Exhibit 10.1
BGS BONDABLE TRANSITION PROPERTY SALE AGREEMENT
between
PSE&G TRANSITION FUNDING II LLC
Issuer
and
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
Seller
Dated as of September 23, 2005
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions................................................................................... 1
Section 1.2. Other Definitional Provisions................................................................. 1
ARTICLE II
CONVEYANCE OF TRANSFERRED BGS BONDABLE TRANSITION PROPERTY
Section 2.1. Conveyance of Initial Transferred BGS Bondable Transition Property............................ 2
Section 2.2. Conditions to Conveyance of BGS Bondable Transition Property.................................. 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.1. Organization and Good Standing................................................................ 5
Section 3.2. Due Qualification............................................................................. 5
Section 3.3. Power and Authority........................................................................... 5
Section 3.4. Binding Obligation............................................................................ 5
Section 3.5. No Violation.................................................................................. 5
Section 3.6. No Proceedings................................................................................ 5
Section 3.7. Approvals..................................................................................... 6
Section 3.8. The Transferred BGS Bondable Transition Property.............................................. 6
Section 3.9. Solvency...................................................................................... 9
ARTICLE IV
COVENANTS OF THE SELLER
Section 4.1. Seller's Existence............................................................................ 9
Section 4.2. No Liens or Conveyances....................................................................... 9
Section 4.3. Use of Proceeds............................................................................... 9
Section 4.4. Delivery of Collections....................................................................... 9
Section 4.5. Notice of Liens............................................................................... 10
Section 4.6. Compliance with Law........................................................................... 10
Section 4.7. Covenants Related to Transferred BGS Bondable Transition Property............................. 10
Section 4.8. Protection of Title........................................................................... 11
Section 4.9. Taxes......................................................................................... 12
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TABLE OF CONTENTS
(continued)
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ARTICLE V
ADDITIONAL UNDERTAKINGS OF THE SELLER
Section 5.1. Liability of the Seller; Indemnities.......................................................... 12
Section 5.2. Merger or Consolidation of, or Assumption of the Obligations of, the Seller................... 13
Section 5.3. Limitation on Liability of the Seller and Others.............................................. 14
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Amendment..................................................................................... 15
Section 6.2. Notices....................................................................................... 16
Section 6.3. Assignment by Seller.......................................................................... 17
Section 6.4. Assignment to Trustee......................................................................... 17
Section 6.5. Limitations on Rights of Others............................................................... 17
Section 6.6. Severability.................................................................................. 17
Section 6.7. Separate Counterparts......................................................................... 17
Section 6.8. Headings...................................................................................... 17
Section 6.9. Governing Law................................................................................. 17
Section 6.10. Nonpetition Covenant......................................................................... 17
EXHIBIT A - ▇▇▇▇ of Sale.................................................................................. A-1
EXHIBIT B - Opinion of Counsel............................................................................ B-1
EXHIBIT C - Opinion of Counsel............................................................................ C-1
APPENDIX A - Master Definitions
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BGS BONDABLE TRANSITION PROPERTY SALE AGREEMENT, dated as of
September 23, 2005, by and between PSE&G TRANSITION FUNDING II LLC, a Delaware
limited liability company, as issuer (the "Issuer"), and PUBLIC SERVICE
ELECTRIC AND GAS COMPANY, a New Jersey corporation, as seller hereunder (in
such capacity, the "Seller").
W I T N E S S E T H:
WHEREAS the Issuer desires to purchase from time to time BGS Bondable
Transition Property created pursuant to the Competition Act and the Financing
Order;
WHEREAS the Seller is willing to sell BGS Bondable Transition
Property to the Issuer;
WHEREAS the Issuer, in order to finance the purchase of the
Transferred BGS Bondable Transition Property, will from time to time issue BGS
Transition Bonds under the Indenture; and
WHEREAS the Issuer, to secure its obligations under the BGS
Transition Bonds and the Indenture, will pledge its right, title and interest
in, to and under the Transferred BGS Bondable Transition Property to the
Trustee for the benefit of the BGS Transition Bondholders.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in Appendix A
hereto.
Section 1.2. Other Definitional Provisions.
(a) "Agreement" means this BGS Bondable Transition Property Sale
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.
(b) Non-capitalized terms used herein which are defined in the
Competition Act, as the context requires, have the meanings assigned to such
terms in the Competition Act, but without giving effect to amendments to the
Competition Act after the date hereof which have a material adverse effect on
the Issuer or the BGS Transition Bondholders.
(c) All terms defined in this Agreement have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.
(d) 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 provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are
references to Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" means "including without
limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms.
ARTICLE II
CONVEYANCE OF TRANSFERRED BGS BONDABLE TRANSITION PROPERTY
Section 2.1. Conveyance of Initial Transferred BGS Bondable
Transition Property.
(a) In consideration of the Issuer's payment to or upon the order of
the Seller of $102,700,000, net of the underwriting discount and the original
issue discount for the BGS Transition Bonds in the aggregate amount of
$520,479.25, or $102,179,520.75 (the "Initial Purchase Price") by wire
transfer of funds immediately available on the date hereof to Seller's account
no. 5000000016439, Attn: CT-2800 for further credit to PSE&G Release Fund at
Wachovia Bank, National Association, routing transit ABA# ▇▇▇▇▇▇▇▇▇, subject
to the conditions specified in Section 2.2, the Seller does hereby irrevocably
sell, transfer, assign and otherwise convey to the Issuer, without recourse
(subject to the obligations of the Seller herein), all right, title and
interest of the Seller in, to and under the Initial Transferred BGS Bondable
Transition Property identified in the ▇▇▇▇ of Sale delivered pursuant to
Section 2.2(a) on or prior to the Initial Transfer Date (such sale, transfer,
assignment and conveyance of the Initial Transferred BGS Bondable Transition
Property to include, to the fullest extent permitted by the Competition Act,
the New Jersey UCC and the Delaware UCC, the assignment of all revenues,
collections, claims, rights, payments, money and proceeds of or arising from
the BGS Transition Bond Charges related to the Initial Transferred BGS
Bondable Transition Property, as the same may be adjusted from time to time).
Such sale, transfer, assignment and conveyance of the Initial Transferred BGS
Bondable Transition Property is hereby expressly stated to be a sale or other
absolute transfer and, pursuant to Section 23.a. of the Competition Act, shall
constitute a sale or other absolute transfer of all of the Seller's right,
title and interest, in, to and under and not a borrowing secured by, the
Initial Transferred BGS Bondable Transition Property. The preceding sentence
is the statement referred to in Section 23.a. of the Competition Act. The
Seller agrees and confirms that upon payment of the Initial Purchase Price and
the execution and delivery of this Agreement and the related ▇▇▇▇ of Sale, the
Seller shall have no right, title or interest in, to or under the Initial
Transferred BGS Bondable Transition Property.
(b) Subject to the conditions specified in Section 2.2, the Issuer
does hereby purchase the Initial Transferred BGS Bondable Transition Property
from the Seller for the consideration set forth in paragraph (a) above.
(c) The Seller and the Issuer each acknowledge and agree that the
purchase price for the Initial Transferred BGS Bondable Transition Property
sold pursuant to this Agreement is equal to its fair market value at the time
of sale.
(d) The Seller and the Issuer further agree that from time to time
the Seller may offer to sell, and the Issuer may purchase, Subsequent
Transferred BGS Bondable Transition Property
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as of Subsequent Transfer Dates, subject to the conditions specified in
Section 2.2, in exchange for consideration to be agreed upon (the "Subsequent
Purchase Price"). The Seller and the Issuer hereby agree that each such sale,
transfer, assignment and conveyance of any Subsequent Transferred BGS Bondable
Transition Property shall include, to the fullest extent permitted by the
Competition Act, the New Jersey UCC and the Delaware UCC, the assignment of
all revenues, collections, claims, rights, payments, money and proceeds of or
arising from the BGS Transition Bond Charges related to the Subsequent
Transferred BGS Bondable Transition Property, as the same may be adjusted from
time to time. Such sale, transfer, assignment and conveyance of the Subsequent
Transferred BGS Bondable Transition Property is hereby expressly stated to be
a sale or other absolute transfer and, pursuant to Section 23.a. of the
Competition Act, shall constitute a sale or other absolute transfer of all of
the Seller's right, title and interest, in, to and under and not a borrowing
secured by, the Subsequent Transferred BGS Bondable Transition Property. The
preceding sentence is the statement referred to in Section 23.a. of the
Competition Act. The Seller agrees and confirms that after giving effect to
any sale contemplated by this paragraph (d) and the execution and delivery of
the related ▇▇▇▇ of Sale, it shall have no right, title or interest in, to or
under the Subsequent Transferred BGS Bondable Transition Property.
(e) Notwithstanding the foregoing, in the event that any sale,
transfer, assignment and conveyance of any Transferred BGS Bondable Transition
Property is determined by a court of competent jurisdiction not to be a true
and absolute sale as contemplated by the parties hereto and by the Competition
Act, then such sale, transfer, assignment and conveyance shall be treated as a
pledge of such Transferred BGS Bondable Transition Property and the Seller
shall be deemed to have granted, and does hereby grant, as of the date hereof
a security interest to the Issuer in such Transferred BGS Bondable Transition
Property to secure a payment obligation incurred by the Seller in the amount
paid by the Issuer for the Transferred BGS Bondable Transition Property.
Section 2.2. Conditions to Conveyance of BGS Bondable Transition
Property. The obligation of the Seller to sell, and the obligation of the
Issuer to purchase BGS Bondable Transition Property upon any Transfer Date
shall be subject to and conditioned upon the satisfaction or waiver of each of
the following conditions:
(a) on or prior to the Transfer Date, the Seller shall
deliver to the Issuer a duly executed ▇▇▇▇ of Sale identifying the
BGS Bondable Transition Property to be conveyed as of that date,
substantially in the form of Exhibit A hereto;
(b) as of the Transfer Date, no breach by the Seller of its
representations, warranties or covenants in this Agreement shall
exist and the Seller shall have delivered to the Issuer and the
Trustee an Officers' Certificate to such effect and no Servicer
Default shall have occurred and be continuing;
(c) as of the Transfer Date:
(i) the Issuer shall have sufficient funds
available to pay the purchase price for the Transferred BGS
Bondable Transition Property to be conveyed on such date,
and
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(ii) all conditions set forth in the Indenture to
the issuance of one or more Series of BGS Transition Bonds
intended to provide such funds shall have been satisfied or
waived;
(d) on or prior to the Transfer Date, the Seller shall have
taken all actions required under the Competition Act, the Financing
Order, the New Jersey UCC and the Delaware UCC, including, without
limitation, filings under the New Jersey UCC and the Delaware UCC, to
transfer to the Issuer ownership of the Transferred BGS Bondable
Transition Property to be conveyed on such date, free and clear of
all Liens other than Liens created by the Issuer pursuant to the
Indenture and to perfect such transfer and the Issuer shall have
taken any action required for the Issuer to grant to the Trustee a
first priority perfected security interest in the Collateral and
maintain such security interest as of such date, including, without
limitation, filings under the New Jersey UCC and the Delaware UCC;
(e) in the case of any sale of Subsequent Transferred BGS
Bondable Transition Property only, the Seller shall have provided the
Issuer and each Rating Agency with a notice specifying the Subsequent
Transfer Date for the Subsequent Transferred BGS Bondable Transition
Property not later than 10 days prior to the Subsequent Transfer
Date;
(f) the Seller shall have delivered to each Rating Agency
and to the Issuer:
(i) an Opinion of Counsel to the Seller with
respect to the transfer of the Transferred BGS Bondable
Transition Property then being conveyed to the Issuer
substantially in the form of Exhibit B hereto, and
(ii) an Opinion of Counsel to the Seller,
substantially in the form of Exhibit C hereto;
(g) the Seller shall have delivered to the Trustee and the
Issuer an Officers' Certificate confirming the satisfaction of each
condition precedent specified in this Section 2.2;
(h) with respect to any Subsequent Sale, the Seller shall
have taken any action necessary in order for the Rating Agency
Condition to have been satisfied; and
(i) the Seller shall have received the Initial Purchase
Price or the Subsequent Purchase Price, as applicable, in funds
immediately available on the applicable Transfer Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As of the Transfer Date, the Seller makes the following
representations and warranties on which the Issuer has relied and will rely in
acquiring Transferred BGS Bondable Transition Property. The following
representations and warranties are made under existing law as in effect
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as of the Transfer Date. The Seller shall not be in breach of any
representation or warranty herein as a result of a change in law occurring
after the Transfer Date. The representations and warranties shall survive the
sale of Transferred BGS Bondable Transition Property to the Issuer and the
pledge thereof to the Trustee pursuant to the Indenture.
Section 3.1. Organization and Good Standing. The Seller is a
corporation duly organized and in good standing under the laws of the State of
New Jersey, with corporate power and authority to own its properties and
conduct its business as currently owned or conducted.
Section 3.2. Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, 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 requires such
qualifications, licenses or approvals (except where the failure to so qualify
and to obtain such licenses and approvals would not be reasonably likely to
have a material adverse effect on the Seller's business, operations, assets,
revenues, properties or prospects).
Section 3.3. Power and Authority. The Seller has the corporate power
and authority to execute and deliver this Agreement and to carry out its
terms; the Seller has full corporate power and authority to own the BGS
Bondable Transition Property and sell and assign the Transferred BGS Bondable
Transition Property to the Issuer, and the Seller has duly authorized such
sale and assignment to the Issuer by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Seller by all necessary corporate action.
Section 3.4. Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Seller enforceable against the Seller in
accordance with its terms subject to bankruptcy, receivership, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
from time to time in effect and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
Section 3.5. No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do 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 Seller, or any indenture,
agreement or other instrument to which the Seller is a party or by which it is
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (except as contemplated by the Basic Documents and as set forth in
Section 2.1(e) hereof); nor violate any law or any order, rule or regulation
applicable to the Seller of any court or of any federal or State regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties. The BGS Bondable Transition
Property is not subject to any Lien thereon created by the indenture, dated
August 1, 1924 (as amended and supplemented by 95 supplemental indentures), of
Public Service Electric and Gas Company to Fidelity Union Trust Company, as
successor trustee.
Section 3.6. No Proceedings. Except as disclosed in writing by the
Seller to the Issuer, there are no proceedings or investigations pending or,
to the Seller's best knowledge, threatened,
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before any court, federal or State regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or its
properties:
(a) asserting the invalidity of the Basic Documents, the BGS
Transition Bonds, the Competition Act or the Financing Order;
(b) seeking to prevent the issuance of the BGS Transition
Bonds or the consummation of any of the transactions contemplated by
the Basic Documents or the BGS Transition Bonds;
(c) challenging the Seller's treatment of the BGS Transition
Bonds as debt of the Seller for federal and State income, gross
receipts or franchise tax purposes; or
(d) seeking any determination or ruling that could
reasonably be expected to materially and adversely affect the
performance by the Seller of its obligations under, or the validity
or enforceability of, the Basic Documents or the BGS Transition
Bonds.
Section 3.7. Approvals. Except for the filing of financing statements
and continuation statements under the New Jersey UCC and the Delaware UCC, no
approval, authorization, consent, order or other action of, or filing with,
any court, federal or State regulatory body, administrative agency or other
governmental instrumentality is required in connection with the execution and
delivery by the Seller of this Agreement, the performance by the Seller of the
transactions contemplated hereby or the fulfillment by the Seller of the terms
hereof, except those that have been obtained or made. The Pricing Advice
Certificate (as defined in the Financing Order) has been filed in accordance
with the Financing Order and is final and incontestable in accordance with its
terms.
Section 3.8. The Transferred BGS Bondable Transition Property.
(a) Information. All information provided by the Seller to the Issuer
with respect to the Transferred BGS Bondable Transition Property is correct in
all material respects.
(b) Effect of Transfer. Each sale, transfer, assignment and
conveyance herein contemplated constitutes a sale or other absolute transfer,
of all right, title and interest of the Seller in, to and under the
Transferred BGS Bondable Transition Property from the Seller to the Issuer;
upon execution and delivery of this Agreement and the related ▇▇▇▇ of Sale,
the Seller will have no right, title or interest in, to or under the
Transferred BGS Bondable Transition Property; and the Transferred BGS Bondable
Transition Property would not be part of the estate of the Seller as debtor in
the event of the filing of a bankruptcy petition by or against the Seller
under any bankruptcy law.
(c) Transfer Filings. The Seller is the sole owner of the Transferred
BGS Bondable Transition Property sold to the Issuer on the Transfer Date; and
the Transferred BGS Bondable Transition Property will have been validly sold,
assigned, transferred and conveyed to the Issuer free and clear of all Liens
other than Liens created by the Issuer pursuant to the Indenture. All actions
or filings, including filings with the New Jersey Division of Revenue/Office
of Commercial Recording under the New Jersey UCC and the Delaware UCC
necessary in any jurisdiction to give the Issuer a valid first priority
perfected ownership interest in the Transferred
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BGS Bondable Transition Property and to grant to the Trustee a first priority
perfected security interest in the Transferred BGS Bondable Transition
Property, free and clear of all Liens of the Seller or anyone else have been
taken or made.
(d) Financing Order Irrevocable; Process Valid; No Litigation; Etc.
(i) The Financing Order as issued on July 12, 2005 has been
issued by the BPU in accordance with the Competition Act, and such
order and the process by which it was issued comply with all
applicable laws, rules and regulations, including but not limited to
the due process requirements of the United States Constitution and
the New Jersey Constitution. The Financing Order has become effective
pursuant to the Competition Act and is and as of the date of issuance
of any BGS Transition Bonds will be in full force and effect and
final and non-appealable.
(ii) As of the Series Issuance Date, the BGS Transition
Bonds of the related Series will be entitled to the protections
provided by the Competition Act and, in accordance with the
Competition Act, the Financing Order and the BGS Transition Bond
Charge authorized therein have become irrevocable and each Advice
Letter is final and uncontestable.
(A) Under the Competition Act, the State of New
Jersey may not limit, alter or impair the Transferred BGS
Bondable Transition Property or other rights vested in the
Seller, the Issuer, the Trustee or the BGS Transition
Bondholders pursuant to the Financing Order until the BGS
Transition Bonds are fully paid and discharged, or in any
way limit, alter, impair or reduce the value or amount of
the Transferred BGS Bondable Transition Property; and
(B) under the Contract Clauses of the United States
Constitution and the New Jersey Constitution, the State of
New Jersey, including the BPU, could not constitutionally
take any action of a legislative character, including the
repeal or amendment of the Competition Act, which would
substantially limit, alter or impair the BGS Bondable
Transition Property or other rights vested in the BGS
Transition Bondholders pursuant to the Financing Order, or
substantially limit, alter, impair or reduce the value or
amount of the BGS Bondable Transition Property, unless such
action is a reasonable exercise of the State of New Jersey's
sovereign powers and of a character reasonable and
appropriate to the public purpose justifying such action and
under the Takings Clauses of the United States and New
Jersey Constitutions, the State of New Jersey could not
repeal or amend the Competition Act or take any other action
in contravention of its pledge and agreement quoted above
without paying just compensation to the BGS Transition
Bondholders, as determined by a court of competent
jurisdiction, if doing so would constitute a permanent
appropriation of a substantial property interest of the BGS
Transition Bondholders in the BGS Bondable Transition
Property and deprive the BGS Transition Bondholders of their
reasonable expectations arising from their investments in
the BGS Transition Bonds. There is no assurance, however,
that, even if a court were to award just compensation, it
would be
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sufficient to pay the full amount of principal of and
interest on the BGS Transition Bonds.
(iii) There is no order by any court providing for
the revocation, alteration, limitation or other impairment
of the Competition Act, the Financing Order, any Advice
Letter, the Transferred BGS Bondable Transition Property or
the BGS Transition Bond Charge or any rights arising under
any of them or to enjoin the performance of any obligations
under the Financing Order.
(iv) No other approval, authorization, consent,
order or other action of, or filing with, any court, federal
or State regulatory body, administrative agency or other
governmental instrumentality is required in connection with
the creation or transfer of the Transferred BGS Bondable
Transition Property, except those that have been obtained or
made.
(v) Except as disclosed by the Seller to the Issuer
in writing, there are no proceedings or investigations
pending, or to the best of the Seller's knowledge,
threatened before any court, federal or State regulatory
body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or the
Issuer or their respective properties challenging the
Competition Act or the Financing Order.
(e) Assumptions. The assumptions used in calculating the BGS
Transition Bond Charge in any Advice Letter delivered by the Issuer to the BPU
pursuant to the Financing Order are reasonable and made in good faith.
(f) Creation of Transferred BGS Bondable Transition Property.
(i) For purposes of the Competition Act, the New Jersey UCC
and the Delaware UCC, the Transferred BGS Bondable Transition
Property constitutes presently existing property;
(ii) the BGS Bondable Transition Property consists of (A)
the irrevocable right of the Seller to charge, collect and receive,
and be paid from collections of, the BGS Transition Bond Charge in
the amount necessary to provide for the full recovery of the Bondable
Stranded Costs which have been determined to be recoverable in the
Financing Order and (B) all rights of the Seller under the Financing
Order, including, without limitation, all rights to obtain periodic
adjustments of the BGS Transition Bond Charge pursuant to the
Competition Act, and (C) all revenues, collections, payments, money
and proceeds arising under, or with respect to, all of the foregoing;
(iii) the BGS Bondable Transition Property is not subject to
any lien created by a previous indenture; and
(iv) the Financing Order, including the right to collect the
BGS Transition Bond Charge, has become irrevocable.
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(g) Prospectus. As of the date hereof, the information describing the
Seller under the caption "The Seller and Servicer of the BGS Bondable
Transition Property" in the Prospectus is correct in all material respects.
Section 3.9. Solvency. After giving effect to the sale of any
Transferred BGS Bondable Transition Property hereunder, the Seller:
(a) is solvent and expects to remain solvent;
(b) is adequately capitalized to conduct its business and
affairs considering its size and the nature of its business and
intended purposes;
(c) is not engaged in nor does it expect to engage in a
business for which its remaining property represents an unreasonably
small capital;
(d) reasonably believes that it will be able to pay its
debts as they come due; and
(e) is able to pay its debts as they mature and does not
intend to incur, or believes that it will incur, indebtedness that it
will not be able to repay at its maturity.
ARTICLE IV
COVENANTS OF THE SELLER
Section 4.1. Seller's Existence. So long as any of the BGS Transition
Bonds are outstanding, the Seller shall keep in full force and effect its
existence as a corporation and remain in good standing under the laws of the
jurisdiction of its organization, and shall obtain and preserve its
qualification to do business in each jurisdiction in which such qualification
is or will be necessary to protect the validity and enforceability of this
Agreement and each other instrument or agreement to which the Seller is a
party necessary to the proper administration of this Agreement and the
transactions contemplated hereby.
Section 4.2. No Liens or Conveyances. Except for the conveyances
hereunder, the Seller shall not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on, any of
the Transferred BGS Bondable Transition Property, whether now existing or
hereafter created, or any interest therein. The Seller shall not at any time
assert any Lien against or with respect to any Transferred BGS Bondable
Transition Property, and shall defend the right, title and interest of the
Issuer and the Trustee, as assignee of the Issuer, in, to and under the
Transferred BGS Bondable Transition Property, whether now existing or
hereafter created, against all claims of third parties claiming through or
under the Seller.
Section 4.3. Use of Proceeds. The Seller shall use proceeds from the
sale of the BGS Bondable Transition Property in accordance with the Financing
Order and the Competition Act.
Section 4.4. Delivery of Collections. If the Seller receives
collections of the BGS Transition Bond Charge with respect to the Transferred
BGS Bondable Transition Property or the proceeds thereof, the Seller shall pay
the Servicer all payments received by the Seller in
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respect thereof as soon as practicable after receipt thereof by the Seller,
but in no event later than two Business Days after such receipt.
Section 4.5. Notice of Liens. The Seller shall notify the Issuer and
the Trustee promptly after becoming aware of any Lien on any Transferred BGS
Bondable Transition Property other than the conveyances hereunder or under the
Indenture.
Section 4.6. Compliance with Law. The Seller shall comply with its
organizational or governing documents and all laws, treaties, rules,
regulations and determinations of any governmental instrumentality applicable
to the Seller, except to the extent that failure to so comply would not
adversely affect the Issuer's or the Trustee's interests in the Transferred
BGS Bondable Transition Property or under any of the Basic Documents or the
Seller's performance of its obligations hereunder.
Section 4.7. Covenants Related to Transferred BGS Bondable Transition
Property.
(a) So long as any of the BGS Transition Bonds are outstanding, the
Seller shall:
(i) treat the BGS Transition Bonds as debt of the Issuer and
not of the Seller, except for financial accounting or tax reporting
purposes;
(ii) disclose in its financial statements that it is not the
owner of the Transferred BGS Bondable Transition Property and that
the assets of the Issuer are not available to pay creditors of the
Seller or any of its Affiliates (other than the Issuer);
(iii) disclose the effects of all transactions between the
Seller and the Issuer in accordance with generally accepted
accounting principles; and
(iv) not own or purchase any BGS Transition Bonds.
(b) The Seller agrees that upon the sale by the Seller of the
Transferred BGS Bondable Transition Property to the Issuer pursuant to this
Agreement:
(i) to the fullest extent permitted by law, including the
Competition Act and applicable BPU Regulations, the Issuer shall have
all of the rights originally held by the Seller with respect to the
Transferred BGS Bondable Transition Property, including the right to
collect any amounts payable by any Customer or Third Party in respect
of such Transferred BGS Bondable Transition Property, notwithstanding
any objection or direction to the contrary by the Seller; and
(ii) any payment by any Customer or Third Party to the
Issuer shall discharge such Customer's or such Third Party's
obligations in respect of such Transferred BGS Bondable Transition
Property to the extent of such payment, notwithstanding any objection
or direction to the contrary by the Seller.
(c) So long as any of the BGS Transition Bonds are Outstanding,
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(i) in all proceedings relating directly or indirectly to
the Transferred BGS Bondable Transition Property the Seller shall:
(A) affirmatively certify and confirm that it has sold the
Transferred BGS Bondable Transition Property to the Issuer (other
than for financial accounting or tax reporting purposes), and (B) not
make any statement or reference in respect of the Transferred BGS
Bondable Transition Property that is inconsistent with the ownership
thereof by the Issuer (other than for financial accounting or tax
reporting purposes); and
(ii) the Seller shall not take any action in respect of the
Transferred BGS Bondable Transition Property except as contemplated
by the Basic Documents.
Section 4.8. Protection of Title. The Seller shall execute and file
such filings, and cause to be executed and filed such filings, and take all
such actions, all in such manner and in such places as may be required by law
fully to preserve, maintain, protect and perfect the interests of the Issuer
and the Trustee in the Transferred BGS Bondable Transition Property, including
all filings required under the New Jersey UCC and the Delaware UCC relating to
the transfer of the ownership of the Transferred BGS Bondable Transition
Property by the Seller to the Issuer and the pledge of the Transferred BGS
Bondable Transition Property by the Issuer to the Trustee. The Seller shall
deliver (or cause to be delivered) to the Issuer and the Trustee file-stamped
copies of, or filing receipts for, any document filed as provided above, as
soon as available following such filing. The Seller shall institute any action
or proceeding necessary to compel the performance by the BPU or the State of
New Jersey of any of their obligations or duties under the Competition Act or
the Financing Order, and the Seller agrees to take such legal or
administrative actions, including defending against or instituting and
pursuing legal actions and appearing or testifying at hearings or similar
proceedings, in each case as may be reasonably necessary:
(a) to protect the Issuer and the BGS Transition Bondholders
from claims, State actions or other actions or proceedings of third
parties which, if successfully pursued, would result in a breach of
any representation set forth in Article III; or
(b) to block or overturn any attempts to cause a repeal of,
modification of or supplement to the Competition Act, the Financing
Order, any Advice Letter, or the rights of BGS Transition Bondholders
by legislative enactment or constitutional amendment that would be
adverse to the Issuer, the Trustee or the BGS Transition Bondholders.
The costs of any such actions or proceedings shall be reimbursed by
the Issuer to the Seller from amounts on deposit in the Collection Account as
an Operating Expense. The Seller's obligations pursuant to this Section 4.8
shall survive and continue notwithstanding that the payment of Operating
Expenses pursuant to the Indenture may be delayed (it being understood that
the Seller may be required to advance its own funds to satisfy its obligation
hereunder). The Seller irrevocably, and as a power coupled with an interest,
designates the Issuer as its agent and attorney-in-fact to execute any filings
of financing statements, continuation statements or other instruments required
of the Issuer pursuant to this Section, it being understood that the Issuer
shall have no obligation to execute any such instruments.
11
Section 4.9. Taxes. So long as any of the BGS Transition Bonds are
outstanding, the Seller shall, and shall cause each of its subsidiaries to,
pay all material taxes, assessments and governmental charges imposed upon it
or any of its properties or assets or with respect to any of its franchises,
business, income or property before any penalty accrues thereon if the failure
to pay any such taxes, assessments and governmental charges would, after any
applicable grace periods, notices or other similar requirements, result in a
Lien on the Transferred BGS Bondable Transition Property; provided that no
such tax need be paid if the Seller or one of its Affiliates is contesting the
same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if the Seller or such Affiliate has established
appropriate reserves as shall be required in conformity with generally
accepted accounting principles.
ARTICLE V
ADDITIONAL UNDERTAKINGS OF THE SELLER
The Seller hereby undertakes the obligations contained in this
Article V and agrees that the Issuer shall have the right to assign its rights
with respect to such obligations to the Trustee for the benefit of the BGS
Transition Bondholders.
Section 5.1. Liability of the Seller; Indemnities.
(a) The Seller shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Seller under this
Agreement.
(b) The Seller shall indemnify the Issuer and the Trustee, for itself
and on behalf of the BGS Transition Bondholders, and each of their respective
officers, directors, managers, employees and agents for, and defend and hold
harmless each such Person from and against, any and all taxes (other than any
taxes imposed on BGS Transition Bondholders solely as a result of their
ownership of BGS Transition Bonds) that may at any time be imposed on or
asserted against any such Person under existing law as of any Transfer Date as
a result of the sale and assignment of the Transferred BGS Bondable Transition
Property by the Seller to the Issuer, the acquisition or holding of the
Transferred BGS Bondable Transition Property by the Issuer or the issuance and
sale by the Issuer of the BGS Transition Bonds, including any sales, gross
receipts, general corporation, personal property, privilege, franchise or
license taxes, but excluding any taxes imposed as a result of a failure of
such person to properly withhold or remit taxes imposed with respect to
payments on any BGS Transition Bond, it being understood that the BGS
Transition Bondholders shall be entitled to enforce their rights against the
Seller under this Section 5.1(b) solely through a cause of action brought for
their benefit by the Trustee.
(c) The Seller shall indemnify the Issuer and the Trustee, for itself
and on behalf of the BGS Transition Bondholders, and each of their respective
officers, directors, managers, employees and agents for, and defend and hold
harmless each such Person from and against, any and all amounts of principal
of and interest on the BGS Transition Bonds not paid when due or when
scheduled to be paid in accordance with their terms and the amount of any
deposits to the Issuer required to have been made in accordance with the terms
of the Basic Documents which are not made when so required, in each case as a
result of the Seller's breach of any of its representations, warranties or
covenants contained in this Agreement, and any and all liabilities,
12
obligations, claims, actions, suits or payments of any kind whatsoever that
may be imposed on or asserted against any such Person, other than any
liabilities, obligations or claims for or payments of principal of or interest
on the BGS Transition Bonds, together with any reasonable costs and expenses
incurred by such Person, as a result of the Seller's breach of any of its
representations, warranties or covenants contained in this Agreement.
(d) The Seller shall pay any and all taxes levied or assessed upon
all or any part of the Issuer's property or assets based on existing law as of
the Transfer Date.
(e) Indemnification under this Section 5.1 shall survive the
resignation or removal of the Trustee and the termination of this Agreement
and shall include reasonable fees and expenses of investigation and litigation
(including reasonable attorneys' fees and expenses). The Seller shall not
indemnify any party under this Section 5.1 for any changes in law after the
Transfer Date.
(f) The indemnification obligation of the Seller under this Section
5.1 shall be pari passu with all other general unsecured obligations of the
Seller.
(g) The Seller will not indemnify any person for any loss, damages,
liability, obligation, claim, action, suit or payment resulting solely from a
downgrade in the ratings on the BGS Transition Bonds or for any consequential
damages, including any loss of market value of the BGS Transition Bonds,
resulting from any default or any downgrade of the ratings on the BGS
Transition Bonds.
Section 5.2. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller. Any Person:
(a) into which the Seller may be merged or consolidated and
which succeeds to all or any material part of the electric
distribution business of the Seller,
(b) which results from the division of the Seller into two
or more Persons and which succeeds to all or any material part of the
electric distribution business of the Seller,
(c) which may result from any merger or consolidation to
which the Seller shall be a party and which succeeds to all or any
material part of the electric distribution business of the Seller,
(d) which may succeed to the properties and assets of the
Seller substantially as a whole and which succeeds to all or any
material part of the electric distribution business of the Seller, or
(e) which may otherwise succeed to all or any material part
of the electric distribution business of the Seller,
which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Seller under this Agreement, shall be the
successor to the Seller
13
hereunder without the execution or filing of any document or any further act
by any of the parties to this Agreement; provided, however, that
(i) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Article III shall have
been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default,
shall have occurred and be continuing,
(ii) the Seller shall have delivered to the Issuer and the
Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 5.2 and that all
conditions precedent, if any, provided for in this Agreement relating
to such transaction have been complied with,
(iii) the Seller shall have delivered to the Issuer and the
Trustee an Opinion of Counsel either
(A) stating that, in the opinion of such counsel,
all filings to be made by the Seller, including New Jersey
UCC and the Delaware UCC filings, that are necessary fully
to preserve and protect fully the respective interests of
the Issuer and the Trustee in the Transferred BGS 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
(v) the Seller shall have delivered to the Issuer and the
Trustee an opinion of independent tax counsel (as selected by, and in
form and substance reasonably satisfactory to, the Seller, and which
may be based on a ruling from the Internal Revenue Service) to the
effect that, for federal income tax purposes, such consolidation or
merger will not result in a material adverse federal income tax
consequence to the Seller, the Issuer, the Trustee or the holders of
the Outstanding BGS Transition Bonds.
The Seller shall not consummate any transaction referred to in clauses (a),
(b), (c), (d) or (e) above except upon execution of the above described
agreement of assumption and compliance with clauses (i), (ii), (iii), (iv) and
(v) above. When any Person acquires the properties and assets of the Seller
substantially as a whole and becomes the successor to the Seller in accordance
with the terms of this Section 5.2, then upon the satisfaction of all of the
other conditions of this Section 5.2, the Seller shall automatically and
without further notice be released from its obligations hereunder.
Section 5.3. Limitation on Liability of the Seller and Others. The
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person, respecting any matters
arising hereunder. Subject to Section 4.8, the Seller shall not be under
14
any obligation to appear in, prosecute or defend any legal action that is not
incidental to its obligations under this Agreement, and that in its opinion
may involve it in any expense or liability.
ARTICLE VI
Miscellaneous Provisions
Section 6.1. Amendment.
(a) This Agreement may be amended by the Seller and the Issuer, with
the consent of the Trustee and the satisfaction of the Rating Agency
Condition. Promptly after the execution of any such amendment or consent, the
Issuer shall furnish written notification of the substance of such amendment
or notification to each of the Rating Agencies.
(b) Prior to the execution of any amendment 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 is authorized or
permitted by this Agreement. The Issuer and the Trustee 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.
(c) Notwithstanding anything to the contrary in this paragraph, no
amendment or modification of this Agreement shall be effective except upon
satisfaction of the conditions precedent in this paragraph (c).
(i) At least fifteen days prior to the effectiveness of any
such amendment or modification and after obtaining the other
necessary approvals set forth in paragraph (a) above (except that the
consent of the Trustee may be subject to the consent of Holders if
such consent is required or sought by the Trustee in connection with
such amendment or modification), the Servicer shall have delivered to
the BPU's executive director and general counsel written notification
of any proposed amendment, which notification shall contain:
(A) a reference to Docket No. EF03070532;
(B) an officer's certificate stating that the
proposed amendment or modification has been approved by all
parties to this Agreement; and
(C) a statement identifying the person to whom the
BPU or its staff is to address any response to the proposed
amendment or to request additional time;
(ii) If the BPU or its staff, within fifteen days (subject
to extension as provided in clause (iii) below) of receiving a
notification complying with paragraph (a) above, shall have delivered
to the office of the person specified in paragraph (i)(C) above a
written statement that the BPU might object to the proposed amendment
or modification, then such proposed amendment or modification shall
not be effective unless and until the BPU subsequently delivers a
written statement that it does not object to such proposed amendment
or modification.
15
(iii) If the BPU or its staff shall have, within fifteen
days of receiving a notification complying with paragraph (a) above,
delivered to the office of the person specified in paragraph (i)(C)
above a written statement requesting an additional amount of time not
to exceed thirty days in which to consider such proposed amendment or
modification, then such proposed amendment or modification shall not
be effective if, within such extended period, the BPU shall have
delivered to the office of the person specified in paragraph (i)(C)
above a written statement as described in clause (ii) above, unless
and until the BPU subsequently delivers a written statement that it
does not object to such proposed amendment or modification.
(iv) If the BPU or its staff shall not have delivered
written notice that the BPU might object to such proposed amendment
or modification within the time periods described in clause (ii) or
clause (iii) above, whichever is applicable, then the BPU shall be
conclusively deemed not to have any objection to the proposed
amendment or modification and such amendment or modification may
subsequently become effective upon satisfaction of the other
conditions specified in paragraph (a) above.
(v) Following the delivery of a notice to the BPU by the
Servicer under clause (ii) above, the Servicer and the Issuer shall
have the right at any time to withdraw from the BPU further
consideration of any proposed amendment.
Section 6.2. Notices. Unless otherwise specifically provided herein,
all notices, directions, consents and waivers required under the terms and
provisions of this Agreement shall be in English and in writing, and any such
notice, direction, consent or waiver may be given by United States first-class
mail, reputable overnight courier service, facsimile transmission or
electronic mail (confirmed by telephone, United States first-class mail or
reputable overnight courier service in the case of notice by facsimile
transmission or electronic mail) or any other customary means of
communication, and any such notice, direction, consent or waiver shall be
effective when delivered or transmitted, or if mailed, five days after deposit
in the United States first-class mail with proper postage for first-class mail
prepaid:
(a) in the case of the Seller, at Public Service Electric
and Gas Company, ▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Treasurer,
(b) in the case of the Issuer, at PSE&G Transition Funding
II LLC, ▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇-▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Managers,
(c) in the case of Moody's, at ▇▇▇▇▇'▇ Investors Service,
Inc., ABS Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇,
(d) in the case of Standard & Poor's, at Standard & Poor's
Ratings Group, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Asset Backed Surveillance Department,
(e) in the case of Fitch, at Fitch, Inc., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS Surveillance, and
16
(f) in the case the Trustee, at the address provided for
notices or communications to the Trustee in the Indenture;
or, as to each of the foregoing, at such other address as shall be designated
by written notice to the other parties.
Section 6.3. Assignment by Seller. Subject to Section 5.2, this
Agreement may not be assigned by the Seller.
Section 6.4. Assignment to Trustee. The Seller hereby acknowledges
and consents to any pledge, assignment and grant of a security interest by the
Issuer to the Trustee pursuant to the Indenture for the benefit of the BGS
Transition Bondholders of all right, title and interest of the Issuer in, to
and under the Transferred BGS Bondable Transition Property and the proceeds
thereof and the assignment of any or all of the Issuer's rights hereunder to
the Trustee.
Section 6.5. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Issuer, the BPU, on
behalf of itself and electricity customers, and the Trustee, on behalf of
itself and the BGS Transition Bondholders, and nothing in this Agreement,
whether express or implied, shall be construed to give to any other Person any
legal or equitable right, remedy or claim in the Collateral or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
Section 6.6. 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 6.7. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 6.8. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 6.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 6.10. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement or the Indenture, the Seller hereby covenants
and agrees that it shall not, prior to the date which is one year and one day
after the termination of the Indenture and the payment in full of the BGS
Transition Bonds, any other amounts owed under the Indenture, acquiesce,
petition or otherwise invoke or cause the Issuer to invoke the process of any
court or government authority for the purpose of commencing or sustaining a
case against the Issuer under any federal or State bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee,
17
trustee, custodian, sequestrator or other similar official of the Issuer or
any substantial part of the property of the Issuer, or ordering the winding up
or liquidation of the affairs of the Issuer.
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the date and year first above written.
PSE&G TRANSITION FUNDING II LLC, as Issuer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Treasurer and
Chief Financial Officer
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY, as Seller
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Treasurer
19
▇▇▇▇ OF SALE
For good and valuable consideration the receipt of which is hereby
acknowledged, PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a New Jersey
corporation (the "Seller"), does hereby sell, assign, transfer and convey to
PSE&G TRANSITION FUNDING II LLC, a Delaware limited liability company (the
"Issuer"), without recourse except as provided in the Sale Agreement referred
to below, all of the Seller's right, title and interest in, to and under all
of its BGS Bondable Transition Property, which sale, assignment, transfer and
conveyance of such BGS Bondable Transition Property shall include, as provided
in the Competition Act, the sale, assignment, transfer and conveyance of all
of the Seller's right, title and interest in, to and under all revenues,
collections, claims, rights, payments, money and proceeds of or arising under
or with respect to the BGS Transition Bond Charge related to such BGS Bondable
Transition Property, as the same may be adjusted from time to time in
accordance with the Competition Act and the Financing Order, to have and to
hold the same unto the Issuer and to the successors and assigns of the Issuer,
forever.
Capitalized terms used herein and not defined shall have the meanings
set forth in the BGS Bondable Transition Property Sale Agreement dated as of
September 23, 2005 (the "Sale Agreement") between the Issuer and the Seller.
This ▇▇▇▇ of Sale is governed by the laws of the State of New Jersey.
IN WITNESS WHEREOF, the Seller has duly executed and delivered this
▇▇▇▇ of Sale this 23rd day of September 2005.
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY, as Seller
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
Accepted this 23rd day of
September 2005.
PSE&G TRANSITION FUNDING II LLC
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
20
EXHIBIT B
Opinion of Counsel
EXHIBIT C
Opinion of Counsel
APPENDIX A
MASTER DEFINITIONS
[To be used in connection with the Servicing Agreement,
the Sale Agreement, the Administration Agreement and the Indenture]
The definitions contained in this Appendix A are applicable to the singular as
well as the plural forms of such terms.
Act has the meaning specified in Section 11.3 of the Indenture.
Adjustment Date means (a) January 1 of each year through January 1,
2015, (b) as long as the BGS Transition Bonds are outstanding,
October 1, January 1, April and July 1 of each year, beginning April
1, 2015, and (c) any other date which is thirty days after a
Calculation Date.
Adjustment Request means an application filed by the Servicer with
the BPU for a BGS Transition Bond Charge Adjustment pursuant to
Section 5(b) of the Issuer Annex.
Administration Agreement means the Administration Agreement dated as
of September 23, 2005, between PSE&G, as administrator, and the
Issuer, as the same may be amended or supplemented from time to time.
Administrator means PSE&G, as administrator under the Administration
Agreement, and each successor to PSE&G, in the same capacity,
pursuant to Section 14 of the Administration Agreement.
Advice Letter means, with respect to any Series of BGS Transition
Bonds, the Issuance Advice Letter, in the form attached as Appendix B
to the Financing Order, filed with the BPU at the time of the
issuance of such Series.
Affiliate means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, control when
used with respect to any specified Person means the power to direct
the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms controlling and controlled have meanings
correlative to the foregoing.
Annual Accountant's Report has the meaning assigned to that term in
Section 3.07 of the Servicing Agreement.
Annual Reconciliation Date means the last Business Day of October of
each year, commencing with October 2006 and continuing through
October 2014 (or such earlier month as the Servicer shall have
specified to the Issuer and the Trustee by not less than 30 days
prior written notice).
A-1
Authorized Denominations means, with respect to any Series or Class
of BGS Transition Bonds, $1,000 and integral multiples of $1.00 above
that amount, provided, however, that one bond of each Class may have
denomination of less than $1,000, or such other denominations as may
be specified in the Series Supplement therefor.
Authorized Officer means, with respect to the Issuer, (i) any Manager
and, (ii) any person designated as an "Officer" under the Issuer LLC
Agreement and authorized thereby to act on behalf of the Issuer.
Basic Documents means the Formation Documents, the Sale Agreement,
any Bills of Sale, the Servicing Agreement, the Administration
Agreement, the Indenture, the Underwriting Agreement, any Interest
Rate Swap Agreement and the Securities Account Control Agreement, as
each may be amended or supplemented from time to time.
BGS Bondable Transition Property has the meaning assigned to that
term in the Financing Order.
BGS Bondable Transition Property Documentation means all documents
relating to the Transferred BGS Bondable Transition Property,
including copies of the Petition and the Financing Order and all
documents filed with the BPU in connection with any BGS Transition
Bond Charge Adjustment.
BGS MTC-Tax has the meaning assigned to that term in the Financing
Order.
BGS Transition Bond means any of the transition bonds (as defined in
the Competition Act) issued by the Issuer pursuant to the Indenture.
BGS Transition Bond Balance means, as of any date, the aggregate
Outstanding Amount of all Series of BGS Transition Bonds on such
date.
BGS Transition Bond Charge means the BGS Transition Bond Charge
authorized by the BPU to be imposed on all Customers by PSE&G or its
successor to recover Bondable Stranded Costs pursuant to the
Competition Act and the Financing Order.
BGS Transition Bond Charge Adjustment means each adjustment to the
BGS Transition Bond Charge related to the Transferred BGS Bondable
Transition Property made in accordance with Section 4.01 of the
Servicing Agreement and the Issuer Annex.
BGS Transition Bond Charge Adjustment Process means the process by
which the BGS Transition Bond Charge is adjusted pursuant to the
Servicing Agreement, the Competition Act, the Petition and the
Financing Order.
BGS Transition Bond Owner means, with respect to a Book-Entry BGS
Transition Bond, the Person who is the beneficial owner of such
Book-Entry BGS Transition Bond, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly as a Clearing Agency Participant
or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
A-2
BGS Transition Bond Register has the meaning specified in Section
2.5(a) of the Indenture.
BGS Transition Bond Registrar has the meaning specified in Section
2.5(a) of the Indenture.
Billing Month means a calendar month during which the BGS Transition
Bond Charge is billed to Customers.
▇▇▇▇ of Sale means any ▇▇▇▇ of sale issued by the Seller to the
Issuer pursuant to the Sale Agreement evidencing the sale of BGS
Bondable Transition Property by the Seller to the Issuer.
Bondable Stranded Costs means those bondable stranded costs, within
the meaning specified in the Competition Act, approved for recovery
in the Financing Order.
Book-Entry BGS Transition Bonds means beneficial interests in the BGS
Transition Bonds, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section
2.11 of the Indenture.
BPU means the State of New Jersey Board of Public Utilities or its
successor.
BPU Regulations means any regulations, orders, guidelines or
directives promulgated, issued or adopted by the BPU.
Business Day means any day other than a Saturday or Sunday or a day
on which banking institutions in the City of Newark, New Jersey, or
in the City of New York, New York.
Calculation Date means (a) December 1 of each year until December 1,
2014 (b) September 1, December 1, March 1 and June 1 of each year
beginning March 1, 2015 and for so long as the BGS Transition Bonds
are outstanding, and (c) any other day on which the Servicer files an
Adjustment Request.
Capital Reserve Subaccount has the meaning specified in Section
8.2(i) of the Indenture.
Capital Subaccount has the meaning specified in Section 8.2(i) of the
Indenture.
Class means, with respect to any Series, any one of the classes of
BGS Transition Bonds of that Series, as specified in the Series
Supplement for that Series.
Class Final Maturity Date means the Final Maturity Date of a Class,
as specified in the Series Supplement for the related Series.
Class Subaccount has the meaning specified in Section 8.2(i) of the
Indenture.
Clearing Agency means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
A-3
Clearing Agency Participant means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency.
Code means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
Collateral has the meaning specified in the Granting Clause of the
Indenture.
Collection Account has the meaning specified in Section 8.2(i) of the
Indenture.
Collection Period means the period from and including the first day
of a calendar month to but excluding the first day of the next
calendar month.
Collections Curve means a forecast prepared by the Servicer of the
percentages of amounts billed in a Billing Month that are expected to
be received during each of the following seven months.
Collections Curve Payment means, with respect to a Billing Month, the
sum of the amounts paid to the Trustee over a seven-month period
following that Billing Month based on the Collections Curve for that
Billing Month.
Commission means the U.S. Securities and Exchange Commission, and any
successor thereof.
Competition Act means the Electric Discount and Energy Competition
Act, New Jersey Statutes Annotated, title 48, chapter 3, article 7.
Corporate Trust Office means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at date of the execution of this Indenture
is located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust- ABS Unit, or at such other address as the
Trustee may designate from time to time by notice to the BGS
Transition Bondholders and the Issuer, or the principal corporate
trust office of any successor Trustee (the address of which the
successor Trustee will notify the BGS Transition Bondholders and the
Issuer in writing).
Covenant Defeasance Option has the meaning specified in Section
4.l(b) of the Indenture.
Curve Payment Shortfall means: (a) with respect to each Annual
Reconciliation Date, the excess of actual TBC Collections in respect
of each of the 12 Billing Months beginning 19 Billing Months (or from
the first Series Issuance Date, if less than 19 months have elapsed)
before the Billing Month in which such Reconciliation Date occurs,
over the actual Collection Curve Payments made to the Trustee in
respect of those Billing Months; and (b) with respect to each Monthly
Reconciliation Date, the excess of actual TBC Collections in respect
of the Billing Month that is 8 months prior to the Billing Month in
which such Reconciliation Date occurs, over the actual Collection
Curve Payments made to the Trustee in respect of that prior Billing
Month.
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Customer means each person who is a retail consumer of electricity
and who accesses PSE&G's transmission and distribution system,
regardless of whether such consumer elects to purchase electricity
from a Third Party.
Daily Remittance Date means, if the Servicer has not satisfied the
conditions of Section 5.11(b) of the Servicing Agreement, each
Business Day commencing on the second Business Day following the date
on which the Servicer begins remittance procedures under Section
3.03(a)(ii) of the Servicing Agreement.
Default means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
Defeasance Subaccount has the meaning specified in Section 8.2(i) of
the Indenture
Definitive BGS Transition Bonds has the meaning specified in Section
2.11 of the Indenture.
Delaware UCC means the Uniform Commercial Code, as in effect in the
State of Delaware, as amended from time to time.
DTC Agreement means the agreement between the Issuer, the Trustee and
The Depository Trust Company, as the initial Clearing Agency, dated
on or about September 22, 2005, relating to the BGS Transition Bonds,
as the same may be amended or supplemented from time to time.
Eligible Guarantor Institution means a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as "an eligible
guarantor institution," including (as such terms are defined
therein):
(a) a bank;
(b) a broker, dealer, municipal securities broker or
dealer or government securities broker or dealer;
(c) a credit union;
(d) a national securities exchange, registered
securities association or clearing agency; or
(e) a savings association that is a participant in a
securities transfer association.
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Eligible Institution means:
(a) the corporate trust department of the Trustee, so
long as any of the securities of the Trustee have a
credit rating from each Rating Agency in one of its
generic rating categories which signifies
investment grade, or
(b) a depositary institution organized under the laws
of the United States of America or any State (or
any domestic branch of a foreign bank), which
(i) has either
(A) with respect to any Eligible
Investment having a maturity of
greater than one month, a
long-term unsecured debt rating
of "AAA" by Standard & Poor's and
Fitch and "Aaa" by Moody's, or
(B) with respect to any Eligible
Investment having a maturity one
month or less, a certificate of
deposit rating of "A-l+" by
Standard & Poor's and "Prime-1 "
by Moody's, or any other
long-term, short-term or
certificate of deposit rating
acceptable to the Rating
Agencies, and
(ii) whose deposits are insured by the FDIC.
Eligible Investments mean:
(a) direct obligations of, and obligations fully and
unconditionally guaranteed as to timely payment by,
the United States of America;
(b) demand deposits, time deposits, certificates of
deposit or bankers' acceptances of any depository
institution incorporated under the laws of the
United States of America or any State, or any
domestic branch of a foreign bank, and subject to
the supervision and examination by federal or State
banking or depository institution authorities; so
long as at the time of the investment or
contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt
obligations, other than any obligations thereof
where the rating is based on the credit of a person
other than that depository institution, shall have
a credit rating from each of the Rating Agencies in
the highest investment category granted thereby;
(c) commercial paper or other short-term obligations of
any corporation other than the Seller organized
under the laws of the United States of America or
any State having a rating, at the time of the
investment or contractual commitment to invest
therein, from each of the Rating Agencies in the
highest short-term or long-term investment category
granted thereby;
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(d) investments in money market funds having a rating
from each of the Rating Agencies in the highest
investment category granted thereby (including
funds for which the Trustee or any of its
Affiliates is investment manager or advisor);
(e) repurchase obligations with respect to any security
that is a direct obligation of, or fully guaranteed
by, the United States of America or any agency or
instrumentality thereof the obligations of which
are backed by the full faith and credit of the
United States of America, in either case entered
into with a depository institution or trust
company, acting as principal, described in clause
(b) of the definition of Eligible Institutions;
(f) repurchase obligations with respect to any security
or whole loan entered into with:
(A) a depository institution or trust company,
acting as principal, described in clause
(b) of the definition of Eligible
Institution, except that the rating
referred to in the proviso in clause (b)
of the definition of Eligible Institution
above shall be "A-1+" or higher in the
case of Standard & Poor's,
(B) a broker/dealer, acting as principal,
registered as a broker or dealer under
Section 15 of the Exchange Act, the
unsecured short-term debt obligations of
which are rated "P-1" by Moody's, "F1+" by
Fitch, if rated by Fitch, and at least
"A-1+" by Standard & Poor's at the time of
entering into this repurchase obligation,
or
(C) an unrated broker/dealer, acting as
principal, that is a wholly-owned
subsidiary of a non-bank or bank holding
company the unsecured short-term debt
obligations of which are rated "P-1" by
Moody's, "F1+" by Fitch, if rated by
Fitch, and at least "A-1+" by Standard &
Poor's at the time of purchase; and
(g) any other investment permitted by each of the
Rating Agencies;
provided, that, unless otherwise permitted by the applicable Rating
Agencies, upon the failure of any Eligible Institution to maintain
any applicable rating set forth in this definition or in the
definition of "Eligible Institution," the related investments at such
institution shall be reinvested in other Eligible Investments within
ten (10) days; and, provided further, that no obligation of, or
security issued by, the Seller shall constitute an Eligible
Investment.
Eligible Securities Account means either:
(a) a segregated trust account with an Eligible
Institution or
(b) a segregated trust account with the corporate trust
department of a depositary institution organized
under the laws of the United States of
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America or any State (or any domestic branch of a
foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such
account, so long as any of the securities of such
depositary institution shall have a credit rating
from each Rating Agency in one of its generic
rating categories which signifies investment grade.
Event of Default has the meaning specified in Section 5.1 of the
Indenture.
Excess Curve Payment means, (a) with respect to each Annual
Reconciliation Date, the excess of the Collections Curve Payments
made to the Trustee in respect of each of the 12 Billing Months
beginning 19 Billing Months (or from the first Series Issuance Date,
if less than 19 months have elapsed) before the Billing Month in
which the Reconciliation Date occurs, over the actual TBC
Collections in respect of those Billing Months; and (b) with respect
to each Monthly Reconciliation Date, the excess of the Collections
Curve Payments made to the Trustee in respect of the Billing Month
that is 8 months prior to the Billing Month in which such
Reconciliation Rate occurs, over the actual TBC Collections in
respect of that prior Billing Month.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Executive Officer means, with respect to any corporation, the chief
executive officer, chief operating officer, chief financial officer,
chief information officer, president, executive vice president, any
vice president, the secretary or the treasurer of such corporation;
and with respect to any limited liability company, any manager
thereof.
Expected Sinking Fund Amortization Schedule means, with respect to
each Series or, if applicable, each Class of BGS Transition Bonds,
the Expected Sinking Fund Amortization Schedule for principal
thereof, as specified in the Series Supplement therefor.
Expected Final Payment Date means, with respect to each Series or, if
applicable, each Class of BGS Transition Bonds, the Payment Date
related to the date when all interest and principal is scheduled to
be paid with respect to that Series or Class in accordance with the
Expected Sinking Fund Amortization Schedule, as specified in the
Series Supplement therefor.
FDIC means the Federal Deposit Insurance Corporation or its
successor.
Final Maturity Date means, for each Series or, if applicable, each
Class of BGS Transition Bonds, the Payment Date related to the date
by which all principal of and interest on such Series or Class of BGS
Transition Bonds is required to be paid, as specified in the Series
Supplement therefor.
Financing Issuance means an issuance of a new Series of BGS
Transition Bonds under the Indenture to provide funds to finance the
purchase by the Issuer of Bondable Transition Property.
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Financing Order means the bondable stranded cost rate order issued by
the BPU on July 12, 2005 pursuant to the Competition Act.
Fitch means Fitch, Inc. or its successor.
Formation Documents means, collectively, the Issuer LLC Agreement,
the Issuer Certificate of Formation and any other document pursuant
to which the Issuer is formed or governed, as each may be amended or
supplemented from time to time.
General Subaccount has the meaning specified in Section 8.2(i) of the
Indenture.
Grant means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and ▇▇▇▇▇ ▇ ▇▇▇▇
upon and a security interest in and right of set-off against,
deposit, set over and confirm. A Grant of the Collateral or of any
other agreement or instrument shall include all rights, powers and
options (but none of the obligations) of the Granting party
thereunder, including the immediate and continuing right to claim
for, collect, receive and give receipt for principal, interest and
other payments in respect of the Collateral and all other moneys
payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all
rights and options, to bring Proceedings in the name of the Granting
party or otherwise and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or
with respect thereto.
Holder or BGS Transition Bondholder or Bondholder means the Person in
whose name a BGS Transition Bond of any Series or Class is registered
in the BGS Transition Bond Register.
Indemnification Event means an event which triggers PSE&G's
obligation to indemnify the Issuer and the Trustee, for itself and on
behalf of the BGS Transition Bondholders, and each of their
respective managers, officers, directors and agents, pursuant to
Section 5.1 of the Sale Agreement.
Indemnity Amount means the amount of any indemnification obligation
payable under the Basic Documents.
Indenture means the Indenture dated as of September 23, 2005, between
the Issuer and the Trustee, as the same may be amended and
supplemented from time to time by one or more Supplemental
Indentures, and shall include each Series Supplement and the forms
and terms of the BGS Transition Bonds established thereunder.
Independent means, when used with respect to any specified Person,
that the Person
(a) is in fact independent of the Issuer, any other
obligor upon the BGSTransition Bonds, PSE&G and any
Affiliate of any of the foregoing Persons,
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(b) does not have any direct financial interest or any
material indirect financial interest in the Issuer,
any such other obligor, PSE&G or any Affiliate of
any of the foregoing Persons, and
(c) is not connected with the Issuer, any such other
obligor, PSE&G or any Affiliate of any of the
foregoing Persons as an officer, employee,
promoter, underwriter, trustee, partner, director
or person performing similar functions.
Independent Certificate means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1
of the Indenture, made by an Independent appraiser or other expert
appointed by an Issuer Order and approved by the Trustee in the
exercise of reasonable care, and such opinion or certificate shall
state that the signer has read the definition of "Independent" in
this Appendix A and that the signer is Independent within the meaning
thereof.
Independent Manager has the meaning set forth in the Issuer LLC
Agreement.
Initial Purchase Price has the meaning set forth in Section 2.1 of
the Sale Agreement.
Initial Transfer Date means the Series Issuance Date for the first
Series of BGS Transition Bonds.
Initial Transferred BGS Bondable Transition Property means the BGS
Bondable Transition Property sold by the Seller to the Issuer as of
the Initial Transfer Date pursuant to the Sale Agreement and the ▇▇▇▇
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
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such Person of any general assignment for the
benefit of creditors, or the failure by such Person
generally to pay its debts as such debts become
due, or the taking of action by such Person in
furtherance of any of the foregoing.
Interest means, for any Payment Date for any Series or Class of BGS
Transition Bonds, the sum, without duplication, of:
(a) an amount equal to the amount of interest accrued
at the applicable Interest Rate from the prior
Payment Date with respect to that Series or Class;
(b) any unpaid interest, to the extent permitted by
law, plus any interest accrued on unpaid interest
at the applicable Interest Rate, to the extent
permitted by applicable law; and
(c) if the BGS Transition Bonds have been declared due
and payable, all accrued and unpaid interest
thereon.
Interest Rate means, with respect to each Series or Class of BGS
Transition Bonds, the rate at which interest accrues on the principal
balance of BGS Transition Bonds of such Series or Class, as specified
in the Series Supplement therefor.
Interest Rate Swap Agreement means any ISDA Master Agreement,
together with the related Schedule and Confirmation, between the
Issuer and a Swap Counterparty, as same may be amended or
supplemented from time to time, with respect to any Series or Class
of BGS Transition Bonds.
Issuer means PSE&G Transition Funding II LLC, a Delaware limited
liability company, or its successor under the Indenture or the party
named as such in the Indenture until a successor replaces it and,
thereafter, means the successor.
Issuer Annex means Annex 1 of the Servicing Agreement.
Issuer Certificate of Formation means the Certificate of Formation of
the Issuer, dated July 18, 2005, which was filed with the Delaware
Secretary of State's Office on July 18, 2005, as the same may be
amended or supplemented from time to time.
Issuer LLC Agreement means the Amended and Restated Limited Liability
Company Agreement between the Issuer and PSE&G, as sole Member, dated
as of September 23, 2005, as the same may be amended or supplemented
from time to time.
Issuer Officer's Certificate means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described
in, and otherwise complying with, the applicable requirements of
Section 11.1 of the Indenture, and delivered to the Trustee. Unless
otherwise specified, any reference in the Indenture to an Officer's
Certificate shall be to an Officer's Certificate of any Authorized
Officer of the Issuer.
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Issuer Opinion of Counsel means one or more written opinions of
counsel who may, except as otherwise expressly provided in the
Indenture, be employees of or counsel to the Issuer or the Seller and
who shall be reasonably satisfactory to the Trustee, and which
opinion or opinions shall be addressed to the Trustee, and shall be
in a form reasonably satisfactory to the Trustee.
Issuer Order or Issuer Request means a written order or request,
respectively, signed in the name of the Issuer by any one of its
Authorized Officers and delivered to the Trustee.
Legal Defeasance Option has the meaning specified in Section 4.1(b)
of the Indenture.
Lien means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.
Losses means collectively, any and all liabilities, obligations,
losses, damages, payments, costs or expenses of any kind whatsoever.
Manager has the meaning set forth in the Issuer LLC Agreement.
Market Transition Charge means the market transition charge that
PSE&G may impose on Customers pursuant to the Competition Act and the
Restructuring Order.
Member means PSE&G, as the sole member of the Issuer, in its capacity
as such member under the Issuer LLC Agreement.
Monthly Reconciliation Date means the last Business Day of each month
commencing with November 2014 (or such earlier month as the Servicer
shall have specified to the Issuer and the Trustee by not less than
30 days prior written notice).
Monthly Remittance Date means the 13th day of each calendar month (or
if such day is not a Business Day, the preceding Business Day)
beginning in October 2005.
Monthly Servicing Fee means the fee payable to the Servicer on a
monthly basis for services rendered, in accordance with Section 5.07
of the Servicing Agreement.
Moody's means ▇▇▇▇▇'▇ Investors Service Inc. or its successor.
MTC-Tax means the tax which PSE&G is entitled to impose under the
Restructuring Order.
New Jersey UCC means the Uniform Commercial Code, as in effect in the
State of New Jersey, as amended from time to time.
Officers' Certificate means a certificate signed by
(a) the chairman of the board, the president, the vice
chairman of the board, any executive vice president
or any vice president; and
(b) the treasurer, any assistant treasurer, the
secretary or any assistant secretary of PSE&G.
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Operating Expenses means, with respect to the Issuer, all fees,
costs, expenses and indemnity payments owed by the Issuer, including,
without limitation, all amounts owed by the Issuer to the Trustee,
the Monthly Servicing Fee, the fees and expenses payable by the
Issuer to the Administrator under the Administration Agreement, the
fees and expenses payable by the Issuer to the Independent Managers
and Special Members of the Issuer, fees of the Rating Agencies, legal
fees and expenses of the Servicer pursuant to Section 3.10 of the
Servicing Agreement, legal and accounting fees, costs and expenses of
the Issuer, and legal, accounting or other fees, costs and expenses
of the Seller (including, without limitation, any costs and expenses
incurred by the Seller pursuant to Section 4.8 of the Sale Agreement)
under or in connection with the Basic Documents or the Financing
Order.
Opinion of Counsel means one or more written opinions of counsel who
may be an employee of or counsel to PSE&G, the Issuer or any other
Person (as the context may require), which counsel shall be
reasonably acceptable to the Trustee, the Issuer or the Rating
Agencies, as applicable, and which shall be in form reasonably
satisfactory to the Trustee, if applicable.
Outstanding with respect to BGS Transition Bonds means, as of the
date of determination, all BGS Transition Bonds theretofore
authenticated and delivered under the Indenture except:
(a) BGS Transition Bonds theretofore canceled by the
BGS Transition Bond Registrar or delivered to the
BGS Transition Bond Registrar for cancellation;
(b) BGS Transition Bonds or portions thereof the
payment for which money in the necessary amount has
been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such BGS
Transition Bonds; and
(c) BGS Transition Bonds in exchange for or in lieu of
other BGS Transition Bonds which have been
authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Trustee
is presented that any such BGS Transition Bonds are
held by a protected purchaser;
provided that in determining whether the Holders of the requisite
Outstanding Amount of the BGS Transition Bonds or any Series or Class
thereof have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, BGS
Transition Bonds owned by the Issuer, any other obligor upon the BGS
Transition Bonds, PSE&G or any Affiliate of any of the foregoing
Persons shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only BGS Transition Bonds that the Trustee
knows to be so owned shall be so disregarded. BGS Transition Bonds so
owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such
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BGS Transition Bonds and that the pledgee is not the Issuer, any
other obligor upon the BGS Transition Bonds, PSE&G or any Affiliate
of any of the foregoing Persons.
Outstanding Amount means the aggregate principal amount of all
Outstanding BGS Transition Bonds or, if the context requires, all
Outstanding BGS Transition Bonds of a Series or Class Outstanding at
the date of determination.
Overcollateralization means, with respect to any Payment Date, an
amount that, if deposited to the Overcollateralization Subaccount,
would cause the balance in such subaccount to equal the Scheduled
Overcollateralization Level for such Payment Date.
Overcollateralization Amount means, with respect to any Series of BGS
Transition Bonds, the amount specified as such in the Series
Supplement therefor.
Overcollateralization Subaccount has the meaning specified in Section
8.2(i) of the Indenture.
Paying Agent means the Trustee or any other Person, including any
Person appointed pursuant to Section 3.2(b) of the Indenture, that
meets the eligibility standards for the Trustee specified in Section
6.11 of the Indenture and is authorized by the Issuer to make the
payments of principal of or premium, if any, or interest on the BGS
Transition Bonds on behalf of the Issuer.
Payment Date means, with respect to each Series or Class of BGS
Transition Bonds, each date or dates respectively specified as
Payment Dates for such Series or Class in the Series Supplement
therefor.
Person means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any
beneficiary thereof), business trust, limited liability company,
unincorporated organization or government or any agency or political
subdivision thereof.
Petition means the petition filed by PSE&G with the BPU, dated July
9, 2003.
Predecessor BGS Transition Bond means, with respect to any particular
BGS Transition Bond, every previous BGS Transition Bond evidencing
all or a portion of the same debt as that evidenced by such
particular BGS Transition Bond; and, for the purpose of this
definition, any BGS Transition Bond authenticated and delivered under
Section 2.6 of the Indenture in lieu of a mutilated, lost, destroyed
or stolen BGS Transition Bond shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen BGS Transition Bond.
Principal means, with respect to any Payment Date and each Series or
Class of BGS Transition Bonds:
(a) the amount of principal scheduled to be paid on
such Payment Date in accordance with the Expected
Sinking Fund Amortization Schedule;
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(b) the amount of principal due on the Final Maturity
Date of any Series or Class on such Payment Date;
(c) the amount of principal due as a result of the
occurrence and continuance of an Event of Default
and acceleration of the BGS Transition Bonds; and
(d) any overdue payments of principal.
Proceeding means any suit in equity, action at law or other judicial
or administrative proceeding.
Projected BGS Transition Bond Balance means, as of any date, the sum
of the amounts provided for in the Expected Sinking Fund Amortization
Schedules for each outstanding Series of BGS Transition Bonds as of
such date.
PSE&G or Seller means Public Service Electric and Gas Company, a New
Jersey corporation, or its successor.
Rating Agency means, as of any date, any rating agency rating the BGS
Transition Bonds of any Class or Series at the time of issuance
thereof at the request of the Issuer. If no such organization or
successor is any longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization or other
comparable Person designated by the Issuer, notice of which
designation shall be given to the Trustee, the Member and the
Servicer.
Rating Agency Condition means, with respect to any action, the
notification by the Trustee to each Rating Agency of such action and
the notification from each of Fitch and S&P to the Trustee and the
Issuer that such action will not result in a reduction or withdrawal
of the then current rating by such Rating Agency of any Outstanding
Series or Class of BGS Transition Bonds.
Reconciliation Date means an Annual Reconciliation Date or a Monthly
Reconciliation Date, as appropriate.
Record Date has the meaning set forth in each Supplemental Indenture.
Registered Holder means, as of any date, the Person in whose name a
BGS Transition Bond is registered in the BGS Transition Bond Register
on such date.
Released Parties has the meaning specified in Section 5.02(e) of the
Servicing Agreement.
Remittance Date means a Daily Remittance Date or a Monthly Remittance
Date, as applicable.
Required Capital Amount means with respect to any Series, the amount
required to be deposited in the Capital Subaccount on the Series
Issuance Date of such Series, as specified in the related Series
Supplement.
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Reserve Subaccount has the meaning specified in Section 8.2(i) of the
Indenture.
Responsible Officer means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any vice
president, assistant vice president, secretary, assistant secretary,
or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers
and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
Restructuring Order means the order of the BPU issued on August 24,
1999 pursuant to Section 13 of the Competition Act.
Retiring Trustee means a Trustee that resigns or vacates the office
of Trustee for any reason.
Sale Agreement means the BGS Bondable Transition Property Sale
Agreement dated September 23, 2005 between the Seller and the Issuer,
as the same may be amended or supplemented from time to time.
Scheduled Overcollateralization Level means, with respect to each
Series and any Payment Date, the amount with respect to such Series
set forth as such in Schedule 1 of the Indenture, as such Schedule
has been adjusted in accordance with Section 3.19 of the Indenture to
reflect defeasances of BGS Transition Bonds and issuances of
additional Series of BGS Transition Bonds.
Securities Account Control Agreement means the securities account
control agreement by and between PSE&G Transition Funding II LLC, as
debtor, the Trustee as the Secured Party and The Bank of New York, in
its capacity as securities intermediary thereunder. Seller means
PSE&G, in its capacity as seller of the BGS Bondable Transition
Property to the Issuer pursuant to the Sale Agreement.
Series means any series of BGS Transition Bonds issued by the Issuer
and authenticated by the Trustee pursuant to the Indenture, as
specified in the Series Supplement therefor.
Series Capital Subaccount has the meaning specified in Section 8.2(i)
of the Indenture.
Series Final Maturity Date means the Final Maturity Date for a
Series.
Series Issuance Date means, with respect to any Series, the date on
which the BGS Transition Bonds of such Series are to be originally
issued in accordance with Section 2.10 of the Indenture and the
Series Supplement for such Series.
Series Overcollateralization Subaccount has the meaning specified in
Section 8.2(i) of the Indenture.
Series Subaccount has the meaning specified in Section 8.2(i) of the
Indenture.
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Series Supplement means an indenture supplemental to the Indenture
that authorizes a particular Series of BGS Transition Bonds, as the
same may be amended or supplemented from time to time.
Servicer means PSE&G, as the servicer of the BGS Bondable Transition
Property, and each successor to PSE&G (in the same capacity) pursuant
to Section 5.03 or 6.04 of the Servicing Agreement.
Servicer Default means an event specified in Section 6.01 of the
Servicing Agreement.
Servicing Agreement means the BGS Bondable Transition Property
Servicing Agreement dated as of September 23, 2005, between the
Issuer and the Servicer, as the same may be amended and supplemented
from time to time.
Servicing Procedures means those procedures set forth in Exhibit A to
the Servicing Agreement.
Special Member has the meaning set forth in the Issuer LLC Agreement.
Standard & Poor's means Standard & Poor's, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or its successor.
Subaccount means any of the subaccounts of the Collection Account
specified in Section 8.2 of the Indenture.
Subsequent Sale means the sale of additional BGS Bondable Transition
Property by the Seller to the Issuer after the Initial Transfer Date,
subject to the satisfaction of the conditions specified in the Sale
Agreement and the Indenture.
Subsequent Transfer Date means the date that a sale of Subsequent
Transferred BGS Bondable Transition Property will be effective, as
specified in a written notice provided by the Seller to the Issuer
pursuant to the Sale Agreement.
Subsequent Transferred BGS Bondable Transition Property means BGS
Bondable Transition Property sold by the Seller to the Issuer as of a
Subsequent Transfer Date pursuant to the Sale Agreement and the ▇▇▇▇
of Sale delivered on or prior to the 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 of the Servicer under the
Servicing Agreement.
Supplemental Indenture means a supplemental indenture entered into by
the Issuer and the Trustee pursuant to Article IX of the Indenture.
Swap Counterparty means, with respect to any Interest Rate Swap
Agreement, the swap counterparty under that Interest Rate Swap
Agreement.
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TBC Collections means amounts received by the Servicer in respect of
the BGS Transition Bond Charge.
Termination Notice has the meaning specified in Section 6.01 of the
Servicing Agreement.
Third Party means any third party, including any electric generation
supplier, providing billing or metering services, licensed by the BPU
pursuant to relevant provisions of the Competition Act, the BPU
Regulations and the Financing Order.
Transfer Date means the Initial Transfer Date or any Subsequent
Transfer Date, as applicable.
Transferred BGS Bondable Transition Property means BGS Bondable
Transition Property which has been sold, assigned and transferred to
the Issuer pursuant to the Sale Agreement.
Trust Indenture Act or TIA means the Trust Indenture Act of 1939, as
in force on the date hereof, unless otherwise specifically provided.
Trustee means The Bank of New York, a New York banking corporation,
or its successor, as trustee under the Indenture and in the capacity
specified in the first paragraph of the Indenture, or any successor
Trustee under the Indenture.
Underwriting Agreement means the Underwriting Agreement dated as of
September 9, 2005, among the Seller, the Issuer and Credit Suisse
First Boston LLC, on behalf of itself and as the representative of
the several underwriters named therein.
U.S. Government Obligations means direct obligations (or certificates
representing an ownership interest in such obligations) of the United
States of America (including any agency or instrumentality thereof)
for the payment of which the full faith and credit of the United
States of America is pledged and which are not callable at the
issuer's option.
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