BGS BONDABLE TRANSITION PROPERTY SERVICING AGREEMENT

Transition Agreement

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Title: BGS BONDABLE TRANSITION PROPERTY SERVICING AGREEMENT
Governing Law: New Jersey Date: 8/15/2005

Exhibit 10.2

BGS BONDABLE TRANSITION PROPERTY SERVICING AGREEMENT

between

PSE&G TRANSITION FUNDING II LLC

Issuer

and

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

Servicer

Dated as of _________, 2005

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TABLE OF CONTENTS

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Page

ARTICLE I Definitions............................................................................................4

Section 1.01. Definitions...............................................................................4

Section 1.02. Other Definitional Provisions.............................................................4

ARTICLE II Appointment and Authorization of Servicer.............................................................5

Section 2.01. Appointment of Servicer; Acceptance of Appointment........................................5

Section 2.02. Authorization.............................................................................5

Section 2.03. Dominion and Control over Transferred BGS Bondable Transition Property....................5

ARTICLE III Billing Services.....................................................................................6

Section 3.01. Duties of Servicer........................................................................6

Section 3.02. Collection and Allocation of the BGS Transition Bond Charge...............................7

Section 3.03. Payment of TBC Collections................................................................7

Section 3.04. Servicing and Maintenance Standards.......................................................9

Section 3.05. Servicer's Certificates..................................................................10

Section 3.06. Annual Statement as to Compliance........................................................10

Section 3.07. Annual Independent Certified Public Accountants' Report..................................10

Section 3.08. BGS Bondable Transition Property Documentation...........................................11

Section 3.09. Computer Records; Audits of Documentation................................................11

Section 3.10. Defending Transferred BGS Bondable Transition Property Against Claims....................12

Section 3.11. Opinions of Counsel......................................................................12

ARTICLE IV Services Related to BGS Transition Bond Charge Adjustments...........................................13

Section 4.01. BGS Transition Bond Charge Adjustments...................................................13

ARTICLE V The Servicer..........................................................................................13

Section 5.01. Representations and Warranties of Servicer...............................................13

Section 5.02. Indemnities of Servicer; Release of Claims...............................................15

Section 5.03. Merger or Consolidation of, or Assumption of the Obligations of, Servicer................17

Section 5.04. Assignment of Servicer's Obligations.....................................................18

Section 5.05. Limitation on Liability of Servicer and Others...........................................18

Section 5.06. PSE&G Not To Resign as Servicer..........................................................19

Section 5.07. Monthly Servicing Fee....................................................................19

Section 5.08. Servicer Expenses........................................................................19

Section 5.09. Subservicing.............................................................................19

Section 5.10. No Servicer Advances.....................................................................20

Section 5.11. Remittances..............................................................................20

Section 5.12. Protection of Title......................................................................20

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TABLE OF CONTENTS

(continued)

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ARTICLE VI Servicer Default.....................................................................................21

Section 6.01. Servicer Default.........................................................................21

Section 6.02. Notice of Servicer Default...............................................................22

Section 6.03. Waiver of Past Defaults..................................................................22

Section 6.04. Appointment of Successor.................................................................22

Section 6.05. Cooperation with Successor...............................................................23

ARTICLE VII Miscellaneous Provisions............................................................................23

Section 7.01. Amendment................................................................................23

Section 7.02. Notices..................................................................................25

Section 7.03. Limitations on Rights of Others..........................................................25

Section 7.04. Severability.............................................................................25

Section 7.05. Separate Counterparts....................................................................26

Section 7.06. Headings.................................................................................26

Section 7.07. GOVERNING LAW............................................................................26

Section 7.08. Assignment to the Trustee................................................................26

Section 7.09. Nonpetition Covenants....................................................................26

Section 7.10. Termination..............................................................................26

ANNEX 1 TBC Adjustment Process and Reports--

PSE&G Transition Funding II LLC

APPENDIX A Master Definitions

EXHIBIT A Servicing Procedures

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BGS BONDABLE TRANSITION PROPERTY SERVICING AGREEMENT, dated as of

_________, 2005, by and between PSE&G TRANSITION FUNDING II LLC, a Delaware

limited liability company, as issuer (the "Issuer"), and PUBLIC SERVICE

ELECTRIC AND GAS COMPANY, a New Jersey corporation ("PSE&G"), as the servicer

of the BGS Bondable Transition Property hereunder (together with each

successor to PSE&G (in the same capacity) pursuant to Section 5.03, 5.04 or

6.04, the "Servicer").

W I T N E S S E T H:

WHEREAS the Servicer is willing to service the Transferred BGS Bondable

Transition Property purchased from the Seller by the Issuer; and

WHEREAS the Issuer, in connection with ownership of Transferred BGS

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 but not otherwise

defined herein have the meanings assigned to them in Appendix A hereto.

Section 1.02. Other Definitional Provisions.

(a) "Agreement" means this BGS Bondable Transition Property Servicing

Agreement, as the same may be amended, supplemented or otherwise modified from

time to time.

(b) Non-capitalized terms used herein which are defined in the

Competition Act, as the context requires, have the meanings assigned to such

terms in the Competition Act, but without giving effect to amendments to the

Competition Act after the date hereof which have a material adverse effect on

the Issuer or the BGS Transition Bondholders.

used in any certificate or other document made or delivered pursuant hereto

unless otherwise defined therein.

(d) The words "hereof", "herein", "hereunder" and words of similar import

when used in this Agreement shall refer to this Agreement as a whole and not

to any particular provision of this Agreement; Section, Annex, Schedule and

Exhibit references contained in this Agreement are references to Sections,

Annexes, Schedules and Exhibits in or to this Agreement unless otherwise

specified; and the term "including" shall mean "including without limitation".

<PAGE>

(e) The definitions contained in this 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. Subject

to Section 5.06 and Article VI, the Issuer hereby appoints the Servicer, and

the Servicer hereby accepts such appointment, to perform the Servicer's

obligations pursuant to this Agreement on behalf of and for the benefit of the

Issuer in accordance with the terms of this Agreement. This appointment and

the Servicer's acceptance thereof may not be revoked except in accordance with

the express terms of this Agreement.

Section 2.02. Authorization. With respect to all or any portion of the

Transferred BGS Bondable Transition Property, the Servicer shall be, and

hereby is, authorized and empowered by the Issuer to:

(a) execute and deliver, on behalf of itself, the Issuer, or both, as

the case may be, any and all instruments, documents or notices, and

(b) on behalf of itself, the Issuer, or both, as the case may be,

make any filing and participate in proceedings of any kind with any

governmental authorities, including with the BPU.

The Issuer shall furnish the Servicer with such documents as have been

prepared by the Servicer for execution by the Issuer, and with such other

documents as may be in the Issuer's possession, as 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 BGS 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 BGS 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 BGS Bondable Transition Property. The Servicer

hereby agrees that it shall not take any action that is not authorized by this

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 BGS Bondable Transition

Property, in each case unless such action is required by law or court or

regulatory order.

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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 BGS Transition Bond

Charge. The Servicer's duties will include:

(i) obtaining meter reads, calculating and billing the BGS

Transition Bond Charge in accordance with the Financing Order and

collecting (from Customers and Third Parties, as applicable) all TBC

Collections;

(ii) responding to inquiries by Customers, Third Parties, the

BPU, or any federal, local or other State governmental authority with

respect to the BGS Transition Bond Charge;

(iii) delivering bills to customers and Third Parties,

accounting for TBC Collections, investigating and resolving

delinquencies, processing and depositing collections, making periodic

remittances and furnishing periodic reports to the Issuer, the BPU,

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 BGS Transition Bond Charge

Adjustments as is set forth herein.

Anything to the contrary notwithstanding, the duties of the Servicer

set forth in this Agreement shall be qualified in their entirety by the

Competition Act, the Financing Order and any BPU Regulations, 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 duties and responsibilities set forth in Annex 1 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 BPU, the Trustee and the Rating

Agencies in writing of any laws or BPU Regulations hereafter promulgated

that have a material adverse effect on the Servicer's ability to perform

its duties under this Agreement.

BPU, the Trustee or any Rating Agency, the Servicer shall provide to the

Issuer, the BPU, the Trustee or the Rating Agencies, as the case may be,

any public financial information in

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respect of the Servicer, or any material information regarding the

Transferred BGS Bondable Transition Property to the extent it is

reasonably available to the Servicer, that may be reasonably necessary

and permitted by law for the Issuer, the BPU, the Trustee or the Rating

Agencies to monitor the performance by the Servicer hereunder. In

addition, so long as any of the BGS Transition Bonds of any Series are

outstanding, the Servicer shall provide to the Issuer, the BPU and to the

Trustee, within a reasonable time after written request therefor, any

information available to the Servicer or reasonably obtainable by it that

is necessary to calculate the BGS Transition Bond Charge.

Section 3.02. Collection and Allocation of the BGS 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

BGS Transition Bond Charge as and when the same shall become due and shall

follow such collection procedures as it follows with respect to collection

activities that the Servicer conducts for itself or others. The Servicer shall

not change the amount of or reschedule the due date of any scheduled payment

of the BGS Transition Bond Charge, except as contemplated in this Agreement or

as required by law or court or BPU Regulations; provided, however, that the

Servicer may 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 it conducts

for itself. The Servicer shall enforce the obligations of any Third Parties

providing billing and collection services with respect to the BGS 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 (which the Servicer collects as trustee for the

State of New Jersey and not for its own account or for that of the

Issuer);

(ii) pro rata to the BGS 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 BGS 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.

PSE&G's other charges may include gas charges which may be billed together

with electric charges, the market transition charge, the MTC-Tax and all other

charges which PSE&G and any Third Party may be authorized to bill and collect

from Customers on account of electric and gas service. If there is more than

one Series of BGS Transition Bonds, the Servicer shall allocate partial

payments among such Series, pro rata, based on the respective outstanding

amounts payable with respect to such Series.

Section 3.03. Payment of TBC Collections. (a) The Servicer shall prepare

annually a Collections Curve for each Billing Month, based on statistically

significant random sampling of actual TBC Collections. With the exception of

the Monthly Servicing Fee, which the Servicer is

<PAGE>

entitled to withhold from TBC Collections pursuant to Section 5.07 hereof, the

Servicer agrees to remit TBC Collections for each Billing Month to the Trustee

for deposit in the Collection Account not later than the corresponding

Reconciliation Date or Dates following such Billing Month. In addition, the

Servicer agrees to make periodic payments on account of TBC Collections to the

Trustee for deposit in the Collection Account 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 of the seven preceding Billing Months

an amount equal to the amount of TBC Collections estimated to have

been received during the preceding calendar month, based on the

applicable Collections Curve then in effect for those seven preceding

Billing Months, 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 for the Billing Month in which such Daily

Remittance Date occurs and for each of the six preceding Billing

Months an amount equal to the amount of TBC Collections estimated to

have been received during the Business Day which is two Business Days

preceding such Daily Remittance Date for those seven Billing Months

(including the Billing Month in which such Daily Remittance Date

occurs), 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, provided that,

(x) in the case of each such Billing Month other than the Billing

Month in which such Daily Remittance Date occurs, such estimate

shall be made by dividing (1) the amount of TBC Collections

estimated to be received during the calendar month in which

such Daily Remittance Date occurs ("the current remittance

month"), based on the applicable Collections Curve then in

effect, for each of those six preceding Billing Months, divided

by (2) the number of Business Days in the current remittance

month,

(y) in the case of the Billing Month in which such Daily Remittance

Date occurs, such estimate shall be made, by

first, determining the amount of TBC Collections estimated to be

received during that Billing Month, based on the applicable

Collections Curve then in effect, for each day on which bills

are sent in such Billing Month (each, a "Billing Day"; such

estimated TBC Collections during such Billing Month for each

Billing Day being the "Billing Month Estimated Collections" for

such Billing Day),

second, dividing the amount of the Billing Month Estimated

Collections for such Billing Day by the number of Business Days

remaining in such

<PAGE>

Billing Month (for each Billing Day, the "Daily Billing Month

Estimated Collections" for such Billing Month),

third, for each Daily Remittance Date during such Billing Month,

summing the amount of the Daily Billing Month Estimated

Collections for each Billing Day in such Billing Month through

the Business Day which is two Business Days preceding such Daily

Remittance Date, and

(z) for each Daily Remittance Date, any unremitted Daily Billing

Month Estimated Collections received in the preceding

Billing Month on a Business Day that is two Business Days

preceding such Daily Remittance Date in accordance with

subclause (y) above shall be remitted on such Daily

Remittance Date.

(b) On or before each Reconciliation Date, the Servicer shall determine

whether there exists a Curve Payment Shortfall or an Excess Curve Payment by

comparing the actual TBC Collections to the Collection Curve Payments

previously made to the Trustee in respect of (i) for each Annual

Reconciliation Date, each of the twelve Billing Months beginning 19 months

before the month in which such Reconciliation Date occurs (or from the first

Series Issuance Date, if less than 19 months have elapsed), and (ii) for each

Monthly Reconciliation Date, the Billing Month that is eight months prior to

the Billing Month in which such Reconciliation Date occurs. In the event that

there is a Curve Payment Shortfall with respect to the applicable Billing

Months or Billing Month, as the case may be, the Servicer shall pay the Curve

Payment Shortfall to the Trustee for deposit into the Collection Account on

that Reconciliation Date. In the event that there is an Excess Curve Payment

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 Excess Curve Payment, or (B) require the Trustee to pay to the Servicer

from the General Subaccount the amount of the Excess Curve Payment, which upon

payment shall become the property of the Servicer.

Collections collected by it for the benefit of the Issuer and that all amounts

will be remitted by the Servicer in accordance with this Agreement without any

surcharge, fee, offset, charge or other deduction and without making any claim

to reduce its obligation to remit all TBC Collections collected by it, except

(i) as set forth in clause (b) above, (ii) the Monthly Servicing Fee which it

may withhold pursuant to Section 5.07 hereof and (iii) 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 BGS Bondable Transition Property with reasonable care and

in material compliance with applicable law, including all applicable BPU

Regulations, using the same degree of care and diligence that the

Servicer exercises with respect to billing and collection activities that

the Servicer conducts for itself and others;

<PAGE>

(b) follow standards, policies and procedures in performing its

duties as Servicer that are customary in the electric distribution

industry;

servicing procedures, to enforce and maintain the Issuer's and the

Trustee's rights in respect of the Transferred BGS Bondable Transition

Property; and

(d) calculate the BGS 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

materially and adversely affect the Issuer's or the Trustee's interest in the

Transferred BGS 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 BGS Bondable Transition

Property, which, in the Servicer's judgment, may include the taking of legal

action pursuant to Section 3.10 or otherwise. Notwithstanding the foregoing,

the Servicer shall not change its customary and usual practices and procedures

in any manner that would materially and adversely affect the Issuer's or the

Trustee's interest in the Transferred BGS 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, the BPU and to the Trustee the statements and certificates specified

in Annex 1.

Section 3.06. Annual Statement as to Compliance.

The Servicer shall deliver to the Issuer, the BPU, the Trustee and each

Rating Agency, on or before March 31 of each year beginning March 31, 2006 to

and including March 31 succeeding the retiring of the BGS Transition Bonds, an

Officers' Certificate, stating that:

(a) a review of the activities of the Servicer during the preceding

calendar year (or relevant portion thereof in the case of the first such

Officer's Certificate) and of its performance under this Agreement has

been made under such officers' supervision, and

(b) to the best of such officers' knowledge, based on such review,

the Servicer has fulfilled all its obligations under this Agreement

throughout such period or, if there has been a default in the fulfillment

of any such obligation, describing each such default and its status.

Section 3.07. Annual Independent Certified Public Accountants' Report.

(a) The Servicer shall cause a firm of independent certified public

accountants (which may also provide other services to the Servicer or the

Seller) to prepare, and the Servicer shall deliver to the Issuer, the BPU to

the Trustee and to each Rating Agency, on or before March 31 of each year,

beginning March 31, 2006 to and including the March 31 succeeding the

retirement of all BGS Transition Bonds, a report addressed to the Servicer

(the "Annual Accountant's Report"), which may be included as part of the

Servicer's customary auditing activities, to the effect that such firm has

performed certain procedures in connection with the Servicer's

<PAGE>

compliance with its obligations under this 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, 2005),

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 within

the meaning of the Code of Professional Ethics of the American Institute of

Certified Public Accountants.

Section 3.08. BGS Bondable Transition Property Documentation. To assure

uniform quality in servicing the Transferred BGS Bondable Transition Property

and to reduce administrative costs, the Servicer shall keep on file, in

accordance with its customary procedures, all BGS 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 BGS 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 BGS

Bondable Transition Property and the BGS 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 BGS Transition Bond Charge and the TBC Collections

from time to time remitted to the Trustee pursuant to Section 3.03 and to

enable the Issuer to comply with this Agreement and the Indenture. The

Servicer shall conduct, or cause to be conducted, periodic audits of the BGS

Bondable Transition Property Documentation held by it under this Agreement and

of the related accounts, records and computer systems, in such a manner as

shall enable the Issuer and the Trustee, as pledgee of the Issuer, to verify

the accuracy of the Servicer's record keeping. The Servicer shall promptly

report to the Issuer, the BPU and to the Trustee any failure on the Servicer's

part to hold the BGS Bondable Transition Property Documentation and maintain

its accounts, records and computer systems as herein provided and promptly

take appropriate action to remedy any such failure. Nothing herein shall be

deemed to require an initial review or any periodic review by the Issuer or

the Trustee of the BGS Bondable Transition Property Documentation. The

Servicer's duties to hold the BGS Bondable Transition Property Documentation

on behalf of the Issuer set forth in this Section 3.09, to the extent such BGS

Bondable Transition Property Documentation has not been previously transferred

to 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 Agreement or (ii) no BGS Transition Bonds of any

Series are outstanding.

(b) Maintenance of and Access to Records. The Servicer shall maintain the

BGS Bondable Transition Property Documentation at 80 Park Plaza, Newark, New

Jersey or at such

<PAGE>

other office as shall be specified to the Issuer, the BPU and to the Trustee

by written notice not later than 30 days prior to any change in location. The

Servicer shall permit the Issuer, the BPU 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 BGS Bondable

Transition Property, the BGS Transition Bond Charge and the BGS 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 BGS 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 BGS Bondable Transition

Property, and the Servicer agrees to take such legal or administrative

actions, including defending against or instituting and pursuing legal actions

and appearing or testifying at hearings or similar proceedings, as may be

reasonably necessary to block or overturn any attempts to cause a repeal of,

modification of or supplement to the Competition Act or the Financing Order,

as the case may be, or the rights of holders of Transferred BGS Bondable

Transition Property that would be adverse to BGS Transition Bondholders. The

costs of any such action reasonably allocated by the Servicer to the

Transferred BGS 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).

Section 3.11. Opinions of Counsel. The Servicer shall deliver to the

Issuer, the BPU and to the Trustee:

(a) promptly after the execution and delivery of this Agreement and

of the Sale Agreement and of each amendment hereto or thereto, and on

each Transfer Date, an Opinion of Counsel either:

(i) to the effect that, in the opinion of such counsel, all UCC

filings that are necessary to fully preserve and protect the

interests of the Trustee in the Transferred BGS Bondable Transition

Property have been executed and will be filed as required, and

reciting the details of such filings or referring to prior Opinions

of Counsel in which such details are given, or

(ii) to the effect that, in the opinion of such counsel, no such

action is necessary to preserve and protect such interest; and

(b) within 90 days after the beginning of each calendar year

beginning with the first calendar year beginning more than three full

calendar months after the Initial Transfer Date, an Opinion of Counsel,

dated as of a date during such 90-day period, either:

<PAGE>

(i) to the effect that, in the opinion of such counsel, all UCC

filings have been executed and filed that are necessary to preserve

fully and protect fully the interest of the Trustee in the

Transferred BGS Bondable Transition Property, and reciting the

details of such filings or referring to prior Opinions of Counsel in

which such details are given, or

(ii) to the effect that, in the opinion of such counsel, no

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