EXECUTION COPY
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BONDABLE TRANSITION PROPERTY SALE AGREEMENT
between
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC
Issuer
and
ATLANTIC CITY ELECTRIC COMPANY
Seller
Dated as of December 19, 2002
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TABLE OF CONTENTS
Page
Article I Definitions..........................................................1
Section 1.01. Definitions......................................1
Section 1.02. Other Definitional Provisions....................1
Article II Conveyance of Transferred Bondable Transition Property..............2
Section 2.01. Conveyance of Initial Transferred Bondable
Transition Property and Subsequent Transferred
Bondable Transition Property.....................2
Section 2.02. Conditions to Conveyance of Bondable Transition
Property.........................................3
Article III Representations and Warranties of Seller...........................5
Section 3.01. Organization and Good Standing...................5
Section 3.02. Due Qualification................................5
Section 3.03. Power and Authority..............................5
Section 3.04. Binding Obligation...............................5
Section 3.05. No Violation.....................................5
Section 3.06. No Proceedings...................................6
Section 3.07. Approvals........................................6
Section 3.08. The Transferred Bondable Transition Property.....6
Section 3.09. Solvency.........................................9
Section 3.10. Limitation on Representations and Warranties.....9
Article IV Covenants of the Seller............................................10
Section 4.01. Seller's Existence..............................10
Section 4.02. No Liens or Conveyances.........................10
Section 4.03. Use of Proceeds.................................10
Section 4.04. Delivery of Collections.........................10
Section 4.05. Notice of Liens.................................10
Section 4.06. Compliance with Law.............................10
Section 4.07. Covenants Related to Transferred Bondable
Transition Property.............................10
Section 4.08. Notice of Indemnification Events................11
Section 4.09. Protection of Title.............................12
Section 4.10. Taxes...........................................12
Section 4.11. Further Assurances..............................13
Article V Additional Undertakings of the Seller...............................13
Section 5.01. Liability of the Seller; Indemnities............13
Section 5.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Seller..................14
Section 5.03. Limitation on Liability of the Seller and
Others..........................................16
Article VI Miscellaneous Provisions...........................................16
Section 6.01. Amendment.......................................16
Section 6.02. Notices.........................................16
Section 6.03. Assignment By Seller............................18
Section 6.04. Assignment to Trustee...........................18
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Section 6.05. Limitations on Rights of Others.................18
Section 6.06. Severability....................................18
Section 6.07. Separate Counterparts...........................18
Section 6.08. Headings........................................18
Section 6.09. Governing Law...................................18
Section 6.10. Nonpetition Covenant............................18
EXHIBIT A XXXX OF SALE.....................................................A-1
EXHIBIT B OPINION OF COUNSEL...............................................B-1
EXHIBIT C OPINION OF COUNSEL...............................................C-1
APPENDIX A MASTER DEFINITIONS..............................................A-1
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BONDABLE TRANSITION PROPERTY SALE AGREEMENT, dated as of December 19,
2002, by and between ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC, a Delaware
limited liability company, as issuer (the "Issuer"), and ATLANTIC CITY ELECTRIC
COMPANY, a New Jersey corporation, as seller (in such capacity, the "Seller").
W I T N E S S E T H:
WHEREAS, on the date hereof and subsequently from time to time, the
Issuer desires to purchase from the Seller and the Seller desires to sell to the
Issuer Bondable Transition Property created pursuant to the Competition Act and
the BPU Financing Orders upon the terms and subject to the conditions hereof;
WHEREAS the Issuer, in order to finance the purchase of the
Transferred Bondable Transition Property, will on the date hereof and on each
such subsequent occasion issue Transition Bonds under the Indenture; and
WHEREAS the Issuer, in order to secure its obligations under the
Transition Bonds and the Indenture, will pledge its right, title and interest
in, to and under the Transferred Bondable Transition Property to the Trustee for
the benefit of the Transition Bondholders.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:
Article I
Definitions
Section 1.01. Definitions. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in Appendix A.
Section 1.02. Other Definitional Provisions.
(a) "Agreement" means this Bondable Transition Property Sale
Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.
(b) The words "hereof", "herein", "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as
a whole and not to any particular portion of this Agreement.
(c) Uncapitalized terms used herein that are defined in the
Competition Act, have as the context requires, the meanings assigned
to such terms in the Competition Act, but without giving effect to
amendments to the Competition Act after the date hereof affecting such
meanings that, if applied hereto, would have a material adverse effect
on the Issuer or the Transition Bondholders.
(d) All terms defined in this Agreement have the meanings herein
assigned to them when used in any certificate or other document made
or delivered pursuant hereto except where otherwise expressly provided
therein.
(e) References in this Agreement to sections, appendices,
annexes, schedules and exhibits are to the sections, appendices,
annexes, schedules and exhibits of, in or to this Agreement unless
otherwise specified.
(f) The term "including" means "including without limitation" and
"or" is used in the inclusive sense.
(g) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of the defined terms, and
personal pronouns refer to all persons regardless of gender.
Article II
Conveyance of Transferred Bondable Transition Property
Section 2.01. Conveyance of Initial Transferred Bondable Transition
Property and Subsequent Transferred Bondable Transition Property.
(a) In consideration of the Issuer's payment to or upon the order of
the Seller of $437,268,726 (the "Initial Purchase Price"), by wire transfer
of funds immediately available on the date hereof to Seller's account no.
00000000 at Allfirst Bank, Baltimore, MD (ABA No. 000000000), subject to
the conditions specified in Section 2.02, the Seller does hereby
irrevocably sell, transfer, assign and otherwise convey to the Issuer,
without recourse (subject to the obligations of the Seller herein), all
right, title and interest of the Seller in, to and under the Initial
Transferred Bondable Transition Property identified in the Xxxx of Sale
delivered pursuant to Section 2.02(a) on or prior to the Initial Transfer
Date (such sale, transfer, assignment and conveyance of the Initial
Transferred Bondable Transition Property to include, to the fullest extent
permitted by the Competition Act and the New Jersey UCC, the assignment of
all revenues, collections, claims, rights, payments, money or proceeds of
or arising from the Transition Bond Charges related to the Initial
Transferred Bondable Transition Property, as the same may be adjusted from
time to time). Such sale, transfer, assignment and conveyance of the
Initial Transferred Bondable Transition Property is hereby expressly stated
to be a sale or other absolute transfer and, pursuant to Section 23.a. of
the Competition Act, shall constitute a sale or other absolute transfer of
all of the Seller's right, title and interest, in, to and under, and not a
borrowing secured by, the Initial Transferred Bondable Transition Property.
The preceding sentence is the statement referred to in Section 23.a. of the
Competition Act. The Seller agrees and confirms that, upon payment of the
Initial Purchase Price and the execution and delivery of this Agreement and
the related Xxxx of Sale, the Seller shall have no right, title or interest
in, to or under the Initial Transferred Bondable Transition Property.
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(b) Subject to the conditions specified in Section 2.02, the Issuer
does hereby purchase the Initial Transferred Bondable Transition Property
from the Seller for the consideration set forth in clause (a) above.
(c) The Seller and the Issuer each acknowledge and agree that the
purchase price for the Initial Transferred Bondable Transition Property
sold pursuant to this Agreement is equal to its fair market value at the
time of sale.
(d) The Seller and the Issuer further agree that from time to time the
Seller may offer to sell, and the Issuer may purchase, Subsequent
Transferred Bondable Transition Property as of Subsequent Transfer Dates,
subject to the conditions specified in Section 2.02, in exchange for
consideration to be agreed upon and set forth in the related Xxxx of Sale
(the "Subsequent Purchase Price"). The Seller and the Issuer hereby agree
that each such sale, transfer, assignment and conveyance of any Subsequent
Transferred Bondable Transition Property shall include, to the fullest
extent permitted by the Competition Act and the New Jersey UCC, the
assignment of all revenues, collections, claims, rights, payments, money or
proceeds of or arising from the Transition Bond Charges related to the
Subsequent Transferred Bondable Transition Property, as the same may be
adjusted from time to time. Such sale, transfer, assignment and conveyance
of the Subsequent Transferred Bondable Transition Property is hereby
expressly stated to be a sale or other absolute transfer and, pursuant to
Section 23.a. of the Competition Act, shall constitute a sale or other
absolute transfer of all of the Seller's right, title and interest, in, to
and under and not a borrowing secured by, the Subsequent Transferred
Bondable Transition Property. The preceding sentence is the statement
referred to in Section 23.a. of the Competition Act. The Seller agrees and
confirms that, after giving effect to any sale contemplated by this clause
(d) and the execution and delivery of the related Xxxx of Sale, it shall
have no right, title or interest in, to or under the Subsequent Transferred
Bondable Transition Property.
(e) Notwithstanding the foregoing, in the event that any sale,
transfer, assignment and conveyance of any Transferred Bondable Transition
Property is determined by a court of competent jurisdiction not to be a
true and absolute sale as contemplated by the parties hereto and by the
Competition Act, then such sale, transfer, assignment and conveyance shall
be treated as a pledge of such Transferred Bondable Transition Property and
the Seller shall be deemed to have granted, and does hereby grant, as of
the date hereof a security interest to the Issuer in such Transferred
Bondable Transition Property to secure a payment obligation incurred by the
Seller in the amount paid by the Issuer for the Transferred Bondable
Transition Property.
Section 2.02. Conditions to Conveyance of Bondable Transition
Property. The obligation of the Seller to sell, and the obligation of the Issuer
to purchase, Bondable Transition Property upon any Transfer Date shall be
subject to and conditioned upon the satisfaction or waiver of each of the
following conditions:
(a) on or prior to such Transfer Date, the Seller shall deliver to the
Issuer a duly executed Xxxx of Sale identifying the Bondable Transition
Property to be conveyed as of that date, substantially in the form of
Exhibit A;
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(b) as of such Transfer Date, no breach by the Seller of its
representations, warranties or covenants in this Agreement shall exist and
the Seller shall have delivered to the Issuer and the Trustee an Officers'
Certificate to such effect, and no Servicer Default shall have occurred and
be continuing;
(c) as of such Transfer Date:
(i) the Issuer shall have sufficient funds available to pay the
purchase price for the Transferred Bondable Transition Property to be
conveyed on such date, and
(ii) all conditions set forth in the Indenture to the issuance of
one or more Series of Transition Bonds intended to provide such funds
shall have been satisfied or waived;
(d) on or prior to such Transfer Date, the Seller shall have taken all
actions required under the Competition Act, the BPU Financing Orders and
the New Jersey UCC and the Delaware UCC, including without limitation
filings under the New Jersey UCC, to transfer to the Issuer ownership of
the Transferred Bondable Transition Property to be conveyed on such date
free and clear of all Liens other than Liens created by the Issuer pursuant
to the Indenture, and the Issuer shall have taken all actions required for
the Issuer to grant to the Trustee a first priority perfected security
interest in the Collateral and maintain such security interest as of such
date, including without limitation any filings required under the New
Jersey UCC and the Delaware UCC;
(e) in the case of any sale of Subsequent Transferred Bondable
Transition Property only, the Seller shall have provided the Issuer and
each Rating Agency with a written notice specifying the Subsequent Transfer
Date for such Subsequent Transferred Bondable Transition Property not later
than 10 days prior to such Subsequent Transfer Date and shall have taken
any other action necessary in order for the Rating Agency Condition to have
been satisfied with respect to such sale;
(f) the Seller shall have delivered to each Rating Agency and to the
Issuer:
(i) an Opinion of Counsel to the Seller with respect to the
transfer of the Transferred Bondable Transition Property then being
conveyed to the Issuer, substantially in the form of Exhibit B, and
(ii) an Opinion of Counsel to the Seller, substantially in the
form of Exhibit C;
(g) the Seller shall have delivered to the Trustee and the Issuer an
Officers' Certificate confirming the satisfaction of each condition
precedent specified in this Section 2.02; and
(h) the Seller shall have received the Initial Purchase Price or the
Subsequent Purchase Price, as applicable, in funds immediately available on
such Transfer Date.
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Article III
Representations and Warranties of Seller
As of each Transfer Date, the Seller makes the following
representations and warranties on which the Issuer is relying in acquiring the
Bondable Transition Property purchased and sold on such Transfer Date. The
representations and warranties made as of any Transfer Date shall survive the
sale of Transferred Bondable Transition Property to the Issuer on such date and
the pledge thereof to the Trustee pursuant to the Indenture.
Section 3.01. Organization and Good Standing. The Seller is a
corporation duly organized and in good standing under the laws of its state of
incorporation, with the corporate power and authority to own its properties and
conduct its business as currently owned and conducted.
Section 3.02. Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in all jurisdictions in which it is required
to be so qualified, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of its property or the conduct of
its business requires such qualification, licenses or approvals (except where
the failure to so qualify and to obtain such licenses and approvals would not be
reasonably likely to have a material adverse effect on the Seller's business,
operations, assets, revenues or properties).
Section 3.03. Power and Authority. The Seller has the corporate power
and authority to execute, deliver and perform this Agreement and to own, sell,
assign, transfer and convey to the Issuer the Bondable Transition Property
purchased and sold on such Transfer Date, and the Seller has duly authorized
such execution, delivery, performance, sale, assignment, transfer and conveyance
by all necessary corporate action.
Section 3.04. Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Seller enforceable against the Seller in
accordance with its terms subject to any applicable bankruptcy, receivership,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
Section 3.05. No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not:
(i) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the Seller, or any indenture or other
material agreement or instrument to which the Seller is a party or by which it
is bound; (ii) result in the creation or imposition of any Lien upon any of the
Seller's properties pursuant to the terms of any such indenture or other
material agreement or instrument (except as contemplated by the Basic Documents
and as set forth in Section 2.01(e)); or (iii) violate any law applicable to the
Seller or any order, rule or regulation applicable to the Seller of any court or
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties. The
Bondable Transition Property is not subject to any Lien thereon created by the
indenture, dated January 15, 1937 (as amended and supplemented),
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between Atlantic City Electric Company and the Bank of New York, as successor
trustee to Irving Trust Company.
Section 3.06. No Proceedings. Except as disclosed in the prospectus
and the related prospectus supplement each dated December 11, 2002, of Atlantic
City Electric Transition Funding LLC relating to the offer and sale of
Transition Bonds, and in any subsequent prospectus supplements relating to a
subsequent offer and sale of Transition Bonds, there are no proceedings or
investigations pending or, to the Seller's best knowledge, threatened, before
any court, federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties:
(a) asserting the invalidity of any of the Basic Documents, the
Transition Bonds, the Competition Act, the Restructuring Order (insofar as
it relates to the transactions contemplated hereby) or the BPU Financing
Orders;
(b) seeking to prevent the issuance of the Transition Bonds or the
consummation of any of the transactions contemplated by the Basic
Documents;
(c) challenging the Seller's treatment of the Transition Bonds as debt
for federal and state income or franchise tax purposes; or
(d) seeking any determination or ruling that could reasonably be
expected to materially and adversely affect the performance by the Seller
or the Issuer of its obligations under, or the validity or enforceability
of, the Basic Documents or the Transition Bonds.
Section 3.07. Approvals. Except for the filing of financing statements
and continuation statements under the New Jersey UCC, no approval,
authorization, consent, order or other action of, or filing with, any court,
federal or state regulatory body, administrative agency or other governmental
instrumentality is required in connection with the execution and delivery by the
Seller of this Agreement, the performance by the Seller of the transactions
contemplated hereby or the fulfillment by the Seller of the terms hereof, except
those that have been obtained, made or taken.
Section 3.08. The Transferred Bondable Transition Property.
(a) Information. All information provided by the Seller to the Issuer
in writing on or prior to such Transfer Date with respect to the
Transferred Bondable Transition Property purchased and sold on such
Transfer Date is, in light of the circumstances under which it was
provided, correct in all material respects.
(b) Effect of Transfer. Each sale, transfer, assignment and conveyance
herein contemplated constitutes a sale or other absolute transfer, of all
right, title and interest of the Seller in, to and under the Transferred
Bondable Transition Property from the Seller to the Issuer; upon execution
and delivery of this Agreement and the related Xxxx of Sale, the Seller
will have no right, title or interest in, to or under the Transferred
Bondable Transition Property purchased and sold on such Transfer Date; such
Transferred Bondable Transition Property would not be part of the estate of
the Seller as debtor in the
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event of the filing of a bankruptcy petition by or against the Seller under
any bankruptcy law; and, to the fullest extent permitted by law, including
the Competition Act and applicable BPU Regulations, the Issuer shall have
all of the rights originally held by the Seller with respect to the
Transferred Bondable Transition Property set forth in the Competition Act,
other than the rights of a public utility, including the right to collect
any amounts payable by any Customer or Third Party in respect of such
Transferred Bondable Transition Property.
(c) Transfer Filings. The Seller is the sole owner of the Transferred
Bondable Transition Property purchased and sold to the Issuer on such
Transfer Date; and such Transferred Bondable Transition Property will be
validly sold, assigned, transferred and conveyed to the Issuer free and
clear of all Liens other than Liens created by the Issuer pursuant to the
Indenture. All actions or filings, including filings with the New Jersey
Division of Revenue/Office of Commercial Recording under the New Jersey UCC
and filings with the BPU under the Competition Act, necessary in any
jurisdiction to give the Issuer a valid first priority perfected ownership
interest in such Transferred Bondable Transition Property and to grant to
the Trustee a first priority perfected security interest in such
Transferred Bondable Transition Property, free and clear of all Liens of
the Seller or anyone else have been taken or made, other than filings that
would not have an adverse effect on the Servicer to collect the Transition
Bond Charges or on the rights of the Issuer or the Trustee with respect to
such Transferred Bondable Transition Property.
(d) BPU Financing Orders Irrevocable; Process Valid; No Litigation;
Etc.
(i) Each BPU Financing Order issued by the BPU on or prior to
such Transfer Date has been in accordance with the Competition Act,
and such order and the process by which it was issued comply with all
applicable laws, rules and regulations and is in full force and effect
and final and non-appealable under state law, and the designee
certification delivered pursuant to such order is final and
incontestable as of its date.
(ii) Each Series of Transition Bonds, as of its Series Issuance
Date, is entitled to the protections provided by the Competition Act
and, in accordance with the Competition Act, the BPU Financing Orders
authorizing the issuance of such Series and the Transition Bond Charge
order have become irrevocable, and the Advice Letter with respect to
such Series is final and incontestable.
(iii) (A) Under the Competition Act, none of the State of New
Jersey, the BPU or any other governmental agency of the State of New
Jersey may limit, alter or in any way impair or reduce the value of
Bondable Transition Property or Transition Bond Charges approved by
the BPU Financing Orders issued by the BPU on or prior to such
Transfer Dates or any rights thereunder until the Transition Bonds are
fully paid and discharged, or in any way limit, alter, impair or
reduce the value or amount of the Transferred Bondable Transition
Property; and
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(B) under the Contract Clauses of the United States
Constitution and the New Jersey Constitution, the State of New
Jersey, the BPU or any other governmental agency of the State of
New Jersey, may take no action that substantially impairs the
rights of Bondable Transition Bondholders unless such action is
justified as necessary and reasonable and of a character
appropriate to advance an important public purpose, such as to
remedy an important general, social or economic problem or to
cope with a great public calamity, and, under the Takings Clauses
of the United States and New Jersey Constitutions, the State of
New Jersey could not repeal or amend the Competition Act by way
of legislative process or take any other action in contravention
of its pledge and agreement under the Competition Act referred to
in this clause (B) without paying just compensation to the
Transition Bondholders, as determined by a court of competent
jurisdiction, if doing so would constitute a permanent
appropriation of the property interest of the Transition
Bondholders and deprive the Transition Bondholders of their
reasonable investment-backed expectations arising from their
investments in the Transition Bonds.
(iv) There is no order by any court (a) providing for the
revocation, alteration, limitation or other impairment of the
Competition Act, any BPU Financing Order, the Restructuring Order
(insofar as it relates to the sale of the Transferred Bondable
Transition Property), any Advice Letter, the Transferred Bondable
Transition Property arising thereunder, or the Transition Bond Charge
approved thereunder, or any rights arising under any of them or (b)
that seeks to enjoin the performance of any obligations under the BPU
Financing Orders.
(v) No other approval, authorization, consent, order or other
action of, or filing with, any court, federal or state regulatory
body, administrative agency or other governmental instrumentality is
required in connection with the creation or transfer of the
Transferred Bondable Transition Property, except those that have been
obtained or made.
(e) Assumptions. The assumptions used in calculating the Transition Bond
Charge in the Advice Letter delivered by the Issuer to the BPU in connection
with the Transition Bonds issued and sold on such Transfer Date pursuant to the
BPU Financing Orders are reasonable and made in good faith.
(f) Creation of Transferred Bondable Transition Property.
(i) For purposes of the Competition Act and the New Jersey UCC,
the Transferred Bondable Transition Property, upon the transfer
thereof to an assignee and receipt of consideration therefor in
connection with its sale to the Issuer, constitutes a vested,
presently existing property right;
(ii) the Transferred Bondable Transition Property includes
without limitation (A) the irrevocable right of the Seller and its
permitted assigns to charge, collect and receive, and be paid from
collections of, the Transition Bond
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Charge, subject to the limitations on electricity rates specified in
the Restructuring Order, in the amount necessary to provide for the
full recovery of the Bondable Stranded Costs which have been
determined to be recoverable in the BPU Financing Orders and (B) all
rights of the Seller under the BPU Financing Orders, including all
rights to obtain periodic adjustments of the Transition Bond Charge
pursuant to the Competition Act, and all revenues, collections,
payments, money and proceeds arising under, or with respect to, any of
the foregoing; and
(iii) the provisions of the BPU Financing Orders creating the
Transferred Bondable Transition Property and authorizing the issuance
of the Transition Bonds, have been declared to be irrevocable by the
BPU and any supplemental order of the BPU of similar effect
authorizing the issuance of the Transition Bonds will be given such
status to the extent necessary to provide the protections provided in
clause (ii) above; and
(iv) no failure on any Transfer Date to satisfy any condition
imposed by the Competition Act with respect to the recovery of
Bondable Stranded Costs will adversely affect the creation of the
Bondable Transition Property sold on such Transfer Date, the sale,
transfer and assignment of such Bondable Transition Property or the
right to collect the related Transition Bond Charges.
Section 3.09. Solvency. After giving effect to the sale, transfer and
conveyance of Transferred Bondable Transition Property purchased and sold on
such Transfer Date, the Seller:
(a) is solvent and expects to remain solvent;
(b) is adequately capitalized to conduct its business and affairs
considering its size and the nature of its business and intended purposes;
(c) is not engaged in nor does it expect to engage in a business for
which its remaining property represents an unreasonably small portion of
its capital;
(d) reasonably believes that it will be able to pay its debts as they
come due; and
(e) does not intend to incur, or believe that it will incur,
indebtedness that it will not be able to repay at its maturity.
Section 3.10. Limitation on Representations and Warranties.
None of the representations and warranties of the Seller herein contained shall
be construed as a representation or warranty that amounts actually collected
from the Transition Bond Charge will be sufficient to meet payment obligations
on the Transition Bonds or that assumptions made in calculating the Transition
Bond Charge will be realized. None of the representations and warranties of the
Seller herein contained shall be construed as a representation or warranty that
there will be no change in law by legislative enactment, constitutional
amendment or judicial reinterpretation of constitutional provisions or that no
attempt will be made by the State of New
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Jersey, the BPU or any other governmental agency of the State of New Jersey to
limit, alter or in any way impair or reduce the value of Bondable Transition
Property or Transition Bond Charges approved by the BPU Financing Orders in
breach of the pledge and agreement of the State of New Jersey under the
Competition Act.
Article IV
Covenants of the Seller
Section 4.01. Seller's Existence. So long as any of the Transition
Bonds are outstanding, the Seller shall keep in full force and effect its
existence as a corporation and remain in good standing under the laws of the
State of New Jersey, and shall obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is necessary to
protect the validity and enforceability of this Agreement and each other
instrument or agreement to which the Seller is a party necessary to the proper
administration of this Agreement and the transactions contemplated hereby.
Section 4.02. No Liens or Conveyances. Except for the conveyances
hereunder, the Seller shall not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on, any of
the Transferred Bondable Transition Property, whether now existing or hereafter
created, or any interest therein. The Seller shall not at any time assert any
Lien against or with respect to any Transferred Bondable Transition Property,
and shall defend the right, title and interest of the Issuer and the Trustee, as
assignee of the Issuer, in, to and under the Transferred Bondable Transition
Property, whether now existing or hereafter created, against all claims of third
parties claiming through or under the Seller.
Section 4.03. Use of Proceeds. The Seller shall use proceeds from the
sale of the Transferred Bondable Transition Property in accordance with the BPU
Financing Orders and the Competition Act. Section 4.04. Delivery of Collections.
If the Seller receives collections of the Transition Bond Charge with respect to
the Transferred Bondable Transition Property or the proceeds thereof and if the
Seller is not the Servicer, the Seller shall pay the Servicer on behalf of the
Issuer all payments received by the Seller in respect thereof as soon as
practicable after receipt thereof by the Seller, but in no event later than two
Business Days after such receipt.
Section 4.05. Notice of Liens. The Seller shall notify the Issuer and
the Trustee promptly after becoming aware of any Lien on any Transferred
Bondable Transition Property other than the conveyances hereunder and under the
Indenture.
Section 4.06. Compliance with Law. The Seller shall comply with its
organizational or governing documents and all laws, treaties, rules, regulations
and determinations of any governmental instrumentality applicable to the Seller,
except to the extent that failure to so comply would not adversely affect the
Issuer's or the Trustee's interests in the Transferred Bondable Transition
Property or under any of the Basic Documents or the Seller's performance of its
obligations hereunder.
Section 4.07. Covenants Related to Transferred Bondable Transition
Property.
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(a) So long as any of the Transition Bonds are outstanding, the Seller
shall:
(i) treat the Transition Bonds as debt of the Seller for federal
income tax purposes;
(ii) disclose in its financial statements that it is not the
owner of the Transferred Bondable Transition Property and that the
assets of the Issuer are not available to pay creditors of the Seller
or any of its Affiliates (other than the Issuer); and
(iii) disclose the effects of all transactions between the Seller
and the Issuer in accordance with generally accepted accounting
principles; and
(b) So long as any of the Transition Bonds are Outstanding,
(i) in all proceedings relating directly or indirectly to the
Transferred Bondable Transition Property, the Seller shall not make
any statement or reference in respect of the Transferred Bondable
Transition Property that is inconsistent with the ownership thereof by
the Issuer (other than for financial accounting or tax reporting
purposes); and
(ii) the Seller shall not take any action in respect of the
Transferred Bondable Transition Property except solely in its capacity
as the Servicer pursuant to the Servicing Agreement or as otherwise
contemplated by or consistent with the Basic Documents or as required
by applicable law.
Section 4.08. Notice of Indemnification Events.
The Seller shall deliver to the Issuer and the Trustee, promptly after having
obtained knowledge thereof, written notice in an Officers' Certificate of any
Indemnification Event or any event that, with the giving of notice or the
passage of time or both, would become an Indemnification Event.
11
Section 4.09. Protection of Title. The Seller shall execute and file
such filings, and cause to be executed and filed such filings, including filings
with the BPU pursuant to the Competition Act, and take all such actions, all in
such manner and in such places as may be required under applicable law fully to
preserve, maintain and protect the interests of the Issuer and the Trustee in
the Transferred Bondable Transition Property, including all filings under the
Competition Act relating to the transfer of the ownership of the Transferred
Bondable Transition Property by the Seller to the Issuer and the pledge of the
Transferred Bondable Transition Property by the Issuer to the Trustee. The
Seller shall deliver (or cause to be delivered) to the Issuer and the Trustee
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing. The Seller shall institute
any action or proceeding necessary to compel the performance by the BPU or the
State of New Jersey of any of their obligations or duties under the Competition
Act or the BPU Financing Orders, and the Seller agrees to take such legal or
administrative actions, including defending against or instituting and pursuing
legal actions and appearing or testifying at hearings or similar proceedings, in
each case as may be reasonably necessary:
(a) to protect the Issuer and its permitted assigns and the Transition
Bondholders from claims, state actions or other actions or proceedings of
third parties which, if successfully pursued, would result in a breach of
any representation set forth in Article III; or
(b) to block or overturn any attempts to cause a repeal of,
modification of or supplement to the Competition Act, the BPU Financing
Orders, any Advice Letter, the Restructuring Order (to the extent it
affects the rights of Transition Bondholders or the validity or value of
the Bondable Transition Property) or the rights of Transition Bondholders
by legislative enactment or constitutional amendment that would be adverse
to the Issuer, the Trustee or the Transition Bondholders.
The costs of any such actions or proceedings reasonably allocated by the Seller
to the Transferred Bondable Transition Property shall be reimbursed by the
Issuer to the Seller from amounts on deposit in the Collection Account as an
Operating Expense. The Seller's obligations pursuant to this Section 4.09 shall
survive and continue notwithstanding that the payment of Operating Expenses
pursuant to the Indenture may be delayed (it being understood that the Seller
may be required to advance its own funds to satisfy its obligation hereunder).
The Seller designates the Issuer as its agent and attorney-in-fact to execute
any filings of financing statements, continuation statements or other
instruments required of the Issuer pursuant to this Section, it being understood
that the Issuer shall have no obligation to execute any such instruments.
Section 4.10. Taxes. So long as any of the Transition Bonds are
outstanding, the Seller shall, and shall cause each of its subsidiaries to, pay
all material taxes, including gross receipts 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 Transferred Bondable Transition Property;
provided that no such tax need be paid if the Seller or one of its subsidiaries
is contesting the same in good faith by appropriate proceedings
12
promptly instituted and diligently conducted and if the Seller or such
subsidiary has established appropriate reserves as shall be required in
conformity with generally accepted accounting principles.
Section 4.11. Further Assurances.
In connection with the issuance of any Transition Bonds, upon request from the
Issuer, the Seller shall execute and deliver such further instruments and do
such further acts as may be necessary to carry out more effectively the
provisions and purposes of this Agreement and the related Xxxx of Sale.
Article V
Additional Undertakings of the Seller
The Seller hereby undertakes the obligations contained in this Article
V and hereby consents to the assignment by the Issuer of its right with respect
to such obligations to the Trustee for the benefit of the Transition
Bondholders.
Section 5.01. Liability of the Seller; Indemnities.
(a) The Seller shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Seller under this
Agreement.
(b) The Seller shall indemnify the Issuer and the Trustee, for itself
and on behalf of the Transition Bondholders, and each of their respective
officers, directors, managers, employees and agents for, and defend and
hold harmless each such Person from and against, any and all taxes (other
than any taxes imposed on Transition Bondholders solely as a result of
their ownership of Transition Bonds) that may at any time be imposed on or
asserted against the Issuer and the Trustee under existing law as of any
Transfer Date as a result of the sale and assignment of the Transferred
Bondable Transition Property by the Seller to the Issuer, the acquisition
or holding of the Transferred Bondable Transition Property by the Issuer or
the issuance and sale by the Issuer of the Transition Bonds, including any
sales, general corporation, personal property, privilege or license taxes,
but excluding any taxes imposed as a result of a failure of such person to
properly withhold or remit taxes imposed with respect to payments on any
Transition Bond, it being understood that the Transition Bondholders shall
be entitled to enforce their rights against the Seller under this Section
5.01(b) subject to Section 5.06 of the Indenture.
(c) The Seller shall indemnify the Issuer and the Trustee, for itself
and on behalf of the Transition Bondholders, and each of their respective
officers, directors, managers, employees and agents for, and defend and
hold harmless each such Person from and against, (i) any and all amounts of
principal of and interest on the Transition Bonds (including amounts owed
to Holders of any floating rate Transition Bonds at the gross fixed rate,
if any, specified in the related Series Supplement) not paid when due or
when scheduled to be paid in accordance with their terms and the amount of
any deposits to the Issuer required to have been made in accordance with
the terms of the Basic Documents which are not made when so required, in
each case as a result of the Seller's
13
breach of any of its representations, warranties or covenants contained in
this Agreement, and (ii) any and all liabilities, obligations, claims,
actions, suits or payments of any kind whatsoever that may be imposed on or
asserted against the Issuer or the Trustee, other than any liabilities,
obligations or claims for or payments of principal of or interest on the
Transition Bonds, together with any reasonable costs and expenses incurred
by such person, as a result of the Seller's breach of any of its
representations, warranties or covenants contained in this Agreement, it
being understood that the Transition Bondholders shall be entitled to
enforce their rights against the Seller under this Section 5.01(c) subject
to Section 5.06 of the Indenture.
(d) The Seller shall indemnify the Issuer and the Trustee, for itself
and on behalf of the Transition Bondholders, for any and all liabilities,
obligations, losses, damages, payments or expenses that result from (i) the
Seller's willful misconduct, bad faith or gross negligence in the
performance of its duties under this Agreement, or (ii) the Seller's
reckless disregard of its obligations and duties under this Agreement, it
being understood that the Transition Bondholders shall be entitled to
enforce their rights against the Seller under this Section 5.01(d) subject
to Section 5.06 of the Indenture.
(e) Indemnification under this Section 5.01 shall survive the
termination of this Agreement and shall include reasonable fees and
expenses of investigation and litigation (including reasonable attorneys'
fees and expenses). The Seller shall not indemnify any party under this
Section 5.01 with respect to any sale of Transferred Bondable Transition
Property for any changes in law after the related Transfer Date.
(f) The indemnification obligation of the Seller under this Section
5.01 shall be pari passu with all other general unsecured obligations of
the Seller.
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller. Any Person or Persons:
(a) into which the Seller may be merged or consolidated and which
succeeds to all or a significant part of the electric distribution business
of the Seller,
(b) which results from the division of the Seller into two or more
Persons and which succeeds to all or a significant part of the electric
distribution business of the Seller,
(c) which may result from any merger or consolidation to which the
Seller shall be a party and which succeeds to all or a significant part of
the electric distribution business of the Seller,
(d) which may succeed to all or a significant part of the electric
distribution business of the Seller, or
(e) which may otherwise succeed to all or a significant part of the
electric distribution business of the Seller,
14
which Person or Persons in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Seller under this Agreement, shall
be the successor or successors to the Seller hereunder without the execution or
filing of any document or any further act by any of the parties to this
Agreement; provided, however, that
(i) immediately after giving effect to such consolidation, merger
or succession, no breach of any representation or warranty made
pursuant to Article III shall have occurred and be continuing
unremedied and no Servicer Default, and no event that, after notice or
lapse of time or both, would become a Servicer Default, shall have
occurred and be continuing,
(ii) the Seller shall have delivered to the Issuer and the
Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 5.02 and that all
conditions precedent, if any, provided for in this Agreement relating
to such consolidation, merger or succession have been complied with,
(iii) the Seller shall have delivered to the Issuer and the
Trustee an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, all
filings to be made by the Seller, including New Jersey UCC
filings, that are necessary fully to preserve and protect fully
the respective interests of the Issuer and the Trustee in the
Transferred Bondable Transition Property have been executed and
filed, and reciting the details of such filings, or
(B) stating that, in the opinion of such counsel, no such
action is necessary to preserve and protect such interests;
(iv) the Rating Agencies shall have received prior written notice
of such transaction and the Rating Agency Condition shall have been
satisfied with respect to such consolidation, merger or succession;
and
(v) the Seller shall have delivered to the Issuer and the Trustee
an opinion of independent tax counsel (as selected by, and in form and
substance reasonably satisfactory to, the Seller, and which may be
based on a ruling from the Internal Revenue Service) to the effect
that, for federal income tax purposes, such consolidation, merger or
succession will not result in a material adverse federal income tax
consequence to the Seller, the Issuer, the Trustee or the holders of
the Outstanding Transition Bonds.
The Seller shall not consummate any transaction referred to in clauses (a), (b),
(c), (d) or (e) above except upon execution of the above-described agreement of
assumption and compliance with clauses (i), (ii), (iii), (iv) and (v) above.
When one or more Persons acquire the properties and assets of the Seller
substantially as a whole and become the successor or successors to the Seller in
accordance with the terms of this Section 5.02, then upon the satisfaction of
all of the
15
other conditions of this Section 5.02, the Seller shall automatically and
without further notice be released from its obligations hereunder.
Section 5.03. Limitation on Liability of the Seller and Others. The
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person, respecting any matters arising
hereunder. Subject to Section 4.09, the Seller shall not be under any obligation
to appear in, prosecute or defend any legal action that is not incidental to its
obligations under this Agreement and that in its opinion may involve it in any
expense or liability.
Article VI
Miscellaneous Provisions
Section 6.01. Amendment. (a) This Agreement may be amended or
supplemented by the Seller and the Issuer with the consent of the Trustee and
the satisfaction of the Rating Agency Condition. Promptly after the execution of
any such amendment or consent, the Issuer shall furnish written notification of
the substance of such amendment or consent to each of the Rating Agencies.
(b) Prior to the execution of any amendment or supplement to this
Agreement, the Issuer and the Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment or
supplement is authorized or permitted by this Agreement. The Issuer and the
Trustee may, but shall not be obligated to, enter into any such amendment
or supplement which affects their own rights, duties or immunities under
this Agreement or otherwise.
Section 6.02. Notices. Unless otherwise specifically provided herein,
all notices, directions, consents and waivers required under the terms and
provisions of this Agreement shall be in English and in writing, and any such
notice, direction, consent or waiver may be given by United States first-class
mail, reputable overnight courier service, facsimile transmission or electronic
mail (confirmed by telephone, United States first-class mail or reputable
overnight courier service in the case of notice by facsimile transmission or
electronic mail) or any other customary means of communication, and any such
notice, direction, consent or waiver shall be effective when delivered or
transmitted, or if mailed, five days after deposit in the United States
first-class mail with proper postage for first-class mail prepaid:
(a) in the case of the Seller, at Atlantic City Electric Company, 000
Xxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: General
Counsel,
(b) in the case of the Issuer, at Atlantic City Electric Transition
Funding LLC, 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention:
Managers,
(c) in the case of Moody's, at Xxxxx'x Investors Service, Inc., ABS
Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
16
(d) in the case of Standard & Poor's, at Standard & Poor's Ratings
Group, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed
Surveillance Department,
(e) in the case of Fitch, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, XX
00000, Attention: ABS Surveillance, and
(f) in the case the Trustee, at the address provided for notices or
communications to the Trustee in the Indenture; or, as to each of the
foregoing, at such other address as shall be designated by written notice
to the other parties.
17
Section 6.03. Assignment By Seller. Subject to Section 5.02, this
Agreement may not be assigned by the Seller.
Section 6.04. Assignment to Trustee. The Seller hereby acknowledges
and consents to any pledge, assignment and grant of a security interest by the
Issuer to the Trustee pursuant to the Indenture for the benefit of the
Transition Bondholders of all right, title and interest of the Issuer in, to and
under the Transferred Bondable Transition Property and the proceeds thereof and
the assignment of any or all of the Issuer's rights hereunder to the Trustee.
Section 6.05. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Issuer and the Trustee,
on behalf of itself and the Transition Bondholders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Collateral or under
or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
Section 6.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and no such prohibition or
unenforceability in any jurisdiction shall invalidate or render unenforceable
such provision in any other jurisdiction.
Section 6.07. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 6.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 6.09. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 6.10. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement or the Indenture, the Seller hereby covenants and
agrees that it shall not, prior to the date which is one year and one day after
the termination of the Indenture and the payment in full of the Transition
Bonds, any other amounts owed under the Indenture, including without limitation
any amounts owed to third-party credit enhancers, and any amounts owed under the
Hedge Agreement or the Interest Rate Swap Agreement, acquiesce, petition or
otherwise invoke or cause the Issuer to invoke the process of any court or
governmental authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
the property of the Issuer, or ordering the winding up or liquidation of the
affairs of the Issuer.
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the date and year first above written.
ATLANTIC CITY ELECTRIC TRANSITION
FUNDING LLC,
as Issuer
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
ATLANTIC CITY ELECTRIC COMPANY,
as Seller
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
19
EXHIBIT A
XXXX OF SALE
Capitalized terms used herein and not defined shall have the meanings
set forth in the Bondable Transition Property Sale Agreement dated as of
December 19, 2002 (the "Sale Agreement") between the Issuer and the Seller.
In consideration of the Issuer's payment to or upon the order of the
Seller of $_________________ (the "Initial Purchase Price"), by wire transfer of
funds immediately available on the date hereof to Seller's account no.
___________ at __________, subject to the conditions specified in Section 2.02
of the Sale Agreement, ATLANTIC CITY ELECTRIC COMPANY, a New Jersey corporation
(the "Seller"), does hereby sell, assign, transfer and convey to ATLANTIC CITY
ELECTRIC TRANSITION FUNDING LLC, a Delaware limited liability company (the
"Issuer"), without recourse except as provided in the Sale Agreement referred to
below, all of the Seller's right, title and interest in, to and under all of its
Bondable Transition Property, which sale, assignment, transfer and conveyance of
such Bondable Transition Property shall include, as provided in the Competition
Act, the sale, assignment, transfer and conveyance of all of the Seller's right,
title and interest in, to and under all revenues, collections, payments, money
or proceeds arising under or with respect to the Transition Bond Charge related
to such Bondable Transition Property, as the same may be adjusted from time to
time in accordance with the Competition Act and the BPU Financing Orders, to
have and to hold the same unto the Issuer and to the successors and assigns of
the Issuer, forever.
This Xxxx of Sale is governed by the laws of the State of New Jersey.
IN WITNESS WHEREOF, the Seller has duly executed and delivered this
Xxxx of Sale this ____ day of _________, ____.
ATLANTIC CITY ELECTRIC COMPANY, as
Seller
By:
-----------------------------------
Name:
----------------------------
Title:
---------------------------
Accepted this ____ day of ___________, 2___.
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
X-0
XXXXXXX X
XXXXXXX XX XXXXXXX
X-0
EXHIBIT C
OPINION OF COUNSEL
C-1
APPENDIX A
MASTER DEFINITIONS
The definitions contained in this Appendix A are applicable to the singular as
well as the plural forms of such terms.
"ACE" means Atlantic City Electric Company, a New Jersey corporation,
and its permitted successors and assigns.
"Act" has the meaning specified in Section 11.03(a) of the Indenture.
"Adjustment Date" means (i) October 1 of each year beginning October
1, 2003 until October 1, 2019, (ii) so long as any Series 2002-1 Transition
Bonds are outstanding, January 1, April 1, July 1 and October 1 of each year,
beginning October 1, 2020, (iii) any other dates designated as Adjustment Dates
in any Series Supplement, and (iv) any other day that is 30 days after a
Calculation Date.
"Adjustment Request" means an application filed by the Servicer with
the BPU for a Transition Bond Charge Adjustment pursuant to Section 5(b) or (e)
of the Issuer Annex.
"Administration Agreement" means the Administration Agreement dated as
of December 19, 2002, between the Issuer and PHI Service Company, as
administrator, as the same may be amended or supplemented from time to time.
"Administrator" means PHI Service Company, as administrator under the
Administration Agreement, and each successor to PHI Service Company, in the same
capacity, pursuant to Section 5.08 of the Administration Agreement.
"Advice Letter" means, with respect to any Series of Transition Bonds,
the Issuance Advice Letter, in the form specified in the BPU Financing Order
authorizing the issuance of Transition Bonds of such Series, filed with the BPU
at the time of the issuance of such Series.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, control when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms controlling and controlled
have meanings correlative to the foregoing.
"Annual Accountant's Report" has the meaning assigned to that term in
Section 3.07 of the Servicing Agreement.
"Authorized Denominations" means, with respect to any Series or Class
of Transition Bonds, $1,000 and integral multiples of $1.00 above that amount,
provided, however, that one bond of each Class may have a denomination of less
than $1,000, or such other denominations as may be specified in the Series
Supplement therefor.
"Authorized Newspaper" means the Luxemburger Wort or any other
newspaper published in Luxembourg on a daily basis.
"Authorized Officer" means, with respect to the Issuer, (a) any
Manager and, (b) any person designated as an "Officer" under the Issuer LLC
Agreement and authorized thereby to act on behalf of the Issuer.
"Basic Documents" means the Formation Documents, the Sale Agreement,
any Bills of Sale, the Servicing Agreement, the Administration Agreement, the
Indenture, as each may be amended or supplemented from time to time.
"Billing Month" means a calendar month during which the Transition
Bond Charge is billed to Customers.
"Xxxx of Sale" means any xxxx of sale issued by the Seller to the
Issuer pursuant to the Sale Agreement evidencing the sale of Bondable Transition
Property by the Seller to the Issuer.
"Bondable Stranded Costs" has the meaning assigned to that term in the
Competition Act and the BPU Financing Orders.
"Bondable Transition Property" has the meaning assigned to that term
in the Competition Act and the BPU Financing Orders.
"Bondable Transition Property Documentation" means all documents
relating to the Transferred Bondable Transition Property, including copies of
the Petition and the BPU Financing Orders and all documents filed with the BPU
in connection with any Transition Bond Charge Adjustment.
"Book-Entry Transition Bonds" means beneficial interests in the
Transition Bonds, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.11 of the Indenture.
"BPU" means the State of New Jersey Board of Public Utilities or its
successor.
"BPU Financing Orders" means the bondable stranded costs rate order
issued by the BPU in favor of ACE on September 20, 2002 pursuant to the
Competition Act, any subsequent bondable stranded costs rate orders issued by
the BPU in favor of ACE pursuant to the Competition Act, and any order
supplemental to any of the foregoing.
"BPU Regulations" means any regulations, orders, guidelines or
directives promulgated, issued or adopted by the BPU.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in The City of New York, New York or with respect to
any Transition Bonds listed on the Luxembourg Stock Exchange, in Luxembourg, are
required or authorized by law or executive order to remain closed.
A-2
"Calculation Date" means (i) September 1 of each year beginning
September 1, 2003 until September 1, 2019, (ii) so long as any Series 2002-1
Transition Bonds are outstanding, March 1, June 1, September 1 and December 1 of
each year, beginning September 1, 2020, (iii) any other dates designated as
Calculation Dates in any Series Supplement, and (iv) any other date on which the
Servicer files an Adjustment Request.
"Capital Subaccount" with respect to any Series has the meaning
specified in Section 8.02(a) of the Indenture.
"Class" means, with respect to any Series, any one of the classes of
Transition Bonds of that Series, as specified in the Series Supplement for that
Series.
"Class Final Maturity Date" means the Final Maturity Date of a Class,
as specified in the Series Supplement for the related Series.
"Class Subaccount," with respect to a Class within a Series, has the
meaning specified in Section 8.02(a) of the Indenture and, if established for
such Series and Class, in the Series Supplement for such Series.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of the
Indenture.
"Collection Account" has the meaning specified in Section 8.02(a) of
the Indenture.
"Collection Period" means the period from and including the first day
of a calendar month to but excluding the first day of the next calendar month.
"Collections Curve" means an annually prepared forecast, with respect
to each Billing Month, of the percentages of amounts billed in such Billing
Month that are expected to be received during such Billing Month and each of the
following six months.
"Collections Curve Payment" means, with respect to any Billing Month,
the sum of the amounts paid to the Trustee during such Billing Month and each of
the following six months based on the Collections Curve then in effect.
"Commission" means the U.S. Securities and Exchange Commission, and
any successor thereof.
A-3
"Competition Act" means the Electric Discount and Energy Competition
Act, New Jersey Statutes Annotated, title 48, chapter 3, article 7, as in effect
from time to time.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at date of the execution of the Indenture is located at 000 Xxxxxxx
Xxxxxx, Xxxxx 8 West, New York, New York 10286, Attn: Asset Backed Securities
(phone: (000) 000-0000; fax: (000) 000-0000), or at such other address as the
Trustee may designate from time to time by notice to the Transition Bondholders
and the Issuer, or the principal corporate trust office of any successor Trustee
(the address of which the successor Trustee will notify the Transition
Bondholders and the Issuer in writing).
"Covenant Defeasance Option" has the meaning specified in Section
4.01(b) of the Indenture.
"Curve Payment Shortfall" means, for a particular Billing Month, the
amount, if any, by which the actual TBC Collections in respect of a Billing
Month exceed the Collections Curve Payments made to the Trustee in respect of
that Billing Month, as determined on the Reconciliation Date for that Billing
Month.
"Customer" means each person who is a retail consumer of electricity
and who accesses ACE's transmission and distribution system, regardless of
whether such consumer elects to purchase electricity from a Third Party.
"Daily Remittance Date" means, if the Servicer has not satisfied the
conditions of Section 5.10(b) of the Servicing Agreement, each Business Day
commencing on the second Business Day following the date on which the Servicer
begins remittance procedures under Section 3.03(a)(ii) of the Servicing
Agreement.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Defeasance Subaccount" has the meaning specified in Section 8.02(a)
of the Indenture.
"Definitive Transition Bonds" has the meaning specified in Section
2.11 of the Indenture.
"Delaware UCC" means the Uniform Commercial Code, as in effect in the
State of Delaware, as amended from time to time.
"DTC Agreement" means the agreement between the Issuer, the Trustee
and The Depository Trust Company, as the initial Clearing Agency, dated on or
about December 19, 2002, relating to the Transition Bonds, as the same may be
amended or supplemented from time to time.
A-4
"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.
"Eligible Institution" means:
(a) the corporate trust department of the Trustee, so long as any of
the securities of the Trustee have a credit rating from each
Rating Agency in one of its generic rating categories which
signifies investment grade, or
(b) a depositary institution organized under the laws of the United
States of America or any state (or any domestic branch of a
foreign bank), which
(i) has either
(A) with respect to any Eligible Investment having a
maturity of greater than one month, a long-term
unsecured debt rating of "AA-" by Standard & Poor's and
Fitch and "Aa3" by Moody's, or
(B) with respect to any Eligible Investment having a
maturity one month or less, a certificate of deposit
rating of "A-1+" by Standard & Poor's, "F1+" by Fitch
and "P-1" by Moody's, or any other long-term,
short-term or certificate of deposit rating acceptable
to the Rating Agencies, and
(ii) whose deposits are insured by the FDIC.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully and unconditionally
guaranteed as to timely payment by, the United States of America;
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(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company (any depositary
institution or trust company being referred to in this definition
as a "financial institution") incorporated under the laws of the
United States of America or any state thereof (or any domestic
branch of a foreign bank) and subject to supervision and
examination by federal or state banking or depositary institution
authorities; provided, however, that at the time of the
investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations
of such financial institution (other than such obligations the
rating of which is based on the credit of a Person other than
such financial institution) shall have a credit rating from each
of the Rating Agencies in the highest investment category granted
thereby;
(c) commercial paper or other short-term unsecured debt obligations
of any corporation organized under the laws of the United States
of America (other than ACE) whose ratings, at the time of the
investment or contractual commitment to invest therein, from each
of the Rating Agencies are in the highest rating category granted
thereby;
(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest rating category granted
thereby (including funds for which the Trustee or any of its
Affiliates act as investment manager or advisor);
(e) bankers' acceptances issued by any depositary institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States
of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of
the United States of America, in either case entered into with a
financial institution (acting as principal) incorporated under
the laws of the United States of America or any state thereof (or
any domestic branch of a foreign bank) and subject to supervision
and examination by federal or state banking or depositary
institution authorities; provided, however, that at the time of
the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations
of such financial institution (other than such obligations the
rating of which is based on the credit of a Person other than
such financial institution) shall have a credit rating from each
of the Rating Agencies in the highest investment category granted
thereby;
(g) repurchase obligations with respect to any security or whole loan
entered into with
(i) a financial institution (acting as principal) described in
clause (b) above,
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(ii) a broker/dealer (acting as principal) registered as a broker
or dealer under Section 15 of the Exchange Act (any
broker/dealer being referred to in this definition as a
"broker/dealer"), the unsecured short-term debt obligations
of which are rated P-1 by Moody's and A-1+ by Standard &
Poor's at the time of entering into the repurchase
obligation, or
(iii) an unrated broker/dealer, acting as principal, that is a
wholly-owned subsidiary of a non-bank or bank holding
company the unsecured short-term debt obligations of which
are rated P-1 by Moody's and A-1+ by Standard & Poor's and
F1+ by Fitch at the time of purchase; or
(h) any other investment permitted by each Rating Agency;
provided, however, that, unless otherwise permitted by each Rating Agency, upon
the failure of any Eligible Institution to maintain any applicable rating set
forth in this definition or the definition of Eligible Institution, the related
investments at such institution shall be reinvested in Eligible Investments at a
successor Eligible Institution within 10 days, and provided, further, that, any
Eligible Investment must not:
(i) be sold, liquidated or otherwise disposed of at a loss,
prior to the maturity thereof, or
(ii) mature later than (i) the date on which the proceeds of such
Eligible Investment will be required to be on deposit in the
Collection Account in order for the Trustee to make all
required and scheduled payments and deposits into
Subaccounts under the Indenture, if such Eligible Investment
is held by an Affiliate of the Trustee, or (ii) the Business
Day prior to the date on which the proceeds of such Eligible
Investment will be required to be on deposit in the
Collection Account in order for the Trustee to make all
required and scheduled payments and deposits into
Subaccounts under the Indenture, if such Eligible Investment
is not held by an Affiliate of the Trustee.
"Eligible Securities Account" means either:
(a) a segregated trust account with an Eligible Institution or
(i) a segregated trust account with the corporate trust department of
a depositary institution organized under the laws of the United
States of America or any state (or any domestic branch of a
foreign bank), having corporate trust powers and acting as
trustee for funds deposited in such account, so long as any of
the securities of such depositary institution shall have a credit
rating from each Rating Agency in one of its generic rating
categories which signifies investment grade.
"Event of Default" has the meaning specified in Section 5.01 of the
Indenture.
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"Excess Curve Payment" means, for a particular Billing Month, the
amount, if any, by which the Collections Curve Payments made to the Trustee in
respect of that Billing Month exceed the actual TBC Collections in respect of
that Billing Month, as determined on the Reconciliation Date for that Billing
Month.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the chief
executive officer, chief operating officer, chief financial officer, chief
information officer, president, executive vice president, any vice president,
the secretary or the treasurer of such corporation; and with respect to any
limited liability company, any manager thereof.
"Expected Amortization Schedule" means, with respect to each Series
or, if applicable, each Class of Transition Bonds, the expected amortization
schedule for principal thereof, as specified in Schedule A to the Series
Supplement for such Series.
"Expected Final Payment Date" means, with respect to each Series or,
if applicable, each Class of Transition Bonds, the Payment Date related to the
date when all interest and principal is scheduled to be paid with respect to
that Series or Class in accordance with the Expected Amortization Schedule, as
specified in the Series Supplement therefor.
"FDIC" means the Federal Deposit Insurance Corporation or its
successor.
"Final Maturity Date" means, for each Series or, if applicable, each
Class of Transition Bonds, the Payment Date related to the date by which all
principal of and interest on such Series or Class of Transition Bonds is
required to be paid, as specified in the Series Supplement therefor.
"Financing Issuance" means an issuance of a new Series of Transition
Bonds under the Indenture to provide funds to finance the purchase by the Issuer
of Bondable Transition Property.
"Fitch" means Fitch, Inc. or its successor.
"Formation Document" means the Issuer LLC Agreement, the Issuer
Certificate of Formation and any other document pursuant to which the Issuer is
formed or governed, as each may be amended or supplemented from time to time.
"General Subaccount" has the meaning specified in Section 8.02(a) of
the Indenture.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and xxxxx x xxxx upon and a
security interest in and right of set-off against, deposit, set over and
confirm. A Grant of the Collateral or of any other agreement or instrument shall
include all rights, powers and options (but none of the obligations) of the
Granting party thereunder, including the immediate and continuing right to claim
for, collect, receive and give receipt for principal, interest and other
payments in respect of the Collateral and all other moneys payable thereunder,
to give and receive notices and other communications, to
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make waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Hedge Agreement" means, with respect to any Series, the document or
documents, if any, identified as a "Hedge Agreement" in the Series Supplement
for such Series.
"Holder" or "Transition Bondholder" means the Person in whose name a
Transition Bond of any Series or Class is registered in the Transition Bond
Register.
"Indemnification Event" means an event which triggers ACE's obligation
to indemnify the Issuer and the Trustee, for itself and on behalf of the
Transition Bondholders, and each of their respective managers, officers,
employees, directors and agents, pursuant to Section 5.01 of the Sale Agreement.
"Indemnity Amount" means the amount of any indemnification obligation
payable under the Basic Documents or any Hedge Agreement or Interest Rate Swap
Agreement.
"Indenture" means the Indenture dated as of December 19, 2002, between
the Issuer and the Trustee, as the same may be amended or supplemented from time
to time by one or more Supplemental Indentures, and shall include each Series
Supplement and the forms and terms of the Transition Bonds established
thereunder.
"Independent" means, when used with respect to any specified Person,
that the Person
(a) is in fact independent of the Issuer, any other obligor upon the
Transition Bonds, ACE and any Affiliate of any of the foregoing
Persons,
(b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other
obligor, ACE or any Affiliate of any of the foregoing Persons,
and
(c) is not connected with the Issuer, any such other obligor, ACE or
any Affiliate of any of the foregoing Persons as an officer,
employee, promoter, underwriter, trustee, partner, director or
other Person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01 of the Indenture,
made by an Independent appraiser or other expert appointed by an Issuer Order
and approved by the Trustee in the exercise of reasonable care, and such opinion
or certificate shall state that the signer has read the definition of
"Independent" in this Appendix A and that the signer is Independent within the
meaning thereof.
"Independent Manager" has the meaning set forth in the Issuer LLC
Agreement.
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"Initial Purchase Price" has the meaning set forth in Section 2.01 of
the Sale Agreement.
"Initial Transfer Date" means the Series Issuance Date for the Series
2002-1 Transition Bonds, i.e., December 19, 2002.
"Initial Transferred Bondable Transition Property" means the Bondable
Transition Property sold by the Seller to the Issuer as of the Initial Transfer
Date pursuant to the Sale Agreement and the Xxxx of Sale delivered on or prior
to the Initial Transfer Date as identified in such Xxxx of Sale.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law in effect on or after December 19, 2002, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of 90 consecutive days
or (b) the commencement by such Person of a voluntary case under any applicable
federal or state bankruptcy, insolvency or other similar law in effect on or
after December 19, 2002, or the consent by such Person to the entry of an order
for relief in an involuntary case under any such law, or the consent by such
Person to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for such Person
or for any substantial part of its property, or the making by such Person of any
general assignment for the benefit of creditors, or the failure by such Person
generally to pay its debts as such debts become due, or the taking of action by
such Person in furtherance of any of the foregoing.
"Interest" means, for any Payment Date for any Series or Class of
Transition Bonds, the sum, without duplication, of
(a) an amount equal to the amount of interest accrued at the
applicable Interest Rate from the prior Payment Date with respect
to that Series or Class;
(b) any unpaid interest, to the extent permitted by applicable law,
plus any interest accrued on this unpaid interest at the
applicable Interest Rate, to the extent permitted by applicable
law;
(c) if the Transition Bonds have been declared due and payable, all
accrued and unpaid interest thereon; and
(d) with respect to a Series or Class to be redeemed prior to the
next Payment Date, the amount of interest that will be payable as
interest on such Series or Class upon such redemption.
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"Interest Rate" means, with respect to each Series or Class of
Transition Bonds, the rate at which interest accrues on the principal balance of
Transition Bonds of such Series or Class, as specified in the Series Supplement
therefor.
"Interest Rate Swap Agreement" means any ISDA Master Agreement,
together with the related schedules and confirmations, between the Issuer and
the counterparty thereunder, as same may be amended or supplemented from time to
time, with respect to any Series or Class of Transition Bonds as provided in the
Series Supplement for such Series or Class, as the case may be.
"Issuer" means Atlantic City Electric Transition Funding LLC, a
Delaware limited liability company, or its successor under the Indenture or the
party named as such in the Indenture until a successor replaces it and,
thereafter, means the successor.
"Issuer Annex" means Annex 1 of the Servicing Agreement.
"Issuer Certificate of Formation" means the Certificate of Formation
of the Issuer, which was filed with the Delaware Secretary of State's Office on
March 28, 2001, as the same may be amended or supplemented from time to time.
"Issuer LLC Agreement" means the Amended and Restated Limited
Liability Company Agreement between the Issuer and ACE, as sole Member, dated as
of December 19, 2002, as the same may be amended or supplemented from time to
time.
"Issuer Officer's Certificate" means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01 of the
Indenture, and delivered to the Trustee. Unless otherwise specified, any
reference in the Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer.
"Issuer Opinion of Counsel" means one or more written opinions of
counsel who may, except as otherwise expressly provided in the Indenture, be
employees of or counsel to the Issuer or the Seller and who shall be reasonably
satisfactory to the Trustee, and which opinion or opinions shall be addressed to
the Trustee, and shall be in a form reasonably satisfactory to the Trustee.
"Issuer Order" or "Issuer Request" means a written order or request,
respectively, signed in the name of the Issuer by any one of its Authorized
Officers and delivered to the Trustee.
"Legal Defeasance Option" has the meaning specified in Section 4.01(b)
of the Indenture.
"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.
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"Manager" has the meaning set forth in the Issuer LLC Agreement.
"Market Transition Charge" means the market transition charge that ACE
may impose on Customers pursuant to the Competition Act and the Restructuring
Order.
"Measure Period" means any period beginning on an Adjustment Date and
ending on the date immediately preceding the next Adjustment Date.
"Member" means ACE, as the sole member of the Issuer, in its capacity
as such member under the Issuer LLC Agreement.
"Monthly Remittance Date" means the 15th day of each calendar month
(or if such day is not a Business Day, the next Business Day).
"Monthly Servicing Fee" means the fee payable to the Servicer on a
monthly basis for services rendered, in accordance with Section 5.07 of the
Servicing Agreement.
"Moody's" means Xxxxx'x Investors Service Inc., or its successor.
"MTC-Tax" means the tax component, to recover federal income and state
corporation business taxes associated with the Market Transition Charge and the
Transition Bond Charge, that ACE is entitled to impose under the Restructuring
Order and under the BPU Financing Orders.
"New Jersey UCC" means the Uniform Commercial Code, as in effect in
the State of New Jersey, as amended from time to time.
"Officers' Certificate" means a certificate signed by (a) the chairman
of the board, the president, the vice chairman of the board, any executive vice
president or any vice president and (b) a treasurer, assistant treasurer,
secretary or assistant secretary, in each case of the Servicer or the Seller, as
applicable.
"Operating Expenses" means, with respect to the Issuer, all fees,
costs, expenses and indemnity payments owed by the Issuer, including, without
limitation, all amounts owed by the Issuer to the Trustee, the Monthly Servicing
Fee, the fees and expenses payable by the Issuer to the Administrator under the
Administration Agreement, the fees and expenses payable by the Issuer to the
Independent Managers and Special Members of the Issuer, fees of the Rating
Agencies, legal fees and expenses of the Servicer pursuant to Section 3.10 of
the Servicing Agreement, legal and accounting fees, costs and expenses of the
Issuer, and legal, accounting or other fees, costs and expenses of the Seller
(including, without limitation, any costs and expenses incurred by the Seller
pursuant to Section 4.08 of the Sale Agreement) under or in connection with the
Basic Documents, any Hedge Agreement or Interest Rate Swap Agreement or the BPU
Financing Orders.
"Opinion of Counsel" means one or more written opinions of counsel who
may be an employee of or counsel to ACE or the Issuer, or any other Person (as
the context may require), which counsel shall be reasonably acceptable to the
Trustee, the Issuer or the Rating
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Agencies, as applicable, and which opinion or opinions shall be in form
reasonably satisfactory to the Trustee, if applicable.
"Outstanding" with respect to Transition Bonds means, as of the date
of determination, all Transition Bonds theretofore authenticated and delivered
under the Indenture except:
(a) Transition Bonds theretofore canceled by the Transition Bond
Registrar or delivered to the Transition Bond Registrar for
cancellation;
(b) Transition Bonds or portions thereof the payment for which money
in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent in trust for the Holders of such
Transition Bonds; provided, however, that if such Transition
Bonds are to be redeemed, notice of such redemption has been duly
given pursuant to the Indenture or provision therefor,
satisfactory to the Trustee, made; and
(c) Transition Bonds in exchange for or in lieu of other Transition
Bonds which have been authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Trustee is presented
that any such Transition Bonds are held by a protected purchaser;
provided that in determining whether the Holders of the requisite Outstanding
Amount of the Transition Bonds or any Series or Class thereof have given any
request, demand, authorization, direction, notice, consent or waiver under the
Indenture or under or with respect to any other Basic Document or any Hedge
Agreement or Interest Rate Swap Agreement, Transition Bonds owned by the Issuer,
any other obligor upon the Transition Bonds, ACE or any Affiliate of any of the
foregoing Persons shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be fully protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Transition Bonds that a Responsible Officer of the Trustee actually
knows to be so owned shall be so disregarded. Transition Bonds so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Transition Bonds and that the pledgee is not the Issuer,
any other obligor upon the Transition Bonds, ACE or any Affiliate of any of the
foregoing Persons.
"Outstanding Amount" means, with respect to one or more Classes or
Series, the aggregate principal amount of, as the context requires, all
Outstanding Transition Bonds of such Class or Classes or of such Series or group
of Series.
"Overcollateralization" means, with respect to any Payment Date and
any Series, the amount, if any, that, if deposited to the Overcollateralization
Subaccount for such Series on such Payment Date, would cause the balance in such
subaccount on such Payment Date to equal the Scheduled Overcollateralization
Level for such Series on such Payment Date.
"Overcollateralization Amount" means, with respect to any Series, the
amount specified as such in Schedule B to the Series Supplement therefor.
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"Overcollateralization Subaccount" with respect to any Series has the
meaning specified in Section 8.02(a) of the Indenture.
"Paying Agent" means the Trustee or any other Person, including any
Person appointed pursuant to Section 3.02(b) of the Indenture, that meets the
eligibility standards for the Trustee specified in Section 6.11 of the Indenture
and is authorized by the Issuer to make the payments of principal of or premium,
if any, or interest on the Transition Bonds on behalf of the Issuer.
"Payment Date" means January 20, April 20, July 20 and October 20, or,
if any such date is not a Business Day, the next succeeding Business Day.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), business trust, limited liability company, unincorporated organization
or government or any agency or political subdivision thereof.
"Petition" means the petition filed by ACE with the BPU, dated June
25, 2001.
"Predecessor Transition Bond" means, with respect to any particular
Transition Bond, every previous Transition Bond evidencing all or a portion of
the same debt as that evidenced by such particular Transition Bond; and, for the
purpose of this definition, any Transition Bond authenticated and delivered
under Section 2.06 of the Indenture in lieu of a mutilated, lost, destroyed or
stolen Transition Bond shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Transition Bond.
"Principal" means, with respect to any Payment Date and each Series or
Class of Transition Bonds:
(a) the amount of principal scheduled to be paid on such Payment Date
in accordance with the Expected Amortization Schedule;
(b) the amount of principal due on the Final Maturity Date of any
Series or Class on such Payment Date;
(c) the amount of principal due as a result of the occurrence and
continuance of an Event of Default and acceleration of the
Transition Bonds;
(d) the amount of principal and premium, if any, due as a result of a
redemption of Transition Bonds on such Payment Date; and
(e) any overdue payments of principal.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Rating Agency" means, as of any date, any rating agency rating the
Transition Bonds of any Class or Series at the time of issuance thereof at the
request of the Issuer. If no
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such organization or successor is any longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization or other comparable
Person designated by the Issuer, notice of which designation shall be given to
the Trustee, the Member and the Servicer.
"Rating Agency Condition" means, with respect to any action, the
notification in writing by the Trustee to each Rating Agency of such action and
the notification by each Rating Agency to the Trustee and the Issuer that such
action will not result in a reduction or withdrawal of the then current rating
by such Rating Agency of any Outstanding Series or Class of Transition Bonds;
provided that, except where such action includes the issuance of Transition
Bonds of a new Series (either as a Financing Issuance or as a Refunding
Issuance), the Rating Agency Condition shall be satisfied with respect to
Moody's by providing Moody's 10 Business Days' prior written notice of such
action.
"Reconciliation Date" for a particular Billing Month means the
fifteenth day (or if that day is not a Business Day, the next succeeding
Business Day) of the calendar month that is seven months after such Billing
Month.
"Record Date" has, with respect to any Series, the meaning set forth
in the related Series Supplement.
"Redemption Date" means, with respect to each Series or Class of
Transition Bonds, the date for the redemption of the Transition Bonds of such
Series or Class pursuant to Section 10.01 or 10.02 of the Indenture or the
Series Supplement for such Series or Class, which in each case shall be a
Payment Date.
"Redemption Price" has the meaning set forth in Section 10.01 of the
Indenture.
"Refunding Issuance" means an issuance of a new Series of Transition
Bonds under the Indenture to pay the cost of refunding, through redemption or
payment on the Expected Final Payment Date for a Series or Class of Transition
Bonds, all or part of the Transition Bonds of such Series or Class to the extent
permitted by the terms thereof.
"Registered Holder" means, as of any date, the Person in whose name a
Transition Bond is registered in the Transition Bond Register on such date.
A Payment Date "relates" to a Measure Period in each of the following
circumstances: (i) if such Measure Period is one year in length, each of the
second, third, fourth and fifth Payment Dates to occur after the first day in
such Measure Period relates to such Measure Period; (ii) if such Measure Period
is one calendar quarter in length, the first Payment Date to occur following the
end of such Measure Period relates to such Measure Period; and (iii) if such
Measure Period is one month in length, the first Payment Date to occur following
the end of the calendar quarter in which such Measure Period falls relates to
such Measure Period.
"Released Parties" has the meaning specified in Section 5.02(e) of the
Servicing Agreement.
"Remittance Date" means a Daily Remittance Date or a Monthly
Remittance Date, as applicable.
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"Required Capital Amount" means, with respect to any Series, the
amount required to be deposited in the Capital Subaccount for such Series on the
Series Issuance Date of such Series, as specified in the related Series
Supplement.
"Reserve Subaccount" with respect to any Series has the meaning
specified in Section 8.02(a) of the Indenture.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any vice president,
assistant vice president, secretary, assistant secretary, or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"Restructuring Order" means the decision and order of the BPU issued
on March 30, 2001 pursuant to Section 13 of the Competition Act.
"Retiring Trustee" has the meaning specified in Section 6.08(b) of the
Indenture.
"Revenue Requirement" means, for any Series with respect to any
Measure Period, the aggregate amount estimated in good faith by the Servicer,
pursuant to the Issuer Annex, to be payable in respect of such Series pursuant
to Sections 8.02(d) and 8.02(e) of the Indenture during such Measure Period.
"Sale Agreement" means the Bondable Transition Property Sale Agreement
dated as of December 19, 2002, between the Seller and the Issuer, as the same
may be amended or supplemented from time to time.
"Scheduled Overcollateralization Level" means, with respect to each
Series and any Payment Date, the amount with respect to such Series set forth as
such in Schedule B to the Series Supplement for such Series.
"Scheduled Transition Bond Balance" means, as of any date, the sum of
the amounts provided for in the Expected Amortization Schedules for each
outstanding Series of Transition Bonds as of such date.
"Seller" means ACE, in its capacity as seller of the Bondable
Transition Property to the Issuer pursuant to the Sale Agreement.
"Series" means the Series 2002-1 Transition Bonds and any subsequent
series of Transition Bonds issued by the Issuer and authenticated by the Trustee
pursuant to the Indenture, as specified in the Series Supplement therefor.
"Series Capital Subaccount" with respect to each Series has the
meaning specified in Section 8.02(a) of the Indenture and in the related Series
Supplement.
"Series Final Maturity Date" means the Final Maturity Date for a
Series.
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"Series Issuance Date" means, with respect to any Series, the date on
which the Transition Bonds of such Series are to be originally issued in
accordance with Section 2.10 of the Indenture and the Series Supplement for such
Series.
"Series Overcollateralization Subaccount" with respect to each Series
has the meaning specified in Section 8.02(a) of the Indenture and in the related
Series Supplement.
"Series Reserve Subaccount" with respect to each Series has the
meaning specified in Section 8.02(a) of the Indenture and in the related Series
Supplement.
"Series Subaccount" with respect to each Series has the meaning
specified in Section 8.02(a) of the Indenture and in the related Series
Supplement.
"Series Supplement" means any Supplemental Indenture that authorizes a
particular Series of Transition Bonds, as the same may be amended or
supplemented from time to time.
"Servicer" means ACE, as the servicer of the Bondable Transition
Property, and each successor to ACE (in the same capacity) pursuant to Section
5.03 or 6.04 of the Servicing Agreement.
"Servicer Default" means an event specified in Section 6.01 of the
Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement dated as of
December 19, 2002, between the Issuer and the Servicer, as the same may be
amended or supplemented from time to time.
"Special Member" has the meaning set forth in the Issuer LLC
Agreement.
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings Group, a
division of The XxXxxx-Xxxx Companies, Inc., or its successor.
"state" in the jurisdictional sense means any one of the 50 states of
the United States of America or the District of Columbia.
"Subaccount" means any of the subaccounts of the Collection Account
specified in Section 8.02 of the Indenture.
"Subsequent Purchase Price" means, in relation to a Subsequent Sale,
the price specified in the related Xxxx of Sale, to be paid by the Issuer for
the Subsequent Transferred Bondable Transition Property purchased and sold in
such Subsequent Sale.
"Subsequent Sale" means any sale of Bondable Transition Property by
the Seller to the Issuer after the Initial Transfer Date.
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"Subsequent Transfer Date" means a date on which a sale of Subsequent
Transferred Bondable Transition Property is effective, as specified in the
written notice relating to such sale contemplated in Section 2.02(e) of the Sale
Agreement.
"Subsequent Transferred Bondable Transition Property" means Bondable
Transition Property sold by the Seller to the Issuer as of a Subsequent Transfer
Date pursuant to the Sale Agreement and a Xxxx of Sale delivered on or prior to
the related Subsequent Transfer Date as identified in such Xxxx of Sale.
"Successor Servicer" means a successor Servicer appointed by the
Trustee pursuant to Section 6.04 of the Servicing Agreement which succeeds to
all the rights and duties of the Servicer under the Servicing Agreement.
"Supplemental Indenture" means a supplemental indenture entered into
by the Issuer and the Trustee pursuant to Article IX of the Indenture.
"Target Payment Date" has the meaning specified in Section 5(a) of the
Issuer Annex.
"TBC Collections" means amounts received by the Servicer in respect of
the Transition Bond Charge.
"Termination Notice" has the meaning specified in Section 6.01 of the
Servicing Agreement.
"Third Party" means any third party, including any electric generation
supplier, providing billing or metering services, licensed by the BPU pursuant
to relevant provisions of the Competition Act, the BPU Regulations and the BPU
Financing Orders.
"Total Revenue Requirement" means, as of any date of determination,
the sum of the Revenue Requirements for all Series outstanding as of such date.
"Transfer Date" means the Initial Transfer Date or any Subsequent
Transfer Date, as applicable.
"Transferred Bondable Transition Property" means, collectively, all
Bondable Transition Property that has been sold, assigned and transferred to the
Issuer pursuant to the Sale Agreement.
"Transition Bond" means any of the transition bonds (as defined in the
Competition Act) issued by the Issuer pursuant to the Indenture.
"Transition Bond Balance" means, as of any date, the aggregate
Outstanding Amount of all Series of Transition Bonds on such date.
"Transition Bond Charge" means the Transition Bond Charge authorized
by the BPU to be imposed on all Customers by ACE or its successor to recover
Bondable Stranded Costs pursuant to the Competition Act and the BPU Financing
Orders.
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"Transition Bond Charge Adjustment" means each adjustment to
Transition Bond Charge related to the Transferred Bondable Transition Property
made in accordance with Section 4.01 of the Servicing Agreement and the Issuer
Annex.
"Transition Bond Charge Adjustment Process" means the process by which
adjustments are made to the Transition Bond Charge or to the formula governing
such adjustments, in either case pursuant to Section 4.01 of the Servicing
Agreement and the Issuer Annex, the Competition Act, the Petition and the BPU
Financing Orders.
"Transition Bond Owner" means, with respect to a Book-Entry Transition
Bond, the Person who is the beneficial owner of such Book-Entry Transition Bond,
as reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Transition Bond Register" has the meaning specified in Section
2.05(a) of the Indenture.
"Transition Bond Registrar" has the meaning specified in Section
2.05(a) of the Indenture.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as in force on the date of the Indenture, unless otherwise specifically provided
therein.
"Trustee" means The Bank of New York, a New York banking corporation,
in the capacity specified in the first paragraph of the Indenture, or any
successor Trustee under the Indenture.
"Underwriting Agreement" means the Underwriting Agreement dated as of
December 11, 2002, among the Seller, the Issuer and Xxxxxx Xxxxxxx & Co.
Incorporated, on behalf of itself and as the representative of the several
underwriters named therein.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
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