INTER-CREDITOR AGREEMENT
INTER-CREDITOR AGREEMENT dated as of March __, 2001 among CITICORP NORTH
AMERICA, INC., a Delaware corporation with an office at 388 Greenwich Street,
New York, New York 10013 ("CNAI"), CITIBANK, N.A., a national banking
association with an office at 388 Greenwich Street, New York, New York 10013
(the "BANK") FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national banking
association with an office at ____________________________, not in its
individual capacity, but solely as Note Trustee under the Note Indenture (as
hereinafter defined) (the "NOTE TRUSTEE"), CL&P RECEIVABLES CORPORATION, a
Connecticut corporation, with an office at 107 Selden Street, Berlin,
Connecticut 06037-1616 ("CRC"), CL&P FUNDING LLC., a Delaware limited liability
company with an office at 107 Selden Street, Berlin, Connecticut 06037-1616 (the
"NOTE ISSUER"), and THE CONNECTICUT LIGHT AND POWER COMPANY, a Connecticut
corporation with an office at 107 Selden Street, Berlin, Connecticut 06037-1616
("CL&P").
WHEREAS, pursuant to the terms of that certain Purchase and Contribution
Agreement, dated as of September 30, 1997, as amended, between CL&P and CRC,
(said agreement as the same now exists and as it may hereafter be amended,
restated or modified, being the "PCA"), CL&P has sold or otherwise transferred
and may continue to sell or otherwise transfer to CRC certain of its accounts
receivable referred to therein as Receivables; and
WHEREAS, pursuant to the terms of that certain Receivables Purchase and
Sale Agreement, dated as of September 30, 1997, as amended and restated as of
March __, 2001, among CL&P, CORPORATE ASSET FUNDING COMPANY, INC. (the
"PURCHASER"), the Bank and CNAI, as agent (the "AGENT") for the Purchasers and
the Banks (said agreement as the same now exists and as it may hereafter from
time to time be amended, restated or modified, being the "RPA"; certain terms
which are capitalized and used throughout this Agreement (in addition to those
defined herein) having the meanings ascribed thereto on this date in the RPA),
CRC has sold and may continue to sell interests in its Receivables referred to
as Receivable Interests to the Purchaser; and
WHEREAS, pursuant to the terms of that certain Transition Property Purchase
and Sale Agreement, dated as of March __, 2001, between CL&P and the Note Issuer
(said agreement as the same now exists and as it may hereafter from time to time
be amended, restated or modified, being the "SALE AGREEMENT"), CL&P is selling
to the Note Issuer certain assets known as Transition Property which includes
the RRB Charge (each as defined in the Sale Agreement); and
WHEREAS, pursuant to the terms of that certain Note Indenture, dated as of
March __, 2001, between the Note Issuer and the Note Trustee (said indenture as
the same now exists and as it may hereafter from time to time be amended,
restated or modified being the "NOTE INDENTURE"), the Note Issuer, among other
things, has granted to the Note Trustee a security interest in certain of its
assets to secure certain Notes issued pursuant to the Note Indenture ("NOTES");
and
1
WHEREAS, pursuant to the terms of that certain Declaration of Trust, dated
as of March __, 2001, between the STATE OF CONNECTICUT, acting through the
office of the State Treasurer (the "FINANCE AUTHORITY"), and FIRST UNION TRUST
COMPANY, NATIONAL ASSOCIATION, as Delaware Trustee (the "DELAWARE TRUSTEE"; said
declaration of trust as the same now exists and as it may hereafter from time to
time be amended, restated or modified being the "DECLARATION OF TRUST"), the
Finance Authority has created CONNECTICUT RRB SPECIAL PURPOSE TRUST CL&P-1 (the
"CERTIFICATE ISSUER"); and
WHEREAS, pursuant to the terms of that certain Note Purchase Agreement,
dated as of March __, 2001, between the Note Issuer and CONNECTICUT RRB SPECIAL
PURPOSE TRUST CL&P-1 (the "CERTIFICATE ISSUER"; said agreement, as the same now
exists and as it may hereafter from time to time be amended, restated or
modified, being the "NOTE PURCHASE AGREEMENT"), the Note Issuer has agreed to
issue and sell, and the Certificate Issuer has agreed to purchase from the Note
Issuer, the Notes; and
WHEREAS, pursuant to the terms of that certain Certificate Indenture, dated
as of March __, 2001, among the Certificate Issuer, the Delaware Trustee and
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, as Certificate Trustee (the
"CERTIFICATE TRUSTEE"; said indenture as the same now exists and as it may
hereafter from time to time be amended, restated and modified being the
"CERTIFICATE INDENTURE"), the Certificate Issuer has granted to the Certificate
Trustee all of its right, title and interest in the Notes acquired pursuant to
the Note Purchase Agreement and agreed to issue certain Certificates
representing fractional undivided beneficial interests in the Notes and the
proceeds thereof (the "CERTIFICATES"); and
WHEREAS, pursuant to the terms of that certain Transition Property
Servicing Agreement, dated as of March __, 2001, between the Note Issuer and
CL&P, as servicer (said agreement being, as the same now exists and as it may
hereafter from time to time be amended, restated or modified, being the
"SERVICING AGREEMENT"), CL&P has agreed to provide for the benefit of the Note
Issuer servicing functions with respect to the collection of the RRB Charge (as
defined in the Servicing Agreement); and
WHEREAS, pursuant to the terms of the PCA and the RPA, CL&P has agreed to
provide for the benefit of CRC, the Purchasers and the Banks servicing functions
with respect to Collections related to Receivables and Receivable Interests; and
WHEREAS, Collections with respect to Receivables and Receivable Interests
and collections with respect to the RRB Charge and related bank accounts as to
which the same may be deposited are the subject of the PCA, the RPA, the Sale
Agreement, the Note Indenture and the Servicing Agreement; and
WHEREAS, the parties hereto wish to agree upon their respective rights
relating to such Collections, collections and bank accounts, as well as other
matters of common interest to them
2
which arise under or result from the coexistence of the PCA, the RPA, the Sale
Agreement, the Note Indenture and the Servicing Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
1. The Agent, the Bank and CRC hereby acknowledge the ownership interest of
the Note Issuer in the Transition Property including the RRB Charge (the "NOTE
ISSUER ASSETS") and the security interest in favor of the Note Trustee in such
assets (the "NOTE TRUSTEE COLLATERAL"). The Note Trustee, the Note Issuer and,
by its signature below, the Certificate Trustee hereby acknowledge the ownership
interest of CRC, the Purchaser, the Banks and the Agent in the Receivables
and/or Receivable Interests, as the case may be. The Agent, the Bank and CRC
further acknowledge that, notwithstanding anything in the RPA or the PCA to the
contrary, none of the Agent, the Bank, CRC or the Purchaser has any interest in
the Note Issuer Assets or the Note Trustee Collateral and each of the Note
Trustee and the Note Issuer further acknowledge that, notwithstanding anything
in the Sale Agreement or the Note Indenture to the contrary, it has no interest
in the Receivables and the Receivable Interests.
2. The Agent, the Bank, CRC and the Note Trustee acknowledge that
Collections relating to the Receivables and Receivable Interests shall be
initially deposited into one or more general accounts of CL&P (together, the
"DEPOSIT ACCOUNT") and that collections with respect to the RRB Charge will also
initially be deposited into the Deposit Account by CL&P as servicer under the
Servicing Agreement. The Note Trustee and the Note Issuer waive any interest in
deposits to the Deposit Account to the extent that they relate to Collections on
account of Receivables and Receivable Interests and CRC, the Agent and the Bank
waive any interest in deposits to the Deposit Account to the extent that they
relate to collections on account of the RRB Charge. Without in any way
derogating their respective security interests in the proceeds of the RRB Charge
or the Receivables or Receivable Interests, as the case may be, or their rights
referred to in Section 5 hereof, each of CRC, the Agent, the Bank, the Note
Issuer and the Note Trustee acknowledges that it has no security interest in or
claim to the Deposit Account as a whole.
3. The Agent, the Bank and CRC hereby acknowledge that, notwithstanding
anything in the RPA or the PCA to the contrary, all collections of the RRB
Charge are, and will continue to be, property of the Note Issuer pledged to the
Note Trustee for the benefit of Noteholders (as defined in the Note Indenture).
Each of the Note Issuer and the Note Trustee hereby acknowledge that,
notwithstanding anything in the Sale Agreement or the Note Indenture to the
contrary, all Collections related to Receivables and Receivable Interests, are,
and will continue to be, the property of the Purchaser and the Bank subject to
the terms of the RPA and the PCA.
4. The acknowledgments contained in Paragraphs 1, 2 and 3 of this Agreement
are applicable irrespective of the time or order of attachment or perfection of
security
3
or ownership interests or the time or order of filing or recording of
financing statements or mortgages.
5. The parties hereto recognize the existence of rights in favor of the
Note Issuer, the Note Trustee, the Certificate Trustee, CRC (assigned to the
Agent) and the Agent under the Note Indenture, the Servicing Agreement, the
Certificate Indenture, the PCA and the RPA, as the case may be, to (i) replace
CL&P as servicer under the Servicing Agreement, or under the PCA and the RPA, as
the case may be, and/or (ii) to take control over Collections relating to
Receivables and Receivable Interests and collections relating to the RRB Charge
by means, among other things, of notifying customers of CL&P to stop making
payments to CL&P on account of Receivables and Receivable Interests or the RRB
Charge, as the case may be, and to direct that such payments be made to a Person
or a lock-box or bank account selected by the relevant party (whether by means
of court ordered sequestration or otherwise), in each case subject to the terms
of this paragraph 5.
In the event that any of the Note Trustee, the Note Issuer, the Certificate
Trustee or the Agent is entitled to and desires (i) to exercise its right to
replace CL&P or its successor as servicer, the party desiring to exercise such
right will consult with the other with respect to the Person who would replace
CL&P or its successor and/or (ii) to exercise its rights referred to in clause
(ii) of the prior paragraph, any redirection of funds will be either to (A) a
replacement servicer agreed to by both the Note Trustee and the Agent in
accordance with the terms hereof or (B) to an account designated by the Note
Trustee or the Agent, as the case may be, which shall be governed by the
following.
Subject to satisfaction of the Rating Agency Condition (as defined below)
and the consent, if required by law or the Financing Order (as defined in the
Sale Agreement), of the Connecticut Department of Public Utility Control, the
Note Trustee and the Agent shall appoint an independent third party (which shall
be a financial institution having minimum capital of $50,000,000 or a
nationally-recognized, independent accounting firm) to (i) allocate and remit
funds from such account on a daily basis to the persons entitled thereto, being
the Note Trustee in the case of all collections relating to the Note Issuer
Assets and the Agent in the case of all Collections relating to the Receivables
and Receivable Interests, and (ii) maintain records as to the amounts deposited
into such account, the amounts remitted therefrom and the allocation as provided
in clause (i). The Note Trustee, the Note Issuer and the Agent agree not to take
any action to contest or interfere with the actions of the independent third
party provided in the preceding clauses (i) or (ii); provided that, subject to
the foregoing, each such party reserves the right to require an accounting of
collections, allocations and remittances by the independent third party in order
to preserve the respective property rights recognized under this Agreement. The
parties hereto agree that such account shall meet the requirements of an
"Eligible Deposit Account," as such term is defined in the Note Indenture and
that such account shall be held for the benefit of the Note Trustee and the
Agent as their interests may appear.
If in accordance with the previous paragraph a replacement servicer
cannot be agreed upon within five Business Days, each of the Note Trustee and
the Agent at their own expense
4
will appoint a Person to select a replacement servicer for them and such Persons
shall agree upon a replacement servicer. Such replacement servicer shall be an
"eligible" servicer which is a Person (i) which is a financial institution
having minimum capital of $50,000,000, experienced in collecting utility company
receivables and (ii) whose appointment is subject to the Rating Agency
Condition.
Anything in this Agreement to the contrary notwithstanding, any action
taken by either the Note Trustee or the Agent pursuant to this paragraph 5 shall
be subject to the Rating Agency Condition and the consent, if required by law,
of the Regulatory Authority. For the purposes of this Agreement, the Rating
Agency Condition means, with respect to any such action, notification to each
rating agency then rating any class or series of the Notes or Certificates, and
the receipt of notification or other assurance acceptable to the Note Trustee
from each of Fitch and S&P (as defined in the Note Indenture) that such action
will not result in a reduction or withdrawal of its then current rating of any
class or series of Notes or Certificates and as of the date of receipt of the
last of such notifications or other assurances from Fitch and S&P, Moody"s (as
defined in the Note Indenture) has not taken any action to reduce or withdraw
its rating of any class or series of Notes or Certificates. The parties hereto
acknowledge and agree that the approval or the consent of the rating agencies
which is required in order to satisfy the Rating Agency Condition is not subject
to any standard of commercial reasonableness, and the parties are bound to
satisfy this condition whether or not the rating agencies are unreasonable or
arbitrary.
6. The Agent, the Note Trustee, the Note Issuer and CL&P agree to cooperate
with each other and make available to each other or any replacement servicer any
and all records and other data relevant to the RRB Charge, Receivables and
Receivable Interests hereinabove mentioned which it may from time to time
receive from CL&P (or its successor) or, in the case of CL&P, possess including,
without limitation, any and all computer programs, data files, documents,
instruments, files and records and any receptacles and cabinets containing the
same.
7. Nothing herein contained shall be deemed as effecting a joint venture
among any of the Agent, CL&P, CRC, the Banks, the Purchaser, the Note Issuer and
the Note Trustee.
8. For the purpose of this Agreement only, the Agent and the Bank hereby
consent and agree to the method of calculation, allocation and remittance of
payments set forth in Section 4.03(a) of the Servicing Agreement and irrevocably
waive any right to object to or enjoin such payment or allocation. Such consent
and agreement shall not relieve CL&P or CRC of any of its obligations to make
payments in accordance with the terms of the RPA and/or the PCA, as the case may
be.
9. This Agreement shall terminate upon the payment in full of either the
Notes or the obligations under the RPA, except that the understandings and
acknowledgments contained in paragraphs 1, 2, 3 and 4 shall survive the
termination of this Agreement.
5
10. CL&P and the Agent shall not cause or permit the PCA or the RPA to be
amended in any manner that would adversely affect the Note Issuer Assets, the
Notes or the holders thereof, without the prior written consent of the Note
Trustee. CL&P and the Note Trustee shall not cause or permit the Note Indenture
to be amended in any manner that would adversely affect the Receivables, the
Receivable Interests, the Agent, the Investors or the Banks, without the prior
written consent of the Agent.
11. This Agreement shall be governed by the laws of the State of New York.
12. The Agent, the Bank, CL&P, CRC, the Purchaser, the Note Issuer and the
Note Trustee agree to execute any and all agreements, instruments, financing
statements, releases and any and all other documents reasonably requested by the
other in order to effectuate the intent of this Agreement. In each case where a
release is to be given pursuant to this Agreement, the term release shall
include any documents or instruments necessary to effect a release, as
contemplated by this Agreement. All releases, subordinations and other
instruments submitted to the executing party are to be prepared at no expense to
such party.
13. This Agreement is solely for the benefit of the Agent, the Bank, CL&P,
the Note Issuer, the Purchasers, the Note Trustee for the benefit of the
Noteholders and the Certificate Trustee for the benefit of the
Certificateholders (as defined in the Certificate Indenture), and no other
person or entity shall have any rights, benefits, priority or interest under or
because of the existence of this Agreement.
14. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.
6
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
CITICORP NORTH AMERICA, INC.,
as Agent
By:
---------------------------------------
Vice President
CITIBANK, N.A.
By:
---------------------------------------
Vice President
THE CONNECTICUT LIGHT AND POWER COMPANY
By:
---------------------------------------
Title:
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not
in its individual capacity
but solely as Note Trustee
under the Note Indenture
By:
---------------------------------------
Title:
CL&P FUNDING LLC
By:
----------------------------------------
Title:
7
CL&P RECEIVABLES CORPORATION
By:
---------------------------------------
Title:
ACKNOWLEDGED AND AGREED:
CONNECTICUT RRB SPECIAL PURPOSE TRUST
CL&P-1
By: First Union Trust Company, National Association,
not in its individual capacity, but solely as Delaware
Trustee under the Declaration of Trust
By:
-----------------------------------------------------
Title:
First Union Trust Company, National Association, not in its individual capacity,
but solely as Delaware Trustee under the Certificate Indenture
By:
-----------------------------------------------------
Title:
First Union Trust Company, National Association, not in its individual capacity
but solely as Certificate Trustee under the Certificate Indenture
By
-----------------------------------------------------
Title:
8