EXHIBIT 10.2
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BONDABLE TRANSITION PROPERTY SERVICING AGREEMENT
between
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC
Issuer
and
ATLANTIC CITY ELECTRIC COMPANY
Servicer
Dated as of ___________, 2002
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TABLE OF CONTENTS
ARTICLE I Definitions....................................................... 1
SECTION 1.01 Definitions................................................. 1
SECTION 1.02 Other Definitional Provisions............................... 1
ARTICLE II Appointment and Authorization of Servicer........................ 2
SECTION 2.01 Appointment of Servicer; Acceptance of Appointment.......... 2
SECTION 2.02 Authorization............................................... 2
SECTION 2.03 Dominion and Control Over Transferred Bondable Transition
Property.................................................... 2
ARTICLE III Billing Services................................................ 3
SECTION 3.01 Duties of Servicer.......................................... 3
SECTION 3.02 Collection of Transition Bond Charges....................... 3
SECTION 3.03 Payment of TBC Collections.................................. 4
SECTION 3.04 Servicing and Maintenance Standards......................... 5
SECTION 3.05 Servicer's Certificates..................................... 6
SECTION 3.06 Annual Statement as to Compliance; Notice of Default........ 6
SECTION 3.07 Annual Independent Certified Public Accountants' Report..... 6
SECTION 3.08 Bondable Transition Property Documentation.................. 7
SECTION 3.09 Computer Records; Audits of Documentation................... 7
SECTION 3.10 Defending Transferred Bondable Transition Property
Against Claims.............................................. 8
SECTION 3.11 Opinions of Counsel......................................... 8
ARTICLE IV Services Related to Transition Bond Charge Adjustments.......... 9
SECTION 4.01 Transition Bond Charge Adjustments.......................... 9
ARTICLE V The Servicer...................................................... 9
SECTION 5.01 Representations and Warranties of Servicer.................. 9
SECTION 5.02 Indemnities of Servicer; Release of Claims.................. 10
SECTION 5.03 Merger or Consolidation of, or Assumption of the Obligations
of, Servicer................................................ 12
SECTION 5.04 Assignment of Servicer's Obligations and Duties............. 13
SECTION 5.05 Limitation on Liability of Servicer and Others.............. 13
SECTION 5.06 ACE Not To Resign as Servicer............................... 13
SECTION 5.07 Monthly Servicing Fee....................................... 14
SECTION 5.08 Servicer Expenses........................................... 14
SECTION 5.09 Subservicing................................................ 14
SECTION 5.10 Remittances................................................. 15
SECTION 5.11 Servicer Advances........................................... 15
SECTION 5.12 Protection of Title......................................... 15
ARTICLE VI Servicer Default................................................. 15
SECTION 6.01 Servicer Default............................................ 15
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SECTION 6.02 Notice of Servicer Default.................................. 17
SECTION 6.03 Waiver of Past Defaults..................................... 17
SECTION 6.04 Appointment of Successor.................................... 17
SECTION 6.05 Cooperation with Successor.................................. 18
ARTICLE VII Miscellaneous Provisions........................................ 18
SECTION 7.01 Amendment................................................... 18
SECTION 7.02 Notices..................................................... 18
SECTION 7.03 Limitations on Rights of Others............................. 19
SECTION 7.04 Severability................................................ 19
SECTION 7.05 Separate Counterparts....................................... 19
SECTION 7.06 Headings.................................................... 19
SECTION 7.07 Governing Law............................................... 19
SECTION 7.08 Assignment to the Trustee................................... 19
SECTION 7.09 Nonpetition Covenants....................................... 20
SECTION 7.10 Termination................................................. 20
SECTION 7.11 Limitation of Liability..................................... 20
EXHIBIT A Servicing Procedures
ANNEX 1 TBC Adjustment Process and Reports - Atlantic City
Electric Transition Funding LLC
APPENDIX A Master Definitions
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BONDABLE TRANSITION PROPERTY SERVICING AGREEMENT dated as of
__________, 2002, between ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC, a
Delaware limited liability company, as issuer (the "Issuer"), and ATLANTIC CITY
ELECTRIC COMPANY, a New Jersey corporation, as servicer of the Bondable
Transition Property hereunder (together with each successor to ATLANTIC CITY
ELECTRIC COMPANY (in the same capacity) pursuant to Section 5.03 or 6.02, the
"Servicer").
WHEREAS the Servicer is willing to service the Bondable Transition
Property purchased from the Seller by the Issuer; and
WHEREAS the Issuer, in connection with ownership of Transferred
Bondable Transition Property, desires to engage the Servicer to carry out the
functions described herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, and intending legally to be
bound, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Definitions.
Capitalized terms used but not otherwise defined herein have the
meanings assigned to them in Appendix A.
SECTION 1.02 Other Definitional Provisions.
(a) "Agreement" means this Bondable Transition Property Servicing
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.
(b) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement refer to this Agreement as a whole and not to
any particular portion of this Agreement.
(c) Uncapitalized terms used herein that are defined in the
Competition Act, have, as the context requires, the meanings assigned to them in
the Competition Act, but without giving effect to amendments to the Competition
Act after the date hereof affecting such assigned meanings that, if applied
hereto, would have a material adverse effect on the Issuer or the Transition
Bondholders.
(d) All terms defined in this Agreement have the meanings herein
assigned to them when used in any certificate or other document made or
delivered pursuant hereto except where otherwise expressly provided therein.
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(e) References in this Agreement to articles, sections, appendices,
annexes, schedules and exhibits are to the sections, appendices, annexes,
schedules and exhibits of, in or to this Agreement unless otherwise specified.
(f) The term "including" means "including without limitation" and
"or" is used in the inclusive sense.
(g) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of the defined terms, and personal
pronouns refer to all persons regardless of gender.
ARTICLE II
Appointment and Authorization of Servicer
SECTION 2.01 Appointment of Servicer; Acceptance of Appointment.
Subject to Section 5.06 and Article VI, the Issuer hereby appoints
the Servicer, and the Servicer hereby accepts such appointment, to perform the
Servicer's obligations pursuant to this Agreement on behalf of and for the
benefit of the Issuer in accordance with the terms of this Agreement. This
appointment and the Servicer's acceptance thereof may not be revoked except in
accordance with the express terms of this Agreement.
SECTION 2.02 Authorization.
With respect to all or any portion of the Transferred Bondable
Transition Property, the Servicer shall be, and hereby is, authorized and
empowered by the Issuer to, on behalf of itself, the Issuer, or both, as may be
required:
(a) execute and deliver any and all instruments, documents or
notices; and
(b) make any filings and participate in proceedings of any kind with
any governmental authorities, including the BPU.
The Issuer shall execute and furnish the Servicer with such documents as have
been prepared by the Servicer for execution by the Issuer and with such other
documents as may be in the Issuer's possession that are necessary or appropriate
to enable the Servicer to carry out its servicing and administrative duties
hereunder. Upon the written request of the Servicer, the Issuer shall furnish
the Servicer with any powers of attorney or other documents necessary or
appropriate to enable the Servicer to carry out such duties.
SECTION 2.03 Dominion and Control Over Transferred Bondable
Transition Property.
Notwithstanding any other provision hereof, the Issuer shall have
dominion and control over the Transferred Bondable Transition Property. The
Servicer shall not take any action that is not authorized by this Agreement,
that is not consistent with its customary procedures and practices or that
impairs the rights of the Issuer in the Transferred Bondable
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Transition Property, in each case unless such action is required by law or court
or regulatory order.
ARTICLE III
Billing Services
SECTION 3.01 Duties of Servicer.
The Servicer shall have the following duties:
(a) Duties of Servicer Generally. The Servicer shall manage,
service, administer and make collections in respect of the Transferred Bondable
Transition Property. The Servicer's duties shall include: (i) obtaining meter
readings, calculating and billing the Bondable Transition Bond Charge and
collecting (from Customers or Third Parties, as applicable) all TBC Collections;
(ii) responding to inquiries by Customers, Third Parties, the BPU, or any
federal, state or local governmental authorities with respect to the Transferred
Bondable Transition Property and the Transition Bond Charge; (iii) accounting
for TBC Collections, investigating delinquencies, processing all TBC Collections
and making periodic remittances thereof, and furnishing periodic reports to the
Issuer, the Trustee and the Rating Agencies; (iv) selling, as agent for the
Issuer, defaulted or written-off accounts in accordance with the Servicer's
usual and customary practices for accounts of its own electric service
customers; and (v) taking such action in connection with Transition Bond Charge
Adjustments as is set forth herein.
Without limiting the generality of this Section 3.01(a), in
furtherance of the foregoing the Servicer shall have, and shall comply with, the
duties and responsibilities set forth in Exhibit A, which among other things
relate to data acquisition, usage and ▇▇▇▇ calculation, billing, customer
service functions, collections, payment processing and remittance. Anything to
the contrary contained herein notwithstanding, the duties of the Servicer set
forth in this Agreement shall be qualified in their entirety by any BPU
Regulations in effect at the time such duties are to be performed.
(b) Notification of Laws and Regulations. The Servicer shall
immediately notify the Issuer, the Trustee and the Rating Agencies in writing of
any laws or BPU Regulations hereafter promulgated that have a material adverse
effect on the Servicer's ability to perform its duties under this Agreement.
(c) Other Information. Upon the reasonable request of the Issuer,
the Trustee or any Rating Agency, the Servicer shall, to the extent permitted by
law, provide to the Issuer, the Trustee or the Rating Agencies, as the case may
be, any public financial information in respect of the Servicer, or any material
information regarding the Transferred Bondable Transition Property to the extent
it is reasonably available to the Servicer, and reasonably necessary for the
Issuer, the Trustee or the Rating Agencies to monitor the performance of the
Servicer hereunder.
SECTION 3.02 Collection of Transition Bond Charges.
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(a) The Servicer shall use all reasonable efforts consistent with
its customary collection procedures to collect all amounts owed in respect of
the Transition Bond Charge as and when the same shall become due and shall
follow such collection procedures as it follows with respect to amounts that the
Servicer collects for itself or others. The Servicer shall not change the amount
of or reschedule the due date of any scheduled payment of the Transition Bond
Charge except as contemplated in this Agreement or as required by law or court
or BPU Regulations; provided, however, that the Servicer may in its own
discretion waive any late payment charges or any other fee or charge relating to
delinquent payments, and may waive or modify any terms of payment of any amount
payable by any customer, if such waiver complies with the Servicer's customary
practices and applicable law and does not materially adversely affect the
Transition Bondholders; provided, further, that the Servicer may take any other
actions to the extent that such actions would be in accordance with customary
billing and collection practices of the Servicer conducted on its own behalf.
The Servicer shall enforce the obligations of any Third Parties providing
billing and collection services with respect to the Transition Bond Charge.
(b) As specified in the Petition and the BPU Financing Orders, any
amounts received by the Servicer from a Customer that represent a partial
payment toward an outstanding balance will be applied in the following manner:
(i) to sales taxes (which the Servicer collects as trustee for the
State of New Jersey and not for its own account or for that of the
Issuer);
(ii) to the Transition Bond Charge and the Servicer's other charges
and taxes, where any of such charges are in arrears, pro rata based on
their proportion to the Servicer's total charges in arrears for that
period; and
(iii) to the Transition Bond Charge and the Servicer's other charges
and taxes, where any of such charges are current charges, pro rata based
on their proportion to the Servicer's total current charges assessed for
that period.
ACE's other charges may include the market transition charge, the
MTC-Tax and all other charges that ACE and any Third Party may be authorized to
▇▇▇▇ and collect from Customers on account of electric service.
SECTION 3.03 Payment of TBC Collections.
(a) The Servicer shall prepare annually a Collections Curve, based
on actual TBC Collections. The Servicer shall remit TBC Collections for each
Billing Month to the Trustee for deposit in the Collection Account not later
than the corresponding Remittance Date or Dates following such Billing Month.
The Servicer shall make periodic payments on account of TBC Collections to the
Trustee for deposit in the Collection Account as follows:
(i) for so long as the Servicer has satisfied the conditions of
Section 5.10(b), the Servicer shall, on each Monthly Remittance Date,
remit to the Trustee for each of the
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seven preceding Billing Months an amount equal to the amount of TBC
Collections estimated to have been received, during the preceding calendar
month, with respect to such seven Billing Months, such estimates to be
based on the Collections Curve then in effect, and
(ii) for so long as the Servicer has not satisfied the conditions
of Section 5.10(b), the Servicer shall, on each Daily Remittance Date,
remit to the Trustee for the Billing Month in which such Daily Remittance
Date occurs and for each of the six preceding Billing Months an amount
equal to the amount of TBC Collections estimated to have been received, on
the Business Day that is two Business Days prior to such Daily Remittance
Date, with respect to the Billing Month in which such Daily Remittance
Date occurs and each of such six preceding Billing Months, such estimates
to be based on the Collections Curve then in effect.
(b) On or before the Reconciliation Date for each Billing Month, the
Servicer shall determine whether there exists a Curve Payment Shortfall or an
Excess Curve Payment for such Billing Month by comparing (i) the actual TBC
Collections with respect to such Billing Month with (ii) the Collection Curve
Payments previously made to the Trustee with respect to such Billing Month. In
the event that there is an Excess Curve Payment for such Billing Month, the
Servicer may either (A) reduce the amount that the Servicer is required to remit
to the Trustee for deposit in the Collection Account on the following Remittance
Date (and, if necessary, succeeding Remittance Dates) by the amount of such
Excess Curve Payment or (B) require the Trustee to pay to the Servicer from the
Collection Account the amount of such Excess Curve Payment, which upon payment
shall become the property of the Servicer. In the event that there is a Curve
Payment Shortfall for such Billing Month, the Servicer shall remit such
shortfall to the Trustee on the Reconciliation Date for such Billing Month.
(c) The Servicer shall hold all TBC Collections collected by it
(which collections may be commingled with other funds the Servicer collects from
Customers or Third Parties, as applicable) for the benefit of the Issuer, and
all amounts shall be remitted by the Servicer in accordance with this Agreement
without any surcharge, fee, offset, charge or other deduction and without making
any claim to reduce its obligation to remit all TBC Collections collected by it,
except (i) as set forth in clause (b) of this Section 3.03 and (ii) for late
fees and interest accrued prior to the date of such remittance as permitted by
Section 5.07.
SECTION 3.04 Servicing and Maintenance Standards.
The Servicer shall, on behalf of the Issuer, (a) manage, service,
administer and make collections in respect of the Transferred Bondable
Transition Property with reasonable care and in material compliance with
applicable law, including all applicable BPU Regulations, using the same degree
of care and diligence that the Servicer exercises with respect to billing and
collection activities that the Servicer conducts for itself and others, (b)
follow standards, policies and procedures in performing its duties as Servicer
that are customary in the Servicer's industry, (c) use all reasonable efforts,
consistent with its customary servicing procedures, to enforce and maintain the
Issuer's and the Trustee's rights in respect of the Transferred Bondable
Transition Property and (d) calculate Transition Bond Charge in compliance with
the Competition Act, the
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BPU Financing Orders and any applicable tariffs, except where the failure to
comply with any of the foregoing standards would not adversely affect the
Issuer's or the Trustee's interest in the Transferred Bondable Transition
Property. The Servicer shall follow such customary and usual practices and
procedures as it deems necessary or advisable in its servicing of all or any
portion of the Transferred Bondable Transition Property, which, in the
Servicer's judgment, may include the taking of legal action pursuant to Section
3.10 or otherwise. Notwithstanding the foregoing, the Servicer shall not change
its customary and usual practices and procedures in any manner that would
materially and adversely affect the Issuer's or the Trustee's interest in the
Transferred Bondable Transition Property unless it shall have provided the
Rating Agencies with prior written notice.
SECTION 3.05 Servicer's Certificates.
(a) The Servicer shall provide to the Issuer and to the Trustee the
statements and certificates specified in Annex 1.
SECTION 3.06 Annual Statement as to Compliance; Notice of Default.
(a) The Servicer shall deliver to the Issuer and the Trustee and
each Rating Agency, on or before March 31 of each year beginning in 2003, an
Officers' Certificate to the effect that (i) a review of the activities of the
Servicer during the preceding calendar year (or relevant portion thereof) and of
its performance under this Agreement has been made under such officers'
supervision and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such period or, if there has been a default in the fulfillment of any
such obligation, describing each such default in reasonable detail.
(b) The Servicer shall deliver to the Issuer, the Trustee and each
Rating Agency, promptly but in no event later than five Business Days after
having obtained knowledge thereof, written notice in an Officers' Certificate of
any event that, with the giving of notice or lapse of time, or both, would
become a Servicer Default under Section 6.01.
SECTION 3.07 Annual Independent Certified Public Accountants'
Report.
(a) The Servicer shall cause a firm of independent certified public
accountants (which may also provide other services to the Servicer or the
Seller) to prepare, and the Servicer shall deliver to the Issuer, the Trustee
and each Rating Agency, on or before March 31 of each year beginning in 2003 to
and including the first March 31 to occur after the retirement of all Transition
Bonds, a report addressed to the Servicer (the "Annual Accountant's Report"),
which may be included as part of the Servicer's customary auditing activities,
to the effect that such firm has performed certain procedures in connection with
the Servicer's compliance with its
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obligations under this Agreement during the preceding calendar year ended
December 31 (or, in the case of the first Annual Accountant's Report, the period
of time from the Initial Transfer Date until December 31, 2002), identifying the
results of such procedures and including any exceptions noted. In the event such
accounting firm requires the Trustee or the Issuer to agree or consent to the
procedures performed by such firm, the Issuer shall direct the Trustee in
writing to so agree, it being understood and agreed that the Trustee may deliver
such letter of agreement or consent in conclusive reliance upon the direction of
the Issuer and that neither the Trustee nor the Issuer will be required to make
any independent inquiry or investigation as to, or have any obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures.
(b) The Annual Accountant's Report shall further indicate that the
accounting firm providing such report is independent of the Servicer within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
SECTION 3.08 Bondable Transition Property Documentation.
To assure uniform quality in servicing the Transferred Bondable
Transition Property and to reduce administrative costs, the Servicer shall keep
on file, in accordance with its customary procedures, all Bondable Transition
Property Documentation, it being understood that the Servicer is acting solely
as the servicing agent and custodian for the Issuer with respect to the Bondable
Transition Property.
SECTION 3.09 Computer Records; Audits of Documentation.
(a) Safekeeping. The Servicer shall maintain accurate and complete
accounts, records and computer systems pertaining to the Bondable Transition
Property and the Bondable Transition Property Documentation in accordance with
its standard accounting procedures and in sufficient detail to permit
reconciliation between payments or recoveries on (or with respect to) the
Transition Bond Charge and the TBC Collections from time to time remitted to the
Trustee pursuant to Section 3.03 and to enable the Issuer to comply with this
Agreement and the Indenture. The Servicer shall conduct, or cause to be
conducted, periodic reviews of the Bondable Transition Property Documentation
held by it under this Agreement and of the related accounts, records and
computer systems, in such a manner as shall enable the Issuer and the Trustee,
as pledgee of the Issuer, to verify the accuracy of the Servicer's record
keeping. The Servicer shall promptly report to the Issuer and the Trustee any
failure on the Servicer's part to hold the Bondable Transition Property
Documentation and maintain its accounts, records and computer systems as herein
provided and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by the Issuer or the Trustee of the Bondable Transition Property
Documentation. The Servicer's duties to hold the Bondable Transition Property
Documentation on behalf of the Issuer set forth in this Section 3.09, to the
extent such Bondable Transition Property Documentation has not been previously
transferred to a successor Servicer, shall terminate three years after the
earlier of (i) the date on which the Servicer is succeeded by a successor
Servicer pursuant to the provisions of this Agreement and (ii) the date on which
no Transition Bonds of any Series are outstanding.
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(b) Maintenance of and Access to Records. The Servicer shall
maintain the Bondable Transition Property Documentation at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ or at such other office as shall be specified to the Issuer
and the Trustee by written notice not later than 30 days prior to any change in
location. The Servicer shall permit the Issuer and the Trustee or their
respective duly authorized representatives, attorneys, agents or auditors at any
time during normal business hours as the Issuer or Trustee shall reasonably
request to inspect, audit and make copies of and abstracts from the Servicer's
records regarding the Transferred Bondable Transition Property, the Transition
Bond Charge and the Bondable Transition Property Documentation. The failure of
the Servicer to provide access to such information as a result of an obligation
or applicable law (including BPU Regulations) prohibiting disclosure of
information regarding customers shall not constitute a breach of this Section
3.09(b).
SECTION 3.10 Defending Transferred Bondable Transition Property
Against Claims.
The Servicer shall institute any action or proceeding necessary to
compel performance by the BPU or the State of New Jersey of any of their
obligations or duties under the Competition Act or the BPU Financing Orders with
respect to the Transferred Bondable Transition Property, and the Servicer agrees
to take such legal or administrative actions, including defending against or
instituting and pursuing legal actions and appearing or testifying at hearings
or similar proceedings, as may be reasonably necessary to block or overturn any
attempts to cause a repeal of, modification of or supplement to the Competition
Act or the BPU Financing Orders, as the case may be, or the rights of holders of
Transferred Bondable Transition Property that would be adverse to Transition
Bondholders. The costs of any such action shall be payable from TBC Collections
as an Operating Expense in accordance with the Indenture. The Servicer's
obligations pursuant to this Section 3.10 shall survive and continue
notwithstanding the fact that the payment of Operating Expenses pursuant to the
Indenture may be delayed (it being understood that the Servicer may be required
to advance its own funds to satisfy its obligations under this Section 3.10).
SECTION 3.11 Opinions of Counsel.
The Servicer shall deliver to the Issuer and the Trustee:
(a) promptly after the execution and delivery of this Agreement and
of each amendment hereto, promptly after the execution of the Sale Agreement and
of each amendment thereto, and on each Transfer Date, an Opinion of Counsel
either (i) to the effect that, in the opinion of such counsel, all filings,
including UCC filings, as are necessary to fully preserve and protect the
interests of the Trustee in the Transferred Bondable Transition Property have
been executed and will be filed as required, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) to the effect that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest; and
(b) within 90 days after the beginning of each calendar year
commencing with the first calendar year beginning more than three months after
the Initial Transfer Date, an Opinion of Counsel, dated as of a date during such
90-day period, either (i) to the effect that, in the
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opinion of such counsel, all UCC filings necessary to preserve and protect the
interest of the Trustee in the Transferred Bondable Transition Property have
been filed, and reciting the details of all such filings or referring to prior
Opinions of Counsel in which such details are given, or (ii) to the effect that,
in the opinion of such counsel, no such action shall be necessary to preserve
and protect such interest.
Each Opinion of Counsel referred to in Section 3.11(a) and (b) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
ARTICLE IV
Services Related to Transition
Bond Charge Adjustments
SECTION 4.01
Transition Bond Charge Adjustments.
The Servicer shall perform the calculations and take the actions
relating to adjusting the Transition Bond Charge, as set forth in Annex 1.
ARTICLE V
The Servicer
SECTION 5.01 Representations and Warranties of Servicer.
The Servicer makes the following representations and warranties as
of each Transfer Date, on which representations and warranties the Issuer has
relied and will rely in acquiring Transferred Bondable Transition Property. The
Servicer's representations and warranties hereunder shall survive the sale of
any of the Transferred Bondable Transition Property to the Issuer and the pledge
thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is a corporation
duly organized and in good standing under the laws of the state of its
incorporation, with the corporate power and authority to own its properties and
to conduct its business as such properties are currently owned and presently
conducted, and has the power, authority and legal right to service the
Transferred Bondable Transition Property.
(b) Due Qualification. The Servicer is duly qualified to do business
as a foreign corporation in all jurisdictions in which it is required to be so
qualified, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business (including the servicing of the Transferred Bondable Transition
Property as required by this Agreement) requires such licenses or approvals,
except where the failure to so qualify or the failure to obtain such necessary
licenses and approvals would not be reasonably likely to have a material adverse
effect on the Servicer's business, operations, assets, revenues or properties or
to adversely affect the servicing of the Transferred Bondable Transition
Property.
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(c) Power and Authority. The Servicer has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery and performance of this Agreement have been duly
authorized by the Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Servicer enforceable against the Servicer in
accordance with its terms subject to bankruptcy, receivership, insolvency,
fraudulent transfer, reorganization, moratorium or other laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
(e) No Violation. The consummation of the transactions contemplated
by this Agreement will not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time)
a default under, the articles of incorporation or by-laws of the Servicer, or
any indenture, or other material agreement or instrument to which the Servicer
is a party or by which it is bound; or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such indenture,
or other material agreement or instrument; or violate any law or any order, rule
or regulation applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties.
(f) Approvals. Except for filings with the BPU for adjusting the
Transition Bond Charge pursuant to Section 4.01 and Annex 1, the filing of
financing statements and continuation statements under the New Jersey UCC, no
approval, authorization, consent, order or other action of, or filing with, any
court, federal or state regulatory body, administrative agency or other
governmental instrumentality is required in connection with the execution and
delivery by the Servicer of this Agreement, the performance by the Servicer of
the transactions contemplated hereby or the fulfillment by the Servicer of the
terms hereof, except for such as have been obtained, made or taken.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's best knowledge, threatened before any court,
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties: (i)
seeking any ruling that might materially and adversely affect the performance by
the Servicer of its obligations under, or the validity or enforceability against
the Servicer of this Agreement or (ii) relating to the Servicer that might
adversely affect the federal or state income or franchise tax attributes of the
Transition Bonds.
(h) Licenses. The Servicer has all material licenses necessary for
it to perform its obligations under this Agreement.
SECTION 5.02 Indemnities of Servicer; Release of Claims.
(a) The Servicer shall be liable in accordance herewith only to the
extent of the
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obligations specifically undertaken by the Servicer under this Agreement.
(b) The Servicer shall indemnify the Issuer and the Trustee, for
itself and on behalf of the Transition Bondholders, and each of their respective
trustees, managers, members, officers, directors, employees and agents for, and
defend and hold harmless each such Person from and against, any and all Losses
that may be incurred by or asserted against any such Person as a result of (i)
the Servicer's willful misconduct, bad faith or gross negligence in the
performance of its duties or observance of its covenants under this Agreement or
the Servicer's reckless disregard of its obligations and duties under this
Agreement, (ii) the Servicer's breach of any of its representations or
warranties in this Agreement and (iii) litigation and related expenses relating
to its status and obligations as servicer, provided, however, that the Servicer
shall not be liable for any Losses resulting from the willful misconduct or
gross negligence of any Person indemnified pursuant to this Section 5.02 (each,
an "Indemnified Person") or resulting from a breach of a representation or
warranty made by any Indemnified Person in any of the Basic Documents that gives
rise to the Servicer's breach.
Promptly after receipt by an Indemnified Person of notice of its
involvement in any action, proceeding or investigation, such Indemnified Person
shall, if a claim for indemnification in respect thereof is to be made against
the Servicer under this Section 5.02, notify the Servicer in writing of such
involvement. Failure by an Indemnified Person to so notify the Servicer shall
relieve the Servicer from the obligation to indemnify and hold harmless such
Indemnified Person under this Section 5.02 only to the extent that the Servicer
suffers actual prejudice as a result of such failure. With respect to any
action, proceeding or investigation brought by a third party for which
indemnification may be sought under this Section 5.02, the Servicer shall be
entitled to assume the defense of any such action, proceeding or investigation.
Upon assumption by the Servicer of the defense of any such action, proceeding or
investigation, the Indemnified Person shall have the right to participate in
such action or proceeding and to retain its own counsel (including local
counsel), and the Servicer shall bear the reasonable fees, costs and expenses of
such separate counsel. The Indemnified Person shall not settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought under this Section 5.02 (whether or not the Servicer is an actual or
potential party to such claim or action) unless the Servicer agrees in writing
to such settlement, compromise or consent and such settlement, compromise or
consent includes an unconditional release of the Servicer from all liability
arising out of such claim, action, suit or proceeding.
(c) The Servicer shall indemnify the Trustee and its officers,
directors and agents for, and defend and hold harmless each such Person from and
against, any and all Losses that may be imposed upon, incurred by or asserted
against any such Person as a result of the acceptance or performance of the
trusts and duties contained herein and in the Indenture, except to the extent
that any such Loss is due to the willful misconduct, bad faith or gross
negligence of the Trustee; provided, however, that the foregoing indemnity is
extended to the Trustee solely in its individual capacity and not for the
benefit of the Transition Bondholders or any other Person. Such amounts shall be
deposited and distributed in accordance with the Indenture.
(d) The Servicer's indemnification obligations under Section 5.02(b)
and (c) for
14
events occurring prior to the removal or resignation of the Trustee or the
termination of this Agreement shall survive the resignation or removal of the
Trustee or the termination of this Agreement and shall include reasonable costs,
fees and expenses of investigation and litigation (including the Issuer's and
the Trustee's reasonable attorneys' fees and expenses).
(e) Except to the extent expressly provided for in this Agreement or
the other Basic Documents (including the Servicer's claims with respect to the
Monthly Servicing Fees), the Servicer hereby releases and discharges the Issuer
(including its managers, members, officers, directors and agents, if any) and
the Trustee (including its officers, directors and agents) (collectively, the
"Released Parties") from any and all actions, claims and demands whatsoever that
the Servicer, in its capacity as Servicer, shall or may have against any such
Person relating to the Transferred Bondable Transition Property or the
Servicer's servicing activities with respect thereto other than any actions,
claims and demands arising out of the willful misconduct, bad faith or gross
negligence of the Released Parties.
SECTION 5.03 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer.
Any Person or Persons:
(a) into which the Servicer may be merged or consolidated and which
succeeds to all or a significant part of the electric distribution business of
the Servicer,
(b) which results from the division of the Servicer into two or more
Persons and which succeeds to all or a significant part of the electric
distribution business of the Servicer,
(c) which may result from any merger or consolidation to which the
Servicer is a party and which succeeds to all or a significant part of the
electric distribution business of the Servicer,
(d) which may succeed to the properties and assets of the Servicer
substantially as a whole and which succeeds to all or a significant part of the
electric distribution business of the Servicer or
(e) which may otherwise succeed to all or a significant part of the
electric distribution business of the Servicer,
which Person or Persons in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Servicer hereunder, shall be the
successor or successors to the Servicer under this Agreement without further act
on the part of any of the parties to this Agreement; provided, however, that (i)
immediately after giving effect to such transaction, no breach of any
representation and warranty made pursuant to Section 5.01 shall have occurred
and be continuing unremedied and no Servicer Default, and no event which, after
notice or lapse of time, or both, would become a Servicer Default, shall have
occurred and be continuing, (ii) the Servicer shall have delivered to the Issuer
and the Trustee an Officers' Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section 5.03 and that all conditions precedent provided for in
this
15
Agreement relating to such transaction have been complied with, (iii) the
Servicer shall have delivered to the Issuer and the Trustee an Opinion of
Counsel either (A) stating that, in the opinion of such counsel, all filings to
be made by the Servicer, including UCC filings, as are necessary to preserve
fully and protect fully the interests of the Issuer in the Transferred Bondable
Transition Property have been executed and filed and reciting the details of
such filings or (B) stating that, in the opinion of such counsel, no such action
is necessary to preserve and protect such interests, (iv) the Rating Agencies
shall have received prior written notice of such transaction and the Rating
Agency Condition shall have been satisfied with respect to such transactions;
and (v) the Servicer shall have delivered to the Issuer and the Trustee an
opinion of independent tax counsel (as selected by, and in form and substance
reasonably satisfactory to, the Servicer, and which may be based on a ruling
from the Internal Revenue Service) to the effect that, for federal income tax
purposes, such consolidation or merger will not result in a material adverse
federal income tax consequence to the Servicer, the Issuer, the Trustee or the
then existing Transition Bondholders. Notwithstanding anything herein to the
contrary, the execution of the above referenced agreement of assumption and
compliance with clauses (i), (ii), (iii), (iv) and (v) above shall be conditions
precedent to the consummation of any of the transactions referred to in clause
(a), (b), (c), (d) or (e) above. When one or more Persons acquire the properties
and assets of the Servicer substantially as a whole and become the successor or
successors to the Servicer in accordance with the terms of this Section 5.03,
then upon the satisfaction of all of the other conditions of this Section 5.03,
the Servicer shall automatically and without further notice be released from its
obligations and duties hereunder.
SECTION 5.04 Assignment of Servicer's Obligations and Duties.
The Servicer may assign any or all of its obligations and duties hereunder
to one or more successors if either (i) the Rating Agency Condition and any
other condition specified in the BPU Financing Orders have been satisfied with
respect to such assignment or (ii) the Servicer is replaced by such successor or
successors pursuant to Section 5.03.
SECTION 5.05 Limitation on Liability of Servicer and Others.
The Servicer shall not be liable to the Issuer, the Trustee, the
holders of the Transition Bonds or any other Person, except as provided under
this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement or for errors in judgment; provided, however,
that this provision shall not protect the Servicer against any liability that
would otherwise be imposed by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of obligations and duties under this Agreement. The Servicer and any director or
officer or employee or agent of the Servicer may rely in good faith on the
advice of counsel reasonably acceptable to the Trustee or on any document of any
kind, prima facie properly executed and submitted by any Person, respecting any
matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that is
not incidental to its duties to service the Transferred Bondable Transition
Property in accordance with this Agreement or related to its obligation to pay
indemnification, and that in its reasonable opinion may cause it to
16
incur any expense or liability.
SECTION 5.06 ACE Not To Resign as Servicer.
Subject to the provisions of Sections 5.03 and 5.04, ACE shall not
resign from the obligations and duties hereby imposed on it as Servicer under
this Agreement except upon a determination that the performance of such
obligations and duties shall no longer be permissible under applicable law.
Notice of any such determination permitting the resignation of ACE shall be
communicated to the Issuer, the Trustee and each Rating Agency at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time), and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Issuer and the Trustee concurrently with or promptly after such
notice. No such resignation shall become effective until a successor Servicer
shall have assumed the servicing obligations and duties hereunder of ACE in
accordance with Section 6.04.
SECTION 5.07 Monthly Servicing Fee.
The Issuer agrees to pay the Servicer, solely to the extent amounts
are available therefor in accordance with the Indenture, the Monthly Servicing
Fee with respect to all Series of Transition Bonds issued by the Issuer. The
Monthly Servicing Fee with respect to a Series shall be as follows: so long as
ACE acts as the Servicer, the Servicing Fee will be 0.10% of the initial
principal balance of all Transition Bonds issued to the date of determination,
such amount to be determined at each time Transition Bonds are issued. If a
successor Servicer is appointed, the Servicing Fee will be based on an amount
approved by the BPU, but not in excess of a per annum rate equal to 1.25% of the
initial principal balance of all Transition Bonds issued to the date of
determination, such amount to be determined at each time Transition Bonds are
issued. The Servicer shall be entitled to retain as additional compensation (a)
net investment income on TBC Collections related to Transferred Bondable
Transition Property received by the Servicer prior to their remittance to the
Trustee and (b) the late fees, if any, paid by Customers to the Servicer
associated with the Transition Bond Charge. The foregoing fees constitute a fair
and reasonable price for the obligations and duties to be performed by the
Servicer.
SECTION 5.08 Servicer Expenses.
Except as otherwise expressly provided herein, the Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder, including fees and disbursements of independent accountants and
counsel, taxes imposed on the Servicer and expenses incurred in connection with
reports to Transition Bondholders, and shall not be entitled to any additional
payment or reimbursement therefor.
SECTION 5.09 Subservicing.
The Servicer may at any time appoint a subservicer to perform all or
any portion of its obligations and duties as Servicer hereunder; provided,
however, that the Rating Agency Condition shall have been satisfied with respect
to such appointment; and provided, further, that the Servicer shall remain
obligated and be liable to the Issuer for the servicing and administering
17
of the Transferred Bondable Transition Property in accordance with the
provisions hereof without diminution of such obligation and liability by virtue
of the appointment of such subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Transferred Bondable Transition Property. The fees and expenses of the
subservicer shall be as agreed between the Servicer and its subservicer from
time to time, and none of the Issuer, the Trustee or the Transition Bondholder
shall have any responsibility therefor. No such appointment shall constitute a
Servicer resignation for purposes of Section 5.06.
SECTION 5.10 Remittances.
(a) Subject to Section 5.07, the Servicer shall remit all TBC
Collections (from whatever source) in accordance with Section 3.03(a)(ii), and
all proceeds of other Collateral of the Issuer, if any, received by the
Servicer, to the Trustee for deposit pursuant to the Indenture, not later than
each Daily Remittance Date. The Servicer shall promptly remit any Indemnity
Amounts paid or received by it immediately to the Trustee for deposit pursuant
to the Indenture.
(b) Notwithstanding Section 5.10(a), (i) as long as ACE or any
successor to ACE's electric distribution business remains the Servicer, (ii) no
Servicer Default has occurred and is continuing and (iii) (A) either ACE or such
successor to ACE's electric distribution business acting as servicer, maintains
a short-term rating of "A-2" or better by Standard & Poor's or Fitch, or "P-2"
or better by Moody's or (B) the Rating Agency Condition shall have been
satisfied with respect to all actions theretofore taken and any conditions or
limitations imposed by any of the Rating Agencies in connection therewith are
complied with, the Servicer need not make the daily remittances specified in
Section 5.10(a) but, in lieu thereof, shall remit all TBC Collections (from
whatever source) in accordance with Section 3.03(a)(i) and all proceeds of other
Collateral of the Issuer, if any, received by the Servicer during any Collection
Period to the Trustee, for deposit pursuant to the Indenture, not later than the
corresponding Monthly Remittance Date.
SECTION 5.11 Servicer Advances.
The Servicer shall not make any advances of interest or principal on
the Series 2002-1 Transition Bonds and shall make such advances on any
subsequent Series in the manner and to the extent, if any, specified in any
supplement to this Agreement entered into in connection with the issuance of
such Series.
SECTION 5.12 Protection of Title.
The Servicer shall execute and make such filings and cause to be
executed and made such filings, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interests of the
Trustee in the Transferred Bondable Transition Property, including all filings
required under the UCC relating to the transfer of ownership or a security
interest in the Transferred Bondable Transition Property by the Seller to the
Issuer or the
18
security interest granted by the Issuer to the Trustee in the Transferred
Bondable Transition Property. The Servicer shall deliver (or cause to be
delivered) to the Issuer and the Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
ARTICLE VI
Servicer Default
SECTION 6.01 Servicer Default.
If any one of the following events (a "Servicer Default") occurs and
is continuing:
(a) any failure by the Servicer to remit to the Trustee, on behalf
of the Issuer, any required remittance that continues unremedied for a period of
five Business Days after written notice of such failure is received by the
Servicer from the Issuer or the Trustee; or
(b) any failure by the Servicer to perform in any material respect
any other covenant or agreement of the Servicer set forth in this Agreement or
any other Basic Document to which it is a party, which failure shall (i)
materially and adversely affect the Bondable Transition Property and (ii)
continues unremedied for a period of 60 days after written notice of such
failure shall have been given to the Servicer by the Issuer or the Trustee or
after discovery of such failure by an officer of the Servicer; or
(c) any representation or warranty made by the Servicer in this
Agreement shall prove to have been incorrect when made, which has a material
adverse effect on the Issuer or the Transition Bondholders and which material
adverse effect continues unremedied for a period of 60 days after the date on
which written notice of the failure thereof shall have been given to the
Servicer by the Issuer or the Trustee or after discovery of such failure by an
officer of the Servicer; or
(d) an Insolvency Event occurs with respect to the Servicer;
then, and in each case so long as the Servicer Default shall not have been
remedied, the Trustee, as assignee of the Issuer, with the consent of Holders of
a majority of the outstanding principal amount of the Transition Bonds of all
Series, by notice then given in writing to the Servicer (a "Termination Notice")
may terminate all the rights and obligations (other than the indemnification
obligations set forth in Section 5.02 and the obligation under Section 6.04 to
continue performing its functions as Servicer until a successor Servicer is
appointed) of the Servicer under this Agreement. In addition, upon a Servicer
Default described in Section 6.01(a), the Issuer and the Trustee shall be
entitled to apply to the BPU for sequestration and payment of revenues arising
with respect to the Transferred Bondable Transition Property. On or after the
receipt by the Servicer of a Termination Notice, all authority and power of the
Servicer under this Agreement with respect to the Issuer, whether with respect
to the Transferred Bondable Transition Property, the related Transition Bond
Charge or otherwise, shall, upon appointment of
19
a successor Servicer pursuant to Section 6.04, without further action, pass to
and be vested in such successor Servicer and, without limitation, the Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
predecessor Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such Termination Notice,
whether to complete the transfer of the Bondable Transition Property
Documentation and related documents, or otherwise. The predecessor Servicer
shall cooperate with the successor Servicer, the Trustee and the Issuer in
effecting the termination of the responsibilities and rights of the predecessor
Servicer under this Agreement, including the transfer to the successor Servicer
for administration by it of all cash amounts that shall at the time be held by
the predecessor Servicer for remittance, or shall thereafter be received by it
with respect to the Transferred Bondable Transition Property or the related
Transition Bond Charge. As soon as practicable after receipt by the Servicer of
such Termination Notice, the Servicer shall deliver the Bondable Transition
Property Documentation to the successor Servicer. All reasonable costs and
expenses (including attorneys' fees and expenses) incurred in connection with
transferring the Bondable Transition Property Documentation to the successor
Servicer and amending this Agreement to reflect such succession as Servicer
pursuant to this Section 6.01 shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses. Termination
of ACE as Servicer shall not terminate ACE's rights or obligations under the
Sale Agreement.
SECTION 6.02 Notice of Servicer Default.
The Servicer shall deliver to the Issuer, the Trustee and each
Rating Agency promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, written notice in an Officers'
Certificate of any event or circumstance (such as a breach of any representation
or warranty made by the Servicer in this Agreement) which would with the giving
of notice or the passage of time or both become a Servicer Default under Section
6.01.
SECTION 6.03 Waiver of Past Defaults.
The Trustee, with the consent of Holders of the majority of the
outstanding principal amount of the Transition Bonds of all Series, may waive in
writing any default by the Servicer in the performance of its obligations and
duties hereunder and its consequences, except a default in making any required
remittances to the Trustee of TBC Collections in accordance with Section 3.03.
Upon any such waiver of a past default, such default shall cease to exist, and
any Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto.
SECTION 6.04 Appointment of Successor.
(a) Upon the Servicer's receipt of a Termination Notice, pursuant to
Section 6.01 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, and shall be
20
entitled to receive the requisite portion of the Monthly Servicing Fees, until a
successor Servicer has assumed in writing the obligations and duties of the
Servicer hereunder as described below. In the event of the Servicer's removal or
resignation hereunder, the Trustee, as assignee of the Issuer, with the consent
of the Holders of a majority of the outstanding principal amount of the
Transition Bonds of all Series, shall appoint a successor Servicer, and the
successor Servicer shall accept its appointment by a written assumption in form
acceptable to the Issuer and the Trustee. If, within 30 days after the delivery
of the Termination Notice, a new Servicer has not been appointed and accepted
such appointment, the Trustee may petition the BPU or a court of competent
jurisdiction to appoint a successor Servicer under this Agreement. A Person
shall qualify as a successor Servicer only if (i) such Person is permitted to
perform the duties of the Servicer pursuant to the Competition Act, the BPU
Regulations, the BPU Financing Orders and this Agreement, (ii) the Rating Agency
Condition has been satisfied with respect to such succession, and (iii) such
Person enters into a servicing agreement with the Issuer having substantially
the same provisions as this Agreement.
(b) Upon appointment, the successor Servicer shall be the successor
in all respects to the predecessor Servicer under this Agreement and shall be
subject to all the responsibilities, duties and liabilities arising thereafter
relating thereto placed on the predecessor Servicer and shall be entitled to the
Monthly Servicing Fee applicable to a successor Servicer and all the rights
granted to the predecessor Servicer by the terms and provisions of this
Agreement.
(c) The successor Servicer may not resign unless it is prohibited
from serving as such by law.
SECTION 6.05 Cooperation with Successor.
The Servicer shall, on an ongoing basis, cooperate with the
successor Servicer and provide whatever information is, and take whatever
actions are, reasonably necessary to assist the successor Servicer in performing
its obligations and duties hereunder.
ARTICLE VII
Miscellaneous Provisions
SECTION 7.01 Amendment.
This Agreement may be amended or supplemented by the Servicer and
the Issuer, with the prior written consent of the Trustee and the satisfaction
of the Rating Agency Condition with respect to such amendment or supplement.
Promptly after the execution of any such amendment or consent, the Issuer shall
furnish written notification of the substance of such amendment or consent to
each of the Rating Agencies.
Prior to the execution of any amendment or supplement to this
Agreement, the Issuer and the Trustee shall be entitled to receive and rely upon
an Opinion of Counsel stating that the execution of such amendment or supplement
is authorized or permitted by this Agreement and the Opinion of Counsel referred
to in Section 3.11. The Issuer and the Trustee
21
may, but shall not be obligated to, enter into any such amendment which affects
their own rights, duties or immunities under this Agreement or otherwise.
SECTION 7.02 Notices.
Unless otherwise specifically provided herein, all notices,
directions, consents, waivers and communications under the terms and provisions
of this Agreement shall be in English and in writing, and any such notice,
direction, consent or waiver may be given by United States first-class mail,
reputable overnight courier service, facsimile transmission or electronic mail
(confirmed by telephone, United States first-class mail or reputable overnight
courier service in the case of notice by facsimile transmission or electronic
mail) or any other customary means of communication, and any such notice,
direction, consent or waiver shall be effective when delivered or transmitted,
or if mailed, five days after deposit in the United States first-class mail with
proper postage for first-class mail prepaid, (a) in the case of the Servicer, to
Atlantic City Electric Company, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, (b) in the case of the Issuer or the
Trustee, to the address provided for notices or communications to such Person in
the Indenture, (c) in the case of Moody's, to ▇▇▇▇▇'▇ Investors Service, Inc.,
ABS Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (d) in
the case of Standard & Poor's, to Standard & Poor's Corporation, ▇▇ ▇▇▇▇▇▇▇▇
(▇▇▇▇ ▇▇▇▇▇), ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of Asset Backed Surveillance
Department and (e) in the case of Fitch, at Fitch, Inc., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS Surveillance; or, as to each of the
foregoing, to such other address as shall be designated by written notice to the
other parties.
SECTION 7.03 Limitations on Rights of Others.
The provisions of this Agreement are solely for the benefit of the
Servicer, the Issuer and the Trustee, on behalf of itself and the Transition
Bondholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in any Collateral or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 7.04 Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 7.05 Separate Counterparts.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 7.06 Headings.
22
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 7.07
Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New JERSEY, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
SECTION 7.08
Assignment to the Trustee. The Servicer hereby acknowledges and
consents to the mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Trustee pursuant to the Indenture for the benefit of the
Transition Bondholders of all right, title and interest of the Issuer in, to and
under the Transferred Bondable Transition Property owned by the Issuer and the
proceeds thereof and the assignment of any or all of the Issuer's rights
hereunder to the Trustee. In no event shall the Trustee have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Issuer, hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Issuer.
SECTION 7.09 Nonpetition Covenants.
Notwithstanding any prior termination of this Agreement or the
Indenture, the Servicer hereby covenants and agrees that it shall not, prior to
the date which is one year and one day after the termination of the Indenture
and the payment in full of all of the outstanding Transition Bonds, all other
amounts owed under the Indenture (including without limitation any amounts owed
to third-party credit enhancers) and all amounts owed by the Issuer under all
Hedge Agreements and the Interest Rate Swap Agreements, acquiesce in, petition
or otherwise invoke or, to the fullest extent permitted by law, cause the Issuer
to invoke the process of any court or governmental authority for the purpose of
commencing or sustaining a case against the Issuer under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of the property of the Issuer, or ordering the
winding up or liquidation of the affairs of the Issuer; provided, however, that
nothing in this Section 7.09 shall constitute a waiver of any right to
indemnification, reimbursement or other payment from the Issuer pursuant to this
Agreement..
SECTION 7.10 Termination.
This Agreement shall terminate when all Transition Bonds issued by
the Issuer have been retired, redeemed or defeased in full.
SECTION 7.11 Limitation of Liability.
It is expressly understood and agreed by the parties hereto that
this Agreement is executed and delivered by ____________________, not
individually or personally but solely as Trustee for the benefit of the
Transition Bondholders, in the exercise of the powers and authority
23
conferred and vested in it, and nothing herein contained shall be construed as
creating any liability on ___________________, individually or personally, to
perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties who are signatories to
this Agreement and by any Person claiming by, through or under such parties;
provided, however, that this provision shall not protect __________________
against any liability that would otherwise be imposed by reason of willful
misconduct, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations or duties under this Agreement.
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the day and year first above written.
ATLANTIC CITY ELECTRIC TRANSITION FUNDING
LLC, as Issuer
by _______________________
Title:
ATLANTIC CITY ELECTRIC COMPANY, as
Servicer,
by _______________________
Title:
Acknowledged and Accepted:
__________________________, not in
its individual capacity but solely
as Trustee on behalf of the Holders
of Transition Bonds issued by the
Issuer,
by __________________________
Title:
25
ANNEX 1
to
SERVICING AGREEMENT
The Servicer agrees to comply with the following with respect to the Issuer:
SECTION 1. Definitions.
Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in Appendix A to the Servicing Agreement dated as of
__________, 2002, between the Issuer and Atlantic City Electric Company, as
Servicer.
SECTION 2. Monthly Fee Disbursement Date Statements.
At least one Business Day before each date on which distributions
are to be made pursuant to Section 8.02(d) of the Indenture (each, a "Monthly
Fee Disbursement Date"), the Servicer shall provide the Trustee with a statement
indicating.
1. the amount to be paid to the Trustee on such Monthly Fee
Disbursement Date in accordance with Section 8.02(d) of the
Indenture and each Series Supplement;
2. the amount to be paid to the Independent Managers on such
Monthly Fee Disbursement Date in accordance with Section
8.02(d) of the Indenture and each Series Supplement;
3. the amount to be paid to the Servicer on such Monthly Fee
Disbursement Date in accordance with Section 8.02(d) of the
Indenture and each Series Supplement;
4. the amount to be paid to the Administrator on such Monthly Fee
Disbursement Date in accordance with Section 8.02(d) of the
Indenture and each Series Supplement; and
5. the amount to be paid to the Issuer (as operating expenses) on
such Monthly Fee Disbursement Date in accordance with Section
8.02(d) of the Indenture and each Series Supplement.
SECTION 3. Payment Date Statements.
At least one Business Day before each date on which distributions
are to be made pursuant to Section 8.02(e) of the Indenture (each, a "Payment
Date"), the Servicer shall provide to the Issuer, the Trustee, each Rating
Agency and, for so long as any Transition Bonds are listed on the Luxembourg
Stock Exchange, any listing agent in Luxembourg, a statement indicating:
1. the amount to be paid to Transition Bondholders of each Series
and Class in respect of interest on such Payment Date in
accordance with
26
Section 8.02(e) of the Indenture and each Series Supplement;
2. the amount to be paid to Transition Bondholders of each Series
and Class in respect of principal on such Payment Date in
accordance with Section 8.02(e) of the Indenture and each
Series Supplement;
3. the Scheduled Transition Bond Balance and the Transition Bond
Balance for each Series and Class as of such Payment Date
(after giving effect to the payments to be made on such
Payment Date);
4. the amount on deposit in the Overcollateralization Subaccount
for each Series and the Scheduled Overcollateralization Level
for each Series, as of such Payment Date (after giving effect
to the transfers to be made from or into the respective
Overcollateralization Subaccounts on such Payment Date);
5. the amount on deposit in the Capital Subaccount for each
Series as of such Payment Date (after giving effect to the
transfers to be made from or into the respective Capital
Subaccounts on such Payment Date) and the required capital
amount for such Series;
6. the amount, if any, on deposit in the Reserve Subaccount for
each Series as of such Payment Date (after giving effect to
the transfers to be made from or into the respective Reserve
Subaccounts on such Payment Date);
7. the amount to be paid to any counterparty under any Hedge
Agreement since the preceding Payment Date and on or before
such Payment Date;
8. the amount to be paid to any counterparty under any Interest
Rate Swap Agreement (on a gross and a net basis, separately
stated) under such Interest Rate Swap Agreement since the
preceding Payment Date and on or before such Payment Date;
9. the amounts paid to the Trustee since the preceding Payment
Date and the amounts to be paid to the Trustee on such Payment
Date pursuant to Section 8.02(e) of the Indenture;
10. the amounts paid to the Issuer since the preceding Payment
Date and the amounts to be paid to the Issuer on such Payment
Date pursuant to Section 8.02(e) of the Indenture;
11. the amounts paid to the Independent Managers since the
preceding Payment Date pursuant to Section 8.02(e) of the
Indenture and the amount to be paid to the Independent
Managers on such Payment Date pursuant to Section 8.02(e) of
the Indenture;
12. the amounts paid to the Servicer since the preceding Payment
Date
27
pursuant to Section 8.02(e) of the Indenture and the amount to
be paid to the Servicer on such Payment Date pursuant to
Section [8.02(e)] of the Indenture;
13. the amounts paid to the Administrator since the preceding
Payment Date pursuant to Section 8.02(e) of the Indenture and
the amount to be paid to the Administrator on such Payment
Date pursuant to Section 8.02(e) of the Indenture; and
14. the amount of any other transfers and payments to be made on
such Payment Date pursuant to Section 8.02 of the Indenture
and any Series Supplement.
SECTION 4. Remittance Date Statements.
At least one Business Day before each Monthly Remittance Date, and
in the case of Daily Remittances, on the last Daily Remittance Date of such
month, the Servicer shall prepare and furnish to the Issuer and the Trustee a
statement setting forth the amount to be remitted by the Servicer to the Trustee
(net of any unreimbursed Excess Curve Payments) for deposit on such Monthly
Remittance Date pursuant to the Indenture or, in the case of Daily Remittances,
the aggregate amount remitted by the Servicer to the Trustee for deposit on the
Daily Remittance Dates during such month pursuant to the Indenture.
SECTION 5. Transition Bond Charge Adjustments.
(a) Prior to each Calculation Date, the Servicer shall calculate
(i) the Transition Bond Balance as of such Calculation Date
(a written copy of which shall be delivered by the Servicer to the
Trustee within five Business Days following such Calculation Date),
and
(ii) the Transition Bond Charge projected by the Servicer to
be such that, if it goes into effect on the next succeeding
Adjustment Date, TBC Collections therefrom allocable to the Issuer
will be, in the Servicer's good faith estimate, sufficient so that:
(A) the Transition Bond Balance on the last Payment
Date to occur before the first Adjustment Date to occur after
the next succeeding Adjustment Date (the "Target Payment
Date") will equal the Scheduled Transition Bond Balance as of
the Target Payment Date,
(B) the amount on deposit in the Overcollateralization
Subaccount for each Series on the Target Payment Date will
equal the Scheduled Overcollateralization Level for such
Series as of the Target Payment Date,
(C) the amount on deposit in the Capital Subaccount
for each
28
Series on the Target Payment Date will equal the required
level for such Series as of the Target Payment Date,
(D) the amount on deposit in the Reserve Subaccount
for each Series on the Target Payment Date will equal zero,
(E) the TBC Collections will provide for (i)
amortization of the remaining outstanding principal amount of
each Series in accordance with the Expected Amortization
Schedule therefor, (ii) payment of interest on each Series
when due, payment of any hedge payments due under the Hedge
Agreement, and payment of any amounts due (other than
termination or breakage amounts) under any Interest Rate Swap
Agreement, and (iii) payment of all Operating Expenses of the
Issuer when due in accordance with the Indenture, and
(F) all other amounts included in the Total Revenue
Requirement from the first Adjustment Date to follow such
Calculation Date up to the next succeeding Adjustment Date.
No later than the first Adjustment Date to follow such Calculation
Date, the Servicer shall furnish to the Trustee in writing a
specification, in reasonable detail, of the components of each
Series' Revenue Requirement (including a specification of each
Series' share of each such component of the Total Revenue
Requirement) up to the next succeeding Adjustment Date.
(b) On each Calculation Date, the Servicer shall file an
Adjustment Request with the BPU. This filing shall include the data specified in
the Petition and the BPU Financing Orders.
(c) On each Adjustment Date, the Servicer shall
(i) take all reasonable actions and make all reasonable
efforts to effectuate all adjustments to the Transition Bond Charge
either approved by the BPU or effective on an interim basis pending
final approval, and
(ii) promptly send to the Trustee copies of all material
notices and documents relating to such adjustments.
(d) On each Adjustment Date, the Servicer shall provide Rating
Agencies with a schedule indicating any changes to the Transition Bond Charge.
(e) If deemed appropriate by the Servicer to protect Transition
Bondholders to remedy a significant and recurring variance between actual and
expected TBC Collections, as authorized by the BPU Financing Orders, the
Servicer shall make "non-routine" filings with the BPU for adjustments to the
formula described in [Exhibit C] to the Petition to assure timely payment of the
Total Payment Requirements (as defined in the BPU Financing Orders). Such
filings shall be made at least 60 days prior to the proposed effective date of
the proposed
29
adjustments.
30
APPENDIX A
MASTER DEFINITIONS
The definitions contained in this Appendix A are applicable to the singular as
well as the plural forms of such terms.
"ACE" means Atlantic City Electric Company, a New Jersey
corporation, and its permitted successors and assigns.
"Act" has the meaning specified in Section 11.03(a) of the
Indenture.
"Adjustment Date" means (a) [January 1] of each year, (b) quarterly
if determined by the Servicer, 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 4(b) of the
Issuer Annex.
"Administration Agreement" means the Administration Agreement dated
as of _________, 2002, between the Issuer and Conectiv Resource Partners, Inc.,
as administrator, as the same may be amended or supplemented from time to time.
"Administrator" means Conectiv Resource Partners, Inc., as
administrator under the Administration Agreement, and each successor to Conectiv
Resource Partners, Inc., in the same capacity, pursuant to Section 5.08 of the
Administration Agreement.
"Advice Letter" means, with respect to any Series of Transition
Bonds, the Issuance Advice Letter, in the form specified in the BPU Financing
Order authorizing the issuance of Transition Bonds of such Series, filed with
the BPU at the time of the issuance of such Series.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, control when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms controlling and controlled
have meanings correlative to the foregoing.
"Annual Accountant's Report" has the meaning assigned to that term
in Section 3.07 of the Servicing Agreement.
"Authorized Denominations" means, with respect to any Series or
Class of Transition Bonds, $1,000 and integral multiples of $1.00 above that
amount, provided, however, that one bond of each Class may have a denomination
of less than $1,000, or such other denominations as may be specified in the
Series Supplement therefor.
"Authorized Newspaper" means the Luxemburger Wort or any other
newspaper published in Luxembourg on a daily basis.
"Authorized Officer" means, with respect to the Issuer, (a) any
Manager and, (b) any person designated as an "Officer" under the Issuer LLC
Agreement and authorized thereby to act on behalf of the Issuer.
"Basic Documents" means the Formation Documents, the Sale Agreement,
any Bills of Sale, the Servicing Agreement, the Administration Agreement, the
Indenture, as each may be amended or supplemented from time to time.
"Billing Month" means a calendar month during which the Transition
Bond Charge is billed to Customers.
"▇▇▇▇ of Sale" means any ▇▇▇▇ of sale issued by the Seller to the
Issuer pursuant to the Sale Agreement evidencing the sale of Bondable Transition
Property by the Seller to the Issuer.
"Bondable Stranded Costs" has the meaning assigned to that term in
the Competition Act and the BPU Financing Orders.
"Bondable Transition Property" has the meaning assigned to that term
in the Competition Act and the BPU Financing Orders.
"Bondable Transition Property Documentation" means all documents
relating to the Transferred Bondable Transition Property, including copies of
the Petition and the BPU Financing Orders and all documents filed with the BPU
in connection with any Transition Bond Charge Adjustment.
"Book-Entry Transition Bonds" means beneficial interests in the
Transition Bonds, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.11 of the Indenture.
"BPU" means the State of New Jersey Board of Public Utilities or its
successor.
"BPU Financing Orders" means the bondable stranded costs rate order
issued by the BPU in favor of ACE on ___________, 2002 pursuant to the
Competition Act, any subsequent bondable stranded costs rate orders issued by
the BPU in favor of ACE pursuant to the Competition Act, and any order
supplemental to any of the foregoing.
"BPU Regulations" means any regulations, orders, guidelines or
directives promulgated, issued or adopted by the BPU.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York or with respect
to any Transition Bonds listed on the Luxembourg Stock Exchange, in Luxembourg,
are required or authorized by law or executive order to remain closed.
"Calculation Date" means (a) [December 1] of each year, (b) if
applicable, [quarterly dates] of each year and for so long as the Transition
Bonds are outstanding, and (c) any
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other day on which the Servicer files an Adjustment Request.
"Capital Subaccount" with respect to any Series has the meaning
specified in Section 8.02(a) of the Indenture.
"Class" means, with respect to any Series, any one of the classes of
Transition Bonds of that Series, as specified in the Series Supplement for that
Series.
"Class Final Maturity Date" means the Final Maturity Date of a
Class, as specified in the Series Supplement for the related Series.
"Class Subaccount," with respect to a Class within a Series, has the
meaning specified in Section 8.02(a) of the Indenture and, if established for
such Series and Class, in the Series Supplement for such Series.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of the
Indenture.
"Collection Account" has the meaning specified in Section 8.02(a) of
the Indenture.
"Collection Period" means the period from and including the first
day of a calendar month to but excluding the first day of the next calendar
month.
"Collections Curve" means an annually prepared forecast, with
respect to each Billing Month, of the percentages of amounts billed in such
Billing Month that are expected to be received during such Billing Month and
each of the following six months.
"Collections Curve Payment" means, with respect to any Billing
Month, the sum of the amounts paid to the Trustee during such Billing Month and
each of the following six months based on the Collections Curve then in effect.
"Commission" means the U.S. Securities and Exchange Commission, and
any successor thereof.
"Competition Act" means the Electric Discount and Energy Competition
Act, New Jersey Statutes Annotated, title 48, chapter 3, article 7, as in effect
from time to time.
"Corporate Trust Office" means the principal office of the Trustee
at which at any
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particular time its corporate trust business shall be administered, which office
at date of the execution of this Indenture is located at [.. ], or at such other
address as the Trustee may designate from time to time by notice to the
Transition Bondholders and the Issuer, or the principal corporate trust office
of any successor Trustee (the address of which the successor Trustee will notify
the Transition Bondholders and the Issuer in writing).
"Covenant Defeasance Option" has the meaning specified in Section
4.01(b) of the Indenture.
"Curve Payment Shortfall" means, for a particular Billing Month, the
amount, if any, by which the actual TBC Collections in respect of a Billing
Month exceed the Collections Curve Payments made to the Trustee in respect of
that Billing Month, as determined on the Reconciliation Date for that Billing
Month.
"Customer" means each person who is a retail consumer of electricity
and who accesses ACE's transmission and distribution system, regardless of
whether such consumer elects to purchase electricity from a Third Party.
"Daily Remittance Date" means, if the Servicer has not satisfied the
conditions of Section 5.10(b) of the Servicing Agreement, each Business Day
commencing on the second Business Day following the date on which the Servicer
begins remittance procedures under Section 3.03(a)(ii)(y) of the Servicing
Agreement.
"Default" means any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"Defeasance Subaccount" has the meaning specified in Section 8.02(a)
of the Indenture.
"Definitive Transition Bonds" has the meaning specified in Section
2.11 of the Indenture.
"DTC Agreement" means the agreement between the Issuer, the Trustee
and The Depository Trust Company, as the initial Clearing Agency, dated on or
about ___________, 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;
A-34
(d) a national securities exchange, registered securities
association or clearing agency; or
(e) a savings association that is a participant in a securities
transfer association.
"Eligible Institution" means:
(a) the corporate trust department of the Trustee, so long as any
of the securities of the Trustee have a credit rating from
each Rating Agency in one of its generic rating categories
which signifies investment grade, or
(b) a depositary institution organized under the laws of the
United States of America or any state (or any domestic branch
of a foreign bank), which
(i) has either
(A) with respect to any Eligible Investment having a
maturity of greater than one month, a long-term
unsecured debt rating of "AA-" by Standard &
Poor's and Fitch and "Aa3" by Moody's, or
(B) with respect to any Eligible Investment having a
maturity one month or less, a certificate of
deposit rating of "A-1+" by Standard & Poor's,
"F1+" by Fitch and "P-1" by Moody's, or any other
long-term, short-term or certificate of deposit
rating acceptable to the Rating Agencies, and
(ii) whose deposits are insured by the FDIC.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully and
unconditionally guaranteed as to timely payment by, the United
States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company (any depositary
institution or trust company being referred to in this
definition as a "financial institution") incorporated under
the laws of the United States of America or any state thereof
(or any domestic branch of a foreign bank) and subject to
supervision and examination by federal or state banking or
depositary institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured
debt obligations of such financial institution (other than
such obligations the rating of which is based on the credit of
a Person other than such financial institution) shall have a
credit rating from each of
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the Rating Agencies in the highest investment category granted
thereby;
(c) commercial paper or other short-term unsecured debt
obligations of any corporation organized under the laws of the
United States of America (other than ACE) whose ratings, at
the time of the investment or contractual commitment to invest
therein, from each of the Rating Agencies are in the highest
rating category granted thereby;
(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest rating category granted
thereby (including funds for which the Trustee or any of its
Affiliates act as investment manager or advisor);
(e) bankers' acceptances issued by any depositary institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United
States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit
of the United States of America, in either case entered into
with a financial institution (acting as principal)
incorporated under the laws of the United States of America or
any state thereof (or any domestic branch of a foreign bank)
and subject to supervision and examination by federal or state
banking or depositary institution authorities; provided,
however, that at the time of the investment or contractual
commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations of such financial
institution (other than such obligations the rating of which
is based on the credit of a Person other than such financial
institution) shall have a credit rating from each of the
Rating Agencies in the highest investment category granted
thereby;
(g) repurchase obligations with respect to any security or whole
loan entered into with
(i) a financial institution (acting as principal) described
in clause (b) above,
(ii) a broker/dealer (acting as principal) registered as a
broker or dealer under Section 15 of the Exchange Act
(any broker/dealer being referred to in this definition
as a "broker/dealer"), the unsecured short-term debt
obligations of which are rated P-1 by Moody's and A-1+
by Standard & Poor's at the time of entering into the
repurchase obligation, or
(iii) an unrated broker/dealer, acting as principal, that is a
wholly-owned subsidiary of a non-bank or bank holding
company the
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unsecured short-term debt obligations of which are rated
P-1 by Moody's and A-1+ by Standard & Poor's and F1+ by
Fitch at the time of purchase; or
(h) any other investment permitted by each Rating Agency;
(i) 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 10 days, and
provided, further, that, any Eligible Investment must
not:
(ii) be sold, liquidated or otherwise disposed of at a loss,
prior to the maturity thereof, or
(iii) mature later than (i) the date on which the proceeds of
such Eligible Investment will be required to be on
deposit in the Collection Account in order for the
Trustee to make all required and scheduled payments and
deposits into Subaccounts under the Indenture, if such
Eligible Investment is held by an Affiliate of the
Trustee, or (ii) the Business Day prior to the date on
which the proceeds of such Eligible Investment will be
required to be on deposit in the Collection Account in
order for the Trustee to make all required and scheduled
payments and deposits into Subaccounts under the
Indenture, if such Eligible Investment is not held by an
Affiliate of the Trustee.
"Eligible Securities Account" means either:
(a) a segregated trust account with an Eligible Institution or
(b) a segregated trust account with the corporate trust department
of a depositary institution organized under the laws of the
United States of America or any state (or any domestic branch
of a foreign bank), having corporate trust powers and acting
as trustee for funds deposited in such account, so long as any
of the securities of such depositary institution shall have a
credit rating from each Rating Agency in one of its generic
rating categories which signifies investment grade.
"Event of Default" has the meaning specified in Section 5.01 of the
Indenture.
"Excess Curve Payment" means, for a particular Billing Month, the
amount, if
A-37
any, by which the Collections Curve Payments made to the Trustee in respect of
that Billing Month exceed the actual TBC Collections in respect of that Billing
Month, as determined on the Reconciliation Date for that Billing Month.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Executive Officer" means, with respect to any corporation, the
chief executive officer, chief operating officer, chief financial officer, chief
information officer, president, executive vice president, any vice president,
the secretary or the treasurer of such corporation; and with respect to any
limited liability company, any manager thereof.
"Expected Amortization Schedule" means, with respect to each Series
or, if applicable, each Class of Transition Bonds, the expected amortization
schedule for principal thereof, as specified in 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.
"Fitch" means Fitch, Inc. or its successor.
"Formation Document" means the Issuer LLC Agreement, the Issuer
Certificate of Formation and any other document pursuant to which the Issuer is
formed or governed, as each may be amended or supplemented from time to time.
"General Subaccount" has the meaning specified in Section 8.02(a) of
the Indenture.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and ▇▇▇▇▇ ▇ ▇▇▇▇ 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
A-38
make waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Hedge Agreement" means, with respect to any Series, the document or
documents, if any, identified as a "Hedge Agreement" in the Series Supplement
for such Series.
"Holder" or "Transition Bondholder" means the Person in whose name a
Transition Bond of any Series or Class is registered in the Transition Bond
Register.
"Indemnification Event" means an event which triggers ACE's
obligation to indemnify the Issuer and the Trustee, for itself and on behalf of
the Transition Bondholders, and each of their respective managers, officers,
directors and agents, pursuant to Section 5.01 of the Sale Agreement.
"Indemnity Amount" means the amount of any indemnification
obligation payable under the Basic Documents.
"Indenture" means the Indenture dated as of ___________, 2002,
between the Issuer and the Trustee, as the same may be amended and supplemented
from time to time, by one or more Supplemental Indentures, and shall include
each Series Supplement and the forms and terms of the Transition Bonds
established thereunder.
"Independent" means, when used with respect to any specified Person,
that the Person
(a) is in fact independent of the Issuer, any other obligor upon
the Transition Bonds, ACE and any Affiliate of any of the
foregoing Persons,
(b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other
obligor, ACE or any Affiliate of any of the foregoing Persons,
and
(c) is not connected with the Issuer, any such other obligor, ACE
or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner,
director or other Person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01 of the Indenture,
made by an Independent appraiser or other expert appointed by an Issuer Order
and approved by the Trustee in the exercise of reasonable care, and such opinion
or certificate shall state that the signer has read the definition of
"Independent" in this Appendix A and that the signer is Independent within the
meaning thereof.
"Independent Manager" has the meaning set forth in the Issuer LLC
Agreement.
A-39
"Initial Purchase Price" has the meaning set forth in Section 2.01
of the Sale Agreement.
"Initial Transfer Date" means the Series Issuance Date for the first
Series of Transition Bonds, i.e., ______ __, 2002.
"Initial Transferred Bondable Transition Property" means the
Bondable Transition Property sold by the Seller to the Issuer as of the Initial
Transfer Date pursuant to the Sale Agreement and the ▇▇▇▇ of Sale delivered on
or prior to the Initial Transfer Date as identified in such ▇▇▇▇ of Sale.
"Insolvency Event" means, with respect to a specified Person, (a)
the filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 90 consecutive days or (b)
the commencement by such Person of a voluntary case under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Interest" means, for any Payment Date for any Series or Class of
Transition Bonds, the sum, without duplication, of
(a) an amount equal to the amount of interest accrued at the
applicable Interest Rate from the prior Payment Date with
respect to that Series or Class;
(b) any unpaid interest, to the extent permitted by applicable
law, plus any interest accrued on this unpaid interest at the
applicable Interest Rate, to the extent permitted by
applicable law;
(c) if the Transition Bonds have been declared due and payable,
all accrued and unpaid interest thereon; and
(d) with respect to a Series or Class to be redeemed prior to the
next Payment Date, the amount of interest that will be payable
as interest on such Series or Class upon such redemption.
"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.
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"Interest Rate Swap Agreement" means any ISDA Master Agreement,
together with the related Schedule and Confirmation, between the Issuer and the
counterparty thereunder, as same may be amended or supplemented from time to
time, with respect to any Series or Class of Transition Bonds as provided in the
Series Supplement for such Series or Class, as the case may be.
"Issuer" means Atlantic City Electric Transition Funding LLC, a
Delaware limited liability company, or its successor under the Indenture or the
party named as such in the Indenture until a successor replaces it and,
thereafter, means the successor.
"Issuer Annex" means Annex 1 of the Servicing Agreement.
"Issuer Certificate of Formation" means the Certificate of Formation
of the Issuer, which was filed with the Delaware Secretary of State's Office on
March 28, 2001, as the same may be amended or supplemented from time to time.
"Issuer LLC Agreement" means the Amended and Restated Limited
Liability Company Agreement between the Issuer and ACE, as sole Member, dated as
of _______, 2002, as the same may be amended or supplemented from time to time.
"Issuer Officer's Certificate" means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01 of the
Indenture, and delivered to the Trustee. Unless otherwise specified, any
reference in the Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer.
"Issuer Opinion of Counsel" means one or more written opinions of
counsel who may, except as otherwise expressly provided in the Indenture, be
employees of or counsel to the Issuer or the Seller and who shall be reasonably
satisfactory to the Trustee, and which opinion or opinions shall be addressed to
the Trustee, and shall be in a form reasonably satisfactory to the Trustee.
"Issuer Order" or "Issuer Request" means a written order or request,
respectively, signed in the name of the Issuer by any one of its Authorized
Officers and delivered to the Trustee.
"Legal Defeasance Option" has the meaning specified in Section
4.01(b) of the Indenture.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.
"Losses" means collectively, any and all liabilities, obligations,
losses, damages, payments, costs or expenses of any kind whatsoever.
"Manager" has the meaning set forth in the Issuer LLC Agreement.
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"Market Transition Charge" means the market transition charge that
ACE may impose on Customers pursuant to the Competition Act and the
Restructuring Order.
"Member" means ACE, as the sole member of the Issuer, in its
capacity as such member under the Issuer LLC Agreement.
"Monthly Remittance Date" means the [15th] day of each calendar
month (or if such day is not a Business Day, the next Business Day) beginning in
_____ 2002.
"Monthly Servicing Fee" means the fee payable to the Servicer on a
monthly basis for services rendered, in accordance with Section 5.07 of the
Servicing Agreement.
"Moody's" means ▇▇▇▇▇'▇ Investors Service Inc., or its successor.
"MTC-Tax" means the tax which ACE is entitled to impose under the
Restructuring Order.
"New Jersey UCC" means the Uniform Commercial Code, as in effect in
the State of New Jersey, as amended from time to time.
"Officers' Certificate" means a certificate signed by (a) the
chairman of the board, the president, the vice chairman of the board, any
executive vice president or any vice president and (b) a treasurer, assistant
treasurer, secretary or assistant secretary, in each case of the Servicer.
"Operating Expenses" means, with respect to the Issuer, all fees,
costs, expenses and indemnity payments owed by the Issuer, including , without
limitation, all amounts owed by the Issuer to the Trustee, the Monthly Servicing
Fee, the fees and expenses payable by the Issuer to the Administrator under the
Administration Agreement, the fees and expenses payable by the Issuer to the
Independent Managers and Special Members of the Issuer, fees of the Rating
Agencies, legal fees and expenses of the Servicer pursuant to Section 3.10 of
the Servicing Agreement, legal and accounting fees, costs and expenses of the
Issuer, and legal, accounting or other fees, costs and expenses of the Seller
(including, without limitation, any costs and expenses incurred by the Seller
pursuant to Section 4.08 of the Sale Agreement) under or in connection with the
Basic Documents or the BPU Financing Orders.
"Opinion of Counsel" means one or more written opinions of counsel
who may be an employee of or counsel to ACE or the Issuer, which counsel shall
be reasonably acceptable to the Trustee, the Issuer or the Rating Agencies, as
applicable, and which shall be in form reasonably satisfactory to the Trustee,
if applicable.
"Outstanding" with respect to 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;
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(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, ACE or any Affiliate of any of the foregoing
Persons shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Transition Bonds that the Trustee knows to be so owned shall be so disregarded.
Transition Bonds so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Transition Bonds and that the
pledgee is not the Issuer, any other obligor upon the Transition Bonds, ACE or
any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means, with respect to one or more Classes or
Series, the aggregate principal amount of, as the context requires, all
Outstanding Transition Bonds of such Class or Classes or of such Series or group
of Series.
"Overcollateralization" means, with respect to any Payment Date and
any Series, the amount, if any, that, if deposited to the Overcollateralization
Subaccount for such Series on such Payment Date, would cause the balance in such
subaccount on such Payment Date to equal the Scheduled Overcollateralization
Level for such Series on such Payment Date.
"Overcollateralization Amount" means, with respect to any Series,
the amount specified as such in the Series Supplement therefor.
"Overcollateralization Subaccount" with has the meaning specified in
Section 8.02(a) of the Indenture.
"Paying Agent" means the Trustee or any other Person, including any
Person appointed pursuant to Section 3.02(b) of the Indenture, that meets the
eligibility standards for the Trustee specified in Section 6.11 of the Indenture
and is authorized by the Issuer to make the payments of principal of or premium,
if any, or interest on the Transition Bonds on behalf of the Issuer.
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"Payment Date" means _____________, _____________, _____________ and
_____________.
"Person" means any individual, corporation, estate, partnership,
joint venture, association, joint stock company, trust (including any
beneficiary thereof), business trust, limited liability company, unincorporated
organization or government or any agency or political subdivision thereof.
"Petition" means the petition filed by ACE with the BPU, dated June
25, 2001.
"Predecessor Transition Bond" means, with respect to any particular
Transition Bond, every previous Transition Bond evidencing all or a portion of
the same debt as that evidenced by such particular Transition Bond; and, for the
purpose of this definition, any Transition Bond authenticated and delivered
under Section 2.06 of the Indenture in lieu of a mutilated, lost, destroyed or
stolen Transition Bond shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Transition Bond.
"Principal" means, with respect to any Payment Date and each Series
or Class of Transition Bonds:
(a) the amount of principal scheduled to be paid on such Payment
Date in accordance with the Expected Amortization Schedule;
(b) the amount of principal due on the Final Maturity Date of any
Series or Class on such Payment Date;
(c) the amount of principal due as a result of the occurrence and
continuance of an Event of Default and acceleration of the
Transition Bonds;
(d) the amount of principal and premium, if any, due as a result
of a redemption of Transition Bonds on such Payment Date; and
(e) any overdue payments of principal.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Rating Agency" means, as of any date, any rating agency rating the
Transition Bonds of any Class or Series at the time of issuance thereof at the
request of the Issuer. If no such organization or successor is any longer in
existence, "Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Issuer, notice of
which designation shall be given to the Trustee, the Member and the Servicer.
"Rating Agency Condition" means, with respect to any action, the
notification in writing by the Trustee to each Rating Agency of such action and
the notification by each Rating Agency to the Trustee and the Issuer that such
action will not result in a reduction or withdrawal of the then current rating
by such Rating Agency of any Outstanding Series or Class of Transition
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Bonds.
"Reconciliation Date" for a particular Billing Month means the
fifteenth day (or if that day is not a Business Day, the next succeeding
Business Day) of the calendar month that is seven months after such Billing
Month.
"Record Date" has, with respect to any Series, the meaning set forth
in the related Series Supplement.
"Redemption Date" means, with respect to each Series or Class of
Transition Bonds, the date for the redemption of the Transition Bonds of such
Series or Class pursuant to Sections 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(f) 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.
"Responsible Officer" means, with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee, including any vice
president, assistant vice president, secretary, assistant secretary, or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Restructuring Order" means the decision and order of the BPU issued
on March 30, 2001 pursuant to Section 13 of the Competition Act.
"Retiring Trustee" means a Trustee that resigns or vacates the
office of Trustee for any reason.
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"Revenue Requirements" means with respect to any Series as of any
date of determination, the amounts estimated in good faith by the Servicer to be
payable in respect of such Series pursuant to Section 8.02(d) and clauses (i)
through (xiii) of Section 8.02(e) during the period commencing on the preceding
Adjustment Date (or on such date of determination if it is an Adjustment Date)
and ending on the day immediately preceding the first Adjustment Date scheduled
to follow such determination date.
"Sale Agreement" means the Bondable Transition Property Sale
Agreement dated as of ___________, 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 1 to the Series Supplement for such Series, as such Schedule 1
shall have 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.
"Scheduled Transition Bond Balance" means, as of any date, the sum
of the amounts provided for in the Expected Amortization Schedules for each
outstanding Series of Transition Bonds as of such date.
"Securities Account Control Agreement" means the securities account
control agreement by and between Atlantic City Electric Transition Funding LLC,
as debtor, the Trustee as the Secured Party and ______________, in its capacity
as securities intermediary thereunder.
"Seller" means ACE, in its capacity as seller of the Bondable
Transition Property to the Issuer pursuant to the Sale Agreement.
"Series" means the Series 2002-1 Transition Bonds and any subsequent
series of Transition Bonds issued by the Issuer and authenticated by the Trustee
pursuant to the Indenture, as specified in the Series Supplement therefor.
"Series Capital Subaccount" with respect to each Series has the
meaning specified in Section 8.02(a) of the Indenture and in the related Series
Supplement.
"Series Final Maturity Date" means the Final Maturity Date for a
Series.
"Series Issuance Date" means, with respect to any Series, the date
on which the Transition Bonds of such Series are to be originally issued in
accordance with Section 2.10 of the Indenture and the Series Supplement for such
Series.
"Series Overcollateralization Subaccount" with respect to each
Series has the meaning specified in Section 8.02(a) of the Indenture and in the
related Series Supplement.
"Series Reserve Subaccount" with respect to each Series has the
meaning specified in Section 8.02(a) of the Indenture and in the related Series
Supplement.
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"Series Subaccount" with respect to each Series has the meaning
specified in Section 8.02(a) of the Indenture and in the related Series
Supplement.
"Series Supplement" means any Supplemental Indenture that authorizes
a particular Series of Transition Bonds, as the same may be amended or
supplemented from time to time.
"Servicer" means ACE, as the servicer of the Bondable Transition
Property, and each successor to ACE (in the same capacity) pursuant to Section
5.03 or 6.04 of the Servicing Agreement.
"Servicer Default" means an event specified in Section 6.01 of the
Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement dated as of
________, 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.
"Standard & Poor's" or "S&P" means Standard & Poor's Rating Group, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, or its successor.
"state" in the jurisdictional sense means any one of the 50 states
of the United States of America or the District of Columbia.
"Subaccount" means any of the subaccounts of the Collection Account
specified in Section 8.02 of the Indenture.
"Subsequent Purchase Price" means, in relation to a Subsequent Sale,
the price specified in the related ▇▇▇▇ of Sale, to be paid by the Issuer for
the Subsequent Transferred Bondable Transition Property purchased and sold in
such Subsequent Sale.
"Subsequent Sale" means any sale of Bondable Transition Property by
the Seller to the Issuer after the Initial Transfer Date.
"Subsequent Transfer Date" means a date on which a sale of
Subsequent Transferred Bondable Transition Property is effective, as specified
in the written notice relating to such sale contemplated in Section 2.02(e) of
the Sale Agreement.
"Subsequent Transferred Bondable Transition Property" means Bondable
Transition Property sold by the Seller to the Issuer as of a Subsequent Transfer
Date pursuant to the Sale Agreement and a ▇▇▇▇ of Sale delivered on or prior to
the related Subsequent Transfer Date as identified in such ▇▇▇▇ of Sale.
"Successor Servicer" means a successor Servicer appointed by the
Trustee pursuant to Section 6.04 of the Servicing Agreement which succeeds to
all the rights and duties
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of the Servicer under the Servicing Agreement.
"Supplemental Indenture" means a supplemental indenture entered into
by the Issuer and the Trustee pursuant to Article IX of the Indenture.
"Target Payment Date" has the meaning specified in Section 5(a) of
Annex 1 to the Servicing 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
generation supplier, providing billing or metering services, licensed by the BPU
pursuant to relevant provisions of the Competition Act, the BPU Regulations and
the BPU Financing Orders.
"Total Revenue Requirement" means, as of any date of determination,
the sum of the Revenue Requirements for all Series outstanding as of such date.
"Transfer Date" means the Initial Transfer Date or any Subsequent
Transfer Date, as applicable.
"Transferred Bondable Transition Property" means, collectively, all
Bondable Transition Property that has been sold, assigned and transferred to the
Issuer pursuant to the Sale Agreement.
"Transition Bond" means any of the transition bonds (as defined in
the Competition Act) issued by the Issuer pursuant to the Indenture.
"Transition Bond Balance" means, as of any date, the aggregate
Outstanding Amount of all Series of Transition Bonds on such date.
"Transition Bond Charge" means the Transition Bond Charge authorized
by the BPU to be imposed on all Customers by ACE or its successor to recover
Bondable Stranded Costs pursuant to the Competition Act and the BPU Financing
Orders.
"Transition Bond Charge Adjustment" means each adjustment to
Transition Bond Charge related to the Transferred Bondable Transition Property
made in accordance with Section 4.01 and Annex 1 of the Servicing Agreement and
the Issuer Annex.
"Transition Bond Charge Adjustment Process" means the process by
which adjustments are made to the Transition Bond Charge or to the formula
governing such adjustments, in either case pursuant to Section 4.01 and Annex 1
of the Servicing Agreement, the Competition Act, the Petition and the BPU
Financing Orders.
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"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" means _________________________, a ___________, or its
successor, as trustee under the Indenture and in the capacity specified in the
first paragraph of the Indenture, or any successor Trustee under the Indenture.
"Underwriting Agreement" means the Underwriting Agreement dated as
of ________, 2002, among the Seller, the Issuer and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.,
Incorporated, on behalf of itself and as the representative of the several
underwriters named therein.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
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