Document:

Unassociated Document

    Exhibit
      10(a)

     

    

      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 ___________, 2006

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      TABLE
        OF CONTENTS

       

      Page

       

      
        	
                ARTICLE
                  I

                 

                DEFINITIONS

                 

              
	
                Section
                  1.01 

              	
                Definitions

              	
                1

              
	
                Section
                  1.02 

              	
                Other
                  Definitional Provisions

              	
                1

              
	
                 

                ARTICLE
                  II

                 

                CONVEYANCE
                  OF TRANSFERRED BONDABLE TRANSITION PROPERTY

                 

              
	
                Section
                  2.01 

              	
                Conveyance
                  of Initial Transferred Bondable Transition Property

              	
                2

              
	
                Section
                  2.02 

              	
                Conditions
                  to Conveyance of Bondable Transition Property

              	
                3

              
	
                 

                ARTICLE
                  III

                 

                REPRESENTATIONS
                  AND WARRANTIES OF THE SELLER

                 

              
	
                Section
                  3.01 

              	
                Organization
                  and Good Standing

              	
                5

              
	
                Section
                  3.02 

              	
                Due
                  Qualification

              	
                5

              
	
                Section
                  3.03 

              	
                Power
                  and Authority

              	
                5

              
	
                Section
                  3.04 

              	
                Binding
                  Obligation

              	
                5

              
	
                Section
                  3.05 

              	
                No
                  Violation

              	
                6

              
	
                Section
                  3.06 

              	
                No
                  Proceedings

              	
                6

              
	
                Section
                  3.07 

              	
                Approvals

              	
                6

              
	
                Section
                  3.08 

              	
                The
                  Transferred Bondable Transition Property

              	
                7

              
	
                Section
                  3.09 

              	
                Solvency

              	
                9

              
	
                 

                ARTICLE
                  IV

                 

                COVENANTS
                  OF THE SELLER

                 

              
	
                Section
                  4.01 

              	
                Seller’s
                  Existence

              	
                10

              
	
                Section
                  4.02 

              	
                No
                  Liens or Conveyances

              	
                10

              
	
                Section
                  4.03 

              	
                Use
                  of Proceeds

              	
                10

              
	
                Section
                  4.04 

              	
                Delivery
                  of Collections

              	
                10

              
	
                Section
                  4.05 

              	
                Notice
                  of Liens

              	
                10

              
	
                Section
                  4.06 

              	
                Compliance
                  with Law

              	
                10

              
	
                Section
                  4.07 

              	
                Covenants
                  Related to Transferred Bondable Transition Property

              	
                11

              
	
                Section
                  4.08 

              	
                Indemnification
                  Notice

              	
                12

              
	
                Section
                  4.09 

              	
                Protection
                  of Title

              	
                12

              
	
                Section
                  4.10 

              	
                Taxes

              	
                13

              

      

       

      
        
          
          

        

        
          (i)

          
            

          

        

        
          
          

        

      

       

      
        	
                ARTICLE
                  V

                 

                ADDITIONAL
                  UNDERTAKINGS OF THE SELLER

                 

              
	
                Section
                  5.01 

              	
                Liability
                  of the Seller; Indemnities

              	
                13

              
	
                Section
                  5.02 

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

              	
                14

              
	
                Section
                  5.03 

              	
                Limitation
                  on Liability of the Seller and Others

              	
                15

              
	
                ARTICLE
                  VI

                 

                MISCELLANEOUS
                  PROVISIONS

                 

              
	
                Section
                  6.01 

              	
                Amendment

              	
                16

              
	
                Section
                  6.02 

              	
                Notices

              	
                16

              
	
                Section
                  6.03 

              	
                Assignment
                  by Seller

              	
                17

              
	
                Section
                  6.04 

              	
                Assignment
                  to Trustee

              	
                17

              
	
                Section
                  6.05 

              	
                Limitations
                  on Rights of Others

              	
                17

              
	
                Section
                  6.06 

              	
                Severability

              	
                17

              
	
                Section
                  6.07 

              	
                Separate
                  Counterparts

              	
                17

              
	
                Section
                  6.08 

              	
                Headings

              	
                17

              
	
                Section
                  6.09 

              	
                Governing
                  Law

              	
                17

              
	
                Section
                  6.10

              	
                Nonpetition
                  Covenant

              	
                17

              
	 	
                 

                 

              	 
	
                EXHIBIT
                  A   -

              	
                Bill
                  of Sale

              	
                A-1

              
	
                EXHIBIT
                  B    -

              	
                Officers’
                  Certificate

              	
                B-1

              

      

      

      APPENDIX
        A - Master Definitions

      

      
        
          
          

        

        
          (ii)

          
            

          

        

        
          
          

        

      

       

      BONDABLE
        TRANSITION PROPERTY SALE AGREEMENT,
        dated
        as of __________, 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 ________,
        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.

       

      (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
        $__________, less the underwriting discount and original issue discount for
        the
        Transition Bonds in the aggregate amount of $__________, or $__________ (the
        “Initial Purchase Price”) by wire transfer of funds immediately available on the
        date hereof to Seller’s account no. [3878-1543 at Citibank Delaware, New Castle,
        Delaware, routing transit ABA# 05300219], 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.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (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;

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (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.

       

      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

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      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).

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      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 ___________, 2006 and the related
        prospectus supplement dated ___________, 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.

       

      
        
          
          

        

        
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      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

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

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

       

      (iii) 

      (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 

       

      (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.

       

      (iv)    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.

       

      (v)    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.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (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.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      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

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      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. 

       

      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

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

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

       

      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

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      to
        its
        obligations hereunder, and that in the Seller’s opinion may involve the Seller
        in any expense or liability.

       

      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.

       

      (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

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      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

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      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

       

      
        	 	
                (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

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      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.

       

      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

              

      

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (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.

       

      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. 
        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

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      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 officers as of
        the
        date and year first above written.

       

      
        	
                JCP&L
                  TRANSITION FUNDING II LLC,
                  

                as
                  Issuer

              
	 
	 
	
                By:______________________________________ 

              
	
                Name: 

              
	
                Title:

              
	 
	 
	
                JERSEY
                  CENTRAL POWER & LIGHT COMPANY,
                  

                as
                  Seller

              
	 
	 
	
                By:______________________________________ 

              
	
                Name:  

              
	
                Title:  

              

      

      

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      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: 

              

      

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

       

      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:

       

      
        
          
          

        

        
          B-1Unassociated Document

    Exhibit
      10(b)

     

     

    SERVICING
      AGREEMENT

     

     

    BONDABLE
      TRANSITION PROPERTY SERVICING AGREEMENT

     

    between

     

    JCP&L
      TRANSITION FUNDING II LLC
Issuer

     

    and

     

    JERSEY
      CENTRAL POWER & LIGHT COMPANY
Servicer

     

    Dated
      as
      of_______, 2006

     

     

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

     

    
      
        
          
            	
                     

                    ARTICLE
                      I 

                     

                  	
                     

                    DEFINITIONS

                     

                  	
                     

                    1

                     

                  
	
                    Section
                      1.01

                  	
                    Definitions

                  	
                    1

                  
	
                    Section
                      1.02

                  	
                    Other
                      Definitional Provisions

                  	
                    1

                  
	
                     

                    ARTICLE
                      II

                     

                  	
                     

                    APPOINTMENT
                      AND AUTHORIZATION OF SERVICER

                     

                  	
                     

                    2

                     

                  
	
                    Section
                      2.01

                  	
                    Appointment
                      of Servicer; Acceptance of Appointment

                  	
                    2

                  
	
                    Section
                      2.02

                  	
                    Authorization

                  	
                    2

                  
	
                    Section
                      2.03

                  	
                    Dominion
                      and Control Over Transferred Bondable Transition Property

                  	
                    2

                  
	
                     

                    ARTICLE
                      III

                     

                  	
                     

                    BILLING
                      SERVICES

                     

                  	
                     

                    3

                     

                  
	
                    Section
                      3.01

                  	
                    Duties
                      of Servicer

                  	
                    3

                  
	
                    Section
                      3.02

                  	
                    Collection
                      and Allocation of the Transition Bond Charge.

                  	
                    4

                  
	
                    Section
                      3.03

                  	
                    Payment
                      of TBC Collections

                  	
                    5

                  
	
                    Section
                      3.04

                  	
                    Servicing
                      and Maintenance Standards

                  	
                    7

                  
	
                    Section
                      3.05

                  	
                    Servicer’s
                      Certificates

                  	
                    7

                  
	
                    Section
                      3.06

                  	
                    Annual
                      Statement as to Compliance

                  	
                    7

                  
	
                    Section
                      3.07

                  	
                    Annual
                      Independent Registered Public Accountants’ Report

                  	
                    8

                  
	
                    Section
                      3.08

                  	
                    Bondable
                      Transition Property Documentation

                  	
                    8

                  
	
                    Section
                      3.09

                  	
                    Computer
                      Records; Audits of Documentation

                  	
                    9

                  
	
                    Section
                      3.10

                  	
                    Defending
                      Transferred Bondable Transition Property Against Claims

                  	
                    9

                  
	
                     

                    ARTICLE
                      IV

                     

                  	
                     

                    SERVICES
                      RELATED TO TRANSITION BOND CHARGE ADJUSTMENTS

                     

                  	
                     

                    10

                     

                  
	
                    Section
                      4.01

                  	
                    Transition
                      Bond Charge Adjustments

                  	
                    10

                  
	
                     

                    ARTICLE
                      V

                     

                  	
                     

                    THE
                      SERVICER

                     

                  	
                     

                    10

                     

                  
	
                    Section
                      5.01

                  	
                    Representations
                      and Warranties of Servicer

                  	
                    10

                  
	
                    Section
                      5.02

                  	
                    Indemnities
                      of Servicer; Release of Claims

                  	
                    12

                  
	
                    Section
                      5.03

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

                  	
                    14

                  
	
                    Section
                      5.04

                  	
                    Assignment
                      of Servicer’s Obligations

                  	
                    15

                  
	
                    Section
                      5.05

                  	
                    Limitation
                      on Liability of Servicer and Others

                  	
                    15

                  
	
                    Section
                      5.06

                  	
                    JCP&L
                      Not to Resign as Servicer

                  	
                    16

                  
	
                    Section
                      5.07

                  	
                    Quarterly
                      Servicing Fee

                  	
                    16

                  
	
                    Section
                      5.08

                  	
                    Servicer
                      Expenses

                  	
                    16

                  
	
                    Section
                      5.09

                  	
                    Subservicing.

                  	
                    16

                  
	
                    Section
                      5.10

                  	
                    No
                      Servicer Advances

                  	
                    17

                  
	
                    Section
                      5.11

                  	
                    Remittances.

                  	
                    17

                  
	
                    Section
                      5.12

                  	
                    Protection
                      of Title

                  	
                    18

                  
	
                     

                    ARTICLE
                      VI

                     

                  	
                     

                    SERVICER
                      DEFAULT

                     

                  	
                     

                    18

                     

                  
	
                    Section
                      6.01

                  	
                    Servicer
                      Default

                  	
                    18

                  
	
                    Section
                      6.02

                  	
                    Notice
                      of Servicer Default

                  	
                    20

                  

          

          
            	
                    Section
                      6.03

                  	
                    Waiver
                      of Past Defaults

                  	
                    20

                  

          

           

          
            
              
              

            

            
              i

              
                

              

            

            
              
              

            

          

           

          
            	
                    Section
                      6.04

                  	
                    Appointment
                      of Successor

                  	
                    20

                  
	
                    Section
                      6.05

                  	
                    Cooperation
                      With Successor

                  	
                    21

                  
	
                     

                    ARTICLE
                      VII

                     

                  	
                     

                    MISCELLANEOUS
                      PROVISIONS

                     

                  	
                     

                    21

                     

                  
	
                    Section
                      7.01

                  	
                    Amendment.

                  	
                    21

                  
	
                    Section
                      7.02

                  	
                    Notices

                  	
                    22

                  
	
                    Section
                      7.03

                  	
                    Limitations
                      on Rights of Others

                  	
                    23

                  
	
                    Section
                      7.04

                  	
                    Severability.

                  	
                    23

                  
	
                    Section
                      7.05

                  	
                    Separate
                      Counterparts

                  	
                    24

                  
	
                    Section
                      7.06

                  	
                    Headings

                  	
                    24

                  
	
                    Section
                      7.07

                  	
                    Governing
                      Law.

                  	
                    24

                  
	
                    Section
                      7.08

                  	
                    Assignment
                      to the Trustee

                  	
                    24

                  
	
                    Section
                      7.09

                  	
                    Nonpetition
                      Covenants

                  	
                    24

                  
	
                    Section
                      7.10

                  	
                    Termination

                  	
                    25

                  

          

        

      
 

    ANNEX
      1      
Issuer
      Annex

     

    EXHIBIT
      A    Servicing
      Procedures

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    BONDABLE
      TRANSITION PROPERTY SERVICING AGREEMENT, dated as of _______ 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 Servicer (the “Servicer”) of the
      Bondable Transition Property hereunder. 

     

    W
      I T N E
      S S E T H:

     

    WHEREAS
      the Servicer is willing to service all Transferred Bondable Transition Property
      purchased from the Seller by the Issuer; 

     

    WHEREAS,
      the TBC Collections initially will be commingled with other funds collected
      by
      the Servicer; 

     

    WHEREAS,
      certain parties may have an interest in such commingled collections, and such
      parties have entered into an Intercreditor Agreement as of the date hereof
      that
      allows the Servicer to allocate the collected, commingled funds according to
      each party’s interest; and

     

    WHEREAS
      the Issuer, in connection with its ownership of the Transferred Bondable
      Transition Property, desires to engage the Servicer to carry out the functions
      described herein.

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants herein
      contained and other good and valuable consideration, the receipt and sufficiency
      of which are hereby acknowledged, and intending 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 them in Appendix A of the Indenture dated as of_______ , 2006
      between the Issuer and The Bank of New York, as Trustee (the
“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 Transition
      Bondholders.

     

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

     

    (c)
       The
      words
“hereof”, “herein”, “hereunder” and words of similar import when used in this
      Servicing Agreement shall refer to this Servicing Agreement as a whole
      and

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    not
      to
      any particular provision of this Servicing Agreement; Article, Section, Annex,
      Schedule and Exhibit references contained in this Servicing Agreement are
      references to Articles, Sections, Annexes, Schedules and Exhibits in or to
      this
      Servicing Agreement unless otherwise specified; and the term “including” shall
      mean “including without limitation”.

     

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

     

    ARTICLE
      II

     

    APPOINTMENT
      AND AUTHORIZATION OF SERVICER

     

    Section
      2.01 Appointment
      of Servicer; Acceptance of Appointment.
      The
      Issuer hereby appoints the Servicer, and the Servicer hereby accepts such
      appointment, to perform the Servicer’s obligations pursuant to this Servicing
      Agreement on behalf of and for the benefit of the Issuer in accordance with
      and
      subject to the terms of this Servicing Agreement. This appointment and the
      Servicer’s acceptance thereof may not be revoked except in accordance with the
      express terms of this Servicing Agreement.

     

    Section
      2.02 Authorization.
      With
      respect to all or any portion of the Transferred Bondable Transition Property
      and in connection with the performance of its duties hereunder, the Servicer
      shall be, and hereby is, authorized and empowered by the Issuer to:

     

    (a)
       on
      behalf
      of itself, the Issuer, or both of them, as the case may be, execute and deliver
      any and all instruments, documents or notices; and

     

    (b)
       on
      behalf
      of itself, the Issuer, or both of them, as the case may be, make any filing
      and
      participate in proceedings of any kind with any governmental authorities,
      including with the BPU and the Securities and Exchange Commission
      (“SEC”).

     

    The
      Issuer shall furnish the Servicer with such executed documents as have been
      prepared by the Servicer for execution by the Issuer, and with such other
      documents as may be in the Issuer’s possession, that are necessary or
      appropriate to enable the Servicer to carry out its servicing and administrative
      duties hereunder. Upon the written request of the Servicer, the Issuer shall
      furnish the Servicer with any powers of attorney or other documents necessary
      or
      appropriate to enable the Servicer to carry out its duties
      hereunder.

     

    Section
      2.03 Dominion
      and Control Over Transferred Bondable Transition Property.
      Notwithstanding
      any other provision herein, the Servicer and the Issuer agree that the Issuer
      shall have dominion and control over the Transferred Bondable Transition
      Property, and the Servicer, in accordance with the terms hereof, is acting
      solely as the servicing agent of the Issuer with respect to the Transferred
      Bondable Transition Property. The Servicer hereby agrees that it shall not
      take
      any action hereunder that is not authorized by this Servicing Agreement, the
      Competition Act or the Financing Order, that is not consistent with its
      customary procedures and practices, or that shall impair the rights of the
      Issuer with respect to the Transferred Bondable Transition Property, in each
      case unless such action is required by law or court or regulatory
      order.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III

     

    BILLING
      SERVICES

     

    Section
      3.01 Duties
      of Servicer.
      The
      Servicer, as agent for the Issuer (to the extent provided herein), shall have
      the following duties: 

     

    (a)
       Duties
      of Servicer Generally.
      The
      Servicer will manage, service, administer and make collections in respect of
      the
      Transition Bond Charge. The Servicer’s duties will include:

     

    (i) obtaining
      meter reads, calculating and billing the Transition Bond Charge in accordance
      with the Financing Order and collecting the Transition Bond Charge from
      Customers and Third Parties, as applicable;

     

    (ii) responding
      to inquiries by Customers, Third Parties, the BPU, or any federal, local or
      other state governmental authority with respect to the Transition Bond
      Charge;

     

    (iii) delivering
      bills or arranging for the delivery of bills to Customers and Third Parties,
      accounting for TBC Collections, investigating and resolving delinquencies (and
      furnishing reports with respect to such delinquencies to the Issuer), processing
      and depositing collections, making periodic remittances and furnishing periodic
      reports to the Issuer, the Trustee and the Rating Agencies;

     

    (iv) selling,
      as the agent for the Issuer, as its interest may appear, defaulted or written
      off accounts in accordance with the Servicer’s usual and customary practices for
      accounts of its own electric service customers; and

     

    (v) taking
      action in connection with Transition Bond Charge Adjustments as set forth
      herein.

     

    Anything
      to the contrary notwithstanding, the duties of the Servicer set forth in this
      Servicing Agreement shall be qualified in their entirety by the Competition
      Act
      and any other applicable law effective in New Jersey, the Financing Order,
      any
      BPU Regulations and the federal securities laws and the rules and regulations
      promulgated thereunder, including without limitation, Regulation AB, as in
      effect at the time such duties are to be performed. Without limiting the
      generality of this Section 3.01(a), in furtherance of the foregoing, the
      Servicer hereby agrees that it shall also have, and shall comply with, the
      procedures, duties and responsibilities set forth in Exhibit A hereto which,
      among other things, relate to data acquisition, usage and bill calculation,
      billing, customer service functions, collections, payment processing and
      remittance. 

     

    (b)
       Notification
      of Laws and Regulations.
      The
      Servicer shall immediately notify the Issuer, the Trustee and the Rating
      Agencies in writing of any laws or BPU Regulations hereafter promulgated that
      have or will reasonably be likely to have a material adverse effect on the
      Servicer’s ability to perform its duties under this Servicing
      Agreement.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (c)
       Other
      Information.
      Upon the
      reasonable request of the Issuer, the Trustee or any Rating Agency, the Servicer
      shall provide to the Issuer, the Trustee or the Rating Agencies, as the case
      may
      be, any public financial information in respect of the Servicer, or any material
      information regarding the Transferred Bondable Transition Property (or related
      TBC Collections) to the extent it is reasonably available to the Servicer,
      that
      may be reasonably necessary and permitted by law for the Issuer, the Trustee
      or
      the Rating Agencies to monitor the performance by the Servicer hereunder. In
      addition, so long as any of the Transition Bonds of any Series are Outstanding,
      the Servicer shall provide to the Issuer and to the Trustee, within a reasonable
      time after written request therefor, any information available to the Servicer
      or reasonably obtainable by the Servicer that is necessary to calculate the
      Transition Bond Charge.

     

    (d)
       Preparation
      of Reports, Certifications, etc.
      The
      Servicer shall prepare, procure, deliver and/or file, or cause to be prepared,
      procured, delivered or filed, any reports, attestations, exhibits,
      certifications or other documents required to be delivered or filed with the
      SEC
      (and/or any other governmental or regulatory agency) by the Issuer under the
      federal securities or other applicable laws or in accordance with the Basic
      Documents, including, but without limiting the generality of foregoing, filing
      with the SEC, if applicable, a copy or copies of (i) the certificates described
      in Section 3.05 and Annex 1 hereof (under Form 10-D or any other applicable
      form), (ii) the annual statements of compliance, attestation reports and other
      certifications described in Section 3.06 hereof, and (iii) the Annual
      Independent Certified Public Accountant’s Report (and any attestation required
      under Regulation AB) described in Section 3.07 hereof. In addition, the
      appropriate officer or officers of the Servicer shall sign the Issuer’s Form
      10-K (and any other applicable SEC or other reports, attestations,
      certifications and other documents), to the extent required by, and consistent
      with, the federal securities laws and/or any other applicable law.

     

    Section
      3.02 Collection
      and Allocation of the Transition Bond Charge.

     

    (a)
       The
      Servicer shall use all reasonable efforts, consistent with its customary
      servicing procedures, to collect all amounts owed in respect of the Transition
      Bond Charge as and when the same shall become due and shall follow such
      collection procedures as the Servicer follows with respect to collection
      activities that the Servicer conducts for itself and others. The Servicer shall
      not change the amount of or reschedule the due date of any scheduled payment
      of
      the Transition Bond Charge, except as contemplated in this Servicing Agreement
      or as required by law or court order or BPU Regulations; provided, however,
      that
      the Servicer may take any of the foregoing actions to the extent that such
      action would be in accordance with customary billing and collection practices
      of
      the Servicer with respect to billing and collection activities that the Servicer
      conducts for itself. The Servicer shall diligently enforce the obligations
      of
      any Third Parties providing billing and collection services with respect to
      the
      Transition Bond Charge.

     

    (b)
       As
      specified in the Petition and the Financing Order, any amounts received by
      the
      Servicer from a Customer that represent a partial payment toward an outstanding
      balance will be applied in the following manner:

     

    (i) to
      sales
      taxes with respect to the partial payment (which the Servicer collects as
      trustee for the State of New Jersey and not for its own account or for that
      of
      the Issuer);

     

    
      
        
        

      

      
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    (ii) pro
      rata
      to the Transition Bond Charge and the Servicer’s other charges and taxes, where
      any of such charges are in arrears, based on their proportion to the Servicer’s
      total charges in arrears for that period; and

     

    (iii) pro
      rata
      to the Transition Bond Charge and the Servicer’s other charges and taxes, where
      any of such charges are current charges, based on their proportion to the
      Servicer’s total current charges assessed for that period.

     

    JCP&L’s
      other charges may include the Market Transition Charge, the MTC-Tax and all
      other charges that JCP&L and any Third Party may be authorized to bill and
      collect from Customers on account of the provision of electric service. If
      there
      is more than one series of transition bonds outstanding, whether they be
      Transition Bonds issued by the Issuer, or transition bonds issued by JCP&L
      Transition Funding LLC or any other issuer for which the Servicer is acting
      as
      servicer, the Servicer shall allocate partial payments among such series in
      accordance with the Intercreditor Agreement.

     

    Section
      3.03 Payment
      of TBC Collections. 

     

    (a)
      With
      the exception of the Quarterly Servicing Fee, which the Servicer is entitled
      to
      withhold from TBC Collections pursuant to Section 5.07 hereof, the Servicer
      agrees to remit to the Trustee for deposit in the Collection Account TBC
      Collections for each Billing Month based on its estimated system-wide write-off
      percentage and the average number of days outstanding of bills, as in effect
      from time to time as follows:

     

    (i) on
      each
      Monthly Remittance Date, for so long as the Servicer has satisfied the
      conditions of Section 5.11(b), the Servicer shall remit to the Trustee for
      each
      preceding Billing Month an amount equal to the amount of TBC Collections deemed
      to have been received during the preceding calendar month, based on the
      estimated system-wide write-off percentage and the average number of days
      outstanding of bills then in effect; and

     

    (ii) on
      each
      Daily Remittance Date, for so long as the Servicer has not satisfied the
      conditions of Section 5.11(b), the Servicer shall remit to the Trustee an amount
      equal to the amount of TBC Collections deemed to have been received during
      the
      Business Day which is two Business Days preceding such Daily Remittance Date,
      including (for the first Daily Remittance Date following a period when the
      Servicer had been remitting on a Monthly Remittance Date) any amounts on deposit
      with the Servicer (for the Billing Month and any prior Billing Month) prior
      to
      such Daily Remittance Date during a period when the Servicer had been remitting
      on a Monthly Remittance Date based on the estimated system-wide write-off
      percentage and the average number of days outstanding of bills then in
      effect.

     

    (b)
       On
      or
      before each Reconciliation Date, the Servicer will reconcile actual TBC
      Collections with estimated TBC Collections previously made to the Trustee in
      respect of (i) each Annual Reconciliation Date, each of the twelve Billing
      Months beginning fifteen months before the month in which such Reconciliation
      Date occurs (or from the first Series Issuance

     

    
      
        
        

      

      
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    Date,
      if
      less than fifteen months have elapsed), and (ii) each Monthly Reconciliation
      Date, the Billing Month that is three months prior to the Billing Month in
      which
      such Reconciliation Date occurs. In the event that there is a payment shortfall
      (i.e., the remittances of the estimated payments are less than the actual
      payments arising from the transition bond charges) with respect to the
      applicable Billing Months or Billing Month, as the case may be, the Servicer
      shall pay the shortfall to the Trustee for deposit into the Collection Account
      within two Business Days of that Reconciliation Date, or, if the Servicer remits
      TBC Collections on each Monthly Remittance Date in accordance with Section
      5.11(b), on the next Monthly Remittance Date. In the event that there is an
      overpayment (i.e., the remittances of estimated payments exceed the amounts
      that
      should have been remitted based on the actual system-wide write-offs) for the
      applicable Billing Months or Billing Month, as the case may be, the Servicer
      may
      either (A) reduce the amount that the Servicer is required to remit to the
      Trustee for deposit in the Collection Account on the following Remittance Date
      (and, if necessary, succeeding Remittance Dates) by the amount of the
      overpayment or (B) direct the Trustee in writing to pay to the Servicer from
      the
      General Subaccount the amount of the overpayment, which upon payment shall
      become the property of the Servicer.

     

    (c)
       In
      the
      event that the Servicer makes changes to its current computerized customer
      information system that would allow the Servicer to track actual TBC Collections
      and/or otherwise monitor payment and collection activity more efficiently or
      accurately than is currently being done under this Servicing Agreement, the
      Servicer may substitute actual remittance procedures for the estimated
      remittance procedures described above and otherwise modify the remittance
      procedures described above as may be appropriate in the interests of efficiency,
      accuracy, cost and/or system capabilities. However, the Servicer may not make
      any such modification or substitution that will materially and adversely affect
      the Transition Bondholders. The Servicer must also give notice to the Rating
      Agencies of any such computer system changes no later than sixty business days
      after the date on which all customer accounts are first billed on the new
      system. 

     

    (d)
       The
      Servicer and Issuer agree and acknowledge that, although the Servicer will
      remit
      estimated payments arising from the TBC Collections to the Trustee, the Servicer
      is not obligated to make any payments on the Transition Bonds. The Servicer
      agrees and acknowledges that it holds all TBC Collections collected by it for
      the benefit of the Issuer and that all amounts will be remitted by the Servicer
      in accordance with this Servicing Agreement without any surcharge, fee, offset,
      charge or other deduction and without making any claim to reduce its obligation
      to remit all TBC Collections collected by it, except (i) as set forth in clause
      (b) above, (ii) with respect to the Quarterly Servicing Fee that it may withhold
      pursuant to Section 5.07 hereof and (iii) with respect to late fees permitted
      by
      Section 5.07. 

     

    Section
      3.04 Servicing
      and Maintenance Standards.
      The
      Servicer shall, on behalf of the Issuer:

     

    (a)
       manage,
      service, administer and make collections in respect of the Transferred Bondable
      Transition Property with reasonable care and in material compliance with
      applicable law and regulations, including all applicable BPU Regulations, using
      the same degree of care and diligence that the Servicer exercises with respect
      to billing and collection activities that the Servicer conducts for itself
      and
      others;

     

    
      
        
        

      

      
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    (b)
       follow
      standards, policies and procedures in performing its duties as Servicer that
      are
      customary in the electric power distribution industry in New
      Jersey;

     

    (c)
       use
      all
      reasonable efforts, consistent with its customary servicing procedures, to
      enforce and maintain the rights of the Issuer and the Trustee in respect of
      the
      Transferred Bondable Transition Property; and

     

    (d)
       calculate
      the Transition Bond Charge in compliance with the Competition Act, the Financing
      Order and any applicable tariffs; 

     

    except
      where the failure to comply with any of the foregoing would not have a material
      adverse effect on the Issuer’s or the Trustee’s respective interests in the
      Transferred Bondable Transition Property. The Servicer shall follow such
      customary and usual practices and procedures as it shall deem necessary or
      advisable in its servicing of the Transferred Bondable Transition Property,
      which, in the Servicer’s judgment, may include the taking of legal action
      pursuant to Section 3.10 or otherwise. Notwithstanding the foregoing, the
      Servicer shall not change its customary and usual practices and procedures
      in
      any manner that would have a material adverse effect on the Issuer’s or the
      Trustee’s respective interests in the Transferred Bondable Transition Property
      unless it shall have provided the Rating Agencies with prior written
      notice.

     

    Section
      3.05 Servicer’s
      Certificates.
      The
      Servicer will provide to the Issuer and to the Trustee the statements specified
      in Annex 1 at the times indicated therein.

     

    Section
      3.06 Annual
      Statement as to Compliance.
      The
      Servicer shall deliver to the Issuer and the Trustee, on or before the earlier
      of (a) March 31 of each year or (b) with respect to each calendar
      year during which the Issuer’s annual report on Form 10-K is required to be
      filed in accordance with the Exchange Act and the rules and regulations
      thereunder, the date on which the annual report on Form 10-K is required to
      be
      filed in accordance with the Exchange Act and the rules and regulations
      thereunder, (i) a Servicer Officers’ Certificate containing, and certifying as
      to, the statements of compliance required by Item 1123 (or any successor or
      similar items or rule) of Regulation AB, as then in effect and (ii) a Servicer
      Officers’ Certificate containing, and certifying as to, the statements and
      assessment of compliance required by Item 1122(a) (or any successor or similar
      items or rule) of Regulation AB, as then in effect.

     

    The
      Servicer shall use commercially reasonable efforts to obtain from each other
      party participating in the servicing function any additional certifications
      as
      to the statements and assessment required under Item 1122 or Item 1123 of
      Regulation AB to the extent required in connection with the filing of the annual
      report on Form 10-K; provided, however, that a failure to obtain such
      certifications shall not be a breach of the Servicer’s duties
      hereunder.

     

    Section
      3.07 Annual
      Independent Registered Public Accountants’ Report.

     

    (a)
       The
      Servicer shall cause a firm of Independent registered public accountants (which
      may also provide other services to the Servicer or the Seller) to prepare,
      and
      the Servicer shall deliver to the Issuer, to the Trustee and to each Rating
      Agency, on or before the earlier of (a) March 31 of each year or
      (b) with respect to each calendar year during which the Issuer’s annual
      report on Form 10-K is required to be filed in accordance with the Exchange
      Act
      and the rules and regulations thereunder, the date on which the annual report
      on
      Form 10-K

     

    
      
        
        

      

      
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    is
      required to be filed in accordance with the Exchange Act and the rules and
      regulations thereunder, a report addressed to the Servicer (the “Annual
      Accountant’s Report”), which may be included as part of the Servicer’s customary
      auditing activities, to the effect that such firm has performed certain
      procedures in connection with the Servicer’s compliance with its obligations
      under this Servicing Agreement during the preceding calendar year (or, in the
      case of the first Annual Accountant’s Report, the period of time from the
      Initial Transfer Date until December 31, 2006), identifying the results of
      such
      procedures and including any exceptions noted. In the event such accounting
      firm
      requires the Trustee or the Issuer to agree or consent to the procedures
      performed by such firm, the Issuer shall direct the Trustee in writing to so
      agree, it being understood and agreed that the Trustee will deliver such letter
      of agreement or consent in conclusive reliance upon the direction of the Issuer,
      and the Trustee will not make any independent inquiry or investigation as to,
      and shall have no obligation or liability in respect of, the sufficiency,
      validity or correctness of such procedures. 

     

    (b)
       The
      Annual Accountant’s Report shall also indicate that the accounting firm
      providing such report is independent of the Servicer in accordance with the
      Rules of the Public Company Accounting Oversight Board and shall include the
      attestation report required under Item 1122(b) of Regulation AB (or any
      successor or similar items or rule), as then in effect.

     

    Section
      3.08 Bondable
      Transition Property Documentation.
      To
      assure uniform quality in servicing the Transferred Bondable Transition Property
      and to reduce administrative costs, the Servicer shall keep on file, in
      accordance with its customary procedures, all Bondable Transition Property
      Documentation, it being understood that the Servicer is acting solely as the
      servicing agent and custodian for the Issuer with respect to the Bondable
      Transition Property Documentation.

     

    Section
      3.09 Computer
      Records; Audits of Documentation.

     

    (a)
       Safekeeping.
      The
      Servicer shall maintain accurate and complete accounts, records and computer
      systems pertaining to the Transferred Bondable Transition Property and the
      Bondable Transition Property Documentation in accordance with its standard
      accounting procedures and in sufficient detail to permit reconciliation between
      payments or recoveries on (or with respect to) the Transition Bond Charge and
      the estimated TBC Collections from time to time remitted to the Trustee pursuant
      to Section 3.03 and to enable the Issuer to comply with this Servicing Agreement
      and the Indenture. The Servicer shall conduct, or cause to be conducted,
      periodic audits of the Bondable Transition Property Documentation held by it
      under this Servicing Agreement and of the related accounts, records and computer
      systems, in such a manner as shall enable the Issuer and the Trustee, as pledgee
      of the Issuer, to verify the accuracy of the Servicer’s record keeping. The
      Servicer shall promptly report to the Issuer and to the Trustee any failure
      on
      the Servicer’s part to hold the Bondable Transition Property Documentation and
      maintain its accounts, records and computer systems as herein provided and
      shall
      promptly take appropriate action to remedy any such failure. Nothing herein
      shall be deemed to require an initial review or any periodic review by the
      Issuer or the Trustee of the Bondable Transition Property Documentation. The
      Servicer’s duties to hold the Bondable Transition Property Documentation on
      behalf of the Issuer set forth in this Section 3.09, to the extent such Bondable
      Transition Property Documentation has not been previously transferred
      to

     

    
      
        
        

      

      
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    a
      Successor Servicer, shall terminate three years after the earlier of the date
      on
      which (i) the Servicer is succeeded by a Successor Servicer pursuant to the
      provisions of this Servicing Agreement or (ii) no Transition Bonds of any Series
      are Outstanding.

     

    (b)
       Maintenance
      of and Access to Records.
      The
      Servicer shall maintain the Bondable Transition Property Documentation at 76
      South Main Street, Akron, Ohio 44308 or at such other office as shall be
      specified to the Issuer and to the Trustee by written notice not later than
      thirty days prior to any change in location. The Servicer shall permit the
      Issuer and the Trustee or their respective duly authorized representatives,
      attorneys, agents or auditors at any time during normal business hours to
      inspect, audit and make copies of and abstracts from the Servicer’s records
      regarding the Transferred Bondable Transition Property, the Transition Bond
      Charge and the Bondable Transition Property Documentation. The failure of the
      Servicer to provide access to such information as a result of an obligation
      or
      applicable law (including BPU Regulations) prohibiting disclosure of information
      regarding customers shall not constitute a breach of this Section
      3.09(b).

     

    Section
      3.10 Defending
      Transferred Bondable Transition Property Against Claims.
      The
      Servicer shall institute and maintain any action or proceeding necessary to
      compel performance by the BPU or the State of New Jersey of any of their
      obligations or duties under the Competition Act or the Financing Order with
      respect to the Transferred Bondable Transition Property, and the Servicer agrees
      to take such legal or administrative actions, including defending against or
      instituting and pursuing legal actions and appearing or testifying at hearings
      or similar proceedings, as may be reasonably necessary to block or overturn
      any
      attempts to cause a repeal of, modification of or supplement to the Competition
      Act, the Financing Order or the Restructuring Order (to the extent it affects
      the rights of Transition Bondholders or the validity or value of the Transferred
      Bondable Transition Property), as the case may be, the Bondable Transition
      Property or the rights of the holders of Transferred Bondable Transition
      Property if such repeal, modification or supplement would be adverse to the
      Transition Bondholders. The costs of any such action reasonably allocated by
      the
      Servicer to the Transferred Bondable Transition Property shall be payable from
      TBC Collections as an Operating Expense in accordance with the Indenture. The
      Servicer’s obligations pursuant to this Section 3.10 shall survive and continue
      notwithstanding the fact that the payment of Operating Expenses pursuant to
      the
      Indenture may be delayed (it being understood that the Servicer may be required
      to advance its own funds to satisfy its obligations under this Section
      3.10).

     

    ARTICLE
      IV

     

    SERVICES
      RELATED TO TRANSITION BOND CHARGE ADJUSTMENTS

     

    Section
      4.01 Transition
      Bond Charge Adjustments.
      The
      Servicer shall perform the calculations and take the actions relating to
      adjusting the Transition Bond Charge, as set forth in Section 5 of Annex 1,
      at
      the times indicated therein.

     

    
      
        
        

      

      
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    ARTICLE
      V

     

    THE
      SERVICER

     

    Section
      5.01 Representations
      and Warranties of Servicer.
      The
      Servicer makes the following representations and warranties as of the Transfer
      Date, on which the Issuer has relied and will rely in acquiring Transferred
      Bondable Transition Property and in entering into this Servicing Agreement.
      These representations and warranties shall survive the execution and delivery
      of
      this Servicing Agreement, the sale, transfer, assignment and conveyance of
      the
      Transferred Bondable Transition Property to the Issuer pursuant to the Sale
      Agreement and the pledge thereof to the Trustee pursuant to the
      Indenture.

     

    (a)
       Organization
      and Good Standing.
      The
      Servicer is a corporation duly organized and in good standing under the laws
      of
      the State of its incorporation, with the corporate power and authority to own
      its properties and to conduct its business as such properties are currently
      owned and such business is presently conducted and to execute, deliver and
      carry
      out the terms of this Servicing Agreement, and has the power, authority and
      legal right to service the Transferred Bondable Transition Property.

     

    (b)
       Due
      Qualification.
      The
      Servicer is duly qualified to do business as a foreign corporation in 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 (including the servicing of the Transferred Bondable Transition
      Property as required by this Servicing Agreement) requires such qualifications,
      licenses or approvals (except where the failure to so qualify would not be
      reasonably likely to have a material adverse effect on the Servicer’s business,
      operations, assets, revenues, properties or prospects or on the transactions
      contemplated by this Servicing Agreement).

     

    (c)
       Power
      and Authority.
      The
      Servicer has the corporate power and authority to execute and deliver this
      Servicing Agreement and to carry out its terms; and the execution, delivery
      and
      performance of this Servicing Agreement have been duly authorized by the
      Servicer by all necessary corporate action.

     

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

     

    (e)
       No
      Violation.
      The
      consummation of the transactions contemplated by this Servicing Agreement and
      the fulfillment of the terms hereof 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 or both) a default under, the articles of incorporation,
      by-laws or other constituent documents of the Servicer, or any indenture,
      material agreement or other material instrument to which the Servicer is a
      party
      or by which it is bound; or result in the creation or imposition of any Lien
      upon any of its properties pursuant to the terms of any such indenture,
      material

     

    
      
        
        

      

      
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    agreement
      or other material instrument; or violate any law or any order, rule or
      regulation applicable to the Servicer of any court or of any federal or State
      regulatory body, administrative agency or other governmental instrumentality
      having jurisdiction over the Servicer or its properties.

     

    (f)
       Approvals.
      Except
      for filings with the BPU for adjusting the Transition Bond Charge pursuant
      to
      Section 4.01 and Annex 1, the filing of financing statements under the New
      Jersey UCC and the Delaware UCC, and the filing of continuation filings 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 Servicer of this Servicing
      Agreement, the performance by the Servicer of the transactions contemplated
      hereby or the fulfillment by the Servicer of the terms hereof, except those
      that
      have been obtained or made. 

     

    (g)
       Reports
      and Certificates.
      Each
      report and certificate delivered in connection with any filing made with the
      BPU
      by the Servicer on behalf of the Issuer with respect to the Transition Bond
      Charge or Transition Bond Charge Adjustments will constitute a representation
      and warranty by the Servicer that each such report or certificate, as the case
      may be, is true and correct in all material respects; provided, however, that
      to
      the extent any such report or certificate is based in part upon or contains
      assumptions, forecasts or other predictions of future events, this
      representation and warranty of the Servicer with respect thereto will be limited
      to the representation and warranty that such assumptions, forecasts or other
      predictions of future events are reasonable based upon historical performance
      or
      facts known to the Servicer on the date such report or certificate is
      delivered.

     

    (h)
       No
      Proceedings.
      There
      are no proceedings or investigations pending or, to the Servicer’s best
      knowledge, threatened before any court, federal or state regulatory body,
      administrative agency or other governmental instrumentality having jurisdiction
      over the Servicer or its properties:

     

    (i) seeking
      to prevent the issuance of the Transition Bonds or the consummation of any
      of
      the transactions contemplated by this Servicing Agreement or any of the other
      Basic Documents;

     

    (ii) except
      as
      disclosed by the Servicer to the Issuer (or as disclosed in filings with the
      Commission made by the Servicer), seeking any determination or ruling that
      might
      materially and adversely affect the performance by the Servicer of its
      obligations under, or the validity or enforceability against the Servicer of,
      this Servicing Agreement or any of the other Basic Documents; or 

     

    (iii) relating
      to the Servicer and which might materially and adversely affect the federal
      or
      State income tax attributes of the Transition Bonds.

     

    Section
      5.02 Indemnities
      of Servicer; Release of Claims.

     

    (a)
       
      The
      Servicer shall be liable as such in accordance herewith only to the extent
      of
      the obligations specifically undertaken by the Servicer under this Servicing
      Agreement.

     

    
      
        
        

      

      
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    (b)
       The
      Servicer shall indemnify the Issuer and the Trustee (for itself and on behalf
      of
      the Transition Bondholders) and each of their respective trustees, members,
      managers, officers, directors, employees and agents for, and defend and hold
      harmless each such person from and against, any and all Losses that may be
      imposed upon, incurred by or asserted against any such person as a result
      of:

     

    (i) the
      Servicer’s willful misconduct, bad faith or gross negligence in the performance
      of its duties or observance of its covenants under this Servicing Agreement
      or
      the Servicer’s reckless disregard of its obligations and duties under this
      Servicing Agreement;

     

    (ii) the
      Servicer’s breach of any of its representations or warranties in this Servicing
      Agreement; and

     

    (iii) litigation
      and related expenses relating to its status and obligations as Servicer (other
      than any proceedings the Servicer is required to institute under this Servicing
      Agreement);

     

    provided,
      however, that the Servicer shall not be liable for any Losses resulting from
      the
      willful misconduct or gross negligence of any person indemnified pursuant to
      this Section 5.02 (each, an “Indemnified Person”) or resulting from a breach of
      a representation or warranty made by such Indemnified Person in any of the
      Basic
      Documents that gives rise to the Servicer’s breach.

     

    Promptly
      after receipt by an Indemnified Person of notice of its involvement in any
      action, proceeding or investigation, such Indemnified Person shall, if a claim
      for indemnification in respect thereof is to be made against the Servicer under
      this Section 5.02, notify the Servicer in writing of such involvement. Failure
      by an Indemnified Person to so notify the Servicer shall relieve the Servicer
      from the obligation to indemnify and hold harmless such Indemnified Person
      under
      this Section 5.02 only to the extent that the Servicer suffers actual prejudice
      as a result of such failure. With respect to any action, proceeding or
      investigation brought by a third party for which indemnification may be sought
      under this Section 5.02, the Servicer shall be entitled to assume the defense
      of
      any such action, proceeding or investigation unless (x) such action, proceeding
      or investigation exposes the Indemnified Person to a risk of criminal liability
      or forfeiture, (y) the Servicer and such Indemnified Person have a conflict
      of
      interest in their respective defenses of such action, proceeding or
      investigation or (z) there exists at the time the Servicer would assume such
      defense an ongoing Servicer Default. Upon assumption by the Servicer of the
      defense of any such action, proceeding or investigation, the Indemnified Person
      shall have the right to participate in such action or proceeding and to retain
      its own counsel (including local counsel), and the Servicer shall bear the
      reasonable fees, costs and expenses of such separate counsel. The Indemnified
      Person shall not settle or compromise or consent to the entry of any judgment
      with respect to any pending or threatened claim, action, suit or proceeding
      in
      respect of which indemnification may be sought under this Section 5.02 (whether
      or not the Servicer is an actual or potential party to such claim or action)
      unless the Servicer agrees in writing to such settlement, compromise or consent
      and such settlement, compromise or consent includes an unconditional release
      of
      the Servicer from all liability arising out of such claim, action, suit or
      proceeding.

     

    
      
        
        

      

      
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    (c)
       The
      Servicer’s indemnification obligations under Section 5.02(b) for events
      occurring prior to the removal or resignation of the Trustee or the termination
      of this Servicing Agreement shall survive the resignation or removal of the
      Trustee or the termination of this Servicing Agreement and shall include
      reasonable costs, fees and expenses of investigation and litigation (including
      the Issuer’s and the Trustee’s reasonable attorneys’ fees and
      expenses).

     

    (d)
       Except
      to
      the extent expressly provided for in the Basic Documents (including the
      Servicer’s claims with respect to the Quarterly Servicing Fees and the Seller’s
      claim for payment of the purchase price of the Transferred Bondable Transition
      Property), the Servicer hereby releases and discharges the Issuer (including
      its
      Member, Managers, officers, employees and agents, if any) and the Trustee
      (including its respective officers, directors, employees and agents)
      (collectively, the “Released Parties”) from any and all actions, claims and
      demands whatsoever, which the Servicer shall or may have against any such person
      relating to the Transferred Bondable Transition Property or the Servicer’s
      activities with respect thereto other than any actions, claims and demands
      arising out of the willful misconduct, bad faith or gross negligence of the
      Released Parties.

     

    Section
      5.03 Merger
      or Consolidation of, or Assumption of the Obligations of,
      Servicer.
      Any
      Person or Persons:

     

    (a)
       into
      which the Servicer may be merged or consolidated and which succeeds to all
      or a
      significant part of the electric distribution business of the
      Servicer,

     

    (b)
       which
      results from the division of the Servicer into two or more Persons and which
      succeeds to all or a significant part of the electric distribution business
      of
      the Servicer,

     

    (c)
       which
      may
      result from any merger or consolidation to which the Servicer shall be a party
      and which succeeds to all or a significant part of the electric distribution
      business of the Servicer,

     

    (d)
       which
      may, in a transaction or a series of related transactions, succeed to the
      properties and assets of the Servicer substantially as a whole and which, in
      a
      transaction or a series of related transactions, succeeds to all or a
      significant part of the electric distribution business of the Servicer, or
      

     

    (e)
       which
      may
      otherwise succeed to all or a significant part of the electric distribution
      business of the Servicer,

     

    which
      Person or Persons in any of the foregoing cases executes or execute an agreement
      of assumption to perform every obligation of the Servicer under this Servicing
      Agreement, shall be the successor or successors to the Servicer hereunder
      without the execution or filing of any document or any further act by any of
      the
      parties to this Servicing Agreement; provided, however, that:

     

    (i) immediately
      after giving effect to such transaction, no representation or warranty made
      pursuant to Section 5.01 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;

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (ii) the
      Servicer shall have delivered to the Issuer, the Trustee and the Rating Agencies
      a Servicer Officers’ Certificate and an Opinion of Counsel each stating that
      such consolidation, merger or succession and such agreement of assumption comply
      with this Section 5.03 and that all conditions precedent, if any, provided
      for
      in this Servicing Agreement relating to such transaction have been complied
      with;

     

    (iii) the
      Servicer shall have delivered to the Issuer, the Trustee and the Rating Agencies
      an Opinion of Counsel either:

     

    
      	 	
              (A)

            	
              stating
                that, in the opinion of such counsel, all filings to be made by the
                Servicer, including New Jersey UCC filings and Delaware UCC filings,
                that
                are necessary fully to preserve and protect the interests of 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 the then current ratings on any of the Outstanding Transition Bonds will
      not
      be withdrawn or downgraded by the Rating Agencies; and

     

    (v) the
      Servicer shall have delivered to the Issuer, the Trustee and the Rating Agencies
      an opinion of independent tax counsel (as selected by, and in form and substance
      reasonably satisfactory to, the Servicer, and which may be based on a ruling
      from the Internal Revenue Service) to the effect that, for federal income tax
      purposes, such consolidation or merger will not result in a material adverse
      federal income tax consequence to the Servicer, the Issuer, the Trustee or
      the
      then existing Transition Bondholders.

     

    The
      Servicer 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 subclauses (i), (ii), (iii), (iv) and (v) above.
      When any Person or Persons acquires or acquire the properties and assets of
      the
      Servicer substantially as a whole and becomes or become the successor or
      successors to the Servicer in accordance with the terms of this Section 5.03,
      then upon the satisfaction of all of the other conditions of this Section 5.03,
      the Servicer shall automatically and without further notice be released from
      its
      obligations hereunder.

     

    Section
      5.04 Assignment
      of Servicer’s Obligations.
      Subject
      to the provisions of Section 5.06, the Servicer may assign any or all of its
      obligations hereunder to any successor if either (i) prior written notice has
      been provided to the Rating Agencies and the then current ratings on any of
      the
      Outstanding Transition Bonds will not be withdrawn or downgraded by the Rating
      Agencies and any other conditions specified in the Financing Order have been
      satisfied or (ii) the Servicer is replaced by a successor pursuant to Section
      5.03 hereof.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Section
      5.05 Limitation
      on Liability of Servicer and Others.
      The
      Servicer, in such capacity, shall not be liable to the Issuer, the Trustee,
      or
      the Transition Bondholders except as provided under this Servicing Agreement,
      for any action taken or for refraining from the taking of any action pursuant
      to
      this Servicing Agreement or for good faith errors in judgment; provided,
      however, that this provision shall not protect the Servicer against any
      liability that would otherwise be imposed by reason of willful misconduct,
      bad
      faith or gross negligence in the performance of its duties or by reason of
      reckless disregard of its obligations and duties under this Servicing Agreement.
      The Servicer and any director, officer, employee or agent of the Servicer may
      rely in good faith on the advice of counsel reasonably acceptable to the Trustee
      or on any document of any kind, prima facie properly executed and submitted
      by
      any Person, respecting any matters arising under this Servicing
      Agreement.

     

    Except
      as
      provided in this Servicing Agreement, the Servicer, in such capacity, shall
      not
      be under any obligation to appear in, prosecute or defend any legal action
      that
      is not incidental to its duties to service the Transferred Bondable Transition
      Property in accordance with this Servicing Agreement or related to its
      indemnification obligations, and that in its reasonable opinion may cause it
      to
      incur any expense or liability.

     

    Section
      5.06 JCP&L
      Not to Resign as Servicer.
      Subject
      to the provisions of Sections 5.03 and 5.04, JCP&L shall not resign
      from the obligations and duties imposed on it as Servicer under this Servicing
      Agreement except upon a determination that the performance of its duties under
      this Servicing Agreement shall no longer be permissible under applicable law.
      Any such resignation shall not be effective until approved by the BPU. Notice
      of
      any such determination permitting the resignation of JCP&L shall be
      communicated to the Issuer, the Trustee and each Rating Agency at the earliest
      practicable time (and, if such communication is not in writing, shall be
      confirmed in writing at the earliest practicable time), and any such
      determination shall be evidenced by an Opinion of Counsel to such effect
      delivered to the Issuer and the Trustee concurrently with or promptly after
      such
      notice. No such resignation shall be permitted if such resignation will result
      in the reduction or withdrawal of the then current ratings on any Outstanding
      Transition Bond. No such resignation shall become effective until a Successor
      Servicer has assumed the servicing obligations and duties hereunder of the
      Servicer in accordance with Section 6.04.

     

    Section
      5.07 Quarterly
      Servicing Fee.
      The
      Issuer agrees to pay the Servicer the Quarterly Servicing Fee with respect
      to
      all Series of Transition Bonds. On each Monthly Remittance Date that coincides
      with a Payment Date, the Servicer shall be entitled to withhold the amount
      of
      the Quarterly Servicing Fee from TBC Collections as compensation under this
      Servicing Agreement unless the Trustee has notified the Servicer in writing
      that
      the Issuer does not hold sufficient funds to pay amounts owed in such month
      to
      the Trustee. For so long as JCP&L is the Servicer, the Quarterly Servicing
      Fee shall be $[ ]. The Servicer shall be entitled to retain as additional
      compensation net investment income on TBC Collections related to the Transferred
      Bondable Transition Property received by the Servicer during any Collection
      Period prior to remittance to the Collection Account and the late fees, if
      any,
      paid by Customers to the Servicer. The Issuer and the Servicer agree and
      acknowledge that the foregoing fees constitute a fair and reasonable price
      for
      the obligations to be performed by the Servicer. In no event shall the Trustee
      be liable for any Quarterly Servicing Fee.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Section
      5.08 Servicer
      Expenses.
      Except
      as
      otherwise expressly provided herein, the Servicer shall be required to pay
      all
      expenses incurred by it in connection with its activities hereunder, including
      fees and disbursements of independent accountants and counsel, taxes imposed
      on
      the Servicer and expenses incurred in connection with reports to the Transition
      Bondholders and shall not be entitled to any additional payment or reimbursement
      therefor.

     

    Section
      5.09 Subservicing.The
      Servicer may at any time appoint a subservicer to perform all or any portion
      of
      its obligations as Servicer hereunder; provided, however, that written notice
      has been given to the Rating Agencies and the Trustee and the then current
      ratings on any Outstanding Transition Bonds will not be withdrawn or downgraded
      by the Rating Agencies; and provided, further, that the Servicer shall remain
      obligated and be liable to the Issuer, the Trustee and the Transition
      Bondholders for the servicing and administering of the Transferred Bondable
      Transition Property in accordance with the provisions hereof without diminution
      of such obligation and liability by virtue of the appointment of such
      subservicer and to the same extent and under the same terms and conditions
      as if
      the Servicer alone were servicing and administering the Transferred Bondable
      Transition Property. The fees and expenses of the subservicer shall be as agreed
      between the Servicer and its subservicer from time to time, and none of the
      Issuer, the Trustee or the Transition Bondholders shall have any responsibility
      therefor. Any such appointment shall not constitute a Servicer resignation
      under
      Section 5.06. 

     

    Section
      5.10 No
      Servicer Advances.
      The
      Servicer shall not make any advances of interest on or principal of the
      Transition Bonds. 

     

    Section
      5.11 Remittances.

     

    (a)
       The
      Servicer shall remit TBC Collections (from whatever source) in accordance with
      Section 3.03(a)(ii), and all proceeds of other Collateral of the Issuer, if
      any, received by the Servicer, to the Trustee for deposit pursuant to the
      Indenture, not later than each Daily Remittance Date. The Servicer shall
      promptly remit any Indemnity Amounts paid or received by it immediately to
      the
      Trustee for deposit pursuant to the Indenture.

     

    (b)
       Notwithstanding
      the foregoing clause (a), as long as 

     

    (i) JCP&L
      or any successor to JCP&L’s electric distribution business remains the
      Servicer,

     

    (ii) no
      Servicer Default has occurred and is continuing,

     

    (iii)
      (A) JCP&L,
      or any Successor Servicer to JCP&L’s electric distribution business,
      maintains a short-term rating of ‘A-1’ or better by S&P, ‘P-1’ or better
      byMoody’s, and ‘F-1’ or better by Fitch,

     

    or

     

    (B) 
any
      additional conditions or limitations imposed by the Rating Agencies are complied
      with and each

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Rating
      Agency has notified the Servicer, the Issuer and the Trustee that the monthly
      remittance will not result in a downgrade or withdrawal of the then current
      ratings of any Outstanding Transition Bonds (except that with regard to Moody’s
      and Fitch it will be sufficient to provide ten days notice of any such
      action),

     

    (iv) the
      BPU
      has approved Servicer remittances on a monthly basis and

     

    (v) the
      Servicer has delivered to the Rating Agencies an Opinion of Counsel addressing
      certain “true sale” and “non-consolidation” issues in form and substance
      reasonably satisfactory to such Rating Agencies,

     

    the
      Servicer need not make the daily remittances required by clause (a), but in
      lieu
      thereof, shall remit all TBC Collections (from whatever source) in accordance
      with Section 3.03(a)(i), and all proceeds of other Collateral of the Issuer,
      if
      any, received by the Servicer during any Collection Period to the Trustee for
      deposit pursuant to the Indenture, not later than the corresponding Monthly
      Remittance Date.

     

    Section
      5.12 Protection
      of Title.The
      Servicer shall execute and file such filings and cause to be executed and filed
      such filings, all in such manner and in such places as may be required by law
      fully to preserve, maintain and protect the interests of the Trustee in the
      Transferred Bondable Transition Property and other Collateral, including all
      filings required under the New Jersey UCC and the Delaware UCC relating to
      the
      transfer of ownership of or a security interest in the Transferred Bondable
      Transition Property by the Seller to the Issuer or the security interest granted
      by the Issuer to the Trustee in the Transferred Bondable Transition Property
      and
      other Collateral. The Servicer shall deliver (or cause to be delivered) to
      the
      Issuer and the Trustee file-stamped copies of, or filing receipts for, any
      document filed as provided above, as soon as available following such
      filing.

     

    ARTICLE
      VI

     

    SERVICER
      DEFAULT

     

    Section
      6.01 Servicer
      Default.
      If
      any
      one of the following events (a “Servicer Default”) occurs and is
      continuing:

     

    (a)
       any
      failure by the Servicer to remit to the Trustee, on behalf of the Issuer, any
      required remittance that continues unremedied for a period of five Business
      Days
      after the date it is required to be paid; or

     

    (b)
       any
      failure by the Servicer duly to observe or perform in any material respect
      any
      other covenant or agreement of the Servicer set forth in this Servicing
      Agreement or any other Basic Document to which the Servicer, as such, is a
      party, which failure:

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (i) materially
      and adversely affects the Transferred Bondable Transition Property or the rights
      of the Transition Bondholders; and

     

    (ii) continues
      unremedied for a period of sixty days after the date on which written notice
      of
      such failure has been given to the Servicer by the Issuer, the Trustee or the
      Holders of not less than twenty-five percent of the Outstanding principal
      balance of the Transition Bonds of all Series and Classes, acting together
      as a
      single class, or after discovery of such failure by an officer of the Servicer,
      as the case may be; or

     

    (c)
       any
      representation or warranty made by the Servicer in this Servicing Agreement
      proves to have been incorrect when made, which has a material adverse effect
      on
      the Issuer or the Transition Bondholders and which material adverse effect
      continues unremedied for a period of sixty days after the date on which written
      notice thereof has been given to the Servicer by the Issuer, the Trustee or
      the
      Holders of not less than twenty-five percent of the Outstanding principal
      balance of the Transition Bonds of all Series and Classes, acting together
      as a
      single class, or after discovery of such failure by an officer of the Servicer,
      as the case may be; or

     

    (d)
       an
      Insolvency Event occurs with respect to the Servicer; 

     

    then,
      and
      in each and every case, so long as the Servicer Default shall not have been
      remedied, the Trustee, with the written consent of the Holders of a majority
      of
      the Outstanding principal balance of the Transition Bonds of all Series and
      Classes, voting together as a single class, by notice then given in writing
      to
      the Servicer (a “Termination Notice”), may terminate all the rights and
      obligations (other than the indemnification obligations set forth in Section
      5.02 hereof, the obligation under Section 6.04 to continue performing its
      functions as Servicer until a Successor Servicer is appointed and the right
      to
      receive the requisite portion of the Quarterly Servicing Fees) of the Servicer
      under this Servicing Agreement. In addition, upon a Servicer Default because
      of
      a failure to make required remittances, the Issuer and the Trustee shall each
      be
      entitled to apply to the BPU or any court of competent jurisdiction for
      sequestration and payment to the Trustee of revenues arising with respect to
      the
      Transferred Bondable Transition Property.

     

    On
      or
      after the receipt by the Servicer of a Termination Notice, all authority and
      power of the Servicer under this Servicing Agreement, whether with respect
      to
      the Transferred Bondable Transition Property, the related Transition Bond Charge
      or otherwise, shall, upon appointment of a Successor Servicer pursuant to
      Section 6.04, without further action, pass to and be vested in such Successor
      Servicer and, without limitation, the Trustee is hereby authorized and empowered
      to execute and deliver, on behalf of the predecessor Servicer, as
      attorney-in-fact or otherwise, any and all documents and other instruments,
      and
      to do or accomplish all other acts or things necessary or appropriate to effect
      the purposes of such Termination Notice, whether to complete the transfer of
      the
      Bondable Transition Property Documentation and related documents, or otherwise.
      The predecessor Servicer shall cooperate with the Successor Servicer, the
      Trustee and the Issuer in effecting the termination of the responsibilities
      and
      rights of the predecessor Servicer under this Servicing Agreement, including
      the
      transfer to the Successor Servicer for administration by it of all cash amounts
      that shall at the time be held by the predecessor Servicer for remittance,
      or
      shall thereafter be received by it with respect to the

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Transferred
      Bondable Transition Property or the related Transition Bond Charge. As soon
      as
      practicable after receipt by the Servicer of such Termination Notice, the
      Servicer shall deliver the Bondable Transition Property Documentation to the
      Successor Servicer. All reasonable costs and expenses (including attorneys’ fees
      and expenses) incurred in connection with transferring the Bondable Transition
      Property Documentation to the Successor Servicer and amending this Servicing
      Agreement to reflect such succession as Servicer pursuant to this Section 6.01
      shall be paid by the predecessor Servicer upon presentation of reasonable
      documentation of such costs and expenses. Termination of JCP&L as Servicer
      shall not terminate JCP&L’s rights or obligations under the Sale
      Agreement.

     

    Section
      6.02 Notice
      of Servicer Default.
      The
      Servicer shall deliver to the Issuer, the Trustee and each Rating Agency
      promptly after having obtained knowledge thereof, but in no event later than
      five Business Days thereafter, written notice in a Servicer Officers’
Certificate of any event or circumstance which, with the giving of notice or
      the
      passage of time or both, would become a Servicer Default under Section 6.01.
      If
      any Outstanding Transition Bonds are listed on the Luxembourg Stock Exchange,
      such notice shall also be given by publication in a daily newspaper in
      Luxembourg, if the rules of the Luxembourg Stock Exchange so require.

     

    Section
      6.03 Waiver
      of Past Defaults.
      The
      Trustee, with the written consent of the Holders of not less than a majority
      of
      the Outstanding principal balance of the Transition Bonds of all Series and
      Classes, voting together as a single class, may waive in writing any default
      by
      the Servicer in the performance of its obligations hereunder and its
      consequences, except a default in making any required remittances to the Trustee
      of TBC Collections in accordance with Section 3.03. Upon any such waiver of
      a
      past default, such default shall cease to exist, and any Servicer Default
      arising therefrom shall be deemed to have been remedied for every purpose of
      this Servicing Agreement. No such waiver shall extend to any subsequent or
      other
      default or impair any right consequent thereto. 

     

    Section
      6.04 Appointment
      of Successor.

     

    (a)
       Upon
      the
      Servicer’s receipt of a Termination Notice pursuant to Section 6.01 or the
      Servicer’s resignation in accordance with the terms of this Servicing Agreement,
      the predecessor Servicer shall continue to perform its functions as Servicer
      under this Servicing Agreement and shall be entitled to receive the requisite
      portion of the Quarterly Servicing Fees, until a Successor Servicer has assumed
      in writing the obligations of the Servicer hereunder as described below. In
      the
      event of the Servicer’s removal or resignation hereunder, the Trustee, as
      assignee of the Issuer, may, at the sole expense of the Issuer, appoint a
      Successor Servicer, with the consent of the Holders of not less than a majority
      of the Outstanding principal balance of the Transition Bonds of all Series
      and
      Classes, voting together as a single class, and the Successor Servicer shall
      accept its appointment by a written assumption in form acceptable to the Issuer
      and the Trustee. If, within thirty days after the delivery of the Termination
      Notice, a new Servicer has not been appointed and accepted such appointment,
      the
      Trustee, at the sole expense of the Issuer, may petition the BPU or a court
      of
      competent jurisdiction to appoint a Successor Servicer under this Servicing
      Agreement. A Person shall qualify as a Successor Servicer only if:

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (i) such
      Person is permitted to perform the duties of the Servicer pursuant to the
      Competition Act, the BPU Regulations, the Financing Order and this Servicing
      Agreement;

     

    (ii) prior
      notice has been given to the Rating Agencies and the then current ratings on
      any
      Outstanding Transition Bonds shall not be withdrawn or downgraded by the Rating
      Agencies; and 

     

    (iii) such
      Person enters into a servicing agreement with the Issuer having substantially
      the same provisions as this Servicing Agreement.

     

    (b)
       Upon
      appointment, the Successor Servicer shall be the successor in all respects
      to
      the predecessor Servicer under this Servicing Agreement and shall be subject
      to
      all the responsibilities, duties and liabilities arising thereafter relating
      thereto placed on the predecessor Servicer and shall be entitled to the
      Quarterly Servicing Fee and all the rights granted to the predecessor Servicer
      by the terms and provisions of this Servicing Agreement. 

     

    (c)
       The
      Successor Servicer may resign only if it is prohibited from serving as such
      by
      applicable law.

     

    (d)
       A
      Successor Servicer may bring an action against a particular Customer for
      nonpayment of the Transition Bond Charge, or terminate service for failure
      to
      pay the Transition Bond Charge, only if such Successor Servicer is the electric
      public utility with respect to that Customer.

     

    (e)
       All
      expenses incurred by the Trustee in connection with the appointment of a
      Successor Servicer shall be reimbursed to the Trustee, pursuant to Section
      8.02(d) of the Indenture.

     

    Section
      6.05 Cooperation
      With Successor.
      The
      Servicer covenants and agrees with the Issuer that it will, on an ongoing basis,
      cooperate with the Successor Servicer and provide whatever information is,
      and
      take whatever actions are, reasonably necessary to assist the Successor Servicer
      in performing its obligations hereunder.

     

    ARTICLE
      VII

     

    MISCELLANEOUS
      PROVISIONS

     

    Section
      7.01 Amendment.

     

    (a)
       Upon
      five
      Business Days’ prior written notice to the Rating Agencies, this Servicing
      Agreement may be amended by the Servicer and the Issuer with the written consent
      of the Trustee upon receipt of an Issuer Order, but without the consent of
      the
      Transition Bondholders, to: 

     

    (i) cure
      any
      ambiguity;

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (ii) correct
      or supplement any provision in this Servicing Agreement;

     

    (iii) add
      any
      provisions to or change in any manner or eliminate any of the provisions of
      this
      Servicing Agreement; or

     

    (iv) modify
      in
      any manner the rights of the Transition Bondholders;

     

    provided,
      that such action will not, as certified in a Servicer Officers’ Certificate of
      the Servicer delivered to the Issuer and to the Trustee and the Managers,
      adversely affect in any material respect the interest of any Holder of
      Transition Bonds then Outstanding.

     

    (b)
       This
      Servicing Agreement may be amended by the Servicer and the Issuer with five
      Business Days’ prior written notice to the Rating Agencies and with the written
      consent of the Trustee and the consent of the Holders of not less than a
      majority of the Outstanding principal balance of the Transition Bonds of all
      Series and Classes affected thereby, voting together as a single class, for
      the
      purpose of adding any provisions to or changing in any manner or eliminating
      any
      of the provisions of this Servicing Agreement or of modifying in any manner
      the
      rights of the Transition Bondholders; provided, however, no amendment adopted
      in
      this manner may increase or decrease, or accelerate or delay the timing or
      collection of the Transition Bond Charge, or reduce the percentage of Transition
      Bondholders required to consent to amendments.

     

    No
      amendment of the provisions of this Servicing Agreement relating to the
      Servicer’s remittance and Transition Bond Charge Adjustment obligations will be
      permitted absent confirmation from the Rating Agencies that such amendment
      will
      not result in a reduction or withdrawal of the then existing ratings of any
      Outstanding Transition Bonds by the Rating Agencies (except that with regard
      to
      Moody’s and Fitch it will be sufficient to provide ten days’ prior notice of the
      amendment).

     

    (c)
       The
      Issuer may also amend the servicing procedures provided in this Servicing
      Agreement solely to address changes to the Servicer’s method of calculating
      payments of the Transition Bond Charge received as a result of changes to the
      Servicer’s current computerized information system, if the amendment does not
      have a material adverse effect on the Holders of Transition Bonds then
      Outstanding, with prior written notice to the Trustee and the Rating Agencies,
      but without the consent of the Trustee, any Rating Agency or any Transition
      Bondholder. These changes may include changes that would replace remittances
      calculated by estimation procedures with remittances of TBC Collections actually
      received.

     

    Prior
      to
      the execution of any amendment to this Servicing 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
      Servicing Agreement and the Opinion of Counsel referred to in Section 3.06(b)
      of
      the Indenture. 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 Servicing Agreement or otherwise. 

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    Section
      7.02 Notices.
      Unless
      otherwise specifically provided herein, all notices, directions, consents and
      waivers required under the terms and provisions of this Servicing Agreement
      shall be in English and in writing, and any such notice, direction, consent
      or
      waiver may be given by United States first-class mail, reputable overnight
      courier service, facsimile transmission or electronic mail (confirmed by
      telephone, United States first-class mail or reputable overnight courier service
      in the case of notice by facsimile transmission or electronic mail) or any
      other
      customary means of communication, and any such notice, direction, consent or
      waiver shall be effective when delivered or transmitted, or if mailed, five
      days
      after deposit in the United States first-class mail with proper postage for
      first-class mail prepaid:

     

    (a)
       in
      the
      case of the Servicer, at Jersey Central Power & Light Company, 76 South Main
      Street, Akron, Ohio 44308;

     

    (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;

     

    (c)
       in
      the
      case of the Trustee, at its Corporate Trust Office;

     

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

     

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

     

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

     

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

     

    Section
      7.03 Limitations
      on Rights of Others.
      The
      provisions of this Servicing Agreement are solely for the benefit of the
      Servicer, the Issuer and the Trustee, on behalf of itself and the Transition
      Bondholders, and nothing in this Servicing Agreement, whether express or
      implied, shall be construed to give to any other Person any legal or equitable
      right, remedy or claim in any Collateral or under or in respect of this
      Servicing Agreement or any covenants, conditions or provisions contained
      herein.

     

    Section
      7.04 Severability.
      Any
      provision of this Servicing Agreement that is prohibited or unenforceable in
      any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.

     

    Section
      7.05 Separate
      Counterparts.
      This
      Servicing Agreement may be executed by the parties hereto in separate
      counterparts, each of which when so executed and delivered shall

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    be
      an
      original, but all such counterparts shall together constitute but one and the
      same instrument.

     

    Section
      7.06 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
      7.07 Governing
      Law.  THIS
      SERVICING AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
      OF NEW JERSEY, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
      OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
      IN
      ACCORDANCE WITH SUCH LAWS.

     

    Section
      7.08 Assignment
      to the Trustee.
       

     

    (a)   The
      Servicer 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 other Collateral owned by the Issuer and the
      proceeds thereof and the assignment of any or all of the Issuer’s rights
      hereunder to the Trustee.

     

    (b) In
      no
      event shall the Trustee have any liability for the representations, warranties,
      covenants, agreements or other obligations of the Issuer hereunder or in any
      of
      the certificates, notices or agreements delivered pursuant hereto, as to all
      of
      which recourse shall be had solely to the assets of the Issuer.

     

    (c) The
      Trustee, in acting hereunder, is entitled to all rights, benefits, protections,
      immunities and indemnities accorded to it under the Indenture. 

     

    Section
      7.09 Nonpetition
      Covenants.
      Notwithstanding any prior termination of this Servicing Agreement or the
      Indenture, the Servicer hereby covenants and agrees that it shall not, prior
      to
      the date which is one year and one day after the satisfaction and discharge
      of
      the Indenture, including, without limitation, any amounts owed to third-party
      credit enhancers, and any amounts owed by the Issuer 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.

     

    Section
      7.10 Termination.
      This
      Servicing Agreement shall terminate upon satisfaction and discharge of the
      Indenture. 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

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

     

    

      
        	 	
                JCP&L
                  TRANSITION FUNDING II LLC,

                as
                  Issuer

                 

              
	 	
                By:

              	 
	 	 	
                Name:

              
	 	 	
                Title:

              
	 	
                
JERSEY
                  CENTRAL POWER & LIGHT COMPANY,

                as
                  Servicer

                 

              
	 	
                By:

              	 
	 	 	
                Name:

              
	 	 	
                Title:

              

      

    

    

     

    Acknowledged
      and Accepted:

     

    The
      Bank
      of New York,

    as
      Trustee 

     

    By:
       __________________________

    Name:
      

    Title:
      

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    ANNEX
      1

     

    TO

     

    SERVICING
      AGREEMENT

     

    The
      Servicer agrees to comply with the following with respect to JCP&L
      Transition Funding II LLC, as Issuer:

     

    Section
      1. Definitions.
      Capitalized
      terms used herein and not otherwise defined shall have the meanings set forth
      in
      Appendix A to the Indenture dated as of_______ , 2006 between the Issuer and
      The
      Bank of New York, as Trustee.

     

    Section
      2. Trustee
      and Servicer Payment Date Statements. At
      least
      one Business Day before each date on which distributions to the Trustee and
      Servicer are to be made pursuant to Sections 8.02(d) and (e) of the Indenture,
      the Servicer shall provide the Trustee with a statement setting forth the
      amounts to be distributed to each of the Trustee and Servicer pursuant to such
      Sections.

     

    Section
      3. Payment
      Date Statements.
      At least
      one Business Day before each Payment Date, the Servicer shall provide to the
      Issuer, the Trustee, each Rating Agency and, for so long as any Transition
      Bonds
      are listed on the Luxembourg Stock Exchange, any listing agent in Luxembourg,
      a
      statement indicating:

     

    
      	 	
              1.
                

            	
              the
                amount to be paid to Transition Bondholders of each Series and Class
                in
                respect of principal on such Payment Date in accordance with Section
                8.02
                of the Indenture and each Series Supplement
                thereto;

            

    

     

    
      	 	
              2.
                

            	
              the
                amount to be paid to Transition Bondholders of each Series and Class
                in
                respect of interest on such Payment Date in accordance with Section
                8.02
                of the Indenture and each Series Supplement
                thereto;

            

    

     

    
      	 	
              3.
                

            	
              the
                Transition Bond Balance and the Projected Transition Bond Balance
                and the
                transition bond balance for each Series and Class as of that Payment
                Date
                (in each case, after giving effect to the payments on such Payment
                Date);

            

    

     

    
      	 	
              4.
                

            	
              the
                amount on deposit in the Overcollateralization Subaccount for each
                Series
                and the Scheduled Overcollateralization Level for each Series, as
                of that
                Payment Date (after giving effect to the transfers to be made from
                or into
                the Overcollateralization Subaccount on such Payment
                Date);

            

    

     

    
      	 	
              5.
                

            	
              the
                amount on deposit in the Capital Subaccount for each Series as of
                that
                Payment Date (after giving effect to the transfers to be made from
                or into
                the Capital Subaccount on such Payment
                Date);

            

    

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.
                

            	
              the
                amount, if any, on deposit in the Reserve Subaccount as of that Payment
                Date (after giving effect to the transfers to be made from or into
                the
                Reserve Subaccount on such Payment
                Date);

            

    

     

    
      	 	
              7.
                

            	
              the
                amounts to be paid to each Swap Counterparty (on a gross and a net
                basis,
                separately stated) under the related Interest Rate Swap Agreement
                on or
                before such Payment Date;

            

    

     

    
      	 	
              8.
                

            	
              the
                amounts paid to the Trustee since the preceding Payment Date pursuant
                to
                Section 8.02(d) of the Indenture;

            

    

     

    
      	 	
              9.
                

            	
              the
                amounts paid to or withheld by the Servicer since the preceding Payment
                Date pursuant to Section 8.02(e) of the Indenture;
                and

            

    

     

    
      	 	
              10.
                

            	
              the
                amount of any other transfers and payments to be made on such Payment
                Date
                pursuant to Sections 8.02(d), (e), (f), (g) and (i) of the
                Indenture.

            

    

     

    Section
      4. Remittance
      Date Statements.
      At least
      one Business Day before each Remittance Date, and in the case of Daily
      Remittances, on the last Remittance Date of such month, the Servicer shall
      prepare and furnish to the Issuer and the Trustee a statement setting forth
      the
      aggregate amount remitted or to be remitted by the Servicer to the Trustee
      (net
      of any payments owed to the Servicer in accordance with Section 3.03(b) of
      the
      Servicing Agreement) for deposit on such Remittance Date pursuant to the
      Indenture.

     

    Section
      5. Transition
      Bond Charge Adjustments.

     

    
      	 	
              (a)
                

            	
              Prior
                to each Calculation Date, the Servicer shall calculate
                

            

    

     

    
      	 	
              (i)

            	
              the
                Transition Bond Balance as of such Calculation Date (a written copy
                of
                which shall be delivered by the Servicer to the Trustee within five
                Business Days following such Calculation Date)
                and

            

    

     

    
      	 	
              (ii)

            	
              the
                revised Transition Bond Charge with respect to the Transferred Bondable
                Transition Property in respect of each Adjustment Date such that
                the
                Servicer projects that TBC Collections therefrom allocable to the
                Issuer
                will be sufficient so that: 

            

    

     

    
      	 	
              (A)

            	
              the
                Transition Bond Balance on the Payment Date immediately preceding
                the next
                Adjustment Date will equal the Projected Transition Bond Balance
                as of
                such date or, if earlier with respect to any Series or Class of Transition
                Bonds, as of the Payment Date immediately preceding the Expected
                Final
                Payment Date therefor;

            

    

     

    
      	 	
              (B)

            	
              the
                amount on deposit in the Overcollateralization Subaccount on the
                Payment
                Date immediately preceding the next Adjustment Date will equal the
                Scheduled 

            

    

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

     

    
      	
            	
               

            	
              
                Overcollateralization
                  Level for such date or,
                  if earlier with respect to any Series or Class of Transition Bonds,
                  as of
                  the Payment Date immediately preceding the Expected Final Payment
                  Date
                  therefor;

              

            

    

     

    
      	 	
              (C)

            	
              the
                amount on deposit in the Capital Subaccount on the Payment Date
                immediately preceding the next Adjustment Date will equal its required
                level for such date or, if earlier with respect to any Series or
                Class of
                Transition Bonds, as of the Payment Date immediately preceding the
                Expected Final Payment Date therefor;

            

    

     

    
      	 	
              (D)

            	
              the
                amount on deposit in the Reserve Subaccount on the Payment Date
                immediately preceding the next Adjustment Date, will equal zero;
                and

            

    

     

    
      	 	
              (E)

            	
              the
                TBC Collections will provide for (i) amortization of the remaining
                outstanding principal balance of each Series in accordance with the
                Expected Amortization Schedule therefor, (ii) payment of interest
                on each
                Series when due and payment of any amounts (other than termination
                or
                breakage amounts) under each Interest Rate Swap Agreement, (iii)
                payment
                of all Operating Expenses of the Issuer when due in accordance with
                the
                Indenture and (iv) deposits to the Overcollateralization Subaccount
                such
                that the balance therein will equal the Scheduled Overcollateralization
                Level on each Payment Date.

            

    

     

    
      	 	
              (b)
                

            	
              On
                each Calculation Date, the Servicer shall file an Adjustment Request
                with
                the BPU. This filing shall include the data specified in the Petition
                and
                the Financing Order.

            

    

     

    
      	 	
              (c)
                

            	
              On
                each Adjustment Date, the Servicer shall

            

    

     

    
      	 	
              (i)

            	
              take
                all reasonable actions and make all reasonable efforts to effectuate
                all
                adjustments to the Transition Bond Charge either approved by the
                BPU or
                effective on an interim basis pending final approval
                and

            

    

     

    
      	 	
              (ii)

            	
              promptly
                send to the Trustee copies of all material notices and documents
                relating
                to such adjustments.

            

    

     

    
      	 	
              (d)
                

            	
              On
                each Adjustment Date, the Servicer shall provide Moody’s with a schedule
                indicating any changes to the Transition Bond Charge.
                

            

    

     

    
      	 	
              (e)
                

            	
              If
                deemed appropriate by the Servicer to protect Transition Bondholders
                and
                to remedy a significant and
                recurring

            

    

     

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

       

      
        	
              	
                 

              	
                variance
                  between actual and expected TBC Collections, as authorized by the
                  Financing Order, the Servicer shall make “non-routine” adjustments to the
                  Transition Bond Charge and the MTC-Tax (as defined in the Financing
                  Order)
                  to accommodate material changes to the methodology described in
                  Attachment
                  E-3 to Revised Exhibit E-Supplement of the Petition. Such filings
                  shall be
                  made at least thirty days prior to the proposed effective date
                  of the
                  proposed adjustments. The Servicer shall provide notice of such
                  non-routine adjustment and resulting change to the Transition Bond
                  Charge
                  to Fitch.

              

      

    

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    SERVICING
      PROCEDURES

     

    The
      Servicer agrees to comply with the following servicing procedures (and to
      consider and use the criteria specified in Item 1122(d) of Regulation AB (or
      any
      successor regulation), in effect from time to time, to assess its compliance
      with applicable servicing criteria.

     

    Section
      1.  Definitions.

     

    
      	 	
              (a)
                

            	
              Capitalized
                terms used herein and not otherwise defined shall have the meanings
                set
                forth in Appendix A to the Indenture dated as of_______ , 2006 between
                the
                Issuer and The Bank of New York, as
                Trustee.

            

    

     

    
      	 	
              (b)
                

            	
              Whenever
                used in this Exhibit A, the following words and phrases shall have
                the
                following meanings:

            

    

     

    Adjustment
      Request
      has,
      with respect to the Issuer, the meaning given to such term in Appendix
      A.

     

    Applicable
      MDMA
      means,
      with respect to each Customer, the meter data management agent or Third Party,
      if any, providing meter reading services for that Customer's
      account.

     

    Applicable
      Third Party
      means,
      with respect to each Customer, the Third Party, if any, providing billing or
      metering services to that Customer.

     

    Billed
      Transition Bond Charges
      means
      the amounts billed to Customers pursuant to the Transition Bond Charge, whether
      billed directly to such Customers by the Servicer or indirectly through a Third
      Party pursuant to Consolidated Third Party Billing. 

     

    Bills
      means
      each of the regular monthly bills, the summary bills, the opening bills and
      the
      Closing Bills issued to Customers or Third Parties by JCP&L.

     

    Budget
      Payment Plan
      means a
      levelized payment plan offered by JCP&L, which, if elected by a Customer,
      provides for level monthly Bill charges to such Customer. For residential
      Customers, this charge is calculated by calculating actual electricity charges
      for the previous year and dividing this amount by twelve. The number which
      results from this calculation is charged to the residential Customer each month.
      In the twelfth month, JCP&L bills the residential Customer for actual use in
      that month, adjusted for any excess or deficit the Customer has paid JCP&L
      over the prior eleven months. If the Customer owes JCP&L $4 or more over the
      normal budget amount, that Customer has the option of repaying the full amount
      in the twelfth month, or

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    spreading
      the amount of this deficit in equal installments over the first four months
      of
      the Customer's next budget year. The procedure is similar for small industrial
      and commercial Customers.

     

    Closing
      Bill
      means
      the final bill issued to a Customer at the time service is
      terminated.

     

    Consolidated
      Third Party Billing
      means
      the billing option available to Customers served by a Third Party pursuant
      to
      which such Third Party will be responsible for billing and collecting all
      charges to Customers electing such billing option, including the Transition
      Bond
      Charge, and will become obligated to the Servicer for the Billed Transition
      Bond
      Charges, all in accordance with applicable BPU Regulations and the Financing
      Order. 

     

    Net
      Write-Off Percent
      means
      the number (expressed as a percent) equal to

     

    
      	 	
              (i)

            	
              the
                amount by which Write-Offs attributable to a particular billing period
                exceed Write-Off recoveries attributable to such billing period,
                divided
                by

            

    

     

    
      	 	
              (ii)

            	
              the
                total billed revenue attributable to such billing period.
                

            

    

     

    Servicer
      Policies and Practices
      means,
      with respect to the Servicer’s duties under this Exhibit A, the policies and
      practices of the Servicer applicable to such duties that the Servicer follows
      with respect to comparable assets that it services for itself.

     

    Transition
      Bond Charge Effective Date
      means
      the date on which the initial Transition Bond Charge goes into effect pursuant
      to the Financing Order.

     

    Variables
      includes
      the following variables used in calculating Adjustment Requests:

     

    
      	 	
              (i)

            	
              the
                estimated Net Write-Off Percent;
                and

            

    

     

    
      	 	
              (ii)

            	
              the
                projected billed consumption to which the Transition Bond Charge
                applies.

            

    

     

    Write-Offs
      means
      arrears that remain unpaid by Customers generally as of ninety days after the
      issuance of the Closing Bills containing such charges, unless payment
      arrangements are made and are being kept.

     

    Section
      2. Data
      Acquisition.

     

    
      	 	
              (a)
                

            	
              Installation
                and Maintenance of Meters.
                Except to the extent that a Third Party is responsible for such services,
                the Servicer shall use its best efforts to cause to be installed,
                replaced
                and maintained meters in such
                places

            

    

     

    
      
        
        

      

      
        Exhibit
          A-2

        
          

        

      

      
        
        

      

    

     

    
      	
            	
               

            	
              and
                in such condition as will enable the Servicer to obtain usage measurements
                for each Customer approximately every thirty days or as provided
                in the
                applicable tariff.

            

    

     

    
      	 	
              (b)
                

            	
              Meter
                Reading.
                At
                least once each calendar month, the Servicer shall obtain usage
                measurements from the Applicable MDMA for each Customer; provided,
                however, that the Servicer may determine any Customer’s usage on the basis
                of estimates in accordance with applicable BPU
                Regulations.

            

    

     

    
      	 	
              (c)
                

            	
              Cost
                of Metering.
                The Issuer shall not be obligated to pay any costs associated with
                the
                metering duties set forth in this Section 2, including, but not limited
                to, the costs of installing, replacing and maintaining meters, nor
                shall
                the Issuer be entitled to any credit against the Servicing Fee for
                any
                cost savings realized by the Servicer or any Third Party as a result
                of
                new metering and/or billing
                technologies.

            

    

     

    Section
      3. Usage
      and Bill Calculation.

     

    The
      Servicer shall obtain a calculation of each Customer’s usage (which may be based
      on data obtained from such Customer’s meter read or on usage estimates
      determined in accordance with applicable BPU Regulations) at least once each
      calendar month and shall determine therefrom each Customer’s individual charge
      relating to the Transition Bond Charge to be included on such Customer’s Bill
      pursuant to the Financing Order and BPU Regulations.

     

    Section
      4. Billing.

     

    The
      Servicer shall implement the Transition Bond Charge as of the Transition Bond
      Charge Effective Date and shall thereafter bill each Customer or the Applicable
      Third Party for the respective Customer’s outstanding current and past due
      charges relating to the Transition Bond Charge, accruing until all payments
      of
      principal and interest on each Series of Transition Bonds and all other costs
      and expenses related to such Series have been paid in accordance with the
      Indenture, all in accordance with the following:

     

    
      	 	
              (a)
                

            	
              Frequency
                of Bills; Billing Practices.
                In
                accordance with the Servicer’s then-existing Servicer Policies and
                Practices, as such Servicer Policies and Practices may be modified
                from
                time to time, the Servicer shall generate and issue a Bill to each
                Customer, or, in the case of a Customer who has elected Consolidated
                Third
                Party Billing, to an Applicable Third Party, for such Customer’s
                respective Transition Bond Charge as a general practice once approximately
                every thirty days or such other time period as allowed by the BPU,
                at the
                same time, with the same frequency and on the same Bill as that containing
                the

            

    

     

    
      
        
        

      

      
        Exhibit
          A-3

        
          

        

      

      
        
        

      

    

     

    
      	
            	
               

            	
              Servicer’s
                own charges to such Customer or Third Party, as the case may be.
                In the
                event that the Servicer makes any material modification to these
                practices, it shall notify the Issuer, the Trustee and the Rating
                Agencies
                as soon as practicable, and in no event later than sixty Business
                Days
                after such modification goes into effect; provided, however,
                that

            

       

    

    
      	 	
              (i)

            	
              the
                Servicer may not make any modification that will materially adversely
                affect the Transition Bondholders
                and

            

    

     

    
      	 	
              (ii)

            	
              the
                Rating Agencies shall receive prior notice of any modification that
                would
                change the frequency with which Bills are issued or would change
                any
                tariff charged.

            

    

     

    
      	 	
              (b)
                

            	
              Format.

            

    

     

    
      	 	
              (i)

            	
              Each
                Bill to a Customer shall contain the charge corresponding to the
                Transition Bond Charge owed by such Customer for the billing period.
                The
                Customer’s Bill will contain in text or in a footnote, text substantially
                to the effect that a portion of the monthly charge representing that
                Bondable Transition Property is being collected on behalf of the
                Issuer as
                owner of the Bondable Transition
                Property.

            

    

     

    
      	 	
              (ii)

            	
              In
                the case of each Customer that has elected Consolidated Third Party
                Billing, the Servicer shall deliver to the Applicable Third Party
                itemized
                charges for such Customer including the amount of such Customer’s
                Transition Bond Charge to be remitted by the Servicer to the
                Issuer.

            

    

     

    
      	 	
              (iii)

            	
              The
                Servicer shall conform to such requirements in respect of the format,
                structure and text of Bills delivered to Customers and Third Parties
                as
                applicable BPU Regulations shall from time to time prescribe. To
                the
                extent that Bill format, structure and text are not prescribed by
                the
                Competition Act, other applicable law or BPU Regulations, the Servicer
                shall, subject to clauses (i) and (ii) above, determine the format,
                structure and text of all Bills in accordance with its reasonable
                business
                judgment, its Servicer Policies and Practices with respect to its
                own
                charges and prevailing industry
                standards.

            

    

     

    
      	 	
              (c)
                

            	
              Delivery.
                The Servicer shall deliver all Bills to Customers
                

            

    

     

    
      	 	
              (i)

            	
              by
                United States mail in such class or classes as are consistent with
                the
                Servicer Policies and Practices followed by the Servicer with respect
                to
                its own charges or

            

    

     

    
      
        
        

      

      
        Exhibit
          A-4

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              by
                any other means, whether electronic or otherwise, that the Servicer
                may
                from time to time use to present its own charges to its
                Customers.

            

    

     

    In
      the
      case of Customers that have elected Consolidated Third Party Billing, the
      Servicer shall deliver all Bills to the Applicable Third Parties by such means
      as are prescribed by applicable BPU Regulations, or, if not prescribed by
      applicable BPU Regulations, by such means as are mutually agreed upon by the
      Servicer and the Applicable Third Party and are consistent with BPU Regulations.
      The Servicer or a Third Party, as applicable, shall pay from its own funds
      all
      costs of issuance and delivery of all Bills, including but not limited to
      printing and postage costs as the same may increase or decrease from time to
      time.

     

    Section
      5. Customer
      Service Functions.

     

    The
      Servicer shall handle all Customer inquiries and other Customer service matters
      according to the same procedures it uses to service Customers with respect
      to
      its own charges.

     

    Section
      6. Collections;
      Payment Processing; Remittance.

     

    
      	 	
              (a)
                

            	
              Collection
                Efforts; Policies; Procedures.

            

    

     

    
      	 	
              (i)

            	
              The
                Servicer shall use reasonable efforts to collect all Billed Transition
                Bond Charges from Customers and Third Parties as and when the same
                become
                due and shall follow such collection procedures as it follows with
                respect
                to comparable assets that it services for itself or others, including,
                as
                follows:

            

    

     

    
      	 	
              (A)

            	
              The
                Servicer shall prepare and deliver overdue notices to Customers and
                Third
                Parties in accordance with applicable BPU Regulations and the Servicer
                Policies and Practices.

            

    

     

    
      	 	
              (B)

            	
              The
                Servicer shall apply late payment charges to outstanding Customer
                and
                Third Party balances in accordance with applicable BPU Regulations.
                All
                late payment charges collected shall be payable to and retained by
                the
                Servicer as a component of its compensation under the Servicing Agreement,
                and the Issuer shall not have any right to share in the
                same.

            

    

     

    
      	 	
              (C)

            	
              The
                Servicer shall deliver verbal and written final call notices in accordance
                with applicable BPU Regulations and Servicer Policies and
                Practices.

            

    

     

    
      	 	
              (D)

            	
              The
                Servicer shall adhere to and carry out disconnection policies in
                accordance with the Competition Act,
                other

            

    

     

    
      
        
        

      

      
        Exhibit
          A-5

        
          

        

      

      
        
        

      

    

     

    
      	
            	
               

            	
              applicable
                law and BPU Regulations and Servicer Policies and
                Practices.

            

    

     

    
      	 	
              (E)

            	
              The
                Servicer may employ the assistance of collections agents in accordance
                with applicable BPU Regulations and Servicer Policies and
                Practices.

            

    

     

    
      	 	
              (F)

            	
              The
                Servicer shall apply Customer and Third Party deposits, Customers’ letters
                of credit and Customer posted surety bonds to the payment of delinquent
                accounts in accordance with applicable BPU Regulations and Servicer
                Policies and Practices and according to the priorities set forth
                in
                Sections 6(b)(ii), (iii) and (iv) of this Exhibit
                A.

            

    

     

    
      	 	
              (G)

            	
              The
                Servicer shall promptly take all necessary action in accordance with
                applicable BPU Regulations to terminate billing of Transition Bond
                Charges
                by Third Parties whose payments are twenty-two or more days delinquent,
                or
                as the then current BPU Regulations and any billing services agreements
                allow, and to resume, prospectively, to collect the Billed Transition
                Bond
                Charges directly from the applicable Customers. At such time, the
                Servicer
                will apply the Third Party’s security deposit to satisfy charges billed
                previously by the Third Party which remain outstanding, including
                outstanding Transition Bond
                Charges.

            

    

     

    
      	 	
              (ii)

            	
              The
                Servicer shall not waive any late payment charge or any other fee
                or
                charge relating to delinquent payments, if any, or waive, vary or
                modify
                any terms of payment of any amounts payable by a Customer, in each
                case
                unless such waiver or action:

            

    

     

    
      	 	
              (A)

            	
              would
                be in accordance with the Servicer’s customary practices or those of any
                Successor Servicer with respect to comparable assets that it services
                for
                itself and for others;

            

    

     

    
      	 	
              (B)

            	
              would
                not materially adversely affect the rights of the Transition Bondholders;
                and

            

    

     

    
      	 	
              (C)

            	
              would
                comply with applicable law;

            

    

     

    provided,
      however, that notwithstanding anything in the Servicing Agreement or this
      Exhibit A to the contrary, the Servicer is authorized to write off any Billed
      Transition Bond Charges in accordance with its Servicer Policies and
      Practices.

     

    
      	 	
              (iii)

            	
              The
                Servicer shall accept payment from Customers in respect of Billed
                Transition Bond Charges in such forms and methods and at
                

            

    

     

    
      
        
        

      

      
        Exhibit
          A-6

        
          

        

      

      
        
        

      

    

     

    
      	
            	
               

            	
              such
                times and places as it accepts for payment of its own charges. The
                Servicer shall accept payment from Third Parties in respect of Billed
                Transition Bond Charges in such forms and methods and at such times
                and
                places as the Servicer and each Third Party shall mutually agree
                in
                accordance with applicable BPU
                Regulations.

            

    

     

    
      	 	
              (b)
                

            	
              Payment
                Processing; Allocation; Priority of Payments.

            

    

     

    
      	 	
              (i)

            	
              The
                Servicer shall post all payments received to Customer accounts as
                promptly
                as practicable, and, in any event, substantially all payments shall
                be
                posted no later than two Business Days after
                receipt.

            

    

     

    
      	 	
              (ii)

            	
              Subject
                to clause (iii) below, the Servicer shall apply payments received
                to each
                Customer’s or Third Party’s account in proportion to the charges contained
                on the outstanding Bill to such Customer or Third
                Party.

            

    

     

    
      	 	
              (iii)

            	
              Any
                amounts collected by the Servicer that represent partial payments
                of the
                total Bill to a Customer or Third Party shall be allocated in accordance
                with the priorities set forth in Section 3.02(b) of the Servicing
                Agreement.

            

    

     

    
      	 	
              (iv)

            	
              The
                Servicer shall hold all over-payments for the benefit of the Issuer
                and
                shall apply such funds to future Bill charges in accordance with
                clauses
                (ii) and (iii) above as such charges become
                due.

            

    

     

    
      	 	
              (v)

            	
              For
                Customers on a Budget Payment Plan, the Servicer shall treat TBC
                Collections received from such Customers as if such Customers had
                been
                billed for the Transition Bond Charge in the absence of the Budget
                Payment
                Plan. Partial payment of a Budget Payment Plan payment shall be allocated
                according to clause (iii) above, and overpayment of a Budget Payment
                Plan
                payment shall be allocated according to clause (iv)
                above.

            

    

     

    
      	 	
              (c)
                

            	
              Accounts;
                Records.

            

    

     

    
      	 	
              (i)

            	
              The
                Servicer shall maintain accounts and records as to the Transferred
                Bondable Transition Property accurately and in accordance with its
                standard accounting procedures and in sufficient detail to permit
                reconciliation between payments or recoveries with respect to the
                Transferred Bondable Transition Property and the amounts from time
                to time
                remitted to the Collection Account in respect of the Transferred
                Bondable
                Transition Property.

            

    

     

    
      
        
        

      

      
        Exhibit
          A-7

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              The
                Servicer shall maintain accounts and records as to Third Parties
                performing Consolidated Third Party Billing for Customers accurately
                and
                in accordance with its standard accounting procedures and in sufficient
                detail to permit reconciliation between payments or recoveries with
                respect to the Transferred Bondable Transition Property and amounts
                owed
                by such Customers in respect of the Transition Bond
                Charge.

            

    

     

    
      	 	
              (d)
                

            	
              Investment
                of TBC Collections.
                Prior to remittance on the applicable Remittance Date, the Servicer
                may
                invest TBC Collections received at its own risk and for its own benefit,
                and such investments and funds shall not be required to be segregated
                from
                the other investments and funds of the
                Servicer.

            

    

     

    
      	 	
              (e)
                

            	
              Calculation
                of Collections; Determination of Aggregate Remittance
                Amount.

            

    

     

    
      	 	
              (i)

            	
              On
                or before each Remittance Date, the Servicer shall calculate the
                total TBC
                Collections received by the Servicer from or on behalf of Customers
                during
                prior Collection Periods in respect of all previously Billed Transition
                Bond Charges.

            

    

     

    
      	 	
              (ii)

            	
              In
                accordance with Section 4.01 of the Servicing Agreement and Annex
                1, the
                Servicer shall update the Variables and shall prepare Adjustment
                Requests
                to reflect the updated Variables when required to do so pursuant
                to Annex
                1.

            

    

     

    
      	 	
              (f)
                

            	
              Remittances.

            

    

     

    
      	 	
              (i)

            	
              The
                Servicer shall make remittances to the Issuer in accordance with
                Section
                5.11 of the Servicing Agreement.

            

    

     

    
      	 	
              (ii)

            	
              In
                the event of any change of account or change of institution affecting
                the
                remittances, the Issuer shall provide written notice thereof to the
                Servicer by the earlier of

            

    

     

    
      	 	
              (A)

            	
              five
                Business Days from the effective date of such change,
                or

            

    

     

    
      	 	
              (B)

            	
              five
                Business Days prior to the next applicable Remittance
                Date.

            

    

     

    
      
        
        

      

      
        Exhibit
          A-8

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