Unassociated Document


    


     

    EXHIBIT
      10.1

     

    EXECUTION
      COPY

     

    


     

    


     

    


     

    SALE
      AGREEMENT

     

    BONDABLE
      TRANSITION
      PROPERTY SALE AGREEMENT

     

    between

     

    JCP&L
      TRANSITION
      FUNDING II LLC

     

    Issuer

     

    and

     

    JERSEY
      CENTRAL POWER
& LIGHT COMPANY

     

    Seller

     

    Dated
      as of August
      10, 2006

     

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    TABLE
      OF
      CONTENTS

    


    ARTICLE
      I

    DEFINITIONS

    
      	 	 	
              Page

            
	
              Section
                1.01

            	
              Definitions

            	
              1

            
	
              Section
                1.02

            	
              Other
                Definitional Purposes

            	
              1

            
	 	 	 
	 	
              ARTICLE
                II

            	 
	 	
              CONVEYANCE
                OF
                TRANSFERRED BONDABLE TRANSITION PROPERTY

            	 
	 	 	 
	
              Section
                2.01

            	
              Conveyance
                of
                Initial Transferred Bondable Transition Property

            	
              3

            
	
              Section
                2.02

            	
              Conditions
                to
                Conveyance of Bondable Transition Property

            	
              4

            
	 	 	 
	 	
              ARTICLE
                III

            	 
	 	
              REPRESENTATIONS
                AND WARRANTIES OF THE SELLER

            	 
	 	 	 
	
              Section
                3.01

            	
              Organization
                and Good Standing

            	
              6

            
	
              Section
                3.02

            	
              Due
                Qualification

            	
              6

            
	
              Section
                3.03

            	
              Power
                and
                Authority

            	
              6

            
	
              Section
                3.04

            	
              Bindling
                Obligation

            	
              6

            
	
              Section
                3.05

            	
              No
                Violation

            	
              7

            
	
              Section
                3.06

            	
              No
                Proceedings

            	
              7

            
	
              Section
                3.07

            	
              Approvals

            	
              7

            
	
              Section
                3.08

            	
              The
                Transferred Bondable Transition Property

            	
              8

            
	
              Section
                3.09

            	
              Solvency

            	
              10

            
	 	 	 
	 	
              ARTICLE
                IV

            	 
	 	
              COVENANTS
                OF
                THE SELLER

            	 
	 	 	 
	
              Section
                4.01

            	
              Seller’s
                Existence

            	
              11

            
	
              Section
                4.02

            	
              No
                Liens or
                Conveyances

            	
              11

            
	
              Section
                4.03

            	
              Use
                of
                Proceeds

            	
              11

            
	
              Section
                4.04

            	
              Delivery
                of
                Collections

            	
              11

            
	
              Section
                4.05

            	
              Notice
                of
                Liens

            	
              11

            
	
              Section
                4.06

            	
              Compliance
                with Law

            	
              11

            
	
              Section
                4.07

            	
              Covenants
                Related to Transferred Bondable Transition Property

            	
              12

            
	
              Section
                4.08

            	
              Indemnification
                Notice

            	
              13

            
	
              Section
                4.09

            	
              Protection
                of
                Title

            	
              13

            
	
              Section
                4.10

            	
              Taxes

            	
              14

            
	 	 	 
	 	
              ARTICLE
                V

            	 
	
                

            	
              ADDITIONAL
                UNDERTAKINGS OF THE SELLER

            	 
	
               Section
                5.01

            	
               Liability
                of the Seller; Indemnities

            	
               14

            
	
               Section
                5.02

            	
               Merger
                or Consolidation of, or Assumption of the Obligations of, the
                Seller

            	
               15

            
	
               Section
                5.03

            	
               Limitation
                on Liability of the Seller and Others

            	
               16

            
	 	 	 
	
                

            	
              ARTICLE
                VI

            	 
	
                

            	
              MISCELLANEOUS
                PROVISIONS

            	 
	
               Section
                6.01

            	
               Amendment

            	
               17

            
	
               Section
                6.02

            	
               Notices

            	
               17

            
	
               Section
                6.03

            	
               Assignment
                by Seller

            	
               18

            
	
               Section
                6.04

            	
               Assignment
                to Trustee

            	
               18

            
	
               Section
                6.05

            	
               Limitations
                on Rights of Others

            	
               18

            
	
               Section
                6.06

            	
               Severability

            	
               18

            
	
               Section
                6.07

            	
               Separate
                Counterparts

            	
               18

            
	
               Section
                6.08

            	
               Headings

            	
               18

            
	
               Section
                6.09

            	
               Governing
                Law

            	
               18

            
	
               Section
                6.10

            	
               Nonpetition
                Covenant

            	
               18

            
	
               

            	
               

            	
               

            
	
               EXHIBIT
                A 

            	
              Bill
                of
                Sale 

            	
               

            
	
               EXHIBIT
                B 

            	
               Officers'
                Certificate

            	
               

            
	
               

            	
               

            	
               

            
	
               APPENDIX
                A

            	
              Master
                Definitions

            	 


    

    



    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    


     


    BONDABLE
      TRANSITION PROPERTY SALE AGREEMENT,
      dated as of August
      10, 2006, by and between JCP&L
      TRANSITION FUNDING II LLC,
      a Delaware limited
      liability company, as Issuer (the “Issuer”), and JERSEY
      CENTRAL POWER & LIGHT COMPANY,
      a New Jersey
      corporation, in its capacity as Seller (the “Seller”) hereunder. 

     

    W
      I T N E S S E T H:

     

    WHEREAS
      the Issuer
      desires to purchase from time to time Bondable Transition Property created
      pursuant to the Competition Act and the Financing Order; 

     

    WHEREAS
      the Seller
      is willing to sell Bondable Transition Property to the Issuer;

     

    WHEREAS
      the Issuer,
      in order to finance the purchase of the Transferred Bondable Transition
      Property, will from time to time issue Transition Bonds under the Indenture;
      and

     

    WHEREAS
      the Issuer,
      to secure its obligations under the Transition Bonds and the Indenture, will
      pledge its right, title and interest in, to and under the Transferred Bondable
      Transition Property to the Trustee for the benefit of the owners of the
      Transition Bonds.

     

    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
      1.01   Definitions.
      Capitalized
      terms used and not otherwise defined herein shall have the meanings assigned
      to
      such terms in Appendix A of the Indenture dated as of August 10, 2006 between
      the Issuer and The Bank of New York, as Trustee.

     

    Section
      1.02   Other
      Definitional Provisions.

     

    (a)
  Non-capitalized
      terms used herein that 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 owners of the
      Transition Bonds.

     

    (b)
  All
      terms defined in
      this Sale Agreement have the defined meanings when used in any certificate
      or
      other document made or delivered pursuant hereto unless otherwise defined
      therein.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c)
  The
      words “hereof”,
“herein”, “hereunder” and words of similar import when used in this Sale
      Agreement refer to this Sale Agreement as a whole and not to any particular
      provision of this Sale Agreement; Article, Section, Schedule and Exhibit
      references contained in this Sale Agreement are references to Articles,
      Sections, Schedules and Exhibits in or to this Sale Agreement unless otherwise
      specified; and the term “including” means “including without
      limitation”.

     

    (d)
  The
      definitions
      contained in this Sale Agreement are applicable to the singular as well as
      the
      plural forms of such terms. 

     

    ARTICLE
      II  

     

    CONVEYANCE
      OF TRANSFERRED BONDABLE TRANSITION PROPERTY

     

    Section
      2.01   Conveyance
      of Initial Transferred Bondable Transition Property.

     

    (a)
  In
      consideration of
      the Issuer’s payment to or upon the order of the Seller of $182,400,000 less the
      underwriting discount, other fees paid to the underwriters and original issue
      discount for the Transition Bonds in the aggregate amount of $1,162,710.52,
      or
      $181,237,289.48 (the “Initial Purchase Price”) by wire transfer of funds
      immediately available on the date hereof to Seller’s account no. 323396496 at
      JPMorgan Chase, New York, New York, routing transit ABA# 021 000 021, subject
      to
      the conditions specified in Section 2.02, the Seller does hereby irrevocably
      sell, transfer, assign and otherwise convey to the Issuer, without recourse
      (subject to the obligations of the Seller herein), all right, title and interest
      of the Seller in, to and under the Initial Transferred Bondable Transition
      Property identified in the Bill of Sale delivered pursuant to Section 2.02(a)
      on
      or prior to the Initial Transfer Date (such sale, transfer, assignment and
      conveyance of the Initial Transferred Bondable Transition Property to include,
      to the fullest extent permitted by the Competition Act, the New Jersey UCC
      and
      the Delaware UCC, and to the extent the Seller has any interest in any thereof,
      the assignment of all revenues, collections, claims, rights, payments, money
      or
      proceeds of or arising from the Transition Bond Charges related to the Initial
      Transferred Bondable Transition Property, as the same may be adjusted from
      time
      to time). Such sale, transfer, assignment and conveyance of the Initial
      Transferred Bondable Transition Property is hereby expressly stated to be a
      sale
      or other absolute transfer from the Seller to the Issuer and, pursuant to
      Section 23(a) of the Competition Act (N.J.S.A. 48:3-72(a)), shall constitute
      a
      sale or other absolute transfer of all of the Seller’s right, title and interest
      in, to and under, and not a borrowing secured by, the Initial Transferred
      Bondable Transition Property. The preceding sentence is the statement referred
      to in Section 23(a) of the Competition Act (N.J.S.A. 48:3-72(a)). The Seller
      agrees and confirms that upon payment of the Initial Purchase Price and the
      execution and delivery of this Sale Agreement and the related Bill of Sale,
      the
      Seller shall have no right, title or interest in, to or under the Initial
      Transferred Bondable Transition Property. The Issuer accepts the transfer and
      assignment of the Initial Transferred Bondable Transition Property from the
      Seller and expressly assumes all of the duties, obligations and liabilities
      incident to ownership of the Initial Transferred Bondable Transition Property,
      and the Seller hereby relinquishes all dominion and control over the Initial
      Transferred Bondable Transition Property to the Issuer. The relationship of
      the
      Issuer and the Seller shall be of buyer and seller, respectively.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (b)
  Subject
      to the
      conditions specified in Section 2.02, the Issuer does hereby purchase the
      Initial Transferred Bondable Transition Property from the Seller for the
      consideration set forth in clause (a) above.

     

    (c)
  The
      Seller and the
      Issuer each acknowledge and agree that the Initial Purchase Price for the
      Initial Transferred Bondable Transition Property sold pursuant to this Sale
      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,
      transfer, assign and convey, and the Issuer may purchase, Subsequent Transferred
      Bondable Transition Property as of Subsequent Transfer Dates, subject to the
      conditions specified in Section 2.02, in exchange for consideration to be agreed
      upon (the “Subsequent Purchase Price”). The Seller and the Issuer hereby agree
      that each such sale, transfer, assignment and conveyance of any Subsequent
      Transferred Bondable Transition Property shall include, to the fullest extent
      permitted by the Competition Act, the New Jersey UCC and the Delaware UCC,
      the
      assignment of all revenues, collections, claims, rights, payments, money or
      proceeds of or arising from the Transition Bond Charges related to the
      Subsequent Transferred Bondable Transition Property, as the same may be adjusted
      from time to time. Such sale, transfer, assignment and conveyance of the
      Subsequent Transferred Bondable Transition Property is hereby expressly stated
      to be a sale and absolute transfer and, pursuant to Section 23(a) (N.J.S.A.
      48:3
      72(a)), of the Competition Act, shall constitute a sale and absolute transfer
      of
      all of the Seller’s right, title and interest in, to and under, and not a
      borrowing secured by, the Subsequent Transferred Bondable Transition Property.
      The preceding sentence is the statement referred to in Section 23(a) (N.J.S.A.
      48:3 72(a)), of the Competition Act. The Seller agrees and confirms that after
      giving effect to any sale contemplated by this clause (d) and the execution
      and
      delivery of the related Bill of Sale, the Seller shall have no right, title
      or
      interest in, to or under the Subsequent Transferred Bondable Transition
      Property. 

     

    (e)
  Notwithstanding
      the
      foregoing, in the event that any sale, transfer, assignment and conveyance
      of
      any Transferred Bondable Transition Property is determined by a court of
      competent jurisdiction not to be a true and absolute sale as contemplated by
      the
      parties hereto and by the Competition Act, then such sale, transfer, assignment
      and conveyance shall be treated as a pledge of such Transferred Bondable
      Transition Property and the Seller shall be deemed to have granted, and does
      hereby grant, as of the date hereof, a security interest in all of Seller’s
      right, title and interest in such Transferred Bondable Transition Property
      to
      the Issuer to secure the payment obligation incurred by the Seller in the amount
      paid by the Issuer for the Transferred Bondable Transition
      Property.

     

    Section
      2.02   Conditions
      to Conveyance of Bondable Transition Property.
      The
      obligation of the Seller to sell, and the obligation of the Issuer to purchase,
      Bondable Transition Property upon any Transfer Date shall be subject to and
      conditioned upon the satisfaction or waiver of each of the following
      conditions:

     

    (a)
  on
      or prior to the
      Transfer Date, the Seller shall deliver to the Issuer a duly executed Bill
      of
      Sale identifying the Bondable Transition Property to be conveyed as of that
      date, substantially in the form of Exhibit A;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b)
  as
      of the Transfer
      Date, no breach by the Seller of its representations, warranties or covenants
      in
      this Sale Agreement shall exist and the Seller shall have delivered to the
      Issuer and the Trustee an Officers’ Certificate to such effect in substantially
      the form and substance as set forth in Exhibit B 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
      Bondable Transition Property to be conveyed on such date; and

     

    (ii)  all
      conditions
      precedent to the issuance of one or more Series of Transition Bonds set forth
      in
      the Indenture intended to provide such funds shall have been satisfied or waived
      by the parties thereto; 

     

    (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 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 all actions required for the Issuer
      to
      grant to the Trustee a valid perfected security interest, which once perfected,
      will be first priority in the Collateral and maintain such security interest
      as
      of such date, including any filings under the New Jersey UCC and the Delaware
      UCC;

     

    (e)
  in
      the case of any
      sale of Subsequent Transferred Bondable Transition Property only, the Seller
      shall have provided the Issuer and each Rating Agency with a notice specifying
      the Subsequent Transfer Date for the Subsequent Transferred Bondable Transition
      Property not later than ten days prior to such Subsequent Transfer Date;


     

    (f)
  the
      Seller shall
      have delivered to each Rating Agency any Opinions of Counsel requested by the
      Rating Agencies;

     

    (g)
  the
      Seller shall
      have delivered to the Trustee and the Issuer an Officers’ Certificate in
      substantially the form and substance as set forth in Exhibit B confirming the
      satisfaction of each condition precedent specified in this Section 2.02;
      and

     

    (h)
  the
      Seller shall
      have received the Initial Purchase Price or the Subsequent Purchase Price,
      as
      applicable, in funds immediately available on the applicable Transfer
      Date.

     

    
      
        
        

      

      
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    ARTICLE
      III  

     

    REPRESENTATIONS
      AND WARRANTIES OF THE SELLER

     

    As
      of each Transfer Date, the Seller makes the following representations and
      warranties on which the Issuer has relied and will rely in acquiring Transferred
      Bondable Transition Property. The following representations and warranties
      are
      made under existing law as in effect as of such 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 such Transfer Date. The
      representations and warranties shall survive the sale of Transferred Bondable
      Transition Property to the Issuer and the pledge thereof to the Trustee pursuant
      to the Indenture. The Seller agrees that the Issuer will have the right to
      assign the right to enforce the following representations and warranties to
      the
      Trustee for the benefit of the Transition Bondholders. The Seller agrees that
      the representations and warranties inure to the benefit of the Issuer and the
      Trustee for the benefit of the Transition Bondholders.

     

    Section
      3.01   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 the full corporate power and authority to own its properties
      and conduct its business as currently owned and conducted.

     

    Section
      3.02   Due
      Qualification.
      The Seller
      is duly qualified to do business as a foreign corporation in good standing,
      and
      has obtained all necessary licenses and approvals, in all jurisdictions in
      which
      the ownership or lease of its property or the conduct of its business requires
      such 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
      3.03   Power
      and
      Authority.
      The Seller
      has the full corporate power and authority to execute and deliver this Sale
      Agreement and to carry out its terms; the Seller has the full corporate power
      and authority to own the Bondable Transition Property and to sell, transfer,
      assign and otherwise convey the Transferred Bondable Transition Property to
      the
      Issuer, and the Seller has duly authorized such sale, transfer, assignment
      and
      conveyance to the Issuer by all necessary corporate action; and the execution,
      delivery and performance of this Sale Agreement have been duly authorized by
      the
      Seller by all necessary corporate action.

     

    Section
      3.04   Binding
      Obligation.
      Each of
      this Sale Agreement and the Bill of Sale constitutes a legal, valid and binding
      obligation enforceable against the Seller in accordance with its terms, subject
      to bankruptcy, receivership, insolvency, fraudulent transfer, reorganization,
      moratorium or other laws affecting creditors’ rights generally from time to time
      in effect and to general principles of equity (regardless of whether considered
      in a proceeding in equity or at law).

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Section
      3.05   No
      Violation.
      The
      execution and delivery by the Seller of each of this Sale Agreement and the
      Bill
      of Sale, the performance by the Seller of the transactions contemplated by
      each
      of this Sale Agreement and the Bill of Sale and the fulfillment by the Seller
      of
      the terms of this Sale Agreement and the Bill of Sale do not and will not
      conflict with, result in any breach of any of the terms and provisions of,
      or
      constitute (with or without notice or lapse of time) a default under, the
      Seller’s organizational documents or any indenture, agreement or other
      instrument to which the Seller is a party or by which the Seller is bound,
      or
      result in the creation or imposition of any lien upon any of the Seller’s
      properties pursuant to the terms of any such indenture, agreement or other
      instrument, except as contemplated by each of the Basic Documents, or 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. 

     

    Section
      3.06   No
      Proceedings.
      Except as
      disclosed in the prospectus dated July 31, 2006 and the related prospectus
      supplement dated August 4, 2006, of the Issuer, relating to the Transition
      Bonds
      (together, the “Prospectus”), there are no proceedings or investigations pending
      or, to the Seller’s best knowledge, threatened, before any court, federal or
      State regulatory body, administrative agency or other governmental
      instrumentality having jurisdiction over the Seller or its
      properties:

     

    (a)
  asserting
      the
      invalidity of any of the Basic Documents or the Transition Bonds;

     

    (b)
  seeking
      to prevent
      the issuance of the Transition Bonds or the consummation of any of the
      transactions contemplated by the Basic Documents or the Transition
      Bonds;

     

    (c)
  seeking
      any
      determination or ruling that could reasonably be expected to materially and
      adversely affect the performance by the Seller or the Issuer of their respective
      obligations under, or the validity or enforceability of, the Basic Documents
      or
      the Transition Bonds;

     

    (d)
  challenging
      the
      Seller’s treatment of the Transition Bonds as debt of the Seller for federal and
      State income tax purposes; or

     

    (e) challenging
      the
      Competition Act, the Financing Order or the Restructuring Order (insofar as
      it
      relates to the sale, assignment or transfer of the Transferred Bondable
      Transition Property and the sale of the Transition Bonds).

     

    Section
      3.07   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 and the Issuer of
      this
      Sale Agreement, the performance by the Seller and the Issuer of the transactions
      contemplated hereby or the fulfillment by the Seller and the Issuer of the
      terms
      hereof, except those that have been obtained or made.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Section
      3.08   The
      Transferred Bondable Transition Property.
      

     

    (a)
  Information.
      All information
      provided by the Seller to the Issuer with respect to the Transferred 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 Bondable Transition Property from the Seller to the
      Issuer; upon execution and delivery of this Sale Agreement and the related
      Bill
      of Sale, the Seller will have no right, title or interest in, to or under the
      Transferred Bondable Transition Property; and the Transferred 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 Bondable Transition Property sold to the Issuer
      on
      the Transfer Date; and upon the execution and delivery of this Sale Agreement
      and the related Bill of Sale, the Transferred 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
      Secretary of State and the Delaware Secretary of State under the New Jersey
      UCC
      and the Delaware UCC, respectively, necessary in any jurisdiction to give the
      Issuer a valid perfected ownership interest (and a valid perfected security
      interest, that when perfected will be first priority, pursuant to Section
      2.01(e) hereof) in the Transferred Bondable Transition Property and to grant
      to
      the Trustee a valid perfected security interest that when perfected will be
      first priority in the Transferred Bondable Transition Property, free and clear
      of all Liens of the Seller or anyone else, other than the Issuer or the Trustee,
      have been taken or made. 

     

    (d)
        Financing
      Order
      Irrevocable; Designee Certification; Process Valid; No Litigation;
      Etc.

     

    (i)(A)The
      Financing Order,
      as issued on June 8, 2006, 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 Transition Bonds
      will be in full force and effect, final and non-appealable.

     

    (B) The
      Designee
      Certification has been filed with the BPU in accordance with the Competition
      Act
      and the Financing Order.

     

    (ii)  As
      of the Series
      Issuance Date, the 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 Transition Bond Charge authorized
      therein, subject to the periodic Transition Bond Charge Adjustments

     

    (iii)  
      authorized in the
      Financing Order, have become irrevocable and, upon issuance, each Advice Letter
      will be irrevocable, final and uncontestable.

     

    (iv)  

     

    (A)
      Under the Competition Act, the State of New Jersey may not limit, alter or
      impair the Transferred Bondable Transition Property or other rights vested
      in
      the Seller, the Issuer and the Trustee (for the benefit of the Transition
      Bondholders) pursuant to the Financing Order until the Transition Bonds are
      fully paid and discharged, or in any way limit, alter, impair or reduce the
      value or amount of the Transferred Bondable Transition Property as approved
      by
      the BPU pursuant to the Financing Order; and 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (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, absent a demonstration that
      such action was necessary to serve a significant and legitimate public purpose,
      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 Bondable Transition Property or other rights vested in
      the
      Transition Bondholders pursuant to the Financing Order, or substantially limit,
      alter, impair or reduce the value or amount of the 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
      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 Transition Bondholders in the Bondable Transition Property
      and
      deprive the Transition Bondholders of their reasonable expectations arising
      from
      their investments in the Transition Bonds. The Seller, however, does not
      represent or warrant that, even if a court were to award just compensation,
      it
      would be sufficient to pay the full amount of principal of and interest on
      the
      Transition Bonds.

     

    (v)  There
      is no order by
      any court providing for the revocation, alteration, limitation or other
      impairment of the Competition Act, the Financing Order, the Restructuring Order
      (insofar as it relates to the sale of the Transferred Bondable Transition
      Property), any Advice Letter, the Transferred Bondable Transition Property
      or
      the Transition Bond Charge or any rights arising under any of the foregoing
      or
      to enjoin the performance of any obligations under the Financing
      Order.

     

    (vi)  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, sale, transfer,
      assignment or conveyance of the Transferred Bondable Transition Property, except
      those that have been obtained or made.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (e)
  Assumptions.
      The assumptions
      used in calculating the Transition Bond Charge in any Advice Letter delivered
      by
      the Seller to the BPU pursuant to the Financing Order are reasonable and made
      in
      good faith. Notwithstanding the foregoing, the Seller makes no representation
      or
      warranty, express or implied, that the assumptions used in calculating the
      Transition Bond Charge will in fact be realized.

     

    (f)
        Creation
      of
      Transferred Bondable Transition Property. 

     

    (i)  For
      purposes of the
      Competition Act, the New Jersey UCC and the Delaware UCC, the Transferred
      Bondable Transition Property, upon transfer thereof to the Issuer, will
      constitute a presently existing property right;

     

    (ii)  the
      Bondable
      Transition Property includes, without limitation, (A) the irrevocable right
      of the Seller to charge, collect and receive, and be paid from collections
      of,
      the Transition Bond Charge in the amounts 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 all rights to obtain periodic adjustments of the
      Transition Bond Charge pursuant to the Competition Act, and all revenues,
      collections, payments, money and proceeds arising under, or with respect to,
      all
      of the foregoing; 

     

    (iii)  the
      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 Transition Bond Charge, has become
      irrevocable. 

     

    Section
      3.09   Solvency.
      After giving effect
      to the sale, transfer, assignment and conveyance of any Transferred 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 portion of its 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 does not believe that
      it
      will incur, indebtedness that it will not be able to repay at its
      maturity.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV  

     

    COVENANTS
      OF
      THE SELLER

     

    The
      Seller makes the
      following covenants and agrees that these covenants inure to the benefit of
      the
      Issuer and the Trustee for the benefit of the Transition
      Bondholders.

     

    Section
      4.01   Seller’s
      Existence.
      Except as provided
      in Section 5.02 hereof, and for so long as any of the Transition Bonds are
      outstanding, the Seller shall keep in full force and effect its existence as
      a
      corporation and remain in good standing under the laws of the 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 Sale Agreement and each other
      instrument or agreement to which the Seller is a party necessary to the proper
      administration of this Sale Agreement and the transactions contemplated
      hereby.

     

    Section
      4.02   No
      Liens or
      Conveyances.
      Except for the
      sales, transfers, assignments and conveyances hereunder, the Seller shall not
      sell, pledge, assign, transfer or otherwise convey to any other Person, or
      grant, create, incur, assume or suffer to exist any Lien on, any of the
      Transferred Bondable Transition Property, whether now existing or hereafter
      created, or any interest therein. The Seller shall not at any time assert any
      Lien against or with respect to any Transferred Bondable Transition Property,
      and shall defend the right, title and interest of the Issuer, and upon the
      pledge of the Issuer to the Trustee, the Trustee’s right, title and interest in,
      to and under the Transferred Bondable Transition Property, whether now existing
      or hereafter created, against all claims of third parties claiming through
      or
      under the Seller. The costs of any such defense shall be reimbursed by the
      Issuer to the Seller from amounts on deposit in the Collection Account as an
      Operating Expense.

     

    Section
      4.03   Use
      of
      Proceeds.
      The Seller shall
      use the proceeds from the sale of the Bondable Transition Property in accordance
      with the Financing Order and the Competition Act.

     

    Section
      4.04   Delivery
      of
      Collections.
      In the event that
      the Seller is no longer acting as the Servicer under the Servicing Agreement,
      if
      the Seller receives collections of the Transition Bond Charge with respect
      to
      the Transferred Bondable Transition Property or the proceeds thereof, the Seller
      shall pay the Servicer, on behalf of the Issuer, all payments received by the
      Seller in respect thereof as soon as practicable after receipt thereof by the
      Seller, but in no event later than two Business Days after such
      receipt.

     

    Section
      4.05   Notice
      of
      Liens.
      The Seller shall
      notify the Issuer and the Trustee promptly after becoming aware of any Lien
      on
      any Transferred Bondable Transition Property other than the conveyances
      hereunder or under the Indenture.

     

    Section
      4.06   Compliance
      with Law.
      The Seller shall
      comply with its organizational or governing documents and all laws, treaties,
      rules, regulations and determinations of any governmental instrumentality
      applicable to the Seller, except to the extent that failure to so comply would
      not adversely affect the Issuer’s or the Trustee’s interests in the Transferred
      Bondable Transition Property or under any of the Basic Documents or the Seller’s
      performance of its obligations hereunder or under any other Basic Document
      to
      which Seller is a party. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    Section
      4.07   Covenants
      Related to Transferred Bondable Transition Property.

     

    (a)
  So
      long as any of
      the Transition Bonds are Outstanding, the Seller shall:

     

    (i)  treat
      the Transition
      Bonds as debt of the Issuer and not of the Seller, except for financial
      accounting, State or federal regulatory or tax reporting purposes;

     

    (ii)  clearly
      disclose in
      its financial statements that it is not the owner of the Transferred Bondable
      Transition Property and that the assets of the Issuer are not available to
      pay
      creditors of the Seller or any of its Affiliates (other than the Issuer);


     

    (iii)  clearly
      disclose all
      transactions between the Seller and the Issuer and the effects thereof in
      accordance with generally accepted accounting principles; and

     

    (iv)  not
      own or purchase
      any Transition Bonds. 

     

    (b)
  The
      Seller agrees
      that upon the sale, transfer, assignment and conveyance by the Seller of the
      Transferred Bondable Transition Property to the Issuer pursuant to this Sale
      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 Bondable Transition Property (other
      than
      the rights exclusively conferred upon an electric public utility as set forth
      in
      the Competition Act), including the right to collect any amounts payable by
      any
      Customer or Third Party in respect of such Transferred 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 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 Transition Bonds are Outstanding: 

     

    (i)  in
      all proceedings
      relating directly or indirectly to the Transferred Bondable Transition Property,
      the Seller shall (A) affirmatively certify and confirm that it has sold the
      Transferred Bondable Transition Property to the Issuer (other than for financial
      accounting, State or federal regulatory or tax purposes) and (B) not make any
      statement or reference in respect of the Transferred Bondable Transition
      Property that is inconsistent with the ownership thereof by the Issuer (other
      than for financial accounting, State or federal regulatory or tax reporting
      purposes); and

     

    (ii)  the
      Seller shall not
      take any action in respect of the Transferred Bondable Transition Property
      except as contemplated by the Basic Documents.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Section
      4.08   Indemnification
      Notice.
      The Seller shall
      deliver an Officers’ Certificate to the Issuer and Trustee promptly after having
      obtained knowledge of the occurrence of any event which requires or which,
      with
      the giving or notice or the passage of time or both, would require the Seller
      to
      make any indemnification payment pursuant to this Sale Agreement.

     

    Section
      4.09   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 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 Bondable Transition
      Property by the Seller to the Issuer and the pledge of the Transferred Bondable
      Transition Property by the Issuer to the Trustee. The Seller shall deliver
      (or
      cause to be delivered) to the Issuer and the Trustee file-stamped copies of,
      or
      filing receipts for, any document filed as provided above, as soon as available
      following such filing. The Seller shall institute any action or proceeding
      necessary to compel the performance by the BPU or the State of New Jersey of
      any
      of their obligations or duties under the Competition Act or the 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 Trustee for the benefit of the Transition Bondholders
                from
                claims, State actions or other actions or proceedings of third parties
                which, if successfully pursued, would result in a breach of any
                representation or warranty set forth in Article III of this Sale
                Agreement
                or of any covenant set forth in this Article IV;
                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, the
                Restructuring Order (to the extent it affects the rights of Transition
                Bondholders or the validity or value of the Bondable Transition Property),
                the Bondable Transition Property or the rights of the Transition
                Bondholders by legislative enactment or constitutional amendment
                that
                would be adverse to the Issuer, the Trustee or the Transition
                Bondholders.

            


    

     

    The
      costs of any such actions or proceedings shall be reimbursed by the Issuer
      to
      the Seller from amounts on deposit in the Collection Account as an Operating
      Expense. The Seller’s obligations pursuant to this Section 4.09 shall survive
      and continue notwithstanding that the payment of Operating Expenses pursuant
      to
      the Indenture may be delayed (it being understood that the Seller may be
      required to advance its own funds to satisfy its obligation hereunder). The
      Seller designates the Issuer as its agent and attorney-in-fact to execute and
      file any of financing statements, continuation statements or other instruments
      required by the Issuer pursuant to this Section 4.09, it being understood that
      the Issuer shall have no obligation to execute any such instruments. It is
      also
      understood that, subject to the provisions of this Section 4.09, the Seller
      is
      not under any obligation to appear in, prosecute or defend any legal action
      that
      is not incidental to its obligations hereunder, and that in the Seller’s opinion
      may involve the Seller in any expense or liability.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Section
      4.10   Taxes.
      So long as any of
      the Transition Bonds are Outstanding, the Seller shall, and shall cause each
      of
      its subsidiaries to, pay all material taxes, assessments and governmental
      charges imposed upon it or any of its properties or assets (including any
      Bondable Transition Property which the Seller is deemed to own for tax purposes)
      or with respect to any of its franchises, business, income or property before
      any penalty accrues thereon if the failure to pay any such material taxes,
      assessments and governmental charges would, after any applicable grace periods,
      notices or other similar requirements, result in a Lien on the Transferred
      Bondable Transition Property; provided, that no such tax need be paid if the
      Seller or any of its subsidiaries is contesting the same in good faith by
      appropriate proceedings promptly instituted and diligently conducted and if
      the
      Seller or such subsidiary has established appropriate reserves as shall be
      required in conformity with generally accepted accounting principles.


     

    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 Transition
      Bondholders.

     

    Section
      5.01   Liability
      of
      the Seller; Indemnities.

     

    (a)
  The
      Seller shall be
      liable in accordance herewith only to the extent of the obligations specifically
      undertaken by the Seller under this Sale Agreement.

     

    (b)
  The
      Seller shall
      indemnify the Issuer, each Swap Counterparty, if any, and the Trustee, for
      itself and on behalf of the Transition Bondholders, and each of their respective
      officers, directors, managers, employees and agents, for, and defend and hold
      harmless each such person from and against, any and all taxes (other than any
      taxes imposed on the Transition Bondholders solely as a result of their
      ownership of the 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, transfer, assignment and conveyance of the Transferred
      Bondable Transition Property by the Seller to the Issuer, the acquisition or
      holding of the Transferred Bondable Transition Property by the Issuer or the
      issuance and sale by the Issuer of the Transition Bonds, including any sales,
      general corporation, personal property, privilege, franchise or license taxes
      not recovered by the Issuer through the Transition Bond Charge or through the
      Market Transition Charge, but excluding any taxes imposed as a result of a
      failure of such person to properly withhold or remit taxes imposed with respect
      to payments on any Transition Bond, it being understood that the Transition
      Bondholders shall be entitled to enforce their rights against the Seller under
      this Section 5.01(b) solely through a cause of action brought for their benefit
      by the Trustee in accordance with the terms of the Indenture.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (c)
  The
      Seller shall
      indemnify the Issuer, each Swap Counterparty, if any, and the Trustee, for
      itself and on behalf of the Transition Bondholders, and each of their respective
      officers, directors, managers, employees and agents, for, and defend and hold
      harmless each such person from and against, (i) any and all amounts of
      principal of and interest on the Transition Bonds (including amounts owed to
      Holders of any floating rate Transition Bonds) 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 or the Financing Order 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 Sale Agreement,
      and
      (ii) any and all liabilities, obligations, claims, actions, suits or payments
      of
      any kind whatsoever that may be imposed on or asserted against any such person,
      other than any liabilities, obligations or claims for, or payments of, principal
      of, or interest on, the Transition Bonds, together with any reasonable costs
      and
      expenses incurred by such person, as a result of the Seller’s breach of any of
      its representations, warranties or covenants contained in this Sale
      Agreement.

     

    (d)
  Indemnification
      under this Section 5.01 shall survive any repeal, modification, or judicial
      invalidation of, or supplement to the Competition Act or any Financing Order
      and
      shall survive the resignation or removal of the Trustee and the termination
      of
      this Sale Agreement and shall include reasonable fees and expenses of
      investigation and litigation (including reasonable attorneys’ fees and
      expenses). The Seller shall not indemnify any party under this Section 5.01
      for
      any changes in law after the Transfer Date.

     

    (e)
  The
      indemnification
      obligation of the Seller under this Section 5.01 shall be pari passu with all
      other general unsecured obligations of the Seller.

     

    Section
      5.02   Merger
      or
      Consolidation of, or Assumption of the Obligations of, the
      Seller.
      Any
      Person:

     

    
      	(a)
                	
              into
                which the
                Seller may be merged, converted or consolidated and which succeeds
                to all
                or substantially all 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 substantially all 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 substantially all 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 substantially all of the electric
                distribution business of the Seller,
                or

            


    

     

    
      	(e)
                	
              which
                may
                otherwise succeed to all or substantially all 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 Sale Agreement, shall be the successor
      to
      the Seller hereunder without the execution or filing of any other document
      or
      any further act by any of the parties to this Sale Agreement; provided, however,
      that

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    
      	(i)  	
              immediately
                after giving effect to such transaction, no representation, warranty
                or
                covenant made pursuant to Article III or Article IV of this Sale
                Agreement, as the case may be, shall have been
                breached,

            


    

     

    
      	(ii)  	
              the
                Seller
                shall have delivered to the Issuer and the Trustee an Officers’
                Certificate and an Opinion of Counsel each stating that such
                consolidation, merger or succession and such agreement of assumption
                comply with this Section 5.02 and that all conditions precedent,
                if any,
                provided for in this Sale 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
                and
                the Issuer, including New Jersey UCC filings 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 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 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 5.02, then upon the satisfaction of all of the other conditions
      of this Section 5.02, the Seller shall automatically and without further notice
      be released from its obligations hereunder.

     

    Section
      5.03   Limitation
      on Liability of the Seller and Others.
      The
      Seller and any
      director, officer, employee or agent of the Seller may rely in good faith on
      the
      advice of counsel or on any document of any kind, prima facie properly executed
      and submitted by any Person, respecting any matters arising hereunder. Subject
      to Section 4.09, the Seller shall not be under any obligation to appear in,
      prosecute or defend any legal action that is not incidental to its obligations
      under this Sale Agreement, and that in its opinion may involve it in any expense
      or liability.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    ARTICLE
      VI  

     

    MISCELLANEOUS
      PROVISIONS

     

    Section
      6.01   Amendment. 

     

    (a)
 This
      Sale Agreement
      may be amended by the Seller and the Issuer, with the consent of the Trustee,
      provided written notice of the substance of the amendment is provided by the
      Issuer to each Rating Agency. 

     

    (b) Prior
      to the
      execution of any amendment to this Sale 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 Sale
      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 Sale Agreement or otherwise. 

     

    Section
      6.02   Notices.
      Unless
      otherwise
      specifically provided herein, all notices, directions, consents and waivers
      required under the terms and provisions of this Sale 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 Jersey Central Power & Light Company, 76 South Main
                Street, Akron, Ohio 44308, Attention:
                Treasurer;

            


    

     

    
      	(b)
                	
              in
                the case of
                the Issuer, at JCP&L Transition Funding II LLC, 103 Foulk Road, Suite
                202, Wilmington, Delaware 19803, with a copy to JCP&L Transition
                Funding II LLC, c/o FirstEnergy Service Company, 76 South Main Street,
                Akron, Ohio 44308, Attention:
                Managers;

            


    

     

    
      	(c)
                	
              in
                the case of
                Moody’s, at Moody’s Investors Service, Inc., ABS Monitoring Department, 99
                Church Street, New York, New York
                10007;

            


    

     

    
      	(d)
                	
              in
                the case of
                Standard & Poor’s, at Standard & Poor’s, Structured Finance, ABS
                Surveillance Group, 55 Water Street, 41st
                Floor, New
                York, New York 10041-0003, Fax: 212-438-2664;


            


    

     

    
      	(e)
                	
              in
                the case of
                Fitch, at Fitch, Inc., One State Street Plaza, New York, New York
                10004,
                Attention: ABS Surveillance; and

            


    

     

    
      	(f)
                	
              in
                the case of
                the Trustee, at the address provided for notices or communications
                to the
                Trustee in Section 11.04(a) of the Indenture;


            


    

     

    or,
      as to each of the foregoing, at such other address as shall be designated by
      written notice to the other parties.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    Section
      6.03   Assignment
      by Seller.
      Subject
      to Section
      5.02, this Sale Agreement may not be assigned by the Seller.

     

    Section
      6.04   Assignment
      to Trustee.
      The Seller hereby
      acknowledges and consents to any pledge, assignment and grant of a security
      interest by the Issuer to the Trustee pursuant to the Indenture of all right,
      title and interest of the Issuer in, to and under the Transferred Bondable
      Transition Property and the proceeds thereof and the assignment of any or all
      of
      the Issuer’s rights hereunder to the Trustee.

     

    Section
      6.05   Limitations
      on Rights of Others.
      The provisions of
      this Sale Agreement are solely for the benefit of the Seller, the Issuer and
      the
      Trustee, on behalf of itself and the Transition Bondholders, and nothing in
      this
      Sale 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 Sale Agreement or any covenants, conditions or
      provisions contained herein.

     

    Section
      6.06   Severability.
      Any provision of
      this Sale 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
      6.07   Separate
      Counterparts.
      This Sale Agreement
      may be executed by the parties hereto in separate counterparts, each of which
      when so executed and delivered shall be an original, but all such counterparts
      shall together constitute but one and the same instrument.

     

    Section
      6.08   Headings.
      The headings of the
      various Articles and Sections herein are for convenience of reference only
      and
      shall not define or limit any of the terms or provisions hereof.

     

    Section
      6.09   Governing
      Law. THIS
      SALE
      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 Sale Agreement or the Indenture, the Seller hereby
      covenants and agrees that it shall not, prior to the date which is one year
      and
      one day after the termination of the Indenture and the payment in full of the
      Transition Bonds, any other amounts owed under the Indenture, including, without
      limitation any amounts owed to third-party credit enhancers, and any amounts
      owed under Interest Rate Swap Agreements, acquiesce, petition or otherwise
      invoke or, cause the Issuer to invoke, the process of any court or government
      authority for the purpose of commencing or sustaining a case against the Issuer
      under any federal or State bankruptcy, insolvency or similar law or appointing
      a
      receiver, liquidator, assignee, trustee, custodian, sequestrator or other
      similar official of the Issuer or any substantial part of the property of the
      Issuer, or ordering the winding up or liquidation of the affairs of the
      Issuer.

     

    


     


    
      
        
        

      

      
        18

        
          

        

      

      
        
        

        
        

      

    

    
 

    
      IN
        WITNESS WHEREOF, the parties hereto have caused this Sale Agreement to be
        duly
        executed and delivered by their respective duly authorized oficers as of
        the
        date and year first above written.

       

       

      
        	 	
                JCP&L
                  TRANSITION FUNDING II LLC,
                  

                as
                  Issuer

              
	 	 
	 	 
	 By:	
                 

              
	 	
                Name:
                  Randy
                  Scilla

              
	 	
                Title:
                  Assistant Treasurer

              
	 	
                 

              
	 	 
	 	
                JERSEY
                  CENTRAL POWER & LIGHT COMPANY,
                  

                as
                  Seller

              
	 	 
	 	 
	 By: 	
              
	 	
                Name:
                  Randy
                  Scilla

              
	 	
                Title:
                  Assistant Treasurer

              


      

      


      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

    

     

     

    EXHIBIT
      A

     

    BILL
      OF
      SALE

     

    For
      good and valuable consideration, the receipt of which is hereby acknowledged,
      JERSEY
      CENTRAL POWER & LIGHT COMPANY,
      a New Jersey
      corporation (the “Seller”), does hereby sell, assign, transfer and convey to
JCP&L
      TRANSITION FUNDING II LLC,
      a Delaware limited
      liability company (the “Issuer”), without recourse except as provided in the
      Bondable Transition Property Sale Agreement dated as of _________, 2006 (the
      “Sale Agreement”) between the Issuer and the Seller, all of the Seller’s right,
      title and interest in, to and under all of its Bondable Transition Property,
      which sale, assignment, transfer and conveyance of such Bondable Transition
      Property shall include, as provided in the Competition Act, the sale,
      assignment, transfer and conveyance of all of the Seller’s right, title and
      interest in, to and under all revenues, collections, payments, money or proceeds
      arising under or with respect to the Transition Bond Charge related to such
      Bondable Transition Property, as the same may be adjusted from time to time
      in
      accordance with the Competition Act and the 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 and not otherwise defined herein shall have the meanings assigned to such
      terms in Appendix A of the Indenture dated as of __________, 2006 between the
      Issuer and The Bank of New York, as Trustee.

     

    This
      Bill of Sale is
      governed by the laws of the State of New Jersey.

     

    IN
      WITNESS WHEREOF, the Seller has duly executed and delivered this Bill of Sale
      this ___ day of __________, 2006.

     

    
      	 	
              JERSEY
                CENTRAL POWER & LIGHT COMPANY,
                

              as
                Seller
                

            
	 	 
	 	 
	 By:  	
            
	 	
              Name: 

            
	 	
              Title: 

               

            


    

    


     

     

    
      	 Accepted
              this _____ day of ________, 2006. 	 	 
	 	 	 	 
	 JCP&L
              TRANSITION FUNDING II LLC,	 	 
	 as
              Issuer	 	 	 
	 	 	 	 


    

     

    
      	 By:	 
	 	 Name:
	 	 Title:


    

     

     


    
      
        
                                                     
            

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    



    EXHIBIT
      B

     

    OFFICERS’
      CERTIFICATE

    


    

      We,
        __________,
        __________ and___________, _________________ of Jersey Central Power & Light
        Company (the "Company"), pursuant to Sections 2.02(b) and 2.02(g) of the
        Bondable Transition Property Sale Agreement, dated as of _______, 2006 (the
        “Sale Agreement”), by and between JCP&L Transition Funding II LLC and the
        Company, hereby certify as follows (capitalized terms used herein and not
        otherwise defined have the meanings set forth in the Sale
        Agreement):

       

      
        	
                (i)

              	
                No
                  breach by
                  the Company of its representations, warranties or covenants in
                  the Sale
                  Agreement exists; and 

              


      

       

      
        	
                (ii)

              	
                Each
                  condition
                  precedent that must be satisfied by the Company under Section 2.02
                  of the
                  Sale Agreement has been satisfied.

              


      

       

    

     

     

     

     

     

     

     

    IN
      WITNESS WHEREOF,
      we have hereunto set our hands this ___ day of _____, 2006.

     

     

     

    
      	 	 
	 	
               Name:

               Title:

            
	 	 
	 	 
	 	 
	 	 Name:
	 	 Title: