CL&P FUNDING LLC,
as Note Issuer
and
THE CONNECTICUT LIGHT AND POWER COMPANY,
as Servicer
TRANSITION PROPERTY SERVICING AGREEMENT
Dated as of March __, 2001
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS............................................1
Section 1.01. Definitions............................................1
Section 1.02. Other Definitional Provisions..........................6
ARTICLE 2 APPOINTMENT AND AUTHORIZATION..........................6
Section 2.01. Appointment of Servicer; Acceptance of Appointment.....6
Section 2.02. Authorization..........................................6
Section 2.03. Dominion and Control Over the Transition Property......7
ARTICLE 3 BILLING SERVICES.......................................7
Section 3.01. Duties of Servicer.....................................7
Section 3.02. Servicing and Maintenance Standards....................8
Section 3.03. Certificate of Compliance..............................8
Section 3.04. Annual Report by Independent Public Accountants........9
ARTICLE 4 SERVICES RELATED TO PERIODIC
ADJUSTMENTS; REMITTANCES...............................9
Section 4.01. Periodic Adjustments...................................9
Section 4.02. Limitation of Liability...............................11
Section 4.03. Remittances...........................................12
ARTICLE 5 THE TRANSITION PROPERTY...............................12
Section 5.01. Custody of Transition Property Records................12
Section 5.02. Duties of Servicer as Custodian.......................13
Section 5.03. Instructions; Authority to Act........................14
Section 5.04. Effective Period and Termination......................14
Section 5.05. Monitoring of Third-Party Suppliers...................14
Section 5.06. Monitoring and Collecting Exit Charges................14
ARTICLE 6 THE SERVICER..........................................14
Section 6.01. Representations and Warranties of Servicer............14
Section 6.02. Indemnities of Servicer...............................16
Section 6.03. Limitation on Liability of Servicer and Others........18
Section 6.04. Merger or Consolidation of, or Assumption
of the Obligations of, Servicer.......................18
TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 6.05. The Connecticut Light and Power Company Not
to Resign as Servicer.................................19
Section 6.06. Servicing Compensation................................19
Section 6.07. Compliance with Applicable Law........................20
Section 6.08. Access to Certain Records and
Information Regarding Transition Property.............20
Section 6.09. Appointments..........................................20
Section 6.10. No Servicer Advances..................................21
Section 6.11. Maintenance of Operations.............................21
ARTICLE 7 DEFAULT...............................................21
Section 7.01. Servicer Default......................................21
Section 7.02. Appointment of Successor..............................22
Section 7.03. Waiver of Past Defaults...............................23
Section 7.04. Notice of Servicer Default............................23
Section 7.05. Inter-Creditor Agreement..............................23
ARTICLE 8 MISCELLANEOUS PROVISIONS..............................23
Section 8.01. Amendment.............................................23
Section 8.02. Maintenance of Accounts and Records...................24
Section 8.03. Notices...............................................24
Section 8.04. Assignment............................................27
Section 8.05. Limitations on Rights of Third Parties................27
Section 8.06. Severability..........................................27
Section 8.07. Separate Counterparts.................................27
Section 8.08. Headings..............................................27
Section 8.09. Governing Law.........................................27
Section 8.10. Assignment to Note Trustee............................27
Section 8.11. Nonpetition Covenants.................................28
-ii-
This TRANSITION PROPERTY SERVICING AGREEMENT, dated as of March __,
2001, is between CL&P Funding LLC, a Delaware limited liability company
(together with any successor thereto permitted under the Note Indenture, as
hereinafter defined, the "NOTE ISSUER"), and The Connecticut Light and Power
Company, a Connecticut corporation.
RECITALS
WHEREAS, pursuant to the Statute and the Financing Order, the Seller
and the Note Issuer are concurrently entering into the Sale Agreement pursuant
to which the Seller is selling to the Note Issuer the Transition Property
created pursuant to the Statute and the Financing Order.
WHEREAS, in connection with its ownership of the Transition Property
and in order to collect the RRB Charge, the Note Issuer desires to engage the
Servicer to carry out the functions described herein. The Servicer currently
performs similar functions for itself with respect to its own charges to its
customers and for others. In addition, the Note Issuer desires to engage the
Servicer to act on its behalf in obtaining Periodic Adjustments from the DPUC.
The Servicer desires to perform all of these activities on behalf of the Note
Issuer.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
Article 1
DEFINITIONS
Section 1.01. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"ADVICE LETTER" means any filing made with the DPUC by the Servicer on
behalf of the Note Issuer to set or adjust the RRB Charge, including the
Issuance Advice Letter, a Routine Annual True-Up Letter, a Routine True-Up
Letter or a Non-Routine True-Up Letter.
"AGREEMENT" means this Transition Property Servicing Agreement,
together with all Exhibits, Schedules and Annexes hereto, as the same may be
amended and supplemented from time to time.
"ANNUAL ACCOUNTANT'S REPORT" has the meaning set forth in Section 3.04.
"APPLICABLE TPS" means, with respect to each customer, the TPS, if any,
billing the RRB Charge to that customer.
"BILLS" means each of the regular monthly bills, summary bills and
other bills issued to customers or TPSs by The Connecticut Light and Power
Company on its own behalf and in its capacity as Servicer.
"CERTIFICATE OF COMPLIANCE" has the meaning set forth in Section 3.03.
"CLOSING DATE" means March __, 2001.
"CTA" means the "competitive transition assessment" as defined in the
Statute.
"DECLARATION OF TRUST" means the Declaration of Trust dated as of March
__, 2001 by First Union Trust Company, National Association, a national banking
association, as Delaware Trustee, and the Finance Authority, as the same may be
amended and supplemented from time to time.
"DPUC" means the Connecticut Department of Public Utility Control and
any successor thereto.
"DPUC REGULATIONS" means all regulations, rules, tariffs and laws
applicable to public utilities or TPSs, as the case may be, and promulgated by,
enforced by or otherwise within the jurisdiction of the DPUC.
"EXPECTED AMORTIZATION SCHEDULE" means SCHEDULE 4.01(a) hereto.
"FINANCE AUTHORITY" means the State of Connecticut, acting through the
office of the State Treasurer.
"FINANCING ORDER" means the order of the DPUC, issued on November 8,
2000 and supplemented on December 12, 2000 and March 12, 2001 in DPUC-00-05-01.
"INDEMNIFIED PERSON" has the meaning assigned to such term in Section
6.02.
"INSOLVENCY EVENT" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due.
"INTER-CREDITOR AGREEMENT" means the Inter-Creditor Agreement dated as
of March __, 2001 among Citicorp North America, Inc., Citibank, N.A., the
Servicer, the Note Trustee, the Note Issuer and CL&P Receivables Corporation, as
amended, supplemented or modified from time to time.
"ISSUANCE ADVICE LETTER" means the initial Issuance Advice Letter,
dated March __, 2001, filed with the DPUC pursuant to the Financing Order.
-2-
"LIEN" means a security interest, lien, charge, pledge or encumbrance
of any kind.
"LOSSES" has the meaning assigned to that term in Section 6.02(b).
"MONTHLY SERVICER CERTIFICATE" has the meaning assigned to that term in
Section 4.01(d)(2).
"NON-ROUTINE PERIODIC ADJUSTMENT" has the meaning set forth in Section
4.01(c)(1).
"NON-ROUTINE TRUE-UP LETTER" means a letter filed with the DPUC in
accordance with the Financing Order with respect to any Non-Routine Periodic
Adjustment, pursuant to which the related Non-Routine Periodic Adjustment will
become effective within 60 days after filing of the Non-Routine True-Up Letter,
subject to the review and approval of the DPUC.
"NOTE INDENTURE" means the Note Indenture dated as of March __, 2001,
between the Note Issuer and the Note Trustee, as the same may be amended and
supplemented from time to time.
"NOTE ISSUER" has the meaning set forth in the preamble to this
Agreement.
"OFFICER'S CERTIFICATE" means a certificate of the Servicer signed by a
Responsible Officer.
"OPINION OF COUNSEL" means one or more written opinions of counsel who
may be an employee of or counsel to the party providing such opinion(s) of
counsel, which counsel shall be reasonably acceptable to the party receiving
such opinion(s) of counsel.
"PERIODIC ADJUSTMENT" means each adjustment to the RRB Charge made
pursuant to the terms of the Financing Order and in accordance with Section 4.01
hereof.
"PRINCIPAL BALANCE" means, as of any Payment Date, the sum of the
outstanding principal amount of the Notes.
"PROJECTED PRINCIPAL BALANCE" means, as of any Payment Date, the sum of
the projected outstanding principal amount of the Notes for such Payment Date
set forth in the Expected Amortization Schedule.
"QUARTERLY SERVICER CERTIFICATE" has the meaning assigned to that term
in Section 4.01(d)(3).
"REMITTANCE" means each remittance pursuant to Section 4.03 of RRB
Charge Payments by the Servicer to the Note Trustee.
"REMITTANCE DATE" means each Servicer Business Day on which a
Remittance is to be made by the Servicer pursuant to Section 4.03.
-3-
"REMITTANCE PERIOD" means the twelve-month period commencing on January
1 of each year and ending on the last day of December of each year; provided,
however, that the initial Remittance Period shall commence on the Closing Date
and end on December 31, 2001.
"REQUIRED DEBT SERVICE" means, for any Remittance Period, the total
dollar amount calculated by the Servicer in accordance with Section 4.01(b)(1)
as necessary to be remitted to the Collection Account during such Remittance
Period (after giving effect to (a) the allocation and distribution of amounts on
deposit in the Reserve Subaccount at the time of calculation and which are
available for payments on the Notes, (b) any shortfalls in Required Debt Service
for any prior Remittance Period and (c) any Remittances based upon the RRB
Charge in effect in the prior Remittance Period that are expected to be realized
in such Remittance Period) in order to ensure that, as of the Payment Date
immediately following the end of such period, (i) all accrued and unpaid
interest on the Notes then due shall have been paid in full, (ii) the Principal
Balance of the Notes is equal to the Projected Principal Balance of the Notes
for that Payment Date, (iii) the balance on deposit in the Capital Subaccount
equals the aggregate Required Capital Level, (iv) the balance on deposit in the
Overcollateralization Subaccount equals the aggregate Required
Overcollateralization Level and (v) all other fees, expenses and indemnities due
and owing and required or allowed to be paid under Section 8.02 of the Note
Indenture as of such date shall have been paid in full; provided, however, that,
with respect to any Periodic Adjustment occurring after the last Scheduled
Maturity Date for any Notes, the Required Debt Service shall be calculated to
ensure that sufficient amounts will be collected to retire such Notes in full as
of the earlier of (x) the next Payment Date and (y) the Final Maturity Date for
such Notes.
"RESPONSIBLE OFFICER" means the chief executive officer, the president,
the chairman or vice chairman of the board, any vice president, the treasurer,
any assistant treasurer, the secretary, any assistant secretary, the controller
or the finance manager of the Servicer.
"RETIREMENT OF THE NOTES" means the day on which the final payment is
made to the Note Trustee in respect of the last outstanding Note.
"ROUTINE ANNUAL TRUE-UP LETTER" means a letter filed with the DPUC,
substantially in the form of EXHIBIT B hereto, at least 15 days prior to January
1 each year in respect of an annual Periodic Adjustment. The Routine Annual
True-Up Letter will become effective on January 1 each year, or such other date
as may be specified in such Routine Annual True-Up Letter, so long as such
effective date is at least 15 days after the filing of such Routine Annual
True-Up Letter.
"ROUTINE TRUE-UP LETTER" means a letter filed with the DPUC,
substantially in the form of EXHIBIT B hereto, in respect of a Periodic
Adjustment. The Routine True-Up Letter will become effective 15 days after the
filing thereof.
"RRB CHARGE" means the portion (which may become all) of the Seller's
CTA designated pursuant to the Financing Order as the RRB Charge (including,
without limitation, the RRB Charge included in special contract customer rates),
as the same may be adjusted from time to time as provided in the Financing
-4-
Order, and may in the future include a pro rata component of any exit fee
collected pursuant to Section 16-245w of the Connecticut General Statutes.
"RRB CHARGE COLLECTIONS" means the RRB Charge Payments remitted to the
Collection Account.
"RRB CHARGE PAYMENTS" means the actual payments received by the
Servicer, directly or indirectly (including through a TPS), from or on behalf of
customers (including, without limitation, the RRB Charge included in special
contract customer rates), multiplied by the percentage of such collections which
is calculated in accordance with ANNEX II hereto to have been received in
respect of the RRB Charge.
"SALE AGREEMENT" means the Transition Property Purchase and Sale
Agreement dated as of March __, 2001, between The Connecticut Light and Power
Company, as Seller, and the Note Issuer, as the same may be amended and
supplemented from time to time.
"SELLER" means The Connecticut Light and Power Company, a Connecticut
corporation, and its permitted successors and assigns under the Sale Agreement.
"SELLER'S RECEIVABLES PURCHASE AND SALE AGREEMENT" means the
Receivables Purchase and Sale Agreement dated as of September 30, 1997, as
amended and restated as of March __, 2001, among CL&P Receivables Corporation,
the Servicer, Corporate Asset Funding Company Inc., and Citibank, N.A. and
Citicorp North America, Inc.
"SERVICER" means The Connecticut Light and Power Company, as the
servicer of the Transition Property, or each successor (in the same capacity)
pursuant to Section 6.04 or 7.02.
"SERVICER BUSINESS DAY" means any Business Day on which the Servicer's
offices in the State of Connecticut are open for business.
"SERVICER DEFAULT" means an event specified in Section 7.01.
"SERVICING FEE" has the meaning set forth in Section 6.06(a). "STATUTE"
means Sections 16-245e to 16-245k of the Connecticut General Statutes.
"TERMINATION NOTICE" has the meaning assigned to that term in Section
7.01(e).
"TPS" means a third party supplier of energy who has entered into a TPS
Service Agreement with the Servicer.
"TPS SERVICE AGREEMENT" means an agreement between a third party
supplier of energy and the Servicer pursuant to which such third party supplier
of energy bills and collects the RRB Charge to and from customers in accordance
with DPUC Regulations, the Financing Order and the guidelines described in
SCHEDULE A TO ANNEX I.
-5-
"TRANSITION PROPERTY" means the transition property that exists under
Order 6 of the Financing Order (including, without limitation, the RRB Charge
included in special contract customer rates) and is sold by the Seller to the
Note Issuer under the Sale Agreement.
"TRANSITION PROPERTY RECORDS" has the meaning assigned to that term in
Section 5.01.
Section 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Note Indenture.
(b) All terms defined in this Agreement shall 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 Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section, Schedule,
Exhibit and Annex references contained in this Agreement are references to
Sections, Schedules, Exhibits and Annexes in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation."
(d) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter forms of such terms.
ARTICLE 2
APPOINTMENT AND AUTHORIZATION
Section 2.01. APPOINTMENT OF SERVICER; ACCEPTANCE OF APPOINTMENT.
Subject to Section 6.05 and Article 7, the Note 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 Note Issuer or any assignee thereof in accordance with the terms
of this Agreement and applicable law. 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 Transition Property, the Servicer shall be, and hereby is, authorized and
empowered by the Note Issuer to (a) execute and deliver, on behalf of itself
and/or the Note Issuer, as the case may be, any and all instruments, documents
or notices, and (b) on behalf of itself and/or the Note Issuer, as the case may
be, make any filing and participate in proceedings of any kind with any
governmental authorities, including with the DPUC. The Note Issuer shall execute
and/or furnish the Servicer with such documents as have been prepared by the
Servicer for execution by the Note Issuer, and with such other documents as may
be in the Note Issuer's possession, as the Servicer may determine to be
necessary or appropriate to enable it to carry out its servicing and
administrative duties hereunder. Upon the Servicer's written request, the Note
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.
-6-
Section 2.03. DOMINION AND CONTROL OVER THE TRANSITION PROPERTY.
Notwithstanding any other provision herein, the Note Issuer shall have dominion
and control over the Transition Property, and the Servicer, in accordance with
the terms hereof, is acting solely as the servicing agent and custodian for the
Note Issuer with respect to the Transition Property and the Transition Property
Records. The Servicer shall not take any action that is not authorized by this
Agreement or that shall impair the rights of the Note Issuer in the Transition
Property, in each case unless such action is required by applicable law.
ARTICLE 3
BILLING SERVICES
Section 3.01. DUTIES OF SERVICER. The Servicer, as agent for the
Note Issuer, shall have the following duties:
(a) DUTIES OF SERVICER GENERALLY.
(1) GENERAL DUTIES. The Servicer's duties in general shall
include management, servicing and administration of the Transition Property;
obtaining meter reads, calculating electricity usage (including usage by
customers of any TPS), billing, collection and posting of all payments in
respect of the Transition Property; responding to inquiries by customers, the
DPUC, or any federal, local or other state governmental authorities with respect
to the Transition Property; delivering Bills to customers and TPSs,
investigating and handling delinquencies, processing and depositing collections
and making periodic remittances; furnishing periodic reports to the Note Issuer,
the Note Trustee, the Certificate Trustee and the Rating Agencies; and taking
all necessary action in connection with Periodic Adjustments as set forth
herein. Certain of the duties set forth above may be performed by TPSs pursuant
to TPS Service Agreements. Without limiting the generality of this Section
3.01(a)(1), in furtherance of the foregoing, the Servicer hereby agrees that it
shall also have, and shall comply with, the duties and responsibilities relating
to data acquisition, usage and ▇▇▇▇ calculation, billing, customer service
functions, collection, payment processing and remittance set forth in ANNEX I
hereto.
(2) DPUC REGULATIONS CONTROL. Notwithstanding anything to the
contrary in this Agreement, the duties of the Servicer set forth in this
Agreement shall be qualified in their entirety by any DPUC Regulations as in
effect at the time such duties are to be performed.
(3) ALLOCATION OF SPECIAL CONTRACTS. The Servicer shall
allocate revenues from special contract customers who are receiving services
under special contracts which were in effect on July 1, 1998, until such
contracts expire, on the same cents/kWh basis as the rest of the rate class in
which the special contract customer resides. The Servicer shall calculate and
include an unbundled breakdown at the bottom of each such special contract
customer's ▇▇▇▇. The Servicer shall allocate the total revenues from each such
special contract customer to each of the unbundled rate components on an
equivalent cents/kWh basis times the actual kilowatt-hours. After the first six
unbundled rate components are fully satisfied with the proper revenue
allocation, the Servicer shall allocate any remaining revenue to the unbundled
-7-
distribution rate component. If more dollars are allocated to the first six rate
components than were billed, the Servicer shall allocate a negative revenue
amount to the unbundled distribution component.
(b) REPORTING FUNCTIONS.
(1) NOTIFICATION OF LAWS AND REGULATIONS. The Servicer shall
promptly notify the Note Issuer, the Note Trustee, the Certificate Trustee and
the Rating Agencies in writing of any laws or DPUC Regulations hereafter
promulgated that have a material adverse effect on the Servicer's ability to
perform its duties under this Agreement.
(2) OTHER INFORMATION. Upon the reasonable request of the
Note Issuer, the Note Trustee, the Certificate Trustee, or any Rating Agency,
the Servicer shall provide to such Note Issuer, Note Trustee, Certificate
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 Transition Property to the extent it is reasonably available to the
Servicer, as may be reasonably necessary and permitted by law for the Note
Issuer, the Note Trustee, the Certificate Trustee, or the Rating Agencies to
monitor the Servicer's performance hereunder.
(3) PREPARATION OF REPORTS TO BE FILED WITH THE SEC. The
Servicer shall prepare or cause to be prepared any reports required to be filed
by the Note Issuer or the Certificate Issuer under the securities laws,
including a copy of each Quarterly Servicer Certificate described in Section
4.01(d)(3), the annual Certificate of Compliance described in Section 3.03 and
the Annual Accountant's Report described in Section 3.04.
Section 3.02. SERVICING AND MAINTENANCE STANDARDS. On behalf of the
Note Issuer, the Servicer shall (a) manage, service, administer and make
collections in respect of the Transition Property with reasonable care and in
accordance with applicable law, including all applicable DPUC Regulations and
guidelines, using the same degree of care and diligence that the Servicer
exercises with respect to similar assets for its own account and, if applicable,
for others; (b) follow customary standards, policies and procedures for the
industry in performing its duties as Servicer; (c) use all reasonable efforts,
consistent with its customary servicing procedures, to ▇▇▇▇ and collect the RRB
Charge; (d) file all filings under the applicable Uniform Commercial Code or the
Statute necessary or desirable to maintain the perfected ownership or security
interest of the Note Issuer and the Note Trustee in the Transition Property; and
(e) comply in all material respects with all laws and regulations applicable to
and binding on it relating to the Transition Property. The Servicer shall follow
such customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of all or any portion of the Transition Property,
which, in the Servicer's judgment, may include the taking of legal action, at
the Note Issuer's expense.
Section 3.03. CERTIFICATE OF COMPLIANCE. The Servicer shall deliver
to the Note Issuer, the Note Trustee, the Certificate Trustee and the Rating
Agencies on or before March 31 of each year, commencing March 31, 2002 to and
including the March 31 succeeding the Retirement of the Notes, an Officer's
Certificate substantially in the form of EXHIBIT A hereto (a "CERTIFICATE OF
COMPLIANCE"), stating that: (i) a review of the activities of the Servicer
during the twelve months ended the preceding December 31 (or, in the case of the
first Certificate of Compliance to be delivered on or before March 31, 2002, the
-8-
period of time from the date of this Agreement until December 31, 2001) and of
its performance under this Agreement has been made under such Responsible
Officer's supervision, and (ii) to such Responsible Officer's knowledge, based
on such review, the Servicer has fulfilled all of its obligations in all
material respects under this Agreement throughout such twelve months (or, in the
case of the Certificate of Compliance to be delivered on or before March 31,
2002, the period of time from the date of this Agreement until December 31,
2001), or, if there has been a default in the fulfillment of any such material
obligation, specifying each such material default known to such Responsible
Officer and the nature and status thereof.
Section 3.04. ANNUAL REPORT BY INDEPENDENT PUBLIC ACCOUNTANTS.
(a) The Servicer, at the Note Issuer's expense, shall cause a
firm of independent certified public accountants (which may provide other
services to the Servicer) to prepare, and the Servicer shall deliver to the Note
Issuer, the Note Trustee, the Certificate Trustee and the Rating Agencies, a
report addressed to the Servicer (the "ANNUAL ACCOUNTANT'S REPORT"), which may
be included as part of the Servicer's customary auditing activities, for the
information and use of the Note Issuer, the Note Trustee, the Certificate
Trustee and the Rating Agencies, on or before March 31 each year, beginning
March 31, 2002 to and including the March 31 succeeding the Retirement of the
Notes, to the effect that such firm has performed certain procedures, agreed
between the Servicer and such accountants, in connection with the Servicer's
compliance with its obligations under this Agreement during the preceding twelve
months ended December 31 (or, in the case of the first Annual Accountant's
Report to be delivered on or before March 31, 2002, the period of time from the
date of this Agreement until December 31, 2001), identifying the results of such
procedures and including any exceptions noted.
(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.
ARTICLE 4
SERVICES RELATED TO PERIODIC ADJUSTMENTS; REMITTANCES
Section 4.01. PERIODIC ADJUSTMENTS. From time to time, until the
Retirement of the Notes, the Servicer shall identify the need for Periodic
Adjustments and shall take all reasonable action to obtain and implement such
Periodic Adjustments, all in accordance with the following:
(a) EXPECTED AMORTIZATION SCHEDULE. The Expected Amortization
Schedule is attached hereto as SCHEDULE 4.01(a).
(b) ROUTINE PERIODIC ADJUSTMENTS AND YEARLY FILINGS.
(1) ROUTINE ANNUAL PERIODIC ADJUSTMENTS AND FILINGS. For the
purpose of preparing a Routine Annual True-Up Letter, the Servicer shall: (A)
update the assumptions underlying the calculation of the RRB Charge, including
energy usage volume, the rate of charge-offs and estimated expenses and fees of
the Note Issuer and the Certificate Issuer to the extent not fixed, in each case
-9-
for the Remittance Period beginning on January 1 of each year; (B) determine the
Required Debt Service for such Remittance Period based upon such updated
assumptions; and (C) determine the RRB Charge to be charged during such
Remittance Period based upon such Required Debt Service. The Servicer shall file
a Routine Annual True-Up Letter with the DPUC no later than fifteen days prior
to January 1 of each year.
(2) ROUTINE PERIODIC ADJUSTMENTS. Beginning in the last year
the Notes are scheduled to be outstanding, the Servicer shall file a Routine
True-Up Letter at least 15 days before the end of each calendar quarter. In
addition, the Servicer shall file a Routine True-Up Letter at least 15 days
before the end of any calendar quarter or, beginning in the last year the Notes
are scheduled to be outstanding, at least 15 days before the end of any calendar
month, at each such time as the Servicer may reasonably determine is necessary
to meet the Required Debt Service for the then current Remittance Period.
(3) The Servicer shall take all reasonable actions and make
all reasonable efforts to secure any Periodic Adjustments.
(c) NON-ROUTINE PERIODIC ADJUSTMENTS.
(1) Whenever the Servicer determines that the existing model
for calculating the RRB Charge should be amended or revised, subject to the
consent of the Note Issuer under the conditions set forth in Section 3.18 of the
Note Indenture, the Servicer shall file a Non-Routine True-Up Letter with the
DPUC designating the adjustments to such model and any corresponding adjustments
to the RRB Charge (collectively, a "NON-ROUTINE PERIODIC ADJUSTMENT"), subject
to the review and approval of the DPUC pursuant to the Financing Order.
(2) The Servicer shall take all reasonable actions and make
all reasonable efforts to secure any Non-Routine Periodic Adjustments.
(3) The Servicer shall implement any resulting adjustments to
the model and any resulting revised RRB Charge as of the effective date of the
Non-Routine True-Up Letter.
(d) REPORTS.
(1) NOTIFICATION OF ADVICE LETTER FILINGS AND PERIODIC
ADJUSTMENTS. Whenever the Servicer files an Advice Letter with the DPUC, the
Servicer shall send a copy of such filing to the Note Issuer, the Note Trustee,
the Certificate Trustee and the Rating Agencies concurrently therewith. If any
Periodic Adjustment requested in any such Advice Letter filing does not become
effective on the applicable date as provided by the Financing Order, the
Servicer shall notify the Note Issuer, the Note Trustee, the Certificate Trustee
and the Rating Agencies by the end of the second Servicer Business Day after
such applicable date.
(2) MONTHLY SERVICER CERTIFICATE. So long as any Notes are
outstanding, not later than fifteen (15) days after the end of each month after
the Certificates are issued (excluding March, 2001), or if such day is not a
Servicer Business Day, the next succeeding Servicer Business Day, the Servicer
shall deliver a written report substantially in the form of EXHIBIT C hereto
-10-
(the "MONTHLY SERVICER CERTIFICATE") to the Note Issuer, the Note Trustee, the
Certificate Trustee and the Rating Agencies.
(3) QUARTERLY SERVICER CERTIFICATE. So long as any Notes are
outstanding, not later than the Servicer Business Day immediately preceding each
Payment Date, the Servicer shall deliver a written report substantially in the
form of EXHIBIT D hereto (the "QUARTERLY SERVICER CERTIFICATE") to the Note
Issuer, the Note Trustee, the Certificate Trustee and the Rating Agencies.
(4) TPS REPORTS. The Servicer shall provide to the Rating
Agencies, upon request, any publicly available reports filed by the Servicer
with the DPUC (or otherwise made publicly available by the Servicer) relating to
TPSs and any other non-confidential and non-proprietary information relating to
TPSs reasonably requested by the Rating Agencies.
Section 4.02. LIMITATION OF LIABILITY.
(a) The Note Issuer and the Servicer expressly agree and
acknowledge that:
(1) In connection with any Periodic Adjustment, the Servicer
is acting solely in its capacity as the servicing agent hereunder.
(2) Neither the Servicer nor the Note Issuer shall be
responsible in any manner for, and shall have no liability whatsoever as a
result of, any action, decision, ruling or other determination made or not made,
or any delay (other than any delay resulting from the Servicer's failure to file
for Periodic Adjustments or Non-Routine Periodic Adjustments required by Section
4.01 in a timely and correct manner or other material breach by the Servicer of
its duties under this Agreement that materially and adversely affects any
Periodic Adjustments or Non-Routine Periodic Adjustments), by the DPUC (or, in
connection with any Non-Routine Periodic Adjustment, by the Rating Agencies) in
any way related to the Transition Property or in connection with any Periodic
Adjustment or Non-Routine Periodic Adjustment, the subject of any filings under
Section 4.01, any proposed Periodic Adjustment or Non-Routine Periodic
Adjustment, or the approval of the RRB Charge and the adjustments thereto.
(3) The Servicer shall have no liability whatsoever relating
to the calculation of the RRB Charge and the adjustments thereto (including any
Non-Routine Periodic Adjustment), including as a result of any inaccuracy of any
of the assumptions made in such calculation regarding expected energy usage
volume, the rate of charge-offs, estimated expenses and fees of the Note Issuer
and the Certificate Issuer, so long as the Servicer has not acted in a negligent
manner in connection therewith, nor shall the Servicer have any liability
whatsoever as a result of any Person, including the Noteholders or the
Certificateholders, not receiving any payment, amount or return anticipated or
expected in respect of any Note or Certificate generally, except only to the
extent that the Servicer is liable under Section 6.02 of this Agreement.
(b) Notwithstanding the foregoing, this Section 4.02 shall not
relieve the Servicer of any liability under Section 6.02 for any
misrepresentation by the Servicer under Section 6.01 or for any breach by the
Servicer of its obligations under this Agreement.
-11-
Section 4.03. REMITTANCES.
(a) Pursuant to the remittance methodology more fully described
in ANNEX II hereto, starting with collections that are received on the first
Servicer Business Day that is at least 45 days after the first day on which The
Connecticut Light & Power Company imposes the RRB Charge, the Servicer will
remit to the Note Trustee, within two Servicer Business Days after receipt, by
wire transfer of immediately available funds to the General Subaccount of the
Collection Account, an amount equal to the RRB Charge Payments (as calculated in
accordance with ANNEX II hereto) received on such day and on any prior day that
was not a Servicer Business Day for which a Remittance has not previously been.
Prior to or simultaneous with each Remittance to the General Subaccount of the
Collection Account pursuant to this Section, the Servicer shall provide written
notice to the Note Trustee of each such Remittance (including the exact dollar
amount to be remitted). In accordance with to Section 16-245g(e) of the Statute,
amounts collected from customers shall be allocated on a pro rata basis among
(i) the RRB Charge, (ii) any remaining portion of the CTA not the subject of the
Financing Order, and (iii) the Servicer's other charges.
(b) The Servicer may elect to make Remittances less frequently
than on a daily basis, and shall be permitted to do so, but in any event shall
make Remittances within one calendar month of collection thereof, provided that
the Servicer shall send written notice of such election to the Note Issuer, the
Note Trustee and the Certificate Trustee, together with (i) an Officer's
Certificate stating that no Servicer Default has occurred and is continuing
under this Servicing Agreement, (ii) evidence that the Rating Agency Condition
has been satisfied, (iii) evidence of the delivery by the Servicer to the Note
Issuer or the Note Trustee, as applicable, of any credit enhancement which may
be required by the Rating Agencies in connection therewith in form and substance
satisfactory to the Note Issuer and the Note Trustee, as applicable, the cost of
which credit enhancement shall be borne solely by the Servicer, and (iv) an
executed copy of any appropriate amendment hereto or to the Note Indenture or
any other Basic Agreement as reasonably requested by the Servicer, the Note
Issuer or the Note Trustee in connection therewith.
(c) The Servicer agrees and acknowledges that it will remit RRB
Charge Payments in accordance with this Section 4.03 without any surcharge, fee,
offset, charge or other deduction except for late fees permitted by Section
6.06.
ARTICLE 5
THE TRANSITION PROPERTY
Section 5.01. CUSTODY OF TRANSITION PROPERTY RECORDS. To assure
uniform quality in servicing the Transition Property and to reduce
administrative costs, the Note Issuer hereby revocably appoints the Servicer,
and the Servicer hereby accepts such appointment, to act as the agent of the
Note Issuer and the Note Trustee as custodian of any and all documents and
records that the Servicer shall keep on file, in accordance with its customary
procedures, relating to the Transition Property, including copies of the
Financing Order and Advice Letters relating thereto and all documents filed with
the DPUC in connection with any Periodic Adjustment or Non-Routine Periodic
Adjustment and computational records relating thereto (collectively, the
-12-
"TRANSITION PROPERTY RECORDS"), which are hereby constructively delivered to the
Note Trustee, as pledgee of the Note Issuer with respect to all Transition
Property.
Section 5.02. DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer shall hold the Transition Property
Records on behalf of the Note Issuer and maintain such accurate and complete
accounts, records and computer systems pertaining to the Transition Property
Records on behalf of the Note Issuer and the Note Trustee as shall enable the
Note Issuer to comply with this Agreement and the Note Indenture. In performing
its duties as custodian the Servicer shall act with reasonable care, using that
degree of care and diligence that the Servicer exercises with respect to
comparable assets that the Servicer services for itself or, if applicable, for
others. The Servicer shall promptly report to the Note Issuer and the Note
Trustee any failure on its part to hold the Transition Property Records 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 Note
Issuer or the Note Trustee of the Transition Property Records. The Servicer's
duties to hold the Transition Property Records on behalf of the Note Issuer set
forth in this Section 5.02, to the extent such Transition Property Records have
not been previously transferred to a successor Servicer pursuant to Article 7,
shall terminate one year and one day after the earlier of the date on which (i)
the Servicer is succeeded by a successor Servicer in accordance with Article 7
and (ii) no Notes are outstanding.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall
maintain at all times records and accounts that permit the Servicer to identify
RRB Charges billed. The Servicer shall maintain the Transition Property Records
in Berlin, Connecticut or at such other office in the United States as shall be
specified to the Note Issuer and the Note Trustee by written notice at least 30
days prior to any change in location. The Servicer shall make available for
inspection to the Note Issuer and the Note Trustee or their respective duly
authorized representatives, attorneys or auditors the Transition Property
Records at such times during normal business hours as the Note Issuer or the
Note Trustee shall reasonably request and which do not unreasonably interfere
with the Servicer's normal operations. Nothing in this Section 5.02(b) shall
affect the obligation of the Servicer to observe any applicable law (including
any DPUC Regulations) prohibiting disclosure of information regarding the
customers, and the failure of the Servicer to provide access to such information
as a result of such obligation shall not constitute a breach of this Section
5.02(b).
(c) RELEASE OF DOCUMENTS. Upon instruction from the Note Trustee
in accordance with the Note Indenture, the Servicer shall release any Transition
Property Records to the Note Trustee, the Note Trustee's agent or the Note
Trustee's designee, as the case may be, at such place or places as the Note
Trustee may designate, as soon as practicable.
(d) DEFENDING TRANSITION PROPERTY AGAINST CLAIMS. The Servicer,
on behalf of the Noteholders and the Certificateholders, shall institute any
action or proceeding necessary to compel performance by the DPUC or the State of
Connecticut of any of their obligations or duties under the Statute, the
Financing Order or any Advice Letter, 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
-13-
cause a repeal of, modification of or supplement to the Statute or the Financing
Order or the rights of holders of Transition Property by executive action,
legislative enactment or constitutional amendment or (if such means become
available in the future) referendum or initiative petition that would be adverse
to Certificateholders. The costs of any such action shall be payable from RRB
Charge Collections as an Operating Expense in accordance with the priorities set
forth in Section 8.02(d) of the Note Indenture. The Servicer's obligations
pursuant to this Section 5.02 shall survive and continue notwithstanding the
fact that the payment of Operating Expenses pursuant to Section 8.02(d) of the
Note Indenture may be delayed (it being understood that the Servicer may be
required to advance its own funds to satisfy its obligations hereunder).
Section 5.03. INSTRUCTIONS; AUTHORITY TO ACT. For so long as any
Notes remain outstanding, the Servicer shall be deemed to have received proper
instructions with respect to the Transition Property Records upon its receipt of
written instructions signed by a Responsible Officer (as defined in the Note
Indenture) of the Note Trustee.
Section 5.04. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Closing Date and shall
continue in full force and effect until terminated pursuant to this Section
5.04. If any Servicer shall resign as Servicer in accordance with the provisions
of this Agreement or if all of the rights and obligations of any Servicer shall
have been terminated under Section 7.01, the appointment of such Servicer as
custodian shall terminate upon appointment of a successor Servicer, subject to
the approval of the DPUC, and acceptance by such successor Servicer of such
appointment.
Section 5.05. MONITORING OF THIRD-PARTY SUPPLIERS. From time to time,
until the Retirement of the Notes, the Servicer shall, using the same degree of
care and diligence that it exercises with respect to payments owed to it for its
own account, implement such procedures and policies as are necessary to properly
enforce the obligations of each TPS to remit RRB Charges, in accordance with the
terms and provisions of the Financing Order, the TPS Service Agreement and
SCHEDULE A TO ANNEX I hereto.
Section 5.06. MONITORING AND COLLECTING EXIT CHARGES. The Servicer
shall, using the same degree of care and diligence that it exercises with
respect to payments owed to it for its own account, ▇▇▇▇ and collect any exit
charges to which it may be entitled pursuant to Section 16-245w of the
Connecticut General Statutes, and shall remit that portion of the exit charges
representing (or allocable to) the RRB Charge together with the RRB Charge
Payments for a particular billing date.
ARTICLE 6
THE SERVICER
Section 6.01. REPRESENTATIONS AND WARRANTIES OF SERVICER. The
Servicer makes the following representations and warranties, as of the Closing
Date, on which the Note Issuer is deemed to have relied in entering into this
Agreement relating to the servicing of the Transition Property.
-14-
(a) ORGANIZATION AND GOOD STANDING. The Servicer is duly
organized and validly existing as a corporation in good standing under the laws
of the State of Connecticut, with the requisite corporate power and authority to
own its properties as such properties are currently owned and to conduct its
business as such business is now conducted by it, and has the requisite
corporate power and authority to service the Transition Property and to hold the
Transition Property Records as custodian.
(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
Transition Property as required by this Agreement) shall require such
qualifications, licenses or approvals (except where the failure to so qualify or
obtain such licenses and approvals would not be reasonably likely to have a
material adverse effect on the Servicer's business, operations, assets, revenues
or properties or adversely affect the servicing of the Transition Property).
(c) POWER AND AUTHORITY. The Servicer has the requisite
corporate power and authority to execute and deliver this Agreement and to carry
out its terms; and the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of the
Servicer.
(d) BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of the Servicer enforceable against it in
accordance with its terms, subject to applicable insolvency, reorganization,
moratorium, fraudulent transfer and other laws relating to or affecting
creditors' rights generally from time to time in effect and to general
principles of equity (including concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a proceeding in
equity or at law.
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not:
(i) conflict with or result in any breach of any of the terms and provisions of,
nor constitute (with or without notice or lapse of time) a default under, the
articles of organization or by-laws of the Servicer, or any material indenture,
agreement or other instrument to which the Servicer is a party or by which it is
bound; (ii) result in the creation or imposition of any Lien upon any of the
Servicer's properties pursuant to the terms of any such indenture, agreement or
other instrument; nor violate any existing law or any existing 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, so as to adversely
affect the Servicer, the Noteholders or the Certificateholders.
(f) NO PROCEEDINGS. There are no proceedings pending and, to the
Servicer's knowledge, there are no proceedings threatened and, to the Servicer's
knowledge, there are no investigations pending or threatened, before any court,
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties
involving or relating to the Servicer or the Note Issuer or, to the Servicer's
knowledge, any other Person: (i) asserting the invalidity of this Agreement;
(ii) seeking to prevent the consummation of any of the transactions contemplated
by this Agreement; or (iii) seeking any determination or ruling that might
-15-
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement.
(g) APPROVALS. No approval, authorization, consent, order or
other action of, or filing with, any court, federal or state regulatory body,
administrative agency or other governmental instrumentality is required in
connection with the execution and delivery by the Servicer of this Agreement,
the performance by the Servicer of the transactions contemplated hereby or the
fulfillment by the Servicer of the terms hereof, except those that have been
obtained or made and those that the Servicer is required to make in the future
pursuant to Article 3 or 4 and post-closing filings in connection therewith.
Section 6.02. INDEMNITIES OF SERVICER.
(a) The Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Servicer and as
expressly provided under this Section 6.02.
(b) The Servicer shall indemnify the Note Issuer, the
Noteholders, the Certificateholders and any Swap Counterparty (each an
"INDEMNIFIED PERSON" for purposes of Sections 6.02 (b) and (d)) for, and defend
and hold harmless each such Person from and against, any and all liabilities,
obligations, losses, damages, payments, claims, costs or expenses of any kind
whatsoever (collectively, "LOSSES") that may be imposed on, incurred by or
asserted against any such Person as a result of (i) the Servicer's willful
misconduct or negligence in the performance of its duties or observance of its
covenants under this Agreement (including the Servicer's willful misconduct or
negligence relating to the maintenance and custody by the Servicer, as
custodian, of the Transition Property Records) or (ii) the Servicer's breach in
any material respect of any of its representations or warranties in this
Agreement; provided, however, that the Servicer shall not be liable for any
Losses resulting from the willful misconduct or gross negligence of any such
Indemnified Person; and, provided, further, that the Noteholders, the
Certificateholders and any Swap Counterparty shall be entitled to enforce their
rights and remedies against the Servicer under this Section 6.02(b) solely
through a cause of action brought for their benefit by the Note Trustee or the
Certificate Trustee, as the case may be; and, provided, further, that the
Servicer shall not be liable for any Losses, regardless of when incurred, after
the Notes and the Certificates have been paid in full, except as provided in
Section 6.02(c).
(c) The Servicer shall indemnify and hold harmless the Note
Trustee, the Delaware Trustee, the Certificate Trustee, the Certificate Issuer,
the State of Connecticut, the Finance Authority, the State Treasurer, agencies
of the State of Connecticut and any of their respective affiliates, officials,
officers, directors, employees, consultants, counsel and agents (each an
"INDEMNIFIED PERSON" for purposes of Section 6.02(c) and (d)) for, and defend
and hold harmless each such Person from and against, any and all Losses imposed
on, incurred by or asserted against any of such Indemnified Persons as a result
of: (i) the Servicer's willful misconduct or negligence in the performance of
its duties or observance of its covenants under this Agreement (including the
Servicer's willful misconduct or negligence relating to the maintenance and
custody by the Servicer, as custodian, of the Transition Property Records) or
(ii) the Servicer's breach in any material respect of any of its representations
-16-
or warranties in this Agreement; provided, however, that the Servicer shall not
be liable for any Losses resulting from the willful misconduct or gross
negligence of such 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.
(d) The Servicer shall not be required to indemnify an
Indemnified Person for any amount paid or payable by such Indemnified Person
pursuant to Section 6.02(b) or (c) in the settlement of any action, proceeding
or investigation without the written consent of the Servicer, which consent
shall not be unreasonably withheld. 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 Section 6.02 (b) or (c), 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 Section 6.02(b) or (c), as
applicable, 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 Section
6.02(b) or (c), the Servicer shall be entitled to assume the defense of any such
action, proceeding or investigation. Upon assumption by the Servicer of the
defense of any such action, proceeding or investigation, the Indemnified Person
shall have the right to participate in such action or proceeding and to retain
its own counsel. The Servicer shall be entitled to appoint counsel of the
Servicer's choice at the Servicer's expense to represent the Indemnified Person
in any action, proceeding or investigation for which a claim of indemnification
is made against the Servicer under Section 6.02(b) or (c) (in which case the
Servicer shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by the Indemnified Person except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
Indemnified Person. Notwithstanding the Servicer's election to appoint counsel
to represent the Indemnified Person in an action, proceeding or investigation,
the Indemnified Person shall have the right to employ separate counsel
(including local counsel), and the Servicer shall bear the reasonable fees,
costs and expenses of such separate counsel if (i) the use of counsel chosen by
the Servicer to represent the Indemnified Person would present such counsel with
a conflict of interest, (ii) the actual or potential defendants in, or targets
of, any such action include both the Indemnified Person and the Servicer and the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the Servicer, (iii) the Servicer shall not have employed counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person within a reasonable time after notice of the institution of such action
or (iv) the Servicer shall authorize the Indemnified Person to employ separate
counsel at the expense of the Servicer. Notwithstanding the foregoing, the
Servicer shall not be obligated to pay for the fees, costs and expenses of more
than one separate counsel for the Indemnified Persons (in addition to local
counsel). The Servicer will not, without the prior written consent of the
Indemnified Person, 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 Section 6.02(b) or (c), as
applicable (whether or not the Indemnified Person is an actual or potential
party to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of the Indemnified Person from all liability
arising out of such claim, action, suit or proceeding.
-17-
(e) Indemnification under Sections 6.02(b) and 6.02(c) shall
include reasonable fees and out-of-pocket expenses of investigation and
litigation (including reasonable attorneys' fees and expenses), except as
otherwise provided in this Agreement.
(f) For purposes of Section 6.02(b) and 6.02(c), in the event of
the termination of the rights and obligations of The Connecticut Light and Power
Company (or any successor thereto pursuant to Section 6.04) as Servicer pursuant
to Section 7.01, or a resignation by such Servicer pursuant to this Agreement,
such Servicer shall be deemed to be the Servicer pending appointment of a
successor Servicer pursuant to Section 7.02.
(g) The indemnities contained in this Section 6.02 survive the
resignation or termination of the Note Trustee, the Certificate Trustee or the
Delaware Trustee or the termination of this Agreement..
Section 6.03. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Except
as otherwise provided under this Agreement, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer shall be liable to the
Note Issuer or any other Person for any action taken or for refraining from the
taking of any action pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
director, officer, employee or agent of the Servicer against any liability that
would otherwise be imposed by reason of willful misconduct or negligence in the
performance of duties under this 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 Note Trustee or on any document of any
kind, prima facie properly executed and submitted by any Person, respecting any
matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action relating to
the Transition Property.
Section 6.04. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER. Any Person (a) into which the Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party or (c) which may succeed to the properties and
assets of the Servicer substantially as a whole, which Person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Servicer hereunder, shall be the successor to the Servicer under this
Agreement without further act on the part of any of the parties to this
Agreement; provided, however, that (i) immediately after giving effect to such
transaction, no Servicer Default and no event which, after notice or lapse of
time, or both, would become a Servicer Default shall have occurred and be
continuing, (ii) the Servicer shall have delivered to the Note Issuer and the
Note Trustee an Officers' Certificate stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section and that
all conditions precedent provided for in this Agreement relating to such
transaction have been complied with, (iii) the Servicer shall have delivered to
the Note Issuer and the Note Trustee an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all statutory filings to be made by the
Servicer, including filings with the DPUC pursuant to the Statute, have been
executed and filed that are necessary to preserve and protect fully the
interests of the Note Issuer in the Transition Property and reciting the details
of such filings or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interests and (iv) the
-18-
Rating Agencies shall have received prior written notice of such transaction.
When any Person acquires the properties and assets of the Servicer substantially
as a whole and becomes the successor to the Servicer in accordance with the
terms of this Section 6.04, then upon satisfaction of all of the other
conditions of this Section 6.04, the Servicer shall automatically and without
further notice be released from all its obligations hereunder.
Section 6.05. THE CONNECTICUT LIGHT AND POWER COMPANY NOT TO RESIGN
AS SERVICER. Subject to the provisions of Section 6.04, The Connecticut Light
and Power Company shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement except upon either (a) a
determination that the performance of its duties under this Agreement shall no
longer be permissible under applicable law or (b) satisfaction of the following:
(i) the Rating Agency Condition shall have been satisfied (except that with
respect to Moody's it shall be sufficient to provide ten days prior notice) and
(ii) the DPUC shall have approved such resignation. Notice of any such
determination permitting the resignation of The Connecticut Light and Power
Company shall be communicated to the Note Issuer, the Note Trustee, the
Certificate Trustee and the Rating Agencies 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 that the performance
of The Connecticut Light and Power Company's duties under this Agreement shall
no longer be permissible under applicable law shall be evidenced by an Opinion
of Counsel to such effect delivered by The Connecticut Light and Power Company
to the Note Issuer, the Note Trustee and the Certificate Trustee concurrently
with or promptly after such notice. No such resignation shall become effective
until a successor Servicer shall have assumed the responsibilities and
obligations of The Connecticut Light and Power Company in accordance with
Section 7.02.
Section 6.06. SERVICING COMPENSATION.
(a) In consideration for its services hereunder, until the
Retirement of the Notes, the Servicer shall receive an annual fee (the
"SERVICING FEE") in an amount equal to (i) five one-hundredth of one percent
(0.05%) of the initial principal balance of the Notes for so long as The
Connecticut Light and Power Company or any successor Servicer bills the RRB
Charge concurrently with other charges for services or (ii) up to one and
one-quarter percent (1.25%) of the initial principal balance of the Notes if the
RRB Charge is being billed separately to customers (which amount shall be
determined by a separate agreement between the Note Issuer and the Servicer).
The Servicing Fee shall be payable in quarterly installments on each Payment
Date. The Servicer also shall be entitled to retain as additional compensation
(i) any interest earnings on RRB Charge Payments received by the Servicer and
invested by the Servicer pursuant to Section 6(c) of ANNEX I hereto prior to
remittance to the Collection Account and (ii) all late payment charges, if any,
collected from customers or TPSs.
(b) The Servicing Fee set forth in Section 6.06(a) and expenses
provided for in Section 6.06(c) shall be paid to the Servicer by the Note
Trustee, on each Payment Date in accordance with the priorities set forth in
Section 8.02(d) of the Note Indenture, by wire transfer of immediately available
funds from the Collection Account to an account designated by the Servicer. Any
portion of the Servicing Fee not paid on such date shall be added to the
Servicing Fee payable on the subsequent Payment Date.
-19-
(c) The Note Issuer shall pay all expenses incurred by the
Servicer in connection with its activities hereunder (including any reasonable
fees to and disbursements by accountants, counsel, or any other Person, any
taxes imposed on the Servicer (other than taxes based on the Servicer's net
income) and any expenses incurred in connection with reports to Noteholders and
Certificateholders, subject to the priorities set forth in Section 8.02(d) of
the Note Indenture).
Section 6.07. COMPLIANCE WITH APPLICABLE LAW. The Servicer covenants
and agrees, in servicing the Transition Property, to comply in all material
respects with all laws applicable to, and binding upon, the Servicer and
relating to such Transition Property the noncompliance with which would have a
material adverse effect on the value of the Transition Property; provided,
however, that the foregoing is not intended to, and shall not, impose any
liability on the Servicer for noncompliance with any law that the Servicer is
contesting in good faith in accordance with its customary standards and
procedures.
Section 6.08. ACCESS TO CERTAIN RECORDS AND INFORMATION REGARDING
TRANSITION PROPERTY. The Servicer shall provide to the Noteholders, the Note
Trustee and the Certificate Trustee access to the Transition Property Records in
such cases where the Noteholders, the Note Trustee and the Certificate Trustee
shall be required by applicable law to be provided access to such records.
Access shall be afforded without charge, but only upon reasonable request and
during normal business hours at the respective offices of the Servicer. Nothing
in this Section shall affect the obligation of the Servicer to observe any
applicable law (including any DPUC Regulation) prohibiting disclosure of
information regarding the customers, and the failure of the Servicer to provide
access to such information as a result of such obligation shall not constitute a
breach of this Section.
Section 6.09. APPOINTMENTS.
(a) The Servicer may at any time appoint any Person to perform
all or any portion of its obligations as Servicer hereunder; provided, however,
that the Rating Agency Condition shall have been satisfied in connection
therewith (except that with respect to Moody's it shall be sufficient to provide
ten days prior notice); and, provided, further, that the Servicer shall remain
obligated and be liable under this Agreement for the servicing and administering
of the Transition Property in accordance with the provisions hereof without
diminution of such obligation and liability by virtue of the appointment of such
Person and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Transition Property; and,
provided, further, however, that nothing herein (including the Rating Agency
Condition) shall preclude the execution by the Servicer of a TPS Service
Agreement with any TPS pursuant to applicable DPUC Regulations. The fees and
expenses of any such Person shall be as agreed between the Servicer and such
Person from time to time and none of the Note Issuer, the Note Trustee, the
Noteholders or any other Person shall have any responsibility therefor or right
or claim thereto. Any such appointment shall not constitute a Servicer
resignation under Section 6.05.
(b) The Servicer has no employees. Therefore, in carrying out
the foregoing duties or any of its other obligations under this Agreement, the
Servicer may enter into transactions with or otherwise deal with any of its
Affiliates to obtain the services of employees of such Affiliates as is its
-20-
current practice; provided, however, that the terms of any such transactions or
dealings shall be no less favorable to the Note Issuer than would be available
from unaffiliated parties or that would be available if the Servicer were to
hire its own employees to perform such services.
Section 6.10. NO SERVICER ADVANCES. The Servicer shall not make any
advances of interest on or principal of the Notes or the Certificates.
Section 6.11. MAINTENANCE OF OPERATIONS. The Servicer agrees to
continue to operate its distribution system to provide service to its customers
so long as it is acting as the Servicer under this Agreement.
ARTICLE 7
DEFAULT
Section 7.01. SERVICER DEFAULT. If any one of the following events
(each a "SERVICER DEFAULT") shall occur and be continuing:
(a) any failure by the Servicer to remit to the Collection
Account on behalf of the Note Issuer any required Remittance that shall continue
unremedied for a period of five (5) Business Days after written notice of such
failure is received by the Servicer from the Note Issuer or the Note Trustee; or
(b) any failure on the part of the Servicer duly to observe or
to perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement, which failure shall (a) materially and
adversely affect the rights of the Noteholders or Certificateholders and (ii)
continue unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
(A) to the Servicer by the Note Issuer or (B) to the Servicer by the Note
Trustee or by the Holders of Notes evidencing not less than 25 percent of the
Outstanding Amount of the Notes; or
(c) any representation or warranty made by the Servicer in this
Agreement shall prove to have been incorrect in any material respect when made,
which has a material adverse effect on the Noteholders or Certificateholders and
which material adverse effect continues unremedied for a period of 60 days after
written notice of such failure is received by the Servicer from the Note Issuer
or the Note Trustee;
(d) an Insolvency Event occurs with respect to the Servicer; or
(e) an "Event of Termination" under the Seller's Receivables
Purchase and Sale Agreement;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Note Trustee, or the Holders of Notes evidencing not
less than 25 percent of the Outstanding Amount of the Notes, by notice then
given in writing to the Servicer (and to the Note Trustee if given by the
Noteholders) (a "TERMINATION NOTICE") may terminate all the rights and
obligations (other than the obligations set forth in Section 6.02) of the
Servicer under this Agreement. In addition, upon a Servicer Default described in
-21-
Section 7.01(a), each of the following shall be entitled to apply to the DPUC
for sequestration and payment of revenues arising with respect to the Transition
Property in accordance with Sections 16-245k(e) and Section 16-245k(g) of the
Statute: (1) the Note Trustee or the Noteholders; (2) the Certificate Trustee or
the Certificateholders; (3) the Delaware Trustee; (4) the Note Issuer or its
assignees; or (5) pledgees or transferees of the Transition Property. On or
after the receipt by the Servicer of a Termination Notice, and subject to the
approval of the DPUC, all authority and power of the Servicer under this
Agreement, whether with respect to the Notes, the Transition Property, the RRB
Charge or otherwise, shall, without further action, pass to and be vested in
such successor Servicer as may be appointed under Section 7.02; and, without
limitation, the Note 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 Transition Property
Records and related documents, or otherwise. The predecessor Servicer shall
cooperate with the successor Servicer, the Note Issuer and the Note Trustee in
effecting the termination of the responsibilities and rights of the predecessor
Servicer under this Agreement, including the transfer to the successor Servicer
for administration by it of all cash amounts that shall at the time be held by
the predecessor Servicer for remittance, or shall thereafter be received by it
with respect to the Transition Property or the RRB Charge. In case a successor
Servicer is appointed as a result of a Servicer Default, all reasonable costs
and expenses (including reasonable attorneys' fees and expenses) incurred in
connection with transferring the Transition Property Records to the successor
Servicer and amending this Agreement to reflect such succession as Servicer
pursuant to this Section shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses. All other
reasonable costs and expenses incurred in transferring servicing
responsibilities to a successor servicer shall constitute Operating Expenses of
the Note Issuer.
Section 7.02. APPOINTMENT OF SUCCESSOR.
(a) Upon the Servicer's receipt of a Termination Notice pursuant
to Section 7.01 or the Servicer's resignation or removal in accordance with the
terms of this Agreement, the predecessor Servicer shall continue to perform its
functions as Servicer under this Agreement, and shall be entitled to receive the
requisite portion of the Servicing Fee and reimbursement of expenses as provided
herein, until a successor Servicer shall have assumed in writing the obligations
of the Servicer hereunder as described below. In the event of the Servicer's
termination hereunder, the Note Issuer shall appoint, subject to the approval of
the DPUC, a successor Servicer with the Note Trustee's prior written consent
thereto (which consent shall not be unreasonably withheld), and the successor
Servicer shall accept its appointment by a written assumption in form reasonably
acceptable to the Note Issuer and the Note Trustee. If within 30 days after the
delivery of the Termination Notice, the Note Issuer shall not have obtained such
a new Servicer, the Note Trustee may appoint or petition the DPUC or a court of
competent jurisdiction to appoint a successor Servicer under this Agreement. A
Person shall qualify as a successor Servicer only if (i) such Person is
permitted under DPUC Regulations to perform the duties of the Servicer, (ii) the
Rating Agency Condition shall have been satisfied and (iii) such Person assumes
in writing the obligations of the Servicer hereunder or enters into a servicing
agreement with the Note Issuer having substantially the same provisions as this
Agreement.
-22-
(b) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer 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
Servicing Fee and all the rights granted to the predecessor Servicer by the
terms and provisions of this Agreement.
Section 7.03. WAIVER OF PAST DEFAULTS. The Holders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes may,
on behalf of all Noteholders, 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 Collection Account in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Servicer Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereto.
Section 7.04. NOTICE OF SERVICER DEFAULT. The Servicer shall deliver
to the Note Issuer, the Note Trustee, the Certificate Trustee, the Certificate
Issuer, the Finance Authority and the Rating Agencies, promptly after any of its
Responsible Officers having obtained actual knowledge thereof, but in no event
later than five Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Default under Section 7.01(a) or (b).
Section 7.05. INTER-CREDITOR AGREEMENT. So long as the Inter-Creditor
Agreement remains in effect, the rights and remedies set forth in this Article 7
shall be subject to the provisions of the Inter-Creditor Agreement.
ARTICLE 8
MISCELLANEOUS PROVISIONS
Section 8.01. AMENDMENT.
(a) This Agreement may be amended in writing by the Servicer and
the Note Issuer with ten Business Days' prior written notice given to the Rating
Agencies and the prior written consent of the Note Trustee (which consent shall
not be unreasonably withheld), but without the consent of any of the Noteholders
or any of the Certificateholders (notwithstanding any provision of any other
document that would otherwise require such consent as a precondition of Note
Trustee consent), to cure any ambiguity, to correct or supplement any provisions
in this Agreement or for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions in this Agreement or of
modifying in any manner the rights of the Noteholders; provided, however, that
such action shall not, as evidenced by an Officer's Certificate delivered to the
Note Issuer and the Note Trustee, adversely affect in any material respect the
interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended in writing from time to
time by the Servicer and the Note Issuer with ten Business Days' prior written
notice given to the Rating Agencies and the prior written consent of the Note
Trustee (which consent shall not be unreasonably withheld) and the prior written
-23-
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders; provided, however,
that any amendment of the provisions of Section 4.01 or 4.03 shall satisfy the
Rating Agency Condition (except that with respect to Moody's it shall be
sufficient to provide ten days' prior notice).
(c) If the written consent of Noteholders is required in
connection with an amendment hereof, approval by Noteholders of the substance of
any proposed amendment or consent shall constitute sufficient consent of the
Noteholders pursuant to this Section, and it shall not be necessary that
Noteholders approve of the particular form of any amendment or consent.
(d) Promptly after the execution thereof, the Note Issuer shall
provide each of the Rating Agencies with a copy of any amendment to this
Agreement.
(e) Prior to its consent to any amendment to this Agreement, the
Note Trustee shall be entitled to receive and conclusively rely upon an Opinion
of Counsel stating that such amendment is authorized or permitted by this
Agreement. The Note Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Note Trustee's own rights, duties or immunities
under this Agreement or otherwise.
Section 8.02. MAINTENANCE OF ACCOUNTS AND RECORDS.
(a) The Servicer shall maintain accounts and records as to the
Transition Property accurately and in accordance with its standard accounting
procedures.
(b) The Servicer shall permit the Note Trustee and its agents at
any time during normal business hours, upon reasonable notice to the Servicer
and to the extent it does not unreasonably interfere with the Servicer's normal
operations, to inspect, audit and make copies of and abstracts from the
Servicer's records regarding the Transition Property and the RRB Charge. Nothing
in this Section 8.02(b) shall affect the obligation of the Servicer to observe
any applicable law (including any DPUC Regulation) prohibiting disclosure of
information regarding the customers, and the failure of the Servicer to provide
access to such information as a result of such obligation shall not constitute a
breach of this Section 8.02(b).
Section 8.03. NOTICES. Unless otherwise specifically provided herein,
all notices, directions, consents and waivers required under the terms and
provisions of this Agreement shall be in English and in writing, and any such
notice, direction, consent or waiver may be given by United States mail, courier
service, facsimile transmission or electronic mail (confirmed by telephone,
United States mail or 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 if mailed, three days after deposit in the United States mail with
-24-
proper postage for ordinary mail prepaid:
(a) if to the Servicer, to
The Connecticut Light and Power Company
c/o Northeast Utilities Service Company
if by U.S. Mail:
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
if by courier:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇.▇▇▇
(b) if to the Note Issuer, to
CL&P Funding LLC
c/o The Connecticut Light and Power Company
if by U.S. Mail:
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
if by courier:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇.▇▇▇
with a copy to:
The Connecticut Light and Power Company
if by U.S. Mail:
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
if by courier:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇.▇▇▇
(c) if to the Note Trustee, to
First Union Trust Company, National Association
One ▇▇▇▇▇▇ Square
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
-25-
(d) if to Moody's, to
▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ABS Monitoring Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(e) if to S&P, to
Standard & Poor's
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Asset Backed Surveillance Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(f) if to Fitch, to
Fitch, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ABS Surveillance
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(g) if to the Finance Authority, to
Office of the State Treasurer
▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Assistant Treasurer - Debt Management
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(h) if to the Certificate Issuer, to:
Connecticut RRB Special Purpose Trust CL&P-1
First Union Trust Company, National Association
One ▇▇▇▇▇▇ Square
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(with copies to the Finance Authority at the addresses listed herein)
-26-
(i) as to each of the foregoing, at such other address as shall
be designated by written notice to the other parties.
Section 8.04. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 6.04 and as provided in the
provisions of this Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by the Servicer.
Section 8.05. LIMITATIONS ON RIGHTS OF THIRD PARTIES. The provisions
of this Agreement are solely for the benefit of the Servicer, the Note Issuer,
the Noteholders, the Certificateholders, the Note Trustee, the Certificate
Trustee, the Delaware Trustee, the Finance Authority, the Certificate Issuer and
the other Persons expressly referred to herein and such Persons shall have the
right to enforce the relevant provisions of this Agreement, except that the
Noteholders and the Certificateholders shall be entitled to enforce their rights
against the Servicer under this Agreement solely through a cause of action
brought for their benefit by the Note Trustee or the Certificate Trustee, as the
case may be. Nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Transition Property or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
Section 8.06. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 8.07. SEPARATE COUNTERPARTS. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 8.08. 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 8.09. GOVERNING LAW. This Agreement shall be construed in
accordance with the substantive laws of the State of Connecticut, without giving
effect to its conflict of law or other principles that would cause the
application of the laws of another jurisdiction, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
Section 8.10. ASSIGNMENT TO NOTE TRUSTEE. The Servicer hereby
acknowledges and consents to the collateral assignment of any or all of the Note
Issuer's rights and obligations hereunder to the Note Trustee for the benefit of
the holders of the Notes and to the further assignment of the Note Trustee's
rights and obligations under the Note Indenture to the Certificate Trustee for
the benefit of the holders of the Certificates.
-27-
Section 8.11. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Note Indenture, but subject to the DPUC's
right to order the sequestration and payment of revenues arising with respect to
the Transition Property notwithstanding any bankruptcy, reorganization or other
insolvency proceedings with respect to the debtor, pledgor or transferor of the
Transition Property pursuant to Sections 16-245k(e) and 16-245k(g) of the
Statute, the Servicer shall not, prior to the date which is one year and one day
after the termination of the Note Indenture with respect to the Note Issuer,
petition or otherwise invoke or cause the Note Issuer or the Trust to invoke the
process of any court or governmental authority for the purpose of commencing or
sustaining a case against the Note Issuer or the Trust 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 Note Issuer or the Trust or any substantial part of the property of the
Note Issuer or the Trust, or ordering the winding up or liquidation of the
affairs of the Note Issuer or the Trust.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-28-
IN WITNESS WHEREOF, the parties hereto have caused this Transition
Property Servicing Agreement to be duly executed by their respective officers as
of the day and year first above written.
CL&P FUNDING LLC,
Note Issuer
By:_____________________________________
Name:
Title:
THE CONNECTICUT LIGHT AND POWER COMPANY,
Servicer
By:_____________________________________
Name:
Title:
-S-1-
EXHIBIT A
CERTIFICATE OF COMPLIANCE
The undersigned hereby certifies that he/she is the duly elected and
acting [________] of The Connecticut Light and Power Company, as servicer (the
"SERVICER") under the Transition Property Servicing Agreement, dated as of March
__, 2001 (the "SERVICING AGREEMENT"), between the Servicer and CL&P Funding LLC
(the "NOTE ISSUER"), and further certifies on behalf of the Servicer that:
1. A review of the activities of the Servicer and of its performance
under the Servicing Agreement during the __________ months ended December 31,
20[_] has been made under the supervision of the undersigned pursuant to Section
3.03 of the Servicing Agreement; and
2. To the undersigned's knowledge, based on such review, the Servicer
has fulfilled all of its material obligations in all material respects under the
Servicing Agreement throughout the __________ months ended December 31, 20[_],
except as listed on ANNEX A hereto.
Executed as of this _______ day of ___________, 20__ .
THE CONNECTICUT LIGHT AND POWER COMPANY,
Servicer
By:_____________________________________
Name:
Title:
-A-1-
ANNEX A TO EXHIBIT A
LIST OF SERVICER DEFAULTS
NATURE OF DEFAULT STATUS
-A-2-
EXHIBIT B
FORM OF ROUTINE TRUE-UP LETTER
[date]
ADVICE
THE STATE OF CONNECTICUT DEPARTMENT OF PUBLIC UTILITY CONTROL (THE "DEPARTMENT")
SUBJECT: Periodic RRB Charge True-Up Mechanism Advice Filing
Pursuant to DPUC Docket No. 00-05-01 (the "FINANCING ORDER"), The Connecticut
Light and Power Company ("CL&P"), as servicer of the RRBs or any successor
Servicer and on behalf of the RRB Trustee as assignee of the special purpose
entity (the "SPE"), may apply for adjustment to the RRB Charge fifteen days
prior to January first of each year and at such additional intervals as may be
provided for in the Financing Order. Any capitalized terms not defined herein
shall have the meanings ascribed thereto in the Financing Order.
PURPOSE
This filing establishes the revised RRB Charge to be assessed and collected from
CL&P's customers, whether or not CL&P's distribution system is being operated by
CL&P or a successor distribution company. The RRB Charge is a usage-based
component of the competitive transition assessment on each customer's monthly
▇▇▇▇ and may include any back-up, maintenance, emergency or other delivery or
energy service fee collected until the Total RRB Payment Requirements are
discharged in full. The RRB Charge is applied equally to all customers of the
same class in accordance with the method of allocation in effect on July 1,
1998. In the Financing Order, the Department authorized CL&P to file Routine
True-Up Letters fifteen days prior to the first day of January of each year and
at such additional intervals, if necessary, as provided for in the Financing
Order. CL&P, or a successor Servicer, is authorized to file periodic RRB Charge
adjustments to the extent necessary to ensure the timely recovery of revenues
sufficient to provide for the payment of an amount equal to the sum of the
Periodic RRB Payment Requirement for the upcoming year, which may include
indemnity obligations of the SPE in the RRB transaction documents for SPE
officers and directors, trustee fees, liabilities of the special purpose trust
and liabilities to the underwriters related to the underwriting of the RRBs.
Routine True-Up Letter filings are those where CL&P uses the methodology
approved by the Department in the Financing Order to adjust upward or downward
the existing RRB Charge.
Using the methodology approved by the Department in the Financing Order, this
filing modifies the variables used in the RRB Charge calculation and provides
the resulting modified RRB Charge. Table I shows the revised assumptions for
each of the variables used in calculating the RRB Charge for customers. The
assumptions underlying the current RRB Charges were filed in an Issuance Advice
Letter, dated ______________.
-B-1-
Table I below shows the current assumptions for each of the variables used in
the RRB Charge calculation.
-B-2-
TABLE I
INPUT VALUES FOR RRB CHARGE
Forecasted retail kWh sales for the period:_____
Forecasted percent of customers' billed amounts charged-off:_____ Percent of
customers' billed amounts charged-off:_____ Weighted average days sales
outstanding:_____
(calculated as follows)
Percent of billed amounts collected in current month:_____ Percent of
billed amounts collected in second month after billing:_____ Percent of
billed amounts collected in third month after billing:_____ Percent of
billed amounts collected in fourth month after billing:_____ Percent of
billed amounts collected in fifth month after billing:_____
Forecasted ongoing interest and transaction expenses (including any already
accrued but unpaid for the period):_____
Current Overcollateralization Subaccount balance:______
Scheduled Overcollateralization Subaccount balance at the end of the period:____
Current Capital Subaccount balance:______
Initial Capital Subaccount balance:______
Current RRB outstanding balance:_____
Scheduled RRB outstanding balance at the end of the period:______
Current Reserve Subaccount balance:______
The adjusted RRB Charge calculated for customers is as follows: _____
-B-3-
EFFECTIVE DATE
In accordance with the Financing Order, Routine True-Up Letters for annual RRB
Charge adjustments shall be filed fifteen days prior to January 1 each year or
more frequently, if necessary, with the resulting changes to be effective 15
days after the filing, notwithstanding the fact that adjustments to other
components of the CTA will occur simultaneously and may not become effective
immediately. No approval by the Department is required. Therefore, these RRB
Charges shall be effective as of ___________.
NOTICE
Copies of this filing are being furnished to the parties on the attached service
list. Notice to the public is hereby given by filing and keeping this filing
open for public inspection at CL&P's corporate headquarters.
Enclosures
-B-4-
EXHIBIT C
FORM OF MONTHLY SERVICER CERTIFICATE
Pursuant to Section 4.01(d)(2) of the Transition Property Servicing
Agreement, dated as of March __, 2001 (the "AGREEMENT"), between The Connecticut
Light and Power Company, as servicer (the "Servicer") and CL&P Funding LLC, the
Servicer does hereby certify as follows:
Capitalized terms used herein have their respective meanings as set
forth in the Agreement.
For the Monthly Period:_____________
1. ▇▇▇▇▇▇▇▇:
a) Monthly kWh Consumption:
b) Applicable RRB Charge:
c) Total RRB Charge Amount Billed this Month:
d) Cumulative RRB Charge Amount Billed this Remittance Period:
2. REMITTANCES:
a) Total Amount Remitted this Month:
b) Cumulative Amount Remitted this Remittance Period:
3. DRAWS ON SUBACCOUNTS:
a) Reserve Subaccount Draw Amount this Month:
b) Cumulative Reserve Subaccount Draw Amount this Remittance Period
(net of funding):
c) Overcollateralization Subaccount Draw Amount this Month:
d) Cumulative Overcollateralization Subaccount Draw Amount this
Remittance Period (net of funding):
e) Capital Subaccount Draw Amount this Month:
f) Cumulative Capital Subaccount Draw Amount this Remittance Period
(net of funding):
Executed as of this _____________ day of ___________.
THE CONNECTICUT LIGHT AND POWER COMPANY,
Servicer
By:_____________________________________
Name:
Title:
-C-1-
EXHIBIT D
FORM OF QUARTERLY SERVICER CERTIFICATE
Pursuant to Section 4.01(d)(3) of the Transition Property Servicing
Agreement, dated as of March __, 2001 (the "AGREEMENT"), between The Connecticut
Light and Power Company, as servicer (the "SERVICER"), and CL&P Funding LLC, the
Servicer does hereby certify, for the current Payment Date (__________ __, 20[
]) (the "Current PAYMENT DATE"), as follows:
Capitalized terms used herein have their respective meanings as set
forth in the Agreement. References herein to certain sections and subsections
are references to the respective sections of the Agreement.
1. RRB CHARGE COLLECTIONS AND AGGREGATE AMOUNTS AVAILABLE FOR THE CURRENT
PAYMENT DATE:
i. Amount Remitted [Month] [Year]
ii. Amount Remitted [Month] [Year]
iii. Amount Remitted [Month] [Year]
iv. Amount Remitted [Month] [Year]
v. Amount Remitted [Month] [Year]
vi. Amount Remitted [Month] [Year]
vii. Amount Remitted [Month] [Year]
viii. Amount Remitted [Month] [Year]
ix. TOTAL AMOUNT REMITTED FOR THIS PERIOD (SUM OF I. THROUGH VIII.
ABOVE):
x. Net Earnings on Collection Account:
xi. Expenses Paid to Date:
xii. GENERAL SUBACCOUNT BALANCE (SUM OF IX. AND X. ABOVE MINUS XI.):
xiii. Reserve Subaccount Balance
xiv. Overcollateralization Subaccount Balance
xv. Capital Subaccount Balance
xvi. COLLECTION ACCOUNT BALANCE (SUM OF XII. THROUGH XV. ABOVE):
2. OUTSTANDING PRINCIPAL BALANCE AS OF PRIOR PAYMENT DATE BY TRANCHE:
i. Class A-1 Principal Balance Outstanding Note/Certificate:
ii. [Class A-2 Principal Balance Outstanding Note/Certificate:]
iii. [Class A-3 Principal Balance Outstanding Note/Certificate:]
iv. [Class A-4 Principal Balance Outstanding Note/Certificate:]
v [Class A-5 Principal Balance Outstanding Note/Certificate:]
vi. TOTAL NOTE/CERTIFICATE PRINCIPAL BALANCE:
-D-1-
3. REQUIRED FUNDING/PAYMENTS AS OF CURRENT PAYMENT DATE
a) PROJECTED PRINCIPAL BALANCES AND PAYMENTS
PROJECTED QUARTERLY
PRINCIPAL BALANCE PRINCIPAL DUE
i. Class A-1 Note/Certificate
ii. [Class A-2 Note/Certificate]
iii. [Class A-3 Note/Certificate]
iv. [Class A-4 Note/Certificate]
v. [Class A-5 Note/Certificate]
vi. TOTAL PROJECTED PRINCIPAL
AMOUNT:
B) REQUIRED INTEREST PAYMENTS
NOTE/CERT DAYS IN INTEREST
INTEREST RATE APPLICABLE PERIOD DUE
i. Class A-1 Note/Certificate
ii. [Class A-2 Note/Certificate]
iii. [Class A-3 Note/Certificate]
iv. [Class A-4 Note/Certificate]
v. [Class A-5 Note/Certificate]
vi. TOTAL REQUIRED INTEREST AMOUNT:
C) PROJECTED SUBACCOUNT PAYMENTS AND LEVELS
SUBACCOUNT PROJECTED LEVEL FUNDING REQUIRED
i. Capital Subaccount:
ii. Overcollateralization
Subaccount:
iii. TOTAL SUBACCOUNT PAYMENTS AND
LEVELS:
-D-2-
4. ALLOCATION OF REMITTANCES AS OF CURRENT PAYMENT DATE PURSUANT TO SECTION
8.02(d) OF NOTE INDENTURE:
a) QUARTERLY EXPENSES
Net Expense Amount (Payable on Current Payment Date)
i. Note, Delaware and Certificate Trustee Fees and Expenses:
ii. Quarterly Servicing Fee:
iii. Quarterly Administration Fee:
iv. Operating Expenses (subject to $[100,000] cap):
v. TOTAL EXPENSES:
b) QUARTERLY INTEREST
AGGREGATE PRINCIPAL
PER $1000 OF ORIGINAL AMOUNT
i. Class A-1 Note/Certificate
ii. [Class A-2 Note/Certificate]
iii. [Class A-3 Note/Certificate]
iv. [Class A-4 Note/Certificate]
v. [Class A-5 Note/Certificate]
vi. TOTAL QUARTERLY INTEREST:
c) QUARTERLY PRINCIPAL
AGGREGATE PRINCIPAL
PER $1000 OF ORIGINAL AMOUNT
i. Class A-1 Note/Certificate
ii. [Class A-2 Note/Certificate]
iii. [Class A-3 Note/Certificate]
iv. [Class A-4 Note/Certificate]
v. [Class A-5 Note/Certificate]
vi. TOTAL QUARTERLY PRINCIPAL:
d) OTHER PAYMENTS
i. Operating Expenses (in excess of
$[100,000]):
ii. Funding of Capital Subaccount (to required
amount):
iii. Funding of Overcollateralization Subaccount
(to required level):
iv. Deposits to Reserve Subaccount:
v. Interest earnings on Capital Account
Released to Note Issuer:
-D-3-
5. OUTSTANDING PRINCIPAL BALANCE AND COLLECTION ACCOUNT BALANCE AS OF
CURRENT PAYMENT DATE (AFTER GIVING EFFECT TO PAYMENTS TO BE MADE ON SUCH
DISTRIBUTION DATE):
a) PRINCIPAL BALANCE OUTSTANDING:
i. Class A-1 Principal Balance Outstanding Note/Certificate:
ii. [Class A-2 Principal Balance Outstanding Note/Certificate:]
iii. [Class A-3 Principal Balance Outstanding Note/Certificate:]
iv. [Class A-4 Principal Balance Outstanding Note/Certificate:]
v. [Class A-5 Principal Balance Outstanding Note/Certificate:]
vi. TOTAL NOTE/CERTIFICATE PRINCIPAL BALANCE:
b) COLLECTION ACCOUNT BALANCES OUTSTANDING:
i. Capital Subaccount:
ii. Overcollateralization Subaccount:
iii. Reserve Subaccount:
iv. TOTAL SUBACCOUNT AMOUNT:
6. SUBACCOUNT DRAWS AS OF CURRENT PAYMENT DATE (IF APPLICABLE, PURSUANT TO
SECTION 8.02(e) OF NOTE INDENTURE):
i. Capital Subaccount:
ii. Overcollateralization Subaccount:
iii. Reserve Subaccount:
iv. TOTAL SUBACCOUNT DRAWS:
7. SHORTFALLS IN INTEREST AND PRINCIPAL PAYMENTS AS OF CURRENT PAYMENT DATE
(IF APPLICABLE):
a) QUARTERLY INTEREST SHORTFALL
i. Class A-1 Note/Certificate
ii. [Class A-2 Note/Certificate]
iii. [Class A-3 Note/Certificate]
iv. [Class A-4 Note/Certificate]
v. [Class A-5 Note/Certificate]
vi. TOTAL QUARTERLY INTEREST SHORTFALL:
b) QUARTERLY PRINCIPAL SHORTFALL
i. Class A-1 Note/Certificate
ii. [Class A-2 Note/Certificate]
iii. [Class A-3 Note/Certificate]
iv. [Class A-4 Note/Certificate]
v. [Class A-5 Note/Certificate]
vi. TOTAL QUARTERLY PRINCIPAL SHORTFALL:
-D-4-
8. SHORTFALLS IN REQUIRED SUBACCOUNT LEVELS AS OF CURRENT DISTRIBUTION
DATE:
i. Capital Subaccount
ii. Overcollateralization Subaccount:
iii. TOTAL SUBACCOUNT SHORTFALLS:
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Quarterly Servicer Certificate this ___ day of ____, ____.
THE CONNECTICUT LIGHT AND POWER COMPANY,
Servicer
By:_____________________________________
Name:
Title:
-D-5-
SCHEDULE 4.01(a)
EXPECTED AMORTIZATION SCHEDULE
OUTSTANDING PRINCIPAL BALANCE
-Schedule 4.01(a)-1-
ANNEX I
SERVICING PROCEDURES
The Servicer agrees to comply with the following servicing procedures:
SECTION 1. DEFINITIONS
(a) Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Agreement.
(b) Whenever used in this Annex I, the following words and phrases
shall have the following meanings:
"BILLED RRB CHARGES" means the dollar amounts billed to customers or
the Applicable TPS or allocated from special contract customers in accordance
with Section 3.01(a)(3) of the Agreement, in each case in respect of the RRB
Charge, whether billed to customers or the Applicable TPS by the Servicer or to
customers by a TPS pursuant to a TPS Service Agreement.
"SERVICER POLICIES AND PRACTICES" means, with respect to the Servicer's
duties under this Annex I, 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 or others, as in effect from time to time and in
accordance with DPUC Regulations. The Servicer shall provide ten days' prior
written notice to the Rating Agencies of any amendment to the Servicer Policies
and Practices that would adversely affect in any material respect the
Noteholders or Certificateholders.
SECTION 2. DATA ACQUISITION
(a) INSTALLATION AND MAINTENANCE OF METERS. Except to the extent that a
TPS is responsible for such services pursuant to a TPS Service Agreement, the
Servicer shall cause to be installed, replaced and maintained meters in
accordance with the Servicer Policies and Practices.
(b) METER READING. In accordance with the Servicer Policies and
Practices, the Servicer shall obtain usage measurements for each customer;
provided, however, that the Servicer may determine any customer's usage on the
basis of estimates in accordance with applicable DPUC Regulations; and,
provided, further, that the Servicer may obtain usage measurements from the
Applicable TPS for customers receiving meter reading services from such TPS if
the applicable TPS Service Agreement so provides.
(c) COST OF METERING. The Note Issuer shall not be obligated to pay any
costs associated with the metering duties set forth in this Section 2, including
the costs of installing, replacing and maintaining meters, nor shall the Note
Issuer be entitled to any credit against the Servicing Fee for any cost savings
realized by the Servicer or any TPS as a result of new metering and/or billing
technologies.
-Annex-I-1-
SECTION 3. USAGE AND ▇▇▇▇ 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 DPUC Regulations) in
accordance with the Servicer Policies and Practices and shall determine
therefrom Billed RRB Charges; provided, however, that in the case of customers
served by a TPS pursuant to a TPS Service Agreement, the Servicer may obtain
usage measurements from the Applicable TPS for customers receiving meter reading
services from such TPS if the applicable TPS Service Agreement so provides and
shall determine therefrom Billed RRB Charges.
SECTION 4. BILLING
(a) The Servicer shall implement the RRB Charge as of the Closing Date
and shall thereafter ▇▇▇▇ each customer or the Applicable TPS, or allocate from
special contract customers in accordance with Section 3.01(a)(3) of the
Agreement, in each case for each customer's Billed RRB Charges in accordance
with the provisions of this Section 4.
(b) FREQUENCY OF BILLS; BILLING PRACTICES. In accordance with the
Servicer Policies and Practices, the Servicer shall generate and issue a ▇▇▇▇ to
each customer, or, in the case of a customer who is being billed by a TPS, to
the Applicable TPS, or allocate from special contract customers in accordance
with Section 3.01(a)(3) of the Agreement, in each case with respect to such
customer's Billed RRB Charges. In the event that the Servicer makes any material
modification to the Servicer Policies and Practices, it shall notify the Note
Issuer, the Note Trustee, the Certificate Trustee and the Rating Agencies as
soon as practicable, and in no event later than 60 Servicer Business Days after
such modification goes into effect; provided, however, that the Servicer may not
make any modification that will materially adversely affect the
Certificateholders.
(c) FORMAT.
(i) Each ▇▇▇▇ to a customer shall contain or be deemed to
contain a CTA that shall include the RRB Charge owed by such customer for the
applicable billing period, subject, in the case of special contract customers,
to Section 3.01(a)(3) of the Agreement.
(ii) Each ▇▇▇▇ in which the CTA is listed as a line item shall
contain a statement (as a footnote) to the effect that all or a portion of the
CTA is owned by the Note Issuer and not the Seller.
(iii) The Servicer shall conform to such requirements in
respect of the format, structure and text of Bills delivered to customers and
TPSs as applicable DPUC Regulations shall from time to time prescribe. To the
extent that ▇▇▇▇ format, structure and text are not prescribed by applicable law
or by applicable DPUC Regulations, the Servicer shall, subject to clauses (i)
and (ii) of this subsection (c), determine the format, structure and text of all
Bills in accordance with its reasonable business judgment, the Servicer Policies
and Practices and historical practice.
-Annex I-2-
(d) DELIVERY. Except as provided in the next sentence, 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 or (ii) by
any other means, whether electronic or otherwise, that the Servicer may from
time to time use in accordance with the Servicer Policies and Practices. In the
case of customers that have elected to be billed by a TPS, the Servicer shall
deliver all Bills to the Applicable TPSs by such means as are mutually agreed
upon by the Servicer and the Applicable TPS in the TPS Service Agreement and
which are consistent with DPUC Regulations. The Servicer or a TPS, as
applicable, shall pay from its own funds all costs of issuance and delivery of
all Bills that it renders, including printing and postage costs as the same may
increase or decrease from time to time.
SECTION 5. CUSTOMER SERVICE FUNCTIONS
The Servicer or a TPS to the extent provided in the applicable TPS
Service Agreement shall handle all customer inquiries and other customer service
matters according to the Servicer Policies and Practices.
SECTION 6. COLLECTIONS; PAYMENT PROCESSING; REMITTANCE
(a) COLLECTION EFFORTS, POLICIES, PROCEDURES.
(i) The Servicer shall collect Billed RRB Charges from
customers and TPSs as and when the same become due in accordance with such
collection procedures as it follows with respect to comparable assets that it
services for itself or others, including the following:
(A) The Servicer shall prepare and deliver overdue notices to
customers and TPSs in accordance with applicable DPUC Regulations and the
Servicer Policies and Practices.
(B) The Servicer shall deliver past-due and shut-off notices
in accordance with applicable DPUC Regulations and the Servicer Policies and
Practices.
(C) The Servicer shall adhere to and carry out disconnection
policies and termination of billing by a TPS pursuant to a TPS Service Agreement
in accordance with Sections 16-262c, 16-262d and 16-262e of the Connecticut
General Statutes or successor provisions, applicable DPUC Regulations and the
Servicer Policies and Practices.
(D) The Servicer may employ the assistance of collection
agents in accordance with applicable DPUC Regulations and the Servicer Policies
and Practices.
(E) The Servicer shall apply customer and TPS deposits to the
payment of delinquent accounts in accordance with applicable DPUC Regulations
and the Servicer Polices and Practices.
-Annex I-3-
(F) The Servicer shall comply with the provisions of Section
3.01(a)(3) of the Agreement relating to special contract customers.
(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
Policies and Practices, (B) would not materially adversely affect the
Certificateholders and (B) would comply in all material respects with applicable
law.
(iii) The Servicer shall accept payment from customers in
respect of Billed RRB Charges in such forms and methods and at such times and
places in accordance with the Servicer Policies and Practices. The Servicer
shall accept payment from TPSs in respect of Billed RRB Charges in such forms
and methods and at such times and places as the Servicer and each TPS shall
mutually agree in accordance with the applicable TPS Service Agreement and
applicable DPUC Regulations.
(b) PAYMENT PROCESSING, ALLOCATION, PRIORITY OF PAYMENTS. The Servicer
shall post all payments received to customer or TPS accounts as promptly as
practicable, and, in any event, substantially all payments shall be posted no
later than one Servicer Business Day after receipt.
(c) INVESTMENT OF RRB CHARGE PAYMENTS RECEIVED. Prior to remittance on
the applicable Remittance Date, the Servicer may invest RRB Charge Payments 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. The Servicer shall be entitled to retain as additional compensation
any interest earnings on RRB Charge Payments invested by it.
(d) CALCULATION OF RRB CHARGE PAYMENTS; REMITTANCES. In accordance with
Section 4.03(a) of the Agreement, the Servicer shall remit to the Note Trustee
for deposit in the Collection Account an amount equal to the RRB Charge Payments
calculated in accordance with the methodology described in Annex II attached to
the Agreement.
(e) REMITTANCES.
(i) The Note Issuer shall cause to be established the
Collection Account in the name of the Note Trustee in accordance with Section
8.02 of the Note Indenture.
(ii) The Servicer shall make or cause to be made Remittances
to the Collection Account in accordance with Section 4.03 of the Agreement.
(iii) Any change of account or change of institution affecting
the Collection Account shall not take effect until the Note Issuer has provided
at least fifteen (15) Servicer Business Days written notice thereof to the
Servicer.
-Annex I-4-
SECTION 7. TPSs
In the event a TPS performs services pursuant to a TPS Service
Agreement, the Servicer shall comply with the procedures set forth in Schedule A
to this Annex I.
-Annex I-5-
SCHEDULE A
TO ANNEX I
Additional Servicing Procedures Applicable to TPSs
1. Establishing TPS Relationship
In addition to any actions required by the DPUC or by applicable law,
for each TPS that is responsible for collecting Billed RRB Charges, the Servicer
shall take the following steps:
(a) Maintain adequate records of the payment arrangement applicable to
such TPS;
(b) Maintain copies of all customer requests to convert to billing by a
TPS;
(c) Verify with the DPUC that each TPS is licensed to supply
electricity in Connecticut;
(d) Obtain information from the TPS including, but not limited to:
name, contact, address, telephone facsimile transmission number and
internet address;
(e) Maintain and update records of customers to permit prompt reversion
to dual-billing;
(f) Maintain estimates of one month's maximum RRB Charge Payments for
each TPS required to post a bond, letter of credit or cash deposit
pursuant to the applicable TPS Service Agreement; and
(g) Comply with credit conditions set out in the Financing Order and
applicable TPS Service Agreement.
2. Monitoring TPS Obligations
(a) The Servicer shall require each TPS to pay all undisputed and all
disputed Billed RRB Charges or make a financial arrangement for
such payment according to the applicable TPS Service Agreement; and
(b) For all TPSs subject to any remittance option where such TPS is
liable for all amounts billed in respect of customers served
thereby regardless of the amounts received therefrom, the Servicer
shall monitor payment compliance and take all actions permitted by
the DPUC and the Financing Order in the event of a default in
payment.
3. Enforcing TPS Obligations
The Servicer shall promptly take all actions specified by the Financing
Order with respect to amounts not remitted to the Servicer in accordance with
the payment terms specified by the Financing Order, in addition to any other
remedies available at law.
-Annex I-6-
ANNEX II
REMITTANCE METHODOLOGY
-ANNEX II-1-