EXHIBIT 10.56
CL&P FUNDING LLC,
as Note Issuer
and
THE CONNECTICUT LIGHT AND POWER COMPANY, as Servicer
TRANSITION PROPERTY SERVICING AGREEMENT
Dated as of March 30, 2001
ARTICLE 1 DEFINITIONS
Section 1.01. Definitions
Section 1.02. Other Definitional Provisions
ARTICLE 2 APPOINTMENT AND AUTHORIZATION
Section 2.01. Appointment of Servicer; Acceptance of Appointment
Section 2.02. Authorization
Section 2.03. Dominion and Control Over the Transition Property
ARTICLE 3 BILLING SERVICES
Section 3.01. Duties of Servicer
Section 3.02. Servicing and Maintenance Standards
Section 3.03. Certificate of Compliance
Section 3.04. Annual Report by Independent Public Accountants
ARTICLE 4 SERVICES RELATED TO PERIODIC ADJUSTMENTS; REMITTANCES
Section 4.01. Periodic Adjustments
Section 4.02. Limitation of Liability
Section 4.03. Remittances
ARTICLE 5 THE TRANSITION PROPERTY
Section 5.01. Custody of Transition Property Records
Section 5.02. Duties of Servicer as Custodian
Section 5.03. Instructions; Authority to Act
Section 5.04. Effective Period and Termination
Section 5.05. Monitoring of Third-Party Suppliers
Section 5.06. Monitoring and Collecting Exit Charges
ARTICLE 6 THE SERVICER
Section 6.01. Representations and Warranties of Servicer
Section 6.02. Indemnities of Servicer
Section 6.03. Limitation on Liability of Servicer and Others
Section 6.04. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer
Section 6.05. The Connecticut Light and Power Company Not to Resign
as Servicer
Section 6.06. Servicing Compensation
Section 6.07. Compliance with Applicable Law
Section 6.08. Access to Certain Records and Information Regarding
Transition Property
Section 6.09. Appointments
Section 6.10. No Servicer Advances
Section 6.11. Maintenance of Operations
ARTICLE 7 DEFAULT
Section 7.01. Servicer Default
Section 7.02. Appointment of Successor
Section 7.03. Waiver of Past Defaults
Section 7.04. Notice of Servicer Default
Section 7.05. Inter-Creditor Agreement
ARTICLE 8 MISCELLANEOUS PROVISIONS
Section 8.01. Amendment
Section 8.02. Maintenance of Accounts and Records
Section 8.03. Notices
Section 8.04. Assignment
Section 8.05. Limitations on Rights of Third Parties
Section 8.06. Severability
Section 8.07. Separate Counterparts
Section 8.08. Headings
Section 8.09. Governing Law
Section 8.10. Assignment to Note Trustee
Section 8.11. Nonpetition Covenants
This TRANSITION PROPERTY SERVICING AGREEMENT, dated as of March 30, 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 30, 2001.
"CTA" means the "competitive transition assessment" as defined in the
Statute.
"Declaration of Trust" means the Declaration of Trust dated as of March 23,
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
30, 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 28, 2001, filed with the DPUC pursuant to the Financing Order.
"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 30, 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.
"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 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 30, 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 30, 2001, among CL&P Receivables Corporation, the Servicer,
Corporate Asset Funding Company, Inc., and Citibank, N.A. and Citicorp North
America, Inc, as the same may be amended, supplemented, restated and renewed
from time to time.
"Servicer" means The Connecticut Light and Power Company, as the servicer
of the Transition Property, or each successor (in the same capacity) pursuant to
Sections 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 through and including 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.
"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.
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 bill
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 bill.
The Servicer shall allocate the total revenues from each such special contract
customer to each of the unbundled rate components (including the unbundled CTA
component and its RRB Charge subcomponent) on an equivalent cents/kWh basis
times the actual kilowatt-hours. After the first six unbundled rate components
(including the unbundled CTA component and its RRB Charge subcomponent) are
fully satisfied with the proper revenue allocation, the Servicer shall allocate
any remaining revenue to the unbundled 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 bill 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 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 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
(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 11:00 a.m. (New York City time) on 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.
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
made. 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 "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
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, bill 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.
(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
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, and the
Certificateholders and any Swap Counterparty(each an "Indemnified Person" for
purposes of Section 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, and 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 and any Losses are fully paid to any Swap Counterparty, except as
provided in Section 6.02(c).
(c) The Servicer shall indemnify and hold harmless the Note Trustee, the
Delaware Trustee, any Swap Counterparty, 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 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.
(e) Indemnification under Section 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 or any Swap 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 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 Servicer is The Connecticut
Light and Power Company or any successor Servicer that 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 for so long as the
Servicer is a successor Servicer that bills the RRB Charge 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.
(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 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 occurs and has not been remedied or waived; 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 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 (subject to the approval of the DPUC) 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.
(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, the Note Trustee and any Swap Counterparty, adversely affect in any
material respect the interests of any Noteholder, or any Certificateholder or
adversely affect the interests of any Swap Counterparty. No amendment may be
made to this Agreement that would adversely affect any Swap Counterparty without
its prior written consent.
(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 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 Sections 4.01 or 4.03 shall satisfy the Rating Agency
Condition.
(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
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:
P.O. Box 270
Hartford, CT 06141-0270
if by courier:
107 Selden Street
Berlin, CT 06037
Attention: Treasurer
Facsimile: (860) 665-5457
Telephone: (860) 665-3258
Email: shoopra@nu.com
(b) if to the Note Issuer, to
CL&P Funding LLC
c/o The Connecticut Light and Power Company
if by U.S. Mail:
P.O. Box 270
Hartford, CT 06141-0270
if by courier:
107 Selden Street
Berlin, CT 06037
Attention: President
Facsimile: (860) 665-5457
Telephone: (860) 665-3258
Email: shoopra@nu.com
with a copy to:
The Connecticut Light and Power Company
if by U.S. Mail:
P.O. Box 270
Hartford, CT 06141-0270
if by courier:
107 Selden Street
Berlin, CT 06037
Attention: Treasurer
Facsimile: 860-665-5457
Telephone: 860-665-3258
Email: shoopra@nu.com
(c) if to the Note Trustee, to
First Union Trust Company, National Association
One Rodney Square
920 King Street, 1st Floor
Wilmington, DE 19801-7475
Attention: Corporate Trust Administration
Facsimile: (302) 888-7544
Telephone: (302) 888-7500
(d) if to Moody's, to
Moody's Investors Service, Inc.
99 Church Street
New York, NY 10007
Attention: ABS Monitoring Department
Facsimile: (212) 553-0573
Telephone: (212) 553-3686
(e) if to S&P, to
Standard & Poor's
55 Water Street, 40th Floor
New York, NY 10041
Attention: Asset Backed Surveillance Department
Facsimile: (212) 438-2655
Telephone: (212) 438-2000
(f) if to Fitch, to
Fitch, Inc.
One State Street Plaza
New York, NY 10004
Attention: ABS Surveillance
Facsimile: (212) 514-9879
Telephone: (212) 908-0500
Email: surv@fitchratings.com
(g) if to the Finance Authority, to
Office of the State Treasurer
55 Elm Street
Hartford, CT 06103
Attention: Assistant Treasurer - Debt Management
Facsimile: (860) 702-3127
Telephone: (860) 702-3034
(h) if to the Certificate Issuer, to:
Connecticut RRB Special Purpose Trust CL&P-1
First Union Trust Company, National Association
One Rodney Square
920 King Street, 1st Floor
Wilmington, DE 19801-7475
Attention: Corporate Trust Administration
Facsimile: (302) 888-7544
Telephone: (302) 888-7500
(with copies to the Finance Authority at the addresses listed herein)
(i) if to any Swap Counterparty, to the address and in the manner set forth
in any Swap Agreement (a copy of which will be provided by the Certificate
Trustee, upon request); and
(j) 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, any Swap Counterparty, 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 and
any Swap Counterparty 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.
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]
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: /S/RANDY A. SHOOP
Name: Randy A. Shoop
Title: President
THE CONNECTICUT LIGHT AND POWER COMPANY,
Servicer
By /S/RANDY A. SHOOP
Name: Randy A. Shoop
Title: Treasurer
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: /S/ RANDY A. SHOOP
Name: RANDY A. SHOOP
Title: Treasurer
ANNEX A TO EXHIBIT A
LIST OF SERVICER DEFAULTS
Nature of Default Status
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"), shall 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
bill 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 March 30, 2001.
Table I below shows the current assumptions for each of the variables used in
the RRB Charge calculation.
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: _____
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
EXHIBIT C
FORM OF MONTHLY SERVICER CERTIFICATE
Pursuant to Section 4.01(d)(2) of the Transition Property Servicing
Agreement, dated as of March 30, 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. Billings:
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:
c) "RRB%" (calculated in accordance with Annex II to the Agreement)for
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: /s/ RANDY A. SHOOP
Name: RANDY A. SHOOP
Title: TREASURER
EXHIBIT D
FORM OF QUARTERLY SERVICER CERTIFICATE
Pursuant to Section 4.01(d)(3) of the Transition Property Servicing
Agreement, dated as of March 30, 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:
3. Required Funding/Payments as of Current Payment Date
a) Projected Principal Balances and Payments
Projected Quarterly
Principal 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 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
Level Required
i. Capital Subaccount:
ii. Overcollateralization Subaccount:
iii. Total Subaccount
Payments and Levels:
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
Per $1000 of Aggregate
Original Principal 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
Per $1000 of Aggregate
Original Principal 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:
e) Aggregate Payments Pursuant to Section 8.02(d)(i) of Note Indenture
i. To Note Trustee, Certificate Trustee and
Delaware Trustee:
ii. To Finance Authority and Certificate Issuer:
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:
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: /s/RANDY A. SHOOP
Name: RANDY A. SHOOP
Title: TREASURER
SCHEDULE 4.01(a)
Expected Amortization Schedule
Outstanding Principal Balance
Payment Class Class Class Class Class
Date A-1 A-2 A-3 A-4 A-5
Closing 224,858,822 255,056,333 292,381,624 287,907,878 378,195,343
9/30/01 181,027,904 255,056,333 292,381,624 287,907,878 378,195,343
12/30/01 145,111,154 255,056,333 292,381,624 287,907,878 378,195,343
3/30/02 112,308,456 255,056,333 292,381,624 287,907,878 378,195,343
6/30/02 87,709,027 255,056,333 292,381,624 287,907,878 378,195,343
9/30/02 58,292,404 255,056,333 292,381,624 287,907,878 378,195,343
12/30/02 32,187,247 255,056,333 292,381,624 287,907,878 378,195,343
3/30/03 0 255,056,333 292,381,624 287,907,878 378,195,343
6/30/03 0 227,732,868 292,381,624 287,907,878 378,195,343
9/30/03 0 195,337,425 292,381,624 287,907,878 378,195,343
12/30/03 0 166,293,780 292,381,624 287,907,878 378,195,343
3/30/04 0 131,792,472 292,381,624 287,907,878 378,195,343
6/30/04 0 102,416,672 292,381,624 287,907,878 378,195,343
9/30/04 0 67,903,967 292,381,624 287,907,878 378,195,343
12/30/04 0 36,747,662 292,381,624 287,907,878 378,195,343
3/30/05 0 0 292,381,624 287,907,878 378,195,343
6/30/05 0 0 260,766,487 287,907,878 378,195,343
9/30/05 0 0 223,906,099 287,907,878 378,195,343
12/30/05 0 0 190,375,878 287,907,878 378,195,343
3/30/06 0 0 151,200,741 287,907,878 378,195,343
6/30/06 0 0 117,159,077 287,907,878 378,195,343
9/30/06 0 0 77,796,006 287,907,878 378,195,343
12/30/06 0 0 41,760,787 287,907,878 378,195,343
3/30/07 0 0 0 287,907,878 378,195,343
6/30/07 0 0 0 251,293,044 378,195,343
9/30/07 0 0 0 209,247,737 378,195,343
12/30/07 0 0 0 170,490,986 378,195,343
3/30/08 0 0 0 125,955,154 378,195,343
6/30/08 0 0 0 86,550,513 378,195,343
9/30/08 0 0 0 41,638,744 378,195,343
12/30/08 0 0 0 0 378,195,343
3/30/09 0 0 0 0 330,702,282
6/30/09 0 0 0 0 288,320,065
9/30/09 0 0 0 0 240,335,496
12/30/09 0 0 0 0 195,586,975
3/30/10 0 0 0 0 144,900,682
6/30/10 0 0 0 0 99,319,619
9/30/10 0 0 0 0 48,054,208
12/30/10 0 0 0 0 0
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.
SECTION 3. USAGE AND BILL CALCULATION
The Servicer shall obtain a calculation of each customer's usage (which may be
based on data obtained from such customer's meter read or on usage estimates
determined in accordance with applicable 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 bill 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 Bill 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 Bill 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 Bill 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 Bill 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.
(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.
(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.
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.
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 II
REMITTANCE METHODOLOGY