Exhibit 10.2
BGS BONDABLE TRANSITION PROPERTY SERVICING AGREEMENT
between
PSE&G TRANSITION FUNDING II LLC
Issuer
and
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
Servicer
Dated as of September 23, 2005
TABLE OF CONTENTS
Page
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ARTICLE I Definitions............................................................................................1
Section 1.01. Definitions...............................................................................1
Section 1.02. Other Definitional Provisions.............................................................1
ARTICLE II Appointment and Authorization of Servicer.............................................................2
Section 2.01. Appointment of Servicer; Acceptance of Appointment........................................2
Section 2.02. Authorization.............................................................................2
Section 2.03. Dominion and Control over Transferred BGS Bondable Transition Property....................2
ARTICLE III Billing Services.....................................................................................3
Section 3.01. Duties of Servicer........................................................................3
Section 3.02. Collection and Allocation of the BGS Transition Bond Charge...............................4
Section 3.03. Payment of TBC Collections................................................................4
Section 3.04. Servicing and Maintenance Standards.......................................................6
Section 3.05. Servicer's Certificates...................................................................7
Section 3.06. Annual Statement as to Compliance.........................................................7
Section 3.07. Annual Independent Certified Public Accountants' Report...................................7
Section 3.08. BGS Bondable Transition Property Documentation............................................8
Section 3.09. Computer Records; Audits of Documentation.................................................8
Section 3.10. Defending Transferred BGS Bondable Transition Property Against Claims.....................9
Section 3.11. Opinions of Counsel.......................................................................9
ARTICLE IV Services Related to BGS Transition Bond Charge Adjustments...........................................10
Section 4.01. BGS Transition Bond Charge Adjustments...................................................10
ARTICLE V The Servicer..........................................................................................10
Section 5.01. Representations and Warranties of Servicer...............................................10
Section 5.02. Indemnities of Servicer; Release of Claims...............................................12
Section 5.03. Merger or Consolidation of, or Assumption of the Obligations of, Servicer................14
Section 5.04. Assignment of Servicer's Obligations.....................................................15
Section 5.05. Limitation on Liability of Servicer and Others...........................................15
Section 5.06. PSE&G Not To Resign as Servicer..........................................................16
Section 5.07. Monthly Servicing Fee....................................................................16
Section 5.08. Servicer Expenses........................................................................16
Section 5.09. Subservicing.............................................................................16
Section 5.10. No Servicer Advances.....................................................................17
Section 5.11. Remittances..............................................................................17
Section 5.12. Protection of Title......................................................................17
TABLE OF CONTENTS
(continued)
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ARTICLE VI Servicer Default.....................................................................................18
Section 6.01. Servicer Default.........................................................................18
Section 6.02. Notice of Servicer Default...............................................................19
Section 6.03. Waiver of Past Defaults..................................................................19
Section 6.04. Appointment of Successor.................................................................19
Section 6.05. Cooperation with Successor...............................................................20
ARTICLE VII Miscellaneous Provisions............................................................................20
Section 7.01. Amendment................................................................................20
Section 7.02. Notices..................................................................................22
Section 7.03. Limitations on Rights of Others..........................................................22
Section 7.04. Severability.............................................................................22
Section 7.05. Separate Counterparts....................................................................23
Section 7.06. Headings.................................................................................23
Section 7.07. GOVERNING LAW............................................................................23
Section 7.08. Assignment to the Trustee................................................................23
Section 7.09. Nonpetition Covenants....................................................................23
Section 7.10. Termination..............................................................................23
ANNEX 1 TBC Adjustment Process and Reports--
PSE&G Transition Funding II LLC
APPENDIX A Master Definitions
EXHIBIT A Servicing Procedures
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BGS BONDABLE TRANSITION PROPERTY SERVICING AGREEMENT, dated as of
September 23, 2005, by and between PSE&G TRANSITION FUNDING II LLC, a Delaware
limited liability company, as issuer (the "Issuer"), and PUBLIC SERVICE
ELECTRIC AND GAS COMPANY, a New Jersey corporation ("PSE&G"), as the servicer
of the BGS Bondable Transition Property hereunder (together with each
successor to PSE&G (in the same capacity) pursuant to Section 5.03, 5.04 or
6.04, the "Servicer").
W I T N E S S E T H:
WHEREAS the Servicer is willing to service the Transferred BGS
Bondable Transition Property purchased from the Seller by the Issuer; and
WHEREAS the Issuer, in connection with ownership of Transferred BGS
Bondable Transition Property, desires to engage the Servicer to carry out the
functions described herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized terms used but not otherwise
defined herein have the meanings assigned to them in Appendix A hereto.
Section 1.02. Other Definitional Provisions.
(a) "Agreement" means this BGS Bondable Transition Property Servicing
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.
(b) Non-capitalized terms used herein which are defined in the
Competition Act, as the context requires, have the meanings assigned to such
terms in the Competition Act, but without giving effect to amendments to the
Competition Act after the date hereof which have a material adverse effect on
the Issuer or the BGS Transition Bondholders.
(c) All terms defined in this Agreement have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.
(d) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section, Annex,
Schedule and Exhibit references contained in this Agreement are references to
Sections, Annexes, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms.
ARTICLE II
APPOINTMENT AND AUTHORIZATION OF SERVICER
Section 2.01. Appointment of Servicer; Acceptance of Appointment.
Subject to Section 5.06 and Article VI, the Issuer hereby appoints the
Servicer, and the Servicer hereby accepts such appointment, to perform the
Servicer's obligations pursuant to this Agreement on behalf of and for the
benefit of the Issuer in accordance with the terms of this Agreement. This
appointment and the Servicer's acceptance thereof may not be revoked except in
accordance with the express terms of this Agreement.
Section 2.02. Authorization. With respect to all or any portion of
the Transferred BGS Bondable Transition Property, the Servicer shall be, and
hereby is, authorized and empowered by the Issuer to:
(a) execute and deliver, on behalf of itself, the Issuer, or
both, as the case may be, any and all instruments, documents or
notices, and
(b) on behalf of itself, the Issuer, or both, as the case
may be, make any filing and participate in proceedings of any kind
with any governmental authorities, including with the BPU.
The Issuer shall furnish the Servicer with such documents as have
been prepared by the Servicer for execution by the Issuer, and with such other
documents as may be in the Issuer's possession, as necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder. Upon the written request of the Servicer, the Issuer shall furnish
the Servicer with any powers of attorney or other documents necessary or
appropriate to enable the Servicer to carry out its duties hereunder.
Section 2.03. Dominion and Control over Transferred BGS Bondable
Transition Property. Notwithstanding any other provision herein, the Servicer
and the Issuer agree that the Issuer shall have dominion and control over the
Transferred BGS Bondable Transition Property, and the Servicer, in accordance
with the terms hereof, is acting solely as the servicing agent of the Issuer
with respect to the Transferred BGS Bondable Transition Property. The Servicer
hereby agrees that it shall not take any action that is not authorized by this
Agreement, the Competition Act or the Financing Order, that is not consistent
with its customary procedures and practices, or that shall impair the rights
of the Issuer with respect to the Transferred BGS Bondable Transition
Property, in each case unless such action is required by law or court or
regulatory order.
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ARTICLE III
BILLING SERVICES
Section 3.01. Duties of Servicer. The Servicer, as agent for the
Issuer (to the extent provided herein), shall have the following duties:
(a) Duties of Servicer Generally. The Servicer will manage,
service, administer and make collections in respect of the BGS
Transition Bond Charge. The Servicer's duties will include:
(i) obtaining meter reads, calculating and billing
the BGS Transition Bond Charge in accordance with the
Financing Order and collecting (from Customers and Third
Parties, as applicable) all TBC Collections;
(ii) responding to inquiries by Customers, Third
Parties, the BPU, or any federal, local or other State
governmental authority with respect to the BGS Transition
Bond Charge;
(iii) delivering bills to customers and Third
Parties, accounting for TBC Collections, investigating and
resolving delinquencies, processing and depositing
collections, making periodic remittances and furnishing
periodic reports to the Issuer, the BPU, the Trustee and the
Rating Agencies;
(iv) selling, as the agent for the Issuer, as its
interest may appear, defaulted or written off accounts in
accordance with the Servicer's usual and customary practices
for accounts of its own electric service customers; and
(v) taking action in connection with BGS Transition
Bond Charge Adjustments as is set forth herein.
Anything to the contrary notwithstanding, the duties of the
Servicer set forth in this Agreement shall be qualified in their
entirety by the Competition Act, the Financing Order and any BPU
Regulations, as in effect at the time such duties are to be
performed. Without limiting the generality of this Section 3.01(a),
in furtherance of the foregoing, the Servicer hereby agrees that it
shall also have, and shall comply with, the duties and
responsibilities set forth in Annex 1 which, among other things,
relate to data acquisition, usage and xxxx calculation, billing,
customer service functions, collections, payment processing and
remittance.
(b) Notification of Laws and Regulations. The Servicer shall
immediately notify the Issuer, the BPU, the Trustee and the Rating
Agencies in writing of any laws or BPU Regulations hereafter
promulgated that have a material adverse effect on the Servicer's
ability to perform its duties under this Agreement.
(c) Other Information. Upon the reasonable request of the
Issuer, the BPU, the Trustee or any Rating Agency, the Servicer shall
provide to the Issuer, the BPU, the Trustee or the Rating Agencies,
as the case may be, any public financial information in
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respect of the Servicer, or any material information regarding the
Transferred BGS Bondable Transition Property to the extent it is
reasonably available to the Servicer, that may be reasonably
necessary and permitted by law for the Issuer, the BPU, the Trustee
or the Rating Agencies to monitor the performance by the Servicer
hereunder. In addition, so long as any of the BGS Transition Bonds of
any Series are outstanding, the Servicer shall provide to the Issuer,
the BPU and to the Trustee, within a reasonable time after written
request therefor, any information available to the Servicer or
reasonably obtainable by it that is necessary to calculate the BGS
Transition Bond Charge.
Section 3.02. Collection and Allocation of the BGS Transition Bond
Charge.
(a) The Servicer shall use all reasonable efforts, consistent with
its customary servicing procedures, to collect all amounts owed in respect of
the BGS Transition Bond Charge as and when the same shall become due and shall
follow such collection procedures as it follows with respect to collection
activities that the Servicer conducts for itself or others. The Servicer shall
not change the amount of or reschedule the due date of any scheduled payment
of the BGS Transition Bond Charge, except as contemplated in this Agreement or
as required by law or court or BPU Regulations; provided, however, that the
Servicer may take any of the foregoing actions to the extent that such action
would be in accordance with customary billing and collection practices of the
Servicer with respect to billing and collection activities that it conducts
for itself. The Servicer shall enforce the obligations of any Third Parties
providing billing and collection services with respect to the BGS Transition
Bond Charge.
(b) As specified in the Petition and the Financing Order, any amounts
received by the Servicer from a Customer that represent a partial payment
toward an outstanding balance will be applied in the following manner:
(i) to sales taxes (which the Servicer collects as trustee
for the State of New Jersey and not for its own account or for that
of the Issuer);
(ii) pro rata to the BGS Transition Bond Charge and the
Servicer's other charges and taxes, where any of such charges are in
arrears, based on their proportion to the Servicer's total charges in
arrears for that period; and
(iii) pro rata to the BGS Transition Bond Charge and the
Servicer's other charges and taxes, where any of such charges are
current charges, based on their proportion to the Servicer's total
current charges assessed for that period.
PSE&G's other charges may include gas charges which may be billed together
with electric charges, the market transition charge, the MTC-Tax and all other
charges which PSE&G and any Third Party may be authorized to xxxx and collect
from Customers on account of electric and gas service. If there is more than
one Series of BGS Transition Bonds, the Servicer shall allocate partial
payments among such Series, pro rata, based on the respective outstanding
amounts payable with respect to such Series.
Section 3.03. Payment of TBC Collections. (a) The Servicer shall
prepare annually a Collections Curve for each Billing Month, based on
statistically significant random sampling of actual TBC Collections. With the
exception of the Monthly Servicing Fee, which the Servicer is
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entitled to withhold from TBC Collections pursuant to Section 5.07 hereof, the
Servicer agrees to remit TBC Collections for each Billing Month to the Trustee
for deposit in the Collection Account not later than the corresponding
Reconciliation Date or Dates following such Billing Month. In addition, the
Servicer agrees to make periodic payments on account of TBC Collections to the
Trustee for deposit in the Collection Account as follows:
(i) on each Monthly Remittance Date, for so long as the
Servicer has satisfied the conditions of Section 5.11(b), the
Servicer shall remit to the Trustee for each of the seven preceding
Billing Months an amount equal to the amount of TBC Collections
estimated to have been received during the preceding calendar month,
based on the applicable Collections Curve then in effect for those
seven preceding Billing Months, and
(ii) on each Daily Remittance Date, for so long as the
Servicer has not satisfied the conditions of Section 5.11(b), the
Servicer shall remit to the Trustee for the Billing Month in which
such Daily Remittance Date occurs and for each of the six preceding
Billing Months an amount equal to the amount of TBC Collections
estimated to have been received during the Business Day which is two
Business Days preceding such Daily Remittance Date for those seven
Billing Months (including the Billing Month in which such Daily
Remittance Date occurs), including (for the first Daily Remittance
Date following a period when the Servicer had been remitting on a
monthly Remittance Date) any amounts on deposit with the Servicer
(for the Billing Month and any prior Billing Month) prior to such
Daily Remittance Date during a period when the Servicer had been
remitting on a Monthly Remittance Date, provided that,
(x) in the case of each such Billing Month other than the
Billing Month in which such Daily Remittance Date occurs,
such estimate shall be made by dividing (1) the amount of
TBC Collections estimated to be received during the calendar
month in which such Daily Remittance Date occurs ("the
current remittance month"), based on the applicable
Collections Curve then in effect, for each of those six
preceding Billing Months, divided by (2) the number of
Business Days in the current remittance month,
(y) in the case of the Billing Month in which such Daily
Remittance Date occurs, such estimate shall be made, by
first, determining the amount of TBC Collections estimated
to be received during that Billing Month, based on the
applicable Collections Curve then in effect, for each day on
which bills are sent in such Billing Month (each, a "Billing
Day"; such estimated TBC Collections during such Billing
Month for each Billing Day being the "Billing Month
Estimated Collections" for such Billing Day),
second, dividing the amount of the Billing Month Estimated
Collections for such Billing Day by the number of Business
Days remaining in such
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Billing Month (for each Billing Day, the "Daily Billing
Month Estimated Collections" for such Billing Month),
third, for each Daily Remittance Date during such Billing
Month, summing the amount of the Daily Billing Month
Estimated Collections for each Billing Day in such Billing
Month through the Business Day which is two Business Days
preceding such Daily Remittance Date, and
(z) for each Daily Remittance Date, any unremitted Daily Billing
Month Estimated Collections received in the preceding
Billing Month on a Business Day that is two Business Days
preceding such Daily Remittance Date in accordance with
subclause (y) above shall be remitted on such Daily
Remittance Date.
(b) On or before each Reconciliation Date, the Servicer shall
determine whether there exists a Curve Payment Shortfall or an Excess Curve
Payment by comparing the actual TBC Collections to the Collection Curve
Payments previously made to the Trustee in respect of (i) for each Annual
Reconciliation Date, each of the twelve Billing Months beginning 19 months
before the month in which such Reconciliation Date occurs (or from the first
Series Issuance Date, if less than 19 months have elapsed), and (ii) for each
Monthly Reconciliation Date, the Billing Month that is eight months prior to
the Billing Month in which such Reconciliation Date occurs. In the event that
there is a Curve Payment Shortfall with respect to the applicable Billing
Months or Billing Month, as the case may be, the Servicer shall pay the Curve
Payment Shortfall to the Trustee for deposit into the Collection Account on
that Reconciliation Date. In the event that there is an Excess Curve Payment
for the applicable Billing Months or Billing Month, as the case may be, the
Servicer may either (A) reduce the amount that the Servicer is required to
remit to the Trustee for deposit in the Collection Account on the following
Remittance Date (and, if necessary, succeeding Remittance Dates) by the amount
of the Excess Curve Payment, or (B) require the Trustee to pay to the Servicer
from the General Subaccount the amount of the Excess Curve Payment, which upon
payment shall become the property of the Servicer.
(c) The Servicer agrees and acknowledges that it holds all TBC
Collections collected by it for the benefit of the Issuer and that all amounts
will be remitted by the Servicer in accordance with this Agreement without any
surcharge, fee, offset, charge or other deduction and without making any claim
to reduce its obligation to remit all TBC Collections collected by it, except
(i) as set forth in clause (b) above, (ii) the Monthly Servicing Fee which it
may withhold pursuant to Section 5.07 hereof and (iii) late fees permitted by
Section 5.07.
Section 3.04. Servicing and Maintenance Standards. The Servicer
shall, on behalf of the Issuer:
(a) manage, service, administer and make collections in
respect of the Transferred BGS Bondable Transition Property with
reasonable care and in material compliance with applicable law,
including all applicable BPU Regulations, using the same degree of
care and diligence that the Servicer exercises with respect to
billing and collection activities that the Servicer conducts for
itself and others;6
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(b) follow standards, policies and procedures in performing
its duties as Servicer that are customary in the electric
distribution industry;
(c) use all reasonable efforts, consistent with its
customary servicing procedures, to enforce and maintain the Issuer's
and the Trustee's rights in respect of the Transferred BGS Bondable
Transition Property; and
(d) calculate the BGS Transition Bond Charge in compliance
with the Competition Act, the Financing Order and any applicable
tariffs; and
(e) invoice Customer in accordance with the procedures set
forth in Exhibit A.
except where the failure to comply with any of the foregoing would not
materially and adversely affect the Issuer's or the Trustee's interest in the
Transferred BGS Bondable Transition Property. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of the Transferred BGS Bondable Transition
Property, which, in the Servicer's judgment, may include the taking of legal
action pursuant to Section 3.10 or otherwise. Notwithstanding the foregoing,
the Servicer shall not change its customary and usual practices and procedures
in any manner that would materially and adversely affect the Issuer's or the
Trustee's interest in the Transferred BGS Bondable Transition Property unless
it shall have provided the Rating Agencies with prior written notice.
Section 3.05. Servicer's Certificates. The Servicer will provide to
the Issuer, the BPU and to the Trustee the statements and certificates
specified in Annex 1.
Section 3.06. Annual Statement as to Compliance.
The Servicer shall deliver to the Issuer, the BPU, the Trustee and
each Rating Agency, on or before March 31 of each year beginning March 31,
2006 to and including March 31 succeeding the retiring of the BGS Transition
Bonds, an Officers' Certificate, stating that:
(a) a review of the activities of the Servicer during the
preceding calendar year (or relevant portion thereof in the case of
the first such Officer's Certificate) and of its performance under
this Agreement has been made under such officers' supervision, and
(b) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under this
Agreement throughout such period or, if there has been a default in
the fulfillment of any such obligation, describing each such default
and its status.
Section 3.07. Annual Independent Certified Public Accountants'
Report.
(a) The Servicer shall cause a firm of independent certified public
accountants (which may also provide other services to the Servicer or the
Seller) to prepare, and the Servicer shall deliver to the Issuer, the BPU to
the Trustee and to each Rating Agency, on or before March 31 of each year,
beginning March 31, 2006 to and including the March 31 succeeding the
retirement of all BGS Transition Bonds, a report addressed to the Servicer
(the "Annual Accountant's
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Report"), which may be included as part of the Servicer's customary auditing
activities, to the effect that such firm has performed certain procedures in
connection with the Servicer's compliance with its obligations under this
Agreement during the preceding calendar year (or, in the case of the first
Annual Accountant's Report, the period of time from the Initial Transfer Date
until December 31, 2005), identifying the results of such procedures and
including any exceptions noted. In the event such accounting firm requires the
Trustee or the Issuer to agree or consent to the procedures performed by such
firm, the Issuer shall direct the Trustee in writing to so agree; it being
understood and agreed that the Trustee will deliver such letter of agreement
or consent in conclusive reliance upon the direction of the Issuer, and the
Trustee will not make any independent inquiry or investigation as to, and
shall have no obligation or liability in respect of, the sufficiency, validity
or correctness of such procedures.
(b) The Annual Accountant's Report shall also indicate that the
accounting firm providing such report is independent of the Servicer within
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
Section 3.08. BGS Bondable Transition Property Documentation. To
assure uniform quality in servicing the Transferred BGS Bondable Transition
Property and to reduce administrative costs, the Servicer shall keep on file,
in accordance with its customary procedures, all BGS Bondable Transition
Property Documentation, it being understood that the Servicer is acting solely
as the servicing agent and custodian for the Issuer with respect to the BGS
Bondable Transition Property Documentation.
Section 3.09. Computer Records; Audits of Documentation.
(a) Safekeeping. The Servicer shall maintain accurate and complete
accounts, records and computer systems pertaining to the Transferred BGS
Bondable Transition Property and the BGS Bondable Transition Property
Documentation in accordance with its standard accounting procedures and in
sufficient detail to permit reconciliation between payments or recoveries on
(or with respect to) the BGS Transition Bond Charge and the TBC Collections
from time to time remitted to the Trustee pursuant to Section 3.03 and to
enable the Issuer to comply with this Agreement and the Indenture. The
Servicer shall conduct, or cause to be conducted, periodic audits of the BGS
Bondable Transition Property Documentation held by it under this Agreement and
of the related accounts, records and computer systems, in such a manner as
shall enable the Issuer and the Trustee, as pledgee of the Issuer, to verify
the accuracy of the Servicer's record keeping. The Servicer shall promptly
report to the Issuer, the BPU and to the Trustee any failure on the Servicer's
part to hold the BGS Bondable Transition Property Documentation and maintain
its accounts, records and computer systems as herein provided and promptly
take appropriate action to remedy any such failure. Nothing herein shall be
deemed to require an initial review or any periodic review by the Issuer or
the Trustee of the BGS Bondable Transition Property Documentation. The
Servicer's duties to hold the BGS Bondable Transition Property Documentation
on behalf of the Issuer set forth in this Section 3.09, to the extent such BGS
Bondable Transition Property Documentation has not been previously transferred
to a successor Servicer, shall terminate three years after the earlier of the
date on which (i) the Servicer is succeeded by a successor Servicer pursuant
to the provisions of this Agreement or (ii) no BGS Transition Bonds of any
Series are outstanding.
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(b) Maintenance of and Access to Records. The Servicer shall maintain
the BGS Bondable Transition Property Documentation at 00 Xxxx Xxxxx, Xxxxxx,
Xxx Xxxxxx or at such other office as shall be specified to the Issuer, the
BPU and to the Trustee by written notice not later than 30 days prior to any
change in location. The Servicer shall permit the Issuer, the BPU and the
Trustee or their respective duly authorized representatives, attorneys, agents
or auditors at any time during normal business hours to inspect, audit and
make copies of and abstracts from the Servicer's records regarding the
Transferred BGS Bondable Transition Property, the BGS Transition Bond Charge
and the BGS Bondable Transition Property Documentation. The failure of the
Servicer to provide access to such information as a result of an obligation or
applicable law (including BPU Regulations) prohibiting disclosure of
information regarding customers shall not constitute a breach of this Section
3.09(b).
Section 3.10. Defending Transferred BGS Bondable Transition Property
Against Claims. The Servicer shall institute and maintain any action or
proceeding necessary to compel performance by the BPU or the State of New
Jersey of any of their obligations or duties under the Competition Act or the
Financing Order with respect to the Transferred BGS Bondable Transition
Property, and the Servicer agrees to take such legal or administrative
actions, including defending against or instituting and pursuing legal actions
and appearing or testifying at hearings or similar proceedings, as may be
reasonably necessary to block or overturn any attempts to cause a repeal of,
modification of or supplement to the Competition Act or the Financing Order,
as the case may be, or the rights of holders of Transferred BGS Bondable
Transition Property that would be adverse to BGS Transition Bondholders. The
costs of any such action reasonably allocated by the Servicer to the
Transferred BGS Bondable Transition Property shall be payable from TBC
Collections as an Operating Expense in accordance with the Indenture. The
Servicer's obligations pursuant to this Section 3.10 shall survive and
continue notwithstanding the fact that the payment of Operating Expenses
pursuant to the Indenture may be delayed (it being understood that the
Servicer may be required to advance its own funds to satisfy its obligations
under this Section 3.10).
Section 3.11. Opinions of Counsel. The Servicer shall deliver to the
Issuer, the BPU and to the Trustee:
(a) promptly after the execution and delivery of this
Agreement and of the Sale Agreement and of each amendment hereto or
thereto, and on each Transfer Date, an Opinion of Counsel either:
(i) to the effect that, in the opinion of such
counsel, all UCC filings that are necessary to fully
preserve and protect the interests of the Trustee in the
Transferred BGS Bondable Transition Property have been
executed and will be filed as required, and reciting the
details of such filings or referring to prior Opinions of
Counsel in which such details are given, or
(ii) to the effect that, in the opinion of such
counsel, no such action is necessary to preserve and protect
such interest; and
(b) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three full
calendar months after the Initial
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Transfer Date, an Opinion of Counsel, dated as of a date during such
90-day period, either:
(i) to the effect that, in the opinion of such
counsel, all UCC filings have been executed and filed that
are necessary to preserve fully and protect fully the
interest of the Trustee in the Transferred BGS Bondable
Transition Property, and reciting the details of such
filings or referring to prior Opinions of Counsel in which
such details are given, or
(ii) to the effect that, in the opinion of such
counsel, no such action is necessary to preserve and protect
such interest.
Each Opinion of Counsel referred to in clause (a) or (b) above shall specify
any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
ARTICLE IV
SERVICES RELATED TO BGS TRANSITION BOND CHARGE ADJUSTMENTS
Section 4.01. BGS Transition Bond Charge Adjustments. The Servicer
shall perform the calculations and take the actions relating to adjusting the
BGS Transition Bond Charge, as set forth in Annex 1.
ARTICLE V
THE SERVICER
Section 5.01. Representations and Warranties of Servicer. The
Servicer makes the following representations and warranties as of each
Transfer Date, on which the Issuer has relied and will rely in acquiring
Transferred BGS Bondable Transition Property and in entering into this
Agreement. The representations and warranties shall survive the execution and
delivery of this Agreement, the sale of the Transferred BGS Bondable
Transition Property to the Issuer and the pledge thereof to the Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is a corporation
duly organized and in good standing under the laws of the State of its
incorporation, with the corporate power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is presently conducted and to execute, deliver and carry out the
terms of this Agreement, and has the power, authority and legal right to
service the Transferred BGS Bondable Transition Property.
(b) Due Qualification. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in, all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the servicing of the
Transferred BGS Bondable Transition Property as required by this Agreement)
requires such qualifications, licenses or approvals (except where the failure
to so qualify would not be reasonably likely to have a material adverse effect
on the Servicer's
10
business, operations, assets, revenues, properties or prospects or adversely
affect the servicing of the Transferred BGS Bondable Transition Property).
(c) Power and Authority. The Servicer has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms;
and the execution, delivery and performance of this Agreement have been duly
authorized by the Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable against the Servicer in
accordance with its terms subject to bankruptcy, receivership, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
from time to time in effect and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof will not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the Servicer, or any indenture,
agreement or other instrument to which the Servicer is a party or by which it
is bound; or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument; or violate any law or any order, rule or regulation applicable to
the Servicer of any court or of any federal or State regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or its properties.
(f) Approvals. Except for filings with the BPU for adjusting the BGS
Transition Bond Charge pursuant to Section 4.01 and Annex 1, filing of
financing statements under the UCC and UCC continuation filings, no approval,
authorization, consent, order or other action of, or filing with, any court,
federal or State regulatory body, administrative agency or other governmental
instrumentality is required in connection with the execution and delivery by
the Servicer of this Agreement, the performance by the Servicer of the
transactions contemplated hereby or the fulfillment by the Servicer of the
terms hereof, except those that have been obtained or made.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's best knowledge, threatened before any court,
federal or State regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties:
(i) seeking to prevent the issuance of the BGS Transition
Bonds or the consummation of any of the transactions contemplated by
this Agreement or any of the other Basic Documents;
(ii) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of
its obligations under, or the validity or enforceability against the
Servicer of, this Agreement or any of the other Basic Documents; or
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(iii) relating to the Servicer and which might materially
and adversely affect the federal or State income, gross receipts or
franchise tax attributes of the BGS Transition Bonds.
(h) Reports and Certificates. Each report and certificate delivered
in connection with any filing made to the BPU by the Servicer on behalf of the
Issuer with respect to the BGS Transition Bond Charge or BGS Transition Bond
Charge Adjustments will constitute a representation and warranty by the
Servicer that each such report or certificate, as the case may be, is true and
correct in all material respects; provided, however, that to the extent any
such report or certificate is based in part upon or contains assumptions,
forecasts or other predictions of future events, the representation and
warranty of the Servicer with respect thereto will be limited to the
representation and warranty that such assumptions, forecasts or other
predictions of future events are reasonable based upon historical performance.
Section 5.02. Indemnities of Servicer; Release of Claims.
(a) The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Servicer under this
Agreement.
(b) The Servicer shall indemnify the Issuer and the Trustee (for
itself and on behalf of the BGS Transition Bondholders) and each of their
respective trustees, members, managers, officers, directors, employees and
agents for, and defend and hold harmless each such Person from and against,
any and all Losses that may be imposed upon, incurred by or asserted against
any such Person as a result of:
(i) the Servicer's willful misconduct, recklessness or gross
negligence in the performance of its duties or observance of its
covenants under this Agreement or the Servicer's reckless disregard
of its obligations and duties under this Agreement;
(ii) the Servicer's breach of any of its representations or
warranties in this Agreement; and
(iii) litigation and related expenses relating to its status
and obligations as Servicer,
provided, however, that the Servicer shall not be liable for any Losses
resulting from the willful misconduct or gross negligence of any Person
indemnified pursuant to this Section 5.02 (each, an "Indemnified Person") or
resulting from a breach of a representation or warranty made by such
Indemnified Person in any of the Basic Documents that gives rise to the
Servicer's breach.
Promptly after receipt by an Indemnified Person of notice of its involvement
in any action, proceeding or investigation, such Indemnified Person shall, if
a claim for indemnification in respect thereof is to be made against the
Servicer under this Section 5.02, notify the Servicer in writing of such
involvement. Failure by an Indemnified Person to so notify the Servicer shall
relieve the Servicer from the obligation to indemnify and hold harmless such
Indemnified Person under this Section 5.02 only to the extent that the
Servicer suffers actual prejudice as a result of such failure. With respect to
any action, proceeding or investigation brought by a third party for
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which indemnification may be sought under this Section 5.02, the Servicer
shall be entitled to assume the defense of any such action, proceeding or
investigation. Upon assumption by the Servicer of the defense of any such
action, proceeding or investigation, the Indemnified Person shall have the
right to participate in such action or proceeding and to retain its own
counsel (including local counsel), and the Servicer shall bear the reasonable
fees, costs and expenses of such separate counsel. The Indemnified Person
shall not settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought under this Section 5.02
(whether or not the Servicer is an actual or potential party to such claim or
action) unless the Servicer agrees in writing to such settlement, compromise
or consent and such settlement, compromise or consent includes an
unconditional release of the Servicer from all liability arising out of such
claim, action, suit or proceeding.
(c) The Servicer shall indemnify the Trustee and its respective
officers, directors and agents for, and defend and hold harmless each such
Person from and against, any and all Losses that may be imposed upon, incurred
by or asserted against any such Person as a result of the acceptance or
performance of the trusts and duties contained herein and in the Indenture,
except to the extent that any such Loss is due to the willful misconduct, bad
faith or gross negligence of the Trustee; provided, however, that the
foregoing indemnity is extended to the Trustee solely in its individual
capacity and not for the benefit of the BGS Transition Bondholders or any
other Person. Such amounts with respect to the Trustee shall be deposited and
distributed in accordance with the Indenture.
(d) Any Servicer that is not subject to retail electric rate
regulation by the BPU shall indemnify electric ratepayers in the historic
service territory of PSE&G for any and all Losses (including, but not limited
to, increased BGS Transition Bond Charges) that may be imposed upon or
incurred by such retail electric ratepayers as a result of:
(i) any such Servicer's willful misconduct, recklessness or
gross negligence in the performance of its obligations, duties and
covenants under this Agreement;
(ii) any such Servicer's breach of any of its
representations or warranties in this Agreement; and
(iii) litigation and related expenses relating to any such
Servicer's status and obligations as Servicer.
The BPU shall be entitled to enforce this Section 5.02(d) for the benefit of
retail electric ratepayers in the historic service territory of PSE&G. If so
directed by the BPU, any successor Servicer that is not subject to retail
electric rate regulation by the BPU and that is obligated to make payments
pursuant to this Section 5.02(d) shall make such payments either to the
Trustee, for deposit to the Collection Account and for allocation to the
Reserve Subaccount therein, or to such other person or account as shall be
specified by the BPU.
(e) The Servicer's indemnification obligations under Section 5.02(b)
and (c) for events occurring prior to the removal or resignation of the
Trustee or the termination of this Agreement shall survive the resignation or
removal of the Trustee or the termination of this
13
Agreement and shall include reasonable costs, fees and expenses of
investigation and litigation (including the Issuer's and the Trustee's
reasonable attorneys' fees and expenses).
(f) Except to the extent expressly provided for in the Basic
Documents (including the Servicer's claims with respect to the Monthly
Servicing Fees and the Seller's claim for payment of the purchase price of the
Transferred BGS Bondable Transition Property), the Servicer hereby releases
and discharges the Issuer (including its Member, Managers, officers, employees
and agents, if any), and the Trustee (including its respective officers,
directors and agents) (collectively, the "Released Parties") from any and all
actions, claims and demands whatsoever, which the Servicer shall or may have
against any such Person relating to the Transferred BGS Bondable Transition
Property or the Servicer's activities with respect thereto other than any
actions, claims and demands arising out of the willful misconduct, bad faith
or gross negligence of the Released Parties.
(g) The Servicer will not indemnify any person for any loss, damages,
liability, obligation, claim, action, suit or payment resulting solely from a
downgrade in the ratings on the BGS Transition Bonds or for any consequential
damages, including any loss of market value of the BGS Transition Bonds,
resulting from any default or any downgrade of the ratings on the BGS
Transition Bonds.
Section 5.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person:
(a) into which the Servicer may be merged or consolidated
and which succeeds to all or the major part of the electric
distribution business of the Servicer,
(b) which results from the division of the Servicer into two
or more Persons and which succeeds to all or the major part of the
electric distribution business of the Servicer,
(c) which may result from any merger or consolidation to
which the Servicer shall be a party and which succeeds to all or the
major part of the electric distribution business of the Servicer,
(d) which may succeed to the properties and assets of the
Servicer substantially as a whole and which succeeds to all or the
major part of the electric distribution business of the Servicer, or
(e) which may otherwise succeed to all or the major part of
the electric distribution business of the Servicer,
which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Servicer under this Agreement, shall be the
successor to the Servicer hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement; provided,
however, that:
(i) immediately after giving effect to such
transaction, no representation or warranty made pursuant to
Section 5.01 shall have been
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breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer
Default, shall have occurred and be continuing;
(ii) the Servicer shall have delivered to the
Issuer, the BPU and the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply
with this Section 5.03 and that all conditions precedent, if
any, provided for in this Agreement relating to such
transaction have been complied with;
(iii) the Servicer shall have delivered to the
Issuer, the BPU and to the Trustee an Opinion of Counsel
either:
(A) stating that, in the opinion of such
counsel, all filings to be made by the Servicer,
including UCC filings, that are necessary fully to
preserve and protect the interests of the Trustee
in the Transferred BGS Bondable Transition Property
have been executed and filed and reciting the
details of such filings, or
(B) stating that, in the opinion of such
counsel, no such action is necessary to preserve
and protect such interests;
(iv) the Rating Agencies shall have received prior
written notice of such transaction; and
(v) the Servicer shall have delivered to the
Issuer, the BPU and the Trustee an opinion of independent
tax counsel (as selected by, and in form and substance
reasonably satisfactory to, the Servicer, and which may be
based on a ruling from the Internal Revenue Service) to the
effect that, for federal income tax purposes, such
consolidation or merger will not result in a material
adverse federal income tax consequence to the Servicer, the
Issuer, the Trustee or the then existing BGS Transition
Bondholders.
The Servicer shall not consummate any transaction referred to in subclauses
(a), (b), (c), (d) or (e) above except upon execution of the above described
agreement of assumption and compliance with subclauses (i), (ii), (iii), (iv)
and (v) above. When any Person acquires the properties and assets of the
Servicer substantially as a whole and becomes the successor to the Servicer in
accordance with the terms of this Section 5.03, then upon the satisfaction of
all of the other conditions of this Section 5.03, the Servicer shall
automatically and without further notice be released from its obligations
hereunder.
Section 5.04. Assignment of Servicer's Obligations. The Servicer may
assign any or all of its obligations hereunder to any successor if either (i)
the Rating Agency Condition and any other condition specified in the Financing
Order have been satisfied, or (ii) the Servicer is replaced by a successor
pursuant to Section 5.03 hereof.
Section 5.05. Limitation on Liability of Servicer and Others. The
Servicer shall not be liable to the Issuer or the Trustee, except as provided
under this Agreement, for any action taken or for refraining from the taking
of any action pursuant to this Agreement or for errors in
15
judgment; provided, however, that this provision shall not protect the
Servicer against any liability that would otherwise be imposed by reason of
willful misconduct, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on the advice of counsel reasonably acceptable
to the Trustee or on any document of any kind, prima facie properly executed
and submitted by any Person, respecting any matters arising under this
Agreement.
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties to service the Transferred BGS Bondable Transition
Property in accordance with this Agreement or related to its obligation to pay
indemnification, and that in its reasonable opinion may cause it to incur any
expense or liability.
Section 5.06. PSE&G Not To Resign as Servicer. Subject to the
provisions of Sections 5.03 and 5.04, PSE&G shall not resign from the
obligations and duties imposed on it as Servicer under this Agreement except
upon a determination that the performance of its duties under this Agreement
shall no longer be permissible under applicable law. Notice of any such
determination permitting the resignation of PSE&G shall be communicated to the
Issuer, the BPU, the Trustee and each Rating Agency at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time), and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Issuer, the BPU and the Trustee concurrently with or promptly
after such notice. No such resignation shall become effective until a
successor Servicer has assumed the servicing obligations and duties hereunder
of the Servicer in accordance with Section 6.04.
Section 5.07. Monthly Servicing Fee. The Issuer agrees to pay the
Servicer the Monthly Servicing Fee with respect to all Series of BGS
Transition Bonds. On any Monthly Remittance Date, the Servicer shall be
entitled to withhold the amount of the Monthly Servicing Fee from TBC
Collections as compensation under this Agreement unless the Trustee has
notified the Servicer in writing that the Issuer does not hold sufficient
funds to pay amounts owed in such month to the Trustee. For so long as PSE&G
is the Servicer, the Monthly Servicing Fee shall be $1,250. The Servicer shall
be entitled to retain as additional compensation net investment income on TBC
Collections related to the Transferred BGS Bondable Transition Property
received by the Servicer during any Collection Period prior to remittance to
the Collection Account and the late fees, if any, paid by Customers to the
Servicer. The foregoing fees constitute a fair and reasonable price for the
obligations to be performed by the Servicer.
Section 5.08. Servicer Expenses. Except as otherwise expressly
provided herein, the Servicer shall be required to pay all expenses incurred
by it in connection with its activities hereunder, including fees and
disbursements of independent accountants and counsel, taxes imposed on the
Servicer and expenses incurred in connection with reports to BGS Transition
Bondholders and shall not be entitled to any additional payment or
reimbursement therefor.
Section 5.09. Subservicing. The Servicer may at any time appoint a
subservicer to perform all or any portion of its obligations as Servicer
hereunder; provided, however, the Rating Agency Condition shall have been
satisfied in connection therewith; and provided further that
16
the Servicer shall remain obligated and be liable to the Issuer, the Trustee
and the BGS Transition Bondholders for the servicing and administering of the
Transferred BGS Bondable Transition Property in accordance with the provisions
hereof without diminution of such obligation and liability by virtue of the
appointment of such subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Transferred BGS Bondable Transition Property. The fees and expenses of the
subservicer shall be as agreed between the Servicer and its subservicer from
time to time, and none of the Issuer, the Trustee or the BGS Transition
Bondholders shall have any responsibility therefor. Any such appointment shall
not constitute a Servicer resignation under Section 5.06.
Section 5.10. No Servicer Advances. The Servicer shall not make any
advances of interest on or principal of the BGS Transition Bonds.
Section 5.11. Remittances.
(a) The Servicer shall remit TBC Collections (from whatever source)
in accordance with Section 3.03(a)(ii), and all proceeds of other Collateral
of the Issuer, if any, received by the Servicer, to the Trustee for deposit
pursuant to the Indenture, not later than each Daily Remittance Date. The
Servicer shall promptly remit any Indemnity Amounts paid or received by it
immediately to the Trustee for deposit pursuant to the Indenture.
(b) Notwithstanding the foregoing clause (a), as long as:
(i) PSE&G or any successor to PSE&G's electric
distribution business remains the Servicer,
(ii) no Servicer Default has occurred and is
continuing, and,
(iii) with respect to Xxxxx'x and Fitch only, PSE&G
maintains a long-term rating on its senior, unsecured debt
of "Baa2" by Xxxxx'x and "BBB" by Fitch, or better, or, if
the senior, unsecured debt of PSE&G is downgraded to "Baa3"
by Xxxxx'x or "BBB-" by Fitch, PSE&G shall received within
30 days of such downgrading, confirmation from Xxxxx'x and
Fitch that remittances in accordance with Section 3.03(a)(i)
will not adversely affect their respective ratings on the
BGS Transition Bonds, or if the long-term, unsecured debt of
PSE&G is downgraded below "Baa3" by Xxxxx'x or "BBB-" by
Fitch, PSE&G shall have received within 48 hours of such
downgrading, confirmation from Xxxxx'x and Fitch that
remittances in accordance with Section 3.03(a)(i) will not
adversely affect their respective ratings on the BGS
Transition Bonds,
the Servicer need not make the daily remittances required by clause (a), but
in lieu thereof, shall remit all TBC Collections (from whatever source) in
accordance with Section 3.03(a)(i), and all proceeds of other Collateral of
the Issuer, if any, received by the Servicer during any Collection Period, to
the Trustee for deposit pursuant to the Indenture, not later than the
corresponding Monthly Remittance Date.
Section 5.12. Protection of Title. The Servicer shall execute and
file such filings and cause to be executed and filed such filings, all in such
manner and in such places as may be
17
required by law fully to preserve, maintain and protect the interests of the
Trustee in the Transferred BGS Bondable Transition Property, including all
filings required under the UCC relating to the transfer of ownership of or a
security interest in the Transferred BGS Bondable Transition Property by the
Seller to the Issuer or the security interest granted by the Issuer to the
Trustee in the Transferred BGS Bondable Transition Property. The Servicer
shall deliver (or cause to be delivered) to the Issuer, the BPU and the
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
ARTICLE VI
SERVICER DEFAULT
Section 6.01. Servicer Default. If any one of the following events (a
"Servicer Default") occurs and is continuing:
(a) any failure by the Servicer to remit to the Trustee, on
behalf of the Issuer, any required remittance that continues
unremedied for a period of five Business Days after written notice of
such failure is received by the Servicer and the BPU from the Issuer
or the Trustee; or
(b) any failure by the Servicer duly to observe or perform
in any material respect any other covenant or agreement of the
Servicer set forth in this Agreement, which failure:
(i) materially and adversely affects the
Transferred BGS Bondable Transition Property or the rights
of the BGS Transition Bondholders, and
(ii) continues unremedied for a period of 60 days
after written notice of such failure has been given to the
Servicer by the Issuer, the BPU or by the Trustee or after
discovery of such failure by an officer of the Servicer; or
(c) any representation or warranty made by the Servicer in
this Agreement proves to have been incorrect when made, which has a
material adverse effect on the Issuer or the BGS Transition
Bondholders and which material adverse effect continues unremedied
for a period of 60 days after the date on which written notice
thereof has been given to the Servicer by the Issuer, the BPU or the
Trustee or after discovery of such failure by an officer of the
Servicer, as the case may be; or
(d) an Insolvency Event occurs with respect to the Servicer;
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, either the Trustee may, or shall upon the written
instruction of the BPU (acting on behalf of Customers) or the Holders of a
majority of the outstanding principal amount of the BGS Transition Bonds of
all Series, by notice then given in writing to the Servicer and to the Trustee
if given by the Holders (a "Termination Notice") may terminate all the rights
and obligations (other than the indemnification obligations set forth in
Section 5.02 hereof and the obligation under Section 6.04 to continue
performing its functions as Servicer until a successor Servicer is appointed)
of the Servicer under this Agreement. In addition, upon a Servicer Default,
the Issuer
18
and the Trustee shall be entitled to apply to the BPU or any court
of competent jurisdiction for sequestration and payment to the Trustee of
revenues arising with respect to the Transferred BGS Bondable Transition
Property.
On or after the receipt by the Servicer of a Termination Notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Transferred BGS Bondable Transition Property, the related BGS
Transition Bond Charge or otherwise, shall, upon appointment of a successor
Servicer pursuant to Section 6.04, without further action, pass to and be
vested in such successor Servicer and, without limitation, the Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
predecessor Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such Termination Notice,
whether to complete the transfer of the BGS Bondable Transition Property
Documentation and related documents, or otherwise. The predecessor Servicer
shall cooperate with the successor Servicer, the Trustee and the Issuer in
effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement, including the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the predecessor Servicer for remittance, or shall
thereafter be received by it with respect to the Transferred BGS Bondable
Transition Property or the related BGS Transition Bond Charge. As soon as
practicable after receipt by the Servicer of such Termination Notice, the
Servicer shall deliver the BGS Bondable Transition Property Documentation to
the successor Servicer. All reasonable costs and expenses (including attorneys
fees and expenses) incurred in connection with transferring the BGS Bondable
Transition Property Documentation to the successor Servicer and amending this
Agreement to reflect such succession as Servicer pursuant to this Section 6.01
shall be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses. Termination of PSE&G as Servicer
shall not terminate PSE&G's rights or obligations under the Sale Agreement.
Section 6.02. Notice of Servicer Default. The Servicer shall deliver
to the Issuer, the BPU, the Trustee and each Rating Agency promptly after
having obtained knowledge thereof, but in no event later than five Business
Days thereafter, written notice in an Officer's Certificate of any event or
circumstance which, with the giving of notice or the passage of time, would
become a Servicer Default under Section 6.01.
Section 6.03. Waiver of Past Defaults. The Trustee, with the consent
of BPU and Holders of the majority of the outstanding principal amount of the
BGS Transition Bonds of all Series, on behalf of all BGS Transition
Bondholders, may waive in writing any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a
default in making any required remittances to the Trustee of TBC Collections
in accordance with Section 3.03. Upon any such waiver of a past default, such
default shall cease to exist, and any Servicer Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereto.
Section 6.04. Appointment of Successor.
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(a) Upon the Servicer's receipt of a Termination Notice pursuant to
Section 6.01 or the Servicer's resignation in accordance with the terms of
this Agreement, the predecessor Servicer shall continue to perform its
functions as Servicer under this Agreement and shall be entitled to receive
the requisite portion of the Monthly Servicing Fees, until a successor
Servicer has assumed in writing the obligations of the Servicer hereunder as
described below. In the event of the Servicer's removal or resignation
hereunder and upon application of the Trustee, the BPU will designate a
successor Servicer. Any appointment of a successor Servicer requires the
consent of the Holders of a majority of the outstanding principal amount of
the BGS Transition Bonds of all Series, and the successor Servicer shall
accept its appointment by a written assumption in form acceptable to the
Issuer and the Trustee. If, within 30 days after the delivery of the
Termination Notice, a new Servicer has not been appointed and accepted such
appointment, the Trustee may petition the BPU or a court of competent
jurisdiction to appoint a successor Servicer under this Agreement. A Person
shall qualify as a successor Servicer only if:
(i) such Person is permitted to perform the duties of the
Servicer pursuant to the Competition Act, the BPU Regulations, the
Financing Order and this Agreement;
(ii) the Rating Agency Condition has been satisfied; and
(iii) such Person enters into a servicing agreement with the
Issuer having substantially the same provisions as this Agreement.
(b) Upon appointment, the successor Servicer shall be the successor
in all respects to the predecessor Servicer under this Agreement and shall be
subject to all the responsibilities, duties and liabilities arising thereafter
relating thereto placed on the predecessor Servicer and shall be entitled to
the Monthly Servicing Fee and all the rights granted to the predecessor
Servicer by the terms and provisions of this Agreement.
(c) The successor Servicer may resign only if it is prohibited from
serving as such by applicable law.
Section 6.05. Cooperation with Successor. The Servicer covenants and
agrees with the Issuer that it will, on an ongoing basis, cooperate with the
successor Servicer and provide whatever information is, and take whatever
actions are, reasonably necessary to assist the successor Servicer in
performing its obligations hereunder.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Amendment. (a) This Agreement may be amended by the
Servicer and the Issuer, with the consent of the Trustee and the satisfaction
of the Rating Agency Condition. Promptly after the execution of any such
amendment or consent, the Issuer shall furnish written notification of the
substance of such amendment or consent to each of the Rating Agencies.
Prior to the execution of any amendment to this Agreement, the Issuer
and the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and the Opinion of Counsel
20
referred to in Section 3.11. The Issuer and the Trustee may, but shall not be
obligated to, enter into any such amendment which affects their own rights,
duties or immunities under this Agreement or otherwise.
(b) Notwithstanding anything to the contrary in this paragraph, no
amendment or modification of this Agreement shall be effective except upon
satisfaction of the conditions precedent in this paragraph (b).
(i) At least fifteen days prior to the effectiveness of any
such amendment or modification and after obtaining the other
necessary approvals set forth in paragraph (a) above (except that the
consent of the Trustee may be subject to the consent of Holders if
such consent is required or sought by the Trustee in connection with
such amendment or modification), the Servicer shall have delivered to
the BPU's executive director and general counsel written notification
of any proposed amendment, which notification shall contain:
(A) a reference to Docket No. EF03070532;
(B) an officer's certificate stating that the
proposed amendment or modification has been approved by all
parties to this Agreement; and
(C) a statement identifying the person to whom the
BPU or its staff is to address any response to the proposed
amendment or to request additional time.
(ii) If the BPU or its staff, within fifteen days (subject
to extension as provided in clause (iii) below) of receiving a
notification complying with paragraph (a) above, shall have delivered
to the office of the person specified in paragraph (i)(C) above a
written statement that the BPU might object to the proposed amendment
or modification, then such proposed amendment or modification shall
not be effective unless and until the BPU subsequently delivers a
written statement that it does not object to such proposed amendment
or modification.
(iii) If the BPU or its staff, within fifteen days of
receiving a notification complying with paragraph (a) above, shall
have delivered to the office of the person specified in paragraph
(i)(C) above a written statement requesting an additional amount of
time not to exceed thirty days in which to consider such proposed
amendment or modification, then such proposed amendment or
modification shall not be effective if, within such extended period,
the BPU shall have delivered to the office of the person specified in
paragraph (i)(C) above a written statement as described in clause
(ii) above, unless and until the BPU subsequently delivers a written
statement that it does not object to such proposed amendment or
modification.
(iv) If the BPU or its staff shall not have delivered
written notice that the BPU might object to such proposed amendment
or modification within the time periods described in clause (ii) or
clause (iii) above, whichever is applicable, then the BPU shall be
conclusively deemed not to have any objection to the proposed
amendment or modification and such amendment or modification may
subsequently become effective upon satisfaction of the other
conditions specified in paragraph (a) above.
21
(v) Following the delivery of a notice to the BPU by the
Servicer under clause (ii) above, the Servicer and the Issuer shall
have the right at any time to withdraw from the BPU further
consideration of any proposed amendment.
Section 7.02. Notices. Unless otherwise specifically provided herein,
all notices, directions, consents and waivers required under the terms and
provisions of this Agreement shall be in English and in writing, and any such
notice, direction, consent or waiver may be given by United States first-class
mail, reputable overnight courier service, facsimile transmission or
electronic mail (confirmed by telephone, United States first-class mail or
reputable overnight courier service in the case of notice by facsimile
transmission or electronic mail) or any other customary means of
communication, and any such notice, direction, consent or waiver shall be
effective when delivered or transmitted, or if mailed, five days after deposit
in the United States first-class mail with proper postage for first-class mail
prepaid,
(a) in the case of the Servicer, at PSE&G, 00 Xxxx Xxxxx, Xxxxxx, Xxx
Xxxxxx 00000;
(b) in the case of the Issuer, at PSE&G Transition Funding II LLC, 00
Xxxx Xxxxx, X-0X, Xxxxxx, Xxx Xxxxxx 00000;
(c) in the case of the Trustee, at the address provided for notices
or communications to the Trustee in the Indenture;
(d) in the case of Moody's, at Xxxxx'x Investors Service, Inc., ABS
Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000;
(e) in the case of Standard & Poor's, at Standard & Poor's Ratings
Group, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed
Surveillance Department;
(f) in the case of Fitch, at Fitch, Inc., 0 Xxxxx Xxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: ABS Surveillance; and
(g) in the case of the BPU, at New Jersey Board of Public Utilities,
Xxx Xxxxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxx Xxxxx;
or, as to each of the foregoing, at such other address as shall be designated
by written notice to the other parties.
Section 7.03. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Servicer, the Issuer, the BPU, on
behalf of itself and electricity consumers, and the Trustee, on behalf of
itself and the BGS Transition Bondholders, and nothing in this Agreement,
whether express or implied, shall be construed to give to any other Person any
legal or equitable right, remedy or claim in any Collateral or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
Section 7.04. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
22
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 7.05. Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 7.06. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 7.08. Assignment to the Trustee. (a) The Servicer hereby
acknowledges and consents to any pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the
benefit of the BGS Transition Bondholders of all right, title and interest of
the Issuer in, to and under the Transferred BGS Bondable Transition Property
owned by the Issuer and the proceeds thereof and the assignment of any or all
of the Issuer's rights hereunder to the Trustee.
(b) In no event shall the Trustee have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Issuer.
Section 7.09. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement or the Indenture, the Servicer hereby covenants
and agrees that it shall not, prior to the date which is one year and one day
after the termination of the Indenture and the payment in full of the BGS
Transition Bonds, any other amounts owed under the Indenture, including,
without limitation, any amounts owed to third-party credit enhancers,
acquiesce in, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any Federal or State bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or
any substantial part of the property of the Issuer, or ordering the winding up
or liquidation of the affairs of the Issuer.
Section 7.10. Termination. This Agreement shall terminate when all
BGS Transition Bonds have been retired, redeemed or defeased in full.
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the date and year first above written.
PSE&G TRANSITION FUNDING II LLC,
as Issuer
By: /s/ XXXXXX X. XXXXXXX
----------------------------
Name: XXXXXX X. XXXXXXX
Title: VICE PRESIDENT and TREASURER and
CHIEF FINANCIAL OFFICER
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY, as Servicer
By: /s/ XXXXXX X. XXXXXXX
----------------------------
Name: XXXXXX X. XXXXXXX
Title: VICE PRESIDENT and TREASURER and
CHIEF FINANCIAL OFFICER
Acknowledged and Accepted:
THE BANK OF NEW YORK,
not in its individual capacity but solely as
Trustee on behalf of the Holders of the BGS
Transition Bonds
By: /s/ XXXXXXXXX XXXXXXXX
-----------------------------
Name: XXXXXXXXX XXXXXXXX
Title: VICE PRESIDENT
ANNEX 1
to
SERVICING AGREEMENT
The Servicer agrees to comply with the following with respect to
PSE&G Transition Funding II LLC (the "Issuer"):
SECTION 1. Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in Appendix A to the
Servicing Agreement dated as of September 23, 2005, between the Issuer and
PSE&G, as Servicer.
SECTION 2. Trustee and Servicer Payment Date Statements. At least one
Business Day before each date on which distributions to the Trustee and
Servicer are to be made pursuant to Sections 8.2(d) and (e) of the Indenture,
the Servicer shall provide the Trustee and the BPU with a statement setting
forth the amounts to be distributed to each of the Trustee and Servicer
pursuant to such Sections.
SECTION 3. Payment Date Statements. At least one Business Day before
each Payment Date, the Servicer shall provide to the Issuer, the Trustee, each
Rating Agency and the BPU, a statement indicating:
1. the amount to be paid to BGS Transition Bondholders of each
Series and Class in respect of principal on such Payment
Date in accordance with Section 8.2 of the Indenture and
each Series Supplement thereto;
2. the amount to be paid to BGS Transition Bondholders of each
Series and Class in respect of interest on such Payment Date
in accordance with Section 8.2 of the Indenture and each
Series Supplement thereto;
3. the Projected BGS Transition Bond Balance and the BGS
Transition Bond Balance for each Series and Class as of that
Payment Date (after giving effect to the payments on such
Payment Date);
4. the amount on deposit in the Overcollateralization
Subaccount for each Series and the Scheduled
Overcollateralization Level for each Series, as of that
Payment Date (after giving effect to the transfers to be
made from or into the Overcollateralization Subaccount on
such Payment Date);
5. the amount on deposit in the Capital Subaccount for each
Series as of that Payment Date (after giving effect to the
transfers to be made from or into the Capital Subaccount on
such Payment Date);
6. the amount, if any, on deposit in the Reserve Subaccount as
of that Payment Date (after giving effect to the transfers
to be made from or into the Reserve Subaccount on such
Payment Date);
7. the amounts paid to the Trustee since the preceding Payment
Date pursuant to Section 8.2(d) of the Indenture;
8. the amounts paid to or withheld by the Servicer since the
preceding Payment Date pursuant to Section 8.2(e) of the
Indenture; and
9. the amount of any other transfers and payments to be made on
such Payment Date pursuant to Sections 8.2(d), (e), (f), (g)
and (i) of the Indenture.
SECTION 4. Remittance Date Statements. At least one Business Day
before each Remittance Date, and in the case of Daily Remittances, on the last
Remittance Date of such month, the Servicer shall prepare and furnish to the
Issuer, the BPU and the Trustee a statement setting forth the aggregate amount
to be remitted by the Servicer to the Trustee (net of any unreimbursed Excess
Curve Payments) for deposit on such Remittance Date pursuant to the Indenture.
SECTION 5. BGS Transition Bond Charge Adjustments.
(a) Prior to each Calculation Date, the Servicer shall calculate
(i) the BGS Transition Bond Balance as of such
Calculation Date (a written copy of which shall be
delivered by the Servicer to the Trustee within
five Business Days following such Calculation
Date), and
(ii) the revised BGS Transition Bond Charge with respect
to the Transferred BGS Bondable Transition Property
in respect of each Adjustment Date such that the
Servicer projects that TBC Collections therefrom
allocable to the Issuer will be sufficient so that:
(A) the BGS Transition Bond Balance on the
Payment Date immediately preceding the
next Adjustment Date will equal the
Projected BGS Transition Bond Balance as
of such date or, if earlier with respect
to any Series or Class of BGS Transition
Bonds, as of the Payment Date immediately
preceding the Expected Final Payment Date
therefor,
(B) the amount on deposit in the
Overcollateralization Subaccount on the
Payment Date immediately preceding the
next Adjustment Date, or if earlier with
respect to any Series or Class of BGS
Transition Bonds, as of the Payment Date
immediately preceding the Expected Final
Payment Date therefor, will equal the
Scheduled Overcollateralization Level for
such date,
(C) the amount on deposit in the Capital
Subaccount on the Payment Date immediately
preceding the next Adjustment Date, or if
earlier with respect to any Series or
Class of BGS Transition Bonds, as of the
Payment Date immediately preceding the
Expected Final Payment Date therefor, will
equal its required level for such date,
(D) the amount on deposit in the Reserve
Subaccount on the Payment Date immediately
preceding the next January 1 Adjustment
Date, will equal zero, and
(E) the TBC Collections will provide for (i)
amortization of the remaining outstanding
principal amount of each Series in
accordance with the Expected Sinking Fund
Amortization Schedule therefor, (ii)
payment of interest on each Series when
due, (iii) payment of all Operating
Expenses of the Issuer when due in
accordance with the Indenture, and (iv)
deposits to the Overcollateralization
Subaccount such that the balance therein
will equal the Calculated
Overcollateralization Level on each
Payment Date.
(b) On each Calculation Date, the Servicer shall file an
Adjustment Request with the BPU. This filing shall include the data specified
in the Petition and the Financing Order.
(c) On each Adjustment Date, the Servicer shall
(i) take all reasonable actions and make all reasonable
efforts to effectuate all adjustments to the BGS
Transition Bond Charge either approved by the BPU
or effective on an interim basis pending final
approval, and
(ii) promptly send to the Trustee copies of all material
notices and documents relating to such adjustments.
(d) On each Adjustment Date, the Servicer shall provide Moody's
with a schedule indicating any changes to the BGS Transition Bond Charge.
(e) If deemed appropriate by the Servicer to protect BGS
Transition Bondholders to remedy a significant and recurring variance between
actual and expected TBC Collections, as authorized by the Financing Order, the
Servicer shall make "non-routine" filings with the BPU for adjustments to the
formula described in Appendices C and F to the Financing Order to assure
timely payment of the Total Payment Requirements (as defined in the Financing
Order). Such filings shall be made at least 90 days prior to the proposed
effective date of the proposed adjustments.
(f) The Servicer is also required to determine, no sooner than
May 1 and not later than May 15 of each year, whether the TBC Collections,
without taking into account amounts in the Capital Subaccount and
Overcollateralization Subaccount, will be sufficient to pay scheduled debt
service and expenses related to the BGS Transition Bonds throughout the end of
the then current calendar year, and to file for an upward Adjustment Request
of the BGS Transition Bond Charge no later than June 1 if a deficiency exists.
APPENDIX A
MASTER DEFINITIONS
[To be used in connection with the Servicing Agreement,
the Sale Agreement, the Administration Agreement and the Indenture]
The definitions contained in this Appendix A are applicable to the singular as
well as the plural forms of such terms.
Act has the meaning specified in Section 11.3 of the Indenture.
Adjustment Date means (a) January 1 of each year through January 1,
2015, (b) as long as the BGS Transition Bonds are outstanding,
October 1, January 1, April and July 1 of each year, beginning April
1, 2015, and (c) any other date which is thirty days after a
Calculation Date.
Adjustment Request means an application filed by the Servicer with
the BPU for a BGS Transition Bond Charge Adjustment pursuant to
Section 5(b) of the Issuer Annex.
Administration Agreement means the Administration Agreement dated as
of September 23, 2005, between PSE&G, as administrator, and the
Issuer, as the same may be amended or supplemented from time to time.
Administrator means PSE&G, as administrator under the Administration
Agreement, and each successor to PSE&G, in the same capacity,
pursuant to Section 14 of the Administration Agreement.
Advice Letter means, with respect to any Series of BGS Transition
Bonds, the Issuance Advice Letter, in the form attached as Appendix B
to the Financing Order, 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.
Annual Reconciliation Date means the last Business Day of October of
each year, commencing with October 2006 and continuing through
October 2014 (or such earlier month as the Servicer shall have
specified to the Issuer and the Trustee by not less than 30 days
prior written notice).
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Authorized Denominations means, with respect to any Series or Class
of BGS Transition Bonds, $1,000 and integral multiples of $1.00 above
that amount, provided, however, that one bond of each Class may have
denomination of less than $1,000, or such other denominations as may
be specified in the Series Supplement therefor.
Authorized Officer means, with respect to the Issuer, (i) any Manager
and, (ii) 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, the Underwriting Agreement, any Interest
Rate Swap Agreement and the Securities Account Control Agreement, as
each may be amended or supplemented from time to time.
BGS Bondable Transition Property has the meaning assigned to that
term in the Financing Order.
BGS Bondable Transition Property Documentation means all documents
relating to the Transferred BGS Bondable Transition Property,
including copies of the Petition and the Financing Order and all
documents filed with the BPU in connection with any BGS Transition
Bond Charge Adjustment.
BGS MTC-Tax has the meaning assigned to that term in the Financing
Order.
BGS Transition Bond means any of the transition bonds (as defined in
the Competition Act) issued by the Issuer pursuant to the Indenture.
BGS Transition Bond Balance means, as of any date, the aggregate
Outstanding Amount of all Series of BGS Transition Bonds on such
date.
BGS Transition Bond Charge means the BGS Transition Bond Charge
authorized by the BPU to be imposed on all Customers by PSE&G or its
successor to recover Bondable Stranded Costs pursuant to the
Competition Act and the Financing Order.
BGS Transition Bond Charge Adjustment means each adjustment to the
BGS Transition Bond Charge related to the Transferred BGS Bondable
Transition Property made in accordance with Section 4.01 of the
Servicing Agreement and the Issuer Annex.
BGS Transition Bond Charge Adjustment Process means the process by
which the BGS Transition Bond Charge is adjusted pursuant to the
Servicing Agreement, the Competition Act, the Petition and the
Financing Order.
BGS Transition Bond Owner means, with respect to a Book-Entry BGS
Transition Bond, the Person who is the beneficial owner of such
Book-Entry BGS 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).
A-2
BGS Transition Bond Register has the meaning specified in Section
2.5(a) of the Indenture.
BGS Transition Bond Registrar has the meaning specified in Section
2.5(a) of the Indenture.
Billing Month means a calendar month during which the BGS 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 BGS
Bondable Transition Property by the Seller to the Issuer.
Bondable Stranded Costs means those bondable stranded costs, within
the meaning specified in the Competition Act, approved for recovery
in the Financing Order.
Book-Entry BGS Transition Bonds means beneficial interests in the BGS
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 Regulations means any regulations, orders, guidelines or
directives promulgated, issued or adopted by the BPU.
Business Day means any day other than a Saturday or Sunday or a day
on which banking institutions in the City of Newark, New Jersey, or
in the City of New York, New York.
Calculation Date means (a) December 1 of each year until December 1,
2014 (b) September 1, December 1, March 1 and June 1 of each year
beginning March 1, 2015 and for so long as the BGS Transition Bonds
are outstanding, and (c) any other day on which the Servicer files an
Adjustment Request.
Capital Reserve Subaccount has the meaning specified in Section
8.2(i) of the Indenture.
Capital Subaccount has the meaning specified in Section 8.2(i) of the
Indenture.
Class means, with respect to any Series, any one of the classes of
BGS 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 has the meaning specified in Section 8.2(i) of the
Indenture.
Clearing Agency means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
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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 8.2(i) 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 a forecast prepared by the Servicer of the
percentages of amounts billed in a Billing Month that are expected to
be received during each of the following seven months.
Collections Curve Payment means, with respect to a Billing Month, the
sum of the amounts paid to the Trustee over a seven-month period
following that Billing Month based on the Collections Curve for that
Billing Month.
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.
Corporate Trust Office means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at date of the execution of this Indenture
is located at 000 Xxxxxxx Xxxxxx, 0X, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Corporate Trust- ABS Unit, or at such other address as the
Trustee may designate from time to time by notice to the BGS
Transition Bondholders and the Issuer, or the principal corporate
trust office of any successor Trustee (the address of which the
successor Trustee will notify the BGS Transition Bondholders and the
Issuer in writing).
Covenant Defeasance Option has the meaning specified in Section
4.l(b) of the Indenture.
Curve Payment Shortfall means: (a) with respect to each Annual
Reconciliation Date, the excess of actual TBC Collections in respect
of each of the 12 Billing Months beginning 19 Billing Months (or from
the first Series Issuance Date, if less than 19 months have elapsed)
before the Billing Month in which such Reconciliation Date occurs,
over the actual Collection Curve Payments made to the Trustee in
respect of those Billing Months; and (b) with respect to each Monthly
Reconciliation Date, the excess of actual TBC Collections in respect
of the Billing Month that is 8 months prior to the Billing Month in
which such Reconciliation Date occurs, over the actual Collection
Curve Payments made to the Trustee in respect of that prior Billing
Month.
A-4
Customer means each person who is a retail consumer of electricity
and who accesses PSE&G'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 5.11(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 8.2(i) of
the Indenture
Definitive BGS 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 September 22, 2005, relating to the BGS 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.
A-5
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 "AAA" by Standard & Poor's and
Fitch and "Aaa" 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-l+" by
Standard & Poor's and "Prime-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:
(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, certificates of
deposit or bankers' acceptances of any depository
institution incorporated under the laws of the
United States of America or any State, or any
domestic branch of a foreign bank, and subject to
the supervision and examination by federal or State
banking or depository institution authorities; so
long as at the time of the investment or
contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt
obligations, other than any obligations thereof
where the rating is based on the credit of a person
other than that depository 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 obligations of
any corporation other than the Seller organized
under the laws of the United States of America or
any State having a rating, at the time of the
investment or contractual commitment to invest
therein, from each of the Rating Agencies in the
highest short-term or long-term investment category
granted thereby;
A-6
(d) investments in money market funds having a rating
from each of the Rating Agencies in the highest
investment category granted thereby (including
funds for which the Trustee or any of its
Affiliates is investment manager or advisor);
(e) 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 depository institution or trust
company, acting as principal, described in clause
(b) of the definition of Eligible Institutions;
(f) repurchase obligations with respect to any security
or whole loan entered into with:
(A) a depository institution or trust company,
acting as principal, described in clause
(b) of the definition of Eligible
Institution, except that the rating
referred to in the proviso in clause (b)
of the definition of Eligible Institution
above shall be "A-1+" or higher in the
case of Standard & Poor's,
(B) a broker/dealer, acting as principal,
registered as a broker or dealer under
Section 15 of the Exchange Act, the
unsecured short-term debt obligations of
which are rated "P-1" by Moody's, "F1+" by
Fitch, if rated by Fitch, and at least
"A-1+" by Standard & Poor's at the time of
entering into this repurchase obligation,
or
(C) 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, "F1+" by Fitch, if rated by
Fitch, and at least "A-1+" by Standard &
Poor's at the time of purchase; and
(g) any other investment permitted by each of the
Rating Agencies;
provided, that, unless otherwise permitted by the applicable Rating
Agencies, upon the failure of any Eligible Institution to maintain
any applicable rating set forth in this definition or in the
definition of "Eligible Institution," the related investments at such
institution shall be reinvested in other Eligible Investments within
ten (10) days; and, provided further, that no obligation of, or
security issued by, the Seller shall constitute an Eligible
Investment.
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
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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 5.1 of the
Indenture.
Excess Curve Payment means, (a) with respect to each Annual
Reconciliation Date, the excess of the Collections Curve Payments
made to the Trustee in respect of each of the 12 Billing Months
beginning 19 Billing Months (or from the first Series Issuance Date,
if less than 19 months have elapsed) before the Billing Month in
which the Reconciliation Date occurs, over the actual TBC
Collections in respect of those Billing Months; and (b) with respect
to each Monthly Reconciliation Date, the excess of the Collections
Curve Payments made to the Trustee in respect of the Billing Month
that is 8 months prior to the Billing Month in which such
Reconciliation Rate occurs, over the actual TBC Collections in
respect of that prior 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 Sinking Fund Amortization Schedule means, with respect to
each Series or, if applicable, each Class of BGS Transition Bonds,
the Expected Sinking Fund Amortization Schedule for principal
thereof, as specified in the Series Supplement therefor.
Expected Final Payment Date means, with respect to each Series or, if
applicable, each Class of BGS 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 Sinking Fund Amortization Schedule, as specified in the
Series Supplement therefor.
FDIC means the Federal Deposit Insurance Corporation or its
successor.
Final Maturity Date means, for each Series or, if applicable, each
Class of BGS Transition Bonds, the Payment Date related to the date
by which all principal of and interest on such Series or Class of BGS
Transition Bonds is required to be paid, as specified in the Series
Supplement therefor.
Financing Issuance means an issuance of a new Series of BGS
Transition Bonds under the Indenture to provide funds to finance the
purchase by the Issuer of Bondable Transition Property.
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Financing Order means the bondable stranded cost rate order issued by
the BPU on July 12, 2005 pursuant to the Competition Act.
Fitch means Fitch, Inc. or its successor.
Formation Documents means, collectively, 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 8.2(i) 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.
Holder or BGS Transition Bondholder or Bondholder means the Person in
whose name a BGS Transition Bond of any Series or Class is registered
in the BGS Transition Bond Register.
Indemnification Event means an event which triggers PSE&G's
obligation to indemnify the Issuer and the Trustee, for itself and on
behalf of the BGS Transition Bondholders, and each of their
respective managers, officers, directors and agents, pursuant to
Section 5.1 of the Sale Agreement.
Indemnity Amount means the amount of any indemnification obligation
payable under the Basic Documents.
Indenture means the Indenture dated as of September 23, 2005, between
the Issuer and the Trustee, as the same may be amended and
supplemented from time to time by one or more Supplemental
Indentures, and shall include each Series Supplement and the forms
and terms of the BGS 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 BGSTransition Bonds, PSE&G 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, PSE&G or any Affiliate of
any of the foregoing Persons, and
(c) is not connected with the Issuer, any such other
obligor, PSE&G or any Affiliate of any of the
foregoing Persons as an officer, employee,
promoter, underwriter, trustee, partner, director
or 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 11.1
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 2.1 of
the Sale Agreement.
Initial Transfer Date means the Series Issuance Date for the first
Series of BGS Transition Bonds.
Initial Transferred BGS Bondable Transition Property means the BGS
Bondable Transition Property sold by the Seller to the Issuer as of
the Initial Transfer Date pursuant to the Sale Agreement and the Xxxx
of Sale delivered on or prior to the Initial Transfer Date as
identified in such Xxxx of Sale.
Insolvency Event means, with respect to a specified Person,
(a) the filing of a decree or order for relief by a
court having jurisdiction in the premises in
respect of such Person or any substantial part of
its property in an involuntary case under any
applicable Federal or State bankruptcy, insolvency
or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar
official for such Person or for any substantial
part of its property, or ordering the winding-up or
liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect
for a period of 90 consecutive days or
(b) the commencement by such Person of a voluntary case
under any applicable Federal or State bankruptcy,
insolvency or other similar law now or hereafter in
effect, or the consent by such Person to the entry
of an order for relief in an involuntary case under
any such law, or the consent by such Person to the
appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or
for any substantial part of its property, or the
making by
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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 BGS
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;
(b) any unpaid interest, to the extent permitted by
law, plus any interest accrued on unpaid interest
at the applicable Interest Rate, to the extent
permitted by applicable law; and
(c) if the BGS Transition Bonds have been declared due
and payable, all accrued and unpaid interest
thereon.
Interest Rate means, with respect to each Series or Class of BGS
Transition Bonds, the rate at which interest accrues on the principal
balance of BGS Transition Bonds of such Series or Class, as specified
in the Series Supplement therefor.
Interest Rate Swap Agreement means any ISDA Master Agreement,
together with the related Schedule and Confirmation, between the
Issuer and a Swap Counterparty, as same may be amended or
supplemented from time to time, with respect to any Series or Class
of BGS Transition Bonds.
Issuer means PSE&G Transition Funding II 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, dated July 18, 2005, which was filed with the Delaware
Secretary of State's Office on July 18, 2005, 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 PSE&G, as sole Member, dated
as of September 23, 2005, 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 11.1 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.
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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 4.1(b)
of the Indenture.
Lien means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.
Losses means collectively, any and all liabilities, obligations,
losses, damages, payments, costs or expenses of any kind whatsoever.
Manager has the meaning set forth in the Issuer LLC Agreement.
Market Transition Charge means the market transition charge that
PSE&G may impose on Customers pursuant to the Competition Act and the
Restructuring Order.
Member means PSE&G, as the sole member of the Issuer, in its capacity
as such member under the Issuer LLC Agreement.
Monthly Reconciliation Date means the last Business Day of each month
commencing with November 2014 (or such earlier month as the Servicer
shall have specified to the Issuer and the Trustee by not less than
30 days prior written notice).
Monthly Remittance Date means the 13th day of each calendar month (or
if such day is not a Business Day, the preceding Business Day)
beginning in October 2005.
Monthly Servicing Fee means the fee payable to the Servicer on a
monthly basis for services rendered, in accordance with Section 5.07
of the Servicing Agreement.
Moody's means Xxxxx'x Investors Service Inc. or its successor.
MTC-Tax means the tax which PSE&G is entitled to impose under the
Restructuring Order.
New Jersey UCC means the Uniform Commercial Code, as in effect in the
State of New Jersey, as amended from time to time.
Officers' Certificate means a certificate signed by
(a) the chairman of the board, the president, the vice
chairman of the board, any executive vice president
or any vice president; and
(b) the treasurer, any assistant treasurer, the
secretary or any assistant secretary of PSE&G.
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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 4.8 of the Sale Agreement)
under or in connection with the Basic Documents or the Financing
Order.
Opinion of Counsel means one or more written opinions of counsel who
may be an employee of or counsel to PSE&G, 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 applicable, and which shall be in form reasonably
satisfactory to the Trustee, if applicable.
Outstanding with respect to BGS Transition Bonds means, as of the
date of determination, all BGS Transition Bonds theretofore
authenticated and delivered under the Indenture except:
(a) BGS Transition Bonds theretofore canceled by the
BGS Transition Bond Registrar or delivered to the
BGS Transition Bond Registrar for cancellation;
(b) BGS 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 BGS
Transition Bonds; and
(c) BGS Transition Bonds in exchange for or in lieu of
other BGS Transition Bonds which have been
authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Trustee
is presented that any such BGS Transition Bonds are
held by a protected purchaser;
provided that in determining whether the Holders of the requisite
Outstanding Amount of the BGS Transition Bonds or any Series or Class
thereof have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, BGS
Transition Bonds owned by the Issuer, any other obligor upon the BGS
Transition Bonds, PSE&G or any Affiliate of any of the foregoing
Persons shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only BGS Transition Bonds that the Trustee
knows to be so owned shall be so disregarded. BGS 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
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BGS Transition Bonds and that the pledgee is not the Issuer, any
other obligor upon the BGS Transition Bonds, PSE&G or any Affiliate
of any of the foregoing Persons.
Outstanding Amount means the aggregate principal amount of all
Outstanding BGS Transition Bonds or, if the context requires, all
Outstanding BGS Transition Bonds of a Series or Class Outstanding at
the date of determination.
Overcollateralization means, with respect to any Payment Date, an
amount that, if deposited to the Overcollateralization Subaccount,
would cause the balance in such subaccount to equal the Scheduled
Overcollateralization Level for such Payment Date.
Overcollateralization Amount means, with respect to any Series of BGS
Transition Bonds, the amount specified as such in the Series
Supplement therefor.
Overcollateralization Subaccount has the meaning specified in Section
8.2(i) of the Indenture.
Paying Agent means the Trustee or any other Person, including any
Person appointed pursuant to Section 3.2(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 BGS
Transition Bonds on behalf of the Issuer.
Payment Date means, with respect to each Series or Class of BGS
Transition Bonds, each date or dates respectively specified as
Payment Dates for such Series or Class in the Series Supplement
therefor.
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 PSE&G with the BPU, dated July
9, 2003.
Predecessor BGS Transition Bond means, with respect to any particular
BGS Transition Bond, every previous BGS Transition Bond evidencing
all or a portion of the same debt as that evidenced by such
particular BGS Transition Bond; and, for the purpose of this
definition, any BGS Transition Bond authenticated and delivered under
Section 2.6 of the Indenture in lieu of a mutilated, lost, destroyed
or stolen BGS Transition Bond shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen BGS Transition Bond.
Principal means, with respect to any Payment Date and each Series or
Class of BGS Transition Bonds:
(a) the amount of principal scheduled to be paid on
such Payment Date in accordance with the Expected
Sinking Fund Amortization Schedule;
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(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 BGS Transition Bonds; and
(d) any overdue payments of principal.
Proceeding means any suit in equity, action at law or other judicial
or administrative proceeding.
Projected BGS Transition Bond Balance means, as of any date, the sum
of the amounts provided for in the Expected Sinking Fund Amortization
Schedules for each outstanding Series of BGS Transition Bonds as of
such date.
PSE&G or Seller means Public Service Electric and Gas Company, a New
Jersey corporation, or its successor.
Rating Agency means, as of any date, any rating agency rating the BGS
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 by the Trustee to each Rating Agency of such action and
the notification from each of Fitch and S&P to the Trustee and the
Issuer that such action will not result in a reduction or withdrawal
of the then current rating by such Rating Agency of any Outstanding
Series or Class of BGS Transition Bonds.
Reconciliation Date means an Annual Reconciliation Date or a Monthly
Reconciliation Date, as appropriate.
Record Date has the meaning set forth in each Supplemental Indenture.
Registered Holder means, as of any date, the Person in whose name a
BGS Transition Bond is registered in the BGS Transition Bond Register
on such date.
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 on the Series
Issuance Date of such Series, as specified in the related Series
Supplement.
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Reserve Subaccount has the meaning specified in Section 8.2(i) 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 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 order of the BPU issued on August 24,
1999 pursuant to Section 13 of the Competition Act.
Retiring Trustee means a Trustee that resigns or vacates the office
of Trustee for any reason.
Sale Agreement means the BGS Bondable Transition Property Sale
Agreement dated September 23, 2005 between the Seller and the Issuer,
as the same may be amended or supplemented from time to time.
Scheduled Overcollateralization Level means, with respect to each
Series and any Payment Date, the amount with respect to such Series
set forth as such in Schedule 1 of the Indenture, as such Schedule
has been adjusted in accordance with Section 3.19 of the Indenture to
reflect defeasances of BGS Transition Bonds and issuances of
additional Series of BGS Transition Bonds.
Securities Account Control Agreement means the securities account
control agreement by and between PSE&G Transition Funding II LLC, as
debtor, the Trustee as the Secured Party and The Bank of New York, in
its capacity as securities intermediary thereunder. Seller means
PSE&G, in its capacity as seller of the BGS Bondable Transition
Property to the Issuer pursuant to the Sale Agreement.
Series means any series of BGS 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 has the meaning specified in Section 8.2(i)
of the Indenture.
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 BGS 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 has the meaning specified in
Section 8.2(i) of the Indenture.
Series Subaccount has the meaning specified in Section 8.2(i) of the
Indenture.
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Series Supplement means an indenture supplemental to the Indenture
that authorizes a particular Series of BGS Transition Bonds, as the
same may be amended or supplemented from time to time.
Servicer means PSE&G, as the servicer of the BGS Bondable Transition
Property, and each successor to PSE&G (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 BGS Bondable Transition Property
Servicing Agreement dated as of September 23, 2005, between the
Issuer and the Servicer, as the same may be amended and supplemented
from time to time.
Servicing Procedures means those procedures set forth in Exhibit A to
the Servicing Agreement.
Special Member has the meaning set forth in the Issuer LLC Agreement.
Standard & Poor's means Standard & Poor's, a division of The
XxXxxx-Xxxx Companies, Inc. or its successor.
Subaccount means any of the subaccounts of the Collection Account
specified in Section 8.2 of the Indenture.
Subsequent Sale means the sale of additional BGS Bondable Transition
Property by the Seller to the Issuer after the Initial Transfer Date,
subject to the satisfaction of the conditions specified in the Sale
Agreement and the Indenture.
Subsequent Transfer Date means the date that a sale of Subsequent
Transferred BGS Bondable Transition Property will be effective, as
specified in a written notice provided by the Seller to the Issuer
pursuant to the Sale Agreement.
Subsequent Transferred BGS Bondable Transition Property means BGS
Bondable Transition Property sold by the Seller to the Issuer as of a
Subsequent Transfer Date pursuant to the Sale Agreement and the Xxxx
of Sale delivered on or prior to the 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.
Swap Counterparty means, with respect to any Interest Rate Swap
Agreement, the swap counterparty under that Interest Rate Swap
Agreement.
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TBC Collections means amounts received by the Servicer in respect of
the BGS 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 Financing Order.
Transfer Date means the Initial Transfer Date or any Subsequent
Transfer Date, as applicable.
Transferred BGS Bondable Transition Property means BGS Bondable
Transition Property which has been sold, assigned and transferred to
the Issuer pursuant to the Sale Agreement.
Trust Indenture Act or TIA means the Trust Indenture Act of 1939, as
in force on the date hereof, unless otherwise specifically provided.
Trustee means The Bank of New York, a New York banking corporation,
or its successor, as trustee under the Indenture and 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
September 9, 2005, among the Seller, the Issuer and Credit Suisse
First Boston LLC, 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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EXHIBIT A
to
BGS BONDABLE TRANSITION PROPERTY SERVICING AGREEMENT
The Servicer agrees to comply with the following servicing procedures:
SECTION l. Definitions.
(a) Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Servicing Agreement dated as of September 23,
2005, between the Issuer and PSE&G, as Servicer (the "Servicing Agreement").
(b) Whenever used in this Exhibit A, the following words and phrases
shall have tile following meanings:
Adjustment Request has, with respect to the Issuer, the meaning given to
such term in Appendix A.
Applicable MDMA means -with respect to each Customer, the meter data
management agent or Third Party providing meter reading services for that
Customer's account.
Applicable Third Party means, with respect to each Customer, the Third
Party, if any, providing billing or metering services to that Customer.
Billed BGS Transition Bond Charges means the amounts billed to Customers
pursuant to the BGS Transition Bond Charge, whether billed directly to
such Customers by the Servicer or indirectly through a Third Party
pursuant to Consolidated Third Party Billing.
Bills means each of the regular monthly bills, the summary bills, the
initial bills and the Closing Bills issued to Customers or Third Parties
by PSE&G
Budget Payment Plan means a levelized payment plan offered by PSE&G,
which, if elected by a Customer, provides for level monthly Xxxx charges
to such Customer. For residential Customers, this charge is calculated by
calculating actual electricity charges for the previous year and dividing
this amount by twelve. The number which results from this calculation is
charged to the residential Customer each month. In the twelfth month,
PSE&G bills the residential Customer for actual use in that month,
adjusted for any excess or deficit the Customer has paid PSE&G over the
prior eleven months. If the Customer owes PSE&G $4 or more over the
normal budget amount, that Customer has the option repaying the full
amount in the twelfth month, or spreading the amount of this deficit in
equal installments over the first four months of the Customer's next
budget year. The procedure is similar for small industrial and commercial
Customers.
2
Closing Xxxx means the final xxxx issued to a Customer at the time
service is terminated.
Consolidated Third Party Billing means the billing option available to
Customers served by a Third Party pursuant to which such Third Party will
be responsible for billing and collecting all charges to Customers
electing such billing option, including the BGS Transition Bond Charge,
and will become obligated to the Servicer for the Billed BGS Transition
Bond Charges, all in accordance with applicable BPU Regulations and the
Financing Order.
Net Write-Off Percent means the number (expressed as a percent) equal to:
(i) the amount by which Write-Offs attributable to a particular
Billing Period exceed Write-Off recoveries attributable to such
Billing Period, divided by
(ii) the total billed revenue attributable to such Billing Period.
Servicer Policies and Practices means, with respect to the Servicer's
duties under this Exhibit A, the policies and practices of the Servicer
applicable to such duties that the Servicer follows with respect to
comparable assets that it services for itself.
BGS Transition Bond Charge Effective Date means the date on which the
initial BGS Transition Bond Charge goes into effect pursuant to the
Financing Order.
Variables includes the following variables used in calculating Adjustment
Requests:
(i) the 30-day outstanding billed revenue;
(ii) the 60-day outstanding billed revenue;
(iii) the 90-day outstanding billed revenue;
(iv) the 120-day outstanding billed revenue;
(v) the 150-day outstanding billed revenue;
(vi) the 180-day outstanding billed revenue;
(vii) the estimated Net Write-Off percentage; and
(viii) the projected billed consumption to which the BGS Transition
Bond Charge applies.
Write-Offs means write-offs of the Billed BGS Transition Bond Charge that
remain unpaid by Customers or Third Parties as of 50-80 days after the
issuance of the Closing Bills containing such charges.
SECTION 2. Data Acquisition.
(a) Installation and Maintenance of Meters. Except to the extent that a
ThirdParty is responsible for such services, the Servicer shall use its best
efforts to cause to be installed,
3
replaced and maintained meters in such places and in such condition as will
enable the Servicer to obtain usage measurements for each Customer
approximately every 30 days or as provided in the applicable tariff.
(b) Meter Reading. At least once each calendar month, the Servicer shall
obtain usage measurements from the Applicable MDMA for each Customer;
provided, however, that the Servicer may determine any Customer's usage on the
basis of estimates in accordance with applicable BPU Regulations.
(c) Cost of Metering. The Issuer shall not be obligated to pay any costs
associated with the metering duties set forth in this Section 2, including,
but not limited to, the costs of installing, replacing and maintaining meters,
nor shall the Issuer be entitled to any credit against the Servicing Fee for
any cost savings realized by the Servicer or any Third Party as a result of
new metering and/or billing technologies.
SECTION 3. Usage and Xxxx Calculation.
The Servicer shall obtain a calculation of each Customer's usage (which may be
based on data obtained from such Customer's meter read or on usage estimates
determined in accordance with applicable BPU Regulations) at least once each
calendar month and shall determine therefrom each Customer's individual charge
relating to the BGS Transition Bond Charge to be included on such Customer's
Xxxx pursuant to the Financing Order and BPU Regulations.
SECTION 4. Billing.
The Servicer shall implement the BGS Transition Bond Charge as of the BGS
Transition Bond Charge Effective Date and shall thereafter xxxx each Customer
or the Applicable Third Party for the respective Customer's outstanding
current and past due charges relating to the BGS Transition Bond Charge,
accruing until all payments of principal and interest on each Series of BGS
Transition Bonds and all other costs and expenses related to such Series have
been paid in accordance with the Indenture, all in accordance with the
following:
(a) Frequency of Bills; Billing Practices. In accordance with the
Servicer's then-existing Servicer Policies and Practices, as such Servicer
Policies and Practices may be modified from time to time, the Servicer shall
generate and issue a Xxxx to each Customer, or, in the case of a Customer who
has elected Consolidated Third Party Billing, to an Applicable Third Party,
for such Customer's respective BGS Transition Bond Charge as a general
practice once approximately every 30 days or such other time period as allowed
by the BPU, at the same time, with the same frequency and on the same Xxxx as
that containing the Servicer's own charges to such Customer or Third Party, as
the case may be. In the event that the Servicer makes any material
modification to these practices, it shall notify the Issuer, the Trustee and
the Rating Agencies as soon as practicable, and in no event later than 60
Business Days after such modification goes into effect; provided, however,
that
(i) the Servicer may not make any modification that will materially
adversely affect the BGS Transition Bondholders, and
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(ii) the Rating Agencies shall receive prior notice of any
modification that would change the frequency with which Bills are
issued or would change any tariff charged.
(b) Format.
(i) Pursuant to the Financing Order, each Xxxx to a non-residential
customer shall contain a single separate line item corresponding to
the Original TBC and the BGS Transition Bond Charge, together with
their related MTC-Tax charges owed for the corresponding Billing
Period. In the case of a residential customer, each Xxxx shall
contain a single line item that combines the Original TBC and the
BGS Transition Bond Charge, together with the MTC-Tax and the BGS
MTC-Tax and the electric distribution charges owed for the
corresponding Billing Period. All Bills, in addition, will contain
in text or in a footnote, text substantially to the effect pursuant
to the Restructuring Order and the Financing Order that a portion of
such combined monthly charge represents Bondable Transition Property
being collected on behalf of the Issuer and of PSE&G Transition
Funding LLC as owners of their respective Bondable Transition
Property.
(ii) In the case of each Customer that has elected Consolidated
Third Party Billing, the Servicer shall deliver to the Applicable
Third Party itemized charges for such Customer including the amount
of such Customer's BGS Transition Bond Charge to be remitted by the
Servicer to the Issuer.
(iii) The Servicer shall conform to such requirements in respect of
the format, structure and text of Bills delivered to Customers and
Third Parties as applicable BPU Regulations shall from time to time
prescribe. To the extent that Xxxx format, structure and text are
not prescribed by the Competition Act, other applicable law or BPU
Regulations, the Servicer shall, subject to clauses (i) and (ii)
above, determine the format, structure and text of all Bills in
accordance with its reasonable business judgment, its Servicer
Policies and Practices with respect to its own charges and
prevailing industry standards.
(c) Delivery. The Servicer shall deliver all Bills to Customers
(i) by United States mail in such class or classes as are consistent
with the Servicer Policies and Practices followed by the Servicer
with respect to its own charges or
(ii) by any other means, whether electronic or otherwise, that the
Servicer may from time to time use to present its own charges to its
Customers. In the case of Customers that have elected Consolidated
Third Party Billing, the Servicer shall deliver all Bills to the
Applicable Third Parties by such
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means as are prescribed by applicable BPU Regulations, or if not
prescribed by applicable BPU Regulations, by such means as are
mutually agreed upon by the Servicer and the Applicable Third Party
and are consistent with BPU Regulations. The Servicer or a Third
Party, as applicable, shall pay from its own funds all costs of
issuance and delivery of all Bills, including but not limited to
printing and postage costs as the same may increase or decrease from
time to time.
SECTION 5. Customer Service Functions.
The Servicer shall handle all Customer inquiries and other Customer service
matters according to the same procedures it uses to service Customers with
respect to its own charges.
SECTION 6. Collections; Payment Processing; Remittance.
(a) Collection Efforts, Policies, Procedures.
(i) The Servicer shall use reasonable efforts to collect all Billed
BGS Transition Bond Charges from Customers and Third Parties as and
when the same become due and shall follow such collection procedures
as it follows with respect to comparable assets that it services for
itself or others, including, as follows:
(A) The Servicer shall prepare and deliver overdue notices to
Customers and Third Parties in accordance with applicable BPU
Regulations and the Servicer Policies and Practices.
(B) The Servicer shall apply late payment charges to
outstanding Customer and Third Party balances in accordance
with applicable BPU Regulations. All late payment charges and
interest collected shall be payable to and retained by the
Servicer as a component of its compensation under the Servicing
Agreement, and the Issuer shall not have any right to share in
the same.
(C) The Servicer shall deliver verbal and written final call
notices in accordance with applicable BPU Regulations and
Servicer Policies and Practices.
(D) The Servicer shall adhere and carry out disconnection
policies in accordance with the Competition Act, other
applicable law and BPU Regulations and Servicer Policies and
Practices.
(E) The Servicer may employ the assistance of collections
agents in accordance with applicable BPU Regulations and
Servicer Policies and Practices.
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(F) The Servicer shall apply Customer and Third Party deposits,
Customers' letters of credit and Customer posted surety bonds
to the payment of delinquent accounts in accordance with
applicable BPU Regulations and Servicer Policies and Practices
and according to the priorities set forth in Section 6(b)(ii),
(iii) and (iv) of this Exhibit A.
(G) The Servicer shall promptly take all necessary action in
accordance with applicable BPU Regulation to terminate billing
of BGS Transition Bond Charges by Third Parties whose payments
are 22 or more days delinquent and to collect the Billed BGS
Transition Bond Charges directly from the applicable Customers.
(ii) The Servicer shall not waive any late payment charge or any
other fee or charge relating to delinquent payments, if any, or
waive, vary or modify any terms of payment of any amounts payable by
a Customer, in each case unless such waiver or action:
(A) would be in accordance with the Servicer's customary
practices or those of any successor Servicer with respect to
comparable assets that it services for itself and for others;
(B) would not materially adversely affect the rights of the BGS
Transition Bondholders; and
(C) would comply with applicable law; provided, however, that
notwithstanding anything in the Servicing Agreement or this
Exhibit A to the contrary, the Servicer is authorized to write
off any Billed BGS Transition Bond Charges, in accordance with
its Servicer Policies and Practices that remain outstanding for
50-80 days.
(iii) The Servicer shall accept payment from Customers in respect of
Billed BGS Transition Bond Charges in such forms, by such methods
and at such times and places as it accepts payment of its own
charges. The Servicer shall accept payment from Third Parties in
respect of Billed BGS Transition Bond Charges in such forms, by such
methods and at such times and places as the Servicer and each Third
Party shall mutually agree in accordance with applicable BPU
Regulations.
(b) Payment Processing; Allocation; Priority of Payments.
(i) The Servicer shall post all payments received to Customer
accounts as promptly as practicable, and, in any event,
substantially all payments shall be posted no later than two
Business Days after receipt.
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(ii) Subject to clause (iii) below, the Servicer shall apply
payments received to each Customer's or Third Party's account in
proportion to the charges contained on the outstanding Xxxx to such
Customer or Third Party.
(iii) Any amounts collected by the Servicer that represent partial
payments of the total Xxxx to a Customer or Third Party shall be
allocated in accordance with the priorities set forth in Section
3.02(b) of the Servicing Agreement.
(iv) The Servicer shall hold all over-payments for the benefit of
the Issuer and shall apply such funds to future Xxxx charges in
accordance with clauses (ii) and (iii) above as such charges become
due.
(v) For Customers on a Budget Payment Plan, the Servicer shall treat
TBC Collections received from such Customers as if such Customers
had been billed for the BGS Transition Bond Charge in the absence of
the Budget Payment Plan. Partial payment of a Budget Payment Plan
payment shall be allocated according to clause (iii) above, and
overpayment of a Budget Payment Plan payment shall be allocated
according to clause (iv) above.
(c) Accounts; Records.
(i) The Servicer shall maintain accounts and records as to the
Transferred BGS Bondable Transition Property accurately and in
accordance with its standard accounting procedures and in sufficient
detail to permit reconciliation between payments or recoveries with
respect to the Transferred BGS Bondable Transition Property and the
amounts from time to time remitted to the Collection Account in
respect of the Transferred BGS Bondable Transition Property.
(ii) The Servicer shall maintain accounts and records as to Third
Parties performing Consolidated Third Party Billing for Customers
accurately and in accordance with its standard accounting procedures
and in sufficient detail to permit reconciliation between payments
or recoveries with respect to the Transferred BGS Bondable
Transition Property and amounts owed by such Customers in respect of
the BGS Transition Bond Charge.
(d) Calculation of Collections; Determination of Aggregate Remittance
Amount.
(i) On or before each Remittance Date, the Servicer shall calculate
the total TBC Collections received by the Servicer from or on behalf
of Customers during prior Collection Periods in respect of all
previously Billed BGS Transition Bond Charges.
(ii) In accordance with Section 4.01 of the Servicing Agreement and
Annex I. the Servicer shall update the Variables and shall prepare
Adjustment Requests to reflect the updated Variables when required
to do so pursuant to Annex I.
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(e) Remittances.
(i) The Servicer shall make remittances to the Issuer in accordance
with Section 5.11 of the Servicing Agreement.
(ii) In the event of any change of account or change of institution
affecting the remittances, the Issuer shall provide written notice
thereof to the Servicer by the earlier of:
(A) five Business Days from the effective date of such change,
or
(B) five Business Days prior to the next applicable Remittance
Date.
