Exhibit 4.3.1
PSE&G TRANSITION FUNDING II LLC,
Issuer
and
THE BANK OF NEW YORK,
Trustee
---------------------
INDENTURE
Dated as of September 23, 2005
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Securing BGS Transition Bonds
Issuable in Series
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions..................................................................................2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act........................................2
SECTION 1.3. Rules of Construction........................................................................3
ARTICLE II
THE BGS TRANSITION BONDS
SECTION 2.1. Form.........................................................................................3
SECTION 2.2. Execution, Authentication and Delivery.......................................................4
SECTION 2.3. Denominations; BGS Transition Bonds Issuable in Series.......................................4
SECTION 2.4. Temporary BGS Transition Bonds...............................................................5
SECTION 2.5. Registration; Registration of Transfer and Exchange..........................................6
SECTION 2.6. Mutilated, Destroyed, Lost or Stolen BGS Transition Bonds....................................7
SECTION 2.7. Persons Deemed Owner.........................................................................8
SECTION 2.8. Payment of Principal and Interest; Interest on Overdue Principal; Principal and Interest
Rights Preserved...................................................................8
SECTION 2.9. Cancellation...............................................................................10
SECTION 2.10. Amount; Authentication and Delivery of BGS Transition Bonds................................10
SECTION 2.11. Book-Entry BGS Transition Bonds............................................................15
SECTION 2.12. Notices to Clearing Agency.................................................................16
SECTION 2.13. Definitive BGS Transition Bonds............................................................16
ARTICLE III
COVENANTS
SECTION 3.1. Payment of Principal and Interest...........................................................17
SECTION 3.2. Maintenance of Office or Agency.............................................................17
SECTION 3.3. Money for Payments To Be Held in Trust......................................................17
SECTION 3.4. Existence...................................................................................19
SECTION 3.5. Protection of Collateral....................................................................19
SECTION 3.6. Opinions as to Collateral...................................................................20
SECTION 3.7. Performance of Obligations..................................................................20
SECTION 3.8. Negative Covenants..........................................................................21
SECTION 3.9. Annual Statement as to Compliance...........................................................21
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms........................................21
SECTION 3.11. Successor or Transferee....................................................................22
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SECTION 3.12. No Other Business..........................................................................23
SECTION 3.13. No Borrowing...............................................................................23
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities..........................................23
SECTION 3.15. Capital Expenditures.......................................................................23
SECTION 3.16. Restricted Payments........................................................................23
SECTION 3.17. Notice of Events of Default................................................................24
SECTION 3.18. Inspection.................................................................................24
SECTION 3.19. Adjusted Overcollateralization Balance Schedules...........................................24
SECTION 3.20. Sale Agreement, Servicing Agreement and Swap Agreement Covenants...........................24
SECTION 3.21. Taxes......................................................................................27
ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 4.1. Satisfaction and Discharge of Indenture; Defeasance.........................................28
SECTION 4.2. Conditions to Defeasance....................................................................29
SECTION 4.3. Application of Trust Money..................................................................30
SECTION 4.4. Repayment of Moneys Held by Paying Agent....................................................31
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default...........................................................................31
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment..........................................32
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.............................33
SECTION 5.4. Remedies....................................................................................35
SECTION 5.5. Optional Preservation of the Collateral.....................................................36
SECTION 5.6. Limitation of Proceedings...................................................................36
SECTION 5.7. Unconditional Rights of BGS Transition Bondholders To Receive Principal and Interest........37
SECTION 5.8. Restoration of Rights and Remedies..........................................................37
SECTION 5.9. Rights and Remedies Cumulative..............................................................38
SECTION 5.10. Delay or Omission Not a Waiver.............................................................38
SECTION 5.11. Control by BGS Transition Bondholders......................................................38
SECTION 5.12. Waiver of Past Defaults....................................................................39
SECTION 5.13. Undertaking for Costs......................................................................39
SECTION 5.14. Waiver of Stay or Extension Laws...........................................................39
SECTION 5.15. Action on BGS Transition Bonds.............................................................40
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ARTICLE VI
THE TRUSTEE
SECTION 6.1. Duties and Liabilities of Trustee...........................................................40
SECTION 6.2. Rights of Trustee...........................................................................41
SECTION 6.3. Individual Rights of Trustee................................................................42
SECTION 6.4. Trustee's Disclaimer........................................................................42
SECTION 6.5. Notice of Defaults..........................................................................42
SECTION 6.6. Reports by Trustee to Holders...............................................................43
SECTION 6.7. Compensation and Indemnity..................................................................44
SECTION 6.8. Replacement of Trustee......................................................................44
SECTION 6.9. Successor Trustee by Merger.................................................................45
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee..............................................46
SECTION 6.11. Eligibility; Disqualification..............................................................47
SECTION 6.12. Preferential Collection of Claims Against Issuer...........................................47
SECTION 6.13. Representations and Warranties of the Trustee..............................................47
ARTICLE VII
BGS TRANSITION BONDHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer To Furnish Trustee Names and Addresses of BGS Transition Bondholders.................47
SECTION 7.2. Preservation of Information; Communications to BGS Transition Bondholders...................48
SECTION 7.3. Reports by Issuer...........................................................................48
SECTION 7.4. Reports by Trustee..........................................................................49
SECTION 7.5. Provision of Servicer Reports...............................................................49
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money.........................................................................49
SECTION 8.2. Collection Account..........................................................................49
SECTION 8.3. Release of Collateral.......................................................................56
SECTION 8.4. Issuer Opinion of Counsel...................................................................57
SECTION 8.5. Reports by Independent Accountants..........................................................57
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of BGS Transition Bondholders.......................57
SECTION 9.2. Supplemental Indentures with Consent of BGS Transition Bondholders..........................59
SECTION 9.3. BPU Condition...............................................................................60
SECTION 9.4. Execution of Supplemental Indentures........................................................62
SECTION 9.5. Effect of Supplemental Indenture............................................................62
SECTION 9.6. Conformity with Trust Indenture Act.........................................................62
SECTION 9.7. Reference in BGS Transition Bonds to Supplemental Indentures................................62
ARTICLE X
[RESERVED]
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions, etc..................................................63
SECTION 11.2. Form of Documents Delivered to Trustee.....................................................63
SECTION 11.3. Acts of BGS Transition Bondholders.........................................................64
SECTION 11.4. Notices, etc., to Trustee, Issuer and Rating Agencies......................................65
SECTION 11.5. Notices to BGS Transition Bondholders; Waiver..............................................66
SECTION 11.6. [Reserved].................................................................................66
SECTION 11.7. Alternate Payment and Notice Provisions....................................................66
SECTION 11.8. Conflict with Trust Indenture Act..........................................................66
SECTION 11.9. Effect of Headings and Table of Contents...................................................67
SECTION 11.10. Successors and Assigns....................................................................67
SECTION 11.11. Severability..............................................................................67
SECTION 11.12. Benefits of Indenture.....................................................................67
SECTION 11.13. Legal Holidays............................................................................67
SECTION 11.14. GOVERNING LAW.............................................................................67
SECTION 11.15. Counterparts..............................................................................67
SECTION 11.16. Issuer Obligation.........................................................................68
SECTION 11.17. No Petition...............................................................................68
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APPENDIX A.................MASTER DEFINITIONS
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INDENTURE, dated as of September 23, 2005, by and between PSE&G
TRANSITION FUNDING II LLC, a Delaware limited liability company, as Issuer,
and THE BANK OF NEW YORK, a New York banking corporation, in its capacity as
trustee for the benefit of the Holders of the BGS Transition Bonds and as
agent for itself and any Swap Counterparty (collectively, the "Trustee").
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for one or more Series of BGS Transition Bonds, issuable
as provided in this Indenture. Each such Series of BGS Transition Bonds will
be issued only under a separate Series Supplement to this Indenture duly
executed and delivered by the Issuer and the Trustee. The Issuer is entering
into this Indenture, and the Trustee is accepting the trusts created hereby,
each for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and each intending to be legally bound hereby.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee for the benefit of (i) the
Holders of the BGS Transition Bonds from time to time issued and outstanding,
(ii) the Trustee and (iii) any Swap Counterparty, all of the Issuer's right,
title and interest whether now owned or hereafter acquired, in, to and under:
(a) all BGS Bondable Transition Property, including, without limitation, the
BGS Bondable Transition Property transferred by the Seller to the Issuer from
time to time pursuant to the Sale Agreement and all proceeds thereof; (b) the
Sale Agreement; (c) all Bills of Sale delivered by the Seller pursuant to the
Sale Agreement; (d) the Servicing Agreement; (e) the Administration Agreement;
(f) any Interest Rate Swap Agreement; (g) the Collection Account and all
sub-accounts thereof (including, without limitation, the General Subaccount,
each Series Overcollateralization Subaccount, each Series Capital Subaccount,
the Reserve Subaccount, each Series Subaccount, any Class Subaccount and any
Defeasance Subaccount, but excluding the Capital Reserve Subaccount) and all
cash, securities, instruments, investment property (including without
limitation all security entitlements) or other assets deposited in or credited
to the Collection Account or any subaccount thereof (other than the Capital
Reserve Subaccount) from time to time or purchased with funds therefrom; (h)
all investment property and all other property of whatever kind owned from
time to time by the Issuer other than: (w) any cash released to any Swap
Counterparty by the Trustee from the related Class Subaccount pursuant to
Section 8.2(f), (x) any cash released to the Issuer by the Trustee from any
Series Capital Subaccount pursuant to Section 8.2(g)(x) and (y) the proceeds
from the sale of the BGS Transition Bonds used to pay (1) the costs of
issuance of the BGS Transition Bonds and the Upfront Transaction Costs and
Capital Reduction Costs (as those terms are defined in the Financing Order)
and (2) the purchase price of the BGS Bondable Transition Property paid
pursuant to the Sale Agreement; (i) all present and future claims, demands,
causes and choses in action in respect of any or all of the foregoing; and (j)
all payments on or under and all proceeds of every kind and nature whatsoever
in respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid property, all
cash proceeds, accounts, accounts receivable, general intangibles, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and
other forms of obligations and receivables, instruments and other
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property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing (collectively, the "Collateral").
Such Grants are made to the Trustee to have and to hold in trust to
secure the payment of principal of, and interest on, and any other amounts
owing in respect of, the BGS Transition Bonds and all fees, expenses, counsel
fees and other amounts due and owing to the Trustee and, if and to the extent
provided in any Series Supplement, any amounts due and owing to any Swap
Counterparty (collectively, the "Secured Obligations"), equally and ratably
without prejudice, preference, priority or distinction, except as expressly
provided in this Indenture and to secure performance by the Issuer of all of
the Issuer's obligations under this Indenture with respect to the BGS
Transition Bonds, all as provided in this Indenture.
The Trustee, as trustee on behalf of the Holders of the BGS
Transition Bonds, acknowledges such Grant, accepts the trusts hereunder in
accordance with the provisions hereof and agrees to perform its duties herein
required.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions. Capitalized terms used but not otherwise
defined in this Indenture have the respective meanings set forth in Appendix A
hereto unless the context otherwise requires. Non-capitalized terms used
herein which are defined in the New Jersey UCC, as the context requires, have
the meanings assigned to such terms in the New Jersey UCC, but without giving
effect to any amendments to the New Jersey UCC after the date hereof which
have a material adverse effect on the Issuer or the BGS Transition
Bondholders.
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. Each of the
following TIA terms used in this Indenture has the following meaning:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the BGS Transition Bonds.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
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SECTION 1.3. Rules of Construction.
(a) An accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in effect
from time to time;
(b) "including" means including without limitation;
(c) with respect to terms defined in Appendix A hereto, words in the
singular include the plural and words in the plural include the singular;
(d) unless otherwise specified, references herein to Sections or
Articles are to Sections or Articles of this Indenture; and
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
THE BGS TRANSITION BONDS
SECTION 2.1. Form.
(a) The BGS Transition Bonds and the Trustee's certificate of
authentication shall be in substantially the forms set forth in Exhibit A to
the related Series Supplement, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture or by the related Series Supplement and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may, consistently herewith, be determined by the Managers of
the Issuer executing such BGS Transition Bonds, as evidenced by their
execution of such BGS Transition Bonds. Any portion of the text of any BGS
Transition Bond may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the BGS Transition Bond. Each BGS Transition
Bond shall be dated the date of its authentication.
(b) The BGS Transition Bonds shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders), all as determined by the Managers of the
Issuer executing such BGS Transition Bonds, as evidenced by their execution of
such BGS Transition Bonds.
(c) Each BGS Transition Bond shall bear upon its face the designation
so selected for the Series and Class, if any, to which it belongs. The terms
of all BGS Transition Bonds of the same Series shall be the same, unless such
Series is comprised of one or more Classes, in which case the terms of all BGS
Transition Bonds of the same Class shall be the same.
(d) Each BGS Transition Bond shall state that the Competition Act
provides that the State of New Jersey pledges and agrees with the holders of
the BGS Transition Bonds that "the State will not limit, alter or impair any
bondable transition property or other rights vested in an
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electric public utility or an assignee or pledgee thereof or a financing
entity or vested in the holders of any transition bonds pursuant to a bondable
stranded costs rate order until such transition bonds, together with the
interest thereon, are fully paid and discharged or until such agreements are
fully performed on the part of the electric public utility, any assignee or
pledgee thereof or the financing entity or in any way limit, alter, impair or
reduce the value or amount of the bondable transition property approved by a
bondable stranded costs rate order."
SECTION 2.2. Execution, Authentication and Delivery.
(a) The BGS Transition Bonds shall be executed on behalf of the
Issuer by a Manager. The signature of any such Manager on the BGS Transition
Bonds may be manual or facsimile.
(b) BGS Transition Bonds bearing the manual or facsimile signature of
individuals who were at any time Managers shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such BGS Transition Bonds.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver BGS Transition Bonds
executed on behalf of the Issuer to the Trustee pursuant to an Issuer Order
for authentication; and the Trustee shall authenticate and deliver such BGS
Transition Bond as in this Indenture provided and not otherwise.
(d) No BGS Transition Bond shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose, unless there appears
on such BGS Transition Bond a certificate of authentication substantially in
the form provided for herein executed by the Trustee by the manual signature
of one of its authorized signatories, and such certificate upon any BGS
Transition Bond shall be conclusive evidence, and the only evidence, that such
BGS Transition Bond has been duly authenticated and delivered hereunder.
SECTION 2.3. Denominations; BGS Transition Bonds Issuable in Series.
(a) The BGS Transition Bonds of each Series shall be issuable as
registered BGS Transition Bonds in the Authorized Denominations specified in
the Series Supplement therefor.
(b) The BGS Transition Bonds may, at the election of and as
authorized by a Manager and set forth in a Series Supplement, be issued in one
or more Series (each of which may be comprised of one or more Classes), and
shall be designated generally as the "BGS Transition Bonds" of the Issuer,
with such further particular designations added or incorporated in such title
for the BGS Transition Bonds of any particular Series or Class as a Manager of
the Issuer may determine and be set forth in the Series Supplement therefor.
(c) Each Series of BGS Transition Bonds shall be created by a Series
Supplement authorized by a Manager and establishing the terms and provisions
of such Series and, if applicable, any Classes thereof. The several Series and
any Classes thereof may differ as between Series and Classes, in respect of
any of the following matters:
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(i) designation of the Series and each Class thereof;
(ii) the aggregate initial principal amount of the BGS
Transition Bonds of the Series and each Class thereof;
(iii) the Interest Rate of the Series and each Class thereof
or the formula, if any, used to calculate the applicable Interest
Rate or Interest Rates for the Series and each Class thereof;
(iv) the Payment Dates of the Series and each Class thereof;
(v) the Expected Final Payment Date of the Series and each
Class thereof;
(vi) the Final Maturity Date of the Series and each Class
thereof;
(vii) the place or places for payments with respect to the
Series and each Class thereof;
(viii) the Authorized Denominations for the Series and each
Class thereof;
(ix) [reserved];
(x) the Expected Sinking Fund Amortization Schedule for the
Series and each Class thereof;
(xi) the Overcollateralization Amount (such amount may be
zero) with respect to the Series;
(xii) the Required Capital Amount with respect to the
Series;
(xiii) the Calculation Dates and Adjustment Dates for the
Series;
(xiv) the credit enhancement, if any, applicable to the
Series and each Class thereof; and
(xv) any other terms of the Series or each Class that are
not inconsistent with the provisions of this Indenture.
SECTION 2.4. Temporary BGS Transition Bonds.
(a) Pending the preparation of definitive BGS Transition Bonds
pursuant to Section 2.13 or, in the case of BGS Transition Bonds held in a
book-entry only system by a Clearing Agency, a Manager on behalf of the Issuer
may execute, and upon receipt of an Issuer Order the Trustee shall
authenticate and deliver, temporary BGS Transition Bonds which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the definitive BGS Transition Bonds in lieu of which they are issued and with
such variations not
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inconsistent with the terms of this Indenture as the Manager executing such
BGS Transition Bonds may determine, as evidenced by their execution of such
BGS Transition Bonds.
(b) If temporary BGS Transition Bonds are issued, the Issuer will
cause definitive BGS Transition Bonds to be prepared without unreasonable
delay except where temporary BGS Transition Bonds are held by a Clearing
Agency. After the preparation of definitive BGS Transition Bonds, the
temporary BGS Transition Bonds shall be exchangeable for definitive BGS
Transition Bonds upon surrender of the temporary BGS Transition Bonds at the
office or agency of the Issuer to be maintained as provided in Section 3.2,
without charge to any Holder. Upon surrender for cancellation of any one or
more temporary BGS Transition Bonds, a Manager on behalf of the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like Series (and if applicable, Class) and aggregate initial principal amount
of definitive BGS Transition Bonds in Authorized Denominations. Until so
exchanged, the temporary BGS Transition Bonds shall in all respects be
entitled to the same benefits under this Indenture as definitive BGS
Transition Bonds.
SECTION 2.5. Registration; Registration of Transfer and Exchange.
(a) The Issuer shall cause to be kept a register (the "BGS Transition
Bond Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of BGS Transition
Bonds and the registration of transfers of BGS Transition Bonds. The Trustee
shall be the registrar (the Trustee or any successor thereof in such capacity,
the "BGS Transition Bond Registrar") for the purpose of registering BGS
Transition Bonds and transfers of BGS Transition Bonds as herein provided.
Upon any resignation of any BGS Transition Bond Registrar, the Issuer shall
promptly appoint a successor or, if it elects not to make such an appointment,
assume the duties of BGS Transition Bond Registrar.
(b) If a Person other than the Trustee is appointed by the Issuer as
BGS Transition Bond Registrar, the Issuer shall give the Trustee and any
transfer, paying or listing agent of the Issuer appointed pursuant to Section
3.2(b) prompt written notice of the appointment of such BGS Transition Bond
Registrar and of the location, and any change in the location, of the BGS
Transition Bond Register; the Trustee and any such agent shall have the right
to inspect the BGS Transition Bond Register at all reasonable times and to
obtain copies thereof; and the Trustee and any such agent shall have the right
to rely upon a certificate executed on behalf of the BGS Transition Bond
Registrar by a duly authorized officer thereof as to the names and addresses
of the Holders of the BGS Transition Bonds and the original and Outstanding
principal amounts and number of such BGS Transition Bonds (separately stated
by Series and, if applicable, Class).
(c) Upon surrender for registration of transfer of any BGS Transition
Bond at the office or agency of the Issuer to be maintained as provided in
Section 3.2, a Manager on behalf of the Issuer shall execute, and the Trustee
shall authenticate and the BGS Transition Bondholder shall obtain from the
Trustee, in the name of the designated transferee or transferees, one or more
new BGS Transition Bonds in any Authorized Denominations, of a like Series
(and, if applicable, Class) and aggregate initial principal amount.
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(d) At the option of the Holder, BGS Transition Bonds may be
exchanged for other BGS Transition Bonds of a like Series (and, if applicable,
Class) and aggregate initial principal amount in Authorized Denominations,
upon surrender of the BGS Transition Bonds to be exchanged at such office or
agency as provided in Section 3.2. Whenever any BGS Transition Bonds are so
surrendered for exchange, a Manager on behalf of the Issuer shall execute, and
the Trustee shall authenticate and the BGS Transition Bondholder shall obtain
from the Trustee, the BGS Transition Bonds which the BGS Transition Bondholder
making the exchange is entitled to receive.
(e) All BGS Transition Bonds issued upon any registration of transfer
or exchange of BGS Transition Bonds shall be the valid obligations of the
Issuer, evidencing the same debt, and entitled to the same benefits under this
Indenture, as the BGS Transition Bonds surrendered upon such registration of
transfer or exchange.
(f) Every BGS Transition Bond presented or surrendered for
registration of transfer or exchange shall be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder thereof or such Holder's attorney duly
authorized in writing, with such signature guaranteed by an Eligible Guarantor
Institution in the form set forth in such BGS Transition Bond.
(g) No service charge shall be made to a Holder for any registration
of transfer or exchange of BGS Transition Bonds, but, other than in respect of
exchanges pursuant to Sections 2.4 or 2.6 not involving any transfer, the
Issuer may require payment by such Holder of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of BGS Transition Bonds, including the
fees and expenses of the Trustee.
(h) The preceding provisions of this Section 2.5 notwithstanding, the
Issuer shall not be required to make, and the BGS Transition Bond Registrar
need not register, transfers or exchanges of BGS Transition Bonds selected for
transfers or exchanges of any BGS Transition Bond for a period of fifteen (15)
days preceding the date on which final payment of principal is to be made with
respect to such BGS Transition Bond.
SECTION 2.6. Mutilated, Destroyed, Lost or Stolen BGS Transition
Bonds.
(a) If (i) any mutilated BGS Transition Bond is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any BGS Transition Bond, and (ii) there is
delivered to the Trustee such security or indemnity as may be required by it
to hold the Issuer and the Trustee harmless, then, in the absence of notice to
the Issuer, the BGS Transition Bond Registrar or the Trustee that such BGS
Transition Bond has been acquired by a protected purchaser, a Manager on
behalf of the Issuer shall execute, and upon a Manager's request the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen BGS Transition Bond, a replacement BGS
Transition Bond of like Series (and, if applicable, Class), tenor and initial
principal amount in Authorized Denominations, bearing a number not
contemporaneously outstanding; provided,
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however, that if any such destroyed, lost or stolen BGS Transition Bond, but
not a mutilated BGS Transition Bond, shall have become or within seven days
shall be due and payable, instead of issuing a replacement BGS Transition
Bond, the Issuer may pay such destroyed, lost or stolen BGS Transition Bond
when so due or payable without surrender thereof. If, after the delivery of
such replacement BGS Transition Bond or payment of a destroyed, lost or stolen
BGS Transition Bond pursuant to the proviso to the preceding sentence, a
protected purchaser of the original BGS Transition Bond in lieu of which such
replacement BGS Transition Bond was issued presents for payment such original
BGS Transition Bond, the Issuer and the Trustee shall be entitled to recover
such replacement BGS Transition Bond (or such payment) from the Person to whom
it was delivered or any Person taking such replacement BGS Transition Bond
from such Person to whom such replacement BGS Transition Bond was delivered or
any assignee of such Person, except a protected purchaser, and shall be
entitled to recover upon the security or indemnity provided therefor to the
extent of any loss, damage, cost or expense incurred by the Issuer or the
Trustee in connection therewith.
(b) Every replacement BGS Transition Bond issued pursuant to this
Section 2.6 in replacement of any mutilated, destroyed, lost or stolen BGS
Transition Bond shall constitute an original additional contractual obligation
of the Issuer, whether or not the mutilated, destroyed, lost or stolen BGS
Transition Bond shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately
with any and all other BGS Transition Bonds duly issued hereunder.
(c) The provisions of this Section 2.6 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen BGS
Transition Bonds.
SECTION 2.7. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any BGS Transition Bond, the Issuer, the Trustee
and any agent of the Issuer or the Trustee may treat the Person in whose name
any BGS Transition Bond is registered (as of the day of determination) as the
owner of such BGS Transition Bond for the purpose of receiving payments of
principal of and interest on such BGS Transition Bond and for all other
purposes whatsoever, whether or not such BGS Transition Bond be overdue, and
neither the Issuer, the Trustee nor any agent of the Issuer or the Trustee
shall be affected by notice to the contrary.
SECTION 2.8. Payment of Principal and Interest; Interest on Overdue
Principal; Principal and Interest Rights Preserved.
(a) The BGS Transition Bonds shall accrue interest as provided in the
form of BGS Transition Bond attached to the Series Supplement for such BGS
Transition Bonds, at the applicable Interest Rate specified therein, and such
interest shall be payable on each Payment Date as specified therein. Any
installment of interest or principal payable on any BGS Transition Bond which
is punctually paid or duly provided for by the Issuer on the applicable
Payment Date shall be paid to the Person in whose name such BGS Transition
Bond (or one or more Predecessor BGS Transition Bonds) is registered on the
Record Date for such Payment Date, in the manner specified in the related
Series Supplement, and if not specified therein, either
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(i) by check mailed first-class, postage prepaid to such Person's address as
it appears on the BGS Transition Bond Register on such Record Date or (ii)
with respect to BGS Transition Bonds registered on a Record Date in the name
of the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds to
the account designated by such nominee, except for the final installment of
principal payable with respect to such BGS Transition Bond on a Payment Date,
which shall be payable as provided in clause (b) below. The funds represented
by any such checks or other amounts returned undelivered shall be held in
accordance with Section 3.3.
(b) The principal of each BGS Transition Bond of each Series (and, if
applicable, Class) shall be payable in installments on each Payment Date
specified in the Expected Sinking Fund Amortization Schedule included in the
form of BGS Transition Bond attached to the Series Supplement for such BGS
Transition Bonds, but only to the extent that moneys are available for such
payment pursuant to Section 8.2; provided that installments of principal not
paid when scheduled to be paid shall be paid upon receipt of moneys available
for such purpose, in the sequential order set forth in the applicable Expected
Sinking Fund Amortization Schedule. Failure to pay in accordance with such
Expected Sinking Fund Amortization Schedule because moneys are not so
available pursuant to Section 8.2 to make such payments shall not constitute a
Default or Event of Default under this Indenture. Notwithstanding the
foregoing, the entire Outstanding principal amount of the BGS Transition Bonds
of any Series or Class shall be due and payable, if not previously paid,
either: (i) on the Final Maturity Date therefor, (ii) on the date on which the
BGS Transition Bonds of all Series have been declared immediately due and
payable in accordance with Section 5.2, if any, therefor. The Trustee shall
notify the Person in whose name a BGS Transition Bond is registered, and any
other Person required under the relevant Series Supplement, at the close of
business on the second Record Date preceding the Payment Date on which the
Issuer expects that the final installment of principal of and interest on such
BGS Transition Bond will be paid. Such notice shall be mailed no later than
five (5) days prior to such final Payment Date and shall specify that such
final installment of principal will be payable only upon presentation and
surrender of such BGS Transition Bond and shall specify the place where such
BGS Transition Bond may be presented and surrendered for payment of such
installment. The Trustee shall also arrange for such notice to be published in
an Authorized Newspaper, not later than the fifth day of the month of the
expected payment of such final installment.
(c) If the Issuer defaults in a payment of interest on the BGS
Transition Bonds of any Series, or in a default of any amount payable to any
Swap Counterparty, the Issuer shall pay defaulted interest, plus interest on
such defaulted interest at the applicable Interest Rate in any lawful manner
(subject to the availability of such amounts in the related Class Subaccount,
in the case of interest owed with respect to any BGS Transition Bonds which
have a floating rate of interest). The Issuer may pay such defaulted interest
to the Persons who are BGS Transition Bondholders and to any Swap
Counterparty, as applicable, at the rate specified in the related Series
Supplement or any Interest Rate Swap Agreement, respectively, on a subsequent
special record date, which date shall be at least five Business Days prior to
the payment date. The Issuer shall fix or cause to be fixed any such special
record date and payment date, and, at least fifteen (15) days before any such
special record date, the Issuer shall mail to each affected BGS
9
Transition Bondholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
SECTION 2.9. Cancellation. All BGS Transition Bonds surrendered for
payment, registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be
promptly canceled by the Trustee. The Issuer may at any time deliver to the
Trustee for cancellation any BGS Transition Bonds previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner
whatsoever, and all BGS Transition Bonds so delivered shall be promptly
canceled by the Trustee. No BGS Transition Bonds shall be authenticated in
lieu of or in exchange for any BGS Transition Bonds canceled as provided in
this Section 2.9, except as expressly permitted by this Indenture. All
canceled BGS Transition Bonds may be held or disposed of by the Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed
or returned to it; provided that such Issuer Order is timely and the BGS
Transition Bonds have not been previously disposed of by the Trustee.
SECTION 2.10. Amount; Authentication and Delivery of BGS Transition
Bonds.
(a) The aggregate principal amount of BGS Transition Bonds that may
be authenticated and delivered under this Indenture shall not exceed
$102,700,000.
(b) BGS Transition Bonds of a new Series may from time to time be
executed by a Manager on behalf of the Issuer and delivered to the Trustee for
authentication and thereupon the same shall be authenticated and delivered by
the Trustee upon Issuer Request and upon delivery by the Issuer, at the
Issuer's expense, to the Trustee of the following:
(i) Trust Action. An Issuer Order authorizing and directing
the authentication and delivery of the BGS Transition Bonds by the
Trustee and specifying the principal amount of BGS Transition Bonds
to be authenticated.
(ii) Authorizing Certificate. A certified resolution of the
Managers authorizing the execution and delivery of the Series
Supplement for the BGS Transition Bonds applied for and the
execution, authentication and delivery of such BGS Transition Bonds.
(iii) Series Supplement. A Series Supplement for the Series
of BGS Transition Bonds being issued, which shall set forth the
provisions and form of the BGS Transition Bonds of such Series (and,
if applicable, each Class thereof).
(iv) Certificates of the Issuer and the Seller.
(A) An Issuer Officer's Certificate dated as of the
Series Issuance Date, stating:
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(1) that no Default has occurred and is
continuing under this Indenture and that the
issuance of the BGS Transition Bonds being issued
will not result in any Default;
(2) that the Issuer has not assigned any
interest or participation in the Collateral except
for the Grant contained in this Indenture; that the
Issuer has the power and authority to Grant the
Collateral to the Trustee as security hereunder;
and that the Issuer, subject to the terms of this
Indenture, has Granted to the Trustee a perfected
security interest in all right, title and interest
in, to and under the Collateral free and clear of
any Lien, except the Lien of this Indenture;
(3) that the Issuer has appointed the firm
of independent certified public accountants as
contemplated in Section 8.5;
(4) that attached thereto are duly
executed, true and complete copies of the Sale
Agreement and the Servicing Agreement;
(5) that all financing statements with
respect to the Collateral which are required to be
filed under the New Jersey UCC or the uniform
commercial code of any other jurisdiction by the
terms of the Sale Agreement, the Servicing
Agreement or this Indenture will be filed as
required; and
(6) that all conditions precedent provided
in this Indenture relating to the authentication
and delivery of the BGS Transition Bonds have been
complied with.
(B) An Officer's Certificate from the Seller, dated
as of the Series Issuance Date, to the effect that, in the
case of the BGS Bondable Transition Property to be
transferred to the Issuer on such date, immediately prior to
the conveyance thereof to the Issuer pursuant to the Sale
Agreement:
(1) the Seller was the sole owner of such
BGS Bondable Transition Property and such ownership
interest was perfected; such BGS Bondable
Transition Property will be validly transferred and
sold to the Issuer free and clear of all Liens
(other than Liens created by the Issuer pursuant to
this Indenture) and such transfer will be
perfected; the Seller has the power and authority
to own, sell and assign such BGS Bondable
Transition Property to the Issuer; the Seller has
duly authorized such sale and assignment to the
Issuer; and the Seller has its chief executive
office in the State of New Jersey; and
(2) the attached copy of the Financing
Order creating such BGS Bondable Transition
Property is true and correct and is in full force
and effect; and
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(v) Issuer Opinion of Counsel. An Issuer Opinion of Counsel,
portions of which may be delivered by counsel for the Issuer and
portions of which may be delivered by counsel for the Seller and/or
the Servicer, dated as of the Series Issuance Date, subject to
customary qualifications, in the form set forth in the Underwriting
Agreement to the collective effect that:
(A) the Issuer has the power and authority to
execute and deliver the Series Supplement and this Indenture
and to issue the BGS Transition Bonds being issued, each of
the Series Supplement and this Indenture and such BGS
Transition Bonds have been duly authorized, executed and
delivered, and the Issuer is duly organized, is validly
existing as a limited liability company and in good standing
under the laws of the jurisdiction of its organization and
is in good standing in any jurisdiction where it is required
to be qualified;
(B) no authorization, approval or consent of any
governmental body is required for the valid issuance,
authentication or delivery of such BGS Transition Bonds,
except for any such authorization, approval or consent as
has already been obtained and such registrations as are
required under the Blue Sky and securities laws of any
State;
(C) the BGS Transition Bonds being issued, when
executed and authenticated in accordance with the provisions
of this Indenture and delivered, will constitute valid and
binding obligations of the Issuer entitled to the benefits
of this Indenture and the related Series Supplement;
(D) the Financing Order is final and
non-appealable;
(E) this Indenture (including the related Series
Supplement), the Sale Agreement and the Servicing Agreement
are valid and binding agreements of the Issuer, enforceable
against the Issuer in accordance with their respective terms
except as such enforceability may be subject to bankruptcy,
insolvency, reorganization and other similar laws affecting
the rights of creditors generally and general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(F) the Sale Agreement is a valid and binding
agreement of the Seller, enforceable against the Seller in
accordance with its terms except as such enforceability may
be subject to bankruptcy, insolvency, reorganization and
other similar laws affecting the rights of creditors
generally and general principles of equity (regardless of
whether such enforcement is considered in a proceeding in
equity or at law);
(G) the Servicing Agreement is a valid and binding
agreement of the Servicer, enforceable against the Servicer
in accordance with its terms except as such enforceability
may be subject to bankruptcy, insolvency, reorganization and
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other similar laws affecting the rights of creditors
generally and general principles of equity (regardless of
whether such enforcement is considered in a proceeding in
equity or at law);
(H) upon giving value by the Issuer to the Seller
with respect to the BGS Bondable Transition Property;
(1) the provisions of the Sale Agreement
together with the Xxxx of Sale are effective to
create, in favor of the Issuer, a valid security
interest (as such term is defined in Section 1-201
of the New Jersey UCC) in the Seller's rights in
the BGS Bondable Transition Property described in
the Xxxx of Sale (the "Transferred BGS Bondable
Transition Property"), which security interest if
characterized as a transfer for security will
secure the amount paid by the Issuer for such
Transferred BGS Bondable Transition Property; it
being noted that the term "security interest"
includes both a sale and a transfer for security of
an account and no opinion is expressed as to the
proper characterization of the transfer of the
Transferred BGS Bondable Transition Property by the
Seller to the Issuer;
(2) the security interest in favor of the
Issuer in the Transferred BGS Bondable Transition
Property has been perfected; and
(3) no other security interest of any
other creditor of the Seller is equal or prior to
the security interest of the Issuer in the
Transferred BGS Bondable Transition Property;
(I) upon the giving of value by the Trustee to the
Issuer with respect to the Collateral,
(1) this Indenture creates in favor of the
Trustee, to secure payment of the BGS Transition
Bonds, a valid security interest in the rights of
the Issuer in, to and under that portion of the
Collateral subject to Article 9 of the New Jersey
UCC, including the BGS Bondable Transition Property
(the "Article 9 Collateral"),
(2) upon filing of the related financing
statements in accordance with the New Jersey UCC
and Delaware UCC, such security interest will be
perfected, and
(3) based solely on a review of the UCC
Search Reports, no other security interest of any
other creditor of the Issuer is equal or prior to
the security interest of the Trustee for the
benefit of the BGS Transition Bondholders in the
Article 9 Collateral;
(J) this Indenture has been duly qualified under
the Trust Indenture Act and either the Series Supplement for
the BGS Transition Bonds applied for
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has been duly qualified under the Trust Indenture Act or no
such qualification of such Series Supplement is necessary;
(K) either
(1) the registration statement covering
the BGS Transition Bonds is effective under the
Securities Act of 1933 and, to the best of such
counsel's knowledge and information, no stop order
suspending the effectiveness of such registration
statement has been issued under the Securities Act
of 1933 nor have proceedings therefor been
instituted or threatened by the Commission or
(2) the BGS Transition Bonds are exempt
from the registration requirements under the
Securities Act of 1933;
(L) this Indenture (including the related Series
Supplement) has been duly authorized, executed and delivered
by the Issuer and constitutes the legal, valid and binding
obligation of the Issuer, enforceable against the Issuer in
accordance with its terms;
(M) the Sale Agreement and the Servicing Agreement
have been duly authorized, executed and delivered by each of
the parties thereto; and
(N) the Issuer is not now and, following the
issuance of the BGS Transition Bonds will not be, required
to be registered under the Investment Company Act of 1940,
as amended.
(vi) Accountant's Certificate or Opinion. A letter addressed
to the Issuer and the Trustee complying with the requirements of
Section 11.1, of a firm of Independent certified public accountants
of recognized national reputation to the effect that (A) such
accountants are Independent with respect to the Issuer within the
meaning of this Indenture, and are independent public accountants
within the meaning of the standards of The American Institute of
Certified Public Accountants, and (B) with respect to the Collateral,
they have made certain specified recalculations of calculations and
information provided by the Issuer for the purpose of determining
that, based on certain specified assumptions used in calculating the
BGS Transition Bond Charge with respect to the related Transferred
BGS Bondable Transition Property, as of the Series Issuance Date for
such Series, the BGS Transition Bond Charge will be sufficient to pay
(1) assumed Operating Expenses when incurred, plus (2) any amounts
due under any Interest Rate Swap Agreement when due, plus (3) the
Overcollateralization Amount (such amount may be zero) for such
Series set forth in the Final Prospectus (as such term is defined in
the Series Supplement), plus (4) interest on the BGS Transition Bonds
at their respective Interest Rates when due as set forth in the Final
Prospectus, plus (5) principal of the BGS Transition Bonds in
accordance with the Expected Sinking Fund
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Amortization Schedule set forth in the Final Prospectus, and found
such calculations to be mathematically correct.
(vii) Required Capital Amount. Evidence satisfactory to the
Trustee that the Required Capital Amount for such Series has been
credited to the Capital Subaccount for such Series, provided that in
the case of the initial Series of BGS Transition Bonds, $100,000 of
the Required Capital Amount for such Series shall have been deposited
to the credit of the Capital Reserve Subaccount.
(viii) Rating Agency Approval. Written notice from each
Rating Agency that such action will not result in a reduction or
withdrawal of the then current rating by such Rating Agency of any
Outstanding Series or Class of BGS Transition Bonds.
(ix) Xxxx of Sale. If the issuance of an additional Series
of BGS Transition Bonds is a Financing Issuance, the Xxxx of Sale
delivered to the Issuer under the Sale Agreement with respect to the
BGS Bondable Transition Property being purchased with the proceeds of
such Financing Issuance.
SECTION 2.11. Book-Entry BGS Transition Bonds. Unless otherwise
specified in the related Series Supplement, each Series of BGS Transition
Bonds, upon original issuance, will be issued in the form of a typewritten BGS
Transition Bond or BGS Transition Bonds representing the Book-Entry BGS
Transition Bonds, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer. Such BGS Transition Bond
shall initially be registered on the BGS Transition Bond Register in the name
of Cede & Co., the nominee of the initial Clearing Agency, and no BGS
Transition Bond Owner will receive a definitive BGS Transition Bond
representing such BGS Transition Bond Owner's interest in such BGS Transition
Bond, except as provided in Section 2.13. Unless and until definitive, fully
registered BGS Transition Bonds (the "Definitive Transition Bonds") have been
issued to BGS Transition Bondholders pursuant to Section 2.13:
(a) the provisions of this Section 2.11 shall be in full
force and effect;
(b) the BGS Transition Bond Registrar and the Trustee shall
be entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
BGS Transition Bonds and the giving of instructions or directions
hereunder) as the sole Holder of the BGS Transition Bonds, and shall
have no obligation to the BGS Transition Bond Owners;
(c) to the extent that the provisions of this Section 2.11
conflict with any other provisions of this Indenture, the provisions
of this Section shall control;
(d) the rights of BGS Transition Bond Owners shall be
exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such BGS Transition
Bond Owners and the Clearing Agency or the Clearing Agency
Participants. Pursuant to the DTC Agreement, unless and until
Definitive BGS Transition Bonds are issued pursuant to Section 2.13,
the initial Clearing Agency will
15
make book-entry transfers among the Clearing Agency Participants and
receive and transmit payments of principal of and interest on the BGS
Transition Bonds to such Clearing Agency Participants; and
(e) whenever this Indenture requires or permits actions to
be taken based upon instructions or directions of Holders of BGS
Transition Bonds evidencing a specified percentage of the Outstanding
Amount of the BGS Transition Bonds or a Series or Class thereof, the
Clearing Agency shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from BGS
Transition Bond Owners or Clearing Agency Participants owning or
representing, respectively, such required percentage of the
beneficial interest in the BGS Transition Bonds or such Series or
Class and has delivered such instructions to the Trustee.
SECTION 2.12. Notices to Clearing Agency. Whenever a notice or other
communication to the BGS Transition Bondholders is required under this
Indenture, unless and until Definitive BGS Transition Bonds shall have been
issued to BGS Transition Bond Owners pursuant to Section 2.13, the Trustee
shall give all such notices and communications specified herein to be given to
BGS Transition Bondholders to the Clearing Agency, and shall have no
obligation to the BGS Transition Bond Owners.
SECTION 2.13. Definitive BGS Transition Bonds.
(a) If (i) the Issuer advises the Trustee in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities as depository with respect to any Series or Class of BGS
Transition Bonds and the Issuer is unable to locate a qualified successor,
(ii) the Issuer, at its option, advises the Trustee in writing that it elects
to terminate the book-entry system through the Clearing Agency with respect to
any Series or Class of BGS Transition Bonds or (iii) after the occurrence of
an Event of Default, BGS Transition Bond Owners representing beneficial
interests aggregating at least a majority of the Outstanding Amount of the BGS
Transition Bonds of all Series advise the Trustee through the Clearing Agency
in writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interests of the BGS Transition Bond Owners,
then the Clearing Agency shall notify all affected BGS Transition Bond Owners
and the Trustee of the occurrence of any such event and of the availability of
Definitive BGS Transition Bonds to affected BGS Transition Bond Owners
requesting the same. Upon surrender to the Trustee of the typewritten BGS
Transition Bond or BGS Transition Bonds representing the Book-Entry BGS
Transition Bonds by the Clearing Agency, accompanied by registration
instructions, a Manager on behalf of the Issuer shall execute and the Trustee
shall authenticate the Definitive BGS Transition Bonds in accordance with the
instructions of the Clearing Agency. None of the Issuer, the BGS Transition
Bond Registrar or the Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive BGS Transition
Bonds, the Trustee shall recognize the Holders of the Definitive BGS
Transition Bonds as BGS Transition Bondholders.
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(b) Definitive BGS Transition Bonds will be transferable and
exchangeable at the offices of the BGS Transition Bond Registrar. With respect
to any transfer of such listed BGS Transition Bonds, the new Definitive BGS
Transition Bonds registered in the names specified by the transferee and the
original transferor shall be available at the offices of such transfer agent.
ARTICLE III
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest on the BGS Transition Bonds
in accordance with the terms of the BGS Transition Bonds and this Indenture;
provided that except on the Final Maturity Date for a Series or Class of BGS
Transition Bonds or upon the acceleration of the BGS Transition Bonds pursuant
to Section 5.2, the Issuer shall only be obligated to pay the principal of
such BGS Transition Bonds on each Payment Date therefor to the extent moneys
are available for such payment pursuant to Section 8.2. Amounts properly
withheld under the Code by any Person from a payment to any BGS Transition
Bondholder of interest or principal shall be considered as having been paid by
the Issuer to such BGS Transition Bondholder for all purposes of this
Indenture.
SECTION 3.2. Maintenance of Office or Agency.
(a) The Issuer will maintain in the Borough of Manhattan, the City of
New York, an office or agency where BGS Transition Bonds may be surrendered
for registration of transfer or exchange, and where notices and demands to or
upon the Issuer in respect of the BGS Transition Bonds and this Indenture may
be served. The Issuer hereby initially appoints the Trustee to serve as its
agent for the foregoing purposes. The Issuer will give prompt written notice
to the Trustee and any agent appointed pursuant to clause (b) below of the
location and identity, and of any change in the location or identity, of any
such office or agency. If at any time the Issuer shall fail to maintain any
such office or agency or shall fail to furnish the Trustee and each such agent
with the address thereof, such surrenders, notices and demands may be made or
served at the Corporate Trust Office, and the Issuer hereby appoints the
Trustee as its agent to receive all such surrenders, notices and demands.
(b) [reserved]
SECTION 3.3. Money for Payments To Be Held in Trust.
(a) As provided in Section 8.2(a), all payments of principal of and
interest on the BGS Transition Bonds that are to be made from amounts
withdrawn from the Collection Account pursuant to Section 8.2(g), or Section
4.3 shall be made on behalf of the Issuer by the Trustee or by another Paying
Agent, and no amounts so withdrawn from the Collection Account for payments of
BGS Transition Bonds shall be paid over to the Issuer except as provided in
this Section 3.3 and in Section 8.2.
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(b) The Issuer shall cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it
hereby so agrees), subject to the provisions of this Section 3.3, that such
Paying Agent will:
(i) hold all sums held by it for the payment of principal of
or interest on the BGS Transition Bonds in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and pay such sums
to such Persons as herein provided;
(ii) give the Trustee and the BPU notice of any Default by
the Issuer (or any other obligor upon the BGS Transition Bonds) of
which the Paying Agent has actual knowledge in the making of any
payment required to be made with respect to the BGS Transition Bonds;
(iii) at any time during the continuance of any such
Default, upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay
to the Trustee all sums held by the Paying Agent in trust for the
payment of BGS Transition Bonds if at any time the Paying Agent
ceases to meet the standards required to be met by a Paying Agent at
the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any BGS Transition
Bonds of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection
therewith.
(c) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which the sums were held by such Paying Agent; and upon
such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
(d) Subject to applicable laws with respect to escheat of funds, any
money held by the Trustee or any Paying Agent in trust for the payment of any
amount of principal of or interest on any BGS Transition Bond and remaining
unclaimed for two years after such amount has become due and payable shall be
discharged from such trust and be paid to the Issuer; and the Holder of such
BGS Transition Bond shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts
so paid to the Issuer), and all liability of the Trustee or such Paying Agent
with respect to such trust money shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Issuer cause to be published once, in a
newspaper
18
published in the English language, customarily published on each Business Day
and of general circulation in the City of New York, and in an Authorized
Newspaper, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than thirty (30) days from the date
of such publication, any unclaimed balance of such money then remaining will
be repaid to the Issuer. The Trustee may also adopt and employ, at the expense
of the Issuer, any other reasonable means of notification of such repayment
(including mailing notice of such repayment to Holders whose BGS Transition
Bonds have been called but have not been surrendered for redemption or whose
right to or interest in moneys due and payable but not claimed is determinable
from the records of the Trustee or of any Paying Agent, at the last address of
record for each such Holder).
SECTION 3.4. Existence. Subject to Section 3.10, the Issuer shall
keep in full effect its existence, rights and franchises as a statutory
limited liability company under the laws of the State of Delaware (unless it
becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other State or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Indenture, the BGS Transition Bonds, the Collateral and each other instrument
or agreement included therein.
SECTION 3.5. Protection of Collateral.
(a) The Issuer shall from time to time execute and deliver all such
supplements and amendments hereto and all such filings, financing statements,
continuation statements, instruments of further assurance and other
instruments, and shall take such other action necessary or advisable to:
(i) maintain and preserve the Grant, Lien and security
interest (and the priority thereof) of this Indenture or carry out
more effectively the purposes hereof;
(ii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral, including any Interest
Rate Swap Agreement;
(iv) preserve and defend title to the Collateral and the
rights of the Trustee and the BGS Transition Bondholders in the
Collateral against the claims of all Persons and parties; or
(v) pay any and all taxes levied or assessed upon all or any
part of the Collateral.
19
(b) The Issuer hereby designates the Trustee its agent and
attorney-in-fact to execute any filing with the BPU, financing
statement, continuation statement or other instrument required by the
Trustee pursuant to this Section 3.5.
SECTION 3.6. Opinions as to Collateral.
(a) On or before March 31 in each calendar year, while any Series is
outstanding, commencing March 31, 2006, the Issuer shall furnish to the
Trustee an Issuer Opinion of Counsel either stating that, in the opinion of
such counsel, such action has been taken with respect to the execution and
filing of any filings pursuant to the New Jersey UCC and Delaware UCC of
financing statements and continuation statements as is necessary to maintain
the Lien and security interest, and the first priority thereof, created by
this Indenture and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain such Grant,
Lien and security interest, and the first priority thereof. Such Issuer
Opinion of Counsel shall also describe the execution and filing of any filings
pursuant to the New Jersey UCC and Delaware UCC of financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the Grant, Lien and security interest of this Indenture until
March 31 in the following calendar year.
(b) Prior to the effectiveness of any amendment to the Sale Agreement
or the Servicing Agreement, the Issuer shall furnish to the Trustee an Issuer
Opinion of Counsel either (i) stating that, in the opinion of such counsel,
all filings, including filings pursuant to the New Jersey UCC and Delaware
UCC, have been executed and filed that are necessary fully to preserve and
protect the interest of the Issuer and the Trustee in the Transferred BGS
Bondable Transition Property and the proceeds thereof, and reciting the
details of such filings or referring to prior Opinions of Counsel in which
such details are given, or (ii) stating that, in the opinion of such counsel,
no such action shall be necessary to preserve and protect such interest.
SECTION 3.7. Performance of Obligations.
(a) The Issuer (i) shall diligently pursue any and all actions to
enforce its rights under each instrument or agreement included in the
Collateral and (ii) shall not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's covenants or obligations under any such instrument
or agreement or that would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such instrument or agreement, except, in each case, as
expressly provided in this Indenture, the Sale Agreement, the Servicing
Agreement, any Interest Rate Swap Agreement or any other Basic Document.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Issuer Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Administrator to assist the Issuer in
performing its duties under this Indenture.
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(c) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in the Sale Agreement, the Servicing
Agreement, any Interest Rate Swap Agreement and in all other instruments and
agreements included in the Collateral.
SECTION 3.8. Negative Covenants. The Issuer shall not:
(a) except as expressly permitted by this Indenture, the
Sale Agreement, the Servicing Agreement, any Interest Rate Swap
Agreement or any other Basic Document, sell, transfer, exchange or
otherwise dispose of any of the Collateral, unless directed to do so
by the Trustee in accordance with Article V;
(b) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the BGS Transition Bonds
(other than amounts properly withheld from such payments under the
Code or pursuant to any Interest Rate Swap Agreement) or assert any
claim against any present or former BGS Transition Bondholder by
reason of the payment of taxes levied or assessed upon the Issuer or
any part of the Collateral; or
(c) (i) permit the validity or effectiveness of this
Indenture to be impaired, or permit the Lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations
with respect to the BGS Transition Bonds under this Indenture except
as may be expressly permitted hereby, (ii) permit any Lien (other
than the Lien created by this Indenture) to be created on or extend
to or otherwise arise upon or burden the Collateral or any part
thereof, any interest therein or the proceeds thereof or (iii) permit
the Lien of this Indenture not to constitute a continuing valid first
priority security interest in the Collateral.
SECTION 3.9. Annual Statement as to Compliance.
(a) The Issuer will deliver to the Trustee and the BPU, within 120
days after the end of each fiscal year of the Issuer (commencing with the
fiscal year 2005), an Issuer Officer's Certificate stating, as to the Manager
signing such Issuer Officer's Certificate, that a review of the activities of
the Issuer during such year (or relevant portion thereof) and of performance
under this Indenture has been made under such Manager's supervision; and
(b) to the best of such Manager's knowledge, based on such review,
the Issuer has complied with all conditions and covenants under this Indenture
throughout such calendar year (or relevant portion thereof), or, if there has
been a default in complying with any such condition or covenant, describing
each such default and the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
The Issuer shall not consolidate or merge with or into any other Person or
sell substantially all of its assets to any other Person or dissolve, unless:
(a) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger or to whom substantially all
of such assets are sold shall be a
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Person organized and existing under the laws of the United States of
America or any State and shall expressly assume by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the
principal of and interest on all BGS Transition Bonds and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all
as provided herein and in the applicable Series Supplement or Series
Supplements;
(b) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger or to whom substantially all
of such assets are sold shall expressly assume all obligations and
succeed to all rights of the Issuer under the Sale Agreement, the
Administration Agreement, the Servicing Agreement and any Interest
Rate Swap Agreement pursuant to an assignment and assumption
agreement executed and delivered to the Trustee, in form satisfactory
to the Trustee;
(c) immediately after giving effect to such consolidation,
merger or sale, no Default or Event of Default shall have occurred
and be continuing;
(d) the Rating Agency Condition shall have been satisfied
with the respect to such consolidation or merger or sale;
(e) the Issuer shall have received an Issuer Opinion of
Counsel (and shall have delivered copies thereof to the Trustee) to
the effect that such consolidation, merger or sale (i) will not have
any material adverse tax consequence to the Issuer or any BGS
Transition Bondholder, (ii) complies with this Indenture and all of
the conditions precedent herein relating to such transaction and
(iii) will result in the Trustee maintaining a continuing valid first
priority perfected security interest in the Collateral;
(f) neither the BGS Bondable Transition Property nor the
Financing Order nor the rights of the Seller, the Servicer or the
Issuer under the Competition Act or the Financing Order shall be
impaired thereby; and
(g) any action as is necessary to maintain the Lien created
by this Indenture shall have been taken.
SECTION 3.11. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10, the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the
same effect as if such Person had been named as the Issuer herein.
(b) Upon any sale by the Issuer of substantially all of its assets in
a sale which complies with Section 3.10, PSE&G Transition Funding II LLC will
be released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the BGS Transition
Bonds and from every covenant and agreement of the Sale
22
Agreement, the Administration Agreement, the Servicing Agreement and any
Interest Rate Swap Agreement to be observed or performed on the part of the
Issuer.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than purchasing and owning BGS Bondable Transition Property,
issuing BGS Transition Bonds from time to time, pledging its interest in the
Collateral to the Trustee under this Indenture in order to secure the BGS
Transition Bonds, entering into the Basic Documents relating to the BGS
Transition Bonds and performing its obligations thereunder and performing
activities that are necessary, suitable or convenient to accomplish these
purposes or are incidental thereto and other than as contemplated by the Basic
Documents.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the BGS Transition Bonds and except as contemplated by
the Basic Documents.
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Basic Documents, Issuer shall not make any loan
or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance on
any obligation or capability of so doing or otherwise), endorse or otherwise
become contingently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire
(or agree contingently to do so) any stock, obligations, assets or securities
of, or any other interest in, or make any capital contribution to, any other
Person, other than any Eligible Investments.
SECTION 3.15. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty) other than BGS Bondable Transition Property
purchased from the Seller pursuant to, and in accordance with, the Sale
Agreement.
SECTION 3.16. Restricted Payments. The Issuer shall not, directly or
indirectly, pay any dividend or make any distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination thereof,
to any owner of a beneficial interest in the Issuer or otherwise with respect
to any ownership or equity interest in, or ownership security of, the Issuer,
redeem, purchase, retire or otherwise acquire for value any such ownership or
equity interest or security or set aside or otherwise segregate any amounts
for any such purpose; provided, however, that if no Event of Default shall
have occurred and be continuing or would otherwise result from such payment,
the Issuer may make, or cause to be made, any such distributions to any owner
of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest or security in or of the Issuer using funds
either distributed to the Issuer pursuant to Section 8.2(g) or which are not
otherwise subject to the Lien of this Indenture, to the extent that such
distributions would not cause the book value of the remaining equity in the
Issuer to decline below 0.5% of the original principal amount of all Series of
BGS Transition Bonds which remain outstanding. The Issuer will not, directly
or indirectly, make payments to or distributions from the Collection Account
except in accordance with this Indenture and the Basic Documents.
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SECTION 3.17. Notice of Events of Default. The Issuer agrees to
deliver to the Trustee, the BPU, and the Rating Agencies written notice in the
form of an Issuer Officer's Certificate of any Default or Event of Default
hereunder or under any of the Basic Documents, its status and what action the
Issuer is taking or proposes to take with respect thereto within five Business
Days after the occurrence thereof.
SECTION 3.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee and any
representative of the BPU, during the Issuer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Issuer, to make copies and extracts therefrom, to cause such books to be
audited annually by Independent certified public accountants, and to discuss
the Issuer's affairs, finances and accounts with the Issuer's officers,
employees and Independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Trustee and the BPU
shall and shall cause their respective representatives to hold in confidence
all such information except to the extent disclosure may be required by law
(and all reasonable applications for confidential treatment are unavailing)
and except to the extent that the Trustee and the BPU may reasonably determine
that such disclosure is consistent with its obligations hereunder.
SECTION 3.19. Adjusted Overcollatera1ization Balance Schedules. Not
later than the date on which a new Series of BGS Transition Bonds is issued or
any outstanding Series of BGS Transition Bonds is defeased, the Issuer shall
deliver to the Trustee and to the BPU a schedule of the adjusted
overcollateralization balance, adjusted to reflect such issuance or defeasance
and setting forth the Scheduled Overcollateralization Level for each Payment
Date with respect to each Series(the "Adjusted Overcollateralization Balance
Schedule"), if the Overcollateralization Amount is greater than zero.
SECTION 3.20. Sale Agreement, Servicing Agreement and Swap Agreement
Covenants. The Issuer agrees to take all such lawful actions to enforce its
rights under the Sale Agreement, the Servicing Agreement and any Interest Rate
Swap Agreement and to compel or secure the performance and observance by the
Seller, the Servicer and any Swap Counterparty, of each of their obligations
to the Issuer under or in connection with the Sale Agreement, the Servicing
Agreement and any Interest Rate Swap Agreement, respectively, in accordance
with the terms thereof. So long as no Event of Default occurs and is
continuing, but subject to Section 3.20(f), the Issuer may exercise any and
all rights, remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Sale Agreement, the Servicing Agreement and
any Interest Rate Swap Agreement.
(i) If an Event of Default occurs and is continuing, the
Trustee may, and, at the direction (which direction shall be in
writing or by telephone (confirmed in writing promptly thereafter))
of with respect to the Sale Agreement or the Servicing Agreement, the
Holders of a majority of the Outstanding Amount of the BGS Transition
Bonds of all Series or with respect to any Interest Rate Swap
Agreement, the Holders of that percentage of the Outstanding Amount
of the BGS Transition Bonds of the related Class specified in the
related Series Supplement, shall, exercise all right, remedies,
powers, privileges and claims of the Issuer against the Seller, the
Servicer or any Swap
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Counterparty under or in connection with the Sale Agreement, the
Servicing Agreement and any Interest Rate Swap Agreement,
respectively, including the right or power to take any action to
compel or secure performance or observance by the Seller, the
Servicer or any Swap Counterparty of each of their obligations to the
Issuer thereunder and to give any consent, request, notice,
direction, approval, extension or waiver under the Sale Agreement,
the Servicing Agreement and any Interest Rate Swap Agreement, and any
right of the Issuer to take such action shall be suspended.
(b) With the consent of the Trustee, the Sale Agreement and the
Servicing Agreement may be amended in accordance with the terms thereof, so
long as the Rating Agency Condition is satisfied in connection therewith, at
any time and from time to time, without the consent of the BGS Transition
Bondholders, or the counterparty under any Interest Rate Swap Agreement.
However, such amendment may not adversely affect in any material respect the
interest of any BGS Transition Bondholder or any counterparty under any
Interest Rate Swap Agreement without the consent of the Holders of a majority
of the Outstanding Amount of the BGS Transition Bonds of each Series or Class,
and each such counterparty, materially and adversely affected thereby.
Further, with the consent of the Trustee and the related counterparty under
any Interest Rate Swap Agreement, any Interest Rate Swap Agreement may be
amended, at any time and from time to time, so long as the Rating Agency
Condition is satisfied in connection therewith. However, such amendment may
not adversely affect in any material respect the interest of any BGS
Transition Bondholder or counterparty under any Interest Rate Swap Agreement
without the consent of sixty-six and two-thirds percent (66-2/3%) of the
Holders of the Outstanding Amount of the BGS Transition Bonds of each Series
or Class and each such other counterparty materially and adversely affected
thereby.
(c) If the Issuer, the Seller or the Servicer proposes to amend,
modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, waiver, supplement, termination, or surrender of, the terms of
the Sale Agreement, the Servicing Agreement or any Interest Rate Swap
Agreement, or waive timely performance or observance thereunder by the Seller,
the Servicer or any Swap Counterparty, respectively, in each case in such a
way as would materially and adversely affect the interests of any Class of any
Series of BGS Transition Bondholders or the counterparty under any Interest
Rate Swap Agreement, the Issuer shall first notify the Rating Agencies of the
proposed amendment, modification, termination or surrender. Upon receiving
notification regarding whether the Rating Agency Condition has been satisfied,
the Issuer shall notify the Trustee, and the Trustee shall notify the BGS
Transition Bondholders and each counterparty under any Interest Rate Swap
Agreement, of the proposal and whether the Rating Agency Condition has been
satisfied with respect thereto. With respect to any such proposed action
related to the Sale Agreement and the Servicing Agreement, the Trustee shall
consent to such proposed action only (i) with the consent of the Holders of a
majority of the Outstanding Amount of the BGS Transition Bonds of each Class
of each Series, and each counterparty under any Interest Rate Swap Agreement,
materially and adversely affected thereby and (ii) upon satisfaction of the
Rating Agency Condition. With respect to any such proposed action related to
any Interest Rate Swap Agreement, the Trustee shall consent to such proposed
action only (y) with the consent of the Holders representing sixty-six and
two-thirds percent (66-2/3%) of the Outstanding Amount of the BGS Transition
Bonds of
25
the related Class, and each counterparty under any Interest Rate Swap
Agreement, materially and adversely affected thereby and (z) upon satisfaction
of the Rating Agency Condition. If any such amendment, modification,
supplement or waiver shall be so consented to by the Trustee or such Holders,
the Issuer agrees to execute and deliver, in its own name and at its own
expense, such agreements, instruments, consents and other documents as shall
be necessary or appropriate in the circumstances.
(d) If the Issuer or the Servicer proposes to amend, modify, waive,
supplement, terminate or surrender in any material respect, or to agree to any
material amendment, modification, waiver, supplement, termination or surrender
of, the BGS Transition Bond Charge Adjustment Process, the Issuer shall notify
the Trustee and the Trustee shall notify BGS Transition Bondholders of such
proposal and the Trustee shall consent thereto only with the consent of the
Holders a majority of the Outstanding Amount of the BGS Transition Bonds of
each Series materially and adversely affected thereby and only if the Rating
Agency Condition has been satisfied with respect thereto.
(e) Promptly following a default by either the Seller, the Servicer
or any Swap Counterparty under the Sale Agreement, the Servicing Agreement or
any Interest Rate Swap Agreement, respectively, and at the Issuer's expense,
the Issuer agrees to take all such lawful actions as the Trustee may request
to compel or secure the performance and observance by the Seller, the Servicer
or any Swap Counterparty, as applicable, of each of their obligations to the
Issuer under or in connection with the Sale Agreement, the Servicing Agreement
or any Interest Rate Swap Agreement in accordance with the terms thereof, and
to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale Agreement, the
Servicing Agreement or any Interest Rate Swap Agreement, respectively, to the
extent and in the manner directed by the Trustee, including the transmission
of notices of default on the part of the Seller, the Servicer or any Swap
Counterparty thereunder and the institution of legal or administrative actions
or proceedings to compel or secure performance by the Seller, the Servicer or
any Swap Counterparty of each of their respective obligations under the Sale
Agreement, the Servicing Agreement and any Interest Rate Swap Agreement.
(f) If the Issuer shall have knowledge of the occurrence of a
Servicer Default under the Servicing Agreement or an event of default,
termination event or downgrade event under any Interest Rate Swap Agreement,
the Issuer shall promptly give written notice thereof to the Trustee and the
Rating Agencies, and shall specify in such notice the action, if any, the
Issuer is taking with respect to such default or event.
(g) If a Servicer Default shall arise from the failure of the
Servicer to perform any of its duties or obligations under the Servicing
Agreement with respect to the BGS Bondable Transition Property or the BGS
Transition Bond Charge, the Issuer shall take all reasonable steps available
to it to remedy such failure. The Issuer shall not take any action to
terminate the Servicer's rights and powers under the Servicing Agreement
following a Servicer Default without the prior written consent of the Trustee
and of the Holders of a majority of the Outstanding Amount of the BGS
Transition Bonds of all Series.
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(h) As promptly as possible after the giving of notice of termination
to the Servicer and the Rating Agencies of the Servicer's rights and powers
pursuant to Section 6.1 of the Servicing Agreement, the Trustee, with the
consent of the Holders of BGS Transition Bonds evidencing not less than a
majority of the Outstanding Amount of the BGS Transition Bonds of all Series,
may appoint a successor Servicer (the "Successor Servicer"), and such
Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Issuer and the Trustee. A person shall qualify as a
Successor Servicer only if such Person satisfies the requirements of Section
6.4 of the Servicing Agreement. In connection with any such appointment, the
Issuer may make such arrangements for the compensation of such Successor
Servicer as it and such Successor Servicer shall agree, subject to the
limitations set forth below and in the Servicing Agreement, and in accordance
with Section 6.4 of the Servicing Agreement, the Issuer shall enter into an
agreement with such Successor Servicer for the servicing of the BGS Bondable
Transition Property (such agreement to be in form and substance satisfactory
to the Trustee).
(i) Upon termination of the Servicer's rights and powers pursuant to
the Servicing Agreement, the Trustee shall promptly notify the Issuer, the BGS
Transition Bondholders and the Rating Agencies of such termination. As soon as
a Successor Servicer is appointed, the Issuer shall notify the Trustee, the
BGS Transition Bondholders and the Rating Agencies of such appointment,
specifying in such notice the name and address of such Successor Servicer.
(j) The Issuer shall not take any action to terminate or assign the
Swap Counterparty's rights and powers under any Interest Rate Swap Agreement
or replace any Swap Counterparty following an event of default, termination
event or downgrade event under any Interest Rate Swap Agreement without (i)
the prior written consent of the Trustee and of the Holders of that percentage
of the Outstanding Amount of the BGS Transition Bonds, if any such consent is
required under the related Series Supplement, of the related Series and Class,
if any, specified in the related Series Supplement, and (ii) satisfying any
other requirements set forth in the related Series Supplement and Interest
Rate Swap Agreement.
(k) Upon termination or assignment of any Swap Counterparty's rights
and powers, pursuant to any Interest Rate Swap Agreement, the Issuer shall
notify the Trustee, and the Trustee shall promptly inform the BPU, the BGS
Transition Bondholders of the related Class and the Rating Agencies of such
termination or assignment. As soon as a replacement Swap Counterparty is
appointed, the Issuer shall notify the Trustee, the BPU, the BGS Transition
Bondholders of the related Class and the Rating Agencies of such appointment,
specifying in such notice the name and address of such replacement Swap
Counterparty.
SECTION 3.21. Taxes. So long as any of the BGS Transition Bonds are
outstanding, the Issuer shall pay all material taxes, assessments and
governmental charges imposed upon it or any of its properties or assets or
with respect to any of its franchises, business, income or property before any
penalty accrues thereon if the failure to pay any such taxes, assessments and
governmental charges would, after any applicable grace periods, notices or
other similar requirements, result in a Lien on the Collateral.
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ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 4.1. Satisfaction and Discharge of Indenture; Defeasance. The
BGS Transition Bonds of any Series, all moneys payable with respect thereto
and this Indenture as it applies to such Series shall cease to be of further
effect and the Lien hereunder shall be released with respect to such Series,
interest shall cease to accrue on the BGS Transition Bonds of such Series and
the Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to the BGS Transition Bonds of such Series, when
(i) either
(A) all BGS Transition Bonds of such Series
theretofore authenticated and delivered (other than (1) BGS
Transition Bonds that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section
2.6 and (2) BGS Transition Bonds for whose payment money has
theretofore been deposited in trust or segregated and held
in trust by the Issuer and thereafter repaid to the Issuer
or discharged from such trust, as provided in Section 3.3)
have been delivered to the Trustee for cancellation; or
(B) the Expected Final Payment Date has occurred
with respect to all BGS Transition Bonds of such Series not
theretofore delivered to the Trustee for cancellation, and
the Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Trustee cash, in trust for
such purpose, in an amount sufficient to pay and discharge
the entire indebtedness on such BGS Transition Bonds not
theretofore delivered to the Trustee on the Expected Final
Payment Date therefor;
(ii) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer with respect to such Series; and
(iii) the Issuer has delivered to the Trustee and to the BPU
an Issuer Officer's Certificate, an Issuer Opinion of Counsel and (if
required by the TIA or the Trustee) an Independent Certificate from a
firm of certified public accountants, each meeting the applicable
requirements of Section 11.1 and each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture with respect to BGS Transition Bonds of
such Series have been complied with.
(b) Subject to Sections 4.1(c) and 4.2, the Issuer at any time may
terminate (i) all its obligations under this Indenture with respect to the BGS
Transition Bonds of any Series ("Legal Defeasance Option") or (ii) its
obligations under Sections 3.4, 3.5, 3.6 (other than with respect to amounts
in the Defeasance Account), 3.7, 3.8, 3.9, 3.10, 3.12, 3.13, 3.14, 3.15, 3.16,
3.17, 3.18, 3.19 and 3.20 and the operation of Section 5.1(d) ("Covenant
Defeasance Option") with respect to any Series of BGS Transition Bonds. The
Issuer may exercise the Legal Defeasance Option
28
with respect to any Series of BGS Transition Bonds notwithstanding its prior
exercise of the Covenant Defeasance Option with respect to such Series.
(c) If the Issuer exercises the Legal Defeasance Option with respect
to any Series, the maturity of the BGS Transition Bonds of such Series may not
be accelerated pursuant to Section 5.2. If the Issuer exercises the Covenant
Defeasance Option with respect to any Series, the maturity of the BGS
Transition Bonds of such Series may not be accelerated because of an Event of
Default specified in Section 5.1(d).
(d) Upon satisfaction of the conditions set forth herein to the
exercise of the Legal Defeasance Option or the Covenant Defeasance Option with
respect to any Series of BGS Transition Bonds, the Trustee, on demand of and
at the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of the obligations that are terminated pursuant to
such exercise.
(e) Notwithstanding Sections 4.1(a) and 4.1(b) above, (i) rights of
registration of transfer and exchange, (ii) rights of substitution of
mutilated, destroyed, lost or stolen BGS Transition Bonds, (iii) rights of BGS
Transition Bondholders to receive payments of principal and interest, but only
from the amounts deposited with the Trustee for such payments, (iv) Sections
4.3 and 4.4, (v) the rights, obligations and immunities of the Trustee
hereunder (including the rights of the Trustee under Section 6.7 and the
obligations of the Trustee under Section 4.3) and (vi) the rights of BGS
Transition Bondholders under this Indenture with respect to the property
deposited with the Trustee payable to all or any of them, shall survive until
the BGS Transition Bonds of the Series as to which this Indenture or certain
obligations hereunder have been satisfied and discharged pursuant to Section
4.1(a) or 4.1(b) and have been paid in full. Thereafter, the obligations in
Sections 6.7 and 4.4 with respect to such Series shall survive.
SECTION 4.2. Conditions to Defeasance.
(a) The Issuer may exercise the Legal Defeasance Option or the
Covenant Defeasance Option with respect to any Series of BGS Transition Bonds
only if:
(i) the Issuer irrevocably deposits or causes to be
deposited in trust with the Trustee cash or U.S. Government
Obligations for the payment of principal of and interest on such
Series of BGS Transition Bonds to the Expected Payment Date therefor,
as applicable, such deposit to be made in the Defeasance Subaccount
for such Series of BGS Transition Bonds;
(ii) the Issuer delivers to the Trustee a certificate from a
nationally recognized firm of Independent accountants expressing its
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations
plus any deposited cash without investment will provide cash at such
times and in such amounts (but, in the case of the Legal Defeasance
Option only, not more than such amounts) as will be sufficient to pay
in respect of the BGS Transition Bonds of such
29
Series (A) subject to clause (B), principal in accordance with the
Expected Sinking Fund Amortization Schedule therefor and (B) interest
when due;
(iii) in the case of the Legal Defeasance Option,
ninety-five (95) days pass after the deposit is made and during such
ninety-five (95) day period no Default specified in Section 5.1(e) or
5.1(f) occurs which is continuing at the end of the period; provided,
however, that in determining whether a default under Section 5.1(e)
has occurred, the requirement that the decree or order shall remain
unstayed and in effect for ninety (90) days shall be disregarded;
(iv) no Default has occurred and is continuing on the day of
such deposit and after giving effect thereto;
(v) in the case of the Legal Defeasance Option, the Issuer
delivers to the Trustee an Issuer Opinion of Counsel stating that (A)
the Issuer has received from, or there has been published by, the
Internal Revenue Service a ruling, or (B) since the date of execution
of this Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the BGS Transition
Bonds of such Series will not recognize income, gain or loss for
federal income tax purposes as a result of the exercise of such Legal
Defeasance Option and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have
been the case if such legal defeasance had not occurred;
(vi) in the case of the Covenant Defeasance Option, the
Issuer delivers to the Trustee an Issuer Opinion of Counsel to the
effect that the Holders of the BGS Transition Bonds of such Series
will not recognize income, gain or loss for federal income tax
purposes as a result of the exercise of such Covenant Defeasance
Option and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case
if such covenant defeasance had not occurred; and
(vii) the Issuer delivers to the Trustee an Issuer Officer's
Certificate and an Issuer Opinion of Counsel, each stating that all
conditions precedent to the satisfaction and discharge of the BGS
Transition Bonds of such Series to the extent contemplated by this
Article IV have been complied with.
(b) [Reserved.]
SECTION 4.3. Application of Trust Money. All moneys or U.S.
Government Obligations deposited with the Trustee pursuant to Sections 4.1 or
4.2 with respect to any Series of BGS Transition Bonds shall be held in trust
in the Defeasance Subaccount for such Series and applied by it, in accordance
with the provisions of the BGS Transition Bonds and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular BGS Transition Bonds for the
payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for
30
principal and interest. Such moneys shall be segregated and held apart solely
for paying such BGS Transition Bonds and such BGS Transition Bonds shall not
be entitled to any amounts on deposit in the Collection Account other than
amounts on deposit in the Defeasance Subaccount for such BGS Transition Bonds.
SECTION 4.4. Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture or the Covenant
Defeasance Option or Legal Defeasance Option with respect to the BGS
Transition Bonds of any Series, all moneys then held by any Paying Agent other
than the Trustee under the provisions of this Indenture with respect to such
BGS Transition Bonds shall, upon demand of the Issuer, be paid to the Trustee
to be held and applied according to Section 3.3 and thereupon such Paying
Agent shall be released from all further liability with respect to such
moneys.
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default. "Event of Default" wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(a) any act or failure to act by the State of New Jersey or
any of its agencies (including the BPU), officers or employees that
violates or is not in accordance with the pledge and agreement of the
State of New Jersey in Section 17.a of the Competition Act;
(b) default in the payment of any interest on any BGS
Transition Bond when the same becomes due and payable and the
continuation of such default for five Business Days;
(c) default in the payment of the then unpaid principal of
any BGS Transition Bond of any Series or Class on the Final Maturity
Date therefor;
(d) default in the observance or performance of any covenant
or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of
which is specifically dealt with in clause (a), (b) or (c) above), or
any representation or warranty of the Issuer made in this Indenture
or in any certificate or other writing delivered pursuant hereto or
in connection herewith proving to have been incorrect in any material
respect as of the time when made, and any such default shall continue
or not be cured, for a period of thirty (30) days after the earliest
of (i) there shall have been given, by registered or certified mail,
to the Issuer by the Trustee or to the Issuer and the Trustee by the
Holders of at least twenty-five percent (25%) of the Outstanding
Amount of the BGS Transition Bonds of any Series or Class, a written
notice specifying such default or incorrect representation or
warranty and
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requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder or (ii) the date the Issuer has knowledge of the
default;
(e) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Collateral in an involuntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for the Issuer or for any
substantial part of the Collateral, or ordering the winding-up or
liquidation of the Issuer's affairs, and such decree or order shall
remain unstayed and in effect for a period of ninety (90) consecutive
days; or
(f) the commencement by the Issuer of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the
consent by the Issuer to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Issuer to
the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for
the Issuer or for any substantial part of the Collateral, or the
making by the Issuer of any assignment for the benefit of creditors,
or the failure by the Issuer generally to pay its debts as such debts
become due, or the taking of action by the Issuer in furtherance of
any of the foregoing.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment. If
an Event of Default (other than an Event of Default under Section 5.1(a))
occurs and is continuing, then and in every such case either the Trustee, or
the Holders of BGS Transition Bonds representing not less than a majority of
the Outstanding Amount of the BGS Transition Bonds of all Series may, but need
not, declare all the BGS Transition Bonds to be immediately due and payable,
by a notice in writing to the Issuer (and to the Trustee and to the BPU if
given by BGS Transition Bondholders), and upon any such declaration the unpaid
principal amount of the BGS Transition Bonds of all Series, together with
accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable.
(i) At any time after such declaration of acceleration of
maturity has been made and before a judgment or decree for payment of
the money due has been obtained by the Trustee as hereinafter in this
Article V, the Holders of BGS Transition Bonds representing a
majority of the Outstanding Amount of the BGS Transition Bonds of all
Series, by written notice to the Issuer, the BPU and the Trustee, may
rescind and annul such declaration and its consequences, provided
that:
(ii) the Issuer has paid or deposited with the Trustee, for
deposit in the General Subaccount of the Collection Account, a sum
sufficient to pay
(A) all payments of principal of and interest on
all BGS Transition Bonds of all Series and all other amounts
that would then be due hereunder or
32
upon such BGS Transition Bonds if the Event of Default
giving rise to such acceleration had not occurred; and
(B) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and
counsel; and
(iii) all Events of Default, other than the nonpayment of
the principal of the BGS Transition Bonds of all Series that has
become due solely by such acceleration, have been cured or waived as
provided in Section 5.12.
(b) No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
(a) The Issuer covenants that if (i) Default is made in the payment
of any interest on any BGS Transition Bond when such interest becomes due and
payable and such Default continues for five Business Days or (ii) Default is
made in the payment of the then unpaid principal of any BGS Transition Bond on
the Final Maturity Date therefor, the Issuer shall, upon demand of the
Trustee, pay to it, for the benefit of the Holders of the BGS Transition Bonds
of such Series, such amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel and the
whole amount then due and payable on such BGS Transition Bonds for principal
and interest, with interest upon the overdue principal and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest, at the respective Interest Rate of such Series or
the applicable Class of such Series.
(b) In case the Issuer shall fail forthwith to pay the amounts
specified in clause (a) above upon such demand, the Trustee, in its own name
and as trustee of an express trust, may institute a Proceeding for the
collection of the sums so due and unpaid, and may prosecute such Proceeding to
judgment or final decree, and may enforce the same against the Issuer or other
obligor upon such BGS Transition Bonds and collect in the manner provided by
law out of the property of the Issuer or other obligor upon such BGS
Transition Bonds, wherever situated, the moneys adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Trustee may,
as more particularly provided in Section 5.4, in its discretion, proceed to
protect and enforce its rights and the rights of the BGS Transition
Bondholders, by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law
including foreclosing or otherwise enforcing the Lien on the BGS Bondable
Transition Property securing the BGS Transition Bonds or applying to the
33
BPU or a court of competent jurisdiction for sequestration of revenues arising
with respect to such BGS Bondable Transition Property.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the BGS Transition Bonds or any Person having or claiming
an ownership interest in the Collateral, Proceedings under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official
shall have been appointed for or taken possession of the Issuer or its
property or such other obligor or Person, or in case of any other comparable
judicial Proceedings relative to the Issuer or other obligor upon the BGS
Transition Bonds, or to the creditors or property of the Issuer or such other
obligor, the Trustee, irrespective of whether the principal of any BGS
Transition Bonds shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand pursuant to the provisions of this Section 5.3, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the BGS
Transition Bonds and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and
each predecessor Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor
Trustee, except as a result of negligence or bad faith) and of the
BGS Transition Bondholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of BGS Transition Bonds in any election
of a trustee, a standby trustee or Person performing similar
functions in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the BGS Transition
Bondholders and of the Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the
claims of the Trustee or the Holders of BGS Transition Bonds allowed
in any judicial proceedings relative to the Issuer, its creditors and
its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such BGS Transition
Bondholders to make payments to the Trustee, and, in the event that the
Trustee shall consent to the making of payments directly to such BGS
Transition Bondholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee except as a result of negligence or bad faith.
34
(e) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any BGS
Transition Bondholder any plan of reorganization, arrangement, adjustment or
composition affecting the BGS Transition Bonds or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of any BGS
Transition Bondholder in any such proceeding except, as aforesaid, to vote for
the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the BGS Transition Bonds, may be enforced by the
Trustee without the possession of any of the BGS Transition Bonds or the
production thereof in any trial or other Proceedings relative thereto, and any
such action or proceedings instituted by the Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment, subject
to the payment of the expenses, disbursements and compensation of the Trustee,
each predecessor Trustee and their respective agents and attorneys, shall be
for the ratable benefit of the Holders of the BGS Transition Bonds.
(g) In any Proceedings brought by the Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party), the Trustee shall be held to represent
all the Holders of the BGS Transition Bonds, and it shall not be necessary to
make any BGS Transition Bondholder a party to any such Proceedings.
SECTION 5.4. Remedies. If an Event of Default other than Section
5.1(a) occurs and is continuing, the Trustee may do one or more of the
following (subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then payable on
the BGS Transition Bonds or under this Indenture with respect
thereto, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Issuer and any other obligor upon such
BGS Transition Bonds moneys adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Collateral;
(iii) exercise any remedies of a secured party under the New
Jersey UCC and Delaware UCC or the Competition Act or any other
applicable law and take any other appropriate action to protect and
enforce the rights and remedies of the Trustee and the Holders of the
BGS Transition Bonds of such Series;
(iv) sell the Collateral or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; and
(v) exercise all rights, remedies, powers, privileges and
claims of the Issuer against the Seller, the Administrator, the
Servicer or any Swap Counterparty under or in connection with the
Sale Agreement, the Administration Agreement, the Servicing Agreement
or any Interest Rate Swap Agreement, respectively, as provided in
Section 3.20(b);
35
provided, however, that the Trustee may not sell or otherwise liquidate any
portion of the Collateral following an Event of Default, other than an Event
of Default described in Section 5.1(a), 5.1(b) or 5.1(c), with respect to any
Series unless (A) the Holders of one hundred percent (100%) of the Outstanding
Amount of the BGS Transition Bonds of all Series consent thereto, (B) the
proceeds of such sale or liquidation distributable to the BGS Transition
Bondholders of all Series are sufficient to discharge in full all amounts then
due and unpaid upon such BGS Transition Bonds for principal and interest, or
(C) the Trustee has been advised in writing by the Servicer that the
Collateral will not continue to provide sufficient funds for all payments on
the BGS Transition Bonds of all Series as they become due if the BGS
Transition Bonds are not declared due and payable and the Trustee obtains the
consent of Holders of sixty-six and two-thirds percent (66 2/3%) of the
Outstanding Amount of the BGS Transition Bonds of all Series. In determining
such sufficiency or insufficiency with respect to clause (B), the Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of
such proposed action and as to the sufficiency of the Collateral for such
purpose.
(b) If an Event of Default under Section 5.1(a) occurs and is
continuing, the Trustee, for the benefit of the Holders, shall be entitled and
empowered to the extent permitted by applicable law to institute or
participate in Proceedings reasonably necessary to compel performance of or to
enforce the pledge and agreement of the State of New Jersey in Section 17.a of
the Competition Act and to collect any monetary damages incurred by the
Holders or the Trustee as a result of any such Event of Default, and may
prosecute any such Proceeding to final judgment or decree. Such remedy shall
be the only remedy that the Trustee may exercise if the only Event of Default
that has occurred and is continuing is an Event of Default under Section
5.1(a).
SECTION 5.5. Optional Preservation of the Collateral. If the BGS
Transition Bonds have been declared to be due and payable under Section 5.2
following an Event of Default and such declaration and its consequences have
not been rescinded and annulled, the Trustee may, but need not, elect, as
provided in Section 5.11(c), to maintain possession of the Collateral and not
sell or liquidate the same. It is the desire of the parties hereto and the BGS
Transition Bondholders that there be at all times sufficient funds for the
payment of principal of and interest on the BGS Transition Bonds, and the
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Collateral or sell or liquidate the same. In
determining whether to maintain possession of the Collateral or sell or
liquidate the same, the Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
SECTION 5.6. Limitation of Proceedings.
(a) No Holder of any BGS Transition Bond of any Series shall have any
right to institute any Proceeding, judicial or otherwise, or to avail itself
of any remedies provided in the Competition Act, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
36
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) the Holders of not less than twenty-five percent (25%)
of the Outstanding Amount of the BGS Transition Bonds of all Series
have made written request to the Trustee to institute such Proceeding
in respect of such Event of Default in its own name as Trustee
hereunder;
(iii) such Holder or Holders have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against
the costs, expenses and liabilities to be incurred in complying with
such request;
(iv) the Trustee for sixty (60) days after its receipt of
such notice, request and offer of indemnity has failed to institute
such Proceedings; and
(v) no direction inconsistent with such written request has
been given to the Trustee during such sixty (60) day period by the
Holders of a majority of the Outstanding Amount of the BGS Transition
Bonds of all Series;
it being understood and intended that no one or more Holders of BGS Transition
Bonds shall have any right in any manner whatever by virtue of, or by availing
of, any provision of this Indenture to affect, disturb or prejudice the rights
of any other Holders of BGS Transition Bonds or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under
this Indenture, except in the manner herein provided.
(b) In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of BGS
Transition Bonds, each representing less than a majority of the Outstanding
Amount of the BGS Transition Bonds of all Series, the Trustee in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provisions of this Indenture.
SECTION 5.7. Unconditional Rights of BGS Transition Bondholders To
Receive Principal and Interest. Notwithstanding any other provisions in this
Indenture, the Holder of any BGS Transition Bond shall have the right, which
is absolute and unconditional, and shall not be impaired without the consent
of each such Holder, (a) to receive payment of (i) the interest, if any, on
such BGS Transition Bond on or after the due dates thereof expressed in such
BGS Transition Bond or in this Indenture or (ii) the unpaid principal, if any,
of such BGS Transition Bonds on or after the Final Maturity Date therefor and
(b) to institute suit for the enforcement of any such payment, and such right
shall not be impaired without the consent of such Holder.
SECTION 5.8. Restoration of Rights and Remedies. If the Trustee or
any BGS Transition Bondholder has instituted any Proceeding to enforce any
right or remedy under this Indenture and such Proceeding has been discontinued
or abandoned for any reason or has been determined adversely to the Trustee or
to such BGS Transition Bondholder, then and in every such case the Issuer, the
Trustee and the BGS Transition Bondholders shall, subject to any determination
in such Proceeding, be restored severally and respectively to their former
positions
37
hereunder, and thereafter all rights and remedies of the Trustee and
the BGS Transition Bondholders shall continue as though no such Proceeding had
been instituted.
SECTION 5.9. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Trustee or to the BGS Transition
Bondholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 5.10. Delay or Omission Not a Waiver. No delay or omission of
the Trustee or any BGS Transition Bondholder to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the BGS Transition Bondholders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the BGS
Transition Bondholders, as the case may be.
SECTION 5.11. Control by BGS Transition Bondholders. The Holders of a
majority of the Outstanding Amount of the BGS Transition Bonds of all Series
(or, if less than all Series or Classes are affected, the affected Series or
Class or Classes) shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Trustee with respect
to the BGS Transition Bonds of such Series or Class or Classes or exercising
any trust or power conferred on the Trustee with respect to such Series or
Class or Classes; provided that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) subject to the express terms of Section 5.4, any
direction to the Trustee to sell or liquidate the Collateral shall be
by the Holders of BGS Transition Bonds representing not less than one
hundred percent (100%) of the Outstanding Amount of the BGS
Transition Bonds of all Series;
(c) if the conditions set forth in Section 5.5 have been
satisfied and the Trustee elects to retain the Collateral pursuant to
such Section and elects not to sell or liquidate the same, then any
direction to the Trustee by Holders of BGS Transition Bonds
representing less than one hundred percent (100%) of the Outstanding
Amount of the BGS Transition Bonds of all Series to sell or liquidate
the Collateral shall be of no force and effect; and
(d) the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction;
38
provided, however, that, subject to Section 6.1, the Trustee need not take any
action that it determines might involve it in liability for which it
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities which might be incurred by it in complying with this
request. The Trustee also need not take any action that it determines might
materially and adversely affect the rights of any BGS Transition Bondholders
not consenting to such action.
SECTION 5.12. Waiver of Past Defaults.
(a) Prior to the declaration of the acceleration of the maturity of
the BGS Transition Bonds of all Series as provided in Section 5.2, the Holders
of not less than a majority of the Outstanding Amount of the BGS Transition
Bonds of all Series, with the written consent of the BPU, together may waive
any past Default or Event of Default and its consequences except a Default (i)
in payment of principal of or interest on any of the BGS Transition Bonds or
(ii) in respect of a covenant or provision hereof which cannot be modified or
amended without the consent of the Holder of each BGS Transition Bond of all
Series or Classes affected. In the case of any such waiver, the Issuer, the
Trustee and the Holders of the BGS Transition Bonds shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.
(b) Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
SECTION 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any BGS Transition Bond by such Holder's acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit instituted by
the Trustee, (b) any suit instituted by any BGS Transition Bondholder, or
group of BGS Transition Bondholders, in each case holding in the aggregate
more than ten percent (10%) of the Outstanding Amount of the BGS Transition
Bonds of a Series or (c) any suit instituted by any BGS Transition Bondholder
for the enforcement of the payment of (i) interest on any BGS Transition Bond
on or after the due dates expressed in such BGS Transition Bond and in this
Indenture or (ii) the unpaid principal, if any, of any BGS Transition Bond on
or after the Final Maturity Date therefor.
SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner
39
whatsoever, claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, that may affect
the covenants or the performance of this Indenture; and the Issuer (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 5.15. Action on BGS Transition Bonds. The Trustee's right to
seek and recover judgment on the BGS Transition Bonds or under this Indenture
shall not be affected by the seeking, obtaining or application of any other
relief under or with respect to this Indenture. Neither the Lien of this
Indenture nor any rights or remedies of the Trustee or the BGS Transition
Bondholders shall be impaired by the recovery of any judgment by the Trustee
against the Issuer or by the levy of any execution under such judgment upon
any portion of the Collateral or upon any of the assets of the Issuer.
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Duties and Liabilities of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent
Person would exercise or use under the circumstances in the conduct of such
Person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this clause (c) does not limit the effect of clause (b)
of this Section 6.1;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
40
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to clauses (a), (b) and (c) of this Section 6.1.
(e) The Trustee shall not be liable for interest on any money
received by it except as provided in this Indenture or as the Trustee may
agree in writing with the Issuer.
(f) Money held in trust by the Trustee need not be segregated from
other funds held by the Trustee except to the extent required by law or the
terms of this Indenture, the Sale Agreement, the Servicing Agreement or any
Interest Rate Swap Agreement.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 6.1 and to the provisions of the
TIA.
(i) Under no circumstances shall the Trustee be liable for any
indebtedness of the Issuer, the Servicer or the Seller evidenced by or arising
under the BGS Transition Bonds or any Basic Document.
SECTION 6.2. Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need
not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Issuer Officer's Certificate or an Issuer Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Issuer Officer's Certificate or an Issuer Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of,
any such agent attorney, custodian, or nominee appointed with due care by it
thereunder.
41
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights
or powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
BGS Transition Bonds shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
SECTION 6.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of BGS
Transition Bonds and may otherwise deal with the Issuer or its affiliates with
the same rights it would have if it were not Trustee. Any Paying Agent, BGS
Transition Bond Registrar, co-registrar or co-paying agent, or agent appointed
pursuant to Section 3.2(b) may do the same with like rights. However, the
Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the BGS Transition Bonds. The Trustee shall not be
accountable for the Issuer's use of the proceeds from the BGS Transition
Bonds, and the Trustee shall not be responsible for any statement of the
Issuer in this Indenture or in any document issued in connection with the sale
of the BGS Transition Bonds or in the BGS Transition Bonds other than the
Trustee's certificate of authentication. The Trustee shall not be responsible
for the form, character, genuineness, sufficiency, value or validity of any of
the Collateral, or for or in respect of the validity or sufficiency of the BGS
Transition Bonds (other than the certificate of authentication for the BGS
Transition Bonds) or the Basic Documents and the Trustee shall in no event
assume or incur any liability, duty or obligation to any Holder of a BGS
Transition Bond, other than as expressly provided for in this Indenture. The
Trustee shall not be liable for the default or misconduct of the Issuer, the
Seller, the Servicer or the Member or any Manager of the Issuer under any
Basic Document or otherwise, or the default or misconduct of any counterparty
under any Interest Rate Swap Agreement, and the Trustee shall have no
obligation or liability to perform the obligations of the Issuer.
SECTION 6.5. Notice of Defaults. If a Default occurs and is
continuing with respect to any Class or Series and if it is known to a
Responsible Officer of the Trustee, the Trustee shall mail to each Rating
Agency, to the BPU and to each Holder of BGS Transition Bonds of all Series
notice of the Default within ninety (90) days after it occurs. Except in the
case of a Default in payment of principal of or interest on any BGS Transition
Bond, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is
in the interests of BGS Transition Bondholders.
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SECTION 6.6. Reports by Trustee to Holders.
(a) Upon the written request of any Holder of BGS Transition Bonds,
the Trustee shall deliver to such Holder such information as may be required
to enable such Holder to prepare its federal and state income tax returns.
(b) With respect to each Series and Class of BGS Transition Bonds, on
or prior to each Payment Date therefor, the Trustee shall deliver a statement
prepared by the Trustee to each Holder of BGS Transition Bonds of such Series
and Class and to the BPU which shall include (to the extent applicable) the
following information (and any other information so specified in the Series
Supplement for such Series) as to the BGS Transition Bonds of such Series and
Class with respect to such Payment Date or the period since the previous
Payment Date, as applicable:
(i) the amount paid to Holders of the BGS Transition Bonds
of such Series and Class in respect of principal; such amount to be
expressed as a dollar amount per thousand;
(ii) the amount paid to Holders of the BGS Transition Bonds
of such Series and Class in respect of interest; such amount to be
expressed as a dollar amount per thousand;
(iii) the BGS Transition Bond Balance, after giving effect
to the payments to be made on such Payment Date, and the Projected
BGS Transition Bond Balance, in each case for such Series and Class
and as of such Payment Date;
(iv) the amount on deposit in the Overcollateralization
Subaccount for such Series and the Scheduled Overcollateralization
Level (such amounts may be zero) for such Series as of such Payment
Date;
(v) the amount on deposit in the Capital Subaccount for such
Series as of such Payment Date;
(vi) the amount, if any, on deposit in the Reserve
Subaccount as of such Payment Date;
(vii) the amount to be paid to any Swap Counterparty;
(viii) the amounts to be paid to the Trustee since the
preceding Payment Date;
(ix) the amounts paid to the Servicer since the preceding
Payment Date; and
(x) any other transfers and payments made pursuant to this
Indenture.
(c) The Trustee's responsibility for disbursing the information
described in clause (b) above to Holders of BGS Transition Bonds and to the
BPU is limited to the availability,
43
timeliness and accuracy of the information provided by the Servicer pursuant
to Section 3.5 and Annex 1 of the Servicing Agreement.
SECTION 6.7. Compensation and Indemnity.
(a) The Issuer shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Issuer shall
reimburse the Trustee for all reasonable out-of-pocket expenses, disbursements
and advances incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Issuer shall indemnify
and hold harmless the Trustee from and against any and all costs, damages,
expenses, losses, liabilities or other amounts whatsoever (including counsel
fees) incurred by the Trustee in connection with the administration of this
trust, the enforcement of this trust and all of the Trustee's rights, powers
and duties under this Indenture and the performance by the Trustee of the
duties and obligations of the Trustee under or pursuant to this Indenture. The
Trustee shall notify the Issuer promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Issuer shall not relieve
the Issuer of its obligations hereunder.
(b) The Issuer shall defend the claim and the Trustee may have
separate counsel and the Issuer shall pay the fees and expenses of such
counsel. The Issuer need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee (i) through the Trustee's
own willful misconduct, negligence or bad faith or (ii) to the extent the
Trustee was reimbursed for or indemnified against any such loss, liability or
expense by the Seller pursuant to the Sale Agreement or by the Servicer
pursuant to the Servicing Agreement.
(c) When the Trustee incurs expenses after the occurrence of a
Default specified in Section 5.1(e) or 5.1(f) with respect to the Issuer, the
expenses are intended to constitute expenses of administration under Title 11
of the United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
SECTION 6.8. Replacement of Trustee.
(a) The Trustee may resign at any time upon thirty (30) days' prior
written notice by so notifying the Issuer. The Issuer may remove the Trustee
with or without cause at any time, with prior notice to the Rating Agencies,
upon thirty (30) days' prior written notice, and shall remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) the Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Trustee or its property; or
44
(iv) the Trustee otherwise becomes incapable of acting.
(b) If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the "Retiring Trustee"), the Issuer shall promptly appoint a
successor Trustee.
(c) In addition, the Holders of a majority in Outstanding Amount of
the BGS Transition Bonds of all Series may remove the Trustee by so notifying
the Issuer and the Trustee and such Holders may appoint a successor Trustee.
(d) A successor Trustee shall deliver a written acceptance of its
appointment to the Retiring Trustee and to the Issuer. Thereupon the
resignation or removal of the Retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. No resignation or removal of the Trustee shall become
effective until the acceptance of the appointment by a successor Trustee. The
successor Trustee shall mail a notice of its succession to BGS Transition
Bondholders. The Retiring Trustee shall promptly transfer all property held by
it as Trustee to the successor Trustee.
(e) If a successor Trustee does not take office within sixty (60)
days after the Retiring Trustee resigns or is removed, the Retiring Trustee,
the Issuer or the Holders of a majority in Outstanding Amount of the BGS
Transition Bonds of all Series may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) If the Trustee fails to comply with Section 6.11, any BGS
Transition Bondholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(g) Notwithstanding the replacement of the Trustee pursuant to this
Section 6.8, the Issuer's obligations under Section 6.7 shall continue for the
benefit of the Retiring Trustee.
SECTION 6.9. Successor Trustee by Merger.
(a) If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation or banking association shall, without any further act
be the successor Trustee. Notice of any such event shall be promptly given to
each Rating Agency by the successor Trustee.
(b) In case at the time such successor or successors by merger,
conversion, consolidation or transfer shall succeed to the trusts created by
this Indenture any of the BGS Transition Bonds shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any Retiring Trustee, and deliver such BGS Transition
Bonds so authenticated; and in case at that time any of the BGS Transition
Bonds shall not have been authenticated, any successor to the Trustee may
authenticate such BGS Transition Bonds either in the name of any Retiring
Trustee hereunder or in the name of the successor to the Trustee; and in all
such cases such certificates shall have the full force and effect
45
granted by the BGS Transition Bonds or by this Indenture and this force and
effect shall be equal to any certificate issued by the Trustee.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint one or
more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Collateral, and to vest in such
Person or Persons, in such capacity and for the benefit of the BGS Transition
Bondholders, such title to the Collateral, or any part hereof, and, subject to
the other provisions of this Section 6.10, such powers, duties, obligations,
rights and trusts as the Trustee may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 6.11 and no notice to BGS
Transition Bondholders of the appointment of any co-trustee or separate
trustee shall be required under Section 6.8. Notice of any such appointment
shall be promptly given to each Rating Agency and to the BPU by the Trustee.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act
or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Collateral or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture
and the conditions of this Article VI. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided
46
therein, subject to all the provisions of this Indenture, specifically
including every provision of this Indenture relating to the conduct of,
affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a) and Section 26(a)(i) of
the Investment Company Act of 1940. The Trustee shall have a combined capital
and surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition and it shall have a long term debt rating of "BBB-"
or better by Standard & Xxxx'x, "Xxx0" or better by Moody's and "BBB-" or
better by Fitch. The Trustee shall comply with TIA Section 310(b), including
the optional provision permitted by the second sentence of TIA Section
310(b)(9); provided, however, that there shall be excluded from the operation
of TIA Section 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13. Representations and Warranties of the Trustee. The
Trustee hereby represents and warrants that:
(a) the Trustee is a banking corporation validly existing in
good standing under the laws of the State of New York; and
(b) the Trustee has full power, authority and legal right to
execute, deliver and perform this Indenture and the Basic Documents
to which the Trustee is a party and has taken all necessary action to
authorize the execution, delivery and performance by it of this
Indenture and such Basic Documents.
ARTICLE VII
BGS TRANSITION BONDHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer To Furnish Trustee Names and Addresses of BGS
Transition Bondholders. The Issuer shall furnish or cause to be furnished to
the Trustee (a) not more than five days after the earlier of (i) each Record
Date with respect to each Series and (ii) three months after the last Record
Date with respect to each Series, a list, in such form as the Trustee
47
may reasonably require, of the names and addresses of the Holders of BGS
Transition Bonds of such Series as of such Record Date, (b) at such other
times as the Trustee may request in writing, within thirty (30) days after
receipt by the Issuer of any such request, a list of similar form and content
as of a date not more than ten (10) days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the BGS
Transition Bond Registrar, no such list shall be required to be furnished.
SECTION 7.2. Preservation of Information; Communications to BGS
Transition Bondholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of BGS Transition Bonds
contained in the most recent list furnished to the Trustee as provided in
Section 7.1 and the names and addresses of Holders of BGS Transition Bonds
received by the Trustee in its capacity as BGS Transition Bond Registrar. The
Trustee may destroy any list furnished to it as provided in such Section 7.1
upon receipt of a new list so furnished.
(b) BGS Transition Bondholders may communicate with other BGS
Transition Bondholders pursuant to Section 312(b) of the TIA, with respect to
their rights under this Indenture or under the BGS Transition Bonds.
(c) The Issuer, the Trustee and the BGS Transition Bond Registrar
shall have the protection of Section 312(c) of the TIA.
SECTION 7.3. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Trustee and with the BPU, within fifteen
(15) days after the Issuer is required to file the same with the
Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Issuer may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee, the BPU and the Commission, such
additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Trustee and the BPU (and the Trustee
shall transmit by mail to all BGS Transition Bondholders described in
TIA Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i)
and (ii) of this Section 7.3(a) as may be required by rules and
regulations prescribed from time to time by the Commission.
48
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4. Reports by Trustee.
(a) If required by TIA Section 313(a), within sixty (60) days after
the end of each fiscal year of the Issuer, commencing with the year after the
issuance of the BGS Transition Bonds of any Series, the Trustee shall mail to
each Holder of BGS Transition Bonds of such Series as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Section 313(b); provided,
however, that the initial report so issued shall be delivered not more than
twelve (12) months after the initial issuance of each Series.
(b) A copy of each report at the time of its mailing to BGS
Transition Bondholders shall be filed by the Trustee with the Commission and
each stock exchange, if any, on which the BGS Transition Bonds are listed (to
the extent required by the rules of such exchange). The Issuer shall notify
the Trustee if and when the BGS Transition Bonds are listed on any stock
exchange.
SECTION 7.5. Provision of Servicer Reports. Upon the written request
of any BGS Transition Bondholder to the Trustee addressed to the Corporate
Trust Office, the Trustee shall provide such BGS Transition Bondholder with a
copy of the Issuer Officer's Certificate referred to in Section 3.5 of the
Servicing Agreement and the Annual Accountant's Report referred to in Section
3.6 of the Servicing Agreement.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as
otherwise expressly provided in this Indenture, if any default occurs in the
making of any payment or performance under any agreement or instrument that is
part of the Collateral, the Trustee may take such action as may be appropriate
to enforce such payment or performance, including the institution and
prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.2. Collection Account.
(i) On or prior to the Series Issuance Date for the first
Series issued hereunder, the Issuer shall open, at the Trustee's
Corporate Trust Office, or at another Eligible Institution, one or
more segregated trust accounts in the Trustee's name for the
49
benefit of the Holders (collectively, the "Collection Account"). The
Collection Account shall initially be divided into subaccounts, which
need not be separate bank accounts: a general subaccount (the
"General Subaccount"), an overcollateralization subaccount for each
Series of BGS Transition Bonds (each, an "Overcollateralization
Subaccount" or the "Series Overcollateralization Subaccount"), a
capital subaccount for each Series of BGS Transition Bonds (each, a
"Capital Subaccount" or the "Series Capital Subaccount"), a capital
reserve subaccount (the "Capital Reserve Subaccount"), a reserve
subaccount (the "Reserve Subaccount"), a series subaccount for each
Series of BGS Transition Bonds (each, a "Series Subaccount") and a
class subaccount for any Class of any Series of BGS Transition Bonds
which has a floating rate of interest as specified in any Series
Supplement (each, a "Class Subaccount"). If so provided in any Series
Supplement, the Series Capital Subaccount for the related Series may
be divided into separate subaccounts bearing the designations
specified in such Series Supplement for the purpose of tracing
deposits to and withdrawals from such Series Capital Subaccount,
provided that in such case the terms Series Capital Subaccount and
Capital Subaccount with respect to such Series shall refer
collectively to all such subaccounts except as specified in such
Series Supplement for purposes of such tracing. On or prior to the
Series Issuance Date for each Series issued after the Series Issuance
Date for the first Series issued hereunder, the Issuer shall
establish an additional Series Subaccount therefor and a Class
Subaccount for any Class of such Series which has a floating rate of
interest and in respect of which the Issuer has entered into an
Interest Rate Swap Agreement, as Subaccounts of the Collection
Account. Prior to depositing funds or U.S. Government Obligations in
the Collection Account pursuant to Sections 4.1 or 4.2, the Issuer
shall establish defeasance subaccounts (each, a "Defeasance
Subaccount") for each Series for which funds shall be deposited, as
subaccounts of the Collection Account. All amounts in the Collection
Account not allocated to any other Subaccount shall be allocated to
the General Subaccount. Prior to the Initial Payment Date, all
amounts in the Collection Account (other than funds deposited into
the Capital Subaccount, up to the Required Capital Amount) shall be
allocated to the General Subaccount. All payments received by the
Trustee from any Swap Counterparty at any time shall be deposited in
the related Class Subaccount. All references to the Collection
Account shall be deemed to include reference to all subaccounts
contained therein. Withdrawals from and deposits to each of the
foregoing subaccounts of the Collection Account shall be made as set
forth in Sections 4.1, 4.2, 4.3 and 8.2(d) through (o). The
Collection Account shall at all times be maintained in an Eligible
Securities Account and only the Trustee shall have access to the
Collection Account for the purpose of making deposits in and
withdrawals from the Collection Account in accordance with this
Indenture. Funds in the Collection Account shall not be commingled by
the Issuer with any other moneys, and shall not be commingled by the
Trustee. All moneys deposited from time to time in the Collection
Account, all deposits therein pursuant to this Indenture, and all
investments made in Eligible Investments with such moneys, including
all income or other gain from such investments, shall be held by the
Trustee in the Collection Account as part of the Collateral as herein
provided, with the exception of any amount up to $100,000 held at any
time in the Capital Reserve Subaccount. The Capital Reserve
Subaccount shall be
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funded with $100,000 from amounts contributed to the Capital
Subaccount for the initial Series of BGS Transition Bonds. Amounts on
deposit in the Capital Reserve Subaccount shall be available, upon
request of the Issuer, to pay any expenses of the Issuer.
(ii) Notwithstanding any other provision of this Indenture,
the Collection Account shall be a securities account and shall be
established only with a securities intermediary (as defined in
Section 8-102(a)(13) of the New Jersey UCC) that agrees with the
Trustee that (A) the Collection Account shall be a securities account
of the Trustee, (B) all property credited to the Collection Account
shall be treated as a financial asset, (C) such securities
intermediary shall treat the Trustee as entitled to exercise the
rights that comprise each financial asset credited to the Collection
Account, (D) such securities intermediary shall comply with
entitlement orders originated by the Trustee without the further
consent of any other person or entity, (E) such securities
intermediary shall not agree with any person other than the Trustee
to comply with entitlement orders originated by such other person,
(F) the Collection Account and all property credited to it shall not
be subject to any Lien, security interest, right of set-off in favor
of such securities intermediary or anyone claiming through it (other
than the Trustee), and (G) such agreement shall be governed by the
laws of the State of New Jersey. The Collection Account shall be
under the control (within the meaning of Section 8-106 of the New
Jersey UCC) of the Trustee. If at any time the Collection Account
ceases to be an Eligible Securities Account, the Trustee shall,
within ten (10) days, establish a new Collection Account as an
Eligible Securities Account.
(b) All or a portion of the funds in the Collection Account shall be
invested in Eligible Investments and reinvested by the Trustee upon Issuer
Order; provided, however, that no funds in the Defeasance Subaccount for any
Series of BGS Transition Bonds shall be invested in Eligible Investments or
otherwise, except that U.S. Government Obligations deposited by the Issuer
with the Trustee pursuant to Sections 4.1 or 4.2 shall remain as such. Except
as provided in Section 8.2(g)(x), all income or other gain from investments of
moneys deposited in the Collection Account shall be deposited by the Trustee
in the Collection Account, and any loss resulting from such investments shall
be charged to the Collection Account. The Issuer shall not direct the Trustee
to make any investment of any funds or to sell any investment held in the
Collection Account unless the security interest granted and perfected in such
account will continue to be perfected in such investment or the proceeds of
such sale, in either case without any further action by any Person, and, in
connection with any direction to the Trustee to make any such investment or
sale, if requested by the Trustee, the Issuer shall deliver to the Trustee an
Issuer Opinion of Counsel, acceptable to the Trustee, to such effect. Subject
to Section 6.1(c), the Trustee shall not in any way be held liable for the
selection of Eligible Investments or for investment losses incurred thereon
except for losses attributable to the Trustee's failure to make payments on
such Eligible Investments issued by the Trustee, in its commercial capacity as
principal obligor and not as Trustee, in accordance with their terms. The
Trustee shall have no liability in respect of losses incurred as a result of
the liquidation of any Eligible Investment prior to its stated maturity or the
failure of the Issuer to provide timely written investment direction. The
Trustee shall have no obligation to invest or reinvest any amounts held
hereunder in the absence of written investment direction pursuant to an Issuer
Order; provided, however, that if
51
(i) the Issuer shall have failed to give investment directions for any funds
on deposit in the Collection Account to the Trustee by 11:00 a.m. (prevailing
New York City time) (or such other time as may be agreed by the Issuer and
Trustee) on any Business Day, or (ii) a Default or Event of Default shall have
occurred and be continuing but the BGS Transition Bonds shall not have been
declared due and payable pursuant to Section 5.2, then the Trustee shall, to
the fullest extent practicable, invest and reinvest funds in the Collection
Account in one or more Eligible Investments of the kind described in clause
(e) of the definition thereof.
(c) Any TBC Collections remitted by the Servicer to the Trustee, any
Indemnity Amounts remitted to the Trustee by the Seller or the Servicer or
otherwise received by the Trustee or the Issuer, any other proceeds of
Collateral received by the Servicer, the Issuer or the Trustee, and any
amounts paid by any counterparty under any Interest Rate Swap Agreement
received by the Servicer, the Issuer or the Trustee, shall be deposited in the
General Subaccount.
(d) Monthly, on the 13th day of each calendar month, or if such day
is not a Business Day, the preceding Business Day, beginning October 2005, the
fee owed to the Trustee in an amount equal to $1,250 for such month, plus any
expenses, including legal fees and expenses, Indemnity Amounts (up to a
maximum of $10,000,0000 in the aggregate for the then current and all prior
Payment Dates and for all Series unless the Issuer has received confirmation
from S&P that a further amount will not result in a reduction or withdrawal of
the then current rating of the Outstanding BGS Transition Bonds) and any other
amounts due and owing to the Trustee pursuant to the Basic Documents for such
month so long as no Event of Default would result from the payment of such
Indemnity Amounts (as limited above) or such other amounts, shall, at the
direction of the Servicer, be paid to the Trustee.
(e) After the distribution made pursuant to clause (d) above,
monthly, 13th day of each calendar month, or if such day is not a Business
Day, the preceding Business Day, beginning October 2005, the Monthly Servicing
Fee and any unpaid Monthly Servicing Fees shall, at the direction of the
Servicer, be paid to the Servicer to the extent that such amounts have not
been withheld by the Servicer from TBC Collections pursuant to Section 5.7 of
the Servicing Agreement.
(f) On each Payment Date, or such other date related to such Payment
Date as may be specified in the related Series Supplement, the Trustee, at the
direction of the Servicer, shall allocate to each Class Subaccount from the
related Series Subaccount the amounts specified in the related Series
Supplement. Such amounts shall be so allocated after taking into account all
allocations required in connection with such Payment Date under clauses (d)
and (e) above and (g)(i) through (iii) below; provided that in the event of
any shortfall of amounts to be allocated pursuant to clause (g)(iii) among
more than one Class of the applicable Series, amounts shall be allocated to
such Class Subaccount on a Pro Rata basis with all other Classes of the
relevant Series. Amounts in each Class Subaccount shall be applied as provided
in the related Series Supplement.
(g) Except as otherwise provided in any Series Supplement with
respect to any floating rate Class, on each Payment Date, by 12:00 noon
(prevailing New York City time), or if
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such day is not a Business Day, on the following Business Day, the Trustee
shall, at the direction of the Servicer, apply all amounts on deposit in the
General Subaccount of the Collection Account and any investment earnings on
the subaccounts in the Collection Account, after distribution in accordance
with clauses (d) and (e) above, and, subject to the qualifications therein,
after allocation to any Class Subaccount and payment to any related Swap
Counterparty in accordance with clause (f) above, in the following priority:
(i) the administration fee payable under the Administration
Agreement, as specified in the related Series Supplement, shall be
paid to the Administrator; and fees payable to the Independent
Managers in an amount equal to $62,500 for such Payment Date, shall
be paid to the Independent Managers;
(ii) so long as no Event of Default has occurred and is
continuing or would be caused by such payment, all Operating Expenses
other than distributions in accordance with clauses (d), (e) and
(g)(i) above shall be paid to the Persons entitled thereto, pro rata
based on the relative amount of Operating Expenses remaining payable
to each such Person, provided that the amount paid on such Payment
Date pursuant to this clause (g)(ii) may not exceed $100,000 in the
aggregate for all Series;
(iii) an amount equal to Interest payable on each Class of
each Series of BGS Transition Bonds on such Payment Date shall be
allocated to the corresponding Series Subaccount, (provided, that, to
the extent provided in any Series Supplement with respect to interest
on any floating rate Class, such amount shall be equal to the
applicable amount specified in the related Series Supplement payable
with respect to that Class) and if there are insufficient funds to
make such allocation in full, amounts will be allocated Pro Rata to
the corresponding Class Subaccount;
(iv) an amount equal to any Principal of each Class of each
Series of BGS Transition Bonds payable as a result of acceleration
pursuant to Section 5.2 and any Principal of any Series or Class of
BGS Transition Bonds payable on the Final Maturity Date of such
Series or Class, shall be allocated to the corresponding Series
Subaccount and, if there are insufficient funds to make such
allocation in full, amounts shall be allocated on a Pro Rata basis;
(v) an amount equal to Principal scheduled to be paid on
each Class of each Series of BGS Transition Bonds on such Payment
Date according to the Expected Sinking Fund Amortization Schedule,
excluding any amounts provided for pursuant to clause (g)(iv) above,
shall be allocated to the corresponding Series Subaccount and, if
there are insufficient funds for such Principal payment, shall be
allocated on a Pro Rata basis;
(vi) all remaining unpaid Operating Expenses and Indemnity
Amounts shall be paid to the Persons entitled thereto, pro rata based
on the relative amount of Operating Expenses and Indemnity Amounts
remaining payable to each such Person;
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(vii) any amount necessary to replenish any shortfalls in
the Capital Subaccount for each Series below the Required Capital
Amount for such Series shall be allocated to the Capital Subaccount
for such Series, Pro Rata, based on the Outstanding principal balance
of each Series;
(viii) an amount shall be allocated to the
Overcollateralization Subaccount for each Series sufficient to cause
the amount in the Overcollateralization Subaccount for such Series to
equal the Scheduled Overcollateralization Level (such amount may be
zero) for such Series as of that Payment Date, Pro Rata, based on the
Outstanding principal balance of each Series;
(ix) so long as no Event of Default has occurred and is
continuing, an amount equal to investment earnings on amounts in the
Capital Subaccount shall be released to the Issuer;
(x) the balance, if any, shall be allocated to the Reserve
Subaccount; and
(xi) following repayment of all outstanding Series of BGS
Transition Bonds, the balance, if any, shall be released to the
Issuer free from the Lien of this Indenture.
(h) For purposes of allocations among Series prior to an acceleration
of the BGS Transition Bonds pursuant to Section 5.2, except as otherwise
provided in any Series Supplement, "Pro Rata" means with respect to any Series
a ratio, (i) in the case of a payment of Interest on any Payment Date, the
numerator of which is the amount of Interest payable on such Series on such
Payment Date and, with respect to any Class of such Series of floating rate
BGS Transition Bonds, the Gross Fixed Amount for that class (as such term is
defined by the related Series Supplement) on such Payment Date and the
denominator of which is the aggregate amount of Interest payable on all Series
on such Payment Date; (ii) in the case of a payment of Principal on any
Payment Date, the numerator of which is the aggregate amount of Principal
scheduled to be paid or payable, as the case may be, on such Payment Date with
respect to such Series and the denominator of which is the sum of the
aggregate amounts of Principal scheduled to be paid or payable, as the case
may be, with respect to all Outstanding Series on such Payment Date; and (iii)
in the case of a payment or allocation on any Payment Date other than of
Interest or Principal, the numerator of which is the Outstanding principal
amount of such Series immediately prior such Payment Date and the denominator
of which is the aggregate Outstanding principal amount of all Series
immediately prior such Payment Date.
(i) If, on any Payment Date, funds on deposit in the General
Subaccount are insufficient to make the payments and allocations contemplated
by subclauses (d), (e), (f) and (g)(i) through (v), (vii) and (viii) above for
all Series, the Trustee shall, at the direction of the Servicer, draw from
amounts on deposit in the following subaccounts in the following order up to
the amount of such shortfall, in order to make such payments and allocations:
(i) from the Reserve Subaccount for all Series, Pro Rata,
for payments and allocations contemplated by subclauses (d), (e), (f)
and (g)(i) through (v), (vii) and (viii),
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(ii) from the Overcollateralization Subaccount for such
Series, Pro Rata, for payments and allocations contemplated by
subclauses (d), (e), (f) and (g)(i) through (v), and
(iii) from the Capital Subaccount for such Series, Pro Rata,
for payments and allocations contemplated by subclauses (d), (e), (f)
and (g)(i) through (v);
provided that no amounts from the Reserve Subaccount, the
Overcollateralization Subaccount for such Series or the Capital Subaccount for
such Series shall by allocated to any Class Subaccount pursuant to subclause
(g)(iii) to the extent a shortfall in amounts available to pay interest due on
the related Class of BGS Transition Bonds is due solely to any failure by a
Swap Counterparty, if any, to make payments due under the related Interest
Rate Swap Agreement.
(j) On each Payment Date for any Series prior to an acceleration of
the BGS Transition Bonds pursuant to Section 5.2, the amounts on deposit in
the Series Subaccount shall be allocated, at the direction of the Servicer, in
the following order of priority: (i) to pay Interest due and payable on the
BGS Transition Bonds of such Series with respect to such Payment Date to the
Holders of BGS Transition Bonds of such Series, and (ii) the balance, if any,
up to the amount of Principal scheduled to be paid or payable on the BGS
Transition Bonds of such Series on such Payment Date, to pay such Principal to
the Holders of BGS Transition Bonds of such Series.
(k) Prior to an acceleration of the BGS Transition Bonds pursuant to
Section 5.2, all allocations of Principal and Interest with respect to any
Series comprised of two or more Classes shall be allocated among the Classes
within such Series on a Pro Rata basis. All payments of Principal shall be
made in the order set forth in the Expected Sinking Fund Amortization Schedule
established with respect to each Series and within such Series, in order of
Class, and any payments of Principal that were not made on the scheduled
Payment Date therefor shall be made in the order that they were scheduled for
payment.
(l) For purposes of allocations among Classes within a single Series
prior to an acceleration of the BGS Transition Bonds pursuant to Section 5.2,
except as otherwise provided in any Series Supplement, "Pro Rata" means with
respect to any Class a ratio, (i) in the case of a payment of Interest with
respect to any Payment Date, the numerator of which is the amount of interest
payable to such Class on such Payment Date, or in the case of any Class of
floating rate BGS Transition Bonds, the Gross Fixed Amount for that class (as
such term is defined by the related Series Supplement) on such Payment Date,
and the denominator of which is the aggregate amount of interest payable on
all Classes within such Series on such Payment Date; and (ii) in the case of a
payment of Principal on any Payment Date, the numerator of which is the
aggregate amount of Principal scheduled to be paid or payable, as the case may
be, on such Payment Date with respect to such Class and the denominator of
which is the sum of the aggregate amounts of Principal scheduled to be paid or
payable, as the case may be, with respect to all Outstanding Classes within
such Series on such Payment Date.
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(m) Prior to an acceleration of the BGS Transition Bonds pursuant to
Section 5.2, all payments of Principal and Interest to Holders of BGS
Transition Bonds of a single Class, or of a single Series without Classes,
shall be made on a proportionate basis based on the respective principal
amounts of such BGS Transition Bonds held by such Holders.
(n) Upon an acceleration of the maturity of the BGS Transition Bonds
pursuant to Section 5.2, the aggregate amount of principal of and interest
accrued on each BGS Transition Bond shall be payable, without priority of
interest over principal or of principal over interest and without regard to
Series or Class, in the proportion that the aggregate amount of principal of
and interest accrued on such BGS Transition Bond bears to the aggregate amount
of principal of and interest accrued on all BGS Transition Bonds.
(o) Notwithstanding any other provision in this Indenture to the
contrary, in the event of an acceleration of the BGS Transition Bonds and a
subsequent liquidation of the Collateral in accordance with Section 5.4(a), if
so provided in any Interest Rate Swap Agreement, the proceeds of such
liquidation allocated to the related Class of floating rate BGS Transition
Bonds in accordance with this Section 8.3 shall be deposited in the related
Class Subaccount and allocated between and paid to the holders of such
floating rate Class, on the one hand, and any related Swap Counterparty, on
the other hand, pro rata based on the aggregate amount of principal and
interest due and payable on such floating rate Class and the aggregate amount
payable to the related Swap Counterparty in accordance with such Interest Rate
Swap Agreement.
SECTION 8.3. Release of Collateral.
(a) All money and other property withdrawn from the Collection
Account by the Trustee for payment to the Issuer as provided in this Indenture
in accordance with Section 8.2 shall be deemed released from this Indenture
when so withdrawn and applied in accordance with the provisions of Article
VIII, without further notice to, or release or consent by, the Trustee.
(b) Other than as provided for in clause (a) above, the Trustee shall
release property from the Lien of this Indenture only as and to the extent
permitted by the Basic Documents and only upon receipt of an Issuer Request
accompanied by an Issuer Officer's Certificate, an Issuer Opinion of Counsel
and Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.1 or an Issuer
Opinion of Counsel in lieu of such Independent Certificates to the effect that
the TIA does not require any such Independent Certificate.
(c) Subject to the payment of its fees and expenses pursuant to
Section 6.7, the Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the Lien of this
Indenture, or convey the Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Trustee as provided in
this Article VIII shall be bound to ascertain the Trustee's authority, inquire
into the satisfaction of any conditions precedent or see to the application of
any moneys.
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(d) Subject to Section 8.3(b), the Trustee shall, at such time as
there are no BGS Transition Bonds Outstanding and all sums due the Trustee
pursuant to Section 6.7 have been paid, release any remaining portion of the
Collateral that secured the BGS Transition Bonds from the Lien of this
Indenture and release to the Issuer or any other Person entitled thereto any
funds or investments then on deposit in or credited to the Collection Account.
SECTION 8.4. Issuer Opinion of Counsel. The Trustee shall receive at
least five days notice when requested by the Issuer to take any action
pursuant to Section 8.3, accompanied by copies of any instruments involved,
and the Trustee shall also require, as a condition to such action, an Issuer
Opinion of Counsel, in form and substance satisfactory to the Trustee, stating
the legal effect of any such action, outlining the steps required to complete
the same, and concluding that all conditions precedent to the taking of such
action have been complied with and such action will not materially and
adversely impair the security for the BGS Transition Bonds or the rights of
the BGS Transition Bondholders in contravention of the provisions of this
Indenture; provided, however, that such Issuer Opinion of Counsel shall not be
required to express an opinion as to the fair value of the Collateral. Counsel
rendering any such opinion may rely, without independent investigation, on the
accuracy and validity of any certificate or other instrument delivered to the
Trustee in connection with any such action.
SECTION 8.5. Reports by Independent Accountants. The Issuer shall
appoint a firm of Independent certified public accountants of recognized
national reputation for purposes of preparing and delivering the reports or
certificates of such accountants required by this Indenture and the related
Series Supplements. Upon any resignation by such firm, the Issuer shall
promptly appoint a successor thereto that shall also be a firm of Independent
certified public accountants of recognized national reputation. If the Issuer
shall fail to appoint a successor to a firm of Independent certified public
accountants that has resigned within fifteen (15) days after such resignation,
the Trustee shall promptly notify the Issuer of such failure in writing. If
the Issuer shall not have appointed a successor within ten (10) days
thereafter, the Trustee shall promptly appoint a successor firm of Independent
certified public accountants of recognized national reputation. The fees of
such firm of Independent certified public accountants and its successor shall
be payable by the Issuer.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of BGS
Transition Bondholders.
(a) Without the consent of the Holders of any BGS Transition Bonds or
the counterparty under any Interest Rate Swap Agreement but with prior notice
to the Rating Agencies, the Issuer and the Trustee, when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Trustee, for any of the following purposes:
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(i) to correct or amplify the description of the Collateral,
or better to assure, convey and confirm unto the Trustee the
Collateral, or to subject to the Lien of this Indenture additional
property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and
the assumption by any applicable successor of the covenants of the
Issuer contained herein and in the BGS Transition Bonds;
(iii) to add to the covenants of the Issuer, for the benefit
of the BGS Transition Bondholders, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to the Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any Supplemental Indenture which may be
inconsistent with any other provision herein or in any Supplemental
Indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any Supplemental
Indenture; provided, however, that (i) such action shall not, as
evidenced by an Issuer Opinion of Counsel, adversely affect in any
material respect the interests of any BGS Transition Bondholder or
any counterparty under any Interest Rate Swap Agreement and (ii) the
Rating Agency Condition shall have been satisfied with respect
thereto;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor Trustee with respect to the BGS
Transition Bonds and to add to or change any of the provisions of
this Indenture as shall be necessary to facilitate the administration
of the trusts hereunder by more than one Trustee, pursuant to the
requirements of Article VI;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA;
(viii) to set forth the terms of any Series that has not
theretofore been authorized by a Supplemental Indenture, provided
that the Rating Agency Condition has been satisfied; or
(ix) to provide for any Interest Rate Swap Agreements with
respect to any Series or Class of BGS Transition Bonds which bears a
floating rate of interest or any Series or Class with specified
credit enhancement; provided, however, that:
(A) such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect
the interests of any BGS Transition Bondholder or any
counterparty under any Interest Rate Swap Agreement and
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(B) the Rating Agency Condition shall have been
satisfied with respect thereto.
(b) The Trustee is hereby authorized to join in the execution of any
such Supplemental Indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
SECTION 9.2. Supplemental Indentures with Consent of BGS Transition
Bondholders.
(a) The Issuer and the Trustee, when authorized by an Issuer Order,
also may, upon satisfaction of the Rating Agency Condition (in each case,
accompanied by the form of the proposed supplemental indenture) and with the
consent of the Holders of not less than a majority of the Outstanding Amount
of the BGS Transition Bonds of each Series or Class to be affected, by Act of
such Holders delivered to the Issuer and the Trustee, enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Holders of the BGS
Transition Bonds under this Indenture; provided, however, that no such
Supplemental Indenture shall, without the consent of the Holder of each
Outstanding BGS Transition Bond of each Series or Class and each counterparty
under any Interest Rate Swap affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any BGS Transition Bond, or reduce the
principal amount thereof, the interest rate thereon, change the
provisions of the Interest Rate Swap Agreement relating to the
amount, calculation or timing of payments, change the provisions of
this Indenture and the related applicable Supplemental Indenture or
Series Supplement relating to the application of collections on, or
the proceeds of the sale of, the Collateral to payment of principal
of or interest on the BGS Transition Bonds, or change the currency in
which, any BGS Transition Bond or the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement
of the provisions of this Indenture requiring the application of
funds available therefor, as provided in Article V, to the payment of
any such amount due on the BGS Transition Bonds on or after the
respective due dates thereof;
(iii) reduce the percentage of the Outstanding Amount of the
BGS Transition Bonds or of a Series or Class thereof, the consent of
the Holders of which is required for any such Supplemental Indenture,
or the consent of the Holders of which is required for any waiver of
compliance with provisions of this Indenture or defaults hereunder
and their consequences provided for in this Indenture or modify or
alter the provisions of the proviso to the definition of the term
"Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
BGS Transition Bonds required to direct the Trustee to direct the
Issuer to sell or liquidate the Collateral pursuant to Section 5.4 or
to preserve the Collateral pursuant to Section 5.5;
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(v) reduce the percentage of the Outstanding Amount of a
Series or Class of BGS Transition Bonds, the consent of the Holders
of which is required for any amendments to the Sale Agreement, the
Administration Agreement, the Servicing Agreement or any Interest
Rate Swap Agreement;
(vi) modify any of the provisions of this Indenture in such
manner so as to affect the amount of any payment of interest or
principal payable on any BGS Transition Bond on any Payment Date or
change the Expected Sinking Fund Amortization Schedules or Final
Maturity Date of any Series or Class of BGS Transition Bonds, or the
method of calculation of interest on any floating rate BGS Transition
Bond;
(vii) decrease the Overcollateralization Amount or Required
Capital Amount with respect to any Series or the Scheduled
Overcollateralization Level with respect to any Payment Date;
(viii) modify or alter the provisions of this Indenture
regarding the voting of BGS Transition Bonds held by the Issuer, the
Seller, an Affiliate of either of them or any obligor on the BGS
Transition Bonds;
(ix) decrease the percentage of the aggregate principal
amount of BGS Transition Bonds required to amend the sections of this
Indenture which specify the applicable percentage of the aggregate
principal amount of the BGS Transition Bonds necessary to amend this
Indenture or any other Basic Documents; or
(x) permit the creation of any Lien ranking prior to or on a
parity with the Lien of this Indenture with respect to any part of
the Collateral or, except as otherwise permitted or contemplated
herein, terminate the Lien of this Indenture on any property at any
time subject hereto or deprive the Holder of any BGS Transition Bond
of the security provided by the Lien of this Indenture.
(b) It shall not be necessary for any Act of BGS Transition
Bondholders under this Section 9.2 to approve the particular form of any
proposed Supplemental Indenture, but it shall be sufficient if such Act shall
approve the substance thereof.
(c) Promptly after the execution by the Issuer and the Trustee of any
Supplemental Indenture pursuant to this Section 9.2, the Trustee shall mail to
the Holders of the BGS Transition Bonds to which such amendment or
Supplemental Indenture relates a notice setting forth in general terms the
substance of such Supplemental Indenture. Any failure of the Trustee to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such Supplemental Indenture.
SECTION 9.3. BPU Condition. Notwithstanding anything to the contrary
in Section 9.1 or 9.2, no Supplemental Indenture shall be effective except
upon satisfaction of the conditions precedent in this Section 9.3.
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(a) At least fifteen days prior to the effectiveness of any such
Supplemental Indenture and after obtaining the other necessary approvals set
forth in Section 9.1 or 9.2, as applicable, except for the consent of the
Trustee and the Holders of the BGS Transition Bonds if the consent of the
Holders is required or sought by the Trustee in connection with such
supplemental indenture, the Seller shall have delivered to the BPU's executive
director and general counsel written notification of any proposed Supplemental
Indenture, which notification shall contain:
(i) a reference to Docket No. EF3070532;
(ii) an Officer's Certificate stating that the proposed
Supplemental Indenture has been approved by all parties to this
Agreement or, if the consent of the Holders of the BGS Transition
Bonds is required or being sought by the Trustee, that the
Supplemental Indenture has been approved by all parties to this
agreement other than the Holders, subject to the consent of the
Holders; and
(iii) a statement identifying the person to whom the BPU or
its staff is to address any response to the proposed Supplemental
Indenture or to request additional time;
(b) If the BPU or its staff, within fifteen days (subject to
extension as provided in Section 9.3(c) below) of receiving a notification
complying with Section 9.3(a) above, shall have delivered to the office of the
person specified in Section 9.3(a)(iii) above a written statement that the BPU
might object to the proposed Supplemental Indenture, then such proposed
Supplemental Indenture shall not be effective unless and until the BPU
subsequently delivers a written statement in writing that it does not object
to such proposed Supplemental Indenture.
(c) If the BPU or its staff, within fifteen days of receiving a
notification complying with Section 9.3(a) above, shall have delivered to the
office of the person specified in Section 9.3(a)(iii) above a written
statement requesting an additional amount of time not to exceed thirty days in
which to consider such Supplemental Indenture, then such proposed Supplemental
Indenture shall not be effective if, within such extended period, the BPU
shall have delivered to the office of the person specified in Section
9.3(a)(iii) above a written statement as described in Section 9.3(b) above,
unless and until the BPU subsequently delivers a written statement in writing
that it does not object to such proposed Supplemental Indenture.
(d) If the BPU or its staff shall not have delivered written notice
that the BPU might object to such proposed Supplemental Indenture within the
time periods described in Section 9.3(b) or Section 9.3(c) above, whichever is
applicable, then the BPU shall be conclusively deemed not to have any
objection to the proposed Supplemental Indenture and such Supplemental
Indenture may subsequently become effective upon satisfaction of the other
conditions specified in Section 9.1 or 9.2.
(e) Following the delivery of a notice to the BPU by the Seller under
Section 9.3(a) above, the Seller and the Issuer shall have the right at any
time to withdraw from the BPU further consideration of a proposed Supplemental
Indenture.
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SECTION 9.4. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any Supplemental Indenture
permitted by this Article IX or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Issuer Opinion of Counsel stating that the execution of such Supplemental
Indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such Supplemental Indenture that
affects the Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.5. Effect of Supplemental Indenture. Upon the execution of
any Supplemental Indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to each Series or Class of BGS Transition Bonds affected thereby, and
the respective rights, limitations of rights, obligations, duties, liabilities
and immunities under this Indenture of the Trustee, the Issuer, the Holders of
the BGS Transition Bonds and any counterparty under any Interest Rate Swap
Agreement shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the
terms and conditions of any such Supplemental Indenture shall be and be deemed
to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 9.6. Conformity with Trust Indenture Act. Every amendment of
this Indenture and every Supplemental Indenture executed pursuant to this
Article IX shall conform to the requirements of the TIA as then in effect so
long as this Indenture shall then be qualified under the TIA.
SECTION 9.7. Reference in BGS Transition Bonds to Supplemental
Indentures. BGS Transition Bonds authenticated and delivered after the
execution of any Supplemental Indenture pursuant to this Article IX may, and
if required by the Trustee shall, bear a notation in form approved by the
Trustee as to any matter provided for in such Supplemental Indenture. If the
Issuer or the Trustee shall so determine, new BGS Transition Bonds so modified
as to conform, in the opinion of the Trustee and the Issuer, to any such
Supplemental Indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Trustee in exchange for Outstanding BGS
Transition Bonds.
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ARTICLE X
[RESERVED]
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Trustee to
take any action under any provision of this Indenture, the Issuer shall
furnish to the Trustee (i) an Issuer Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Issuer Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with and (iii) (if required by the TIA) an Independent
Certificate from a firm of certified public accountants meeting the applicable
requirements of this Section 11.1, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
(b) Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or investigation
as is necessary to enable such signatory to express an informed
opinion as to whether or not such covenant or condition has been
complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
SECTION 11.2. Form of Documents Delivered to Trustee.
(a) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document, but
one such Person may certify or give an opinion with respect to some matters
63
and one or more other such Persons as to other matters, and any such Person
may certify or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer
or Issuer Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer
or officers of the Servicer, the Seller or the Issuer, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Seller or the Issuer, unless such Authorized Officer or counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
(d) Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to
the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.3. Acts of BGS Transition Bondholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by BGS
Transition Bondholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such BGS Transition
Bondholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the BGS Transition Bondholders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and
the Issuer, if made in the manner provided in this Section 11.3.
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(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of BGS Transition Bonds shall be proved by the BGS
Transition Bond Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any BGS Transition Bonds shall bind
the Holder of every BGS Transition Bond issued upon the registration thereof
or in exchange therefor or in lieu thereof, in respect of anything done,
omitted or suffered to be done by the Trustee or the Issuer in reliance
thereon, whether or not notation of such action is made upon such BGS
Transition Bond.
SECTION 11.4. Notices, etc., to Trustee, Issuer and Rating Agencies.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or Act of BGS Transition Bondholders or other documents provided or
permitted by this Indenture to be made upon, given or furnished to or filed
with:
(i) the Trustee by any BGS Transition Bondholder or by the
Issuer, or
(ii) the Issuer by the Trustee or by any BGS Transition
Bondholder, or
(iii) the BPU by the Seller, the Issuer or the Trustee,
shall be sufficient for every purpose hereunder if in English and in writing,
and sent by United States first-class mail, reputable overnight courier
service, facsimile transmission or electronic mail (confirmed by telephone,
United States first-class mail or reputable overnight courier service in the
case of notice by facsimile transmission or electronic mail) or any other
customary means of communication, and any such request, demand, authorization,
direction, notice, consent, waiver or Act shall be effective when delivered or
transmitted, or if mailed, five days after deposit in the United States
first-class mail with proper postage for first-class mail prepaid, in the case
of the Trustee, addressed to the Trustee at its Corporate Trust Office, and in
the case of the Issuer, addressed to: PSE&G Transition Funding II LLC, 00 Xxxx
Xxxxx, X-0X, Xxxxxx, Xxx Xxxxxx, 00000, Attention: Managers, and in the case
of the BPU, New Jersey Board of Public Utilities, Xxx Xxxxxxx Xxxxxx, Xxxxxx,
XX 00000, Attention: Xxxx Xxxxx, or at any other address previously furnished
in writing to the Trustee by the Issuer or the BPU. The Issuer shall promptly
transmit any notice received by it from the BGS Transition Bondholders to the
Trustee.
(b) Notices required to be given to the Rating Agencies by the
Issuer, the Trustee or a Manager shall be in writing, delivered personally,
via facsimile transmission, by reputable overnight courier or by first-class
mail, postage prepaid, to: (i) in the case of Moody's: Xxxxx'x Investors
Service, Inc., Attention: ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000; (ii) in the case of Standard & Poor's: Standard & Poor's
Corporation, 00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Asset Backed
Surveillance Department and
65
(iii) in the case of Fitch: Fitch, Inc., 0 Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: ABS Surveillance.
SECTION 11.5. Notices to BGS Transition Bondholders; Waiver.
(a) Where this Indenture provides for notice to BGS Transition
Bondholders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and delivered by
first-class mail, postage prepaid, to each BGS Transition Bondholder affected
by such event, at the address of such BGS Transition Bondholder as it appears
on the BGS Transition Bond Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to BGS Transition Bondholders is given by mail, neither
the failure to mail such notice nor any defect in any notice so mailed to any
particular BGS Transition Bondholder shall affect the sufficiency of such
notice with respect to other BGS Transition Bondholders, and any notice that
is mailed in the manner herein provided shall conclusively be presumed to have
been duly given.
(b) Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by BGS Transition Bondholders shall be filed
with the Trustee but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such a waiver.
(c) In case it shall be impractical to deliver notice in accordance
with clause (a) of this Section 11.5 to the Holders of BGS Transition Bonds
when such notice is required to be given pursuant to any provision of this
Indenture, then any manner of giving such notice as shall be satisfactory to
the Trustee shall be deemed to be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default
or Event of Default.
SECTION 11.6. [Reserved].
SECTION 11.7. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the BGS Transition
Bonds to the contrary, the Issuer may enter into any agreement with any Holder
of a BGS Transition Bond providing for a method of payment, or notice by the
Trustee or any Paying Agent to such Holder, that is different from the methods
provided for in this Indenture for such payments or notices. The Issuer will
furnish to the Trustee a copy of each such agreement and the Trustee will
cause payments to be made and notices to be given in accordance with such
agreements.
SECTION 11.8. Conflict with Trust Indenture Act.
(a) If any provision hereof limits, qualifies or conflicts with
another provision hereof that is required to be included in this Indenture by
any of the provisions of the TIA, such required provision shall control.
66
(b) The provisions of TIA Sections 310 through 317 that impose duties
on any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
SECTION 11.9. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.10. Successors and Assigns.
(a) All covenants and agreements in this Indenture and the BGS
Transition Bonds by the Issuer shall bind its successors and permitted assigns,
whether so expressed or not.
(b) All agreements of the Trustee in this Indenture shall bind its
successors.
(c) The Trustee shall provide prior notice to the Rating Agencies
of any assignment of the obligations under this Agreement.
SECTION 11.11. Severability. In case any provision in this Indenture
or in the BGS Transition Bonds shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 11.12. Benefits of Indenture. Nothing in this Indenture or in
the BGS Transition Bonds, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, and the BGS Transition
Bondholders, and any other party secured hereunder, and any other Person with
an ownership interest in any part of the Collateral, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 11.13. Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the BGS Transition Bonds or this Indenture) payment need
not be made on such date, but may be made on the next succeeding Business Day
with the same force and effect as if made on the date on which nominally due,
and no interest shall accrue for the period from and after any such nominal
date.
SECTION 11.14. GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 11.15. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
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SECTION 11.16. Issuer Obligation. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer or the Trustee on
the BGS Transition Bonds or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Member
or any Manager, employee or agent of the Issuer or (ii) any stockholder,
officer, director, employee or agent of the Trustee (it being understood that
none of the Trustee's obligations are in its individual capacity).
SECTION 11.17. No Petition. The Trustee, by entering into this
Indenture, and each BGS Transition Bondholder, by accepting a BGS Transition
Bond, hereby covenants and agrees (or shall be deemed to have covenanted and
agreed) that it shall not at any time institute against the Issuer, or join in
the institution against the Issuer of, or acquiesce, petition or otherwise
invoke or cause the Issuer to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
Issuer under any federal or State bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Issuer or any substantial part of the
property of the Issuer or ordering the winding up or liquidation of the
affairs of the Issuer.
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed and delivered by a Manager and an officer,
respectively, thereof, each thereunto duly authorized, all as of the day and
year first above written.
PSE&G TRANSITION FUNDING II LLC,
as Issuer
By: /s/ XXXXXX X. XXXXXXX
-----------------------------------------
Name: XXXXXX X. XXXXXXX
Title: MANAGER
THE BANK OF NEW YORK,
as Trustee
By: /s/ XXXXXXXXX XXXXXXXX
-----------------------------------------
Name: XXXXXXXXX XXXXXXXX
Title: ASSISTANT VICE PRESIDENT
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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).
A-1
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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