EXECUTION COPY
INDENTURE
JCP&L TRANSITION FUNDING LLC,
as Issuer
and
THE BANK OF NEW YORK
as Trustee
----------
INDENTURE
Dated as of June 11, 2002
----------
Securing Transition Bonds
Issuable in Series
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.........................2
SECTION 1.01 DEFINITIONS...............................................2
SECTION 1.02 INCORPORATION BY REFERENCE OF THE TRUST
INDENTURE ACT.............................................2
SECTION 1.03 RULES OF CONSTRUCTION.....................................2
ARTICLE II THE TRANSITION BONDS..............................................3
SECTION 2.01 FORM......................................................3
SECTION 2.02 EXECUTION, AUTHENTICATION AND DELIVERY....................4
SECTION 2.03 DENOMINATIONS; TRANSITION BONDS ISSUABLE IN
SERIES....................................................4
SECTION 2.04 TEMPORARY TRANSITION BONDS................................5
SECTION 2.05 REGISTRATION; REGISTRATION OF TRANSFER AND
EXCHANGE..................................................6
SECTION 2.06 MUTILATED, DESTROYED, LOST OR STOLEN TRANSITION
BONDS.....................................................7
SECTION 2.07 PERSONS DEEMED OWNER......................................8
SECTION 2.08 PAYMENT OF PRINCIPAL AND INTEREST; INTEREST ON
OVERDUE PRINCIPAL; PRINCIPAL AND INTEREST
RIGHTS PRESERVED..........................................8
SECTION 2.09 CANCELLATION.............................................10
SECTION 2.10 AMOUNT; AUTHENTICATION AND DELIVERY OF
TRANSITION BONDS.........................................10
SECTION 2.11 BOOK-ENTRY TRANSITION BONDS..............................15
SECTION 2.12 NOTICES TO CLEARING AGENCY...............................16
SECTION 2.13 DEFINITIVE TRANSITION BONDS..............................16
ARTICLE III COVENANTS.......................................................17
SECTION 3.01 PAYMENT OF PRINCIPAL AND INTEREST........................17
SECTION 3.02 MAINTENANCE OF OFFICE OR AGENCY..........................17
SECTION 3.03 MONEY FOR PAYMENTS TO BE HELD IN TRUST...................18
SECTION 3.04 EXISTENCE................................................19
SECTION 3.05 PROTECTION OF COLLATERAL.................................19
SECTION 3.06 OPINIONS AS TO COLLATERAL................................20
SECTION 3.07 PERFORMANCE OF OBLIGATIONS...............................20
SECTION 3.08 NEGATIVE COVENANTS.......................................21
SECTION 3.09 ANNUAL STATEMENT AS TO COMPLIANCE........................21
SECTION 3.10 ISSUER MAY CONSOLIDATE, ETC..............................21
SECTION 3.11 SUCCESSOR OR TRANSFEREE..................................22
SECTION 3.12 NO OTHER BUSINESS........................................23
SECTION 3.13 NO BORROWING.............................................23
SECTION 3.14 GUARANTEES, LOANS, ADVANCES AND OTHER
LIABILITIES..............................................23
SECTION 3.15 CAPITAL EXPENDITURES.....................................23
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SECTION 3.16 RESTRICTED PAYMENTS......................................23
SECTION 3.17 NOTICE OF EVENTS OF DEFAULT..............................23
SECTION 3.18 INSPECTION...............................................24
SECTION 3.19 ADJUSTED OVERCOLLATERALIZATION BALANCE SCHEDULES.........24
SECTION 3.20 SALE AGREEMENT, SERVICING AGREEMENT AND
INTEREST RATE SWAP AGREEMENT COVENANTS...................24
SECTION 3.21 TAXES....................................................27
ARTICLE IV SATISFACTION AND DISCHARGE; DEFEASANCE...........................28
SECTION 4.01 SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE...............................................28
SECTION 4.02 CONDITIONS TO DEFEASANCE.................................29
SECTION 4.03 APPLICATION OF TRUST MONEY...............................30
SECTION 4.04 REPAYMENT OF MONEYS HELD BY PAYING AGENT.................31
ARTICLE V REMEDIES..........................................................31
SECTION 5.01 EVENTS OF DEFAULT........................................31
SECTION 5.02 ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT................................................32
SECTION 5.03 COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE...................................33
SECTION 5.04 REMEDIES.................................................35
SECTION 5.05 OPTIONAL PRESERVATION OF THE COLLATERAL..................36
SECTION 5.06 LIMITATION OF PROCEEDINGS................................36
SECTION 5.07 UNCONDITIONAL RIGHTS OF TRANSITION BONDHOLDERS
TO RECEIVE PRINCIPAL AND INTEREST........................37
SECTION 5.08 RESTORATION OF RIGHTS AND REMEDIES.......................37
SECTION 5.09 RIGHTS AND REMEDIES CUMULATIVE...........................38
SECTION 5.10 DELAY OR OMISSION NOT A WAIVER...........................38
SECTION 5.11 CONTROL BY TRANSITION BONDHOLDERS........................38
SECTION 5.12 WAIVER OF PAST DEFAULTS..................................39
SECTION 5.13 UNDERTAKING FOR COSTS....................................39
SECTION 5.14 WAIVER OF STAY OR EXTENSION LAWS.........................39
SECTION 5.15 ACTION ON TRANSITION BONDS...............................40
ARTICLE VI THE TRUSTEE......................................................40
SECTION 6.01 DUTIES AND LIABILITIES OF TRUSTEE........................40
SECTION 6.02 RIGHTS OF TRUSTEE........................................41
SECTION 6.03 INDIVIDUAL RIGHTS OF TRUSTEE.............................41
SECTION 6.04 TRUSTEE'S DISCLAIMER.....................................42
SECTION 6.05 NOTICE OF DEFAULTS.......................................42
SECTION 6.06 REPORTS BY TRUSTEE TO HOLDERS............................42
SECTION 6.07 COMPENSATION AND INDEMNITY...............................43
SECTION 6.08 REPLACEMENT OF TRUSTEE...................................44
SECTION 6.09 SUCCESSOR TRUSTEE BY MERGER..............................45
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SECTION 6.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE............45
SECTION 6.11 ELIGIBILITY; DISQUALIFICATION............................47
SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE
ISSUER...................................................47
SECTION 6.13 REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE............47
SECTION 6.14 RIGHT OF TRUSTEE IN CAPACITY OF REGISTRAR OR
PAYING AGENT.............................................47
ARTICLE VII TRANSITION BONDHOLDERS' LISTS AND REPORTS.......................47
SECTION 7.01 ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES
OF TRANSITION BONDHOLDERS................................47
SECTION 7.02 PRESERVATION OF INFORMATION; COMMUNICATIONS TO
TRANSITION BONDHOLDERS...................................48
SECTION 7.03 REPORTS BY ISSUER........................................48
SECTION 7.04 REPORTS BY TRUSTEE.......................................48
SECTION 7.05 PROVISION OF SERVICER REPORTS............................49
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES...........................49
SECTION 8.01 COLLECTION OF MONEY......................................49
SECTION 8.02 COLLECTION ACCOUNT.......................................49
SECTION 8.03 RELEASE OF COLLATERAL....................................56
SECTION 8.04 ISSUER OPINION OF COUNSEL................................57
SECTION 8.05 REPORTS BY INDEPENDENT ACCOUNTANTS.......................57
ARTICLE IX SUPPLEMENTAL INDENTURES..........................................58
SECTION 9.01 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
TRANSITION BONDHOLDERS...................................58
SECTION 9.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF
TRANSITION BONDHOLDERS...................................59
SECTION 9.03 EXECUTION OF SUPPLEMENTAL INDENTURES.....................61
SECTION 9.04 EFFECT OF SUPPLEMENTAL INDENTURE.........................61
SECTION 9.05 CONFORMITY WITH TRUST INDENTURE ACT......................62
SECTION 9.06 REFERENCE IN TRANSITION BONDS TO SUPPLEMENTAL
INDENTURES...............................................62
ARTICLE X REDEMPTION OF TRANSITION BONDS....................................62
SECTION 10.01 OPTIONAL REDEMPTION BY ISSUER............................62
SECTION 10.02 MANDATORY REDEMPTION BY ISSUER...........................62
SECTION 10.03 FORM OF REDEMPTION NOTICE................................63
SECTION 10.04 PAYMENT OF REDEMPTION PRICE..............................63
ARTICLE XI MISCELLANEOUS....................................................63
SECTION 11.01 COMPLIANCE CERTIFICATES AND OPINIONS, ETC................63
SECTION 11.02 FORM OF DOCUMENTS DELIVERED TO TRUSTEE...................64
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SECTION 11.03 ACTS OF TRANSITION BONDHOLDERS...........................65
SECTION 11.04 NOTICES, ETC.............................................65
SECTION 11.05 NOTICES TO TRANSITION BONDHOLDERS; WAIVER................66
SECTION 11.06 ALTERNATE PAYMENT AND NOTICE PROVISIONS..................67
SECTION 11.07 CONFLICT WITH TRUST INDENTURE ACT........................67
SECTION 11.08 EFFECT OF HEADINGS AND TABLE OF CONTENTS.................67
SECTION 11.09 SUCCESSORS AND ASSIGNS...................................67
SECTION 11.10 SEVERABILITY.............................................68
SECTION 11.11 BENEFITS OF INDENTURE....................................68
SECTION 11.12 LEGAL HOLIDAYS...........................................68
SECTION 11.13 GOVERNING LAW............................................68
SECTION 11.14 COUNTERPARTS.............................................68
SECTION 11.15 ISSUER OBLIGATION........................................68
SECTION 11.16 NO PETITION..............................................68
APPENDIX A MASTER DEFINITIONS
SCHEDULE I SCHEDULED OVERCOLLATERALIZATION LEVELS
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INDENTURE, dated as of June 11, 2002, by and between JCP&L
TRANSITION FUNDING LLC, a Delaware limited liability company, as Issuer, and The
Bank of New York, a New York banking corporation, in its capacity as trustee for
the benefit of the Holders of the Transition Bonds and as agent for itself and
any Swap Counterparty (in its collective capacities, the "Trustee").
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for one or more Series of Transition Bonds, issuable as
provided in this Indenture. Each such Series of Transition Bonds will be issued
only under a separate Series Supplement to this Indenture duly executed and
delivered by the Issuer and the Trustee. The Issuer is entering into this
Indenture, and the Trustee is accepting the trusts created hereby, each for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and each intending to be legally bound hereby.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee for the benefit of (i) the
Holders of the Transition Bonds from time to time issued and outstanding, (ii)
the Trustee and (iii) any Swap Counterparty (but only to the extent specified in
any Series Supplement), all of the Issuer's right, title and interest whether
now owned or hereafter acquired, in, to and under: (a) all Bondable Transition
Property, including, without limitation, the Bondable Transition Property
transferred by the Seller to the Issuer from time to time pursuant to the Sale
Agreement and all proceeds thereof; (b) the Sale Agreement; (c) all Bills of
Sale delivered by the Seller pursuant to the Sale Agreement; (d) the Servicing
Agreement; (e) the Administration Agreement; (f) any Interest Rate Swap
Agreement; (g) the Collection Account and all sub-accounts thereof (including,
without limitation, the General Subaccount, each Series Overcollateralization
Subaccount, each Series Capital Subaccount, the Reserve Subaccount, each Series
Subaccount, any Class Subaccount and any Defeasance Subaccount) and all cash,
securities, instruments, investment property or other assets deposited in or
credited to the Collection Account or any subaccount thereof from time to time
or purchased with funds therefrom; (h) all investment property and all other
property of whatever kind owned from time to time by the Issuer other than (x)
any cash released to any Swap Counterparty by the Trustee from the related Class
Subaccount pursuant to Section 8.02(f) and the related Series Supplement, (y)
any cash or other property released to the Issuer by the Trustee from any Series
Capital Subaccount pursuant to Section 8.02(g)(x) and (z) the proceeds from the
sale of the Transition Bonds used to pay (1) the costs of issuance of the
Transition Bonds and the Upfront Transaction Costs and Capital Reduction Costs
(as those terms are defined in the Financing Order) and (2) the purchase price
of the Bondable Transition Property paid pursuant to the Sale Agreement; (i) all
present and future claims, demands, causes and choses in action in respect of
any or all of the foregoing; and (j) all payments on or under and all proceeds
of every kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, general
intangibles, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing (collectively, the "Collateral").
Such Grants are made to the Trustee to have and to hold in trust to
secure the payment of principal of and premium, if any, and interest on, and any
other amounts owing in respect of, the Transition Bonds and all fees, expenses,
counsel fees and other amounts due and owing to the Trustee and, if and to the
extent provided in any Series Supplement, any amounts due and owing to any Swap
Counterparty (collectively, the "Secured Obligations"), equally and ratably
without prejudice, preference, priority or distinction, except as expressly
provided in this Indenture and to secure performance by the Issuer of all of the
Issuer's obligations under this Indenture with respect to the Transition Bonds,
all as provided in this Indenture.
The Trustee, as trustee on behalf of the Holders of the Transition
Bonds, acknowledges such Grant, accepts the trusts hereunder in accordance with
the provisions hereof and agrees to perform its duties herein required.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 DEFINITIONS. Capitalized terms used but not otherwise
defined in this Indenture have the respective meanings set forth in Appendix A
hereto unless the context otherwise requires.
SECTION 1.02. INCORPORATION BY REFERENCE OF THE TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. Each of the
following TIA terms used in this Indenture has the following meaning:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Transition Bonds.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule have the
meanings assigned to them by such definitions.
SECTION 1.03. RULES OF CONSTRUCTION. For purposes of this Indenture:
(a) An accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles of
the United States of America as in effect from time to time;
(b) "including" means including without limitation;
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(c) with respect to terms defined in Appendix A hereto, words in the
singular include the plural and words in the plural include the singular;
(d) unless otherwise specified, references herein to Sections or
Articles are to Sections or Articles of this Indenture; and
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
THE TRANSITION BONDS
SECTION 2.01 FORM.
(a) The Transition Bonds and the Trustee's certificate of
authentication shall be in substantially the forms set forth in the Exhibits to
the related Series Supplement, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture or by the related Series Supplement and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the Manager of the Issuer
executing such Transition Bonds, as evidenced by his or her execution of such
Transition Bonds. Any portion of the text of any Transition Bond may be set
forth on the reverse thereof, with an appropriate reference thereto on the face
of the Transition Bond. Each Transition Bond shall be dated the date of its
authentication.
(b) The Transition Bonds shall be typewritten, printed, lithographed
or engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the Manager of the Issuer
executing such Transition Bonds, as evidenced by his or her execution of such
Transition Bonds.
(c) Each Transition Bond shall bear upon its face the designation so
selected for the Series and Class, if any, to which it belongs. The terms of all
Transition Bonds of the same Series shall be the same, unless such Series is
comprised of one or more Classes, in which case the terms of all Transition
Bonds of the same Class shall be the same.
(d) Each Transition Bond shall state that the Competition Act
provides that the State of New Jersey pledges and agrees with the holders of the
Transition Bonds that "the State will not limit, alter or impair any bondable
transition property or other rights vested in an electric public utility or an
assignee or pledgee thereof or a financing entity or vested in the holders of
any transition bonds pursuant to a bondable stranded costs rate order until such
transition bonds, together with the interest and acquisition or redemption
premium, if any, thereon, are fully paid and discharged or until such agreements
are fully performed on the part of the electric public utility, any assignee or
pledgee thereof or the financing entity or in any way limit, alter, impair or
reduce the value or amount of the bondable transition property approved by a
bondable stranded costs rate order".
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SECTION 2.02 EXECUTION, AUTHENTICATION AND DELIVERY.
(a) The Transition Bonds shall be executed on behalf of the Issuer
by a Manager. The signature of any such Manager on the Transition Bonds may be
manual or facsimile.
(b) Transition Bonds bearing the manual or facsimile signature of
individuals who were at any time Managers shall bind the Issuer, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Transition Bonds.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver Transition Bonds executed on
behalf of the Issuer to the Trustee pursuant to an Issuer Order for
authentication; and the Trustee shall authenticate and deliver such Transition
Bonds as in this Indenture and in such Issuer Order provided and not otherwise.
(d) No Transition Bond shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears on
such Transition Bond a certificate of authentication substantially in the form
provided for in the related Series Supplement executed by the Trustee by the
manual signature of one of its authorized signatories, and such certificate upon
any Transition Bond shall be conclusive evidence, and the only evidence, that
such Transition Bond has been duly authenticated and delivered hereunder.
(e) The Trustee may appoint an authenticating agent acceptable to
the Issuer to authenticate Transition Bonds. An authenticating agent may
authenticate Transition Bonds whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as the Paying Agent and the
Transition Bond Registrar to deal with the Issuer or any Affiliate of the
Issuer.
SECTION 2.03 DENOMINATIONS; TRANSITION BONDS ISSUABLE IN SERIES.
(a) The Transition Bonds of each Series shall be issuable as
registered Transition Bonds in the Authorized Denominations specified in the
Series Supplement therefor.
(b) The Transition Bonds may, at the election of and as authorized
by a Manager and set forth in a Series Supplement, be issued in one or more
Series (each of which may be comprised of one or more Classes), and shall be
designated generally as the "Transition Bonds" of the Issuer, with such further
particular designations added or incorporated in such title for the Transition
Bonds of any particular Series or Class as a Manager of the Issuer may determine
and be set forth in the Series Supplement therefor.
(c) Each Series of Transition Bonds shall be created by a Series
Supplement authorized by a Manager and establishing the terms and provisions of
such Series and, if applicable, any Classes thereof. The several Series and any
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Classes thereof may differ as between Series and Classes, in respect of any of
the following matters:
(i) designation of the Series and each Class thereof;
(ii) the aggregate initial principal amount of the Transition
Bonds of the Series and each Class thereof;
(iii) the Interest Rate or Interest Rates of the Series and each
Class thereof or the formula, if any, used to calculate the applicable
Interest Rate or Interest Rates for the Series and each Class thereof;
(iv) the Payment Dates of the Series and each Class thereof;
(v) the Expected Final Payment Date of the Series and each
Class thereof;
(vi) the Final Maturity Date of the Series and each Class
thereof;
(vii) the Series Issuance Date of the Series;
(viii) the place or places for payments with respect to the
Series and each Class thereof;
(ix) the Authorized Denominations for the Series and each Class
thereof;
(x) the provisions, if any, for redemption by the Issuer of
the Series and each Class thereof;
(xi) the Expected Amortization Schedule for the Series and each
Class thereof;
(xii) the Overcollateralization Amount with respect to the
Series;
(xiii) the Required Capital Amount with respect to the Series;
(xiv) the Calculation Dates and Adjustment Dates for the Series;
(xv) the credit enhancement, if any, applicable to the Series
and each Class thereof; and
(xvi) any other terms of the Series or each Class that are not
inconsistent with the provisions of this Indenture.
SECTION 2.04 TEMPORARY TRANSITION BONDS.
(a) Pending the preparation of definitive Transition Bonds pursuant
to Section 2.13, or, in the case of Transition Bonds held in a book-entry only
system by a Clearing Agency, any Manager on behalf of the Issuer may execute,
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and upon receipt of an Issuer Order the Trustee shall authenticate and deliver,
temporary Transition Bonds which are printed, lithographed, typewritten,
mimeographed or otherwise produced, of the tenor of the definitive Transition
Bonds in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture and the related Series Supplement as the
Manager executing such Transition Bonds may determine, as evidenced by his or
her execution of such Transition Bonds.
(b) If temporary Transition Bonds are issued, the Issuer will cause
definitive Transition Bonds to be prepared without unreasonable delay except
where temporary Transition Bonds are held by a Clearing Agency. After the
preparation of definitive Transition Bonds, the temporary Transition Bonds shall
be exchangeable for definitive Transition Bonds upon surrender of the temporary
Transition Bonds at the office or agency of the Issuer to be maintained as
provided in Section 3.02, without charge to any Holder. Upon surrender for
cancellation of any one or more temporary Transition Bonds, a Manager on behalf
of the Issuer shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like Series (and, if applicable, Class) and aggregate
initial principal amount of definitive Transition Bonds in Authorized
Denominations. Until so exchanged, the temporary Transition Bonds shall in all
respects be entitled to the same benefits under this Indenture as definitive
Transition Bonds.
SECTION 2.05 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Issuer shall cause to be kept a register (the "Transition
Bond Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Transition Bonds and
the registration of transfers of Transition Bonds. The Trustee shall be the
registrar (the Trustee or any successor thereof in such capacity, the
"Transition Bond Registrar") for the purpose of registering Transition Bonds and
transfers of Transition Bonds as herein provided. Upon any resignation of any
Transition Bond Registrar, the Issuer shall promptly appoint a successor or, if
it elects not to make such an appointment, shall assume the duties of Transition
Bond Registrar.
(b) If a Person other than the Trustee is appointed by the Issuer as
Transition Bond Registrar, the Issuer shall give the Trustee and any transfer,
paying or listing agent of the Issuer appointed pursuant to Section 3.02(b)
prompt written notice of the appointment of such Transition Bond Registrar and
of the location, and any change in the location, of the Transition Bond
Register; the Trustee and any such agent shall have the right to inspect the
Transition Bond Register at all reasonable times and to obtain copies thereof;
and the Trustee and any such agent shall have the right to conclusively rely
upon a certificate executed on behalf of the Transition Bond Registrar by a duly
authorized officer thereof as to the names and addresses of the Holders of the
Transition Bonds and the original and Outstanding principal amounts and number
of such Transition Bonds (separately stated by Series and, if applicable,
Class).
(c) Upon surrender for registration of transfer of any Transition
Bond at the office or agency of the Issuer to be maintained as provided in
Section 3.02, a Manager on behalf of the Issuer shall execute, and the Trustee
shall authenticate and the Transition Bondholder shall obtain from the Trustee,
in the name of the designated transferee or transferees, one or more new
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Transition Bonds in any Authorized Denominations, of a like Series (and, if
applicable, Class) and aggregate initial principal amount.
(d) At the option of the Holder, Transition Bonds may be exchanged
for other Transition Bonds of a like Series (and, if applicable, Class) and
aggregate initial principal amount in Authorized Denominations, upon surrender
of the Transition Bonds to be exchanged at such office or agency as provided in
Section 3.02. Whenever any Transition Bonds are so surrendered for exchange, a
Manager on behalf of the Issuer shall execute, and the Trustee shall
authenticate and the Transition Bondholder shall obtain from the Trustee, the
Transition Bonds which the Transition Bondholder making the exchange is entitled
to receive.
(e) All Transition Bonds issued upon any registration of transfer or
exchange of Transition Bonds shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Transition Bonds surrendered upon such registration of
transfer or exchange.
(f) Every Transition Bond presented or surrendered for registration
of transfer or exchange shall be duly endorsed by, or be accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing,
with such signature guaranteed by an Eligible Guarantor Institution in the form
set forth in such Transition Bond.
(g) No service charge shall be made to a Holder for any registration
of transfer or exchange of Transition Bonds, but, other than in respect of
exchanges made pursuant to Sections 2.04 or 9.06 not involving any transfer, the
Issuer may require payment by such Holder of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Transition Bonds, including the fees and
expenses of the Trustee.
(h) The preceding provisions of this Section 2.05 notwithstanding,
the Issuer shall not be required to make, and the Transition Bond Registrar need
not register, transfers or exchanges of Transition Bonds selected for redemption
or transfers or exchanges of any Transition Bond for a period of fifteen days
preceding the date on which final payment of principal is to be made with
respect to such Transition Bond.
SECTION 2.06 MUTILATED, DESTROYED, LOST OR STOLEN TRANSITION BONDS.
(a) If (i) any mutilated Transition Bond is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Transition Bond, and (ii) there is delivered
to the Trustee such security or indemnity as may be required by it to hold the
Issuer and the Trustee harmless, then, in the absence of notice to the Issuer,
the Transition Bond Registrar or the Trustee that such Transition Bond has been
acquired by a protected purchaser, a Manager on behalf of the Issuer shall
execute, and upon a Manager's written request the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Transition Bond, a replacement Transition Bond of like Series (and, if
applicable, Class), tenor and initial principal amount in Authorized
Denominations, bearing a number not contemporaneously outstanding; provided,
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however, that if any such destroyed, lost or stolen Transition Bond, but not a
mutilated Transition Bond, shall have become or within seven (7) days shall be
due and payable, or shall have been called for redemption, instead of issuing a
replacement Transition Bond, the Issuer may pay such destroyed, lost or stolen
Transition Bond when so due or payable or upon the Redemption Date without
surrender thereof. If, after the delivery of such replacement Transition Bond or
payment of a destroyed, lost or stolen Transition Bond pursuant to the proviso
to the preceding sentence, a protected purchaser of the original Transition Bond
in lieu of which such replacement Transition Bond was issued presents for
payment such original Transition Bond, the Issuer and the Trustee shall be
entitled to recover such replacement Transition Bond (or such payment) from the
Person to whom it was delivered or any Person taking such replacement Transition
Bond from such Person to whom such replacement Transition Bond was delivered or
any assignee of such Person, except a protected purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Issuer or the Trustee in
connection therewith.
(b) Every replacement Transition Bond issued pursuant to this
Section 2.06 in replacement of any mutilated, destroyed, lost or stolen
Transition Bond shall constitute an original additional contractual obligation
of the Issuer, whether or not the mutilated, destroyed, lost or stolen
Transition Bond shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Transition Bonds duly issued hereunder. Upon the issuance of
any new Transition Bond under this Section, the Issuer may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including the
fees and expenses of the Trustee and its counsel) connected therewith.
(c) The provisions of this Section 2.06 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Transition
Bonds.
SECTION 2.07 PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Transition Bond, the Issuer, the Trustee and any
agent of the Issuer or the Trustee may treat the Person in whose name any
Transition Bond is registered (as of the day of determination) as the owner of
such Transition Bond for the purpose of receiving payments of principal of and
interest on such Transition Bond and for all other purposes whatsoever, whether
or not such Transition Bond be overdue, and neither the Issuer, the Trustee nor
any agent of the Issuer or the Trustee shall be affected by notice to the
contrary.
SECTION 2.08 PAYMENT OF PRINCIPAL AND INTEREST; INTEREST ON OVERDUE
PRINCIPAL; PRINCIPAL AND INTEREST RIGHTS PRESERVED.
(a) The Transition Bonds shall accrue interest as provided in the
form of Transition Bond attached to the Series Supplement for such Transition
Bonds, at the applicable Interest Rate or Interest Rates specified therein, and
such interest shall be payable on each Payment Date as specified therein. Any
installment of interest or principal payable on any Transition Bond which is
punctually paid or duly provided for by the Issuer on the applicable Payment
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Date shall be paid to the Person in whose name such Transition Bond (or one or
more Predecessor Transition Bonds) is registered on the Record Date for such
Payment Date, in the manner specified in the related Series Supplement, and if
not specified therein, either (i) by check mailed first-class, postage prepaid
to such Person's address as it appears on the Transition Bond Register on such
Record Date or (ii) with respect to Transition Bonds registered on a Record Date
in the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), by wire transfer in immediately available funds to the account
designated by such nominee, except for the final installment of principal
payable with respect to such Transition Bond on a Payment Date, which shall be
payable as provided in clause (b) below. The funds represented by any such
checks or other amounts returned undelivered shall be held in accordance with
Section 3.03.
(b) The principal of each Transition Bond of each Series (and, if
applicable, Class) shall be payable in installments on each Payment Date
specified in the Expected Amortization Schedule included in the Series
Supplement for such Transition Bonds, but only to the extent that moneys are
available for such payment pursuant to Section 8.02; provided, that installments
of principal not paid when scheduled to be paid shall be paid upon receipt of
moneys available for such purpose, in the sequential order set forth in the
applicable Expected Amortization Schedule. Failure to pay in accordance with
such Expected Amortization Schedule because moneys are not so available pursuant
to Section 8.02 to make such payments shall not constitute a Default or Event of
Default under this Indenture. Notwithstanding the foregoing, the entire
Outstanding principal amount of the Transition Bonds of any Series or Class
shall be due and payable, if not previously paid, either (i) on the Final
Maturity Date therefor, (ii) on the date on which the Transition Bonds of all
Series have been declared immediately due and payable in accordance with Section
5.02 or (iii) on the Redemption Date, if any, therefor. The Trustee shall notify
the Person in whose name a Transition Bond is registered, and any other Person
required under the relevant Series Supplement, at the close of business on the
second Record Date preceding the Payment Date on which the Issuer expects that
the final installment of principal of and interest on such Transition Bond will
be paid. Such notice shall be mailed no later than five days prior to such final
Payment Date and shall specify that such final installment of principal will be
payable only upon presentation and surrender of such Transition Bond and shall
specify the place where such Transition Bond may be presented and surrendered
for payment of such installment. Notices in connection with redemptions of
Transition Bonds also shall be mailed to Transition Bondholders as provided in
Section 10.03.
(c) If the Issuer defaults in a payment of interest on the
Transition Bonds of any Series, or is in default with respect to any amount
payable to any Swap Counterparty, the Issuer shall pay such defaulted interest
or such other amount, as the case may be, plus interest on such defaulted
interest or on such other amount at the applicable Interest Rate or Interest
Rates in any lawful manner (subject to the availability of such amounts in the
related Class Subaccount, in the case of interest owed with respect to any
Transition Bonds which have floating rates of interest). The Issuer may pay such
defaulted interest to the Persons who are Transition Bondholders and to any Swap
Counterparty, as applicable, at the rate specified in the related Series
Supplement or Interest Rate Swap Agreement, respectively, on a subsequent
special record date, which date shall be at least five Business Days prior to
the payment date. The Issuer shall fix or cause to be fixed any such special
record date and payment date, and, at least fifteen days before any such special
record date, the Issuer shall mail to each affected Transition Bondholder and
9
the Trustee a notice that states the special record date, the payment date and
the amount of defaulted interest to be paid.
SECTION 2.09 CANCELLATION. All Transition Bonds surrendered for
payment, registration of transfer, exchange or redemption shall, if surrendered
to any Person other than the Trustee, be delivered to the Trustee and shall be
promptly canceled by the Trustee. The Issuer may at any time deliver to the
Trustee for cancellation any Transition Bonds previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Transition Bonds so delivered shall be promptly canceled by the Trustee.
No Transition Bonds shall be authenticated in lieu of or in exchange for any
Transition Bonds canceled as provided in this Section 2.09, except as expressly
permitted by this Indenture. All canceled Transition Bonds may be held or
disposed of by the Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it; provided, that such Issuer Order
is timely and the Transition Bonds have not been previously disposed of by the
Trustee.
SECTION 2.10 AMOUNT; AUTHENTICATION AND DELIVERY OF TRANSITION
BONDS.
(a) The Issuer may issue Transition Bonds of a new Series as a
Financing Issuance or a Refunding Issuance.
(b) Transition Bonds of a new Series may from time to time be
executed by a Manager on behalf of the Issuer and delivered to the Trustee for
authentication and thereupon the same shall be authenticated and delivered by
the Trustee upon an Issuer Request and upon delivery by the Issuer, at the
Issuer's expense, to the Trustee of the following:
(i) Trust Action. An Issuer Order authorizing and directing the
authentication and delivery of the Transition Bonds by the Trustee and
specifying the principal amount of Transition Bonds to be authenticated.
(ii) Authorizing Certificate. A certified resolution of the Managers
authorizing the execution and delivery of the Series Supplement for the
Transition Bonds applied for and the execution, authentication and
delivery of such Transition Bonds.
(iii) Series Supplement. A Series Supplement for the Series of
Transition Bonds being issued, which shall set forth the provisions and
form of the Transition Bonds of such Series (and, if applicable, each
Class thereof).
(iv) Certificates of the Issuer and the Seller.
(A) An Issuer Officers' Certificate dated as of the Series
Issuance Date, stating:
(1) that no Default has occurred and is continuing under
this Indenture and that the issuance of the Transition Bonds
being issued on such Series Issuance Date will not result in
any Default;
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(2) that the Issuer has not assigned any interest or
participation in the Collateral except for the Grant contained
in this Indenture; that the Issuer has the power and authority
to Grant the Collateral to the Trustee as security hereunder;
and that the Issuer, subject to the terms of this Indenture,
has Granted to the Trustee a perfected security interest in
all right, title and interest in, to and under the Collateral
free and clear of any Lien, except the Lien of this Indenture;
(3) that the Issuer has appointed a firm of Independent
certified public accountants as contemplated in Section 8.05;
(4) that attached thereto are duly executed, true and
complete copies of the Sale Agreement and the Servicing
Agreement;
(5) that all financing statements with respect to the
Collateral which are required to be filed under the New Jersey
UCC, the Delaware UCC or the uniform commercial code of any
other jurisdiction by the terms of the Sale Agreement, the
Servicing Agreement or this Indenture have been or will be
filed as required; and
(6) that all conditions precedent provided in this
Indenture relating to the authentication and delivery of the
Transition Bonds have been complied with.
(B) An Officers' Certificate from the Seller, dated as of the
Series Issuance Date, to the effect that, in the case of the
Bondable Transition Property to be transferred to the Issuer on such
date, immediately prior to the conveyance thereof to the Issuer
pursuant to the Sale Agreement:
(1) no entity, other than the Seller, had any ownership
interest in such Bondable Transition Property at any time; to
the extent the Seller had any interest in the Bondable
Transition Property, such interest and the Bondable Transition
Property will be validly transferred and sold to the Issuer
free and clear of all Liens (other than Liens created by the
Issuer pursuant to this Indenture) and such transfer will be
perfected; the Seller has the power and authority to sell and
assign any such interest in the Bondable Transition Property
to the Issuer; the Seller has duly authorized such sale and
assignment to the Issuer; and the Seller's state of
incorporation is the State of New Jersey;
(2) the attached copy of the Financing Order creating
such Bondable Transition Property is true and correct and is
in full force and effect; and
(3) if the Series Issuance Date is after the date
hereof, the representations and warranties contained in
Sections 3.08(b), (d)(iv), (d)(v) and (f)(i)-(iii) of the Sale
Agreement are true as if made on the date of conveyance of the
Bondable Transition Property.
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(v) Issuer Opinion of Counsel. An Issuer Opinion of Counsel, or any
other opinion or opinions on which the Trustee may conclusively rely,
portions of which may be delivered by counsel for the Issuer and portions
of which may be delivered by counsel for the Seller and/or the Servicer,
dated as of the Series Issuance Date, subject to customary qualifications,
substantially to the collective effect that:
(A) the Issuer has the power and authority to execute and
deliver the related Series Supplement and this Indenture and to
issue the Transition Bonds being issued, each of the related Series
Supplement and this Indenture and such Transition Bonds has been
duly authorized, executed and delivered, and the Issuer is duly
organized, validly existing as a limited liability company and in
good standing under the laws of the jurisdiction of its organization
and is in good standing in any jurisdiction where it is required to
be qualified;
(B) no authorization, approval or consent of any governmental
body is required for the valid issuance, authentication or delivery
of such Transition Bonds, except for any such authorization,
approval or consent as has already been obtained and such
registrations as are required under the blue sky and securities laws
of any State;
(C) the Transition Bonds being issued, when executed and
authenticated in accordance with the provisions of this Indenture
and delivered, will constitute valid and binding obligations of the
Issuer entitled to the benefits of this Indenture and the related
Series Supplement;
(D) the Financing Order with respect to the related Transition
Bonds is final and non-appealable;
(E) this Indenture, the Sale Agreement and the Servicing
Agreement are valid and binding agreements of the Issuer,
enforceable against the Issuer in accordance with their respective
terms except as such enforceability may be subject to bankruptcy,
insolvency, moratorium, reorganization, receivership and other
similar laws affecting the rights and remedies of creditors
generally and general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law);
(F) the Sale Agreement is a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its terms
except as such enforceability may be subject to bankruptcy,
insolvency, moratorium, reorganization, receivership and other
similar laws affecting the rights and remedies of creditors
generally and general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law);
(G) the Servicing Agreement is a valid and binding agreement
of the Servicer, enforceable against the Servicer in accordance with
its terms except as such enforceability may be subject to
bankruptcy, insolvency, reorganization, receivership, moratorium and
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other laws affecting the rights and remedies of creditors generally
and general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(H)
(1) the provisions of the Sale Agreement together with
the related Bill of Sale are effective to create, in favor of
the Issuer, a valid security interest (as such term is defined
in Section 1-201 of the New Jersey UCC) in the Seller's rights
in the Bondable Transition Property described in the Bill of
Sale (the "Transferred Bondable Transition Property"), which
security interest if characterized as a transfer for security
will secure the amount paid by the Issuer for such Transferred
Bondable Transition Property; it being noted that the term
"security interest" for the purposes of this paragraph
includes both a sale and a transfer for security of an account
and no opinion will be expressed as to the proper
characterization of the transfer of the Transferred Bondable
Transition Property by the Seller to the Issuer;
(2) the security interest in favor of the Issuer in the
Transferred Bondable Transition Property has been perfected;
and
(3) no other security interest of any other creditor of
the Seller is equal or prior to the security interest of the
Issuer in the Transferred Bondable Transition Property;
(I) upon the giving of value by the Trustee to the Issuer with
respect to the Collateral,
(1) this Indenture creates in favor of the Trustee, to
secure payment of the Transition Bonds, a valid security
interest in the rights of the Issuer in, to and under that
portion of the Collateral subject to Article 9 of the New
Jersey UCC, including the Transferred Bondable Transition
Property (the "Article 9 Collateral"),
(2) upon filing of the related financing statements in
accordance with the New Jersey UCC and the Delaware UCC, such
security interest will be perfected, and
(3) based solely on a review of the search reports under
the Uniform Commercial Code, no other security interest of any
other creditor of the Issuer is equal or prior to the security
interest of the Trustee for the benefit of the Transition
Bondholders in the Article 9 Collateral;
(J) this Indenture has been duly qualified under the Trust
Indenture Act and either the related Series Supplement for the
Transition Bonds applied for has been duly qualified under the Trust
Indenture Act or no such qualification of such Series Supplement is
necessary;
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(K) all instruments furnished to the Trustee hereunder conform
to the requirements of this Indenture and constitute all of the
documents required to be delivered hereunder for the Trustee to
authenticate and deliver the Transition Bonds applied for, and all
conditions precedent provided for in this Indenture relating to the
authentication and delivery of the Transition Bonds have been
complied with;
(L) either
(1) the registration statement covering the Transition
Bonds is effective under the Securities Act of 1933, as
amended, and, to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of
such registration statement has been issued under the
Securities Act of 1933, as amended, nor have proceedings
therefor been instituted or threatened by the Commission or
(2) the Transition Bonds are exempt from the
registration requirements under the Securities Act of 1933, as
amended;
(M) this Indenture has been duly authorized, executed and
delivered by the Issuer and constitutes a legal, valid and binding
obligation of the Issuer, enforceable against the Issuer in
accordance with its terms, except as such enforceability may be
subject to bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws affecting the rights and remedies
of creditors generally and general principles of equity (regardless
of whether such enforcement is considered in a proceeding in equity
or at law);
(N) the Sale Agreement and the Servicing Agreement have been
duly authorized, executed and delivered by each of the parties
thereto; and
(O) the Issuer is not now and, following the issuance of the
Transition Bonds, will not be, required to be registered under the
Investment Company Act of 1940, as amended.
(vi) Accountant's Certificate or Opinion. A letter addressed to the
Issuer and the Trustee complying with the requirements of Section 11.01,
of a firm of Independent certified public accountants of recognized
national reputation to the effect that (A) such accountants are
Independent with respect to the Issuer within the meaning of this
Indenture, and are independent public accountants within the meaning of
the standards of The American Institute of Certified Public Accountants,
and (B) with respect to the Collateral, they have made certain specified
recalculations of calculations and information provided by the Issuer for
the purpose of determining that, based on certain specified assumptions
used in calculating the Transition Bond Charge with respect to the related
Transferred Bondable Transition Property, as of the Series Issuance Date
for such Series, after giving effect to the issuance of such Series and
the application of the proceeds therefrom, and taking into account any
amounts on deposit in the Reserve Subaccount, the Transition Bond Charge
will be sufficient to pay (1) assumed Operating Expenses when incurred,
14
plus (2) any amounts due under any Interest Rate Swap Agreement when due,
plus (3) the Overcollateralization Amount for such Series set forth in the
Final Prospectus (as such term is defined in the Underwriting Agreement),
plus (4) interest on the Transition Bonds at their respective Interest
Rates when due as set forth in the Final Prospectus, plus (5) principal of
the Transition Bonds in accordance with the Expected Amortization Schedule
set forth in the Final Prospectus, as of each Payment Date and found such
calculations to be mathematically correct.
(vii) Required Capital Amount. Evidence satisfactory to the Trustee
that the Required Capital Amount for such Series has been credited to the
Capital Subaccount for such Series.
(viii) Rating Agency Approval. If there are any Outstanding Series
or Classes of Transition Bonds, written notice from each Rating Agency
that such action will not result in a reduction or withdrawal of the then
current rating or ratings by such Rating Agency of any such Outstanding
Series or Class.
(ix) Bill of Sale. If the issuance of an additional Series of
Transition Bonds is a Financing Issuance, the Bill of Sale delivered to
the Issuer under the Sale Agreement with respect to the Bondable
Transition Property being purchased with the proceeds of such Financing
Issuance.
(x) Moneys for Refunding. If the issuance of a Series of Transition
Bonds is a Refunding Issuance, the amount of money necessary to pay
premiums, if any, and the outstanding principal balance of and interest on
the Transition Bonds being refunded to the Redemption Date for the
Transition Bonds being refunded upon redemption, such money to be
deposited into a separate account with the Trustee.
SECTION 2.11 BOOK-ENTRY TRANSITION BONDS. Unless otherwise specified
in the related Series Supplement, each Series of Transition Bonds, upon original
issuance, will be issued in the form of a typewritten Transition Bond or
Transition Bonds representing the Book-Entry Transition Bonds, to be delivered
to the Trustee as custodian for The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer. Such Transition Bond shall
initially be registered on the Transition Bond Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Transition Bond Owner
will receive a definitive Transition Bond representing such Transition Bond
Owner's interest in such Transition Bond, except as provided in Section 2.13.
Unless and until definitive, fully registered Transition Bonds (the "Definitive
Transition Bonds") have been issued to Transition Bondholders pursuant to
Section 2.13:
(a) the provisions of this Section 2.11 shall be in full force and
effect;
(b) the Transition Bond Registrar and the Trustee shall be entitled
to deal with the then acting Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Transition Bonds and
the giving of instructions or directions hereunder) as the sole Holder of the
Transition Bonds, and shall have no obligation to the Transition Bond Owners;
15
(c) to the extent that the provisions of this Section 2.11 conflict
with any other provisions of this Indenture, the provisions of this Section 2.11
shall control;
(d) the rights of Transition Bond Owners shall be exercised only
through the then acting Clearing Agency and shall be limited to those
established by law and agreements between such Transition Bond Owners and the
Clearing Agency or the Clearing Agency Participants. Pursuant to the DTC
Agreement, unless and until Definitive Transition Bonds are issued pursuant to
Section 2.13, the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit payments of principal
of and interest on the Transition Bonds to such Clearing Agency Participants;
and
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Transition Bonds evidencing
a specified percentage of the Outstanding Amount of the Transition Bonds or a
Series or Class thereof, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to such effect
from Transition Bond Owners or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial interest
in the Transition Bonds or such Series or Class and has delivered such
instructions to the Trustee.
SECTION 2.12 NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Transition Bondholders is required under this Indenture,
unless and until Definitive Transition Bonds shall have been issued to
Transition Bond Owners pursuant to Section 2.13, the Trustee shall give all such
notices and communications specified herein to be given to Transition
Bondholders to the Clearing Agency, and shall have no obligation to the
Transition Bond Owners.
SECTION 2.13 DEFINITIVE TRANSITION BONDS.
(a) If (i) the Issuer advises the Trustee in writing that the then
acting Clearing Agency is no longer willing or able to properly discharge its
responsibilities as depository with respect to any Series or Class of Transition
Bonds and the Issuer is unable to locate a qualified successor, (ii) the Issuer,
at its option, advises the Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency with respect to any Series or
Class of Transition Bonds or (iii) after the occurrence of an Event of Default,
Transition Bond Owners representing beneficial interests aggregating at least a
majority of the Outstanding Amount of the Transition Bonds of all Series advise
the Trustee through the Clearing Agency in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Transition Bond Owners, then the Clearing Agency shall notify all
affected Transition Bond Owners and the Trustee of the occurrence of any such
event and of the availability of Definitive Transition Bonds to affected
Transition Bond Owners requesting the same. Upon surrender to the Trustee of the
typewritten Transition Bond or Transition Bonds representing the Book-Entry
Transition Bonds by the Clearing Agency, accompanied by registration
instructions, a Manager on behalf of the Issuer shall execute and the Trustee
shall authenticate the Definitive Transition Bonds in accordance with the
instructions of the Clearing Agency. None of the Issuer, the Transition Bond
Registrar or the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
16
such instructions. Upon the issuance of Definitive Transition Bonds, the Trustee
shall recognize the Holders of the Definitive Transition Bonds as Transition
Bondholders.
(b) Definitive Transition Bonds will be transferable and
exchangeable at the offices of the Transition Bond Registrar.
ARTICLE III
COVENANTS
SECTION 3.01 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer will duly
and punctually pay, or will cause the Servicer to duly and punctually pay, the
principal of and interest on the Transition Bonds in accordance with the terms
of the Transition Bonds and this Indenture; provided, that except on the Final
Maturity Date or the Redemption Date for a Series or Class of Transition Bonds
or upon the acceleration of the Transition Bonds pursuant to Section 5.02, the
Issuer shall only be obligated to pay the principal of such Transition Bonds on
each Payment Date therefor to the extent moneys are available for such payment
pursuant to Section 8.02. Amounts properly withheld under the Code by any Person
from a payment to any Transition Bondholder of interest or principal shall be
considered as having been paid by the Issuer to such Transition Bondholder for
all purposes of this Indenture.
SECTION 3.02 MAINTENANCE OF OFFICE OR AGENCY.
(a) The Issuer will maintain in the Borough of Manhattan, The City
of New York, an office or agency where Transition Bonds may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Transition Bonds and this Indenture may be served.
The Issuer hereby initially appoints the Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the Trustee
and any agent appointed pursuant to clause (b) below of the location and
identity, and of any change in the location or identity, of any such office or
agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Trustee and each such agent with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Trustee as its agent
to receive all such surrenders, notices and demands.
(b) To the extent any of the Transition Bonds are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require, (i) the
Issuer will maintain in Luxembourg (A) an office and a transfer agent where
Transition Bonds may be surrendered for registration of transfer or exchange,
(B) an office and a listing agent where notices and demands to or upon the
Issuer in respect of the Transition Bonds and this Indenture may be served, and
(C) an office and a paying agent where payments in respect of the Transition
Bonds may be made and (ii) any reference in this Indenture to the office or
agency of the Issuer referenced in Section 3.02(a) shall also refer to such
offices, and the transfer, listing and paying agents, of the Issuer in
Luxembourg, as applicable. The Issuer shall give the Trustee and any other agent
appointed under this Section 3.02(b) prompt written notice of the location and
identity, and of any change in the location or identity, of any such office or
agency.
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SECTION 3.03 MONEY FOR PAYMENTS TO BE HELD IN TRUST.
(a) As provided in Section 8.02(a), all payments of principal of and
interest on the Transition Bonds that are to be made from amounts withdrawn from
the Collection Account pursuant to Section 8.02(g) or Section 4.03 shall be made
on behalf of the Issuer by the Trustee or by another Paying Agent, and no
amounts so withdrawn from the Collection Account for payments of Transition
Bonds shall be paid over to the Issuer except as provided in this Section 3.03
and in Section 8.02.
(b) The Issuer shall cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section 3.03, that such Paying
Agent will:
(i) hold all sums held by it for the payment of principal of or
interest on the Transition Bonds in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such Persons
as herein provided;
(ii) give the Trustee written notice of any Default by the Issuer
(or any other obligor upon the Transition Bonds) of which the Paying Agent
has actual knowledge in the making of any payment required to be made with
respect to the Transition Bonds;
(iii) at any time during the continuance of any such Default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Trustee all sums held by the Paying Agent in trust for the payment of
Transition Bonds if at any time the Paying Agent ceases to meet the
standards required to be met by a Paying Agent at the time of its
appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Transition Bonds of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
(c) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such payment
by any Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
(d) Subject to applicable laws with respect to escheat of funds, any
money held by the Trustee or any Paying Agent in trust for the payment of any
amount of principal of or interest on any Transition Bond and remaining
unclaimed for two years after such amount has become due and payable shall be
18
discharged from such trust and be paid to the Issuer upon Issuer Order; and the
Holder of such Transition Bond shall thereafter, as an unsecured general
creditor, look only to the Issuer for payment thereof (but only to the extent of
the amounts so paid to the Issuer), and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Issuer cause to be published once,
in a newspaper published in the English language, customarily published on each
Business Day and of general circulation in the City of New York, and in an
Authorized Newspaper, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than thirty (30) days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including mailing notice of such repayment to Holders whose
Transition Bonds have been called but have not been surrendered for redemption
or whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Trustee or of any Paying Agent, at the last
address of record for each such Holder).
SECTION 3.04 EXISTENCE. Subject to Section 3.10, the Issuer shall
keep in full effect its existence, rights and franchises as a statutory limited
liability company under the laws of the State of Delaware (unless it becomes, or
any successor Issuer hereunder is or becomes, organized under the laws of any
other State or of the United States of America, in which case the Issuer will
keep in full effect its existence, rights and franchises under the laws of such
other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Transition Bonds, the Collateral and each other instrument or agreement included
herein and therein.
SECTION 3.05 PROTECTION OF COLLATERAL. (a) The Issuer shall from
time to time execute and deliver all such supplements and amendments hereto and
all such filings, financing statements, continuation statements, instruments of
further assurance and other instruments, and shall take such other action
necessary or advisable to:
(i) maintain and preserve the Lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iii) enforce any of the Collateral, including its rights under any
Interest Rate Swap Agreement;
(iv) preserve and defend title to the Collateral and the rights of
the Trustee and the Transition Bondholders in the Collateral against the
claims of all Persons and parties; and
(v) pay any and all taxes levied or assessed upon all or any part of
the Collateral.
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(b) The Issuer hereby designates the Trustee as its agent and
attorney-in-fact to execute any filing with the BPU, financing statement,
continuation statement or other instrument required by the Trustee pursuant to
this Section 3.05.
SECTION 3.06 OPINIONS AS TO COLLATERAL.
(a) Promptly after the execution and delivery of this Indenture,
promptly after each Series Issuance Date, if any, and on or before May 31 in
each calendar year, while any Series is outstanding, commencing May 31, 2003,
the Issuer shall furnish to the Trustee an Issuer Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken
pursuant to the New Jersey UCC and Delaware UCC so as to make effective the Lien
and security interest created by this Indenture and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain such Lien and security interest, and no other security
interest of any other creditor of the Issuer is equal or prior to the security
interest of the Issuer in the Transferred Bondable Transition Property. Such
Issuer Opinion of Counsel shall also describe the execution and filing of any
filings pursuant to the New Jersey UCC and Delaware UCC of financing statements,
continuation statements and other instruments that will, in the opinion of such
counsel, be required to maintain the Grant, Lien and security interest of this
Indenture until May 31 in the following calendar year.
(b) Prior to the effectiveness of any amendment to the Sale
Agreement or the Servicing Agreement, the Issuer shall furnish to the Trustee an
Issuer Opinion of Counsel either (i) stating that, in the opinion of such
counsel, all actions, with respect to filings, including filings pursuant to the
New Jersey UCC and Delaware UCC, have been taken that are necessary fully to
maintain the security interests of the Issuer and the Trustee in all the
Collateral, and reciting the details of such filings or referring to prior
Issuer Opinions of Counsel in which such details are given, or (ii) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest.
SECTION 3.07 PERFORMANCE OF OBLIGATIONS.
(a) The Issuer (i) shall diligently pursue any and all actions to
enforce its rights under each instrument or agreement included in the Collateral
and (ii) shall not take any action and will use its best efforts not to permit
any action to be taken by others that would release any Person from any of such
Person's covenants or obligations under any such instrument or agreement or that
would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument or
agreement, except, in each case, as expressly provided in this Indenture, the
Sale Agreement, the Servicing Agreement, any Interest Rate Swap Agreement or any
other Basic Document.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Issuer Officer's Certificate shall
be deemed to be action taken by the Issuer. Initially, the Issuer has contracted
with the Administrator to assist the Issuer in performing its duties under this
Indenture.
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(c) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in the Sale Agreement, this Indenture and
any supplements thereto, the Servicing Agreement, any Interest Rate Swap
Agreement and in all other instruments and agreements included in the
Collateral.
SECTION 3.08 NEGATIVE COVENANTS. The Issuer shall not:
(a) except as expressly permitted by this Indenture, the Sale
Agreement, the Servicing Agreement, any Interest Rate Swap Agreement or any
other Basic Document, sell, transfer, exchange or otherwise dispose of any of
the Collateral, unless directed to do so by the Trustee in accordance with
Article V;
(b) claim any credit on, or make any deduction from the principal or
premium, if any, or interest payable in respect of, the Transition Bonds (other
than amounts properly withheld from such payments under the Code or pursuant to
any Interest Rate Swap Agreement) or assert any claim against any present or
former Transition Bondholder by reason of the payment of taxes levied or
assessed upon the Issuer or any part of the Collateral; or
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the Lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenants or obligations with respect to the Transition Bonds under this
Indenture except as may be expressly permitted hereby, (ii) permit any Lien
(other than the Lien created by this Indenture) to be created on or extend to or
otherwise arise upon or burden the Collateral or any part thereof, any interest
therein or the proceeds thereof or (iii) permit the Lien of this Indenture not
to constitute a continuing valid first priority security interest in the
Collateral.
SECTION 3.09 ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 2002), an Issuer Officer's Certificate
stating, as to the Manager signing such Issuer Officer's Certificate, that:
(a) a review of the activities of the Issuer during such year (or
relevant portion thereof) and of performance under this Indenture has been made
under such Manager's supervision; and
(b) to the best of such Manager's knowledge, based on such review,
the Issuer has complied with all conditions and covenants under this Indenture
throughout such calendar year (or relevant portion thereof), or, if there has
been a default in complying with any such condition or covenant, describing each
such default and the nature and status thereof.
SECTION 3.10 ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Issuer shall not consolidate or merge with or into any other Person or sell,
in one or a series of related transactions, substantially all of its assets to
any other Person or dissolve, unless:
(a) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger or to whom substantially all of such assets are
sold shall be a Person organized and existing under the laws of the United
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States of America or any State and shall expressly assume by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the principal of and premium, if
any, and interest on all Transition Bonds and the performance of every agreement
and covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein and in the applicable Series Supplement or
Series Supplements;
(b) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger or to whom substantially all of such assets are
sold shall expressly assume all obligations and succeed to all rights of the
Issuer under the Sale Agreement, the Administration Agreement, the Servicing
Agreement and any interest rate swap agreement pursuant to an assignment and
assumption agreement executed and delivered to the Trustee, in form satisfactory
to the Trustee;
(c) immediately after giving effect to such consolidation, merger or
sale, no Default or Event of Default shall have occurred and be continuing;
(d) prior notice of such consolidation, merger or sale shall be
given to the Rating Agencies and the then current ratings on any Outstanding
Transition Bonds shall not be withdrawn or downgraded in connection with such
consolidation, merger or sale;
(e) the Issuer shall have received an Issuer Opinion of Counsel (and
shall have delivered copies thereof to the Trustee) to the effect that such
consolidation, merger or sale (i) will not have any material adverse tax
consequence to the Issuer or any Transition Bondholder, (ii) complies with this
Indenture and all of the conditions precedent herein relating to such
transaction and (iii) will result in the Trustee maintaining a continuing valid
first priority perfected security interest in the Collateral;
(f) neither the Bondable Transition Property nor the Financing Order
nor the rights of the Seller, the Servicer or the Issuer under the Competition
Act or the Financing Order shall be impaired thereby; and
(g) any action as is necessary to maintain the Lien created by this
Indenture shall have been taken.
SECTION 3.11 SUCCESSOR OR TRANSFEREE.
(a) Upon any consolidation or merger of the Issuer in accordance
with Section 3.10, the Person formed by or surviving such consolidation or
merger (if other than the Issuer) shall succeed to, and be substituted for, and
may exercise every right and power of, the Issuer under this Indenture with the
same effect as if such Person had been named as the Issuer herein.
(b) Upon any sale by the Issuer of substantially all of its assets
in accordance with Section 3.10, JCP&L Transition Funding LLC will be released
from every covenant and agreement of this Indenture to be observed or performed
on the part of the Issuer with respect to the Transition Bonds and from every
covenant and agreement of the Sale Agreement, the Administration Agreement, the
Servicing Agreement and any Interest Rate Swap Agreement to be observed or
performed on the part of the Issuer.
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SECTION 3.12 NO OTHER BUSINESS. The Issuer shall not engage in any
business other than purchasing and owning Bondable Transition Property, issuing
Transition Bonds from time to time, pledging its interest in the Collateral to
the Trustee under this Indenture in order to secure the Transition Bonds,
entering into the Basic Documents and all other agreements relating to the
Transition Bonds and performing its obligations thereunder and performing
activities that are necessary, suitable or convenient to accomplish these
purposes or are incidental thereto.
SECTION 3.13 NO BORROWING. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Transition Bonds and except as contemplated by the
Basic Documents and the Underwriting Agreement.
SECTION 3.14 GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.
Except as contemplated by the Basic Documents, the Issuer shall not make any
loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person, other
than any Eligible Investments.
SECTION 3.15 CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty) other than Bondable Transition Property purchased
from the Seller pursuant to, and in accordance with, the Sale Agreement.
SECTION 3.16 RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (a) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest in, or ownership security of, the
Issuer, (b) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or security or (c) set aside or otherwise segregate
any amounts for any such purpose; provided, however, that if no Event of Default
shall have occurred and be continuing or would otherwise result from such
payment, the Issuer may make, or cause to be made, any such distributions to any
owner of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest or security in or of the Issuer using funds either
distributed to the Issuer pursuant to Section 8.02(g) or which are not otherwise
subject to the Lien of this Indenture, to the extent that such distributions
would not cause the book value of the remaining equity in the Issuer to decline
below 0.5% of the initial principal amount of all Series of Transition Bonds
which remain outstanding. The Issuer will not, directly or indirectly, make
payments to or distributions from the Collection Account except in accordance
with the Basic Documents.
SECTION 3.17 NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to
deliver to the Trustee and the Rating Agencies written notice in the form of an
Issuer Officer's Certificate of any Default or Event of Default hereunder or
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under any of the Basic Documents, its status and what action the Issuer is
taking or proposes to take with respect thereto within five Business Days after
the occurrence thereof.
SECTION 3.18 INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports and
other papers of the Issuer, to make copies and extracts therefrom, to cause such
books to be audited annually by Independent certified public accountants, and to
discuss the Issuer's affairs, finances and accounts with the Issuer's officers,
employees and Independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Trustee shall and shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Trustee may reasonably determine that such disclosure is consistent with its
obligations hereunder.
SECTION 3.19 ADJUSTED OVERCOLLATERALIZATION BALANCE SCHEDULES. Not
later than the date on which a new Series of Transition Bonds is issued or any
outstanding Series of Transition Bonds is redeemed or defeased, the Issuer shall
deliver to the Trustee a replacement Schedule A to the related Series
Supplement, adjusted to reflect such issuance, redemption or defeasance and
setting forth the Scheduled Overcollateralization Level for each Payment Date
with respect to each Series.
SECTION 3.20 SALE AGREEMENT, SERVICING AGREEMENT AND INTEREST RATE
SWAP AGREEMENT COVENANTS.
(a) The Issuer agrees to take all such lawful actions to enforce its
rights under the Sale Agreement, the Servicing Agreement and any Interest Rate
Swap Agreement and to compel or secure the performance and observance by the
Seller, the Servicer and any Swap Counterparty, of each of their obligations to
the Issuer under or in connection with the Sale Agreement, the Servicing
Agreement and any Interest Rate Swap Agreement, respectively, in accordance with
the terms thereof. So long as no Event of Default occurs and is continuing, but
subject to Section 3.20(f), the Issuer may exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer under or in
connection with the Sale Agreement, the Servicing Agreement and any Interest
Rate Swap Agreement.
(b) If an Event of Default occurs and is continuing, the Trustee
may, and, at the direction (which direction shall be in writing) of (i) with
respect to the Sale Agreement or the Servicing Agreement, the Holders of a
majority of the Outstanding Amount of the Transition Bonds of all Series, voting
together as a single class, or (ii) with respect to any Interest Rate Swap
Agreement, the Holders of that percentage of the Outstanding Amount of the
Transition Bonds of the related Class specified in the related Series
Supplement, shall exercise all rights, remedies, powers, privileges and claims
of the Issuer against the Seller, the Servicer or any Swap Counterparty under or
in connection with the Sale Agreement, the Servicing Agreement and any Interest
Rate Swap Agreement, respectively, including the right or power to take any
action to compel or secure performance or observance by the Seller, the Servicer
or any Swap Counterparty of each of their obligations to the Issuer thereunder
and to give any consent, request, notice, direction, approval, extension or
24
waiver under the Sale Agreement, the Servicing Agreement and any Interest Rate
Swap Agreement, and any right of the Issuer to take such action shall be
suspended.
(c) With the consent of the Trustee, the Sale Agreement and the
Servicing Agreement may be amended, provided notice of the substance of the
amendment is given to each Rating Agency, at any time and from time to time,
without the consent of the Transition Bondholders, or the counterparty under any
Interest Rate Swap Agreement; provided, however, such amendment may not
adversely affect in any material respect the interests of any Transition
Bondholder or any counterparty under any Interest Rate Swap Agreement without
the consent of the Holders of a majority of the Outstanding Amount of the
Transition Bonds of each Series or Class and each such counterparty, materially
and adversely affected thereby. Further, with the consent of the Trustee and the
related counterparty under any Interest Rate Swap Agreement, any Interest Rate
Swap Agreement may be amended, at any time and from time to time, so long as
prior notice is provided to the Rating Agencies and the then current ratings on
any Outstanding Transition Bonds are not withdrawn or downgraded by the Rating
Agencies. However, such amendment may not adversely affect in any material
respect the interest of any Transition Bondholder or counterparty under any
Interest Rate Swap Agreement without the consent of sixty-six and two thirds
percent of the Holders of the Outstanding Amount of the Transition Bonds of each
Series or Class and each such other counterparty materially and adversely
affected thereby.
(d) If the Issuer, the Seller, the Servicer or any Swap Counterparty
proposes to amend, modify, waive, supplement, terminate or surrender, or agree
to any amendment, modification, waiver, supplement, termination, or surrender
of, the terms of the Sale Agreement, the Servicing Agreement or any Interest
Rate Swap Agreement, or waives timely performance or observance thereunder by
the Seller, the Servicer or any Swap Counterparty, respectively, in each case in
such a way as would materially and adversely affect the interests of any Class
of any Series of Transition Bondholders or the counterparty under any Interest
Rate Swap Agreement, the Issuer shall first notify the Rating Agencies of the
proposed amendment, modification, supplement, waiver, termination or surrender.
After sending such notification to the Rating Agencies, the Issuer shall notify
the Trustee, and the Trustee shall notify the Transition Bondholders and each
counterparty under any Interest Rate Swap Agreement, of the proposal. With
respect to any such proposed action related to the Sale Agreement and the
Servicing Agreement, the Trustee shall consent to such proposed action only (i)
with the consent of the Holders of a majority of the Outstanding Amount of the
Transition Bonds of each Class of each Series and each counterparty under any
Interest Rate Swap Agreement, materially and adversely affected thereby and (ii)
upon written notice of the substance of the proposed action to the Rating
Agencies and the Rating Agencies' subsequent confirmation that the then current
ratings on any Outstanding Transition Bonds will not be withdrawn or downgraded
by the Rating Agencies. With respect to any such proposed action related to any
Interest Rate Swap Agreement, the Trustee shall consent to such proposed action
only (y) with the consent of the Holders representing sixty-six and two-thirds
percent of the Outstanding Amount of the Transition Bonds of the related Series
or Class, and each counterparty under any Interest Rate Swap Agreement,
materially and adversely affected thereby and (z) upon written notice of the
substance of the proposed action to the Rating Agencies and the Rating Agencies'
subsequent confirmation that the then current ratings on any Outstanding
Transition Bonds will not be withdrawn or downgraded by the Rating Agencies. If
25
any such amendment, modification, supplement, waiver, termination or surrender
shall be so consented to by the Trustee or such Holders, the Issuer agrees to
execute and deliver, in its own name and at its own expense, such agreements,
instruments, consents and other documents as shall be necessary or appropriate
in the circumstances. For so long as any of the Transition Bonds are listed on
the Luxembourg Stock Exchange and the rules of that exchange so require, notice
of such proposed action will be published by an agent to be appointed by the
Issuer in an Authorized Newspaper promptly following its effectiveness.
(e) If the Issuer or the Servicer proposes to amend, modify, waive,
supplement, terminate or surrender in any material respect, or to agree to any
material amendment, modification, waiver, supplement, termination or surrender
of, the Transition Bond Charge Adjustment Process, the Issuer shall notify the
Trustee in writing and the Trustee shall notify the Transition Bondholders of
such proposal and the Trustee shall consent thereto only with the written
consent of the Holders a majority of the Outstanding Amount of the Transition
Bonds of each Series, voting together as a single class, materially and
adversely affected thereby; provided, notice of the substance of such proposal
is provided to the Rating Agencies and the Rating Agencies subsequently confirm
that the then current ratings on any Outstanding Transition Bonds will not be
withdrawn or downgraded by the Rating Agencies (except that with regard to
Moody's it will be sufficient to provide ten days' prior notice of any such
action).
(f) Promptly following a default by either the Seller, the Servicer
or any Swap Counterparty under the Sale Agreement, the Servicing Agreement or
any Interest Rate Swap Agreement, respectively, and at the Issuer's expense, the
Issuer agrees to take all such lawful actions as the Trustee may request to
compel or secure the performance and observance by the Seller, the Servicer or
any Swap Counterparty, as applicable, of each of their obligations to the Issuer
under or in connection with the Sale Agreement, the Servicing Agreement or any
Interest Rate Swap Agreement in accordance with the terms thereof, and to
exercise any and all rights, remedies, powers and privileges lawfully available
to the Issuer under or in connection with the Sale Agreement, the Servicing
Agreement or Interest Rate Swap Agreement, respectively, to the extent and in
the manner directed by the Trustee, including the transmission of notices of
default on the part of the Seller, the Servicer or any Swap Counterparty
thereunder and the institution of legal or administrative actions or proceedings
to compel or secure performance by the Seller, the Servicer or any Swap
Counterparty of each of their respective obligations under the Sale Agreement,
the Servicing Agreement and any Interest Rate Swap Agreement.
(g) If the Issuer shall have knowledge of the occurrence of a
Servicer Default under the Servicing Agreement or an event of default,
termination event or downgrade event under any Interest Rate Swap Agreement, the
Issuer shall promptly give written notice thereof to the Trustee and the Rating
Agencies, and shall specify in such notice the action, if any, the Issuer is
taking with respect to such default or event of default.
(h) If a Servicer Default shall arise from the failure of the
Servicer to perform any of its duties or obligations under the Servicing
Agreement with respect to the Bondable Transition Property or the Transition
Bond Charge, the Issuer shall take all reasonable steps available to it to
remedy such failure. The Issuer shall not take any action to terminate the
Servicer's rights and powers under the Servicing Agreement following a Servicer
26
Default without the prior written consent of the Trustee and of the Holders of a
majority of the Outstanding Amount of the Transition Bonds of all Series.
(i) As promptly as possible after the giving of notice of
termination to the Servicer and the Rating Agencies of the Servicer's rights and
powers pursuant to Section 6.01 of the Servicing Agreement, the Trustee, with
the consent of the Holders of Transition Bonds evidencing not less than a
majority of the Outstanding Amount of the Transition Bonds of all Series, may
appoint a successor Servicer (the "Successor Servicer"), and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Issuer and the Trustee. A Person shall qualify as a Successor
Servicer only if such Person satisfies the requirements of Section 6.04 of the
Servicing Agreement. In connection with any such appointment, the Issuer may
make such arrangements for the compensation of such Successor Servicer as it and
such Successor Servicer shall agree, subject to the limitations set forth below
and in the Servicing Agreement, and, in accordance with Section 6.04 of the
Servicing Agreement, the Issuer shall enter into an agreement with such
Successor Servicer for the servicing of the Bondable Transition Property (such
agreement to be in form and substance satisfactory to the Trustee).
(j) Upon termination of the Servicer's rights and powers pursuant to
the Servicing Agreement, the Trustee shall promptly notify the Issuer, the
Transition Bondholders and the Rating Agencies of such termination. As soon as a
Successor Servicer is appointed, the Issuer shall notify the Trustee, the
Transition Bondholders and the Rating Agencies in writing of such appointment,
specifying in such notice the name and address of such Successor Servicer.
(k) The Issuer shall not take any action to terminate or assign the
Swap Counterparty's rights and powers under any Interest Rate Swap Agreement or
replace any Swap Counterparty following an event of default, termination event
or downgrade event under any Interest Rate Swap Agreement without (i) the prior
written consent of the Trustee and of the Holders of that percentage of the
Outstanding Amount of the Transition Bonds, if any such consent is required
under the related Series Supplement, of the related Series and Class, if any,
specified in the related Series Supplement, and (ii) satisfying any other
requirements set forth in the related Series Supplement and Interest Rate Swap
Agreement.
(l) Upon termination or assignment of any Swap Counterparty's rights
and powers, pursuant to any Interest Rate Swap Agreement, the Trustee shall
promptly inform the Issuer, the Transition Bondholders of the related Class and
the Rating Agencies of such termination or assignment. As soon as a replacement
Swap Counterparty is appointed, the Issuer shall notify the Trustee, the
Transition Bondholders of the related Class and the Rating Agencies in writing
of such appointment, specifying in such notice the name and address of such
replacement Swap Counterparty.
SECTION 3.21 TAXES. So long as any of the Transition Bonds are
outstanding, the Issuer shall pay or cause to be paid all material taxes,
assessments and governmental charges imposed upon it or any of its properties or
assets or with respect to any of its franchises, business, income or property
before any penalty accrues thereon if the failure to pay any such taxes,
assessments and governmental charges would, after any applicable grace periods,
notices or other similar requirements, result in a Lien on the Collateral.
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ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 4.01 SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE.
(a) The Transition Bonds of any Series, all moneys payable with
respect thereto and this Indenture as it applies to such Series shall cease to
be of further effect and the Lien hereunder shall be released with respect to
such Series, interest shall cease to accrue on the Transition Bonds of such
Series and the Trustee, on written demand of and at the expense of the Issuer,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture with respect to the Transition Bonds of such Series, when
(i) either
(A) all Transition Bonds of such Series theretofore
authenticated and delivered (other than (1) Transition Bonds that
have been destroyed, lost or stolen and that have been replaced or
paid as provided in Section 2.06 and (2) Transition Bonds for whose
payment money has theretofore been deposited in trust or segregated
and held in trust by the Issuer and thereafter repaid to the Issuer
or discharged from such trust, as provided in Section 3.03(d)) have
been delivered to the Trustee for cancellation; or
(B) the Expected Final Payment Date or Redemption Date has
occurred with respect to all Transition Bonds of such Series not
theretofore delivered to the Trustee for cancellation, and the
Issuer has irrevocably deposited or caused to be irrevocably
deposited with the Trustee cash, in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on
such Transition Bonds not theretofore delivered to the Trustee on
the Expected Final Payment Date or Redemption Date, as applicable,
therefor;
(ii) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer with respect to such Series; and
(iii) the Issuer has delivered to the Trustee an Issuer Officers'
Certificate, an Issuer Opinion of Counsel and (if required by the TIA or
the Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.01 and
each stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture with respect to
Transition Bonds of such Series have been complied with.
(b) Subject to Sections 4.01(c) and 4.02, the Issuer at any time may
terminate (i) all its obligations under this Indenture with respect to the
Transition Bonds of any Series ("Legal Defeasance Option") or (ii) its
obligations under Sections 3.04, 3.05, 3.06 (other than with respect to amounts
in the Defeasance Subaccount), 3.07, 3.08, 3.09, 3.10, 3.12, 3.13, 3.14, 3.15,
3.16, 3.17, 3.18, 3.19 and 3.20 and the operation of Section 5.01(d) ("Covenant
Defeasance Option") with respect to any Series of Transition Bonds. The Issuer
may exercise the Legal Defeasance Option with respect to any Series of
28
Transition Bonds notwithstanding its prior exercise of the Covenant Defeasance
Option with respect to such Series.
(c) If the Issuer exercises the Legal Defeasance Option with respect
to any Series, the maturity of the Transition Bonds of such Series may not be
(i) accelerated pursuant to Section 5.02 or (ii) except as provided in Section
4.02, redeemed. If the Issuer exercises the Covenant Defeasance Option with
respect to any Series, the maturity of the Transition Bonds of such Series may
not be accelerated because of an Event of Default specified in Section 5.01(d).
(d) Upon satisfaction of the conditions set forth herein to the
exercise of the Legal Defeasance Option or the Covenant Defeasance Option with
respect to any Series of Transition Bonds, the Trustee, on written demand of and
at the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of the obligations that are terminated pursuant to
such exercise.
(e) Notwithstanding Sections 4.01(a) and 4.01(b) above, (i) the
rights of registration of transfer and exchange, (ii) the rights of substitution
of mutilated, destroyed, lost or stolen Transition Bonds, (iii) the rights of
Transition Bondholders to receive payments of principal and interest, but only
from the amounts deposited with the Trustee for such payments, (iv) Sections
4.03 and 4.04, (v) the rights, obligations and immunities of the Trustee
hereunder (including the rights of the Trustee under Section 6.07 and the
obligations of the Trustee under Section 4.03) and (vi) the rights of Transition
Bondholders under this Indenture with respect to the property deposited with the
Trustee payable to all or any of them, shall survive until the Transition Bonds
of the Series as to which this Indenture or certain obligations hereunder have
been satisfied and discharged pursuant to Section 4.01(a) or 4.01(b) and have
been paid in full. Thereafter, the obligations in Sections 6.07 and 4.04 with
respect to such Series shall survive.
SECTION 4.02 CONDITIONS TO DEFEASANCE.
(a) The Issuer may exercise the Legal Defeasance Option or the
Covenant Defeasance Option with respect to any Series of Transition Bonds only
if:
(i) the Issuer irrevocably deposits or causes to be deposited in
trust with the Trustee cash or U.S. Government Obligations for the payment
of principal of and premium, if any, and interest on such Series of
Transition Bonds to the Expected Final Payment Date or Redemption Date
therefor, as applicable, such deposit to be made in the Defeasance
Subaccount for such Series of Transition Bonds;
(ii) the Issuer delivers to the Trustee a certificate from a
nationally recognized firm of Independent certified public accountants
expressing its opinion that the payments of principal of and interest when
due and without reinvestment on the deposited U.S. Government Obligations
plus any deposited cash without investment will provide cash at such times
and in such amounts (but, in the case of the Legal Defeasance Option only,
not more than such amounts) as will be sufficient to pay in respect of the
Transition Bonds of such Series (A) subject to clause (B), principal in
accordance with the Expected Amortization Schedule therefor, (B) if such
Series is to be redeemed, the Redemption Price therefor on the Redemption
Date therefor and (C) interest when due;
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(iii) in the case of the Legal Defeasance Option, ninety-five days
pass after the deposit is made and during such ninety-five day period no
Default specified in Section 5.01(e) or 5.01(f) occurs which is continuing
at the end of the period; provided, however, that in determining whether a
default under Section 5.01(e) has occurred, the requirement that the
decree or order shall remain unstayed and in effect for ninety days shall
be disregarded;
(iv) no Default has occurred and is continuing on the day of such
deposit and after giving effect thereto;
(v) in the case of the Legal Defeasance Option, the Issuer delivers
to the Trustee an Issuer Opinion of Counsel stating that (A) the Issuer
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (B) since the date of execution of this Indenture,
there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion shall
confirm that, the Holders of the Transition Bonds of such Series will not
recognize income, gain or loss for federal income tax purposes as a result
of the exercise of such Legal Defeasance Option and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance had not occurred;
(vi) in the case of the Covenant Defeasance Option, the Issuer
delivers to the Trustee an Issuer Opinion of Counsel to the effect that
the Holders of the Transition Bonds of such Series will not recognize
income, gain or loss for federal income tax purposes as a result of the
exercise of such Covenant Defeasance Option and will be subject to federal
income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance had not occurred; and
(vii) the Issuer delivers to the Trustee an Issuer Officer's
Certificate and an Issuer Opinion of Counsel, each stating that all
conditions precedent to the satisfaction and discharge of the Transition
Bonds of such Series to the extent contemplated by this Article IV have
been complied with.
(b) Notwithstanding any other provision of this Section 4.02 to the
contrary, no delivery of cash or U.S. Government Obligations to the Trustee
under this Section 4.02 shall terminate any obligations of the Issuer under this
Indenture with respect to any Transition Bonds which are to be redeemed prior to
the Expected Final Payment Date therefor until such Transition Bonds shall have
been irrevocably called or designated for redemption on a date thereafter on
which such Transition Bonds may be redeemed in accordance with the provisions of
this Indenture and proper notice of such redemption shall have been given in
accordance with the provisions of this Indenture or the Issuer shall have given
the Trustee, in form satisfactory to the Trustee, irrevocable instructions to
give, in the manner and at the times prescribed herein, notice of redemption of
such Series.
SECTION 4.03 APPLICATION OF TRUST MONEY. All moneys or U.S.
Government Obligations deposited with the Trustee pursuant to Sections 4.01 or
4.02 with respect to any Series of Transition Bonds shall be held in trust in
the Defeasance Subaccount for such Series and applied by the Trustee, in
30
accordance with the provisions of the Transition Bonds and this Indenture, to
the payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Transition Bonds for the payment or
redemption of which such moneys have been deposited with the Trustee, of all
sums due and to become due thereon for principal, premium, if any, and interest.
Such moneys shall be segregated and held apart solely for paying such Transition
Bonds and such Transition Bonds shall not be entitled to any amounts on deposit
in the Collection Account other than amounts on deposit in the Defeasance
Subaccount for such Transition Bonds.
SECTION 4.04 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture, the Covenant Defeasance
Option or the Legal Defeasance Option with respect to the Transition Bonds of
any Series, all moneys then held by any Paying Agent other than the Trustee
under the provisions of this Indenture with respect to such Transition Bonds
shall, upon demand of the Issuer, be paid to the Trustee to be held and applied
according to Section 3.03 and thereupon such Paying Agent shall be released from
all further liability with respect to such moneys.
ARTICLE V
REMEDIES
SECTION 5.01 EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one or more of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of any interest on any Transition Bond
when the same becomes due and payable and the continuation of such default for
five Business Days;
(b) default in the payment of the then unpaid principal of any
Transition Bond of any Series or Class on the Final Maturity Date therefor;
(c) default in the payment of the Redemption Price for any
Transition Bond on the Redemption Date therefor;
(d) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is specifically
dealt with in clause (a), (b) or (c) above), or any material representation or
warranty of the Issuer made in this Indenture or in any certificate or other
writing delivered pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when made, and any such default
shall continue or not be cured, for a period of thirty days after the earlier of
(i) the date that there shall have been given, by registered or certified mail,
to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of
at least twenty-five percent of the Outstanding Amount of the Transition Bonds
of any Series or Class, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating that such
31
notice is a "Notice of Default" hereunder or (ii) the date the Issuer has
knowledge of the default;
(e) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of
the Collateral in an involuntary case or proceeding under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for the Issuer or for any substantial part of the
Collateral, or ordering the winding-up or liquidation of the Issuer's affairs,
and such decree or order shall remain unstayed and in effect for a period of
ninety consecutive days;
(f) the commencement by the Issuer of a voluntary case or proceeding
under any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent by
the Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for the Issuer or
for any substantial part of the Collateral, or the making by the Issuer of any
assignment for the benefit of creditors, or the failure by the Issuer generally
to pay its debts as such debts become due, or the taking of action by the Issuer
in furtherance of any of the foregoing; or
(g) any act or failure to act by the State of New Jersey or any of
its agencies (including the BPU), officers or employees that violates or is not
in accordance with the pledge and agreement of the State of New Jersey in
Section 17.a of the Competition Act.
SECTION 5.02 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT
(a) If an Event of Default (other than an Event of Default under
Section 5.01(g)) occurs and is continuing, then and in every such case either
the Trustee or the Holders of Transition Bonds representing not less than a
majority of the Outstanding Amount of the Transition Bonds of all Series, voting
together as a single class, may, but need not, declare all the Transition Bonds
to be immediately due and payable, by a notice in writing to the Issuer (and to
the Trustee if given by Transition Bondholders), and upon any such declaration
the unpaid principal amount of the Transition Bonds of all Series, together with
accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable.
(b) At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as provided in this Article V, the Holders of
Transition Bonds representing a majority of the Outstanding Amount of the
Transition Bonds of all Series, voting together as a single class, by written
notice to the Issuer and the Trustee, may rescind and annul such declaration and
its consequences, provided that:
(i) the Issuer has paid or deposited with the Trustee, for deposit
in the General Subaccount of the Collection Account, a sum sufficient to
pay:
(A) all payments of principal of and interest on all
Transition Bonds of all Series and all other amounts that would then
32
be due hereunder or upon such Transition Bonds if the Event of
Default giving rise to such acceleration had not occurred; and
(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Transition Bonds of all Series that has become due solely
by such acceleration, have been cured or waived as provided in Section
5.12.
(c) No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 5.03 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
(a) The Issuer covenants that if (i) Default is made in the payment
of any interest on any Transition Bond when such interest becomes due and
payable and such Default continues for five Business Days, (ii) Default is made
in the payment of the then unpaid principal of any Transition Bond on the Final
Maturity Date therefor or (iii) Default is made in the payment of the Redemption
Price or for any Transition Bond on the Redemption Date therefor, the Issuer
shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of
the Transition Bonds of such Series, such amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee and its agents and counsel
and the whole amount then due and payable on such Transition Bonds for principal
and interest, with interest upon the overdue principal and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest, at the respective Interest Rate of such Series or the
applicable Class of such Series.
(b) In case the Issuer shall fail forthwith to pay the amounts
specified in clause (a) above upon such demand, the Trustee, in its own name and
as trustee of an express trust, may institute a Proceeding for the collection of
the sums so due and unpaid, and may prosecute such Proceeding to judgment or
final decree, and may enforce the same against the Issuer or other obligor upon
such Transition Bonds and collect in the manner provided by law out of the
property of the Issuer or other obligor upon such Transition Bonds, wherever
situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Trustee
may, as more particularly provided in Section 5.04, in its discretion, proceed
to protect and enforce its rights and the rights of the Transition Bondholders,
by such appropriate Proceedings as the Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Trustee by this Indenture or by law including foreclosing or
otherwise enforcing the Lien on the Bondable Transition Property securing the
Transition Bonds. The Trustee shall request a court of competent jurisdiction to
33
permit the BPU to issue and enforce any order for sequestration of revenues
arising with respect to such Bondable Transition Property.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Transition Bonds or any Person having or claiming an
ownership interest in the Collateral, Proceedings under Title 11 of the United
States Code or any other applicable federal or state bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Transition Bonds, or to the
creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of any Transition Bonds shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand pursuant to the provisions of
this Section 5.03, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Transition Bonds
and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for reimbursement
of all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence or
bad faith) and of the Transition Bondholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Transition Bonds in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Transition Bondholders and of the Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
or the Holders of Transition Bonds allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Transition Bondholders
to make payments to the Trustee, and, in the event that the Trustee shall
consent to the making of payments directly to such Transition Bondholders, to
pay to the Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Trustee, each predecessor Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith.
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(e) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Transition Bondholder any plan of reorganization, arrangement, adjustment or
composition affecting the Transition Bonds or the rights of any Holder thereof
or to authorize the Trustee to vote in respect of the claim of any Transition
Bondholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Transition Bonds, may be enforced by the Trustee
without the possession of any of the Transition Bonds or the production thereof
in any trial or other Proceedings relative thereto, and any such action or
Proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Transition Bonds.
(g) In any Proceedings brought by the Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party), the Trustee shall be held to represent all
the Holders of the Transition Bonds, and it shall not be necessary to make any
Transition Bondholder a party to any such Proceedings.
SECTION 5.04 REMEDIES.
(a) If an Event of Default other than Section 5.01(g) occurs and is
continuing, the Trustee may do one or more of the following (subject to Section
5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Transition Bonds or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect from
the Issuer and any other obligor upon such Transition Bonds moneys
adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the New Jersey
UCC , the Delaware UCC or the Competition Act or any other applicable law
and take any other appropriate action to protect and enforce the rights
and remedies of the Trustee and the Holders of the Transition Bonds;
(iv) sell the Collateral or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; and
(v) exercise all rights, remedies, powers, privileges and claims of
the Issuer against the Seller, the Administrator, the Servicer or any Swap
Counterparty under or in connection with the Sale Agreement, the
Administration Agreement, the Servicing Agreement or any Interest Rate
Swap Agreement, respectively, as provided in Section 3.20(b);
35
provided, however, that the Trustee may not sell or otherwise liquidate any
portion of the Collateral following an Event of Default, other than an Event of
Default described in Section 5.01(a), 5.01(b) or 5.01(c), with respect to any
Series unless (A) the Holders of one hundred percent of the Outstanding Amount
of the Transition Bonds of all Series consent in writing thereto, (B) the
proceeds of such sale or liquidation distributable to the Transition Bondholders
of all Series are sufficient to discharge in full all amounts then due and
unpaid upon such Transition Bonds for principal and premium, if any, and accrued
interest or (C) the Trustee determines that the Collateral will not continue to
provide sufficient funds for all payments on the Transition Bonds of all Series
as they would have become due if the Transition Bonds had not been declared due
and payable and the Trustee obtains the consent of Holders of at least sixty-six
and two-thirds percent of the Outstanding Amount of the Transition Bonds of all
Series. In determining such sufficiency or insufficiency with respect to clauses
(B) and (C), the Trustee may, but need not, obtain and conclusively rely upon an
opinion of an Independent investment banking or certified public accounting firm
of national reputation as to the feasibility of such proposed action and as to
the sufficiency of the Collateral for such purpose.
(b) If an Event of Default under Section 5.01(g) occurs and is
continuing, the Trustee, for the benefit of the Holders, shall be entitled and
empowered to the extent permitted by applicable law to institute or participate
in Proceedings reasonably necessary to compel performance of or to enforce the
pledge and agreement of the State of New Jersey in Section 17.a of the
Competition Act and to collect any monetary damages incurred by the Holders or
the Trustee as a result of any such Event of Default, and may prosecute any such
Proceeding to final judgment or decree. Such remedy shall be the only remedy
that the Trustee may exercise if the only Event of Default that has occurred and
is continuing is an Event of Default under Section 5.01(g).
SECTION 5.05 OPTIONAL PRESERVATION OF THE COLLATERAL. If the
Transition Bonds have been declared to be due and payable under Section 5.02
following an Event of Default and such declaration and its consequences have not
been rescinded and annulled, the Trustee may, but need not, elect, as provided
in Section 5.11(c), to maintain possession of the Collateral and not sell or
liquidate the same. It is the desire of the parties hereto and the Transition
Bondholders that there be at all times sufficient funds for the payment of
principal of and interest on the Transition Bonds, and the Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Collateral or sell or liquidate the same. In determining whether to
maintain possession of the Collateral or sell or liquidate the same, the Trustee
may, but need not, obtain and conclusively rely upon an opinion of an
Independent investment banking or certified public accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
SECTION 5.06 LIMITATION OF PROCEEDINGS.
(a) No Holder of any Transition Bond of any Series shall have any
right to institute any Proceeding, judicial or otherwise, to avail itself of any
remedies provided in the Competition Act or to avail itself of the right to
foreclose on the Bondable Transition Property or otherwise enforce the Lien on
the Bondable Transition Property, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
36
(i) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(ii) the Holders of not less than twenty-five percent of the
Outstanding Amount of the Transition Bonds of all Series have made written
request of the Trustee to institute such Proceeding in respect of such
Event of Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee security or
indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in complying with such request;
(iv) the Trustee for sixty days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceeding;
and
(v) no direction inconsistent with such written request has been
given to the Trustee during such sixty day period by the Holders of a
majority of the Outstanding Amount of the Transition Bonds of all Series;
it being understood and intended that no one or more Holders of Transition Bonds
shall have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Transition Bonds or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
except in the manner herein provided.
(b) In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of
Transition Bonds, each representing less than a majority of the Outstanding
Amount of the Transition Bonds of all Series, the Trustee in its sole discretion
may determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
SECTION 5.07 UNCONDITIONAL RIGHTS OF TRANSITION BONDHOLDERS TO
RECEIVE PRINCIPAL AND INTEREST. Notwithstanding any other provisions in this
Indenture, the Holder of any Transition Bond shall have the right, which is
absolute and unconditional, and shall not be impaired without the consent of
each such Holder, (a) to receive payment of (i) the interest, if any, on such
Transition Bond on or after the due dates thereof expressed in such Transition
Bond or in this Indenture or any supplement thereto, (ii) the unpaid principal,
if any, of such Transition Bonds on or after the Final Maturity Date therefor or
(iii) in the case of redemption, receive payment of the unpaid principal, if
any, and interest, if any, on such Transition Bond on or after the Redemption
Date therefor and (b) to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.
SECTION 5.08 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or
any Transition Bondholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or to
such Transition Bondholder, then and in every such case the Issuer, the Trustee
and the Transition Bondholders shall, subject to any determination in such
37
Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the
Transition Bondholders shall continue as though no such Proceeding had been
instituted.
SECTION 5.09 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Trustee or to the Transition
Bondholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.10 DELAY OR OMISSION NOT A WAIVER. No delay or omission of
the Trustee or any Transition Bondholder to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Transition Bondholders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the
Transition Bondholders, as the case may be.
SECTION 5.11 CONTROL BY TRANSITION BONDHOLDERS. The Holders of a
majority of the Outstanding Amount of the Transition Bonds of all Series (or, if
less than all Series or Classes are affected, the affected Series or Class or
Classes), voting together as a single class, shall have the right to direct the
time, method and place of conducting any Proceeding for any remedy available to
the Trustee with respect to the Transition Bonds of such Series or Class or
Classes or exercising any trust or power conferred on the Trustee with respect
to such Series or Class or Classes; provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to the express terms of Section 5.04, any direction to
the Trustee to sell or liquidate the Collateral shall be by the Holders of
Transition Bonds representing not less than one hundred percent of the
Outstanding Amount of the Transition Bonds of all Series;
(c) if the conditions set forth in Section 5.05 have been satisfied
and the Trustee elects to retain the Collateral pursuant to such Section 5.05
and elects not to sell or liquidate the same, then any direction to the Trustee
by Holders of Transition Bonds representing less than one hundred percent of the
Outstanding Amount of the Transition Bonds of all Series to sell or liquidate
the Collateral shall be of no force and effect; and
(d) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.01, the Trustee need not take any
action that it determines might involve it in liability for which it reasonably
believes it will not be indemnified to its reasonable satisfaction against the
costs, expenses and liabilities which might be incurred by it in complying with
this request. The Trustee also need not take any action that it determines might
38
materially and adversely affect the rights of any Transition Bondholders not
consenting to such action.
SECTION 5.12 WAIVER OF PAST DEFAULTS. (a) Prior to the declaration
of the acceleration of the maturity of the Transition Bonds of all Series as
provided in Section 5.02, the Holders of not less than a majority of the
Outstanding Amount of the Transition Bonds of all Series, voting together as a
single class, may waive any past Default or Event of Default and its
consequences except a Default (i) in payment of principal of and premium, if
any, or interest on any of the Transition Bonds or (ii) in respect of a covenant
or provision hereof which cannot be modified or amended without the waiver or
consent of the Holder of each Transition Bond of all Series or Classes affected.
In the case of any such waiver, the Issuer, the Trustee and the Holders of the
Transition Bonds shall be restored to their former positions and rights
hereunder, respectively, but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
(b) Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
SECTION 5.13 UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Transition Bond by such Holder's acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided,
however, the provisions of this Section 5.13 shall not apply to (a) any suit
instituted by the Trustee, (b) any suit instituted by any Transition Bondholder,
or group of Transition Bondholders, in each case holding in the aggregate more
than ten percent of the Outstanding Amount of the Transition Bonds of a Series
or (c) any suit instituted by any Transition Bondholder for the enforcement of
the payment of (i) interest on any Transition Bond on or after the due dates
expressed in such Transition Bond and in this Indenture, (ii) the unpaid
principal, if any, of any Transition Bond on or after the Final Maturity Date
therefor or (iii) in the case of redemption, the unpaid principal of and
interest on any Transition Bond on or after the Redemption Date therefor.
SECTION 5.14 WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture. The Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
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SECTION 5.15 ACTION ON TRANSITION BONDS. The Trustee's right to seek
and recover judgment on the Transition Bonds or under this Indenture shall not
be affected by the seeking, obtaining or application of any other relief under
or with respect to this Indenture. Neither the Lien of this Indenture nor any
rights or remedies of the Trustee or the Transition Bondholders shall be
impaired by the recovery of any judgment by the Trustee against the Issuer or by
the levy of any execution under such judgment upon any portion of the Collateral
or upon any of the assets of the Issuer.
ARTICLE VI
THE TRUSTEE
SECTION 6.01 DUTIES AND LIABILITIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent Person
would exercise or use under the circumstances in the conduct of such Person's
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this clause (c) does not limit the effect of clause (b) of this
Section 6.01;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it hereunder.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to clauses (a), (b) and (c) of this Section 6.01.
(e) The Trustee shall not be liable for interest on any money
received by it except as provided in this Indenture.
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(f) Money held in trust by the Trustee need not be segregated from
other funds held by the Trustee except to the extent required by law or the
terms of this Indenture, the Sale Agreement or the Servicing Agreement or any
Interest Rate Swap Agreement.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any liability, financial or
otherwise, in the performance of any of its duties hereunder or in the exercise
of any of its rights or powers, if it shall have reasonable grounds to believe
that repayments of such funds or indemnity reasonably satisfactory to it against
such risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 6.01 and to the provisions of the TIA.
(i) Under no circumstances shall the Trustee be liable for any
indebtedness of the Issuer, the Servicer, the Seller or any Swap Counterparty
evidenced by or arising under the Transition Bonds or any Basic Document.
SECTION 6.02 RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely on any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in any such document.
(b) Before the Trustee acts or refrains from acting, it may require
an Issuer Officer's Certificate or an Issuer Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Issuer Officer's Certificate or an Issuer Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
a custodian or nominee, and the Trustee shall not be responsible for any
misconduct or negligence on the part of, or for the supervision of, any such
agent, attorney, custodian or nominee appointed with due care by it thereunder.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion
of such counsel with respect to legal matters relating to this Indenture and the
Transition Bonds shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
SECTION 6.03 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Transition
Bonds and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Trustee. Any Paying Agent, Transition Bond
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Registrar, co-registrar or co-paying agent, or agent appointed pursuant to
Section 3.02(b) may do the same with like rights; provided, however, the Trustee
must comply with Sections 6.11 and 6.12.
SECTION 6.04 TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Transition Bonds. The Trustee shall not be accountable for
the Issuer's use of the proceeds from the Transition Bonds, and the Trustee
shall not be responsible for any statement of the Issuer in this Indenture or in
any document issued in connection with the sale of the Transition Bonds or in
the Transition Bonds other than the Trustee's certificate of authentication. The
Trustee shall not be responsible for the form, character, genuineness,
sufficiency, value or validity of any of the Collateral, or for or in respect of
the validity or sufficiency of the Transition Bonds (other than the certificate
of authentication for the Transition Bonds) or the Basic Documents and the
Trustee shall in no event assume or incur any liability, duty or obligation to
any Holder of a Transition Bond, other than as expressly provided for in this
Indenture. The Trustee shall not be liable for the default or misconduct of the
Issuer, the Seller, the Servicer or the Member or any Manager of the Issuer
under any Basic Document or otherwise, or the default or misconduct of any
counterparty under any Interest Rate Swap Agreement, and the Trustee shall have
no obligation or liability to perform the obligations of the Issuer.
SECTION 6.05 NOTICE OF DEFAULTS. If a Default occurs and is
continuing with respect to any Class or Series and if it is actually known to a
Responsible Officer of the Trustee, the Trustee shall mail to each Rating Agency
and to each Holder of Transition Bonds of all Series notice of the Default
within ninety days after it occurs. Except in the case of a Default in payment
of principal of or interest on any Transition Bond, the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Transition
Bondholders.
SECTION 6.06 REPORTS BY TRUSTEE TO HOLDERS.
(a) The Trustee shall deliver to each Holder of Transition Bonds
such information as may be required to enable such Holder to prepare its federal
and state income tax returns.
(b) With respect to each Series and Class of Transition Bonds, on or
prior to each Payment Date therefor, the Trustee shall deliver a statement
prepared by the Trustee to each Holder of Transition Bonds of such Series and
Class which shall include (to the extent applicable) the following information
(and any other information so specified in the Series Supplement for such
Series) as to the Transition Bonds of such Series and Class with respect to such
Payment Date or the period since the previous Payment Date, as applicable:
(i) the amount paid to Holders of the Transition Bonds of such
Series and Class in respect of principal, such amount to be expressed as a
dollar amount per thousand;
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(ii) the amount paid to Holders of the Transition Bonds of such
Series and Class in respect of interest, such amount to be expressed as a
dollar amount per thousand;
(iii) the Transition Bond Balance, after giving effect to the
payments to be made on such Payment Date, and the Projected Transition
Bond Balance, in each case for such Series and Class and as of such
Payment Date;
(iv) the amount on deposit in the Overcollateralization Subaccount
for such Series and the Scheduled Overcollateralization Level for such
Series as of such Payment Date;
(v) the amount on deposit in the Series Capital Subaccount for such
Series as of such Payment Date;
(vi) the amount, if any, on deposit in the Reserve Subaccount as of
such Payment Date;
(vii) the amount to be paid to any Swap Counterparty;
(viii) the amounts to be paid to the Trustee since the preceding
Payment Date;
(ix) the amounts paid to the Servicer since the preceding Payment
Date; and
(x) any other transfers and payments made pursuant to this
Indenture.
(c) If any Transition Bonds are listed on the Luxembourg Stock
Exchange and the rules of such exchange so require, the Listing Agent shall
arrange for publication in an Authorized Newspaper that such statement shall be
available with the Issuer's listing agent in Luxembourg appointed pursuant to
Section 3.02(b).
(d) The Trustee's responsibility for disbursing the information
described in clause (b) above to Holders of Transition Bonds is limited to the
availability, timeliness and accuracy of the information provided by the
Servicer pursuant to Section 3.05 and Annex 1 of the Servicing Agreement.
SECTION 6.07 COMPENSATION AND INDEMNITY.
(a) The Issuer shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Issuer shall
reimburse the Trustee for all reasonable out-of-pocket expenses, disbursements
and advances incurred or made by it, including costs of collection, in addition
to the compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Issuer shall indemnify and hold harmless
the Trustee and its officers, directors, employees and agents, to the extent
permitted by law, from and against any and all costs, damages, expenses, losses,
43
taxes (other than taxed imposed on the Trustee in connection with any fees
earned in accordance with this Indenture) liabilities or other amounts
whatsoever (including reasonable counsel fees and expenses) incurred by the
Trustee in connection with the administration of this trust, the enforcement of
this trust and all of the Trustee's rights, powers and duties under this
Indenture and the performance by the Trustee of the duties and obligations of
the Trustee under or pursuant to this Indenture, the Administration Agreement
and any Series Supplement. The Trustee shall notify the Issuer promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Issuer shall not relieve the Issuer of its obligations hereunder.
(b) The Issuer shall defend such claim and the Trustee may have
separate counsel and the Issuer shall pay the fees and expenses of such counsel.
The Issuer need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Trustee (i) through the Trustee's own
willful misconduct, negligence or bad faith or (ii) to the extent the Trustee
was reimbursed for or indemnified against any such loss, liability or expense by
the Seller pursuant to the Sale Agreement or by the Servicer pursuant to the
Servicing Agreement.
(c) When the Trustee incurs expenses after the occurrence of an
Event of Default specified in Section 5.01(e) or 5.01(f) with respect to the
Issuer, the expenses are intended to constitute expenses of administration under
Title 11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or similar law. The obligations of the Issuer under this
Section 6.07 shall survive the termination of this Indenture and the earlier
resignation of removal of the Trustee. To secure the Issuer's payment
obligations in this Section 6.07, the Trustee shall have a lien prior to the
Transition Bonds on all money or property held or collected by the Trustee, in
its capacity as Trustee, except that held in trust to pay principal and interest
on particular Transition Bonds.
SECTION 6.08 REPLACEMENT OF TRUSTEE.
(a) The Trustee may resign at any time upon thirty days' prior
written notice to the Issuer. The Issuer may remove the Trustee with or without
cause at any time, with prior notice to the Rating Agencies, upon thirty days'
prior written notice to the Trustee, and shall remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) the Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Trustee
or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
(b) If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the "Retiring Trustee"), the Issuer shall promptly appoint a
successor Trustee.
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(c) The Holders of a majority in Outstanding Amount of the
Transition Bonds of all Series, voting together as a single class, may remove
the Trustee by so notifying the Issuer and the Trustee and such Holders may
appoint a successor Trustee.
(d) A successor Trustee shall deliver a written acceptance of its
appointment to the Retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the Retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. No resignation or removal of the Trustee shall become effective until
the acceptance of the appointment by a successor Trustee. The successor Trustee
shall mail a notice of its succession to the Transition Bondholders. The
Retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee.
(e) If a successor Trustee does not take office within thirty days
after the Retiring Trustee resigns or is removed, the Retiring Trustee, the
Issuer or the Holders of a majority in Outstanding Amount of the Transition
Bonds of all Series may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) If the Trustee fails to comply with Section 6.11, any Transition
Bondholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(g) Notwithstanding the replacement of the Trustee pursuant to this
Section 6.08, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the Retiring Trustee.
SECTION 6.09 SUCCESSOR TRUSTEE BY MERGER.
(a) If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation or banking association shall, without any further act, be
the successor Trustee. Notice of any such event shall be promptly given to each
Rating Agency by the successor Trustee.
(b) In case at the time such successor or successors by merger,
conversion, consolidation or transfer shall succeed to the trusts created by
this Indenture any of the Transition Bonds shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any Retiring Trustee, and deliver such Transition Bonds so
authenticated; and in case at that time any of the Transition Bonds shall not
have been authenticated, any successor to the Trustee may authenticate such
Transition Bonds either in the name of any Retiring Trustee hereunder or in the
name of the successor to the Trustee; and in all such cases such certificates
shall have the full force and effect granted by the Transition Bonds or by this
Indenture and this force and effect shall be equal to any certificate issued by
the Trustee.
SECTION 6.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
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(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint one or
more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Collateral, and to vest in such
Person or Persons, in such capacity and for the benefit of the Transition
Bondholders, such title to the Collateral, or any part hereof, and, subject to
the other provisions of this Section 6.10, such powers, duties, obligations,
rights and trusts as the Trustee may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 6.11 and no notice to the
Transition Bondholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.08. Notice of any such appointment shall be
promptly given to each Rating Agency by the Trustee.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Collateral or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
46
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 6.11 ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a) and Section 26(a)(i) of the
Investment Company Act of 1940, as amended. The Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition and it shall have a long term debt rating
of "BBB-" or better by Standard & Poor's, "Baa3" or better by Moody's and "BBB-"
or better by Fitch. The Trustee shall comply with TIA Section 310(b), including
the optional provision permitted by the second sentence of TIA Section
310(b)(9); provided, however, that there shall be excluded from the operation of
TIA Section 310(b)(1) any indenture or indentures under which other securities
of the Issuer are outstanding if the requirements for such exclusion set forth
in TIA Section 310(b)(1) are met.
SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE ISSUER.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13 REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee hereby represents and warrants that:
(a) the Trustee is a banking corporation validly existing in good
standing under the laws of the State of New York; and
(b) the Trustee has full power, authority and legal right to
execute, deliver and perform this Indenture and the Basic Documents to which the
Trustee is a party and has taken all necessary action to authorize the
execution, delivery and performance by it of this Indenture and such Basic
Documents.
SECTION 6.14 RIGHT OF TRUSTEE IN CAPACITY OF REGISTRAR OR PAYING
AGENT. In the event that the Trustee is also acting in the capacity of Paying
Agent or Registrar hereunder, the rights, protections, immunities and
indemnities afforded to the Trustee shall also be afforded to the Trustee in its
capacity as Paying Agent or Registrar.
ARTICLE VII
TRANSITION BONDHOLDERS' LISTS AND REPORTS
SECTION 7.01 ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
TRANSITION BONDHOLDERS. The Issuer shall furnish or cause to be furnished to the
Trustee (a) not more than five days after the earlier of (i) each Record Date
with respect to each Series and (ii) three months after the last Record Date
with respect to each Series, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Transition Bonds of such
Series as of such Record Date, (b) at such other times as the Trustee may
request in writing, within thirty days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than ten days
prior to the time such list is furnished; provided, however, that so long as the
47
Trustee is the Transition Bond Registrar, no such list shall be required to be
furnished.
SECTION 7.02 PRESERVATION OF INFORMATION; COMMUNICATIONS TO
TRANSITION BONDHOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Transition
Bonds contained in the most recent list furnished to the Trustee as provided in
Section 7.01 and the names and addresses of Holders of Transition Bonds received
by the Trustee in its capacity as Transition Bond Registrar. The Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Transition Bondholders may communicate with other Transition
Bondholders pursuant to Section 312(b) of the TIA, with respect to their rights
under this Indenture or under the Transition Bonds.
(c) The Issuer, the Trustee and the Transition Bond Registrar shall
have the protection of Section 312(c) of the TIA.
SECTION 7.03 REPORTS BY ISSUER.
(a) The Issuer shall:
(i) file with the Trustee within fifteen days after the Issuer is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Issuer may be required
to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act;
(ii) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance
by the Issuer with the conditions and covenants of this Indenture as may
be required from time to time by such rules and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by mail
to all Transition Bondholders described in TIA Section 313(c)), such
summaries of any information, documents and reports required to be filed
by the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) as
may be required by rules and regulations prescribed from time to time by
the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.04 REPORTS BY TRUSTEE.
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(a) If required by TIA Section 313(a), within sixty days after the
end of each fiscal year of the Issuer, commencing with the year after the
issuance of the Transition Bonds of any Series, the Trustee shall mail to each
Holder of Transition Bonds of such Series as required by TIA Section 313(c) a
brief report dated as of such date that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Section 313(b); provided, however, that the
initial report so issued shall be delivered not more than twelve months after
the initial issuance of each Series.
(b) A copy of each report at the time of its mailing to Transition
Bondholders shall be filed by the Trustee with the Commission and each stock
exchange, if any, on which the Transition Bonds are listed (to the extent
required by the rules of such exchange or exchanges). The Issuer shall notify
the Trustee if and when the Transition Bonds are listed on any stock exchange.
SECTION 7.05 PROVISION OF SERVICER REPORTS. Upon the written request
of any Transition Bondholder to the Trustee addressed to the Corporate Trust
Office, the Trustee shall provide such Transition Bondholder with a copy of the
Issuer Officer's Certificate referred to in Section 3.06 of the Servicing
Agreement and the Annual Accountant's Report referred to in Section 3.07 of the
Servicing Agreement.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01 COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Collateral, the Trustee may take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any right
to claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article V.
SECTION 8.02 COLLECTION ACCOUNT.
(a) (i) On or prior to the Series Issuance Date for the first Series
issued hereunder, the Issuer shall open, at the Trustee's Corporate Trust
Office, or at another Eligible Institution, one or more segregated non-interest
bearing trust accounts in the Trustee's name for the benefit of the Holders
(collectively, the "Collection Account"). The Collection Account shall initially
be divided into subaccounts, which need not be separate bank accounts: a general
subaccount (the "General Subaccount"), an overcollateralization subaccount for
each Series of Transition Bonds (each, an "Overcollateralization Subaccount" or
the "Series Overcollateralization Subaccount"), a capital subaccount for each
Series of Transition Bonds (each, a "Capital Subaccount" or the "Series Capital
Subaccount"), a reserve subaccount (the "Reserve Subaccount"), a series
subaccount for each Series of Transition Bonds (each, a "Series Subaccount") and
49
a class subaccount for any Class of any Series of Transition Bonds which has a
floating rate of interest as specified in any Series Supplement (each, a "Class
Subaccount"). If so provided in any Series Supplement, the Series Capital
Subaccount for the related Series may be divided into separate subaccounts
bearing the designations specified in such Series Supplement for the purpose of
tracing deposits to and withdrawals from such Series Capital Subaccount,
provided that in such case the terms Series Capital Subaccount and Capital
Subaccount with respect to such Series shall refer collectively to all such
subaccounts except as specified in such Series Supplement for purposes of such
tracing. On or prior to the Series Issuance Date for each Series issued after
the Series Issuance Date for the first Series issued hereunder, the Issuer shall
establish an additional Series Subaccount therefor and a Class Subaccount for
any Class of such Series which has a floating rate of interest and in respect of
which the Issuer has entered into an Interest Rate Swap Agreement, as
Subaccounts of the Collection Account. Prior to depositing funds or U.S.
Government Obligations in the Collection Account pursuant to Sections 4.01 or
4.02, the Issuer shall establish defeasance subaccounts (each, a "Defeasance
Subaccount") for each Series for which funds shall be deposited, as subaccounts
of the Collection Account. All amounts in the Collection Account not allocated
to any other Subaccount shall be allocated to the General Subaccount. Prior to
the initial Payment Date, all amounts in the Collection Account (other than
funds deposited into the Capital Subaccount, up to the Required Capital Amount)
shall be allocated to the General Subaccount. All payments received by the
Trustee from any Swap Counterparty at any time shall be deposited in the related
Class Subaccount. All references to the Collection Account shall be deemed to
include reference to all subaccounts contained therein. Withdrawals from and
deposits to each of the foregoing subaccounts of the Collection Account shall be
made as set forth in Sections 4.01, 4.02, 4.03 and 8.02(d) through (n). The
Collection Account shall at all times be maintained in an Eligible Securities
Account and only the Trustee shall have access to the Collection Account for the
purpose of making deposits in and withdrawals from the Collection Account in
accordance with this Indenture. Funds in the Collection Account shall not be
commingled by the Issuer with any other moneys, and shall not be commingled by
the Trustee. All moneys deposited from time to time in the Collection Account,
all deposits therein pursuant to this Indenture, and all investments made in
Eligible Investments with such moneys, including all income or other gain from
such investments, shall be held by the Trustee in the Collection Account as part
of the Collateral as herein provided.
(ii) Notwithstanding any other provision of this Indenture, the
Collection Account shall be a "securities account" (as defined in Section
8-501(a) of the New Jersey UCC) and shall be established only with a "securities
intermediary" (as defined in Section 8-102(a)(14) of the New Jersey UCC) that
agrees with the Trustee that (A) the Collection Account shall be a securities
account of the Trustee, (B) each item of property (whether cash, cash
equivalents, instruments, investments, investment property or other) credited to
the Collection Account shall be treated as a "financial asset" within the
meaning of Section 8-102(a)(9) of the New Jersey UCC, (C) such securities
intermediary shall treat the Trustee as a "entitlement holder" (as defined in
Section 8-102(a)(7) of the New Jersey UCC) entitled to exercise the rights that
comprise each financial asset credited to the Collection Account, (D) such
securities intermediary shall comply with entitlement orders originated by the
Trustee without the further consent of any other person or entity, (E) such
securities intermediary shall not have agreed to comply with the instructions of
any person with respect to the Collection Account or any security entitlements
or financial assets relating thereto (other than pursuant to this Indenture) and
50
shall not agree with any person other than the Trustee to comply with
entitlement orders originated by such other person in respect of the Collection
Account or any security entitlement or financial asset carried in the Collection
Account, (F) the Collection Account and all property credited to it shall not be
subject to any Lien, security interest, right of set-off in favor of such
securities intermediary or anyone claiming through it (other than the Trustee)
and in the event such securities intermediary or anyone claiming through it
(other than the Trustee) has or subsequently obtains by agreement, operation of
law or otherwise a security interest in the Collection Account, the securities
intermediary agrees that such security interest shall be subordinate to the
security interest of the Trustee, (G) the securities intermediary shall not have
any knowledge without any independent investigation of any adverse claim to the
Collection Account or to the security entitlements with respect thereto, (H) the
securities intermediary's jurisdiction (as defined in Section 8-110(e) of the
New Jersey UCC) shall be the State of New Jersey and this Indenture is the
agreement that governs the Collection Account for purposes of the New Jersey
UCC, (I) all securities and other property underlying any financial assets
credited to the Collection Account shall be registered in the name of the
Trustee or endorsed to the Trustee or in blank, (J) the securities intermediary
shall not change the name or account number (other than in the normal course of
operations in order to comply with internal system requirements) for the
Collection Account without the prior written consent of the Trustee or otherwise
in accordance with this Indenture and (K) such agreement shall be governed by
the laws of the State of New Jersey. The securities intermediary and the parties
hereto agree that the Collection Account shall be under the control (within the
meaning of Section 8-106 of the New Jersey UCC) of the Trustee and no other
person. Each party hereto and the securities intermediary agree that from time
to time it shall promptly execute and deliver all instruments and documents, and
take all actions, that may be reasonably necessary or that the Trustee may
reasonably request in order to perfect and protect the security interest granted
or intended to be granted hereby or to enable the Trustee to exercise and
enforce its rights and remedies hereunder with respect to the Collection Account
and all proceeds thereof. If at any time the Collection Account ceases to be an
Eligible Securities Account, the Trustee shall, within ten days, establish a new
Collection Account as an Eligible Securities Account.
(b) All or a portion of the funds in the Collection Account shall be
invested in Eligible Investments and reinvested by the Trustee upon an Issuer
Order; provided, however, that no funds in the Defeasance Subaccount for any
Series of Transition Bonds shall be invested in Eligible Investments or
otherwise, except that U.S. Government Obligations deposited by the Issuer with
the Trustee pursuant to Sections 4.01 or 4.02 shall remain as such. Except as
provided in Section 8.02(g)(x), all income or other gain from investments of
moneys deposited in the Collection Account shall be deposited by the Trustee in
the Collection Account, and any loss resulting from such investments shall be
charged to the Collection Account. The Issuer shall not direct the Trustee to
make any investment of any funds or to sell any investment held in the
Collection Account unless the security interest granted and perfected in such
account will continue to be perfected in such investment or the proceeds of such
sale, in either case without any further action by any Person, and, in
connection with any direction to the Trustee to make any such investment or
sale, if requested by the Trustee, the Issuer shall deliver to the Trustee an
Issuer Opinion of Counsel, acceptable to the Trustee, to such effect. Subject to
Section 6.01(c), the Trustee shall not in any way be held liable for the
selection of Eligible Investments or for investment losses incurred thereon
except for losses attributable to the Trustee's failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial capacity as
51
principal obligor and not as Trustee, in accordance with their terms. The
Trustee shall have no liability in respect of losses incurred as a result of the
liquidation of any Eligible Investment prior to its stated maturity or the
failure of the Issuer to provide timely written investment direction. The
Trustee shall have no obligation to invest or reinvest any amounts held
hereunder in the absence of written investment direction pursuant to an Issuer
Order; provided, however, that if a Default or Event of Default shall have
occurred and be continuing but the Transition Bonds shall not have been declared
due and payable pursuant to Section 5.02, then the Trustee shall, to the fullest
extent practicable, invest and reinvest funds in the Collection Account in one
or more Eligible Investments of the kind described in clause (e) of the
definition thereof.
(c) Any TBC Collections remitted by the Servicer to the Trustee, all
investment earnings on the subaccounts in the Collection Account other than any
Capital Subaccount, any Indemnity Amounts remitted to the Trustee by the Seller
or the Servicer or otherwise received by the Trustee, any other proceeds of
Collateral received by the Servicer, the Issuer or the Trustee and any amounts
paid by any Swap Counterparty under any Interest Rate Swap Agreement received by
the Servicer, the Issuer or the Trustee, shall be deposited in the General
Subaccount.
(d) On each Payment Date, any expenses, including legal fees and
expenses, Indemnity Amounts (up to a maximum of $10 million in the aggregate for
the then current and all prior Payment Dates and $2,500,000 for any particular
Payment Date and for all Series unless the Issuer has received confirmation from
S&P that a further amount will not result in a reduction or withdrawal of the
then current rating of the Outstanding Transition Bonds) and any other amounts
due and owing to the Trustee pursuant to the Basic Documents for such quarter so
long as no Event of Default would result from the payment of such Indemnity
Amounts (as limited above) or such other amounts, shall, at the direction of the
Servicer, be paid to the Trustee; and (ii) the fees payable to the Independent
Managers in an amount equal to $800 for such quarter and any other amounts due
and owing to the Independent Managers pursuant to the Issuer LLC Agreement
shall, at the direction of the Servicer, be paid to the Independent Managers.
(e) On each Payment Date, after the distributions made pursuant to
clause (d) above the Quarterly Servicing Fee and any unpaid Quarterly Servicing
Fees shall, at the written direction of the Servicer, be paid to the Servicer to
the extent that such amounts have not been withheld by the Servicer from TBC
Collections pursuant to Section 5.07 of the Servicing Agreement.
(f) On each Payment Date, or such other date related to such Payment
Date as may be specified in the related Series Supplement, the Trustee, at the
written direction of the Servicer, shall allocate to each Class Subaccount the
amounts specified in the related Series Supplement. Such amounts shall be so
allocated after taking into account all allocations required in connection with
such Payment Date under clauses (d) and (e) above and (g)(i) through (iii)
below; provided that in the event of any shortfall of amounts to be allocated
pursuant to clause (g)(iii) among more than one Class of the applicable Series,
amounts shall be allocated to such Class Subaccount on a Pro Rata basis with all
other Classes of the relevant Series. Amounts in each Class Subaccount shall be
applied as provided in the related Series Supplement.
52
(g) On each Payment Date, or before each Payment Date to the extent
otherwise specified in the related Series Supplement with respect to any Class
Subaccount, by 12:00 noon (prevailing New York City time), or if such day is not
a Business Day, on the following Business Day, the Trustee shall, at the written
direction of the Servicer, apply all amounts on deposit in the General
Subaccount of the Collection Account and any investment earnings on the
subaccounts in the Collection Account, except for earnings in the Capital
Subaccount, after distribution in accordance with clauses (d) and (e) above,
and, subject to the qualifications therein, after allocation to any Class
Subaccount in accordance with clause (f) above and payment to any related Swap
Counterparty in accordance with the related Series Supplement, in the following
priority:
(i) the administration fee payable under, and determined in
accordance with, the Administration Agreement in an amount not to exceed
the Administrator's actual cost, shall be paid to the Administrator;
(ii) so long as no Event of Default has occurred and is continuing
or would be caused by such payment, all Operating Expenses other than
distributions in accordance with clauses (d), (e) and (g)(i) above shall
be paid to the Persons entitled thereto, provided that the amount paid on
such Payment Date pursuant to this clause (g)(ii) may not exceed an annual
aggregate of $250,000 for all Series;
(iii) Payment of interest as follows:
(A) First, payment of unpaid interest on any Series from any
prior period, including payment of any amount payable to any Swap
Counterparty in accordance with the related Interest Rate Swap
Agreement, which amount of unpaid interest shall be allocated to the
corresponding Series Subaccount;
(B) Then, payment of the current interest then due on each
Series, including payment of any amount payable to the Swap
Counterparty in accordance with the related interest rate swap
agreement which amount of current interest shall be allocated to the
corresponding Series Subaccount (provided, that, to the extent
provided in any Series Supplement with respect to interest on any
floating rate Class, such amount shall be equal to the applicable
amount specified in the related Series Supplement payable with
respect to that Class) and if there are insufficient funds to make
such allocation in full, amounts will be allocated Pro Rata to the
corresponding Series Subaccount;
(iv) an amount equal to any Principal of each Class of each Series
of Transition Bonds payable as a result of acceleration pursuant to
Section 5.02, any Principal of any Series or Class of Transition Bonds
payable because such Payment Date is on or after the Final Maturity Date
of such Series or Class, and any Principal of a Series or Class of
Transition Bonds payable on the Redemption Date for such Series or Class
shall be allocated to the corresponding Series Subaccount and, to the
extent there are insufficient funds to make such allocation in full,
amounts shall be allocated on a Pro Rata basis;
53
(v) an amount equal to Principal scheduled to be paid on each Class
of each Series of Transition Bonds on such Payment Date according to the
Expected Amortization Schedule, excluding any amounts provided for
pursuant to clause (g)(iv) above, shall be allocated to the corresponding
Series Subaccount and, if there are insufficient funds for such Principal
payment, shall be allocated on a Pro Rata basis;
(vi) all remaining unpaid Operating Expenses and Indemnity Amounts
shall be paid to the Persons entitled thereto;
(vii) any amount necessary to replenish any shortfalls in the
Capital Subaccount for each Series below the Required Capital Amount for
such Series shall be allocated to the Capital Subaccount for such Series,
Pro Rata, based on the Outstanding principal balance of each Series;
(viii)an amount shall be allocated to the Overcollateralization
Subaccount for each Series sufficient to cause the amount in the
Overcollateralization Subaccount for such Series to equal the Scheduled
Overcollateralization Level for such Series as of that Payment Date, Pro
Rata, based on the Outstanding principal balance of each Series;
(ix) any termination or breakage amounts payable by the Issuer under
any Interest Rate Swap Agreement on such Payment Date shall be paid to the
Persons entitled thereto (provided, however, that for the avoidance of
doubt, payments under this clause (ix) shall be paid on an unsecured basis
and shall be paid after payment on such Payment Date of all amounts
provided in (d), (e), (f) and (g)(i) through (viii) above);
(x) so long as no Event of Default has occurred and is continuing,
an amount equal to investment earnings on amounts in the Capital
Subaccount shall be released to the Issuer;
(xi) the balance, if any, shall be allocated to the Reserve
Subaccount; and
(xii) following repayment of all outstanding Series of Transition
Bonds, the balance, if any, shall be released to the Issuer free from the
Lien of this Indenture.
(h) For purposes of allocations among Series prior to an
acceleration of the Transition Bonds pursuant to Section 5.02, except as
otherwise provided in any Series Supplement, "Pro Rata" means with respect to
any Series a ratio: (i) in the case of a payment of Interest on any Payment
Date, the numerator of which is the amount of Interest payable on such Series on
such Payment Date and, with respect to any Class of such Series of floating rate
Transition Bonds, the Gross Fixed Amount for that class (as such term is defined
by the related Series Supplement) on such Payment Date and the denominator of
which is the aggregate amount of Interest payable on all Series on such Payment
Date; (ii) in the case of a payment of Principal on any Payment Date, the
numerator of which is the aggregate amount of Principal scheduled to be paid or
payable, as the case may be, on such Payment Date with respect to such Series
and the denominator of which is the sum of the aggregate amounts of Principal
scheduled to be paid or payable, as the case may be, with respect to all
Outstanding Series on such Payment Date; and (iii) in the case of a payment or
54
allocation on any Payment Date other than of Interest or Principal, the
numerator of which is the Outstanding principal amount of such Series
immediately prior such Payment Date and the denominator of which is the
aggregate Outstanding principal amount of all Series immediately prior such
Payment Date.
(i) If, on any Payment Date, funds on deposit in the General
Subaccount are insufficient to make the payments and allocations contemplated by
subclauses (d), (e), (f) and (g)(i) through (viii) above for all Series, the
Trustee shall, at the written direction of the Servicer, draw from amounts on
deposit in the following subaccounts in the following order up to the amount of
such shortfall, in order to make such payments and allocations:
(i) from the Reserve Subaccount for all Series, Pro Rata, for
payments and allocations contemplated by subclauses (d), (e), (f) and
(g)(i) through (v), (vii) and (viii);
(ii) from the Overcollateralization Subaccount for such Series, Pro
Rata, for payments and allocations contemplated by subclauses (d), (e),
(f) and (g)(i) through (v); and
(iii) from the Capital Subaccount for such Series, Pro Rata, for
payments and allocations contemplated by subclauses (d), (e), (f) and
(g)(i) through (v);
provided that no amounts from the Reserve Subaccount, the Overcollateralization
Subaccount for such Series or the Capital Subaccount for such Series shall be
allocated to any Class Subaccount pursuant to subclause (g)(iii) to the extent a
shortfall in amounts available to pay interest due on the related Class of
Transition Bonds is due solely to any failure by a Swap Counterparty to make
payments due under the related Interest Rate Swap Agreement.
(j) On each Payment Date for any Series prior to an acceleration of
the Transition Bonds pursuant to Section 5.02, the amounts on deposit in the
Series Subaccount shall be allocated, at the written direction of the Servicer,
in the following order of priority: (i) to pay Interest due and payable on the
Transition Bonds of such Series with respect to such Payment Date to the Holders
of Transition Bonds of such Series; and (ii) the balance, if any, up to the
amount of Principal scheduled to be paid or payable on the Transition Bonds of
such Series on such Payment Date, to pay such Principal to the Holders of
Transition Bonds of such Series.
(k) Prior to an acceleration of the Transition Bonds pursuant to
Section 5.02, payments of Interest with respect to any Series comprised of two
or more Classes shall be allocated among the Classes within such Series on a Pro
Rata basis. All payments of Principal shall be made in the order set forth in
the Expected Amortization Schedule established with respect to each Series and
within such Series, in order of Class, and any payments of Principal that were
not made on the scheduled Payment Date therefor shall be made in the order that
they were scheduled for payment.
(l) For purposes of allocations among Classes within a single Series
prior to an acceleration of the Transition Bonds pursuant to Section 5.02,
except as otherwise provided in any Series Supplement, "Pro Rata" means with
respect to any Class a ratio: (i) in the case of a payment of Interest with
respect to any Payment Date, the numerator of which is the amount of interest
55
payable to such Class on such Payment Date, or in the case of any Class of
floating rate Transition Bonds, the Gross Fixed Amount for that class (as such
term is defined by the related Series Supplement) on such Payment Date, and the
denominator of which is the aggregate amount of interest payable on all Classes
within such Series on such Payment Date; and (ii) in the case of a payment of
Principal on any Payment Date, the numerator of which is the aggregate amount of
Principal scheduled to be paid or payable, as the case may be, on such Payment
Date with respect to such Class and the denominator of which is the sum of the
aggregate amounts of Principal scheduled to be paid or payable, as the case may
be, with respect to all Outstanding Classes within such Series on such Payment
Date.
(m) Prior to an acceleration of the Transition Bonds pursuant to
Section 5.02, all payments of Principal and Interest to Holders of Transition
Bonds of a single Class, or of a single Series without Classes, shall be made on
a proportionate basis based on the respective principal amounts of such
Transition Bonds held by such Holders.
(n) Upon an acceleration of the maturity of the Transition Bonds
pursuant to Section 5.02, the aggregate amount of principal of and interest
accrued on each Transition Bond shall be payable, without priority of interest
over principal or of principal over interest and without regard to Series or
Class, in the proportion that the aggregate amount of principal of and interest
accrued on such Transition Bond bears to the aggregate amount of principal of
and interest accrued on all Transition Bonds.
(o) Notwithstanding any other provision in this Indenture to the
contrary, in the event of an acceleration of the Transition Bonds and a
subsequent liquidation of the Collateral in accordance with Section 5.04(a), if
so required by any Interest Rate Swap Agreement, the proceeds of such
liquidation allocated to the related Class of floating rate Transition Bonds in
accordance with this Section 8.02 shall be deposited in the related Class
Subaccount and allocated between and paid to the holders of such floating rate
Class, on the one hand, and the related Swap Counterparty, on the other hand,
pro rata based on the aggregate amount of principal and interest due and payable
on such floating rate Class and the aggregate amount payable to the related Swap
Counterparty in accordance with such Interest Rate Swap Agreement.
SECTION 8.03 RELEASE OF COLLATERAL.
(a) All money and other property withdrawn from the Collection
Account by the Trustee for payment to the Issuer as provided in this Indenture
in accordance with Section 8.02 shall be deemed released from this Indenture
when so withdrawn and applied in accordance with the provisions of Article VIII,
without further notice to, or release or consent by, the Trustee.
(b) Other than as provided for in clause (a) above, the Trustee
shall release property from the Lien of this Indenture only as and to the extent
permitted by the Basic Documents and only upon receipt of an Issuer Request
accompanied by an Issuer Officer's Certificate, an Issuer Opinion of Counsel and
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1)
meeting the applicable requirements of Section 11.01 or an Issuer Opinion of
56
Counsel in lieu of such Independent Certificates to the effect that the TIA does
not require any such Independent Certificate.
(c) Subject to the payment of its fees and expenses pursuant to
Section 6.07, the Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the Lien of this
Indenture, or convey the Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Trustee as provided in this
Article VIII shall be bound to ascertain the Trustee's authority, inquire into
the satisfaction of any conditions precedent or see to the application of any
moneys.
(d) Subject to Section 8.03(b), the Trustee shall, at such time as
there are no Transition Bonds Outstanding and all sums due the Trustee pursuant
to Section 6.07 have been paid, release any remaining portion of the Collateral
that secured the Transition Bonds from the Lien of this Indenture and release to
the Issuer or any other Person entitled thereto any funds or investments then on
deposit in or credited to the Collection Account.
SECTION 8.04 ISSUER OPINION OF COUNSEL. The Trustee shall receive at
least five days notice when requested by the Issuer to take any action pursuant
to Section 8.03, accompanied by copies of any instruments involved, and the
Trustee shall also require, as a condition to such action, an Issuer Opinion of
Counsel, in form and substance satisfactory to the Trustee, stating the legal
effect of any such action, outlining the steps required to complete the same,
and concluding that all conditions precedent to the taking of such action have
been complied with and such action will not materially and adversely impair the
security for the Transition Bonds or the rights of the Transition Bondholders in
contravention of the provisions of this Indenture; provided, however, that such
Issuer Opinion of Counsel shall not be required to express an opinion as to the
fair value of the Collateral. The Opinion of Counsel may be based (without
further examination or investigation), insofar as it relates to or is dependent
upon factual matters, information with respect to which is in the possession of
the Issuer, upon a certificate of, or representations by, an officer or officers
of the Issuer, and insofar as it relates to or is dependent upon matters which
are subject to verification by accountants or other experts upon a certificate
or opinion of, or representations by, such accountant or other expert, unless
such counsel has actual knowledge that the certificate or opinion or
representations with respect to the matters upon which the opinion may be based
as aforesaid are erroneous.
SECTION 8.05 REPORTS BY INDEPENDENT ACCOUNTANTS. The Issuer shall
appoint a firm of Independent certified public accountants of recognized
national reputation for purposes of preparing and delivering the reports or
certificates of such accountants required by this Indenture and the related
Series Supplements. Upon any resignation by such firm, the Issuer shall promptly
appoint a successor thereto that shall also be a firm of Independent certified
public accountants of recognized national reputation. If the Issuer shall fail
to appoint a successor to a firm of Independent certified public accountants
that has resigned within fifteen days after such resignation, the Trustee shall
promptly notify the Issuer of such failure in writing. If the Issuer shall not
have appointed a successor within ten days thereafter, the Trustee shall
promptly appoint a successor firm of Independent certified public accountants of
recognized national reputation. The fees of such firm of Independent certified
public accountants and its successor shall be payable by the Issuer.
57
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF TRANSITION
BONDHOLDERS.
(a) Without the consent of the Holders of any Transition Bonds or
the counterparty under any Interest Rate Swap Agreement but with prior notice to
the Rating Agencies, the Issuer and the Trustee, when authorized by an Issuer
Order, at any time and from time to time, may enter into one or more indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Trustee, for any of the following purposes:
(i) to correct or amplify the description of the Collateral, or to
better assure, convey and confirm to the Trustee the Collateral, or to
subject to the Lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any applicable successor of the covenants of the Issuer contained herein
and in the Transition Bonds;
(iii) to add to the covenants of the Issuer, for the benefit of the
Transition Bondholders, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
the Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any Supplemental Indenture which may be inconsistent with any
other provision herein or in any Supplemental Indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any Supplemental Indenture; provided, however, that (A)
such action shall not, as evidenced by an Issuer Opinion of Counsel,
adversely affect in any material respect the interests of any Transition
Bondholder or any counterparty under any Interest Rate Swap Agreement and
(B) the then current ratings on any Outstanding Transition Bonds shall not
be withdrawn or downgraded by the Rating Agencies;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor Trustee with respect to the Transition Bonds and
to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Article VI;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture under the TIA or under any similar federal statute
58
hereafter enacted and to add to this Indenture such other provisions as
may be expressly required by the TIA;
(viii) to set forth the terms of any additional Series of Transition
Bonds that has not theretofore been authorized by a Supplemental
Indenture, provided that the then current ratings on any Outstanding
Transition Bonds have not been withdrawn or downgraded by the Rating
Agencies and will not be withdrawn or downgraded as a result of the
issuance of such additional Series; or
(ix) to provide for any Interest Rate Swap Agreements with respect
to any Series or Class of Transition Bonds which bears a floating rate of
interest or any Series or Class with specified credit enhancement;
provided, however, that:
(A) such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of
any Transition Bondholder or any counterparty under any Interest
Rate Swap Agreement;
(B) the then current ratings on any Outstanding Transition
Bonds shall not be withdrawn or downgraded by the Rating Agencies;
or
(C) to authorize the appointment of any listing agent,
transfer agent or paying agent or additional registrar for any Class
of any Series of Transition Bonds required or advisable in
connection with the listing of any Class or any Series of Transition
Bonds on the Luxembourg Stock Exchange or any other stock exchange,
and otherwise to amend this Indenture to incorporate any changes
requested or required by any governmental authority, stock exchange
authority, listing agent, transfer agent or paying agent or
additional registrar for any Class or any Series of Transition Bonds
in connection with that listing.
(b) The Trustee is hereby authorized to join in the execution of any
such Supplemental Indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
SECTION 9.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF TRANSITION
BONDHOLDERS.
(a) The Issuer and the Trustee, when authorized by an Issuer Order,
also may, upon prior notice to the Rating Agencies (in each case, accompanied by
the form of the proposed supplemental indenture) and with the consent of the
Holders of not less than a majority of the Outstanding Amount of the Transition
Bonds of each Series or Class to be affected thereby, voting as a single class,
by Act of such Holders delivered to the Issuer and the Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Transition Bonds under this Indenture; provided, however, that no such
Supplemental Indenture shall, without the consent of the Holder of each
Outstanding Transition Bond of each Series or Class and each counterparty under
any Interest Rate Swap Agreement affected thereby:
59
(i) change the date of payment of any installment of principal of or
premium, if any, or interest on any Transition Bond, or reduce the
principal amount thereof, the interest rate thereon or the redemption
price or the premium, if any, with respect thereto, change the provisions
of the Interest Rate Swap Agreement relating to the amount, calculation or
timing of payments, change the provisions of this Indenture and the
related applicable Supplemental Indenture or Series Supplement relating to
the application of collections on, or the proceeds of the sale of, the
Collateral to payment of principal of or premium, if any, or interest on
the Transition Bonds, or change the currency in which any Transition Bond
or the interest thereon, is payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due
on the Transition Bonds on or after the respective due dates thereof (or,
in the case of redemption, on or after the Redemption Date);
(iii) reduce the percentage of the Outstanding Amount of the
Transition Bonds or of a Series or Class thereof, the consent of the
Holders of which is required for any such Supplemental Indenture, or the
consent of the Holders of which is required for any waiver of compliance
with provisions of this Indenture or defaults hereunder and their
consequences provided for in this Indenture or modify or alter the
provisions of the proviso to the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Transition Bonds required to direct the Trustee to direct the Issuer to
liquidate or preserve the Collateral pursuant to Section 5.04 or to
preserve the Collateral pursuant to Section 5.05;
(v) modify this Section 9.02(a), except to increase any percentage
specified in this Section 9.02(a) or to provide that this Section 9.02(a)
or the Basic Documents cannot be modified or waived without the consent of
each Holder of Outstanding Transition Bonds affected thereby;
(vi) reduce the percentage of the Outstanding Amount of a Series or
Class of Transition Bonds, the consent of the Holders of which is required
for any amendments to the Sale Agreement, the Administration Agreement,
the Servicing Agreement or any Interest Rate Swap Agreement entered into
in connection with any Series or Class of Transition Bonds;
(vii) modify any of the provisions of this Indenture in such a
manner so as to affect the amount of any payment of interest, principal or
premium, if any, payable on any Transition Bond on any Payment Date or
change the Redemption Dates, Expected Amortization Schedules or Final
Maturity Date of any Series or Class of Transition Bonds, or the method of
calculation of interest on any floating rate Transition Bond;
(viii) decrease the Overcollateralization Amount or Required Capital
Amount with respect to any Series or the Scheduled Overcollateralization
Level with respect to any Payment Date;
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(ix) modify or alter the provisions of this Indenture regarding the
voting of Transition Bonds held by the Issuer, the Seller, an Affiliate of
either of them or any obligor on the Transition Bonds;
(x) decrease the percentage of the Outstanding Amount of Transition
Bonds required to amend the Sections of this Indenture which specify the
applicable percentage of the Outstanding Amount of the Transition Bonds
necessary to amend this Indenture or any other Basic Document; or
(xi) permit the creation of any Lien ranking prior to or on parity
with the Lien of this Indenture with respect to any part of the Collateral
or, except as otherwise permitted or contemplated herein, terminate the
Lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Transition Bond of the security provided by the
Lien of this Indenture.
(b) It shall not be necessary for any Act of Transition Bondholders
under this Section 9.02 to approve the particular form of any proposed
Supplemental Indenture, but it shall be sufficient if such Act shall approve the
substance thereof.
(c) Promptly after the execution by the Issuer and the Trustee of
any Supplemental Indenture pursuant to this Section 9.02, the Trustee shall mail
to the Holders of the Transition Bonds to which such Supplemental Indenture
relates a notice setting forth in general terms the substance of such
Supplemental Indenture. Any failure of the Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such Supplemental Indenture. If any Transition Bonds are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require, the Listing
Agent shall arrange for publication in an Authorized Newspaper that such notice
shall be available with the Issuer's listing agent in Luxembourg appointed
pursuant to Section 3.02(b).
SECTION 9.03 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any Supplemental Indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02 shall be fully protected in relying upon, an Issuer
Opinion of Counsel stating that the execution of such Supplemental Indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such Supplemental Indenture that affects the
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise.
SECTION 9.04 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of
any Supplemental Indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to each Series or Class of Transition Bonds affected thereby, and the
respective rights, limitations of rights, obligations, duties, liabilities and
immunities under this Indenture of the Trustee, the Issuer, the Holders of the
Transition Bonds and any counterparty under any Interest Rate Swap Agreement
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
61
of any such Supplemental Indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.05 CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of
this Indenture and every Supplemental Indenture executed pursuant to this
Article IX shall conform to the requirements of the TIA as then in effect so
long as this Indenture shall then be qualified under the TIA.
SECTION 9.06 REFERENCE IN TRANSITION BONDS TO SUPPLEMENTAL
INDENTURES. Transition Bonds authenticated and delivered after the execution of
any Supplemental Indenture pursuant to this Article IX may, and if required by
the Trustee shall, bear a notation in form approved by the Trustee as to any
matter provided for in such Supplemental Indenture. If the Issuer or the Trustee
shall so determine, new Transition Bonds so modified as to conform, in the
opinion of the Trustee and the Issuer, to any such Supplemental Indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Trustee in exchange for Outstanding Transition Bonds.
ARTICLE X
REDEMPTION OF TRANSITION BONDS
SECTION 10.01 OPTIONAL REDEMPTION BY ISSUER. If so provided in the
related Series Supplement and provided that there is no Interest Rate Swap
Agreement with respect to any Class of that Series in effect, the Issuer may, at
its option, redeem all, but not less than all, of the Transition Bonds of a
Series on any Payment Date if, after giving effect to payments that would
otherwise be made on such Payment Date, the Outstanding Amount of any such
Series of Transition Bonds has been reduced to less than five percent of the
initial principal balance of such Series. The redemption price in any case shall
be equal to the outstanding principal amount of the Bonds to be redeemed plus
accrued and unpaid interest thereon at the Interest Rate to the Redemption Date
(the "Redemption Price"). If the Issuer elects to redeem the Transition Bonds of
a Series pursuant to this Section 10.01, it shall furnish notice of such
election to (a) the Trustee, not later than twenty-five days prior to the
Redemption Date for such redemption and (b) the Rating Agencies, not later than
ten days prior to such Redemption Date, whereupon all such Transition Bonds
shall be due and payable on such Redemption Date upon the furnishing of a notice
complying with Section 10.03 to each Holder of the Transition Bonds of such
Series pursuant to this Section 10.01.
SECTION 10.02 MANDATORY REDEMPTION BY ISSUER. The Issuer shall
redeem the Transition Bonds of a Series on the Redemption Date or Dates, if any,
in the amounts required, if any, and at the redemption price specified in the
Series Supplement for such Series, which in any case shall be not less than the
outstanding principal amount of the Bonds to be redeemed, plus accrued interest
thereon to such Redemption Date. If the Issuer is required to redeem the
Transition Bonds of a Series pursuant to this Section 10.02, it shall furnish
notice of such requirement to the Trustee not later than twenty-five days prior
to the Redemption Date for such redemption whereupon all such Transition Bonds
shall be due and payable on the Redemption Date upon the furnishing of a notice
complying with Section 10.03 to each Holder of the Transition Bonds of such
Series pursuant to this Section 10.02.
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SECTION 10.03 FORM OF REDEMPTION NOTICE.
(a) Unless otherwise specified in the Series Supplement relating to
a Series of Transition Bonds, notice of redemption under Section 10.01 or 10.02
shall be given by the Trustee by first-class mail, postage prepaid, mailed not
less than five days nor more than forty-five days prior to the applicable
Redemption Date to each Holder of Transition Bonds to be redeemed, as of the
close of business on the Record Date preceding the applicable Redemption Date at
such Holder's address appearing in the Transition Bond Register.
(b) All notices of redemption shall state:
(i) the Redemption Date;
(ii) the amount of such Transition Bonds to be redeemed;
(iii) the Redemption Price; and
(iv) the place where such Transition Bonds are to be surrendered for
payment of the Redemption Price and accrued interest (which shall be the
office or agency of the Issuer to be maintained as provided in Section
3.02).
(c) Notice of redemption of the Transition Bonds to be redeemed
shall be given by the Trustee in the name and at the expense of the Issuer.
Failure to give notice of redemption, or any defect therein, to any Holder of
any Transition Bond selected for redemption shall not impair or affect the
validity of the redemption of any other Transition Bond. Notice of optional
redemption shall be irrevocable once given.
SECTION 10.04 PAYMENT OF REDEMPTION PRICE. If notice of redemption
has been duly mailed or duly waived by the Holders of all Transition Bonds
called for redemption, then the Transition Bonds called for redemption shall be
payable on the applicable Redemption Date at the applicable Redemption Price. No
further interest will accrue on the principal amount of any Transition Bonds
called for redemption after the Redemption Date, and the Holders of such
Transition Bonds will have no rights with respect thereto, if payment of the
Redemption Price has been duly provided for on or before the Redemption Date
declared therefor. Notwithstanding the foregoing, the Holders of the Transition
Bonds shall be entitled to payment of interest on the Redemption Price accrued
at the related Interest Rates to the extent the Issuer fails to pay the
Redemption Price on the Redemption Date. Payment of the Redemption Price shall
be made by the Trustee to or upon the order of the Holders of the Transition
Bonds called for redemption upon surrender of such Transition Bonds, and the
Transition Bonds so redeemed shall cease to be of further effect and the Lien
hereunder shall be released with respect to such Transition Bonds.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
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(a) Upon any application or request by the Issuer to the Trustee to
take any action under any provision of this Indenture, the Issuer shall furnish
to the Trustee (i) an Issuer Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Issuer Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of Independent certified public accountants meeting the applicable
requirements of this Section 11.01, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
(b) Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
SECTION 11.02 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
(a) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Issuer Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Servicer, the Seller or the Issuer, stating that the information
with respect to such factual matters is in the possession of the Servicer, the
Seller or the Issuer, unless such Authorized Officer or counsel knows, or in the
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exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
(c) Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
(d) Whenever in this Indenture, in connection with any application
or certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to conclusively rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.03 ACTS OF TRANSITION BONDHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Transition Bondholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Transition Bondholders
in person or by agents duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Transition Bondholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01) conclusive in favor of the Trustee and the Issuer,
if made in the manner provided in this Section 11.03.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Transition Bonds shall be proved by the
Transition Bond Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Transition Bonds shall bind the
Holder of every Transition Bond issued upon the registration thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Issuer in reliance thereon, whether or
not notation of such action is made upon such Transition Bond.
SECTION 11.04 NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING AGENCIES.
(a) Any request, demand, authorization, direction, notice, consent, waiver or
65
Act of Transition Bondholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to or filed with
(i) the Trustee by any Transition Bondholder or by the Issuer or
(ii) the Issuer by the Trustee or by any Transition Bondholder
shall be sufficient for every purpose hereunder if in English and in writing,
and sent by United States first-class mail, reputable overnight courier service,
facsimile transmission or electronic mail (confirmed by telephone, United States
first-class mail or reputable overnight courier service in the case of notice by
facsimile transmission or electronic mail) or any other customary means of
communication, and any such request, demand, authorization, direction, notice,
consent, waiver or Act shall be effective when delivered or transmitted, or if
mailed five days after deposit in the United States first-class mail with proper
postage for first-class mail prepaid, in the case of the Trustee, addressed to
the Trustee at its Corporate Trust Office, and in the case of the Issuer,
addressed to: JCP&L Transition Funding LLC, 103 Foulk Road, Suite 202,
Wilmington, Delaware 19803, with a copy to JCP&L Transition Funding LLC, c/o GPU
Service, Inc., 76 South Main Street, Akron, Ohio 44308, Attention: Managers, or
at any other address previously furnished in writing to the Trustee by the
Issuer. The Issuer shall promptly transmit any notice received by it from the
Transition Bondholders to the Trustee.
(b) Notices required to be given to the Rating Agencies by the
Issuer, the Trustee or a Manager shall be in writing, delivered personally, via
facsimile transmission, by reputable overnight courier or by first-class mail,
postage prepaid, to: (i) in the case of Moody's: Moody's Investors Service,
Inc., Attention: ABS Monitoring Department, 99 Church Street, New York, New York
10007; (ii) in the case of Standard & Poor's: Standard & Poor's, ABS
Surveillance Group, 55 Water Street, 41st Floor, New York, New York 10041-0003;
fax: 212-438-2664; and (iii) in the case of Fitch: Fitch, Inc., One State Street
Plaza, New York, New York 10004, Attention: ABS Surveillance.
SECTION 11.05 NOTICES TO TRANSITION BONDHOLDERS; WAIVER.
(a) Where this Indenture provides for notice to Transition
Bondholders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and delivered by first-class
mail, postage prepaid, to each Transition Bondholder affected by such event, at
the address of such Transition Bondholder as it appears on the Transition Bond
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Transition Bondholders is given by mail, neither the failure to mail such notice
nor any defect in any notice so mailed to any particular Transition Bondholder
shall affect the sufficiency of such notice with respect to other Transition
Bondholders, and any notice that is mailed in the manner herein provided shall
conclusively be presumed to have been duly given.
(b) Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Transition Bondholders shall be filed with the
66
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
(c) In case it shall be impractical to deliver notice in accordance
with clause (a) of this Section 11.05 to the Holders of Transition Bonds when
such notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be satisfactory to the Trustee
shall be deemed to be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.06 ALTERNATE PAYMENT AND NOTICE PROVISIONS.
Notwithstanding any provision of this Indenture or any of the Transition Bonds
to the contrary, the Issuer may enter into any agreement with any Holder of a
Transition Bond providing for a method of payment, or notice by the Trustee or
any Paying Agent to such Holder, that is different from the methods provided for
in this Indenture for such payments or notices. The Issuer will furnish to the
Trustee a copy of each such agreement and the Trustee will cause payments to be
made and notices to be given in accordance with such agreements.
SECTION 11.07 CONFLICT WITH TRUST INDENTURE ACT.
(a) If any provision hereof limits, qualifies or conflicts with
another provision hereof that is required to be included in this Indenture by
any of the provisions of the TIA, such required provision shall control.
(b) The provisions of TIA Sections 310 through 317 that impose
duties on any person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
SECTION 11.08 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.09 SUCCESSORS AND ASSIGNS.
(a) All covenants and agreements in this Indenture and the
Transition Bonds by the Issuer shall bind its successors and permitted assigns,
whether so expressed or not, unless expressly agreed to the contrary.
(b) All agreements of the Trustee in this Indenture shall bind its
successors.
(c) The Trustee shall provide prior notice to the Rating Agencies of
any assignment of the obligations under this Indenture.
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SECTION 11.10 SEVERABILITY. In case any provision in this Indenture
or in the Transition Bonds shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 11.11 BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Transition Bonds, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, and the Transition
Bondholders, and any other party secured hereunder, and any other Person with an
ownership interest in any part of the Collateral, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 11.12 LEGAL HOLIDAYS. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Transition Bonds or this Indenture) payment need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date on which nominally due, and no interest
shall accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 11.14 COUNTERPARTS. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 ISSUER OBLIGATION. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer or the Trustee on
the Transition Bonds or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Member or any
Manager, employee or agent of the Issuer or (ii) any stockholder, officer,
director, employee or agent of the Trustee (it being understood that none of the
Trustee's obligations are in its individual capacity).
SECTION 11.16 NO PETITION. The Trustee, by entering into this
Indenture, and each Transition Bondholder, by accepting a Transition Bond,
hereby covenants and agrees (or shall be deemed to have covenanted and agreed)
that it shall not at any time institute against the Issuer, or join in the
institution against the Issuer of, or acquiesce, petition or otherwise invoke or
cause the Issuer to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Issuer under any
federal or State bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of the property of the Issuer or ordering
the winding up or liquidation of the affairs of the Issuer.
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed and delivered by a Manager and an officer,
respectively, thereof, each thereunto duly authorized, all as of the day and
year first above written.
JCP&L TRANSITION FUNDING LLC,
as Issuer
By:
--------------------------------------
Name: Richard H. Marsh
Title: Manager, Senior Vice President
and Chief Financial Officer
THE BANK OF NEW YORK,
as Trustee
By:
--------------------------------------
Name: Cassandra Shedd
Title: Assistant Vice President
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APPENDIX A
MASTER DEFINITIONS
The definitions contained in this Appendix A are applicable to the singular as
well as the plural forms of such terms.
ACT has the meaning specified in Section 11.03 (a) of the Indenture.
ADJUSTMENT DATE means (a) May 1 of each year through May 1, 2016, (b) as long as
the Transition Bonds are outstanding, August 1, November 1, February 1 and May 1
of each year, beginning August 1, 2016, and (c) any other date which is thirty
days after a Calculation Date.
ADJUSTMENT REQUEST means an application filed by the Servicer with the BPU for a
Transition Bond Charge Adjustment pursuant to Section 5(b) of the Issuer Annex.
ADMINISTRATION AGREEMENT means the Administration Agreement dated as of June 11,
2002, between GPU Service or its successor, as administrator, and the Issuer, as
the same may be amended or supplemented from time to time.
ADMINISTRATOR means GPU Service, as administrator under the Administration
Agreement, and each successor to GPU Service, in the same capacity, pursuant to
Section 14 of the Administration Agreement.
ADVICE LETTER means, with respect to any Series of Transition Bonds, the
Issuance Advice Letter, in the form attached as Appendix B to the Financing
Order, to be filed with the BPU not later than five Business Days after the
issuance and sale of the Transition Bonds.
AFFILIATE means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, control when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms controlling and controlled
have meanings correlative to the foregoing.
ANNUAL ACCOUNTANT'S REPORT has the meaning assigned to that term in Section 3.07
of the Servicing Agreement.
ANNUAL RECONCILIATION DATE means the last Business Day of May of each year,
commencing with May 2003 and continuing through May 2016 (or such earlier month
as the Servicer shall have specified to the Issuer and the Trustee by not less
than thirty days prior written notice).
ARTICLE 9 COLLATERAL has the meaning specified in Section 2.10(b)(v)(I)(1) of
the Indenture.
AUTHORIZED DENOMINATIONS means, with respect to any Series or Class of
Transition Bonds, $1,000 and integral multiples of $1,000 above that amount,
provided, however, that one bond of each Class may have denomination of less
than $1,000, or such other denominations as may be specified in the Series
Supplement therefor.
AUTHORIZED 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 or (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 Sale Agreement, the Servicing Agreement, the Indenture
and any supplements thereto, the Administration Agreement, any Bills of Sale,
the Formation Documents and any Interest Rate Swap Agreement, 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.
BILL OF SALE means any bill 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 means those bondable stranded costs, within the meaning
specified in the Competition Act, approved for recovery in the Financing Order.
BONDABLE TRANSITION PROPERTY has the meaning assigned to that term in the
Competition Act and the Financing Order.
BONDABLE TRANSITION PROPERTY DOCUMENTATION means all documents related to the
Transferred Bondable Transition Property, including copies of the Petition and
the Financing Order 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 New Jersey Board of Public Utilities or its successor.
BPU REGULATIONS means any regulations, orders, guidelines or directives
promulgated, issued or adopted by the BPU.
BUSINESS DAY means any day other than a Saturday or Sunday or a day on which
banking institutions in 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 close.
CALCULATION DATE means (a) May 1 of each year until May 1, 2016, (b) August 1,
November 1, February 1 and May 1 of each year beginning August 1, 2016 and for
so long as the Transition Bonds are outstanding, and (c) any other day on which
the Servicer files an Adjustment Request.
CAPITAL SUBACCOUNT has the meaning specified in Section 8.02(a) of the
Indenture.
A-2
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 has the meaning specified in Section 8.02(a) of the Indenture.
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 first paragraph of 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.
COMMISSION means the U.S. Securities and Exchange Commission, and any successor
thereof.
COMPETITION ACT means the Electric Discount and Energy Competition Act, New
Jersey Statutes Annotated, Title 48, Chapter 3, Article 7.
CORPORATE TRUST OFFICE means the principal office of the Trustee at which at any
particular time its corporate trust business shall be administered, which office
at date of the execution of the Indenture is located at 101 Barclay Street,
Floor 8W, New York, NY 10286, Attention: Asset Backed Securities, Phone:
212-328-7538, Fax: 212-328-7623, 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.
CUSTOMER means each person who is a retail consumer of electricity and who
accesses JCP&L's transmission and distribution system, other than any customer,
for any period during which such customer takes service from JCP&L under service
classification GTX and certain end users that are connected to JCP&L's
transmission and distribution system but who self-generate from on-site
facilities, regardless of whether such consumer elects to purchase electricity
from a Third Party.
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DAILY REMITTANCE DATE means, if the Servicer has not satisfied the conditions of
Section 5.11(b) of the Servicing Agreement, each Business Day commencing on the
second Business Day following the date on which the Servicer receives TBC
Collections.
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 June
11, 2002, relating to the Transition Bonds, as the same may be amended or
supplemented from time to time.
ELIGIBLE GUARANTOR INSTITUTION means a firm or other entity identified in Rule
17Ad-15 under the Exchange Act as "an eligible guarantor institution," including
(as such terms are defined therein):
(a) a bank;
(b) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;
(c) a credit union;
(d) a national securities exchange, registered securities association or
clearing agency; or
(e) a savings association that is a participant in a securities transfer
association.
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 depository institution organized under the laws of the United
States of America or any State (or any domestic branch of a foreign
bank), which
(i) has either
(A) with respect to any Eligible Investment having a
maturity of greater than one month, a long-term
unsecured debt rating of "AAA" by Standard & Poor's and
Fitch and "Aaa" by Moody's, or
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(B) with respect to any Eligible Investment having a
maturity of one month or less, a certificate of deposit
rating of "A-1+" by Standard & Poor's and "P-1" by
Moody's, or any other long-term, short-term or
certificate of deposit rating acceptable to the Rating
Agencies, and
(ii) whose deposits are insured by the FDIC.
ELIGIBLE INVESTMENTS mean book-entry securities, negotiable instruments or
securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully and unconditionally
guaranteed as to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company (any depositary institution
or trust company being referred to in this definition as a
"financial institution") incorporated under the laws of the United
States of America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal
or State banking or depositary institution authorities; provided,
however, that at the time of the investment or contractual
commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations
the rating of which is based on the credit of a Person other than
such depositary institution or trust company) thereof shall have a
credit rating from each of the Rating Agencies in the highest
investment category granted thereby;
(c) commercial paper or other short term obligations of any corporation
organized under the laws of the United States of America (other than
JCP&L and any of its Affiliates) whose ratings, at the time of the
investment or contractual commitment to invest therein, from each of
the Rating Agencies are in the highest investment category granted
thereby;
(d) demand deposits, time deposits and certificates of deposit which are
fully insured by the FDIC;
(e) investments in money market funds having a rating from each of the
Rating Agencies in the highest investment category granted thereby
(including funds for which the Trustee or any of its Affiliates act
as investment manager or advisor);
(f) bankers' acceptances issued by any depositary institution or trust
company referred to in clause (b) above;
(g) 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 depositary institution
or trust company (acting as principal) described in clause (b)
above;
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(h) repurchase obligations with respect to any security or whole loan
entered into with
(i) a financial institution (acting as principal) described in
clause (b) above,
(ii) a broker/dealer (acting as principal) registered as a broker
or dealer under Section 15 of the Exchange Act (any
broker/dealer being referred to in this definition as a
"broker/dealer"), the unsecured short-term debt obligations of
which are rated "P-1" by Moody's and "A-1+" by Standard &
Poor's at the time of entering into this 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 at the time
of purchase; or
(i) any other investment permitted by each Rating Agency;
provided, however, that, with respect to Moody's only, the obligor related to
clauses (b), (c), (d), (f), (g) and (h) above must have both a long term rating
of at least "A1" and a short term rating of at least "P-1", and provided
further, 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 ten days, and provided, further, that, any
Eligible Investment must not:
(A) be sold, liquidated or otherwise disposed of at a loss,
prior to the maturity thereof, or
(B) 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 non-interest bearing trust account with an Eligible
Institution; or
(b) a segregated non-interest bearing trust account with the corporate
trust department of a depository 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
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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.
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 the Series Supplement therefor.
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.
FINANCING ORDER means the bondable stranded costs rate order issued with respect
to the Issuer's Transition Bonds by the BPU on February 6, 2002 pursuant to the
Competition Act and any subsequent bondable stranded costs rate order, if any,
issued with respect to any of the Issuer's Transition Bonds by the BPU.
FITCH means Fitch, Inc., or its successor.
FORMATION DOCUMENTS means, collectively, the Issuer LLC Agreement, the Issuer
Certificate of Formation and any other document pursuant to which the Issuer is
formed or governed, as each may be amended or supplemented from time to time.
GENERAL SUBACCOUNT has the meaning specified in Section 8.02(a) of the
Indenture.
GPU SERVICE means GPU Service, Inc., a Pennsylvania corporation, or its
successor.
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GRANT means mortgage, pledge, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, create and grant a lien upon and a security interest
in and right of set-off against, deposit, set over and confirm. A Grant of the
Collateral or of any other agreement or instrument shall include all rights,
powers and options (but none of the obligations) of the Granting party
thereunder, including the immediate and continuing right to claim for, collect,
receive and give receipt for principal, interest and other payments in respect
of the Collateral and all other moneys payable thereunder, to give and receive
notices and other communications, to make waivers or other agreements, to
exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
HOLDER OR 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 JCP&L'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, directors,
employees and agents, pursuant to Section 5.01 of the Sale Agreement.
INDEMNITY AMOUNT means the amount paid by JCP&L to the Trustee, for the Trustee
itself or on behalf of the Transition Bondholders, in respect of indemnification
obligations pursuant to the Indenture, the Sale Agreement or the Servicing
Agreement.
INDENTURE means the Indenture dated as of June 11, 2002, by and 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, JCP&L 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 upon the
Transition Bonds, JCP&L or any Affiliate of any of the foregoing
Persons and
(c) is not connected with the Issuer, any such other obligor upon the
Transition Bonds, JCP&L or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
INDEPENDENT CERTIFICATE means a certificate or opinion to be delivered to the
Trustee under the circumstances described in, and otherwise complying with, the
applicable requirements of Section 11.01 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.
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INDEPENDENT MANAGER has the meaning set forth in Section 1.01 of the Issuer LLC
Agreement.
INITIAL PURCHASE PRICE has the meaning set forth in Section 2.01(a) of the Sale
Agreement.
INITIAL TRANSFER DATE means the Series Issuance Date for the first Series of
Transition Bonds.
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 Bill of Sale delivered on or prior to the
Initial Transfer Date as identified in such Bill of Sale.
INSOLVENCY EVENT means, with respect to a specified Person,
(a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any
substantial part of its property in an involuntary case under any
applicable federal or State bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its
property, or ordering the winding-up or liquidation of such Person's
affairs, and such decree or order shall remain unstayed and in
effect for a period of ninety consecutive days or
(b) the commencement by such Person of a voluntary case under any
applicable federal or State bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such
law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any
substantial part of its property, or the making by 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 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 Schedule and Confirmations, between the Issuer and a Swap Counterparty,
as the same may be amended or supplemented from time to time, with respect to
any Series or Class of Transition Bonds.
ISSUER means JCP&L 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 to the Servicing Agreement.
ISSUER CERTIFICATE OF FORMATION means the Certificate of Formation of the
Issuer, dated February 24, 2000, which was filed with the Delaware Secretary of
State's Office on February 24, 2000, as the same may be amended or supplemented
from time to time.
ISSUER LLC AGREEMENT means the Amended and Restated Limited Liability Company
Agreement of the Issuer between the Member and the Issuer, dated as of June 11,
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 in a form reasonably satisfactory to 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 in a
form reasonably satisfactory to and delivered to the Trustee.
JCP&L means Jersey Central Power & Light Company, a New Jersey corporation, or
its successor.
LEGAL DEFEASANCE OPTION has the meaning specified in Section 4.01(b) of the
Indenture.
LIEN means a security interest, lien, mortgage, charge, claim, pledge, equity or
other 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 Section 1.01 of the Issuer LLC Agreement.
MARKET TRANSITION CHARGE means the market transition charge that JCP&L may
impose on Customers pursuant to the Competition Act and the Restructuring Order.
MEMBER means JCP&L, as the sole member of the Issuer, in its capacity as such
member under the Issuer LLC Agreement.
MONTHLY RECONCILIATION DATE means the last Business Day of each month commencing
with June 2016 (or such earlier month as the Servicer shall have specified to
the Issuer and the Trustee by not less than thirty days prior written notice).
MONTHLY REMITTANCE DATE means the first day of each calendar month (or if such
day is not a Business Day, the preceding Business Day) beginning on July 1,
2002.
MOODY'S means Moody's Investors Service, Inc., or its successor.
MTC-TAX means the tax component included in the Market Transition Charge which
JCP&L is entitled to collect as authorized by the Financing Order and the
Restructuring Order.
NEW JERSEY UCC means the Uniform Commercial Code, as in effect in the State of
New Jersey, as amended from time to time.
OFFICERS' CERTIFICATE means a certificate signed by:
(a) the chairman of the board, the president, the vice chairman of the
board, any executive vice president or any vice president of JCP&L;
and
(b) the chief financial officer, the treasurer, any assistant treasurer,
the secretary or any assistant secretary of JCP&L.
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 Quarterly 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 or the Financing Order.
OPINION OF COUNSEL means one or more written opinions of counsel who may be an
employee of or counsel to JCP&L, the Issuer or any other Person (as the context
may require), which counsel shall be reasonably acceptable to the Trustee, the
Issuer or the Rating Agencies, as applicable, and which shall be in form
reasonably satisfactory to the Trustee, if applicable.
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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 hereunder
or under any Basic Document, Transition Bonds owned by the Issuer, any other
obligor upon the Transition Bonds, JCP&L 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 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, JCP&L or any Affiliate of any of the foregoing Persons.
OUTSTANDING AMOUNT means the aggregate principal amount of all Outstanding
Transition Bonds or, if the context requires, all Outstanding Transition Bonds
of a Series or Class Outstanding at the date of determination.
OVERCOLLATERALIZATION means, with respect to any Payment Date, an amount that,
if deposited to the Overcollateralization Subaccount, would cause the balance in
such subaccount to equal the Scheduled Overcollateralization Level for such
Payment Date.
OVERCOLLATERALIZATION AMOUNT means, with respect to any Series of Transition
Bonds, the amount specified as such in the Series Supplement therefor.
OVERCOLLATERALIZATION SUBACCOUNT 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
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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, with respect to each Series or Class of Transition Bonds,
each date or dates respectively specified as Payment Dates for such Series or
Class in the Series Supplement therefor.
PERSON means any individual, corporation, estate, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
business trust, limited liability company, unincorporated organization or
government or any agency or political subdivision thereof.
PETITION means the petition filed by JCP&L with the BPU, dated August 25, 1999,
as amended on December 14, 1999 and May 29, 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.
PROJECTED 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.
PRO RATA shall have the meaning specified in Section 8.02(h) and Section 8.02(l)
of the Indenture.
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PROSPECTUS shall have the meaning specified in Section 3.06 of the Sale
Agreement.
QUARTERLY SERVICING FEE means the fee payable to the Servicer on a quarterly
basis for services rendered, in accordance with Section 5.07 of the Servicing
Agreement.
RATING AGENCY means, as of any date, any rating agency rating the Transition
Bonds of any Class or Series at the time of issuance thereof at the request of
the Issuer. If no such organization or successor is any longer in existence,
"Rating Agency" shall be a nationally recognized statistical rating organization
or other comparable Person designated by the Issuer, notice of which designation
shall be given to the Trustee, the Member and the Servicer.
RECONCILIATION DATE means an Annual Reconciliation Date or a Monthly
Reconciliation Date, as appropriate.
RECORD DATE has the meaning set forth in each 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.
RELEASED PARTIES has the meaning specified in Section 5.02(d) of the Servicing
Agreement.
REMITTANCE DATE means a Daily Remittance Date or a Monthly Remittance Date, as
applicable.
REQUIRED CAPITAL AMOUNT means, with respect to any Series, the amount required
to be deposited in the Capital Subaccount on the Series Issuance Date of such
Series, as specified in the related Series Supplement.
RESERVE SUBACCOUNT 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.
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RESTRUCTURING ORDER means the order of the BPU issued on March 7, 2001 pursuant
to Section 13 of the Competition Act with respect to JCP&L.
RETIRING TRUSTEE has the meaning specified in Section 6.08(b) of the Indenture.
SALE AGREEMENT means the Bondable Transition Property Sale Agreement dated June
11, 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 I of the Indenture, as such Schedule I has been adjusted in accordance
with Section 3.19 of the Indenture to reflect redemptions or defeasances of
Transition Bonds and issuances of additional Series of Transition Bonds.
SECURED OBLIGATIONS has the meaning specified in the second paragraph of the
Granting Clause of the Indenture.
SELLER means JCP&L, in its capacity as seller of the Bondable Transition
Property to the Issuer pursuant to the Sale Agreement.
SERIES means any 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 has the meaning specified in Section 8.02(a) of the
Indenture.
SERIES FINAL MATURITY DATE means the Final Maturity Date for a Series.
SERIES ISSUANCE DATE means, with respect to any Series, the date on which the
Transition Bonds of such Series are to be originally issued in accordance with
Section 2.10 of the Indenture and the Series Supplement for such Series.
SERIES OVERCOLLATERALIZATION SUBACCOUNT has the meaning specified in Section
8.02(a) of the Indenture.
SERIES SUBACCOUNT has the meaning specified in Section 8.02(a) of the Indenture.
SERIES SUPPLEMENT means an indenture supplemental to the Indenture that
authorizes a particular Series of Transition Bonds, as the same may be amended
or supplemented from time to time.
SERVICER means JCP&L, as the servicer of the Bondable Transition Property, and
each successor to JCP&L (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 June 11, 2002,
between the Issuer and the Servicer, as the same may be amended and supplemented
from time to time.
SPECIAL MEMBER has the meaning set forth in the Issuer LLC Agreement.
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STANDARD & POOR'S OR S&P means Standard & Poor's Ratings Group, a division of
The McGraw-Hill Companies, or its successor.
STATE means any one of the fifty 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 has the meaning specified in Section 2.01(d) of the
Sale Agreement.
SUBSEQUENT SALE means the sale of additional Bondable Transition Property by the
Seller to the Issuer after the Initial Transfer Date, subject to the
satisfaction of the conditions specified in the Sale Agreement and the
Indenture.
SUBSEQUENT TRANSFER DATE means the date that a sale of Subsequent Transferred
Bondable Transition Property will be effective, as specified in a written notice
provided by the Seller to the Issuer pursuant to the Sale Agreement.
SUBSEQUENT TRANSFERRED 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 the Bill of Sale delivered on or prior to the
Subsequent Transfer Date as identified in such Bill of Sale.
SUCCESSOR SERVICER has the meaning specified in Section 3.20(i) of the
Indenture.
SUPPLEMENTAL INDENTURE means a supplemental indenture entered into by the Issuer
and the Trustee pursuant to Article IX of the Indenture.
SWAP COUNTERPARTY means, with respect to any Interest Rate Swap Agreement, the
swap counterparty under that Interest Rate Swap Agreement.
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 power supplier,
providing billing or metering services, licensed by the BPU pursuant to relevant
provisions of the Competition Act, any BPU Regulations and the Financing Order.
TRANSFER DATE means the Initial Transfer Date or any Subsequent Transfer Date,
as applicable.
TRANSFERRED BONDABLE TRANSITION PROPERTY has the meaning specified in Section
2.10(b)(v)(H)(1) of the Indenture.
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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 JCP&L or its successor to recover Bondable
Stranded Costs pursuant to the Competition Act and the Financing Order.
TRANSITION BOND CHARGE ADJUSTMENT means each adjustment to the 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 the
Transition Bond Charge is adjusted pursuant to the Servicing Agreement, the
Competition Act, the Petition and the Financing Order.
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 hereof, unless otherwise specifically provided.
TRUSTEE has the meaning specified in the first paragraph of the Indenture.
UNDERWRITING AGREEMENT means the Underwriting Agreement dated June 4, 2002,
among the Seller, the Issuer and Goldman, Sachs & Co., 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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SCHEDULE I
SCHEDULED OVERCOLLATERALIZATION LEVELS
Required Required
Overcollateralization Overcollateralization
Payment Date Level Payment Date Level
------------ --------------------- ------------ ---------------------
3/5/03 $ 80,000 6/5/10 $ 853,333
6/5/03 $106,667 9/5/10 $ 880,000
9/5/03 $133,333 12/5/10 $ 906,667
12/5/03 $160,000 3/5/11 $ 933,333
3/5/04 $186,667 6/5/11 $ 960,000
6/5/04 $213,333 9/5/11 $ 986,667
9/5/04 $240,000 12/5/11 $1,013,333
12/5/04 $266,667 3/5/12 $1,040,000
3/5/05 $293,333 6/5/12 $1,066,667
6/5/05 $320,000 9/5/12 $1,093,333
9/5/05 $346,667 12/5/12 $1,120,000
12/5/05 $373,333 3/5/13 $1,146,667
3/5/06 $400,000 6/5/13 $1,173,333
6/5/06 $426,667 9/5/13 $1,200,000
9/5/06 $453,333 12/5/13 $1,226,667
12/5/06 $480,000 3/5/14 $1,253,333
3/5/07 $506,667 6/5/14 $1,280,000
6/5/07 $533,333 9/5/14 $1,306,667
9/5/07 $560,000 12/5/14 $1,333,333
12/5/07 $586,667 3/5/15 $1,360,000
3/5/08 $613,333 6/5/15 $1,386,667
6/5/08 $640,000 9/5/15 $1,413,333
9/5/08 $666,667 12/5/15 $1,440,000
12/5/08 $693,333 3/5/16 $1,466,667
3/5/09 $720,000 6/5/16 $1,493,333
6/5/09 $746,667 9/5/16 $1,520,000
9/5/09 $773,333 12/5/16 $1,546,667
12/5/09 $800,000 3/5/17 $1,573,333
3/5/10 $826,667 6/5/17 $1,600,000