INTERCREDITOR AGREEMENT
Exhibit
10(e)
INTERCREDITOR
AGREEMENT dated as of __________________, 2006 among:
Jersey
Central Power & Light Company, a New Jersey corporation (in its individual
capacity, the “Company”),
JCP&L
Transition Funding LLC, a Delaware limited liability company (the “Initial
Transition Bond Issuer”),
JCP&L
Transition Funding II LLC, a Delaware limited liability company (the
“Additional
Transition Bond Issuer”),
The
Bank
of New York, a New York banking corporation, in its capacity as trustee under
the Indenture dated as of June 11, 2002 by and between the Initial Transition
Bond Issuer and The Bank of New York, as Trustee, (the “Initial
Transition Bond Trustee”),
Jersey
Central Power & Light Company, a New Jersey corporation, in its capacity as
the initial servicer of the Initial Transition Property referred to below
(including any successor in such capacity, the “Initial
TC Servicer”),
The
Bank
of New York, a New York banking corporation, in its capacity as trustee under
the Indenture dated as of ___________, 2006 by and between the Additional
Transition Bond Issuer and The Bank of New York, as Trustee, (the “Additional
Transition Bond Trustee”),
Jersey
Central Power & Light Company, a New Jersey corporation, in its capacity as
the initial servicer of the Additional Transition Property referred to below
(including any successor in such capacity, the “Additional
TC Servicer”),
and
Jersey
Central Power & Light Company, a New Jersey corporation, in its capacity as
collection agent for the benefit of the Initial TC Servicer and the Additional
TC Servicer (the “Utility”).
WHEREAS,
pursuant to the terms of the Sale Agreement dated as of June 11, 2002 by and
between the Initial Transition Bond Issuer and Jersey Central Power & Light
Company, in its capacity as Seller (as it may hereafter from time to time be
amended, restated or modified, the “Initial
Sale Agreement”),
the
Company has sold to the Initial Transition Bond Issuer certain assets known
as
“Transition Property” which includes the “Transition Charges” (hereinafter, the
“Initial
Transition Property”
and
the
“Initial
Transition Charges”);
and
WHEREAS,
pursuant to the terms of the Indenture dated as of June 11, 2002 by and between
the Initial Transition Bond Issuer and the Initial Transition Bond Trustee
(as
it may hereafter from time to time be amended, restated or modified and as
supplemented from time to time by one or more Series Supplements, such Series
Supplements and Indenture being collectively referred to herein as the
“Initial
Indenture”),
the
Initial Transition Bond Issuer, among other things, has granted to the Initial
Transition Bond Trustee a security interest in certain of its assets, including
the Initial Transition Property, to secure, among other things, the Transition
Bonds issued pursuant to the Initial Indenture (the “Initial
Transition Bonds”);
and
WHEREAS,
pursuant to the terms of the Servicing Agreement dated as of June 11, 2002
by
and between the Initial Transition Bond Issuer and the Initial TC Servicer
(as
it may hereafter from time to time be amended, restated or modified, the
“Initial
Servicing Agreement”),
the
Initial TC Servicer has agreed to provide for the benefit of the Initial
Transition Bond Issuer servicing functions with respect to the Initial
Transition Charges; and
WHEREAS,
pursuant to the terms of the Sale Agreement dated as of ___________, 2006 by
and
between the Additional Transition Bond Issuer and Jersey Central Power &
Light Company, in its capacity as Seller (as it may hereafter from time to
time
be amended, restated or modified, the “Additional
Sale Agreement”),
the
Company has sold to the Additional Transition Bond Issuer certain additional
Transition Property which includes additional related Transition Charges
(hereinafter, the “Additional
Transition Property”
and
the
“Additional
Transition Charges”);
and
WHEREAS,
pursuant to the terms of the Indenture dated as of ___________, 2006 by and
between the Additional Transition Bond Issuer and the Additional Transition
Bond
Trustee (as it may hereafter from time to time be amended, restated or modified
and as supplemented from time to time by one or more Series Supplements, such
Series Supplements and Indenture being collectively referred to herein as the
“Additional
Indenture”,
and
together with the Initial Indenture, the “Indentures”),
the
Additional Transition Bond Issuer, among other things, has granted to the
Additional Transition Bond Trustee a security interest in certain of its assets,
including the Additional Transition Property, to secure, among other things,
the
Transition Bonds issued pursuant to the Additional Indenture (the “Additional
Transition Bonds”);
and
WHEREAS,
pursuant to the terms of the Servicing Agreement dated as of ______________,
2006 by and between the Additional Transition Bond Issuer and the Additional
TC
Servicer (as it may hereafter from time to time be amended, restated or
modified, the “Additional
Servicing Agreement”,
and
together with the Initial Servicing Agreement, the “Servicing
Agreements”),
the
Additional TC Servicer has agreed to provide for the benefit of the
Additional Transition Bond Issuer servicing functions with respect to the
Additional Transition Charges; and
WHEREAS,
the Initial Transition Charges, Additional Transition Charges, related MTC-Tax
charges (“MTC-Taxes”),
applicable New Jersey sales and use taxes (the “Sales
and Use Taxes”)
will
be combined as a single line item (i) with the non-utility generation charge
on
each non-residential customer’s xxxx and (ii) with the electric distribution
charge on each residential customer’s xxxx (such combined amounts, the
“Collections”);
and
WHEREAS,
the parties hereto wish to agree upon their respective rights relating to such
Collections and any bank accounts into which the same may be deposited, as
well
as other matters of common interest to them which arise under or result from
the
coexistence of the Initial Sale Agreement, the Initial Indenture, the Initial
Servicing Agreement, the Additional Sale Agreement, the Additional Indenture
and
the Additional Servicing Agreement;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:
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SECTION
1. Acknowledgment
of Ownership Interests and Security Interests.
The
Initial Transition Bond Trustee, the Initial Transition Bond Issuer and the
Initial TC Servicer hereby acknowledge the ownership interest of the Additional
Transition Bond Issuer in the Additional Transition Property, including the
Additional Transition Charges and the revenues, collections, claims, rights,
payments, money and proceeds arising therefrom, and the security interest in
favor of the Additional Transition Bond Trustee for the benefit of itself,
the
holders of the Additional Transition Bonds and any credit enhancement provider
in the Additional Transition Property.
The
Additional Transition Bond Trustee, the Additional Transition Bond Issuer and
the Additional TC Servicer hereby acknowledge the ownership interest of the
Initial Transition Bond Issuer in the Initial Transition Property, including
the
Initial Transition Charges and the revenues, collections, claims, rights,
payments, money and proceeds arising therefrom, and the security interest in
favor of the Initial Transition Bond Trustee for the benefit of itself, the
holders of the Initial Transition Bonds and any credit enhancement provider
in
the Initial Transition Property.
The
Initial Transition Bond Trustee, the Initial Transition Bond Issuer, the Initial
TC Servicer, the Additional Transition Bond Trustee, the Additional Transition
Bond Issuer and the Additional TC Servicer hereby acknowledge the ownership
interest of the State of New Jersey with respect to the Sales and Use Taxes
and
acknowledge that the Initial TC Servicer and the Additional TC Servicer will
collect the same for remittance to the State of New Jersey and not for its
own
account or that of the Initial Transition Bond Issuer or the Additional
Transition Bond Issuer.
SECTION
2. Deposit
Accounts.
Each of
the Initial Transition Bond Issuer, the Initial Transition Bond Trustee, the
Initial TC Servicer, the Additional Transition Bond Issuer, the Additional
Transition Bond Trustee and the Additional TC Servicer acknowledges that
Collections with respect to the Initial Transition Property and the Additional
Transition Property may from time to time be deposited into one or more
designated accounts of the Utility (the “Deposit
Accounts”).
Subject to Section 4 below, the Utility agrees to:
(a) maintain
the collections held in the Deposit Accounts for the benefit of the Initial
TC
Servicer, the Initial Transition Bond Trustee, the Initial Transition Bond
Issuer, the Additional TC Servicer, the Additional Transition Bond Trustee
and
the Additional Transition Bond Issuer, in accordance with their respective
interests as described in this Agreement and the other Basic Documents (as
defined in the Initial Indenture and the Additional Indenture, respectively),
to
the extent applicable;
(b) allocate
and remit funds from the Deposit Accounts at the times specified in the
respective Indentures and Servicing Agreements to the Initial Transition Bond
Trustee in the case of Collections relating to the Initial Transition Property
and to the Additional Transition Bond Trustee in the case of Collections
relating to the Additional Transition Property; provided
that:
(i) Collections from customers will be first applied to the payment of the
Sales
and Use Tax (which are not “charges” for purposes of the following allocations),
then to charges in arrears, if any, and then to current charges; (ii) to the
extent the combined amounts of remittance by customers are insufficient to
satisfy amounts owed in respect of the Initial Transition Charges,
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the
Additional Transition Charges, the MTC-Taxes and the transmission and
distribution charges (other than late-payment penalties), such allocation and
remittances shall be made on a pro rata basis as between the Initial Transition
Charges, the Additional Transition Charges, the MTC-Taxes and the applicable
transmission and distribution charges based on the relative amounts owed in
respect of such charges; and (iii) all Collections constituting late payment
charges shall be payable to and retained by the Initial TC Servicer or
Additional TC Servicer (or any successor(s) thereof), as applicable, as a
component of its compensation under the applicable Servicing Agreement;
and
(c) maintain
records as to the amounts deposited into the Deposit Accounts and the allocation
and remittances therefrom as provided in Section 2(b) above.
The
Utility shall allocate and pay all interest accrued on amounts in each Deposit
Account to the Initial TC Servicer or the Additional TC Servicer, as applicable.
The Initial Transition Bond Trustee, the Initial Transition Bond Issuer, the
Additional Transition Bond Trustee and the Additional Transition Bond Issuer,
shall each have the right to require an accounting from time to time of
collections, allocations and remittances by the Utility relating to the Deposit
Accounts.
Each
of
the parties hereto acknowledges the respective interests of the other parties
hereto in amounts on deposit in the Deposit Accounts to the extent of their
respective interests as described in this Agreement and the other Basic
Documents, to the extent applicable.
SECTION
3. Time
or Order of Attachment.
The
acknowledgments contained in Sections 1 and 2 of this Agreement are applicable
irrespective of the time or order of attachment or perfection of security or
ownership interests or the time or order of filing or recording of financing
statements or mortgages or filings under the Electric Discount and Energy
Competition Act, N.J.S.A.
48:3-48
et
seq..
SECTION
4. Servicing.
(a) Pursuant
to Section 2 above, the Company, in its role as Initial TC Servicer and
Additional TC Servicer, shall allocate and remit funds received from customers
for the Initial Transition Bonds and the Additional Transition Bonds,
respectively, and shall control the movement of such funds out of the Deposit
Accounts (such allocation, remittance and deposits hereafter called the
“Allocation
Services”).
Each
of the parties hereto acknowledges that the Initial TC Servicer or the
Additional TC Servicer may be replaced in accordance with the applicable Basic
Documents. Any such replacement, if such entity is retained in accordance with
such applicable Basic Documents, is referred to herein as a “Replacement
Servicer”.
Each
of the parties hereto agree that the Replacement Servicer for the Initial TC
Servicer and the Additional TC Servicer shall be the same entity.
(b) In
the
event that the Initial Transition Bond Trustee or the Additional Transition
Bond
Trustee is entitled to and desires to exercise its rights under the Initial
Indenture or the Additional Indenture, as applicable, to redirect Collections
relating to the Initial Transition Property or the Additional Transition
Property (as the case may be), any redirection of funds shall be either to
(A)
the Replacement Servicer or (B) if there is no Replacement Servicer, to a
Designated Account (as defined below) with an Eligible Institution chosen in
accordance with
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the
provisions of the Initial Indenture or the Additional Indenture, as applicable.
The “Designated
Account”
shall
be an “Eligible
Account”
(as
defined in the Initial Indenture and the Additional Indenture, as applicable)
and shall be held for the benefit of the Initial Transition Bond Trustee and
the
Additional Transition Bond Trustee as their interests may appear. Each of the
parties hereto agree that the Eligible Institution acting as the Designated
Account holder in accordance with the Initial Indenture and the Additional
Indenture shall be the same entity.
(c) Upon
exercise by the Initial Transition Bond Trustee or the Additional Transition
Bond Trustee of its rights to redirect Collections relating to the Initial
Transition Property or the Additional Transition Property, and in the absence
of
a Replacement Servicer, the parties agree that all Collections relating to
the
Initial Transition Property and the Additional Transition Property shall be
deposited into the Designated Account and that the Eligible Institution acting
as the Designated Account holder shall be instructed by the Utility to (i)
allocate and remit funds from such Designated Account, in amounts calculated
by
the Utility, with such calculations provided to the Eligible Institution acting
as Designated Account holder on a daily basis, to the Persons entitled thereto,
being the Initial Transition Bond Trustee in the case of all Collections
relating to the Initial Transition Property and the Additional Transition Bond
Trustee in the case of all Collections relating to the Additional Transition
Property (other than, in each case, late payment charges, which shall be
allocated and remitted as described in Section 2(b) above); and (ii) maintain
records as to the amounts deposited into such account and the amounts allocated
and remitted therefrom as provided in clause (i). The fees and expenses of
the
Eligible Institution acting as Designated Account holder shall be payable from
amounts deposited into the Designated Account on a pro rata basis as between
Collections relating to the Initial Transition Property and the Additional
Transition Property, provided that the portion of those fees and expenses
allocable to Collections relating to the Initial Transition Property shall
be
payable by the Initial TC Servicer or its successor, as the case may be, from,
and only to the extent of, the servicer fees provided for in the Initial
Servicing Agreement, and the portion of those fees and expenses allocable to
Collections relating to the Additional Transition Property shall be payable
by
the Additional TC Servicer or its successor, as the case may be, from, and
only
to the extent of, the servicer fees provided for in the Additional Servicing
Agreement. The Initial Transition Bond Trustee, the Initial Transition Bond
Issuer, the Additional Transition Bond Trustee and the Additional Transition
Bond Issuer shall each have the right to require an accounting from time to
time
of collections, allocations and remittances by the Eligible Institution acting
as Designated Account holder.
(d) Anything
in this Agreement to the contrary notwithstanding, any action taken by either
the Initial Transition Bond Trustee or the Additional Transition Bond Trustee
to
appoint a Replacement Servicer or designate an Eligible Institution acting
as a
Designated Account holder shall be subject to the Rating Agency Condition and
the consent, if required by law or the Financing Order (as defined in the
Initial Indenture or the Additional Indenture), of the New Jersey Board of
Public Utilities. For the purposes of this Agreement, the “Rating
Agency Condition”
means,
with respect to any such action, notification to each rating agency then rating
any class or series of the Initial Transition Bonds or the Additional Transition
Bonds of such action, and the receipt of written notification from each such
rating agency, other than Xxxxx’x and Fitch (as such terms are defined in the
Initial Indenture and the Additional Indenture, as applicable), that such action
will not result in a reduction or withdrawal of its respective then current
rating on the Initial Transition Bonds or the Additional Transition Bonds;
provided that
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the
Rating Agency Condition shall not be satisfied if Xxxxx’x or Fitch provides
notice that such action will result in a reduction or withdrawal of its
respective then current rating on the Initial Transition Bonds or the Additional
Transition Bonds. The parties hereto acknowledge and agree that the approval
or
the consent of the rating agencies which is required in order to satisfy the
Rating Agency Condition is not subject to any standard of commercial
reasonableness, and the parties are bound to satisfy this condition whether
or
not the rating agencies are unreasonable or arbitrary.
SECTION
5. Sharing
of Information.
The
parties hereto agree to cooperate with each other and make available to each
other or any Replacement Servicer any and all records and other data relevant
to
the Initial Transition Property and the Additional Transition Property which
it
may have in its possession or may from time to time receive from the Company,
the Initial TC Servicer, the Additional TC Servicer or any successors to any
of
the foregoing, including, without limitation, any and all computer programs,
data files, documents, instruments, files and records and any receptacles and
cabinets containing the same. The Company hereby consents to the release of
information regarding the Company pursuant to this Section 5.
SECTION
6. No
Joint Venture.
Nothing
herein contained shall be deemed as effecting a joint venture among any of
the
Initial Transition Bond Issuer, the Initial Transition Bond Trustee, the
Additional Transition Bond Issuer, the Additional Transition Bond Trustee and
the Company.
SECTION
7. Method
of Adjustment and Allocation.
Notwithstanding any provision herein to the contrary, for the purpose of this
Agreement only, the Additional Transition Bond Issuer hereby
acknowledges (a) the method of adjustment of the Initial Transition Charge
in
accordance with
Section 5 of Annex I to the Initial Servicing Agreement, and (b) the method
of
calculation and allocation of payments in accordance with Sections 3.02 and
3.03
of the Initial Servicing Agreement. Notwithstanding any provision herein to
the
contrary, for the purpose of this Agreement only, the Initial Transition Bond
Issuer hereby acknowledges (a) the method of adjustment of the Additional
Transition Charge in accordance with
Section 5 of Annex I to the Additional Servicing Agreement, and (b) the method
of calculation and allocation of payments in accordance with Sections 3.02
and
3.03 of the Additional Servicing Agreement. Each of the parties referenced
above
in this Section 7 irrevocably waives any right to object to or enjoin any
adjustment, calculation, payment or allocation consented and agreed to in this
Section 7.
SECTION
8. Termination.
This
Agreement shall terminate upon the payment in full of the Initial Transition
Bonds and the Additional Transition Bonds, except that the understandings and
acknowledgments contained in paragraphs 1, 2 and 3 shall survive the termination
of this Agreement.
SECTION
9. Governing
Law.
This
Agreement shall be governed by 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
10. Further
Assurances.
Each of
the parties hereto agrees to execute any and all agreements, instruments and
any
and all other documents reasonably requested by any of the other parties hereto
in order to effectuate the intent of this Agreement. Notwithstanding
any
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provision
hereof to the contrary, the Initial Transition Bond Trustee and the Additional
Transition Bond Trustee shall not be required to take any action pursuant to
this Section 10 unless directed to do so in writing by the Initial Transition
Bond Issuer or the Additional Transition Bond Issuer, respectively.
SECTION
11. Limitation
on Rights of Others.
This
Agreement is solely for the benefit of the Initial Transition Bond Issuer,
the
Initial Transition Bond Trustee for the benefit of itself, the Additional
Transition Bond Issuer, the Additional Transition Bond Trustee for the benefit
of itself, the holders of the Initial Transition Bonds and the holders of the
Additional Transition Bonds, the Company and any credit enhancement provider
in
the Initial Transition Property or the Additional Transition Property, as
applicable, and no other person or entity shall have any rights, benefits,
priority or interest under or because of the existence of this
Agreement.
SECTION
12. Counterparts.
This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument. Delivery of an executed counterpart
of a signature page to this Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Agreement.
SECTION
13. Nonpetition
Covenant.
Notwithstanding any prior termination of this Agreement, the Initial Indenture
or the Additional Indenture, each of the parties covenants that it shall not,
prior to the date which is one year and one day after payment in full of the
Initial Transition Bonds and the Additional Transition Bonds, acquiesce,
petition or otherwise invoke or cause either the Initial Transition Bond Issuer
or the Additional Transition Bond Issuer to invoke the process of any court
or
government authority for the purpose of commencing or sustaining a case against
the Initial Transition Bond Issuer or the Additional Transition Bond 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 Initial Transition Bond Issuer or the Additional
Transition Bond Issuer or any substantial part of its property, or ordering
the
winding up or liquidation of the affairs of the Initial Transition Bond Issuer
or the Additional Transition Bond Issuer.
SECTION
14. Trustees.
The
Bank of New York, as Initial Transition Bond Trustee, in acting hereunder is
entitled to all rights, benefits, protections, immunities and indemnities
accorded to it under the Initial Indenture. The Bank of New York, as Additional
Transition Bond Trustee, in acting hereunder is entitled to all rights,
benefits, protections, immunities and indemnities accorded to it under the
Additional Indenture.
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above
written.
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JERSEY
CENTRAL POWER & LIGHT COMPANY
as
Company
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By:
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Name:
Title:
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JERSEY
CENTRAL POWER & LIGHT COMPANY
as Initial TC Servicer |
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By:
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Name:
Title:
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JERSEY
CENTRAL POWER & LIGHT COMPANY
as Additional TC Servicer |
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By:
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Name:
Title:
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JERSEY
CENTRAL POWER & LIGHT COMPANY
as Utility |
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By:
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Name:
Title:
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JCP&L
TRANSITION FUNDING LLC
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By:
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Name:
Title:
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JCP&L
TRANSITION FUNDING II LLC
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By:
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Name:
Title:
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THE
BANK OF NEW YORK,
as Initial Transition Bond Trustee |
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By:
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Name:
Title:
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THE
BANK OF NEW YORK,
as Additional Transition Bond Trustee |
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By:
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Name:
Title:
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