PSNH FUNDING LLC 2,
as Issuer
and
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
as Servicer
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SERVICING AGREEMENT
Dated as of January __, 2002
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TABLE OF CONTENTS
Page
Article 1 DEFINITIONS ................................................... 1
Section 1.01. Definitions 1
Section 1.02. Other Definitional Provisions ...................... 5
Article 2 APPOINTMENT AND AUTHORIZATION 6
Section 2.01. Appointment of Servicer; Acceptance of
Appointment ........................................ 6
Section 2.02. Authorization ...................................... 6
Section 2.03. Dominion and Control Over the RRB Property ......... 6
Article 3 BILLING SERVICES .............................................. 7
Section 3.01. Duties of Servicer ................................. 7
Section 3.02. Servicing and Maintenance Standards ................ 8
Section 3.03. Certificate of Compliance .......................... 8
Section 3.04. Annual Report by Independent Public Accountants .... 8
Article 4 SERVICES RELATED TO PERIODIC ADJUSTMENTS; REMITTANCES ......... 9
Section 4.01. Periodic Adjustments ............................... 9
Section 4.02. Limitation of Liability ............................ 11
Section 4.03. Remittances ........................................ 11
Article 5 THE RRB PROPERTY .............................................. 12
Section 5.01. Custody of RRB Property Records .................... 12
Section 5.02. Duties of Servicer as Custodian .................... 12
Section 5.03. Instructions; Authority to Act ..................... 14
Section 5.04. Effective Period and Termination ................... 14
Section 5.05. Monitoring of Third Party Suppliers ................ 14
Article 6 THE SERVICER .................................................. 14
Section 6.01. Representations and Warranties of Servicer ......... 14
Section 6.02. Indemnities of Servicer ............................ 16
Section 6.03. Limitation on Liability of Servicer and Others ..... 18
Section 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer ........................... 18
Section 6.05. Public Service Company of New Hampshire Not to
Resign as Servicer ................................. 19
TABLE OF CONTENTS
(continued)
Page
Section 6.06. Servicing Compensation ................................ 19
Section 6.07. Compliance with Applicable Law ........................ 20
Section 6.08. Access to Certain Records and Information Regarding
RRB Property .......................................... 20
Section 6.09. Appointments .......................................... 20
Section 6.10. No Servicer Advances .................................. 21
Section 6.11. Maintenance of Operations ............................. 21
Article 7 DEFAULT ....................................................... 21
Section 7.01. Servicer Default ...................................... 21
Section 7.02. Appointment of Successor .............................. 22
Section 7.03. Waiver of Past Defaults ............................... 23
Section 7.04. Notice of Servicer Default ............................ 23
Article 8 MISCELLANEOUS PROVISIONS ...................................... 23
Section 8.01. Amendment ............................................. 23
Section 8.02. Maintenance of Accounts and Records ................... 24
Section 8.03. Notices ............................................... 24
Section 8.04. Assignment ............................................ 27
Section 8.05. Limitations on Rights of Third Parties ................ 27
Section 8.06. Severability .......................................... 28
Section 8.07. Separate Counterparts ................................. 28
Section 8.08. Headings .............................................. 28
Section 8.09. Governing Law ......................................... 28
Section 8.10. Assignment to Trustee ................................. 28
Section 8.11. Nonpetition Covenants ................................. 28
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This SERVICING AGREEMENT, dated as of January __, 2002, is between PSNH
Funding LLC 2, a Delaware limited liability company (together with any successor
thereto permitted under the Indenture, as hereinafter defined, the "Issuer"),
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and Public Service Company of New Hampshire, a New Hampshire corporation.
RECITALS
WHEREAS, pursuant to the Statute and the Finance Order, the Seller and the
Issuer are concurrently entering into the Sale Agreement pursuant to which the
Seller is selling to the Issuer the RRB Property created pursuant to the Statute
and the Finance Order.
WHEREAS, in connection with its ownership of the RRB Property and in order
to collect the RRB Charge, the 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. In
addition, the Issuer desires to engage the Servicer to act on its behalf in
obtaining Periodic Adjustments from the NHPUC. The Servicer desires to perform
all of these activities on behalf of the 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
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words and phrases shall have the following meanings:
"Advice Letter" means any filing made with the NHPUC by the Servicer on
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behalf of the Issuer to set or adjust the RRB Charge, including the Issuance
Advice Letter, a Routine Semiannual True-Up Letter, a Routine True-Up Letter or
a Non-Routine True-Up Letter.
"Agreement" means this Servicing Agreement, together with all Exhibits,
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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,
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billing the RRB Charge to that customer.
"Bills" means each of the regular monthly bills, summary bills and other
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bills issued to customers or TPSs by Public Service Company of New Hampshire on
its own behalf and in its capacity as Servicer.
"Certificate of Compliance" has the meaning set forth in Section 3.03.
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"Closing Date" means January __, 2002.
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"Expected Amortization Schedule" means Schedule 4.01(a) hereto.
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"Finance Order" means the order of the NHPUC, DE 01-089, issued on December
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6, 2001 (Order No. 23,859).
"Indemnified Person" has the meaning assigned to such term in Section 6.02.
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"Indenture" means the Indenture dated as of the date hereof between the
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Issuer and the Trustee, as the same may be amended and supplemented from time to
time.
"Insolvency Event" means, with respect to a specified Person, (a) the
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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.
"Issuer" has the meaning set forth in the preamble to this Agreement.
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"Issuance Advice Letter" means the initial Issuance Advice Letter, dated
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January __, 2002, filed with the NHPUC pursuant to the Finance Order.
"Lien" means a security interest, lien, charge, pledge or encumbrance of
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any kind.
"Losses" has the meaning assigned to that term in Section 6.02(b).
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"Monthly Servicer Certificate" has the meaning assigned to that term in
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Section 4.01(d)(2).
"NHPUC" means the New Hampshire Public Utilities Commission and any
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successor thereto.
"NHPUC Regulations" means all regulations, rules, tariffs and laws
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applicable to public utilities or TPSs, as the case may be, and promulgated by,
enforced by or otherwise within the jurisdiction of the NHPUC.
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"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 NHPUC in
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accordance with the Finance 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 NHPUC.
"Officer's Certificate" means a certificate of the Servicer signed by a
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Responsible Officer.
"Opinion of Counsel" means one or more written opinions of counsel who may
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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
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to the terms of the Finance Order and in accordance with Section 4.01 hereof.
"Principal Balance" means, as of any Payment Date, the sum of the
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outstanding principal amount of the Bonds.
"Projected Principal Balance" means, as of any Payment Date, the sum of the
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projected outstanding principal amount of the Bonds for such Payment Date set
forth in the Expected Amortization Schedule.
"Quarterly Servicer Certificate" has the meaning assigned to that term in
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Section 4.01(d)(3).
"Remittance" means each remittance pursuant to Section 4.03 of RRB Charge
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Payments by the Servicer to the Trustee.
"Remittance Date" means each Servicer Business Day on which a Remittance is
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to be made by the Servicer pursuant to Section 4.03.
"Remittance Period" means, in each year, each successive six-month period
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commencing on May 1 and ending on October 31 and commencing on November 1 and
ending on April 30; provided, however, that the initial Remittance Period shall
commence on the Closing Date and end on April 30, 2002.
"Required Debt Service" means, for any Remittance Period, the total dollar
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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 Bonds, (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
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Payment Date immediately following the end of such period, (i) all accrued and
unpaid interest on the Bonds then due shall have been paid in full, (ii) the
Principal Balance of the Bonds is equal to the Projected Principal Balance of
the Bonds for that Payment Date, (iii) the balance on deposit in the Interest
Reserve Subaccount equals the aggregate Required Interest Reserve Level, (iv)
the balance on deposit in the Capital Subaccount equals the aggregate Required
Capital Level, (v) the balance on deposit in the Overcollateralization
Subaccount equals the aggregate Required Overcollateralization Level and (vi)
all other fees, expenses and indemnities due and owing and required or allowed
to be paid under Section 8.02 of the 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 Bonds, the Required
Debt Service shall be calculated to ensure that sufficient amounts will be
collected to retire such Bonds in full as of the earlier of (x) the next Payment
Date and (y) the Final Maturity Date for such Bonds.
"Responsible Officer" means the chief executive officer, the president, the
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chairman or vice chairman of the board, the any vice president, the treasurer,
any assistant treasurer, the secretary, the clerk, any assistant secretary, and
assistant clerk, the controller or the finance manager of the Servicer.
"Retirement of the Bonds" means the day on which the final payment is made
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to the Trustee in respect of the last outstanding Bond.
"Routine Semiannual True-Up Letter" means a letter filed with the NHPUC,
---------------------------------
substantially in the form of Exhibit B hereto, not later than 30 days prior to
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April 25 and October 25 in each year, in respect of a semiannual Periodic
Adjustment. Absent manifest error in the Routine Semiannual True-Up Letter, the
resulting upward or downward adjustments to the RRB Charge will be effective on
the ensuing May 1 or November 1.
"Routine True-Up Letter" means a letter filed with the NHPUC, substantially
----------------------
in the form of Exhibit B hereto, as frequently as monthly, in respect of a
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Periodic Adjustment. Absent manifest error in the Routine True-Up Letter, the
resulting upward or downward adjustments to the RRB Charge will be effective
immediately upon the filing of such Routine True-Up Letter.
"RRB Charge" means the portion (which may become all) of the Seller's
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"stranded cost recovery charge" designated pursuant to the Finance Order and RSA
369-B:2, XIII as the RRB Charge, as the same may be adjusted from time to time
as provided in the Finance Order.
"RRB Charge Collections" means the RRB Charge Payments remitted to the
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Collection Account.
"RRB Charge Payments" means the actual payments received by the Servicer,
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directly or indirectly (including through a TPS), from or on behalf of
customers,
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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
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Charge.
"RRB Property" means the RRB Property that exists under Approval Nos. 20 to
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22 of the Finance Order and is sold by the Seller to the Issuer under the Sale
Agreement.
"RRB Property Records" has the meaning assigned to that term in Section
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5.01.
"Sale Agreement" means the Purchase and Sale Agreement dated as of the date
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hereof between Public Service Company of New Hampshire, as Seller, and the
Issuer, as the same may be amended and supplemented from time to time.
"Seller" means Public Service Company of New Hampshire, a New Hampshire
------
corporation, and its permitted successors and assigns under the Sale Agreement.
"Servicer" means Public Service Company of New Hampshire, as the servicer
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of the RRB Property, or each successor (in the same capacity) pursuant to
Section 6.04 or Section 7.02.
"Servicer Business Day" means any Business Day on which the Servicer's
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offices in the State of New Hampshire are open for business.
"Servicer Default" means an event specified in Section 7.01.
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"Servicing Fee" has the meaning set forth in Section 6.06(a).
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"Statute" means RSA Chapter 369-B.
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"Termination Notice" has the meaning assigned to that term in Section 7.01.
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"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
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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 NHPUC
Regulations, the Finance Order and the guidelines described in Schedule A to
Annex I.
Section 1.02. Other Definitional Provisions.
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(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the 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
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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
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to Section 6.05 and Article 7, the Issuer hereby appoints the Servicer, and the
Servicer hereby accepts such appointment, to perform the Servicer's obligations
pursuant to this Agreement on behalf of and for the benefit of the Issuer 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 RRB
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Property, the Servicer shall be, and hereby is, authorized and empowered by the
Issuer to (a) execute and deliver, on behalf of itself and/or the Issuer, as the
case may be, any and all instruments, documents or notices, and (b) on behalf of
itself and/or the Issuer, as the case may be, make any filing and participate in
proceedings of any kind with any governmental authorities, including with the
NHPUC. The Issuer shall execute and/or furnish the Servicer with such documents
as have been prepared by the Servicer for execution by the Issuer, and with such
other documents as may be in the Issuer's possession, as 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
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 RRB Property. Notwithstanding
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any other provision herein, the Issuer shall have dominion and control over the
RRB Property, and the Servicer, in accordance with the terms hereof, is acting
solely as the servicing agent and custodian for the Issuer with respect to the
RRB Property and the RRB Property Records. The Servicer shall not take any
action that is not authorized by this Agreement or that shall impair the rights
of the Issuer or the Trustee in the RRB Property, in each case unless such
action is required by applicable law.
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ARTICLE 3
BILLING SERVICES
Section 3.01. Duties of Servicer. The Servicer, as agent for the
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Issuer, shall have the following duties:
(a) Duties of Servicer Generally.
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(1) General Duties. The Servicer's duties in general
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shall include management, servicing and administration of the RRB 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 RRB Property; responding to inquiries by customers, the NHPUC, or
any federal, local or other state governmental authorities with respect to the
RRB Property; delivering Bills to customers and TPSs, investigating and handling
delinquencies, processing and depositing collections and making periodic
remittances; furnishing periodic reports to the Issuer, the 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 xxxx
calculation, billing, customer service functions, collection, payment processing
and remittance set forth in Annex I hereto.
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(2) NHPUC Regulations Control. Notwithstanding anything
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to the contrary in this Agreement, the duties of the Servicer set forth in this
Agreement shall be qualified in their entirety by any NHPUC Regulations as in
effect at the time such duties are to be performed.
(b) Reporting Functions.
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(1) Notification of Laws and Regulations. The Servicer
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shall promptly notify the Issuer, the Trustee and the Rating Agencies in writing
of any laws or NHPUC 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
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the Issuer, the Trustee or any Rating Agency, the Servicer shall provide to such
Issuer, 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 RRB Property to the extent it is reasonably available to the Servicer, as
may be reasonably necessary and permitted by law for the Issuer, the Trustee ,
or the Rating Agencies to monitor the Servicer's performance hereunder.
(3) Preparation of Reports to be Filed with the SEC. The
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Servicer shall prepare or cause to be prepared any reports required to be filed
by the
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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
-----------------------------------
Issuer, the Servicer shall (a) manage, service, administer and make collections
in respect of the RRB Property with reasonable care and in accordance with
applicable law, including all applicable NHPUC 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 xxxx 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 interest and security interest of
the Issuer and the Trustee in the RRB Property; and (e) comply in all material
respects with all laws and regulations applicable to and binding on it relating
to the RRB 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 RRB Property, which, in the Servicer's
judgment, may include the taking of legal action, at the Issuer's expense.
Section 3.03. Certificate of Compliance. The Servicer shall deliver to the
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Issuer, the Trustee and the Rating Agencies on or before March 31 of each year,
commencing March 31, 2003 to and including the March 31 succeeding the
Retirement of the Bonds, an Officer's Certificate substantially in the form of
Exhibit A hereto (a "Certificate of Compliance"), stating that: (i) a review of
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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, 2003, the period of time from the date of this
Agreement until December 31, 2002) 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, 2003 the period of time from the date of
this Agreement until December 31, 2002), 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.
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(a) The Servicer, at the 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 Issuer, the
Trustee and the Rating Agencies, a report addressed to the Servicer (the "Annual
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Accountant's Report"), which may be included as part of the Servicer's customary
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auditing activities, for the information and use of the Issuer, the Trustee and
the Rating Agencies, on or before March 31 each year, beginning March 31, 2003
to and including the March 31 succeeding the Retirement of the Bonds, to the
effect that such firm has performed
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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,
2003, the period of time from the date of this Agreement until December 31,
2002), 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
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Retirement of the Bonds, 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
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Schedule is attached hereto as Schedule 4.01(a).
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(b) Routine Periodic Adjustments and Semiannual Filings.
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(1) Routine Semiannual Periodic Adjustments and Filings.
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For the purpose of preparing a Routine Semiannual 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 Issuer to the extent not fixed, for the Remittance Period
beginning on May 1 or November 1 (whichever is next to occur) 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 Semiannual True-Up Letter with the NHPUC no later than 30 days prior
to April 25 and October 25 of each year.
(2) Routine Periodic Adjustments. The Servicer shall
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file a Routine True-Up Letter 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.
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(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 Issuer under the conditions set forth in Section 3.18 of the
Indenture, the Servicer shall file a Non-Routine True-Up Letter with the NHPUC
designating the adjustments to such model and any corresponding adjustments to
the RRB Charge (collectively, a "Non-Routine Periodic Adjustment"), subject to
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the review and approval of the NHPUC pursuant to the Finance 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.
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(1) Notification of Advice Letter Filings and Periodic
--------------------------------------------------
Adjustments. Whenever the Servicer files an Advice Letter with the NHPUC, the
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Servicer shall send a copy of such filing to the Issuer, the 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 Finance Order, the Servicer shall notify the Issuer, the
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 Bonds
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are outstanding, not later than fifteen (15) days after the end of each month
after the Bonds are issued (excluding January, 2002), 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
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(the "Monthly Servicer Certificate") to the Issuer, the Trustee and the Rating
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Agencies.
(3) Quarterly Servicer Certificate. So long as any Bonds
------------------------------
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
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Servicer Certificate") to the Issuer, the Trustee and the Rating Agencies.
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(4) TPS Reports. The Servicer shall provide to the Rating
-----------
Agencies, upon request, any publicly available reports filed by the Servicer
with the NHPUC (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.
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(e) Uniformity of RRB Charge. The Servicer shall not take any
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action to implement any Periodic Adjustment that would cause the RRB Charge to
vary among customer classes unless the Rating Agency Condition shall have been
satisfied.
Section 4.02. Limitation of Liability.
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(a) The 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 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 NHPUC (or, in
connection with any Non-Routine Periodic Adjustment, by the Rating Agencies) in
any way related to the RRB 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
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 Bondholders, not receiving any payment,
amount or return anticipated or expected in respect of any Bond 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 Public Service Company of New Hampshire imposes the RRB Charge, the
Servicer will remit to the Trustee on each Servicer Business Day, within two
Servicer Business Days after receipt, by wire transfer of immediately available
funds to the General Subaccount of the Collection Account, an
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amount equal to the RRB Charge Payments (as calculated in accordance with Annex
II hereto) received on such Servicer Business 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 Trustee of each such Remittance (including the exact dollar amount
to be remitted).
(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
Issuer and the 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 Issuer or the 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
Issuer and the 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 Indenture or any other Basic Agreement as
reasonably requested by the Servicer, the Issuer or the 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 RRB PROPERTY
Section 5.01. Custody of RRB Property Records. To assure uniform
-------------------------------
quality in servicing the RRB Property and to reduce administrative costs, the
Issuer hereby revocably appoints the Servicer, and the Servicer hereby accepts
such appointment, to act as the agent of the Issuer and the 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 RRB Property,
including copies of the Finance Order and Advice Letters relating thereto and
all documents filed with the NHPUC in connection with any Periodic Adjustment or
Non-Routine Periodic Adjustment and computational records relating thereto
(collectively, the "RRB Property Records"), which are hereby constructively
--------------------
delivered to the Trustee, as pledgee of the Issuer with respect to all RRB
Property.
Section 5.02. Duties of Servicer as Custodian.
-------------------------------
(a) Safekeeping. The Servicer shall hold the RRB Property
-----------
Records on behalf of the Issuer and the Trustee and maintain such accurate and
complete accounts, records and computer systems pertaining to the RRB Property
Records on behalf of the Issuer and the Trustee as shall enable the Issuer to
comply with this Agreement and the Indenture. In performing its duties as
custodian the Servicer shall act
-12-
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
Issuer and the Trustee any failure on its part to hold the RRB 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
Issuer or the Trustee of the RRB Property Records. The Servicer's duties to hold
the RRB Property Records on behalf of the Issuer set forth in this Section 5.02,
to the extent such RRB 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 Bonds 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 RRB Property Records in
Manchester, New Hampshire, Berlin, Connecticut or at such other office in the
United States as shall be specified to the Issuer and the Trustee by written
notice at least 30 days prior to any change in location. The Servicer shall make
available for inspection to the Issuer, the Trustee, the NHPUC or their
respective duly authorized representatives, attorneys or auditors the RRB
Property Records at such times during normal business hours as the Issuer, the
Trustee or the NHPUC 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 NHPUC 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 Trustee in
--------------------
accordance with the Indenture, the Servicer shall release any RRB Property
Records to the Trustee, the Trustee's agent or the Trustee's designee, as the
case may be, at such place or places as the Trustee may designate, as soon as
practicable.
(d) Defending RRB Property Against Claims. The Servicer shall
-------------------------------------
institute any action or proceeding necessary to compel performance by the NHPUC
or the State of New Hampshire of any of their obligations or duties under the
Statute, the Finance 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 Finance
Order or the rights of holders of RRB 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 Bondholders,
the Issuer or the Trustee. 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 Indenture. The Servicer's obligations
pursuant to this Section 5.02 shall survive and continue notwithstanding the
fact that the
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payment of Operating Expenses pursuant to Section 8.02(d) of the 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 Bonds
------------------------------
remain outstanding, the Servicer shall be deemed to have received proper
instructions with respect to the RRB Property Records upon its receipt of
written instructions signed by a Responsible Officer (as defined in the
Indenture) of the 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 NHPUC, 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 Bonds, 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 Finance Order, the TPS Service Agreement and
Schedule A to Annex I hereto.
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 Issuer is deemed to have relied in entering into this Agreement
relating to the servicing of the RRB 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 New Hampshire, 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 RRB Property and to hold the RRB
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
RRB 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
-14-
to have a material adverse effect on the Servicer's business, operations,
assets, revenues or properties or adversely affect the servicing of the RRB
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 Issuer or the Bondholders.
(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 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
-15-
make in the future pursuant to Article 3 or Article 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 Issuer and the
Bondholders (each an "Indemnified Person" for purposes of Sections 6.02 (b) and
------------------
(d)) for, and defend and hold harmless each such Person from and against, any
and all liabilities, obligations, losses, damages, payments, claims, costs or
expenses of any kind whatsoever (collectively, "Losses") that may be imposed on,
------
incurred by or asserted against any such Person as a result of (i) the
Servicer's willful misconduct or negligence in the performance of its duties or
observance of its covenants under this Agreement (including the Servicer's
willful misconduct or negligence relating to the maintenance and custody by the
Servicer, as custodian, of the RRB 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 Bondholders 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 Trustee; and, provided, further, that the Servicer shall not be liable for
any Losses, regardless of when incurred, after the Bonds have been paid in full,
except as provided in Section 6.02(c).
(c) The Servicer shall indemnify and hold harmless
the Trustee, the State of New Hampshire, the Treasurer of the State of New
Hampshire, agencies of the State of New Hampshire 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 RRB 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 Section 6.02(c) in the settlement of any action,
proceeding or investigation
-16-
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 Section 6.02(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 Section
6.02(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 Section 6.02(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 Section 6.02(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 Section 6.02(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 Section 6.02(c) shall
survive the resignation or removal of the Trustee and the termination of this
Agreement and shall include reasonable fees and out-of-pocket expenses of
investigation and
-17-
litigation (including reasonable attorneys' fees and expenses), except as
otherwise provided in this Agreement.
(f) For purposes of Section 6.02(b) and Section 6.02(c), in the
event of the termination of the rights and obligations of Public Service Company
of New Hampshire (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.
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
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 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 RRB 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 Issuer and the 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 Issuer and the
Trustee an Opinion of Counsel stating that, in the opinion of such counsel (A)
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 and (B) either
(1) all filings to be made by the Servicer, including filings with the NHPUC
pursuant to the Statute and filings under the applicable Uniform Commercial
Code, have been executed and filed that are necessary to preserve and protect
fully the interests of the Issuer and the Trustee in the RRB Property and
reciting the details of such filings or (2) no such action shall be necessary to
preserve and protect such interests and (iv) the Rating Agencies shall have
received prior written
-18-
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. Public Service Company of New Hampshire Not to Resign as
--------------------------------------------------------
Servicer. Subject to the provisions of Section 6.04, Public Service Company of
--------
New Hampshire 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
NHPUC shall have approved such resignation. Notice of any such determination
permitting the resignation of Public Service Company of New Hampshire shall be
communicated to the Issuer, the 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 Public Service Company of New Hampshire'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 Public
Service Company of New Hampshire to the Issuer and the 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
Public Service Company of New Hampshire in accordance with Section 7.02.
Section 6.06. Servicing Compensation.
----------------------
(a) In consideration for its services hereunder, until the
Retirement of the Bonds, the Servicer shall receive an annual fee (the
"Servicing Fee") in an amount equal to (i) one-quarter of one percent (0.25%) of
-------------
the outstanding principal balance of the Bonds for so long as the Servicer is
Public Service Company of New Hampshire or any successor Servicer that bills the
RRB Charge concurrently with other charges for services or (ii) up to one and
one-half percent (1.5%) of the outstanding principal balance of the Bonds 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 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 Trustee, on
each Payment Date in accordance with the priorities set forth in Section 8.02(d)
of the Indenture, by wire transfer of immediately available funds from the
Collection Account
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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 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 Bondholders, subject to the
priorities set forth in Section 8.02(d) of the Indenture).
Section 6.07. Compliance with Applicable Law. The Servicer covenants and
------------------------------
agrees, in servicing the RRB Property, to comply in all material respects with
all laws applicable to, and binding upon, the Servicer and relating to such RRB
Property the noncompliance with which would have a material adverse effect on
the value of the RRB 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 RRB
-------------------------------------------------------
Property. The Servicer shall provide to the Bondholders, the Issuer and the
--------
Trustee access to the RRB Property Records in such cases where the Bondholders,
the Issuer or the 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 NHPUC 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 RRB 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 RRB 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 NHPUC 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 Issuer, the Trustee, the Bondholders 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.
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(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 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 Bonds.
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 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 Issuer or the 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 Bondholders 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 Issuer or (B) to the Servicer by the Trustee or by the Holders of Bonds
evidencing not less than 25 percent of the Outstanding Amount of the Bonds; 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 Bondholders 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 Issuer or the Trustee; or
(d) an Insolvency Event occurs with respect to the Servicer;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Trustee, or the Holders of Bonds evidencing not less
than 25 percent of the Outstanding Amount of the Bonds, by notice then given in
writing to the Servicer (and to the Trustee if given by the Bondholders) (a
"Termination Notice") may terminate all the rights and obligations (other than
------------------
the obligations set forth in Section 6.02) of the
-21-
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 NHPUC
for sequestration and payment of revenues arising with respect to the RRB
Property in accordance with RSA 369-B:7, VI and VIII: (1) the Bondholders or the
Trustee; (2) the Issuer or its assignees; or (3) pledgees or transferees of the
RRB Property. On or after the receipt by the Servicer of a Termination Notice,
and subject to the approval of the NHPUC, all authority and power of the
Servicer under this Agreement, whether with respect to the Bonds, the RRB
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 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 RRB
Property Records and related documents, or otherwise. The predecessor Servicer
shall cooperate with the successor Servicer, the Issuer and the 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 RRB 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 RRB 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 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 Issuer shall appoint, subject to the approval of the
NHPUC, a successor Servicer with the 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 Issuer and the Trustee. If within 30 days after the delivery
of the Termination Notice, the Issuer shall not have obtained such a new
Servicer, the Trustee may appoint (subject to the approval of the NHPUC) or
petition the NHPUC 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 NHPUC 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
-22-
obligations of the Servicer hereunder or enters into a servicing agreement
with the 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 Bonds evidencing not
-----------------------
less than a majority of the Outstanding Amount of the Bonds may, on behalf of
all Bondholders, 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
--------------------------
Issuer, the Trustee 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 Section 7.01(b).
Article 8
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment.
---------
(a) This Agreement may be amended in writing by the Servicer and the
Issuer with ten Business Days' prior written notice given to the Rating Agencies
and the prior written consent of the Trustee (which consent shall not be
unreasonably withheld), but without the consent of any of the Bondholders, 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 Bondholders; provided, however, that such action shall
not, as evidenced by an Officer's Certificate delivered to the Issuer and the
Trustee, adversely affect in any material respect the interests of any
Bondholder.
(b) This Agreement may also be amended in writing from time to time
by the Servicer and the Issuer with ten Business Days' prior written notice
given to the Rating Agencies and the prior written consent of the Trustee (which
consent shall not be unreasonably withheld) and the prior written consent of the
Holders of Bonds evidencing
-23-
not less than a majority of the Outstanding Amount of the Bonds, 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 Bondholders; provided, however, that any amendment of the provisions of
Section 4.01 or Section 4.03 shall satisfy the Rating Agency Condition.
(c) If the written consent of Bondholders is required in connection
with an amendment hereof, approval by Bondholders of the substance of any
proposed amendment or consent shall constitute sufficient consent of the
Bondholders pursuant to this Section, and it shall not be necessary that
Bondholders approve of the particular form of any amendment or consent.
(d) Promptly after the execution thereof, the 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
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 Trustee may, but shall not be obligated to, enter into any such
amendment which affects the 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 RRB
Property accurately and in accordance with its standard accounting procedures.
(b) The Servicer shall permit the Issuer and the 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 RRB 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 NHPUC 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:
-24-
(a) if to the Servicer, to
Public Service Company of New Hampshire
if prior to April 1, 2002:
0000 Xxx Xxxxxx
Xxxxxxxxxx, XX 00000
if on or after April 1, 2002:
000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
E-Mail: xxxxxxx@xx.xxx (email)
with a copy to:
Public Service Company of New Hampshire
c/o Northeast Utilities Service Company
if by U.S. Mail:
X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
if by courier:
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Assistant Treasurer - Finance
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
E-Mail: xxxxxxx@xx.xxx
(b) if to the Issuer, to
PSNH Funding LLC 2
c/o Public Service Company of New Hampshire
-25-
if prior to April 1, 2002:
0000 Xxx Xxxxxx
Xxxxxxxxxx, XX 00000
if on or after April 1, 2002:
000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
E-Mail: xxxxxxx@xx.xxx (email)
with a copy to:
Public Service Company of New Hampshire
c/o Northeast Utilities Service Company
if by U.S. Mail:
X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
if by courier:
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Assistant Treasurer - Finance
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
E-Mail: xxxxxxx@xx.xxx
(c) if to the Trustee, to
The Bank of New York
0 Xxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Unit
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(d) if to Moody's, to
-26-
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: ABS Monitoring Department
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(e) if to S&P, to
Standard & Poor's
00 Xxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attention: Asset Backed Surveillance Department
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(f) if to Fitch, to
Fitch, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: ABS Surveillance
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
E-mail: xxxx@xxxxxxxxxxxx.xxx
(g) 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 Issuer, the
Bondholders, the Trustee, the State of New Hampshire, the Treasurer of the State
of New Hampshire, agencies of the State of New Hampshire 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 Bondholders 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 Trustee.
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
RRB Property or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
-27-
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 New Hampshire, 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 Trustee. The Servicer hereby acknowledges and
---------------------
consents to the collateral assignment or pledge of, or grant of a security
interest in, any or all of the Issuer's rights and obligations hereunder to the
Trustee for the benefit of the holders of the Bonds.
Section 8.11. Nonpetition Covenants. Notwithstanding any prior termination
---------------------
of this Agreement or the Indenture, but subject to the NHPUC's right to order
the sequestration and payment of revenues arising with respect to the RRB
Property notwithstanding any bankruptcy, reorganization or other insolvency
proceedings with respect to the debtor, pledgor or transferor of the RRB
Property pursuant to RSA 369-B:7, VI and RSA 369-B:7, VIII, the Servicer shall
not, prior to the date which is one year and one day after the termination of
the Indenture with respect to the Issuer, petition or otherwise invoke or cause
the Issuer to invoke the process of any court or governmental authority for the
purpose of commencing or sustaining a case against the Issuer under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of the property of the Issuer, or ordering
the winding up or liquidation of the affairs of the Issuer.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-28-
IN WITNESS WHEREOF, the parties hereto have caused this Servicing Agreement
to be duly executed by their respective officers as of the day and year first
above written.
PSNH FUNDING LLC 2,
Issuer
By:_____________________________________________
Name: Xxxxx X. Xxxxx
Title: President
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE,
Servicer
By:_____________________________________________
Name: Xxxxx X. Xxxxx
Title: Assistant Treasurer - Finance
-S-1-
EXHIBIT A
CERTIFICATE OF COMPLIANCE
The undersigned hereby certifies that he/she is the duly elected and
acting [________] of Public Service Company of New Hampshire, as servicer (the
"Servicer") under the Servicing Agreement, dated as of January __, 2002 (the
--------
"Servicing Agreement"), between the Servicer and PSNH Funding LLC 2 (the
-------------------
"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__ .
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE,
Servicer
By:_____________________________________
Name:
Title:
-A-1-
ANNEX A TO EXHIBIT A
LIST OF SERVICER DEFAULTS
Nature of Default Status
----------------- ------
-A-2-
EXHIBIT B
FORM OF ROUTINE TRUE-UP LETTER
[Date]
[Name]
New Hampshire Public Utilities Commission
0 Xxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Re: Order No. 23,859 ("Finance Order"), Docket No. DE 01-089
Periodic RRB Charge True-Up Mechanism Advice Filing
Dear [name]:
Pursuant to Order No. 23,859 issued on December 6, 2001 in Docket No. DE 01-089
(the "Finance Order"), Public Service Company of New Hampshire ("PSNH"), as
servicer of the Rate Reduction Bonds ("RRBs") and on behalf of the RRB trustee
as assignee of PSNH Funding LLC 2 (the special purpose entity, or "the SPE"),
shall apply for adjustment to the RRB Charge semiannually and at such additional
intervals, if necessary, as may be provided for in the Finance Order. Any
capitalized terms not defined herein shall have the meanings ascribed thereto in
the Finance Order.
PURPOSE
-------
This filing establishes the revised RRB Charge to be assessed and collected from
retail users of PSNH's distribution system within PSNH's service territory,
whether or not energy is purchased from PSNH or third party supplier, and
whether or not such distribution system is being operated by PSNH or a successor
distribution company. The RRB Charge is a usage-based component of the stranded
cost recovery charge on each retail user's monthly xxxx until the Total RRB
Payment Requirements are discharged in full. In the Finance Order, the
Commission authorized PSNH to file Routine True-Up Letters semi-annually and at
such additional intervals, if necessary, as may be provided for in the Finance
Order. The purpose of such filings and resulting adjusted RRB Charges is 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 Requirements for the
upcoming period, which may include indemnity obligations of the SPE in the RRB
transaction documents for SPE officers and directors, trustee fees and other
liabilities of the SPE.
Using the methodology approved by the Commission in the Finance Order, this
filing modifies the variables used in the RRB Charge calculation and provides
the resulting modified RRB Charge. Table 1 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 January __, 2002.
Table I below shows the current assumptions for each of the variables used in
the RRB Charge calculation.
-B-1-
Table 1 below shows the current assumptions for each of the variables used in
the RRB Charge calculation.
TABLE 1
INPUT VALUES FOR RRB CHARGE
Forecasted Usage (kWh)
----------------------
Percent of billed amounts expected to be charged-off: ________
Weighted average days sales outstanding: _____
Collections Curve
--------------------------------------------------------------------------
Residential Commercial Industrial Other
--------------------------------------------------------------------------
1m
----------
2m
----------
3m
----------
4m
--------------------------------------------------------------------------
Forecasted ongoing interest and transaction expenses (including any already
accrued but unpaid for the period): _____
Current Interest Reserve Subaccount balance: ______
Scheduled Interest Reserve Subaccount balance at the end of 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: ______
-B-2-
Current Reserve Subaccount balance: ______
The adjusted RRB Charge calculated for retail users is as follows:
_____(cent)/kWh
EFFECTIVE DATE
--------------
In accordance with the Finance Order, Routine True-Up Letters for semiannual RRB
Charge adjustments shall be filed not later than 30 days prior to April 25 and
October 25 in each year, with the resulting upward or downward adjustments to
the RRB Charge to be effective - absent manifest error in the Routine True-Up
Letters - on the ensuing May 1 or November 1, as applicable. In accordance with
the Finance Order, Routine True-Up Letters may also be filed as frequently as
monthly, with the resulting upward or downward adjustments to the RRB Charge to
be effective - absent manifest error in the Routine True-Up Letters -
immediately upon the filing of the on the Routine True-Up Letters. No approval
by the Commission 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 PSNH will keep this
filing open for public inspection at PSNH's corporate headquarters, [1000 Xxx
Xxxxxx, Xxxxxxxxxx (prior to April 0, 0000)][000 Xxxxx Xxxxxxxxxx Xxxxxx,
Xxxxxxxxx (on or after April 1, 2002)].
-B-3-
EXHIBIT C
FORM OF MONTHLY SERVICER CERTIFICATE
Pursuant to Section 4.01(d)(2) of the Servicing Agreement, dated as of
January __, 2002 (the "Agreement"), between Public Service Company of New
---------
Hampshire, as servicer (the "Servicer"), and PSNH Funding LLC 2, 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. Xxxxxxxx:
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):
g) Interest Reserve Subaccount Draw Amount this Month:
h) Cumulative Interest Reserve Subaccount Draw Amount this Remittance
Period (net of funding):
-C-1-
Executed as of this _____________ day of ___________.
PUBLIC SERVICE COMPANY OF NEW
HAMPSHIRE,
Servicer
By:_____________________________________
Name:
Title:
-C-2-
EXHIBIT D
FORM OF QUARTERLY SERVICER CERTIFICATE
Pursuant to Section 4.01(d)(3) of the Servicing Agreement, dated as of
January __, 2002 (the "Agreement"), between Public Service Company of New
---------
Hampshire, as servicer (the "Servicer"), and PSNH Funding LLC 2, 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. Interest Reserve Subaccount Balance
xvii. Collection Account Balance (sum of xii. through xvi. above):
2. Outstanding Principal Balance as of Prior Payment Date by Tranche:
i. Class A-1 Principal Balance Outstanding Bond:
ii. Total Bond Principal Balance:
3. Required Funding/Payments as of Current Payment Date
a) Projected Principal Balances and Payments
Projected Quarterly
--------- ---------
Principal Balance Principal Due
----------------- -------------
-D-1-
i. Class A-1 Bond
iv. Total Projected Principal Amount:
b) Required Interest Payments
Days in
Bond Applicable Interest
Interest Rate Period Due
------------- ------ ---
i. Class A-1 Bond
ii. Total Required Interest Amount:
c) Projected Subaccount Payments and Levels
Projected Funding
Subaccount Level Required
---------- ----- --------
i. Interest Reserve Subaccount:
ii. Capital Subaccount:
iii. Overcollateralization Subaccount:
iv. Total Subaccount Payments and Levels:
4. Allocation of Remittances as of Current Payment
Date Pursuant to Section 8.02(d) of Indenture:
a) Quarterly Expenses
Net Expense Amount (Payable on Current Payment Date)
i. 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 Bond
ii. Total Quarterly Interest:
-D-2-
c) Quarterly Principal
Per $1000 of Aggregate
Original Principal Amount
-------- ----------------
i. Class A-1 Bond
ii. Total Quarterly Principal:
d) Other Payments
i. Operating Expenses (in excess of
$100,000):
ii. Funding of Interest Reserve
Subaccount (to required level):
iii. Funding of Capital Subaccount (to
required amount):
iv. Funding of Overcollateralization
Subaccount (to required level):
v. Deposits to Reserve Subaccount:
vi. Interest earnings on Capital
Subaccount Released to Issuer:
e) Aggregate Payments Pursuant to Section 8.02(d)(i) of Indenture
i. To Trustee:
ii. To other Persons indemnified under
Indenture or Fee and Indemnity
Agreement:
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 Bond:
ii. Total Bond Principal Balance:
b) Collection Account Balances Outstanding:
i. Interest Reserve Subaccount:
ii. Capital Subaccount:
iii. Overcollateralization Subaccount:
iv. Reserve Subaccount:
v. Total Subaccount Amount:
6. Subaccount Draws as of Current Payment Date (if applicable, pursuant to
Section 8.02(e) of Indenture):
-D-3-
i. Interest Reserve Subaccount:
ii. Capital Subaccount:
iii. Overcollateralization Subaccount:
iv. Reserve Subaccount:
v. 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 Bond
ii. Total Quarterly Interest Shortfall:
b) Quarterly Principal Shortfall
i. Class A-1 Bond
ii. Total Quarterly Principal Shortfall:
8. Shortfalls in Required Subaccount Levels as of Current Distribution Date:
i. Interest Reserve Subaccount
ii. Capital Subaccount
iii. Overcollateralization Subaccount:
iv. Total Subaccount Shortfalls:
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Quarterly Servicer Certificate this ___ day of ____, ____.
PUBLIC SERVICE COMPANY OF NEW
HAMPSHIRE,
Servicer
By:________________________________
Name:
Title:
-D-4-
SCHEDULE 4.01(a)
Expected Amortization Schedule
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- Schedule 4.01(a)-1 -
ANNEX I
SERVICING PROCEDURES
The Servicer agrees to comply with the following servicing procedures:
SECTION 1. DEFINITIONS
(a) Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in the Agreement.
(b) Whenever used in this Annex I, the following words and phrases shall
have the following meanings:
"Billed RRB Charges" means the dollar amounts billed to customers or the
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Applicable TPS 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
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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 NHPUC 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
Bondholders.
SECTION 2. DATA ACQUISITION
(a) Installation and Maintenance of Meters. Except to the extent that a TPS
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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,
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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 NHPUC 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 Issuer shall not be obligated to pay any costs
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associated with the metering duties set forth in this Section 2, including the
costs of installing, replacing and maintaining meters, nor shall the Issuer be
entitled to any credit against the Servicing Fee for any cost savings realized
by the Servicer or any TPS as a result of new metering and/or billing
technologies.
-Annex I-1-
SECTION 3. USAGE AND XXXX 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 NHPUC 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 xxxx each customer or the Applicable TPS 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
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Policies and Practices, the Servicer shall generate and issue a Xxxx to each
customer, or, in the case of a customer who is being billed by a TPS, to the
Applicable TPS 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 Issuer, the 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 Bondholders.
(c) Format.
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(i) Each Xxxx to a customer shall contain a stranded cost recovery
charge that shall include the RRB Charge owed by such customer for the
applicable billing period.
(ii) Each Xxxx in which the stranded cost recovery charge is listed as
a line item shall contain a statement (as a footnote) to the effect that all or
a portion of the stranded cost recovery charge is owned by the 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 NHPUC Regulations shall from time to time prescribe. To the extent
that Xxxx format, structure and text are not prescribed by applicable law or by
applicable NHPUC 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
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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
-Annex I-2-
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 NHPUC 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.
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(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 NHPUC Regulations and the
Servicer Policies and Practices.
(B) The Servicer shall deliver past-due and shut-off notices in
accordance with applicable NHPUC 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 RSA 369-B:4, IV, the Finance Order, applicable NHPUC
Regulations and the Servicer Policies and Practices.
(D) The Servicer may employ the assistance of collection agents
in accordance with applicable NHPUC 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 NHPUC Regulations
and the Servicer Polices and Practices.
(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
-Annex I-3-
not materially adversely affect the Bondholders, and (C) 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 NHPUC
Regulations.
(b) Payment Processing, Allocation, Priority of Payments. The Servicer
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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
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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
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Section 4.03(a) of the Agreement, the Servicer shall remit to the 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.
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(i) The Issuer shall cause to be established the Collection Account
in the name of the Trustee in accordance with Section 8.02 of the 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 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.
- Annex I-4 -
SCHEDULE A
TO ANNEX I
Additional Servicing Procedures Applicable to TPSs
1. Establishing TPS Relationship
In addition to any actions required by the NHPUC 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 NHPUC that each TPS is licensed to supply
electricity in New Hampshire;
(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 Finance 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 NHPUC and the
Finance Order in the event of a default in payment.
3. Enforcing TPS Obligations
The Servicer shall promptly take all actions specified by the Finance
Order with respect to amounts not remitted to the Servicer in accordance with
the payment terms specified by the Finance Order, in addition to any other
remedies available at law.
- Annex I-5 -
ANNEX II
REMITTANCE METHODOLOGY
- Annex II-1 -
