Independent Managers since the previous
Payment Date to and including such Payment Date; and
(xiii) any other transfers and payments made pursuant to this
Indenture since the previous Payment Date.
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(c) If any Transition Bonds are listed on the Luxembourg Stock Exchange and
the rules of such exchange so require, the listing agent appointed pursuant to
Section 3.02(b) shall arrange for publication in an Authorized Newspaper that
such statement shall be available with the Issuer's listing agent in Luxembourg
appointed pursuant to Section 3.02(b).
(d) The Trustee's responsibility for disbursing the information described
in clause (b) above to Holders of Transition Bonds is limited to the
availability, timeliness and accuracy of the information provided by the
Servicer pursuant to Section 3.05 and the Issuer Annex.
Section 6.07. COMPENSATION AND INDEMNITY. (a) The Issuer shall pay to the
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall reimburse the Trustee for all
reasonable out-of-pocket expenses, disbursements and advances incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Issuer shall indemnify and hold harmless the Trustee and its
officers, directors, employees and agents, from and against any and all costs,
damages, expenses, losses, liabilities or other amounts whatsoever (including
reasonable counsel fees and expenses) 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 such 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 an Event of
Default specified in Section 5.01(e) or 5.01(f) with respect to the Issuer, the
expenses are intended to constitute expenses of administration under Title 11 of
the United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
(d) The obligations of the Issuer under this Section 6.07 shall survive the
termination of this Indenture or the earlier resignation or removal of the
Trustee with respect to services, expenses and indemnifiable claims performed,
incurred or arising, as the case may be, prior to such termination or
resignation.
Section 6.08. REPLACEMENT OF TRUSTEE. (a) The Trustee may resign at any
time upon 30 days' prior written notice by so notifying the Issuer. The Issuer
may remove the Trustee with or without cause at any time, with prior notice to
the Rating Agencies, upon 30 days' prior written notice, and shall remove the
Trustee if:
(i) the Trustee fails to comply with Section 6.11;
42
(ii) the Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Trustee
or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
(b) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
hereinafter as the "Retiring Trustee"), the Issuer shall promptly appoint a
successor Trustee.
(c) The Holders of a majority in Outstanding Amount of the Transition Bonds
of all Series may remove the Trustee by so notifying the Issuer and the Trustee
in writing and such Holders may appoint a successor Trustee.
(d) A successor Trustee shall deliver a written acceptance of its
appointment to the Retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the Retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. No resignation or removal of the Trustee shall become effective until
the acceptance of the appointment by a successor Trustee. The successor Trustee
shall mail a notice of its succession to Transition Bondholders. The Retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee.
(e) If a successor Trustee does not take office within 60 days after the
Retiring Trustee resigns or is removed, the Retiring Trustee, the Issuer or the
Holders of a majority in Outstanding Amount of the Transition Bonds of all
Series may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(f) If the Trustee fails to comply with Section 6.11, any Transition
Bondholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(g) Notwithstanding the replacement of the Trustee pursuant to this Section
6.08, the Issuer's obligations under Section 6.07 shall continue for the benefit
of the Retiring Trustee.
Section 6.09. SUCCESSOR TRUSTEE BY MERGER. (a) If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association shall, without any further act be the successor Trustee. Notice of
any such event shall be promptly given by the successor Trustee to each Rating
Agency and any agent in Luxembourg appointed pursuant to Section 3.02(b).
(b) In case at the time such successor or successors by merger, conversion,
consolidation or transfer shall succeed to the trusts created by this Indenture
any of the Transition Bonds shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
Retiring Trustee, and deliver such Transition Bonds so authenticated; and in
case at that time any of the Transition Bonds shall not have been authenticated,
any successor to the Trustee may authenticate such Transition Bonds either in
the name of any Retiring Trustee hereunder or in the name of the successor to
the Trustee; and in all such cases such certificates shall have the
43
full force and effect granted by the Transition Bonds or by this Indenture and
this force and effect shall be equal to any certificate issued by the Trustee.
Section 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Collateral may at the time be located, the Trustee shall have the power
and may execute and deliver all instruments to appoint one or more Persons to
act as a co-trustee or co-trustees, or separate trustee or separate trustees, of
all or any part of the Collateral, and to vest in such Person or Persons, in
such capacity and for the benefit of the Transition Bondholders, such title to
the Collateral, or any part hereof, and, subject to the other provisions of this
Section 6.10, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 6.11 and no notice to the Transition Bondholders of the appointment of
any co-trustee or separate trustee shall be required under Section 6.08. Notice
of any such appointment shall be promptly given to each Rating Agency by the
Trustee.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Collateral or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Indenture and the conditions
of this Article VI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
44
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 THE ISSUER. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee that has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
Section 6.13. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The Trustee
hereby represents and warrants that:
(a) the Trustee is a banking corporation validly existing and 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.
Section 6.14. TRUSTEE ACTIONS IN CAPACITY OF REGISTRAR OR PAYING AGENT. In
the event that the Trustee is also acting in the capacity of Paying Agent or
Registrar hereunder, (i) the duties, obligations, standards of care and
liability imposed upon the Trustee under this Article VI and (ii) the rights,
protections, immunities and indemnities afforded to the Trustee under this
Article VI shall, as the case may be, be imposed upon or afforded to the Trustee
in its capacity as Paying Agent or Registrar.
Article VII
TRANSITION BONDHOLDERS' LISTS AND REPORTS
Section 7.01. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF TRANSITION
BONDHOLDERS. The Issuer shall furnish or cause to be furnished to the Trustee
(a) not more than five days after the earlier of (i) each Record Date with
respect to each Series and (ii) three months after the last Record Date with
respect to each Series, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Transition Bonds of such
Series as of such Record Date, (b) at such other times as the Trustee may
request in writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long
45
as the Trustee is the Transition Bond Registrar, no such list shall be required
to be furnished. In addition, the Issuer shall furnish such list to any listing,
transfer or paying agent appointed under Section 3.02(b) to the extent such
information is required by the rules and regulations of the Luxembourg Stock
Exchange.
Section 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO TRANSITION
BONDHOLDERS. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Transition
Bonds contained in the most recent list furnished to the Trustee as provided in
Section 7.01 and the names and addresses of Holders of Transition Bonds received
by the Trustee in its capacity as Transition Bond Registrar. The Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Transition Bondholders may communicate with other Transition
Bondholders pursuant to Section 312(b) of the TIA with respect to their rights
under this Indenture or under the Transition Bonds.
(c) The Issuer, the Trustee and the Transition Bond Registrar shall have
the protection of Section 312(c) of the TIA.
Section 7.03. REPORTS BY ISSUER. (a) The Issuer shall:
(i) file with the Trustee and, so long as any Transition Bonds are
listed on the Luxembourg Stock Exchange and its rules so require, with the
listing agent of the Issuer in Luxembourg appointed pursuant to Section
3.02(b), within 15 days after the Issuer is required to file the same with
the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and regulations
prescribe) that the Issuer may be required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee, the Commission and, so long as any
Transition Bonds are listed on the Luxembourg Stock Exchange, the listing
agent in Luxembourg appointed pursuant to Section 3.02(b), in accordance
with rules and regulations prescribed from time to time by the Commission
or the Luxembourg Stock Exchange, respectively, such additional
information, documents and reports with respect to compliance by the Issuer
with the conditions and covenants of this Indenture as may be required from
time to time by such rules and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by mail to
all Transition Bondholders described in TIA Section 313(c)) and, so long as
any Transition Bonds are listed on the Luxembourg Stock Exchange and its
rules so require, to the listing agent of the Issuer in Luxembourg
appointed pursuant to Section 3.02(b), such summaries of any information,
documents and reports required to be filed by the Issuer pursuant to
clauses (i) and (ii) of this Section 7.03(a) as may be required by rules
and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
46
Section 7.04. REPORTS BY TRUSTEE. (a) If required by TIA Section 313(a),
within 60 days after the end of each fiscal year of the Issuer, commencing with
the year after the issuance of the Transition Bonds of any Series, the Trustee
shall mail to each Holder of Transition Bonds of such Series as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Trustee also shall comply with TIA Section 313(b); provided,
however, that the initial report so issued shall be delivered not more than 12
months after the initial issuance of each Series.
(b) A copy of each report at the time of its mailing to Transition
Bondholders shall be filed by the Trustee with the Commission and each stock
exchange, if any, on which the Transition Bonds are listed (to the extent
required by the rules of such exchange). The Issuer shall notify the Trustee in
writing if and when the Transition Bonds are listed on any stock exchange.
Section 7.05. PROVISION OF SERVICER REPORTS. Upon the written request of
any Transition Bondholder to the Trustee addressed to the Corporate Trust
Office, the Trustee shall provide such Transition Bondholder with a copy of the
Issuer Officer's Certificate referred to in Section 3.05 of the Servicing
Agreement and the Annual Accountant's Report referred to in Section 3.06 of the
Servicing Agreement. If any Transition Bonds are listed on the Luxembourg Stock
Exchange and rules of such exchange so require, the listing agent appointed
pursuant to Section 3.02(b) shall also arrange for publication in an Authorized
Newspaper that a copy of such Issuer Officer's Certificate and such Annual
Accountant's Report shall be available with the Issuer's listing agent in
Luxembourg appointed pursuant to Section 3.02(b).
Article VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. COLLECTION OF MONEY. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Trustee pursuant to this Indenture. The Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Collateral,
the Trustee may take such action as may be appropriate to enforce such payment
or performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V.
Section 8.02. COLLECTION ACCOUNT. (a) (i) 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 accounts: a
general subaccount (the "General Subaccount"), an overcollateralization
subaccount for each Series of Transition Bonds (each, a "Series
Overcollateralization Subaccount" or "Overcollateralization Subaccount"), a
capital subaccount for each Series of Transition Bonds (each, a "Series Capital
Subaccount" or "Capital Subaccount"), a reserve subaccount for each Series of
Transition Bonds (each, a "Series Reserve Subaccount" or "Reserve Subaccount"),
a series subaccount for each Series of Transition Bonds (each, a "Series
Subaccount") and a class subaccount for any Class of any Series of Transition
Bonds that has a floating rate of interest if and as specified in the related
Series Supplement (each, a "Class
47
Subaccount"). On or prior to the Series Issuance Date for each Series issued
after the Series Issuance Date for the first Series issued hereunder, the Issuer
shall establish for such Series an additional Series Subaccount, a Series
Overcollateralization Subaccount, a Series Capital Subaccount, a Series Reserve
Subaccount and, if and as specified in the related Series Supplement, a Class
Subaccount for any Class of such Series that has a floating rate of interest,
each as Subaccounts of the Collection Account. Prior to depositing funds or U.S.
Government Obligations in the Collection Account pursuant to Section 4.01 or
4.02, the Issuer shall establish defeasance subaccounts (each, a "Defeasance
Subaccount") for each Series for which funds shall be deposited, as subaccounts
of the Collection Account. All amounts in the Collection Account not allocated
to any other Subaccount shall be allocated to the General Subaccount. Prior to
the initial Payment Date for the Series 2002-1 Transition Bonds, all amounts in
the Collection Account (other than funds deposited into the Capital Subaccount
for such Series, up to the Required Capital Amount) shall be allocated to the
General Subaccount. All payments received by the Trustee from any counterparty
under any Interest Rate Swap Agreement with respect to any Class of floating
rate Transition Bonds shall be deposited in the Class Subaccount, if any, for
such Class unless otherwise specified in the related Series Supplement. All
references to the Collection Account shall be deemed to include reference to all
subaccounts contained therein. Withdrawals from and deposits to each of the
foregoing subaccounts of the Collection Account shall be made as set forth in
Sections 4.01, 4.02, 4.03 and this Section 8.02. The Collection Account shall at
all times be an Eligible Securities Account and only the Trustee shall have
access to the Collection Account for the purpose of making deposits in and
withdrawals from the Collection Account in accordance with this Indenture. Funds
in the Collection Account shall not be commingled by the Issuer with any other
moneys, and shall not be commingled by the Trustee. All moneys deposited from
time to time in the Collection Account, all deposits therein pursuant to this
Indenture, and all investments made in Eligible Investments with such moneys,
including all income or other gain from such investments, shall be held by the
Trustee in the Collection Account as part of the Collateral as herein provided.
(ii) The Collection Account shall be a securities account and shall be
established only with a securities intermediary (as defined in Section
8-102(a)(14) of the New Jersey UCC) that agrees with the Trustee that (A)
the Collection Account shall be a securities account of the Trustee, (B)
all property credited to the Collection Account and each Subaccount
thereunder shall be treated as a financial asset, (C) such securities
intermediary shall treat the Trustee as entitled to exercise the rights
that comprise each financial asset credited to the Collection Account and
each Subaccount thereunder, (D) such securities intermediary shall comply
with entitlement orders originated by the Trustee without the further
consent of any other person or entity, (E) such securities intermediary
shall not agree with any person other than the Trustee to comply with
entitlement orders originated by such other person, (F) the Collection
Account, each Subaccount thereunder and all property credited to any of
them shall not be subject to any Lien, security interest, right of set-off
in favor of such securities intermediary or anyone claiming through it
(other than the Trustee), and (G) such agreement shall be governed by the
laws of the State of New Jersey. The Collection Account and each Subaccount
thereunder shall be under the control (within the meaning of Section 8-106
of the New Jersey UCC) of the Trustee. If at any time, the Collection
Account or any Subaccount thereunder ceases to be an Eligible Securities
Account and a Responsible Officer of the Trustee has actual knowledge of
such fact, the Trustee shall, within ten (10) days, establish a new
Collection Account or Subaccount, as the case may be, as an Eligible
Securities Account. Notwithstanding the foregoing provisions of this
Section 8.02(a)(ii) and without limiting the effect of Section 3.05, if
after the date hereof changes in applicable law or in accepted practices
for the maintenance and preservation of security
48
interests make it necessary or advisable to take specified action
supplemental to or in substitution for the aforementioned action in order
to maintain and preserve the Grant, Lien and security interest (including
the priority thereof) created by this Indenture with respect to the
Collection Account, any Subaccount thereunder or any of the Collateral held
therein or credited thereto, then the Issuer and the Trustee shall be
authorized to take such specified action, provided that the Issuer shall
furnish to the Trustee an Issuer Opinion of Counsel stating that, in the
opinion of such counsel, such specified action will not adversely affect
the Lien created by this Indenture.
(b) All or a portion of the funds in the Collection Account shall be
invested in Eligible Investments and, so long as no Default or Event of Default
has occurred and is continuing, shall be reinvested by the Trustee upon Issuer
Order; provided, however, that no funds in the Defeasance Subaccount for any
Series of Transition Bonds shall be invested in Eligible Investments or
otherwise, except that U.S. Government Obligations deposited by the Issuer with
the Trustee pursuant to Section 4.01 or 4.02 shall remain as such. Except as
provided in Section 8.02(e)(xii), all income or other gain from investments of
moneys deposited in the Collection Account shall be deposited by the Trustee in
the Collection Account, and any loss resulting from such investments shall be
charged to the Collection Account. The Issuer shall not direct the Trustee to
make any investment of any funds or to sell any investment held in the
Collection Account unless the security interest granted and perfected in such
account will continue to be perfected in such investment or the proceeds of such
sale, in either case without any further action by any Person, and, in
connection with any direction to the Trustee to make any such investment or
sale, if requested by the Trustee, the Issuer shall deliver to the Trustee an
Issuer Opinion of Counsel, acceptable to the Trustee, to such effect. Subject to
Section 6.01(c), the Trustee shall not in any way be held liable for the
selection of Eligible Investments or for investment losses incurred thereon
except for losses attributable to the Trustee's failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial capacity as
principal obligor and not as Trustee, in accordance with their terms. The
Trustee shall have no liability in respect of losses incurred as a result of the
liquidation of any Eligible Investment prior to its stated maturity or the
failure of the Issuer to provide timely written investment directions pursuant
to an Issuer Order (it being understood that investment directions may, at the
Issuer's election, be given either in the form of standing instructions to be
carried out in the absence of contrary instructions or in the form of
instructions to be carried out with respect to particular funds on deposit). The
Trustee shall have no obligation to invest or reinvest any amounts held
hereunder in the absence of written investment direction pursuant to an Issuer
Order; provided, however, that if (i) the Issuer shall have failed to give
investment directions for any funds on deposit in the Collection Account to the
Trustee by 11:00 a.m. (prevailing New York City time) (or such other time as may
be agreed by the Issuer and Trustee) on any Business Day, or (ii) a Default or
Event of Default shall have occurred and be continuing but the Transition Bonds
shall not have been declared due and payable pursuant to Section 5.02, then the
Trustee shall, to the fullest extent practicable, invest and reinvest funds in
the Collection Account in one or more Eligible Investments of the kind described
in clause (d) of the definition thereof.
(c) Any TBC Collections remitted by the Servicer to the Trustee, any
Indemnity Amounts remitted to the Trustee by the Seller or the Servicer or
otherwise received by the Trustee or the Issuer, any other proceeds of
Collateral received by the Servicer, the Issuer or the Trustee, and any amounts
paid by any counterparty under any Hedge Agreement or Interest Rate Swap
Agreement received by the Servicer, the Issuer or the Trustee, shall be
deposited in the General Subaccount.
49
(d) Monthly, by 12:00 noon (prevailing New York City time) on the 20th day
of each calendar month (other than a month in which a Payment Date occurs), or
if such day is not a Business Day, the next Business Day thereafter, beginning
January 20, 2003 (each, a "Monthly Fee Disbursement Date"), the Trustee shall,
at the written direction of the Servicer, apply all amounts on deposit into the
General Subaccount and, if and to the extent necessary and available, any
investment earnings on the subaccounts in the Collection Account (other than the
Series Capital Subaccounts) in the following priority:
(i) to the Trustee, the fee owed to the Trustee for all Series for
such month and any unpaid monthly trustee fees for prior months, plus any
expenses payable to the Trustee hereunder, including legal fees and
expenses and Indemnity Amounts (provided that Indemnity Amounts shall be
limited to $10,000,000 in the aggregate for all Payment Dates and Monthly
Fee Disbursement Dates with respect to all Series, unless the payment of
any additional amounts shall satisfy the Rating Agency Condition), and any
other amounts due and owing to the Trustee pursuant to the Basic Documents
for such month;
(ii) to the Issuer, the monthly fees for the Independent Managers and
any unpaid monthly Independent Manager fees for prior months;
(iii) to the Servicer, the Monthly Servicing Fee and any unpaid
Monthly Servicing Fees for prior months;
(iv) to the Administrator, the monthly administration fee payable
under the Administration Agreement and any unpaid monthly Administrator
fees for prior months;
(v) to the Persons entitled thereto (or, to the extent such Persons
have already been paid by the Issuer, to the Issuer), so long as no Event
of Default has occurred and is continuing or would be caused by such
payment, all Operating Expenses other than those described in clauses (i)
through (iv) above (up to an aggregate amount of $100,000 for all Series
under this clause (v) and Section 8.02(e)(v) for each quarterly interest
period ending in a Payment Date) including all current and past due
amounts.
Of the total amount applied on any Monthly Fee Disbursement Date pursuant to
each of clauses (i) through (v) of this Section 8.02(d), each outstanding Series
of Transition Bonds shall be deemed to have paid, pursuant to each such clause,
a portion of such total amount equal to the product of (A) the total amount
applied pursuant to such clause on such date times (B) the fraction (x) whose
numerator is the principal amount of Transition Bonds of such Series as of the
immediately preceding Payment Date and (y) whose denominator is the aggregate
principal amount of Transition Bonds of all Series as of the immediately
preceding Payment Date. In addition, if on any Monthly Fee Disbursement Date
amounts available in the general subaccount of the Collection Account (including
available investment earnings in the subaccounts (other than the Capital
Subaccounts) of the Collection Account) are insufficient to pay a Series' share
of the monthly fees and expenses listed in clauses (i) through (v) of this
Section 8.02(d), the Trustee shall, at the written direction of the Servicer,
draw from funds on deposit in the Reserve Subaccount for such Series up to the
amount necessary to make such payments.
(e) On the Business Day preceding each Payment Date, the Trustee, at the
written direction of the Servicer, shall deposit into the General Subaccount any
investment earnings on the subaccounts in the Collection Account (including
without limitation the Capital Subaccounts) and,
50
after taking into account such deposits and the amounts remitted on such
Business Day by the Servicer pursuant to Section 3.03 of the Servicing
Agreement, shall allocate to the Series Subaccount for each outstanding Series
of Transition Bonds an amount equal to (x) the amount of funds on deposit in the
General Subaccount times (y) the fraction whose numerator is the Revenue
Requirement for such Series during the Measure Period to which such Payment Date
relates (giving effect to any redetermination of Revenue Requirements pursuant
to Section 6 of the Issuer Annex) and whose denominator is the Total Revenue
Requirement during such Measure Period. By 12:00 noon (prevailing New York City
time) on the Payment Date immediately following such Business Day, the Trustee
shall, at the written direction of the Servicer, apply the amount so allocated
to each Series Subaccount in the following priority:
(i) to the Trustee, such Series' share of the fee owed to the Trustee
for the month in which such Payment Date occurs, plus any unpaid Trustee
fees, plus such Series' share of any expenses payable to the Trustee
hereunder, including legal fees and expenses, Indemnity Amounts (provided
that Indemnity Amounts shall be limited to $10,000,000 in the aggregate for
all Payment Dates and Monthly Fee Disbursement Dates with respect to all
Series, unless the payment of any additional amounts shall satisfy the
Rating Agency Condition), and any other amounts due and owing to the
Trustee pursuant to the Basic Documents for such month;
(ii) to the Issuer, such Series' share of the monthly fees for the
Independent Managers and any unpaid Independent Manager fees;
(iii) to the Servicer, such Series' share of the Monthly Servicing Fee
and any unpaid Monthly Servicing Fees;
(iv) to the Administrator, such Series' share of the monthly
administration fee payable under the Administration Agreement and any
unpaid Administrator fees, plus reimbursement of the Administrator's fees
and expenses;
(v) to the Persons entitled thereto (or, to the extent such Persons
have already been paid by the Issuer, to the Issuer), so long as no Event
of Default has occurred and is continuing or would be caused by such
payment, such Series' share of all Operating Expenses other than those
described in clauses (i) through (iv) above (up to an aggregate amount of
$100,000 for all Series under this clause (v) and Section 8.02(d)(v) for
each quarterly interest period ending on a Payment Date) including all
current and past due amounts;
(vi) to the Transition Bondholders of such Series, the Interest
payable on each Class of such Series on such Payment Date plus any
previously accrued and unpaid interest on each such Class (provided that,
in the case of any floating rate Class for which an Interest Rate Swap
Agreement is in effect, such amount shall equal the amount specified, and
the payee of such amount shall be the payee specified, in the related
Series Supplement as payable on such Payment Date);
(vii) to the Transition Bondholders of such Series, the Principal of
each Class of such Series of Transition Bonds payable as a result of
acceleration pursuant to Section 5.02, any Principal of any Class of such
Series of Transition Bonds payable on the Final Maturity Date of such
Class, and any Principal of any Class of such Series of Transition Bonds
payable on the Redemption Date for such Class;
51
(viii) to the Transition Bondholders of such Series, the Principal
scheduled to be paid on each Class of such Series of Transition Bonds on
such Payment Date according to the related Expected Amortization Schedules,
excluding any amounts provided for pursuant to Section 8.02(e)(vii);
(ix) to the Persons entitled thereto (or, to the extent such Persons
have already been paid by the Issuer, to the Issuer), such Series' share
(as determined below) of any remaining unpaid Operating Expenses;
(x) to the Capital Subaccount for such Series, the amounts, if any,
necessary to restore the balance in such account to its Required Capital
Amount;
(xi) to the Overcollateralization Subaccount for such Series, the
amount, if any, necessary to bring the balance in such account to such
Series' Scheduled Overcollateralization Level;
(xii) to the Issuer, free and clear of the Lien of this Indenture, so
long as no Event of Default has occurred and is continuing, an amount equal
to investment earnings on amounts in the Capital Subaccount for such
Series;
(xiii) to the Reserve Subaccount for such Series, any remaining
amounts; provided that such amounts shall be subject to reallocation on
such Payment Date to another Series as may be necessary to prevent or
mitigate a Default pursuant to Section 5.01(a) or (b) on such Payment Date
(such funds to be drawn pro rata, in the case of a surplus of funds in more
than one Series Reserve Subaccount, based on the amount of funds on deposit
in each such Subaccount on such Payment Date after giving effect to all
intra-Series allocations of funds from such Subaccounts pursuant to Section
8.02(f)(i) required to prevent or mitigate Defaults pursuant to Section
5.01(a) or (b) on such Payment Date); and
(xiv) in the event such Series of Transition Bonds shall have been
paid in full on such Payment Date, the balance, if any, in the Series
Subaccount, Capital Subaccount, Overcollateralization Subaccount and
Reserve Subaccount for such Series shall be released on such Payment Date
to the Issuer free and clear of the Lien of this Indenture or, to the
extent, if any, specified in the Series Supplements for one or more Series,
shall be allocated on such Payment Date to the Series Subaccounts of one or
more other Series.
Of the total amount applied on any Payment Date (for all Series of
Transition Bonds) pursuant to each of clauses (i) through (v) and clauses (ix)
and (x) of this Section 8.02(e), the portion of such total amount representing
the share of each outstanding Series of Transition Bonds for purposes of this
Section 8.02(e) shall be an amount equal to the product of (A) the total amount
applied pursuant to such clause (for all Series of Transition Bonds) on such
date times (B) the fraction (x) whose numerator is the principal amount of
Transition Bonds of such Series as of the immediately preceding Payment Date and
(y) whose denominator is the aggregate principal amount of Transition Bonds as
of the immediately preceding Payment Date.
(f) If, on any Payment Date, funds on deposit in any Series Subaccount for
any Series for which the allocation made on such Payment Date pursuant to
Section 8.02(e) are insufficient to make the payments and allocations
contemplated by Section 8.02(e)(i) through (xiii) with respect to such Series,
the Trustee shall, at the written direction of the Servicer, draw from amounts
on deposit in the
52
following subaccounts for such Series in the following order up to the amount of
such shortfall in order to make such payments and allocations:
(i) from the Reserve Subaccount for such Series, for payments and
allocations contemplated by Section 8.02(e)(i) through (xiii), with respect
to such Series,
(ii) from the Overcollateralization Subaccount for such Series, for
payments and allocations contemplated by Section 8.02(e)(i) through (viii)
and 8.02(e)(x), with respect to such Series, and
(iii) from the Capital Subaccount for such Series, for payments and
allocations contemplated by Section 8.02(e)(i) through (viii), with respect
to such Series.
(g) If on any Payment Date the funds available for allocations and payments
with respect to one or more Series of Transition Bonds (after giving effect to
all allocations pursuant to the proviso to Section 8.02(e)(xiii) and pursuant to
Section 8.02(f)) are insufficient to prevent or cure a Default or Event of
Default pursuant to Section 5.01(a) or (b), the Trustee shall, at the written
direction of the Servicer, draw from funds on deposit in the Reserve Subaccount
for each other Series of Transition Bonds in respect of whose payment
obligations no such Default or Event of Default exists or requires prevention
(or which, if it exists or requires prevention, can be cured or prevented using
less than all of the funds on deposit in the Reserve Subaccount for such Series)
up to the amount necessary to make such payments. In the event that funds in
more than one Series Reserve Subaccount are available for such an allocation,
such funds shall be drawn pro rata from such Reserve Subaccounts based on
amounts remaining in each such Subaccount after allocations have been made
therefrom to cure or prevent a Default or Event of Default in respect of the
payment obligations of the Series to which such Reserve Subaccount relates.
(h) Distributions on each Payment Date of interest and principal pursuant
to clauses (vi), (vii) and (viii) of Section 8.02(e) shall be allocated pro rata
among Series and among Classes within each Series based on amounts payable in
respect of each Series and each Class under such clauses (vi), (vii) and (viii),
respectively, as reflected in the Revenue Requirements (it being understood
that, if the maturity of the Transition Bonds is accelerated pursuant to Section
5.02 or if the Transition Bonds are redeemed pursuant to Section 10.01 or 10.02,
the Servicer will recalculate the Revenue Requirements so as to take into
account such acceleration or redemption, as the case may be, and furnish the
same in writing to the Trustee); provided that, in the case of a floating rate
Class, the interest distributable to such Class pursuant to Section 8.02(e)(vi)
shall be based on a fixed rate of interest if so specified in the related Series
Supplement; provided, further, that, if and to the extent the Series Supplement
for a particular Series of Transition Bonds comprising two or more Classes so
specifies, distributions of principal to the Classes of such Series shall be
allocated in a sequential manner or in credit priorities. Notwithstanding any
other provisions of this Section 8.02, upon an acceleration of the maturity of
the Transition Bonds and the sale or other liquidation of the Collateral, the
total outstanding principal balance of and interest accrued on all outstanding
Series and Classes shall be payable without priority of interest over principal
or principal over interest and without regard to Series or Class, in the
proportion that (i) the total outstanding principal balance of and interest
accrued on each Series and Class bears to (ii) the total outstanding principal
balances of and interest accrued on all Series and Classes; provided that (x)
the Series Supplement for a particular Series comprising two or more Classes may
establish priorities among Classes within such Series in the event of an
acceleration of the maturity of the Transition Bonds and the sale or other
liquidation of the Collateral and (y) if a Series includes one or more floating
rate Classes, interest for purposes of
53
this sentence shall mean net swap payments with respect to such Class or Classes
if and to the extent specified in the related Series Supplement.
(i) Notwithstanding any provision of this Section 8.02, if any Class of any
Series of Transition Bonds has a floating rate of interest, then the Series
Supplement relating to such Series shall specify the priority and other terms
governing the basis, if any, on which (i) amounts in the Series Subaccount,
Reserve Subaccount, Overcollateralization Subaccount and Capital Subaccount for
such Series shall be allocable to the Class Subaccount, if any, for such Series.
(j) Notwithstanding any provision of this Section 8.02, if a Hedge
Agreement is entered into with respect to any Series, then the Series Supplement
relating to such Series shall specify the terms governing the allocation of
amounts payable to or received from the counterparty under such Hedge Agreement
and the basis, if any, on which amounts in the Reserve Subaccount,
Overcollateralization Subaccount and Capital Subaccount for such Series shall be
allocable to such counterparty.
Section 8.03. RELEASE OF COLLATERAL. (a) All money and other property
withdrawn from the Collection Account by the Trustee for payment to the Issuer
as provided in this Indenture in accordance with Section 8.02 shall be deemed
released from this Indenture when so withdrawn and applied in accordance with
the provisions of Article VIII, without further notice to, or release or consent
by, the Trustee.
(b) Other than as provided for in clause (a) above, the Trustee shall
release property from the Lien of this Indenture only as and to the extent
permitted by the Basic Documents, any Hedge Agreement or any Interest Rate Swap
Agreement, and only upon receipt of an Issuer Request accompanied by an Issuer
Officer's Certificate, an Issuer Opinion of Counsel and Independent Certificates
in accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.01 or an Issuer Opinion of Counsel in lieu of such
Independent Certificates to the effect that the TIA does not require any such
Independent Certificate.
(c) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Trustee may, and when required by the provisions of this Indenture
shall, execute instruments to release property from the Lien of this Indenture,
or convey the Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Trustee as provided in this
Article VIII shall be bound to ascertain the Trustee's authority, inquire into
the satisfaction of any conditions precedent or see to the application of any
moneys.
(d) Subject to Section 8.03(b), the Trustee shall, at such time as there
are no Transition Bonds Outstanding and all sums due the Trustee pursuant to
Section 6.07 have been paid, release any remaining portion of the Collateral
that secured the Transition Bonds from the Lien of this Indenture and release to
the Issuer or any other Person entitled thereto any funds or investments then on
deposit in or credited to the Collection Account upon Issuer Order.
Section 8.04. ISSUER OPINION OF COUNSEL. The Trustee shall receive at least
five days' notice when requested by the Issuer to take any action pursuant to
Section 8.03, accompanied by copies of any instruments involved, and the Trustee
shall also require, as a condition to such action, an Issuer Opinion of Counsel,
in form and substance satisfactory to the Trustee, stating the legal effect of
any such action, outlining the steps required to complete the same, and
concluding that
54
all conditions precedent to the taking of such action have been complied with
and such action will not materially and adversely impair the security for the
Transition Bonds or the rights of the Transition Bondholders in contravention of
the provisions of this Indenture; provided, however, that such Issuer Opinion of
Counsel shall not be required to express an opinion as to the fair value of the
Collateral. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Trustee in connection with any such action.
Section 8.05. REPORTS BY INDEPENDENT ACCOUNTANTS. The Issuer shall appoint
a firm of Independent certified public accountants of recognized national
reputation for purposes of preparing and delivering the reports or certificates
of such accountants required by this Indenture and the related Series
Supplements. Upon any resignation by such firm, the Issuer shall promptly
appoint a successor thereto that shall also be a firm of Independent certified
public accountants of recognized national reputation. If the Issuer shall fail
to appoint a successor to a firm of Independent certified public accountants
that has resigned within 15 days after such resignation, the Trustee shall
promptly notify the Issuer of such failure in writing. If the Issuer shall not
have appointed a successor within ten days thereafter, the Trustee shall
promptly appoint a successor firm of Independent certified public accountants of
recognized national reputation. The fees of such firm of Independent certified
public accountants and its successor shall be payable by the Issuer.
Article IX
SUPPLEMENTAL INDENTURES
Section 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF TRANSITION
BONDHOLDERS. (a) Without the consent of the Holders of any Transition Bonds or
the counterparty under any Hedge Agreement or Interest Rate Swap Agreement but
with prior notice to the Rating Agencies, the Issuer and the Trustee, when
authorized by an Issuer Order, at any time and from time 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, to better
assure, convey and confirm unto the Trustee the Collateral (including
without limitation by eliminating or modifying the requirements specified
in Section 8.02(a)(ii), provided that the Issuer shall furnish to the
Trustee an Issuer Opinion of Counsel stating that, in the opinion of such
counsel, such elimination or modification, as the case may be, will not
adversely affect the Lien created by this Indenture), or to subject to the
Lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any applicable successor of the covenants of the Issuer contained herein
and in the Transition Bonds;
(iii) to add to the covenants of the Issuer, for the benefit of the
Transition Bondholders, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
the Trustee for the benefit of the Transition Bondholders, the Trustee and
any counterparty under any Interest Rate Swap Agreement;
55
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any Supplemental Indenture that may be inconsistent with any
other provision herein or in any Supplemental Indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any Supplemental Indenture; provided, however, that (i)
such action shall not, as evidenced by an Issuer Opinion of Counsel,
adversely affect in any material respect the interests of any Transition
Bondholder or any counterparty under any Hedge Agreement or Interest Rate
Swap Agreement and (ii) the Rating Agency Condition shall have been
satisfied with respect to such action;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor Trustee with respect to the Transition Bonds and
to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Article VI;
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA;
(viii) to set forth the terms of any Series that has not theretofore
been authorized by a Supplemental Indenture, provided that the Rating
Agency Condition shall have been satisfied with respect to such action;
(ix) to provide for any Interest Rate Swap Agreements with respect to
any Series or Class of Transition Bonds that bears a floating rate of
interest or any Series or Class with specified credit enhancement;
provided, however, that:
(A) such action shall not, as evidenced by an Issuer Opinion of
Counsel, adversely affect in any material respect the interests of any
Transition Bondholder or any counterparty under any Hedge Agreement or
any Interest Rate Swap Agreement and
(B) the Rating Agency Condition shall have been satisfied with
respect thereto; or
(x) to authorize the appointment of any listing agent, transfer agent
or paying agent or additional registrar for any Class of any Series of
Transition Bonds required or advisable in connection with the listing of
any Class or any Series of Transition Bonds on the Luxembourg Stock
Exchange in accordance with Section 3.02(b) or on any other stock exchange,
and otherwise to amend this Indenture to incorporate any changes requested
or required by any governmental authority, stock exchange authority,
listing agent, transfer agent or paying agent or additional registrar for
any Class or any Series of Transition Bonds in connection with that
listing.
(b) Subject to 9.02(a), the Issuer and the Trustee may enter into one or
more indentures supplemental hereto, without the consent of the Holders of any
Transition Bonds, to add provisions to or change in any manner or eliminate any
provisions hereof, or to modify, in any manner the rights of Transition
Bondholders hereunder; provided, however, that: (1) such action shall not, as
evidenced by an Issuer Opinion of Counsel, in any manner adversely affect in any
material respect
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the interests of any Transition Bondholder and (2) the Rating Agency Condition
shall have been satisfied with respect to such action.
(c) The Trustee is hereby authorized to join in the execution of any such
Supplemental Indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
Section 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF TRANSITION
BONDHOLDERS. (a) The Issuer and the Trustee, when authorized by an Issuer Order,
also may, upon satisfaction of the Rating Agency Condition (in each case,
accompanied by the form of the proposed supplemental indenture) and with the
consent of the Holders of not less than a majority of the Outstanding Amount of
the Transition Bonds of each Series or Class to be affected, by Act of such
Holders delivered to the Issuer and the Trustee, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Transition Bonds
under this Indenture; provided, however, that no such Supplemental Indenture
shall, without the consent of the Holder of each Outstanding Transition Bond of
each Series or Class affected thereby and each counterparty under any Hedge
Agreement or Interest Rate Swap Agreement affected thereby:
(i) change the date of payment of any installment of principal of, or
interest or premium, if any, on any Transition Bond, or reduce the
principal amount thereof, the interest rate thereon or the redemption price
or the premium with respect thereto, change the provisions of this
Indenture and the related applicable Supplemental Indenture or Series
Supplement relating to the application of collections on, or the proceeds
of the sale of, the Collateral to payment of principal of, or interest or
premium, if any, on the Transition Bonds, change the coin or currency in
which, any Transition Bond or the interest thereon is payable or change the
provisions of any Interest Rate Swap Agreement relating to the amount,
calculation or timing of payments;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due
on the Transition Bonds on or after the respective due dates thereof (or,
in the case of redemption, on or after the Redemption Date);
(iii) reduce the percentage of the Outstanding Amount of the
Transition Bonds or of a Series or Class thereof, the consent of the
Holders of which is required for any such Supplemental Indenture, or the
consent of the Holders of which is required for any waiver of compliance
with provisions of this Indenture or defaults hereunder and their
consequences provided for in this Indenture or modify or alter the
provisions of the proviso to the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Transition
Bonds required to direct the Trustee to direct the Issuer to sell or
liquidate the Collateral pursuant to Section 5.04 or to preserve the
Collateral pursuant to Section 5.05;
(v) reduce the percentage of the Outstanding Amount of a Series or
Class of Transition Bonds, the consent of the Holders of which is required
for any amendments to the
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Sale Agreement, the Administration Agreement, the Servicing Agreement, any
Hedge Agreement or any Interest Rate Swap Agreement;
(vi) modify any of the provisions of this Indenture in such manner so
as to affect the amount of any payment of interest or principal payable on
any Transition Bond on any Payment Date or change the Redemption Dates,
Expected Amortization Schedules or Final Maturity Date of any Series or
Class of Transition Bonds, or the method of calculation of interest on any
floating rate Transition Bond;
(vii) decrease the Overcollateralization Amount or Required Capital
Amount with respect to any Series or the Scheduled Overcollateralization
Level with respect to any Payment Date;
(viii) modify the provisions of this Indenture regarding the voting of
Transition Bonds held by the Issuer, the Seller, any Affiliate of either of
them or any obligor on the Transition Bonds;
(ix) decrease the percentage of the aggregate principal amount of
Transition Bonds required to amend the provisions of this Indenture that
specify the applicable percentage of the aggregate principal amount of the
Transition Bonds necessary to amend this Indenture, any other Basic
Documents or any Hedge Agreement or Interest Rate Swap Agreement;
(x) permit the creation of any Lien ranking prior to or on a parity
with the Lien of this Indenture with respect to any part of the Collateral
or, except as otherwise permitted or contemplated herein, terminate the
Lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Transition Bond of the security provided by the
Lien of this Indenture; or
(xi) alter any of the allocations of revenues, indemnity payments,
fees or similar amounts among Series.
(b) It shall not be necessary for any Act of Transition Bondholders under
this Section 9.02 to approve the particular form of any proposed Supplemental
Indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
(c) Promptly after the execution by the Issuer and the Trustee of any
Supplemental Indenture pursuant to this Section 9.02, the Trustee shall mail to
the Holders of the Transition Bonds to which such amendment or Supplemental
Indenture relates a notice setting forth in general terms the substance of such
Supplemental Indenture. Any failure of the Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such Supplemental Indenture. If any Transition Bonds are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require, the listing
agent appointed pursuant to Section 3.02(b) shall arrange for publication in an
Authorized Newspaper that such notice shall be available with the Issuer's
listing agent in Luxembourg appointed pursuant to Section 3.02(b).
Section 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any Supplemental Indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to
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receive, and subject to Sections 6.01 and 6.02 shall be fully protected in
relying upon, an Issuer Opinion of Counsel stating that the execution of such
Supplemental Indenture is authorized or permitted by this Indenture. The Trustee
may, but shall not be obligated to, enter into any such Supplemental Indenture
that affects the Trustee's own rights, duties, liabilities or immunities under
this Indenture or otherwise.
Section 9.04. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any
Supplemental Indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to each Series or Class of Transition Bonds affected thereby, and the respective
rights, limitations of rights, obligations, duties, liabilities and immunities
under this Indenture of the Trustee, the Issuer, the Holders of the Transition
Bonds and any counterparty under any Hedge Agreement or Interest Rate Swap
Agreement shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such Supplemental Indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of this
Indenture and every Supplemental Indenture executed pursuant to this Article IX
shall conform to the requirements of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
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Section 9.06. REFERENCE IN TRANSITION BONDS TO SUPPLEMENTAL INDENTURES.
Transition Bonds authenticated and delivered after the execution of any
Supplemental Indenture pursuant to this Article IX may, and if required by the
Trustee shall, bear a notation in form approved by the Trustee as to any matter
provided for in such Supplemental Indenture. If the Issuer or the Trustee shall
so determine, new Transition Bonds so modified as to conform, in the opinion of
the Trustee and the Issuer, to any such Supplemental Indenture may be prepared
and executed by the Issuer and authenticated and delivered by the Trustee in
exchange for Outstanding Transition Bonds.
Article X
REDEMPTION OF TRANSITION BONDS
Section 10.01. OPTIONAL REDEMPTION BY ISSUER. If and to the extent provided
in the related Series Supplement, and if no Interest Rate Swap Agreement with
respect to any Class of that Series is in effect, the Issuer may, at its option,
redeem all, but not less than all, of the Transition Bonds of a Series on any
Payment Date if, after giving effect to payments that would otherwise be made on
such Payment Date, the Outstanding Amount of any such Series of Transition Bonds
has been reduced to a percentage of the initial principal balance of such Series
below the percentage specified in such Series Supplement. The redemption price
in any case shall be equal to the outstanding principal amount of the Bonds to
be redeemed plus accrued and unpaid interest thereon at the Interest Rate to the
Redemption Date (the "Redemption Price"). If the Issuer elects to redeem the
Transition Bonds of a Series pursuant to this Section 10.01, it shall furnish
written notice of such election to (a) the Trustee, not later than 25 days prior
to the Redemption Date for such redemption and (b) to the Rating Agencies, not
later than 10 days prior to such Redemption Date, whereupon all such Transition
Bonds shall be due and payable on such Redemption Date upon the furnishing of a
written notice complying with Section 10.03 to each Holder of the Transition
Bonds of such Series pursuant to this Section 10.01.
Section 10.02. MANDATORY REDEMPTION BY ISSUER. The Issuer shall redeem the
Transition Bonds of a Series on the Redemption Date or Dates, if any, in the
amounts required, if any, and at the redemption price specified in the Series
Supplement for such Series, which in any case shall be not less than the
outstanding principal amount of the Bonds to be redeemed, plus accrued interest
thereon to such Redemption Date. If the Issuer is required to redeem the
Transition Bonds of a Series pursuant to this Section 10.02, it shall furnish
notice of such requirement to the Trustee not later than 25 days prior to the
Redemption Date for such redemption whereupon all such Transition Bonds shall be
due and payable on the Redemption Date upon the furnishing of a notice complying
with Section 10.03 to each Holder of the Transition Bonds of such Series
pursuant to this Section 10.02.
Section 10.03. FORM OF REDEMPTION NOTICE. (a) Unless otherwise specified in
the Series Supplement relating to a Series of Transition Bonds, notice of
redemption under Section 10.01 or 10.02 shall be given by the Trustee by
first-class mail, postage prepaid, mailed not less than five days nor more than
45 days prior to the applicable Redemption Date to each Holder of Transition
Bonds to be redeemed, as of the close of business on the Record Date preceding
the applicable Redemption Date at such Holder's address appearing in the
Transition Bond Register.
(b) All notices of redemption shall state:
(i) the Redemption Date;
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(ii) the Series and amount of the Transition Bonds to be redeemed;
(iii) the Redemption Price; and
(iv) the place where Transition Bonds to be redeemed are to be
surrendered for payment of the Redemption Price and accrued interest (which
shall be the office or agency of the Issuer to be maintained as provided in
Section 3.02).
(c) Notice of redemption of the Transition Bonds to be redeemed shall be
given by the Trustee in the name and at the expense of the Issuer. For so long
as any Transition Bonds are listed on the Luxembourg Stock Exchange and the
rules of such exchange so require, the listing agent appointed pursuant to
Section 3.02(b) shall arrange that such notice will also be given by publication
in an Authorized Newspaper at least ten days prior to the Redemption Date.
Failure to give notice of redemption, or any defect therein, to any Holder of
any Transition Bond selected for redemption shall not impair or affect the
validity of the redemption of any other Transition Bond. Notice of optional
redemption shall be irrevocable once given.
Section 10.04. PAYMENT OF REDEMPTION PRICE. If notice of redemption has
been duly mailed or duly waived by the Holders of all Transition Bonds called
for redemption, then the Transition Bonds called for redemption shall be payable
on the applicable Redemption Date at the applicable Redemption Price. No further
interest shall accrue on the principal amount of any Transition Bonds called for
redemption after the Redemption Date, and the Holders of such Transition Bonds
shall have no rights with respect thereto, if payment of the Redemption Price
has been duly provided for on or before the Redemption Date declared therefor.
Notwithstanding the foregoing, the Holders of the Transition Bonds shall be
entitled to payment of interest on the Redemption Price accrued at the related
Interest Rates to the extent the Issuer fails to pay the Redemption Price on the
Redemption Date. Payment of the Redemption Price shall be made by the Trustee to
or upon the order of the Holders of the Transition Bonds called for redemption
upon surrender of such Transition Bonds, and the Transition Bonds so redeemed
shall cease to be of further effect and the Lien hereunder shall be released
with respect to such Transition Bonds.
Article XI
MISCELLANEOUS
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC. (a) Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the Trustee (i) an
Issuer Officer's Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Issuer Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with and
(iii) (if required by the TIA) an Independent Certificate from a firm of
certified public accountants meeting the applicable requirements of this Section
11.01, except that, in the case of any such application or request as to which
the furnishing of such documents is specifically required by any provision of
this Indenture, no additional certificate or opinion need be furnished.
(b) Every certificate or opinion with respect to compliance with a covenant
or condition provided for in this Indenture shall include:
61
(i) statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory,
such covenant or condition has been complied with.
Section 11.02. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. (a) In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Issuer Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Servicer or the Seller or a Manager or Managers, stating that
the information with respect to such factual matters is in the possession of the
Servicer, the Seller or the Issuer, unless such Authorized Officer or counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
(d) Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of 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 conclusively to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
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Section 11.03. ACTS OF TRANSITION BONDHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Transition Bondholders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Transition Bondholders in person or by agents duly appointed in writing;
and except as herein otherwise expressly provided such action shall become
effective when such instrument or instruments are delivered to the Trustee, and,
where it is hereby expressly required, to the Issuer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Transition Bondholders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and
the Issuer, if made in the manner provided in this Section 11.03.
(b) The fact and date of the execution by any person of any such instrument
or writing may be proved in any manner that the Trustee deems sufficient.
(c) The ownership of Transition Bonds shall be proved by the Transition
Bond Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Transition Bonds shall bind the Holder of
every Transition Bond issued upon the registration thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Transition Bond.
Section 11.04. NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING AGENCIES. (a)
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Transition Bondholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to or filed with:
(i) the Trustee by any Transition Bondholder or by the Issuer, or
(ii) the Issuer by the Trustee or by any Transition Bondholder,
shall be sufficient for every purpose hereunder if in English and in writing,
and sent by United States first-class mail, reputable overnight courier service,
facsimile transmission or electronic mail (confirmed by telephone, United States
first-class mail or reputable overnight courier service in the case of notice by
facsimile transmission or electronic mail) or any other customary means of
communication, and any such request, demand, authorization, direction, notice,
consent, waiver or Act shall be effective when delivered or transmitted, or if
mailed, five days after deposit in the United States first-class mail with
proper postage for first-class mail prepaid, in the case of the Trustee,
addressed to the Trustee at its Corporate Trust Office, and in the case of the
Issuer, addressed to: Atlantic City Electric Transition Funding LLC, 000 Xxxx
Xxxxxx, X.X. Xxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Managers, or at any
other address previously furnished in writing to the Trustee by the Issuer. The
Issuer shall promptly transmit any notice received by it from the Transition
Bondholders to the Trustee.
(b) Notices required to be given to the Rating Agencies by the Issuer, the
Trustee or a Manager shall be in writing, delivered personally, via facsimile
transmission, by reputable overnight courier or by first-class mail, postage
prepaid, to (until notice of a different address is received from
63
the relevant Rating Agency in writing by the Trustee and the Issuer): (i) in the
case of Moody's: Xxxxx'x Investors Service, Inc., Attention: ABS Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; (ii) in the case of
Standard & Poor's: Standard & Poor's Corporation, 00 Xxxxx Xxxxxx, Xxx Xxxx, XX
00000, Attention: Asset Backed Surveillance Department and (iii) in the case of
Fitch: Fitch, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
ABS Surveillance.
Section 11.05. NOTICES TO TRANSITION BONDHOLDERS; WAIVER. (a) Where this
Indenture provides for notice to Transition Bondholders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and delivered by first-class mail, postage prepaid, to each
Transition Bondholder affected by such event, at the address of such Transition
Bondholder as it appears on the Transition Bond Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Transition Bondholders is given by
mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Transition Bondholder shall affect the sufficiency of
such notice with respect to other Transition Bondholders, and any notice that is
mailed in the manner herein provided shall conclusively be presumed to have been
duly given.
(b) Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Transition Bondholders shall be filed with the
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
(c) In case it shall be impractical to deliver notice in accordance with
clause (a) of this Section 11.05 to the Holders of Transition Bonds when such
notice is required to be given pursuant to any provision of this Indenture, then
any manner of giving such notice as shall be satisfactory to the Trustee shall
be deemed to be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
Section 11.06. NOTICES TO LUXEMBOURG STOCK EXCHANGE. (a) For so long as any
Transition Bonds are listed on the Luxembourg Stock Exchange and to the extent
the rules of such exchange so require, the Issuer shall notify the Luxembourg
Stock Exchange and any agent appointed pursuant to Section 3.02(b) if any rating
assigned to such Transition Bonds is reduced or withdrawn and shall arrange for
such notice to be published in an Authorized Newspaper.
(b) For so long as any Transition Bonds are listed on the Luxembourg Stock
Exchange and the rules of such exchange so require, the listing agent appointed
pursuant to Section 3.02(b) shall make available to the Holders of such
Transition Bonds, and shall maintain at its offices, copies of the Basic
Documents, all Hedge Agreements and Interest Rate Swap Agreements, all reports
provided to Transition Bondholders pursuant to this Indenture, the prospectus
related to such Transition Bonds, the reports of independent certified public
accountants obtained with respect to the Issuer pursuant to this Indenture, the
financial information regarding ACE (and, to the extent required as aforesaid,
any direct or indirect parent company of ACE) in its annual report on Form 10-K
for the fiscal year ended December 31, 2001 and copies of each annual report of
ACE (and any such parent) on Form 10-K for subsequent fiscal years. The listing
agent appointed pursuant to
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Section 3.02(b) shall deposit with the Chief Registrar of the District Court of
Luxembourg prior to listing on the Luxembourg Stock Exchange a copy of the
Issuer Certificate of Formation, the Issuer LLC Agreement and any legal notices
relating to the issuance of such Transition Bonds.
Section 11.07. ALTERNATE PAYMENT AND NOTICE PROVISIONS. Notwithstanding any
provision of this Indenture or any of the Transition Bonds to the contrary, the
Issuer may enter into any agreement with any Holder of a Transition Bond
providing for a method of payment, or notice by the Trustee or any Paying Agent
to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices. The Issuer shall furnish to the Trustee
a copy of each such agreement and the Trustee shall cause payments to be made
and notices to be given in accordance with such agreements.
Section 11.08. CONFLICT WITH TRUST INDENTURE ACT. (a) If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the TIA,
such required provision shall control.
(b) The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 11.09. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 11.10. SUCCESSORS AND ASSIGNS. (a) All covenants and agreements in
this Indenture and the Transition Bonds by the Issuer shall bind its successors
and permitted assigns, whether so expressed or not.
(b) All agreements of the Trustee in this Indenture shall bind its
successors.
(c) The Trustee shall provide prior notice to the Rating Agencies of any
assignment of its obligations under this Agreement.
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Section 11.11. SEVERABILITY. In case any provision in this Indenture or in
the Transition Bonds shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 11.12. BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Transition Bonds, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Transition Bondholders,
and any other party secured hereunder, and any other Person with an ownership
interest in any part of the Collateral, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 11.13. LEGAL HOLIDAYS. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Transition Bonds or this Indenture) payment need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date on which nominally due, and no interest
shall accrue for the period from and after any such nominal date.
Section 11.14. GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 11.15. COUNTERPARTS. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 11.16. ISSUER OBLIGATION. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Trustee on the
Transition Bonds or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Member or any
Manager, employee or agent of the Issuer or (ii) any stockholder, officer,
director, employee or agent of the Trustee (it being understood that none of the
Trustee's obligations are in its individual capacity).
Section 11.17. NO PETITION. The Trustee, by entering into this Indenture,
and each Transition Bondholder, by accepting a Transition Bond, hereby covenants
and agrees (or shall be deemed to have covenanted and agreed) that it shall not
at any time institute against the Issuer, or join in the institution against the
Issuer of, or acquiesce, petition or otherwise invoke or cause the Issuer to
invoke the process of any court or governmental authority for the purpose of
commencing or sustaining a case against the Issuer under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of the property of the Issuer or ordering the
winding up or liquidation of the affairs of the Issuer.
Section 11.18. PREFUNDING. If and to the extent specified in a Series
Supplement, the Issuer may elect to issue Transition Bonds in a principal amount
that, on the date of issuance, exceeds the aggregate amount of Bondable
Transition Property created under the related BPU Financing Order or other such
orders then in effect. The incremental amount of Transition Bonds issued over
the amount of Bondable Transition Property then created would be issued in
anticipation of a subsequent authorization by the BPU, within a period of time
specified in the related Series
66
Supplement, of additional Bondable Transition Property in the same incremental
amount. In the event of such an incremental issuance, the Issuer would
immediately deposit the bond proceeds from the sale of such incremental issuance
into a separate prefunding account (the "Prefunding Account") to be owned by the
Issuer and administered by the Trustee. ACE may in its discretion provide
additional credit enhancement for the incremental principal amount of such
Transition Bonds. Amounts in the Prefunding Account would be used, to the extent
necessary, to meet obligations on the Transition Bonds of such Series in the
manner set forth in the related Series Supplement. If following such an issuance
but within the time period specified in the related Series Supplement, the BPU
approves the creation of additional Bondable Transition Property in an amount
equal to the incremental amount of Transition Bonds issued, ACE shall sell such
additional Bondable Transition Property to the Issuer pursuant to the Sale
Agreement and a Xxxx of Sale, and ACE shall receive in consideration thereof all
amounts in the Prefunding Account. If, however, the BPU shall not have approved
the creation of additional Bondable Transition Property in the incremental
amount within such time period, then at the end of such time period all amounts
in the Prefunding Account shall be applied to redeem the incremental principal
amount of Transition Bonds of such Series and pay accrued interest thereon on
the terms set forth in the related Series Supplement.
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Indenture
to be duly executed and delivered by a Manager and an officer, respectively,
thereof, each thereunto duly authorized, all as of the day and year first above
written.
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC,
as Issuer
By: /s/ Xxxxx X. Xxxxx
---------------------
Name: /s/ Xxxxx X. Xxxxx
-------------------
Title: Manager
THE BANK OF NEW YORK,
as Trustee
By: /s/ Xxxxxxxxx Xxxxx
---------------------------
Name: Xxxxxxxxx Xxxxx
-------------------------
Title: Assistant Vice President
------------------------
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APPENDIX A
MASTER DEFINITIONS
The definitions contained in this Appendix A are applicable to the singular as
well as the plural forms of such terms.
"ACE" means Atlantic City Electric Company, a New Jersey corporation, and
its permitted successors and assigns.
"Act" has the meaning specified in Section 11.03(a) of the Indenture.
"Adjustment Date" means (i) October 1 of each year beginning October 1,
2003 until October 1, 2019, (ii) so long as any Series 2002-1 Transition Bonds
are outstanding, January 1, April 1, July 1 and October 1 of each year,
beginning October 1, 2020, (iii) any other dates designated as Adjustment Dates
in any Series Supplement, and (iv) any other day that is 30 days after a
Calculation Date.
"Adjustment Request" means an application filed by the Servicer with the
BPU for a Transition Bond Charge Adjustment pursuant to Section 5(b) or (e) of
the Issuer Annex.
"Administration Agreement" means the Administration Agreement dated as of
December 19, 2002, between the Issuer and PHI Service Company, as administrator,
as the same may be amended or supplemented from time to time.
"Administrator" means PHI Service Company, as administrator under the
Administration Agreement, and each successor to PHI Service Company, in the same
capacity, pursuant to Section 5.08 of the Administration Agreement.
"Advice Letter" means, with respect to any Series of Transition Bonds, the
Issuance Advice Letter, in the form specified in the BPU Financing Order
authorizing the issuance of Transition Bonds of such Series, filed with the BPU
at the time of the issuance of such Series.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, control when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms controlling and controlled
have meanings correlative to the foregoing.
"Annual Accountant's Report" has the meaning assigned to that term in
Section 3.07 of the Servicing Agreement.
"Authorized Denominations" means, with respect to any Series or Class of
Transition Bonds, $1,000 and integral multiples of $1.00 above that amount,
provided, however, that one bond of each Class may have a denomination of less
than $1,000, or such other denominations as may be specified in the Series
Supplement therefor.
"Authorized Newspaper" means the Luxemburger Wort or any other newspaper
published in Luxembourg on a daily basis.
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"Authorized Officer" means, with respect to the Issuer, (a) any Manager
and, (b) any person designated as an "Officer" under the Issuer LLC Agreement
and authorized thereby to act on behalf of the Issuer.
"Basic Documents" means the Formation Documents, the Sale Agreement, any
Bills of Sale, the Servicing Agreement, the Administration Agreement, the
Indenture, as each may be amended or supplemented from time to time.
"Billing Month" means a calendar month during which the Transition Bond
Charge is billed to Customers.
"Xxxx of Sale" means any xxxx of sale issued by the Seller to the Issuer
pursuant to the Sale Agreement evidencing the sale of Bondable Transition
Property by the Seller to the Issuer.
"Bondable Stranded Costs" has the meaning assigned to that term in the
Competition Act and the BPU Financing Orders.
"Bondable Transition Property" has the meaning assigned to that term in the
Competition Act and the BPU Financing Orders.
"Bondable Transition Property Documentation" means all documents relating
to the Transferred Bondable Transition Property, including copies of the
Petition and the BPU Financing Orders and all documents filed with the BPU in
connection with any Transition Bond Charge Adjustment.
"Book-Entry Transition Bonds" means beneficial interests in the Transition
Bonds, ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.11 of the Indenture.
"BPU" means the State of New Jersey Board of Public Utilities or its
successor.
"BPU Financing Orders" means the bondable stranded costs rate order issued
by the BPU in favor of ACE on September 20, 2002 pursuant to the Competition
Act, any subsequent bondable stranded costs rate orders issued by the BPU in
favor of ACE pursuant to the Competition Act, and any order supplemental to any
of the foregoing.
"BPU Regulations" means any regulations, orders, guidelines or directives
promulgated, issued or adopted by the BPU.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in The City of New York, New York or with respect to
any Transition Bonds listed on the Luxembourg Stock Exchange, in Luxembourg, are
required or authorized by law or executive order to remain closed.
"Calculation Date" means (i) September 1 of each year beginning September
1, 2003 until September 1, 2019, (ii) so long as any Series 2002-1 Transition
Bonds are outstanding, March 1, June 1, September 1 and December 1 of each year,
beginning September 1, 2020, (iii) any other dates designated as Calculation
Dates in any Series Supplement, and (iv) any other date on which the Servicer
files an Adjustment Request.
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"Capital Subaccount" with respect to any Series has the meaning specified
in Section 8.02(a) of the Indenture.
"Class" means, with respect to any Series, any one of the classes of
Transition Bonds of that Series, as specified in the Series Supplement for that
Series.
"Class Final Maturity Date" means the Final Maturity Date of a Class, as
specified in the Series Supplement for the related Series.
"Class Subaccount," with respect to a Class within a Series, has the
meaning specified in Section 8.02(a) of the Indenture and, if established for
such Series and Class, in the Series Supplement for such Series.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of the
Indenture.
"Collection Account" has the meaning specified in Section 8.02(a) of the
Indenture.
"Collection Period" means the period from and including the first day of a
calendar month to but excluding the first day of the next calendar month.
"Collections Curve" means an annually prepared forecast, with respect to
each Billing Month, of the percentages of amounts billed in such Billing Month
that are expected to be received during such Billing Month and each of the
following six months.
"Collections Curve Payment" means, with respect to any Billing Month, the
sum of the amounts paid to the Trustee during such Billing Month and each of the
following six months based on the Collections Curve then in effect.
"Commission" means the U.S. Securities and Exchange Commission, and any
successor thereof.
"Competition Act" means the Electric Discount and Energy Competition Act,
New Jersey Statutes Annotated, title 48, chapter 3, article 7, as in effect from
time to time.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
office at date of the execution of the Indenture is located at 000 Xxxxxxx
Xxxxxx, Xxxxx 8 West, New York, New York 10286, Attn: Asset Backed Securities
(phone: (000) 000-0000; fax: (000) 000-0000), or at such other address as the
Trustee may designate from time to time by notice to the Transition Bondholders
and the Issuer, or
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the principal corporate trust office of any successor Trustee (the address of
which the successor Trustee will notify the Transition Bondholders and the
Issuer in writing).
"Covenant Defeasance Option" has the meaning specified in Section 4.01(b)
of the Indenture.
"Curve Payment Shortfall" means, for a particular Billing Month, the
amount, if any, by which the actual TBC Collections in respect of a Billing
Month exceed the Collections Curve Payments made to the Trustee in respect of
that Billing Month, as determined on the Reconciliation Date for that Billing
Month.
"Customer" means each person who is a retail consumer of electricity and
who accesses ACE's transmission and distribution system, regardless of whether
such consumer elects to purchase electricity from a Third Party.
"Daily Remittance Date" means, if the Servicer has not satisfied the
conditions of Section 5.10(b) of the Servicing Agreement, each Business Day
commencing on the second Business Day following the date on which the Servicer
begins remittance procedures under Section 3.03(a)(ii) of the Servicing
Agreement.
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Defeasance Subaccount" has the meaning specified in Section 8.02(a) of the
Indenture.
"Definitive Transition Bonds" has the meaning specified in Section 2.11 of
the Indenture.
"Delaware UCC" means the Uniform Commercial Code, as in effect in the State
of Delaware, as amended from time to time.
"DTC Agreement" means the agreement between the Issuer, the Trustee and The
Depository Trust Company, as the initial Clearing Agency, dated on or about
December 19, 2002, relating to the Transition Bonds, as the same may be amended
or supplemented from time to time.
"Eligible Guarantor Institution" means a firm or other entity identified in
Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein):
(a) a bank;
(b) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;
(c) a credit union;
(d) a national securities exchange, registered securities association
or clearing agency; or
(e) a savings association that is a participant in a securities
transfer association.
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"Eligible Institution" means:
(a) the corporate trust department of the Trustee, so long as any of
the securities of the Trustee have a credit rating from each
Rating Agency in one of its generic rating categories which
signifies investment grade, or
(b) a depositary institution organized under the laws of the United
States of America or any state (or any domestic branch of a
foreign bank), which
(i) has either
(A) with respect to any Eligible Investment having a
maturity of greater than one month, a long-term
unsecured debt rating of "AA-" by Standard & Poor's and
Fitch and "Aa3" by Moody's, or
(B) with respect to any Eligible Investment having a
maturity one month or less, a certificate of deposit
rating of "A-1+" by Standard & Poor's, "F1+" by Fitch
and "P-1" by Moody's, or any other long-term,
short-term or certificate of deposit rating acceptable
to the Rating Agencies, and
(ii) whose deposits are insured by the FDIC.
"Eligible Investments" mean book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully and unconditionally
guaranteed as to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company (any depositary
institution or trust company being referred to in this definition
as a "financial institution") incorporated under the laws of the
United States of America or any state thereof (or any domestic
branch of a foreign bank) and subject to supervision and
examination by federal or state banking or depositary institution
authorities; provided, however, that at the time of the
investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations
of such financial institution (other than such obligations the
rating of which is based on the credit of a Person other than
such financial institution) shall have a credit rating from each
of the Rating Agencies in the highest investment category granted
thereby;
(c) commercial paper or other short-term unsecured debt obligations
of any corporation organized under the laws of the United States
of America (other than ACE) whose ratings, at the time of the
investment or contractual commitment to invest therein, from each
of the Rating Agencies are in the highest rating category granted
thereby;
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(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest rating category granted
thereby (including funds for which the Trustee or any of its
Affiliates act as investment manager or advisor);
(e) bankers' acceptances issued by any depositary institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States
of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of
the United States of America, in either case entered into with a
financial institution (acting as principal) incorporated under
the laws of the United States of America or any state thereof (or
any domestic branch of a foreign bank) and subject to supervision
and examination by federal or state banking or depositary
institution authorities; provided, however, that at the time of
the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations
of such financial institution (other than such obligations the
rating of which is based on the credit of a Person other than
such financial institution) shall have a credit rating from each
of the Rating Agencies in the highest investment category granted
thereby;
(g) repurchase obligations with respect to any security or whole loan
entered into with
(i) a financial institution (acting as principal) described in
clause (b) above,
(ii) a broker/dealer (acting as principal) registered as a
broker or dealer under Section 15 of the Exchange Act (any
broker/dealer being referred to in this definition as a
"broker/dealer"), the unsecured short-term debt obligations
of which are rated P-1 by Moody's and A-1+ by Standard &
Poor's at the time of entering into the repurchase
obligation, or
(iii) an unrated broker/dealer, acting as principal, that is a
wholly-owned subsidiary of a non-bank or bank holding
company the unsecured short-term debt obligations of which
are rated P-1 by Moody's and A-1+ by Standard & Poor's and
F1+ by Fitch at the time of purchase; or
(h) any other investment permitted by each Rating Agency;
provided, however, that, unless otherwise permitted by each Rating Agency, upon
the failure of any Eligible Institution to maintain any applicable rating set
forth in this definition or the definition of Eligible Institution, the related
investments at such institution shall be reinvested in Eligible Investments at a
successor Eligible Institution within 10 days, and provided, further, that, any
Eligible Investment must not:
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(i) be sold, liquidated or otherwise disposed of at a loss, prior to
the maturity thereof, or
(ii) mature later than (i) the date on which the proceeds of such
Eligible Investment will be required to be on deposit in the
Collection Account in order for the Trustee to make all required
and scheduled payments and deposits into Subaccounts under the
Indenture, if such Eligible Investment is held by an Affiliate of
the Trustee, or (ii) the Business Day prior to the date on which
the proceeds of such Eligible Investment will be required to be
on deposit in the Collection Account in order for the Trustee to
make all required and scheduled payments and deposits into
Subaccounts under the Indenture, if such Eligible Investment is
not held by an Affiliate of the Trustee.
"Eligible Securities Account" means either:
(a) a segregated trust account with an Eligible Institution or
(b) a segregated trust account with the corporate trust department of
a depositary institution organized under the laws of the United
States of America or any state (or any domestic branch of a
foreign bank), having corporate trust powers and acting as
trustee for funds deposited in such account, so long as any of
the securities of such depositary institution shall have a credit
rating from each Rating Agency in one of its generic rating
categories which signifies investment grade.
"Event of Default" has the meaning specified in Section 5.01 of the
Indenture.
"Excess Curve Payment" means, for a particular Billing Month, the amount,
if any, by which the Collections Curve Payments made to the Trustee in respect
of that Billing Month exceed the actual TBC Collections in respect of that
Billing Month, as determined on the Reconciliation Date for that Billing Month.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the chief
executive officer, chief operating officer, chief financial officer, chief
information officer, president, executive vice president, any vice president,
the secretary or the treasurer of such corporation; and with respect to any
limited liability company, any manager thereof.
"Expected Amortization Schedule" means, with respect to each Series or, if
applicable, each Class of Transition Bonds, the expected amortization schedule
for principal thereof, as specified in Schedule A to the Series Supplement for
such Series.
"Expected Final Payment Date" means, with respect to each Series or, if
applicable, each Class of Transition Bonds, the Payment Date related to the date
when all interest and principal is scheduled to be paid with respect to that
Series or Class in accordance with the Expected Amortization Schedule, as
specified in the Series Supplement therefor.
"FDIC" means the Federal Deposit Insurance Corporation or its successor.
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"Final Maturity Date" means, for each Series or, if applicable, each Class
of Transition Bonds, the Payment Date related to the date by which all principal
of and interest on such Series or Class of Transition Bonds is required to be
paid, as specified in the Series Supplement therefor.
"Financing Issuance" means an issuance of a new Series of Transition Bonds
under the Indenture to provide funds to finance the purchase by the Issuer of
Bondable Transition Property.
"Fitch" means Fitch, Inc. or its successor.
"Formation Document" means the Issuer LLC Agreement, the Issuer Certificate
of Formation and any other document pursuant to which the Issuer is formed or
governed, as each may be amended or supplemented from time to time.
"General Subaccount" has the meaning specified in Section 8.02(a) of the
Indenture.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and xxxxx x xxxx upon and a security
interest in and right of set-off against, deposit, set over and confirm. A Grant
of the Collateral or of any other agreement or instrument shall include all
rights, powers and options (but none of the obligations) of the Granting party
thereunder, including the immediate and continuing right to claim for, collect,
receive and give receipt for principal, interest and other payments in respect
of the Collateral and all other moneys payable thereunder, to give and receive
notices and other communications, to make waivers or other agreements, to
exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Hedge Agreement" means, with respect to any Series, the document or
documents, if any, identified as a "Hedge Agreement" in the Series Supplement
for such Series.
"Holder" or "Transition Bondholder" means the Person in whose name a
Transition Bond of any Series or Class is registered in the Transition Bond
Register.
"Indemnification Event" means an event which triggers ACE's obligation to
indemnify the Issuer and the Trustee, for itself and on behalf of the Transition
Bondholders, and each of their respective managers, officers, employees,
directors and agents, pursuant to Section 5.01 of the Sale Agreement.
"Indemnity Amount" means the amount of any indemnification obligation
payable under the Basic Documents or any Hedge Agreement or Interest Rate Swap
Agreement.
"Indenture" means the Indenture dated as of December 19, 2002, between the
Issuer and the Trustee, as the same may be amended or supplemented from time to
time by one or more Supplemental Indentures, and shall include each Series
Supplement and the forms and terms of the Transition Bonds established
thereunder.
"Independent" means, when used with respect to any specified Person, that
the Person
(a) is in fact independent of the Issuer, any other obligor upon the
Transition Bonds, ACE and any Affiliate of any of the foregoing
Persons,
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(b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other
obligor, ACE or any Affiliate of any of the foregoing Persons,
and
(c) is not connected with the Issuer, any such other obligor, ACE or
any Affiliate of any of the foregoing Persons as an officer,
employee, promoter, underwriter, trustee, partner, director or
other Person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered to
the Trustee under the circumstances described in, and otherwise complying with,
the applicable requirements of Section 11.01 of the Indenture, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Appendix A and that the signer is Independent within the meaning
thereof.
"Independent Manager" has the meaning set forth in the Issuer LLC
Agreement.
"Initial Purchase Price" has the meaning set forth in Section 2.01 of the
Sale Agreement.
"Initial Transfer Date" means the Series Issuance Date for the Series
2002-1 Transition Bonds, i.e., December 19, 2002.
"Initial Transferred Bondable Transition Property" means the Bondable
Transition Property sold by the Seller to the Issuer as of the Initial Transfer
Date pursuant to the Sale Agreement and the Xxxx of Sale delivered on or prior
to the Initial Transfer Date as identified in such Xxxx of Sale.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law in effect on or after December 19, 2002, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of 90 consecutive days
or (b) the commencement by such Person of a voluntary case under any applicable
federal or state bankruptcy, insolvency or other similar law in effect on or
after December 19, 2002, or the consent by such Person to the entry of an order
for relief in an involuntary case under any such law, or the consent by such
Person to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for such Person
or for any substantial part of its property, or the making by such Person of any
general assignment for the benefit of creditors, or the failure by such Person
generally to pay its debts as such debts become due, or the taking of action by
such Person in furtherance of any of the foregoing.
"Interest" means, for any Payment Date for any Series or Class of
Transition Bonds, the sum, without duplication, of
(a) an amount equal to the amount of interest accrued at the
applicable Interest Rate from the prior Payment Date with respect
to that Series or Class;
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(b) any unpaid interest, to the extent permitted by applicable law,
plus any interest accrued on this unpaid interest at the
applicable Interest Rate, to the extent permitted by applicable
law;
(c) if the Transition Bonds have been declared due and payable, all
accrued and unpaid interest thereon; and
(d) with respect to a Series or Class to be redeemed prior to the
next Payment Date, the amount of interest that will be payable as
interest on such Series or Class upon such redemption.
"Interest Rate" means, with respect to each Series or Class of Transition
Bonds, the rate at which interest accrues on the principal balance of Transition
Bonds of such Series or Class, as specified in the Series Supplement therefor.
"Interest Rate Swap Agreement" means any ISDA Master Agreement, together
with the related schedules and confirmations, between the Issuer and the
counterparty thereunder, as same may be amended or supplemented from time to
time, with respect to any Series or Class of Transition Bonds as provided in the
Series Supplement for such Series or Class, as the case may be.
"Issuer" means Atlantic City Electric Transition Funding LLC, a Delaware
limited liability company, or its successor under the Indenture or the party
named as such in the Indenture until a successor replaces it and, thereafter,
means the successor.
"Issuer Annex" means Annex 1 of the Servicing Agreement.
"Issuer Certificate of Formation" means the Certificate of Formation of the
Issuer, which was filed with the Delaware Secretary of State's Office on March
28, 2001, as the same may be amended or supplemented from time to time.
"Issuer LLC Agreement" means the Amended and Restated Limited Liability
Company Agreement between the Issuer and ACE, as sole Member, dated as of
December 19, 2002, as the same may be amended or supplemented from time to time.
"Issuer Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01 of the Indenture,
and delivered to the Trustee. Unless otherwise specified, any reference in the
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"Issuer Opinion of Counsel" means one or more written opinions of counsel
who may, except as otherwise expressly provided in the Indenture, be employees
of or counsel to the Issuer or the Seller and who shall be reasonably
satisfactory to the Trustee, and which opinion or opinions shall be addressed to
the Trustee, and shall be in a form reasonably satisfactory to the Trustee.
"Issuer Order" or "Issuer Request" means a written order or request,
respectively, signed in the name of the Issuer by any one of its Authorized
Officers and delivered to the Trustee.
"Legal Defeasance Option" has the meaning specified in Section 4.01(b) of
the Indenture.
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"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.
"Losses" means collectively, any and all liabilities, obligations, losses,
damages, payments, costs or expenses of any kind whatsoever.
"Manager" has the meaning set forth in the Issuer LLC Agreement.
"Market Transition Charge" means the market transition charge that ACE may
impose on Customers pursuant to the Competition Act and the Restructuring Order.
"Measure Period" means any period beginning on an Adjustment Date and
ending on the date immediately preceding the next Adjustment Date.
"Member" means ACE, as the sole member of the Issuer, in its capacity as
such member under the Issuer LLC Agreement.
"Monthly Remittance Date" means the 15th day of each calendar month (or if
such day is not a Business Day, the next Business Day).
"Monthly Servicing Fee" means the fee payable to the Servicer on a monthly
basis for services rendered, in accordance with Section 5.07 of the Servicing
Agreement.
"Moody's" means Xxxxx'x Investors Service Inc., or its successor.
"MTC-Tax" means the tax component, to recover federal income and state
corporation business taxes associated with the Market Transition Charge and the
Transition Bond Charge, that ACE is entitled to impose under the Restructuring
Order and under the BPU Financing Orders.
"New Jersey UCC" means the Uniform Commercial Code, as in effect in the
State of New Jersey, as amended from time to time.
"Officers' Certificate" means a certificate signed by (a) the chairman of
the board, the president, the vice chairman of the board, any executive vice
president or any vice president and (b) a treasurer, assistant treasurer,
secretary or assistant secretary, in each case of the Servicer or Seller, as
applicable.
"Operating Expenses" means, with respect to the Issuer, all fees, costs,
expenses and indemnity payments owed by the Issuer, including, without
limitation, all amounts owed by the Issuer to the Trustee, the Monthly Servicing
Fee, the fees and expenses payable by the Issuer to the Administrator under the
Administration Agreement, the fees and expenses payable by the Issuer to the
Independent Managers and Special Members of the Issuer, fees of the Rating
Agencies, legal fees and expenses of the Servicer pursuant to Section 3.10 of
the Servicing Agreement, legal and accounting fees, costs and expenses of the
Issuer, and legal, accounting or other fees, costs and expenses of the Seller
(including, without limitation, any costs and expenses incurred by the Seller
pursuant to Section 4.08 of the Sale Agreement) under or in connection with the
Basic Documents, any Hedge Agreement or Interest Rate Swap Agreement or the BPU
Financing Orders.
"Opinion of Counsel" means one or more written opinions of counsel who may
be an employee of or counsel to ACE or the Issuer, or any other Person (as the
context may require), which counsel shall be reasonably acceptable to the
Trustee, the Issuer or the Rating Agencies, as
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applicable, and which opinion or opinions shall be in form reasonably
satisfactory to the Trustee, if applicable.
"Outstanding" with respect to Transition Bonds means, as of the date of
determination, all Transition Bonds theretofore authenticated and delivered
under the Indenture except:
(a) Transition Bonds theretofore canceled by the Transition Bond
Registrar or delivered to the Transition Bond Registrar for
cancellation;
(b) Transition Bonds or portions thereof the payment for which money
in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent in trust for the Holders of such
Transition Bonds; provided, however, that if such Transition
Bonds are to be redeemed, notice of such redemption has been duly
given pursuant to the Indenture or provision therefor,
satisfactory to the Trustee, made; and
(c) Transition Bonds in exchange for or in lieu of other Transition
Bonds which have been authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Trustee is presented
that any such Transition Bonds are held by a protected purchaser;
provided that in determining whether the Holders of the requisite Outstanding
Amount of the Transition Bonds or any Series or Class thereof have given any
request, demand, authorization, direction, notice, consent or waiver under the
Indenture or under or with respect to any other Basic Document or any Hedge
Agreement or Interest Rate Swap Agreement, Transition Bonds owned by the Issuer,
any other obligor upon the Transition Bonds, ACE or any Affiliate of any of the
foregoing Persons shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be fully protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Transition Bonds that a Responsible Officer of the Trustee actually
knows to be so owned shall be so disregarded. Transition Bonds so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Transition Bonds and that the pledgee is not the Issuer,
any other obligor upon the Transition Bonds, ACE or any Affiliate of any of the
foregoing Persons.
"Outstanding Amount" means, with respect to one or more Classes or Series,
the aggregate principal amount of, as the context requires, all Outstanding
Transition Bonds of such Class or Classes or of such Series or group of Series.
"Overcollateralization" means, with respect to any Payment Date and any
Series, the amount, if any, that, if deposited to the Overcollateralization
Subaccount for such Series on such Payment Date, would cause the balance in such
subaccount on such Payment Date to equal the Scheduled Overcollateralization
Level for such Series on such Payment Date.
"Overcollateralization Amount" means, with respect to any Series, the
amount specified as such in Schedule B to the Series Supplement therefor.
"Overcollateralization Subaccount" with respect to any Series has the
meaning specified in Section 8.02(a) of the Indenture.
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"Paying Agent" means the Trustee or any other Person, including any Person
appointed pursuant to Section 3.02(b) of the Indenture, that meets the
eligibility standards for the Trustee specified in Section 6.11 of the Indenture
and is authorized by the Issuer to make the payments of principal of or premium,
if any, or interest on the Transition Bonds on behalf of the Issuer.
"Payment Date" means January 20, April 20, July 20 and October 20, or, if
any such date is not a Business Day, the next succeeding Business Day.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), business trust, limited liability company, unincorporated organization
or government or any agency or political subdivision thereof.
"Petition" means the petition filed by ACE with the BPU, dated June 25,
2001.
"Predecessor Transition Bond" means, with respect to any particular
Transition Bond, every previous Transition Bond evidencing all or a portion of
the same debt as that evidenced by such particular Transition Bond; and, for the
purpose of this definition, any Transition Bond authenticated and delivered
under Section 2.06 of the Indenture in lieu of a mutilated, lost, destroyed or
stolen Transition Bond shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Transition Bond.
"Principal" means, with respect to any Payment Date and each Series or
Class of Transition Bonds:
(a) the amount of principal scheduled to be paid on such Payment Date
in accordance with the Expected Amortization Schedule;
(b) the amount of principal due on the Final Maturity Date of any
Series or Class on such Payment Date;
(c) the amount of principal due as a result of the occurrence and
continuance of an Event of Default and acceleration of the
Transition Bonds;
(d) the amount of principal and premium, if any, due as a result of a
redemption of Transition Bonds on such Payment Date; and
(e) any overdue payments of principal.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency" means, as of any date, any rating agency rating the
Transition Bonds of any Class or Series at the time of issuance thereof at the
request of the Issuer. If no such organization or successor is any longer in
existence, "Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Issuer, notice of
which designation shall be given to the Trustee, the Member and the Servicer.
"Rating Agency Condition" means, with respect to any action, the
notification in writing by the Trustee to each Rating Agency of such action and
the notification by each Rating Agency to the Trustee and the Issuer that such
action will not result in a reduction or withdrawal of the then current
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rating by such Rating Agency of any Outstanding Series or Class of Transition
Bonds; provided that, except where such action includes the issuance of
Transition Bonds of a new Series (either as a Financing Issuance or as a
Refunding Issuance), the Rating Agency Condition shall be satisfied with respect
to Moody's by providing Moody's 10 Business Days' prior written notice of such
action.
"Reconciliation Date" for a particular Billing Month means the fifteenth
day (or if that day is not a Business Day, the next succeeding Business Day) of
the calendar month that is seven months after such Billing Month.
"Record Date" has, with respect to any Series, the meaning set forth in the
related Series Supplement.
"Redemption Date" means, with respect to each Series or Class of Transition
Bonds, the date for the redemption of the Transition Bonds of such Series or
Class pursuant to Section 10.01 or 10.02 of the Indenture or the Series
Supplement for such Series or Class, which in each case shall be a Payment Date.
"Redemption Price" has the meaning set forth in Section 10.01 of the
Indenture.
"Refunding Issuance" means an issuance of a new Series of Transition Bonds
under the Indenture to pay the cost of refunding, through redemption or payment
on the Expected Final Payment Date for a Series or Class of Transition Bonds,
all or part of the Transition Bonds of such Series or Class to the extent
permitted by the terms thereof.
"Registered Holder" means, as of any date, the Person in whose name a
Transition Bond is registered in the Transition Bond Register on such date.
A Payment Date "relates" to a Measure Period in each of the following
circumstances: (i) if such Measure Period is one year in length, each of the
second, third, fourth and fifth Payment Dates to occur after the first day in
such Measure Period relates to such Measure Period; (ii) if such Measure Period
is one calendar quarter in length, the first Payment Date to occur following the
end of such Measure Period relates to such Measure Period; and (iii) if such
Measure Period is one month in length, the first Payment Date to occur following
the end of the calendar quarter in which such Measure Period falls relates to
such Measure Period.
"Released Parties" has the meaning specified in Section 5.02(e) of the
Servicing Agreement.
"Remittance Date" means a Daily Remittance Date or a Monthly Remittance
Date, as applicable.
"Required Capital Amount" means, with respect to any Series, the amount
required to be deposited in the Capital Subaccount for such Series on the Series
Issuance Date of such Series, as specified in the related Series Supplement.
"Reserve Subaccount" with respect to any Series has the meaning specified
in Section 8.02(a) of the Indenture.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any vice president,
assistant vice president, secretary, assistant secretary, or any other officer
of the Trustee customarily performing functions similar to those
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performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Restructuring Order" means the decision and order of the BPU issued on
March 30, 2001 pursuant to Section 13 of the Competition Act.
"Retiring Trustee" has the meaning specified in Section 6.08(b) of the
Indenture.
"Revenue Requirement" means, for any Series with respect to any Measure
Period, the aggregate amount estimated in good faith by the Servicer, pursuant
to the Issuer Annex, to be payable in respect of such Series pursuant to
Sections 8.02(d) and 8.02(e) of the Indenture during such Measure Period.
"Sale Agreement" means the Bondable Transition Property Sale Agreement
dated as of December 19, 2002, between the Seller and the Issuer, as the same
may be amended or supplemented from time to time.
"Scheduled Overcollateralization Level" means, with respect to each Series
and any Payment Date, the amount with respect to such Series set forth as such
in Schedule B to the Series Supplement for such Series.
"Scheduled Transition Bond Balance" means, as of any date, the sum of the
amounts provided for in the Expected Amortization Schedules for each outstanding
Series of Transition Bonds as of such date.
"Seller" means ACE, in its capacity as seller of the Bondable Transition
Property to the Issuer pursuant to the Sale Agreement.
"Series" means the Series 2002-1 Transition Bonds and any subsequent series
of Transition Bonds issued by the Issuer and authenticated by the Trustee
pursuant to the Indenture, as specified in the Series Supplement therefor.
"Series Capital Subaccount" with respect to each Series has the meaning
specified in Section 8.02(a) of the Indenture and in the related Series
Supplement.
"Series Final Maturity Date" means the Final Maturity Date for a Series.
"Series Issuance Date" means, with respect to any Series, the date on which
the Transition Bonds of such Series are to be originally issued in accordance
with Section 2.10 of the Indenture and the Series Supplement for such Series.
"Series Overcollateralization Subaccount" with respect to each Series has
the meaning specified in Section 8.02(a) of the Indenture and in the related
Series Supplement.
"Series Reserve Subaccount" with respect to each Series has the meaning
specified in Section 8.02(a) of the Indenture and in the related Series
Supplement.
"Series Subaccount" with respect to each Series has the meaning specified
in Section 8.02(a) of the Indenture and in the related Series Supplement.
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"Series Supplement" means any Supplemental Indenture that authorizes a
particular Series of Transition Bonds, as the same may be amended or
supplemented from time to time.
"Servicer" means ACE, as the servicer of the Bondable Transition Property,
and each successor to ACE (in the same capacity) pursuant to Section 5.03 or
6.04 of the Servicing Agreement.
"Servicer Default" means an event specified in Section 6.01 of the
Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement dated as of December
19, 2002, between the Issuer and the Servicer, as the same may be amended or
supplemented from time to time.
"Special Member" has the meaning set forth in the Issuer LLC Agreement.
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings Group, a
division of The XxXxxx-Xxxx Companies, Inc., or its successor.
"state" in the jurisdictional sense means any one of the 50 states of the
United States of America or the District of Columbia.
"Subaccount" means any of the subaccounts of the Collection Account
specified in Section 8.02 of the Indenture.
"Subsequent Purchase Price" means, in relation to a Subsequent Sale, the
price specified in the related Xxxx of Sale, to be paid by the Issuer for the
Subsequent Transferred Bondable Transition Property purchased and sold in such
Subsequent Sale.
"Subsequent Sale" means any sale of Bondable Transition Property by the
Seller to the Issuer after the Initial Transfer Date.
"Subsequent Transfer Date" means a date on which a sale of Subsequent
Transferred Bondable Transition Property is effective, as specified in the
written notice relating to such sale contemplated in Section 2.02(e) of the Sale
Agreement.
"Subsequent Transferred Bondable Transition Property" means Bondable
Transition Property sold by the Seller to the Issuer as of a Subsequent Transfer
Date pursuant to the Sale Agreement and a Xxxx of Sale delivered on or prior to
the related Subsequent Transfer Date as identified in such Xxxx of Sale.
"Successor Servicer" means a successor Servicer appointed by the Trustee
pursuant to Section 6.04 of the Servicing Agreement which succeeds to all the
rights and duties of the Servicer under the Servicing Agreement.
"Supplemental Indenture" means a supplemental indenture entered into by the
Issuer and the Trustee pursuant to Article IX of the Indenture.
"Target Payment Date" has the meaning specified in Section 5(a) of the
Issuer Annex.
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"TBC Collections" means amounts received by the Servicer in respect of the
Transition Bond Charge.
"Termination Notice" has the meaning specified in Section 6.01 of the
Servicing Agreement.
"Third Party" means any third party, including any electric generation
supplier, providing billing or metering services, licensed by the BPU pursuant
to relevant provisions of the Competition Act, the BPU Regulations and the BPU
Financing Orders.
"Total Revenue Requirement" means, as of any date of determination, the sum
of the Revenue Requirements for all Series outstanding as of such date.
"Transfer Date" means the Initial Transfer Date or any Subsequent Transfer
Date, as applicable.
"Transferred Bondable Transition Property" means, collectively, all
Bondable Transition Property that has been sold, assigned and transferred to the
Issuer pursuant to the Sale Agreement.
"Transition Bond" means any of the transition bonds (as defined in the
Competition Act) issued by the Issuer pursuant to the Indenture.
"Transition Bond Balance" means, as of any date, the aggregate Outstanding
Amount of all Series of Transition Bonds on such date.
"Transition Bond Charge" means the Transition Bond Charge authorized by the
BPU to be imposed on all Customers by ACE or its successor to recover Bondable
Stranded Costs pursuant to the Competition Act and the BPU Financing Orders.
"Transition Bond Charge Adjustment" means each adjustment to Transition
Bond Charge related to the Transferred Bondable Transition Property made in
accordance with Section 4.01 of the Servicing Agreement and the Issuer Annex.
"Transition Bond Charge Adjustment Process" means the process by which
adjustments are made to the Transition Bond Charge or to the formula governing
such adjustments, in either case pursuant to Section 4.01 of the Servicing
Agreement and the Issuer Annex, the Competition Act, the Petition and the BPU
Financing Orders.
"Transition Bond Owner" means, with respect to a Book-Entry Transition
Bond, the Person who is the beneficial owner of such Book-Entry Transition Bond,
as reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Transition Bond Register" has the meaning specified in Section 2.05(a) of
the Indenture.
"Transition Bond Registrar" has the meaning specified in Section 2.05(a) of
the Indenture.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as in
force on the date of the Indenture, unless otherwise specifically provided
therein.
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"Trustee" means The Bank of New York, a New York banking corporation, in
the capacity specified in the first paragraph of the Indenture, or any successor
Trustee under the Indenture.
"Underwriting Agreement" means the Underwriting Agreement dated as of
December 11, 2002, among the Seller, the Issuer and Xxxxxx Xxxxxxx & Co.
Incorporated, on behalf of itself and as the representative of the several
underwriters named therein.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
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