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Exhibit 10.2
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BEC FUNDING LLC,
as Note Issuer
and
BOSTON EDISON COMPANY,
as Servicer
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TRANSITION PROPERTY SERVICING AGREEMENT
Dated as of July __, 1999
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS.......................................................................................... 1
Section 1.01 Definitions.................................................................. 1
Section 1.02 Other Definitional Provisions................................................ 6
ARTICLE II. APPOINTMENT AND AUTHORIZATION....................................................................... 7
Section 2.01 Appointment of Servicer; Acceptance of Appointment........................... 7
Section 2.02 Authorization................................................................ 7
Section 2.03 Dominion and Control Over the Transition Property............................ 7
ARTICLE III. BILLING SERVICES................................................................................... 8
Section 3.01 Duties of Servicer........................................................... 8
Section 3.02 Servicing and Maintenance Standards.......................................... 9
Section 3.03 Certificate of Compliance.................................................... 9
Section 3.04 Annual Report by Independent Public Accountants.............................. 10
ARTICLE IV. SERVICES RELATED TO PERIODIC ADJUSTMENTS; REMITTANCES AND RECONCILIATIONS........................... 10
Section 4.01 Periodic Adjustments......................................................... 10
Section 4.02 Limitation of Liability...................................................... 12
Section 4.03 Remittances; Reconciliations................................................. 13
ARTICLE V. THE TRANSITION PROPERTY.............................................................................. 14
Section 5.01 Custody of Transition Property Records....................................... 14
Section 5.02 Duties of Servicer as Custodian.............................................. 14
Section 5.03 Instructions; Authority to Act............................................... 15
Section 5.04 Effective Period and Termination............................................. 15
Section 5.05 Monitoring of Third-Party Suppliers.......................................... 15
ARTICLE VI. THE SERVICER........................................................................................ 16
Section 6.01 Representations and Warranties of Servicer................................... 16
Section 6.02 Indemnities of Servicer...................................................... 17
Section 6.03 Limitation on Liability of Servicer and Others............................... 19
Section 6.04 Merger or Consolidation of, or Assumption of the Obligations of,
Servicer................................................................. 20
Section 6.05 Boston Edison Company Not to Resign as Servicer.............................. 20
Section 6.06 Servicing Compensation....................................................... 21
Section 6.07 Compliance with Applicable Law............................................... 21
Section 6.08 Access to Certain Records and Information Regarding Transition
Property................................................................ 21
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Section 6.09 Appointments................................................................. 22
Section 6.10 No Servicer Advances......................................................... 22
Section 6.11 Maintenance of Operations.................................................... 22
ARTICLE VII. DEFAULT............................................................................................ 22
Section 7.01 Servicer Default............................................................. 22
Section 7.02 Appointment of Successor..................................................... 24
Section 7.03 Waiver of Past Defaults...................................................... 24
Section 7.04 Notice of Servicer Default................................................... 25
ARTICLE VIII. MISCELLANEOUS PROVISIONS.......................................................................... 25
Section 8.01 Amendment.................................................................... 25
Section 8.02 Protection of Title to Trust................................................. 26
Section 8.03 Notices...................................................................... 26
Section 8.04 Assignment................................................................... 26
Section 8.05 Limitations on Rights of Third Parties....................................... 26
Section 8.06 Severability................................................................. 27
Section 8.07 Separate Counterparts........................................................ 27
Section 8.08 Headings..................................................................... 27
Section 8.09 Governing Law................................................................ 27
Section 8.10 Assignment to Note Trustee................................................... 27
Section 8.11 Nonpetition Covenants........................................................ 27
Section 8.12 Limitation of Liability...................................................... 28
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EXHIBITS AND SCHEDULES
Exhibit A Form of Certificate of Compliance
Exhibit B Form of Routine True-Up Letter
Exhibit C Form of Monthly Servicer Certificate
Exhibit D Form of Semiannual Servicer Certificate
Exhibit E Form of Annual Reconciliation
Schedule 4.01(a) Expected Amortization Schedule
Schedule 6.01(f) Proceedings
ANNEXES
Annex I Servicing Procedures
Schedule A to Annex I Additional Servicing Procedures Applicable to TPSs
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This TRANSITION PROPERTY SERVICING AGREEMENT, dated as of July __,
1999, is between BEC Funding LLC, a Delaware limited liability company (the
"Note Issuer"), and Boston Edison Company, a Massachusetts corporation.
RECITALS
WHEREAS, pursuant to the Statute and the Financing Order, the Seller
and the Note Issuer are concurrently entering into the Sale Agreement pursuant
to which the Seller is selling to the Note Issuer the Transition Property
created pursuant to the Statute and the Financing Order.
WHEREAS, in connection with its ownership of the Transition Property
and in order to collect the RTC Charge, the Note Issuer desires to engage the
Servicer to carry out the functions described herein. The Servicer currently
performs similar functions for itself with respect to its own charges to its
customers and for others. In addition, the Note Issuer desires to engage the
Servicer to act on its behalf in obtaining Periodic Adjustments from the DTE.
The Servicer desires to perform all of these activities on behalf of the Note
Issuer.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01 Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Advice Letter" means any filing made with the DTE by the Servicer on
behalf of the Note Issuer to set or adjust the RTC Charge, including the
Issuance Advice Letter, a Routine Anniversary True-Up Letter, a Routine True-Up
Letter or a Non-Routine True-Up Letter.
"Agreement" means this Transition Property Servicing Agreement,
together with all Exhibits, Schedules and Annexes hereto, as the same may be
amended and supplemented from time to time.
"Annual Accountant's Report" has the meaning set forth in Section 3.04.
"Applicable TPS" means, with respect to each Customer, the TPS, if any,
billing the RTC Charge to that Customer.
"Bills" means each of the regular monthly bills, summary bills and
other bills issued to Customers or TPSs by Boston Edison Company 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 July __, 1999.
"Customers" means all classes of retail users of the Seller's
distribution system within the its geographic service territory as in effect on
July 1, 1997.
"Declaration of Trust" means the Declaration of Trust dated as of July
__, 1999 by Bank of New York (Delaware), a Delaware banking corporation, as
Delaware Trustee, the Massachusetts Development Finance Agency and the
Massachusetts Health and Educational Facilities Authority, as the same may be
amended and supplemented from time to time.
"Deemed RTC Charge Payments" means the payments in respect of the RTC
Charge, which are deemed to have been received by the Servicer, directly or
indirectly (including through a TPS), from or on behalf of Customers, calculated
in accordance with Annex I hereto.
"DTE" means the Massachusetts Department of Telecommunications and
Energy and any successor thereto.
"DTE Regulations" means all regulations, rules, tariffs and laws
applicable to public utilities or TPSs, as the case may be, and promulgated by,
enforced by or otherwise within the jurisdiction of the DTE.
"Estimated RTC Charge Payments" means the estimated payments in respect
of the RTC Charge, which are deemed to have been received by the Servicer,
directly or indirectly (including through a TPS), from or on behalf of
Customers, calculated in accordance with Annex I hereto.
"Expected Amortization Schedule" means Schedule 4.01(a) hereto.
"Financing Order" means the order of the XXX, XXX-00-000, issued on
April 2, 1999, as further clarified by the Order on the Massachusetts
Development Finance Agency's and Massachusetts Health and Educational Facilities
Authority's Motion for Clarification dated May 21, 1999.
"Financing Order Anniversary Date" means April 2 of each year.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by
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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.
"Issuance Advice Letter" means the initial Issuance Advice Letter,
dated July __, 1999, filed with the DTE pursuant to the Financing Order.
"Lien" means a security interest, lien, charge, pledge or encumbrance
of any kind.
"Losses" has the meaning assigned to that term in Section 6.02(b).
"Monthly Servicer Certificate" has the meaning assigned to that term in
Section 4.01(d)(ii).
"Non-Routine Periodic Adjustment" has the meaning set forth in Section
4.01(c)(i).
"Non-Routine True-Up Letter" means an Advice Letter filed with the DTE
in accordance with the Financing Order with respect to any Non-Routine Periodic
Adjustment, pursuant to which the related Non-Routine Periodic Adjustment will
become effective within 60 days after filing of the Non-Routine True-Up Letter,
subject to the review and approval of the DTE.
"Note Indenture" means the Note Indenture dated as of July __, 1999,
between the Note Issuer and the Note Trustee, as the same may be amended and
supplemented from time to time.
"Note Issuer" has the meaning set forth in the preamble to this
Agreement.
"Officer's Certificate" means a certificate of the Servicer signed by a
Responsible Officer.
"Opinion of Counsel" means one or more written opinions of counsel who
may be an employee of or counsel to the party providing such opinion(s) of
counsel, which counsel shall be reasonably acceptable to the party receiving
such opinion(s) of counsel.
"Periodic Adjustment" means each adjustment to the RTC Charge made
pursuant to the terms of the Financing Order and in accordance with Section 4.01
hereof.
"Principal Balance" means, as of any Payment Date, the sum of the
outstanding principal amount of the Notes.
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"Projected Principal Balance" means, as of any Payment Date, the sum of
the projected outstanding principal amount of the Notes for such Payment Date
set forth in the Expected Amortization Schedule.
"Reconciliation Period" means the twelve-month period commencing on
January 1 of each year and ending on December 31 of each year; provided,
however, that the initial Reconciliation Period shall commence on the Closing
Date and end on December 31, 1999.
"Remittance" means each remittance hereunder of Estimated RTC Charge
Payments by the Servicer to the Note Trustee.
"Remittance Date" means each Servicer Business Day on which a
Remittance is to be made by the Servicer pursuant to Section 4.03.
"Remittance Excess" means the amount, if any, calculated for a
particular Reconciliation Period, by which all RTC Charge Collections during
such Reconciliation Period exceed Deemed RTC Charge Payments during such
Reconciliation Period.
"Remittance Period" means the twelve-month period commencing on March 1
of each year and ending on the last day of February of each year; provided,
however, that the initial Remittance Period shall commence on the Closing Date
and end on February 29, 2000.
"Remittance Shortfall" means the amount, if any, calculated for a
particular Reconciliation Period, by which Deemed RTC Charge Payments during
such Reconciliation Period exceed RTC Charge Collections during such
Reconciliation Period.
"Required Debt Service" means, for any Remittance Period, the total
dollar amount calculated by the Servicer in accordance with Section 4.01(b)(i)
as necessary to be remitted to the Collection Account during such Remittance
Period (after giving effect to the allocation and distribution of amounts on
deposit in the Reserve Subaccount at the time of calculation and which are
available for payments on the Notes and including any shortfalls in Required
Debt Service for any prior Remittance Period and the required payment or credit
of any Remittance Excess or Remittance Shortfall and any Remittances based upon
the RTC Charge in effect in the prior Remittance Period that are expected to be
realized in such Remittance Period) in order to ensure that, as of the Payment
Date immediately following the end of such period, (i) all accrued and unpaid
interest on the Notes then due shall have been paid in full, (ii) the Principal
Balance of the Notes is equal to the Projected Principal Balance of the Notes
for that Payment Date, (iii) the balance on deposit in the Capital Subaccount
equals the aggregate Required Capital Level, (iv) the balance on deposit in the
Overcollateralization Subaccount equals the aggregate Required
Overcollateralization Level and (v) all other fees and expenses due and owing
and required or allowed to be paid under Section 8.02 of the Note Indenture as
of such date shall have been paid in full; provided, however, that, with respect
to any Periodic Adjustment occurring after the last Scheduled Maturity Date for
any Notes, the Required Debt Service shall be
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calculated to ensure that sufficient amounts will be collected to retire such
Notes in full as of the earlier of (x) the next Payment Date and (y) the Final
Maturity Date for such Notes.
"Responsible Officer" means the chief executive officer, the president,
the vice chairman of the board, any vice president, the treasurer, any assistant
treasurer, the clerk, any assistant clerk, the controller or the finance manager
of the Servicer.
"Retirement of the Notes" means the day on which the final payment is
made to the Note Trustee in respect of the last outstanding Note.
"Routine Anniversary True-Up Letter" means a Routine True-Up Letter
filed with the DTE prior to the Financing Order Anniversary Date in respect of
an annual Periodic Adjustment. The Routine Anniversary True-Up Letter will
become effective on the first calendar day of the next succeeding calendar month
after filing, or such date as may be specified in such Routine Anniversary
True-Up Letter, so long as such effective date is at least 15 days after the
filing of such Routine Anniversary True-Up Letter.
"Routine True-Up Letter" means an Advice Letter filed with the DTE in
respect of a Periodic Adjustment, substantially in the form of Exhibit B hereto.
The Routine True-Up Letter will become effective on the first calendar day of
the next succeeding calendar month after filing, or such date as may be
specified in such Routine True-Up Letter, so long as such effective date is at
least 15 days after the filing of such Routine True-Up Letter.
"RTC Charge" means the portion (which may become all) of the Seller's
Transition Charge designated pursuant to the Financing Order as the RTC Charge,
as the same may be adjusted from time to time as provided in the Financing
Order.
"RTC Charge Collections" means the Estimated RTC Charge Payments
remitted to the Collection Account.
"Sale Agreement" means the Transition Property Sale Agreement dated as
of July __, 1999, between Boston Edison Company, as Seller, and the Note Issuer,
as the same may be amended and supplemented from time to time.
"Seller" means Boston Edison Company, a Massachusetts corporation, and
its permitted successors and assigns under the Sale Agreement.
"Semiannual Servicer Certificate" has the meaning assigned to that term
in Section 4.01(d)(iii).
"Servicer" means Boston Edison Company, as the servicer of the
Transition Property, or each successor (in the same capacity) pursuant to
Section 6.04 or 7.02.
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"Servicer Business Day" means any Business Day on which the Servicer's
offices in The Commonwealth of Massachusetts are open for business.
"Servicer Default" means an event specified in Section 7.01.
"Servicing Fee" has the meaning set forth in Section 6.06(a).
"Statute" means Chapter 164 of the Massachusetts Acts of 1997, entitled
an Act Relative to Restructuring the Electric Utility Industry in the
Commonwealth, Regulating the Provision of Electricity and Other Services, and
Promoting Enhanced Consumer Protections Therein.
"Termination Notice" has the meaning assigned to that term in Section
7.01.
"TPS" means a third party supplier of energy who has entered into a TPS
Service Agreement with the Servicer.
"TPS Service Agreement" means an agreement between a third party
supplier of energy and the Servicer pursuant to which such third party supplier
of energy bills and collects the RTC Charge to and from Customers in accordance
with DTE Regulations, the Financing Order and the guidelines described in
Schedule A to Annex I.
"Transition Charge" means the "access charge" as defined in Boston
Edison Company's Restructuring Settlement Agreement, D.P.U. Docket Nos. 96-100
and 96-23 and subsequent filings with the DTE pursuant thereto.
"Transition Property" means the transition property that exists under
Order 7 of the Financing Order and is sold by the Seller to the Note Issuer
under the Sale Agreement.
"Transition Property Records" has the meaning assigned to that term in
Section 5.01.
"Weighted Average Days Outstanding" means the weighted average number
of days Boston Edison Company's monthly retail customer bills remain outstanding
during the calendar year immediately preceding the calculation thereof pursuant
to Section 4.01(b)(i). For all purposes of this Agreement, the calculation of
Weighted Average Days Outstanding pursuant to Section 4.01(b)(i) shall become
effective on March 16 of each year. The initial Weighted Average Days
Outstanding shall be 45 days until updated pursuant to Section 4.01(b)(i) of
this Agreement.
Section 1.02 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Note Indenture.
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(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(c) The words "hereof," "herein," "hereunder" and words of
similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement; Section, Schedule, Exhibit and Annex references contained in
this Agreement are references to Sections, Schedules, Exhibits and
Annexes in or to this Agreement unless otherwise specified; and the
term "including" shall mean "including without limitation."
(d) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter forms of such terms.
ARTICLE II. APPOINTMENT AND AUTHORIZATION
Section 2.01 Appointment of Servicer; Acceptance of Appointment.
Subject to Section 6.05 and Article 7, the Note Issuer hereby appoints the
Servicer, and the Servicer hereby accepts such appointment, to perform the
Servicer's obligations pursuant to this Agreement on behalf of and for the
benefit of the Note Issuer or any assignee thereof in accordance with the terms
of this Agreement and applicable law. This appointment and the Servicer's
acceptance thereof may not be revoked except in accordance with the express
terms of this Agreement.
Section 2.02 Authorization. With respect to all or any portion of the
Transition Property, the Servicer shall be, and hereby is, authorized and
empowered by the Note Issuer to (a) execute and deliver, on behalf of itself
and/or the Note Issuer, as the case may be, any and all instruments, documents
or notices, and (b) on behalf of itself and/or the Note Issuer, as the case may
be, make any filing and participate in proceedings of any kind with any
governmental authorities, including with the DTE. The Note Issuer shall execute
and/or furnish the Servicer with such documents as have been prepared by the
Servicer for execution by the Note Issuer, and with such other documents as may
be in the Note Issuer's possession, as the Servicer may determine to be
necessary or appropriate to enable it to carry out its servicing and
administrative duties hereunder. Upon the Servicer's written request, the Note
Issuer shall furnish the Servicer with any powers of attorney or other documents
necessary or appropriate to enable the Servicer to carry out its duties
hereunder.
Section 2.03 Dominion and Control Over the Transition Property.
Notwithstanding any other provision herein, the Note Issuer shall have dominion
and control over the Transition Property, and the Servicer, in accordance with
the terms hereof, is acting solely as the servicing agent and custodian for the
Note Issuer with respect to the Transition Property and the Transition Property
Records. The Servicer shall not take any action that is not authorized by this
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Agreement or that shall impair the rights of the Note Issuer in the Transition
Property, in each case unless such action is required by applicable law.
ARTICLE III. BILLING SERVICES
Section 3.01 Duties of Servicer. The Servicer, as agent for the Note
Issuer, shall have the following duties:
(a) Duties of Servicer Generally.
(i) General Duties. The Servicer's duties in general
shall include management, servicing and administration of the
Transition Property; obtaining meter reads, calculating
electricity usage (including usage by Customers of any TPS),
billing, collection and posting of all payments in respect of
the Transition Property; responding to inquiries by Customers,
the DTE, or any federal, local or other state governmental
authorities with respect to the Transition Property;
delivering Bills to Customers and TPSs, investigating and
handling delinquencies, processing and depositing collections
and making periodic remittances; furnishing periodic reports
to the Note Issuer, the Note Trustee, the Certificate Trustee
and the Rating Agencies; and taking all necessary action in
connection with Periodic Adjustments as set forth herein.
Certain of the duties set forth above may be performed by TPSs
pursuant to TPS Service Agreements. Without limiting the
generality of this Section 3.01(a)(i), 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.
(ii) DTE Regulations Control. Notwithstanding
anything to the contrary in this Agreement, the duties of the
Servicer set forth in this Agreement shall be qualified in
their entirety by any DTE Regulations as in effect at the time
such duties are to be performed.
(b) Reporting Functions.
(i) Annual Reconciliation Report. The Servicer shall
deliver annual written reconciliation reports substantially in
the form of Exhibit E hereto as required by Section 4.03(b)
hereof.
(ii) Notification of Laws and Regulations. The
Servicer shall promptly notify the Note Issuer, the Note
Trustee, the Certificate Trustee and the Rating Agencies in
writing of any laws or DTE Regulations hereafter promulgated
that
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have a material adverse effect on the Servicer's ability to
perform its duties under this Agreement.
(iii) Other Information. Upon the reasonable request
of the Note Issuer, the Note Trustee, the Certificate Trustee,
or any Rating Agency, the Servicer shall provide to such Note
Issuer, Note Trustee, Certificate Trustee, or the Rating
Agencies, as the case may be, any public financial information
in respect of the Servicer, or any material information
regarding the Transition Property to the extent it is
reasonably available to the Servicer, as may be reasonably
necessary and permitted by law for the Note Issuer, the Note
Trustee, the Certificate Trustee, or the Rating Agencies to
monitor the Servicer's performance hereunder.
(iv) Preparation of Reports to be Filed with the SEC.
The Servicer shall prepare any reports required to be filed by
the Note Issuer or the Certificate Issuer under the securities
laws, including a copy of each Semiannual Servicer Certificate
described in Section 4.01(d)(iii), the annual Certificate of
Compliance described in Section 3.03 and the Annual
Accountant's Report described in Section 3.04.
Section 3.02 Servicing and Maintenance Standards. On behalf of the Note
Issuer, the Servicer shall (a) manage, service, administer and make collections
in respect of the Transition Property with reasonable care and in accordance
with applicable law, including all applicable DTE 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 RTC Charge; and
(d) comply with all laws and regulations applicable to and binding on it
relating to the Transition Property. The Servicer shall follow such customary
and usual practices and procedures as it shall deem necessary or advisable in
its servicing of all or any portion of the Transition Property, which, in the
Servicer's judgment, may include the taking of legal action, at the Note
Issuer's expense.
Section 3.03 Certificate of Compliance. The Servicer shall deliver to
the Note Issuer, the Note Trustee, the Certificate Trustee and the Rating
Agencies on or before March 31 of each year, commencing March 31, 2000 to and
including the March 31 succeeding the Retirement of the Notes, an Officer's
Certificate substantially in the form of Exhibit A hereto (a "Certificate of
Compliance"), stating that: (i) a review of the activities of the Servicer
during the twelve months ended the preceding December 31 (or, in the case of the
first Certificate of Compliance to be delivered on or before March 31, 2000, the
period of time from the date of this Agreement until December 31, 1999) 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 material obligations in
all material respects under this Agreement throughout such twelve months (or, in
the case of the Certificate of Compliance
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to be delivered on or before March 31, 2000, the period of time from the date of
this Agreement until December 31, 1999), or, if there has been a default in the
fulfillment of any such material obligation, specifying each such material
default known to such Responsible Officer and the nature and status thereof.
Section 3.04 Annual Report by Independent Public Accountants.
(a) The Servicer, at the Note Issuer's expense, shall cause a
firm of independent certified public accountants (which may provide
other services to the Servicer) to prepare, and the Servicer shall
deliver to the Note Issuer, the Note Trustee, the Certificate Trustee
and the Rating Agencies, a report addressed to the Servicer (the
"Annual Accountant's Report"), which may be included as part of the
Servicer's customary auditing activities, for the information and use
of the Note Issuer, the Note Trustee, the Certificate Trustee and the
Rating Agencies, on or before March 31 each year, beginning March 31,
2000 to and including the March 31 succeeding the Retirement of the
Notes, to the effect that such firm has performed certain procedures,
agreed between the Servicer and such accountants, in connection with
the Servicer's compliance with its obligations under this Agreement
during the preceding twelve months ended December 31 (or, in the case
of the first Annual Accountant's Report to be delivered on or before
March 31, 2000, the period of time from the date of this Agreement
until December 31, 1999), 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 IV. SERVICES RELATED TO PERIODIC ADJUSTMENTS;
REMITTANCES AND RECONCILIATIONS
Section 4.01 Periodic Adjustments. From time to time, until the
Retirement of the Notes, the Servicer shall identify the need for Periodic
Adjustments and shall take all reasonable action to obtain and implement such
Periodic Adjustments, all in accordance with the following:
(a) Expected Amortization Schedule. The Expected
Amortization Schedule is attached hereto as Schedule 4.01(a).
(b) Routine Periodic Adjustments and Yearly Filings.
(i) Routine Anniversary Periodic Adjustments and
Filings. For the purpose of preparing a Routine Anniversary
True-Up Letter, no later than March 15 of each year, the
Servicer shall: (A) update the assumptions underlying the
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calculation of the RTC Charge, including energy usage volume,
the rate of charge-offs and estimated expenses and fees of the
Note Issuer and the Certificate Issuer to the extent not
fixed, in each case for the Remittance Period beginning on
March 1 of such year; (B) update the calculation of Weighted
Average Days Outstanding; (C) determine the Required Debt
Service for such Remittance Period based upon such updated
assumptions; and (D) determine the RTC Charge to be charged
during such Remittance Period based upon such Required Debt
Service. The Servicer shall file a Routine Anniversary True-Up
Letter with the DTE no later than March 15 of each year.
(ii) Routine Periodic Adjustments. The Servicer shall
file a Routine True-Up Letter at least 15 days before the end
of any calendar quarter or Payment Date at such times as it
may reasonably determine to meet the Required Debt Service for
the then current Remittance Period.
(c) Non-Routine Periodic Adjustments.
(i) Whenever the Servicer determines that the
existing model for calculating the RTC Charge should be
amended or revised, subject to the consent of the Note Issuer
under the conditions set forth in Section 3.18 of the Note
Indenture, the Servicer shall file a Non-Routine True-Up
Letter with the DTE designating the adjustments to such model
and any corresponding adjustments to the RTC Charge
(collectively, a "Non-Routine Periodic Adjustment"), subject
to the review and approval of the DTE pursuant to the
Financing Order.
(ii) The Servicer shall take all reasonable actions
and make all reasonable efforts to secure any Periodic
Adjustments and Non-Routine Periodic Adjustments.
(iii) The Servicer shall implement any resulting
adjustments to the model and any resulting revised RTC Charge
as of the effective date of the Non-Routine True-Up Letter.
(d) Reports.
(i) Notification of Advice Letter Filings and
Periodic Adjustments. Whenever the Servicer files an Advice
Letter with the DTE, the Servicer shall send a copy of such
filing to the Note Issuer, the Note Trustee, the Certificate
Trustee and the Rating Agencies concurrently therewith. If any
Periodic Adjustment requested in any such Advice Letter filing
does not become effective on the applicable date as provided
by the Financing Order, the Servicer shall notify the Note
Issuer, the Note Trustee, the Certificate Trustee and the
Rating
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Agencies by the end of the second Servicer Business Day after
such applicable date.
(ii) Monthly Servicer Certificate. So long as any
Notes are outstanding, not later than fifteen (15) days after
the end of each month, or if such day is not a Servicer
Business Day, the next succeeding Servicer Business Day,
commencing after the Certificates are issued, the Servicer
shall deliver a written report substantially in the form of
Exhibit C hereto (the "Monthly Servicer Certificate") to the
Note Issuer, the Note Trustee, the Certificate Trustee and the
Rating Agencies.
(iii) Semiannual Servicer Certificate. So long as any
Notes are outstanding, not later than the Servicer Business
Day immediately preceding each Payment Date, the Servicer
shall deliver a written report substantially in the form of
Exhibit D hereto (the "Semiannual Servicer Certificate") to
the Note Issuer, the Note Trustee, the Certificate Trustee and
the Rating Agencies.
(iv) TPS Reports. The Servicer shall provide to the
Rating Agencies, upon request, any publicly available reports
filed by the Servicer with the DTE (or otherwise made publicly
available by the Servicer) relating to TPSs and any other
non-confidential and non-proprietary information relating to
TPSs reasonably requested by the Rating Agencies.
Section 4.02 Limitation of Liability.
(a) The Note Issuer and the Servicer expressly agree and
acknowledge that:
(i) In connection with any Periodic Adjustment, the
Servicer is acting solely in its capacity as the servicing
agent hereunder.
(ii) Neither the Servicer nor the Note Issuer shall
be responsible in any manner for, and shall have no liability
whatsoever as a result of, any action, decision, ruling or
other determination made or not made, or any delay (other than
any delay resulting from the Servicer's failure to file the
applications 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 the
Periodic Adjustment), by the DTE in any way related to the
Transition Property or in connection with any Periodic
Adjustment or Non-Routine Periodic Adjustment, the subject of
any filings under Section 4.01, any proposed Periodic
Adjustment or Non-Routine Periodic Adjustment, or the approval
of the RTC Charge and the adjustments thereto.
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(iii) The Servicer shall have no liability whatsoever
relating to the calculation of the RTC Charge and the
adjustments thereto (including any Non-Routine Periodic
Adjustment), including as a result of any inaccuracy of any of
the assumptions made in such calculation regarding expected
energy usage volume, the rate of charge-offs, estimated
expenses and fees of the Note Issuer and the Certificate
Issuer, so long as the Servicer has not acted in a grossly
negligent manner in connection therewith, nor shall the
Servicer have any liability whatsoever as a result of any
Person, including the Noteholders or the Certificateholders,
not receiving any payment, amount or return anticipated or
expected in respect of any Note or Certificate generally,
except only to the extent that the Servicer is liable under
Section 6.02 of this Agreement.
(b) Notwithstanding the foregoing, this Section 4.02 shall not
relieve the Servicer of any liability under Section 6.02 for any
misrepresentation by the Servicer under Section 6.01 or for any breach
by the Servicer of its other obligations under this Agreement.
Section 4.03 Remittances; Reconciliations.
(a) Subject to Section 4.03(b) below, on each Servicer
Business Day commencing 45 days after the date of this Agreement, the
Servicer shall cause to be made within two (2) Servicer Business Days a
wire transfer of immediately available funds to the General Subaccount
of the Collection Account in an amount equal to the Estimated RTC
Charge Payments (as calculated in accordance with Annex I hereto)
deemed to be received on such day and on any prior day that was not a
Servicer Business Day for which a Remittance has not previously been
made (taking into account the Weighted Average Days Outstanding in
effect from time to time). Prior to or simultaneous with each
Remittance to the General Subaccount of the Collection Account pursuant
to this Section, the Servicer shall provide written notice to the Note
Trustee of each such Remittance (including the exact dollar amount to
be remitted).
(b) On or before each March 31, the Servicer shall calculate
the amount of any Remittance Shortfall or Remittance Excess
attributable to the prior Reconciliation Period and (A) if a Remittance
Shortfall exists, the Servicer shall make a supplemental wire transfer
of immediately available funds to the General Subaccount of the
Collection Account not later than the fifth Servicer Business Day
following such calculation in the amount of such Remittance Shortfall,
or (B) if a Remittance Excess exists, the Servicer may elect to either
reduce the amount of Remittances to be made to the Note Issuer on
succeeding Servicer Business Days or receive a payment or payments on
succeeding Payment Dates from the Note Issuer equal to the amount of
such Remittance Excess until the balance of the Remittance Excess has
been reduced to zero. The Servicer shall deliver a written report
setting forth in reasonable detail the calculation of any Remittance
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Excess or Remittance Shortfall to the Note Issuer, the Note Trustee,
the Certificate Trustee and the Rating Agencies.
(c) The Servicer agrees and acknowledges that it will remit
Estimated RTC Charge Payments in accordance with this Section 4.03
without any surcharge, fee, offset, charge or other deduction except
(i) as set forth in Section 4.03(b) above and (ii) for late fees
permitted by Section 6.06.
ARTICLE V. THE TRANSITION PROPERTY
Section 5.01 Custody of Transition Property Records. To assure uniform
quality in servicing the Transition Property and to reduce administrative costs,
the Note Issuer hereby revocably appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent of the Note Issuer and the Note
Trustee as custodian of any and all documents and records that the Seller shall
keep on file, in accordance with its customary procedures, relating to the
Transition Property, including copies of the Financing Order and Advice Letters
relating thereto and all documents filed with the DTE in connection with any
Periodic Adjustment or Non-Routine Periodic Adjustment (collectively, the
"Transition Property Records"), which are hereby constructively delivered to the
Note Trustee, as pledgee of the Note Issuer with respect to all Transition
Property.
Section 5.02 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer shall hold the Transition
Property Records on behalf of the Note Issuer and maintain such
accurate and complete accounts, records and computer systems pertaining
to the Transition Property Records on behalf of the Note Issuer and the
Note Trustee as shall enable the Note Issuer to comply with this
Agreement and the Note Indenture. In performing its duties as custodian
the Servicer shall act with reasonable care, using that degree of care
and diligence that the Servicer exercises with respect to comparable
assets that the Servicer services for itself or, if applicable, for
others. The Servicer shall promptly report to the Note Issuer and the
Note Trustee any failure on its part to hold the Transition Property
Records and maintain its accounts, records and computer systems as
herein provided and promptly take appropriate action to remedy any such
failure. Nothing herein shall be deemed to require an initial review or
any periodic review by the Note Issuer or the Note Trustee of the
Transition Property Records. The Servicer's duties to hold the
Transition Property Records on behalf of the Note Issuer set forth in
this Section 5.02, to the extent such Transition Property Records have
not been previously transferred to a successor Servicer pursuant to
Article VII, 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 VII hereof and (ii) no Notes are
outstanding.
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(b) Maintenance of and Access to Records. The Servicer shall
maintain at all times records and accounts that permit the Servicer to
identify RTC Charges billed. The Servicer shall maintain the Transition
Property Records in Boston, Massachusetts or at such other office as
shall be specified to the Note Issuer and the Note Trustee by written
notice at least 30 days prior to any change in location. The Servicer
shall make available for inspection to the Note Issuer and the Note
Trustee or their respective duly authorized representatives, attorneys
or auditors the Transition Property Records at such times during normal
business hours as the Note Issuer or the Note Trustee shall reasonably
request and which do not unreasonably interfere with the Servicer's
normal operations. Nothing in this Section 5.02(b) shall affect the
obligation of the Servicer to observe any applicable law (including any
DTE Regulations) prohibiting disclosure of information regarding the
Customers, and the failure of the Servicer to provide access to such
information as a result of such obligation shall not constitute a
breach of this Section 5.02(b).
(c) Release of Documents. Upon instruction from the Note
Trustee in accordance with the Note Indenture, the Servicer shall
release any Transition Property Records to the Note Trustee, the Note
Trustee's agent or the Note Trustee's designee, as the case may be, at
such place or places as the Note Trustee may designate, as soon as
practicable.
(d) Defending Transition Property Against Claims. The Servicer
shall institute any action or proceeding necessary to compel
performance by the DTE or The Commonwealth of Massachusetts of any of
their obligations or duties under the Statute, the Financing Order or
any Advice Letter, and the Servicer agrees to take such legal or
administrative actions, including defending against or instituting and
pursuing legal actions and appearing or testifying at hearings or
similar proceedings, as may be reasonably necessary to block or
overturn any attempts to cause a repeal of, modification of or
supplement to the Statute or the Financing Order or the rights of
holders of Transition Property by legislative enactment, voter
initiative or constitutional amendment that would be adverse to
Certificateholders. The costs of any such action shall be payable from
RTC Charge Collections as an Operating Expense in accordance with the
priorities set forth in Section 8.02(d) of the Note Indenture.
Section 5.03 Instructions; Authority to Act. For so long as any Notes
remain outstanding, the Servicer shall be deemed to have received proper
instructions with respect to the Transition Property Records upon its receipt of
written instructions signed by a Responsible Officer (as defined in the Note
Indenture) of the Note Trustee.
Section 5.04 Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Closing Date and shall
continue in full force and effect until terminated pursuant to this Section
5.04. If any Servicer shall resign as Servicer in accordance with the provisions
of this Agreement or if all of the rights and obligations of any
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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 DTE, and acceptance by such successor Servicer of
such appointment.
Section 5.05 Monitoring of Third-Party Suppliers. From time to time,
until the Retirement of the Notes, the Servicer shall, using the same degree of
care and diligence that it exercises with respect to payments owed to it for its
own account, implement such procedures and policies as are necessary to properly
enforce the obligations of each TPS to remit RTC Charges, in accordance with the
terms and provisions of the Financing Order, the TPS Service Agreement and
Schedule A to Annex I hereto.
ARTICLE VI. THE SERVICER
Section 6.01 Representations and Warranties of Servicer. The Servicer
makes the following representations and warranties, as of the Closing Date, on
which the Note Issuer is deemed to have relied in entering into this Agreement
relating to the servicing of the Transition Property.
(a) Organization and Good Standing. The Servicer is duly
organized and validly existing as a corporation in good standing under
the laws of The Commonwealth of Massachusetts, with the requisite
corporate power and authority to own its properties as such properties
are currently owned and to conduct its business as such business is now
conducted by it, and has the requisite corporate power and authority to
service the Transition Property and to hold the Transition Property
Records as custodian.
(b) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business
(including the servicing of the Transition Property as required by this
Agreement) shall require such qualifications, licenses or approvals
(except where the failure to so qualify or obtain such licenses and
approvals would not be reasonably likely to have a material adverse
effect on the Servicer's business, operations, assets, revenues or
properties or adversely affect the servicing of the Transition
Property).
(c) Power and Authority. The Servicer has the requisite
corporate power and authority to execute and deliver this Agreement and
to carry out its terms; and the execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate
action on the part of the Servicer.
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Servicer enforceable against it in
accordance with its terms, subject to applicable insolvency,
reorganization, moratorium, fraudulent transfer and other laws
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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.
(f) No Proceedings. Except as set forth on Schedule 6.01(f),
there are no proceedings pending and, to the Servicer's knowledge,
there are no proceedings threatened and, to the Servicer's knowledge,
there are no investigations pending or threatened, before any court,
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or
its properties involving or relating to the Servicer or the Note Issuer
or, to the Servicer's knowledge, any other Person: (i) asserting the
invalidity of this Agreement; (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement; or (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by the Servicer of its obligations under, or the
validity or enforceability of, this Agreement.
(g) Approvals. No approval, authorization, consent, order or
other action of, or filing with, any court, federal or state regulatory
body, administrative agency or other governmental instrumentality is
required in connection with the execution and delivery by the Servicer
of this Agreement, the performance by the Servicer of the transactions
contemplated hereby or the fulfillment by the Servicer of the terms
hereof, except those that have been obtained or made and those that the
Servicer is required to make in the future pursuant to Article III or
IV hereof.
Section 6.02 Indemnities of Servicer.
(a) The Servicer shall be liable in accordance herewith only
to the extent of the obligations specifically undertaken by the
Servicer and as expressly provided under this Section 6.02.
(b) The Servicer shall indemnify the Note Issuer, the Note
Trustee (for the benefit of the Noteholders) and the Certificate
Trustee (for the benefit of the Certificateholders)
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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
gross negligence in the performance of its duties or observance of its
covenants under this Agreement (including the Servicer's willful
misconduct or gross negligence relating to the maintenance and custody
by the Servicer, as custodian, of the Transition Property Records) or
(ii) the Servicer's breach in any material respect of any of its
representations or warranties in this Agreement; provided, however,
that the Servicer shall not be liable for any Losses resulting from the
willful misconduct or gross negligence of any such indemnified person;
and, provided, further, that the Servicer shall not be liable for any
Losses, regardless of when incurred, after the Notes and the
Certificates have been paid in full.
(c) The Servicer shall indemnify and hold harmless the Note
Trustee (for itself), the Delaware Trustee, the Certificate Trustee
(for itself), the Certificate Issuer, the Agencies and any of their
respective affiliates, officers, directors, employees and agents (each
an "Indemnified Person") 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 gross negligence in the
performance of its duties or observance of its covenants under this
Agreement (including the Servicer's willful misconduct or gross
negligence relating to the maintenance and custody by the Servicer, as
custodian, of the Transition Property Records) or (ii) the Servicer's
breach in any material respect of any of its representations or
warranties in this Agreement; provided, however, that the Servicer
shall not be liable for any Losses resulting from the willful
misconduct or gross negligence of any Indemnified Person or resulting
from a breach of a representation or warranty made by Indemnified
Person in any of the Basic Documents that gives rise to the Servicer's
breach. The Servicer shall not be required to indemnify an Indemnified
Person for any amount paid or payable by such Indemnified Person in the
settlement of any action, proceeding or investigation without the
written consent of the Servicer, which consent shall not be
unreasonably withheld. Promptly after receipt by an Indemnified Person
of notice of its involvement in any action, proceeding or
investigation, such Indemnified Person shall, if a claim for
indemnification in respect thereof is to be made against the Servicer
under this 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 this Section 6.02(c) 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
this 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
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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
this 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
other than 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 this Section 6.02(c) (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.
(d) Indemnification under Sections 6.01(b) and 6.02(c) shall
include reasonable out-of-pocket fees and expenses of investigation and
litigation (including reasonable attorneys' fees and expenses), except
as otherwise provided in this Agreement. For purposes of Section
6.02(b) and 6.02(c), in the event of the termination of the rights and
obligations of Boston Edison Company (or any successor thereto pursuant
to Section 6.04) as Servicer pursuant to Section 7.01, or a resignation
by such Servicer pursuant to this Agreement, such Servicer shall be
deemed to be the Servicer pending appointment of a successor Servicer
pursuant to Section 7.02.
Section 6.03 Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be liable to the Note Issuer or any other Person, except as
provided under this Agreement, for any action taken or for
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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
gross negligence in the performance of duties under this Agreement. The Servicer
and any director, officer, employee or agent of the Servicer may rely in good
faith on the advice of counsel reasonably acceptable to the Note Trustee or on
any document of any kind, prima facie properly executed and submitted by any
Person, respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action relating to
the Transition Property.
Section 6.04 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (a) into which the Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party or (c) which may succeed to the properties and
assets of the Servicer substantially as a whole, which Person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Servicer hereunder, shall be the successor to the Servicer under this
Agreement without further act on the part of any of the parties to this
Agreement; provided, however, that (i) immediately after giving effect to such
transaction, no Servicer Default and no event which, after notice or lapse of
time, or both, would become a Servicer Default shall have occurred and be
continuing, (ii) the Servicer shall have delivered to the Note Issuer and the
Note Trustee an Officers' Certificate stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section and that
all conditions precedent provided for in this Agreement relating to such
transaction have been complied with, (iii) the Servicer shall have delivered to
the Note Issuer and the Note Trustee an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all statutory filings to be made by the
Servicer, including filings with the DTE pursuant to the Statute, have been
executed and filed that are necessary to preserve and protect fully the
interests of the Note Issuer in the Transition Property and reciting the details
of such filings or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interests and (iv) the
Rating Agencies shall have received prior written notice of such transaction.
When any Person acquires the properties and assets of the Servicer substantially
as a whole and becomes the successor to the Servicer in accordance with the
terms of this Section 6.04, then upon satisfaction of all of the other
conditions of this Section 6.04, the Servicer shall automatically and without
further notice be released from all its obligations hereunder.
Section 6.05 Boston Edison Company Not to Resign as Servicer. Subject
to the provisions of Section 6.04, Boston Edison Company shall not resign from
the obligations and duties hereby imposed on it as Servicer under this Agreement
except upon either (a) a determination that the performance of its duties under
this Agreement shall no longer be permissible under applicable law or (b)
satisfaction of the following: (i) the Rating Agency Condition shall have been
satisfied (except that with respect to Moody's it shall be sufficient to provide
ten days prior notice) and (ii) the DTE shall have approved such resignation.
Notice of
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any such determination permitting the resignation of Boston Edison Company shall
be communicated to the Note Issuer, the Note Trustee, the Certificate Trustee
and the Rating Agencies at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination that the performance of Boston
Edison Company's duties under this Agreement shall no longer be permissible
under applicable law shall be evidenced by an Opinion of Counsel to such effect
delivered by Boston Edison Company to the Note Issuer, the Note Trustee and the
Certificate Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until a successor Servicer shall have assumed
the responsibilities and obligations of Boston Edison Company in accordance with
Section 7.02.
Section 6.06 Servicing Compensation.
(a) In consideration for its services hereunder, until the
Retirement of the Notes, the Servicer shall receive an annual fee (the
"Servicing Fee") in an amount equal to (i) 0.05 percent of the initial
principal balance of the Notes for so long as Boston Edison Company or
any successor Servicer bills the RTC Charge concurrently with other
charges for services or (ii) up to 1.25 percent of the initial
principal balance of the Notes if the RTC Charge is being billed
separately to Customers (which amount shall be determined by a separate
agreement between the Note Issuer and the Servicer). The Servicing Fee
shall be payable semiannually on each Payment Date. The Servicer also
shall be entitled to retain as additional compensation (i) any interest
earnings on Estimated RTC Charge Payments deemed 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) above and
expenses provided for in Section 6.06(c) below shall be paid to the
Servicer by the Note Trustee, on each Payment Date in accordance with
the priorities set forth in Section 8.02(d) of the Note Indenture, by
wire transfer of immediately available funds from the Collection
Account to an account designated by the Servicer. Any portion of the
Servicing Fee not paid on such date shall be added to the Servicing Fee
payable on the subsequent Payment Date.
(c) The Note Issuer shall pay all expenses incurred by the
Servicer in connection with its activities hereunder (including any
fees to and disbursements by accountants, counsel, or any other Person,
any taxes imposed on the Servicer (other than taxes based on the
Servicer's net income) and any expenses incurred in connection with
reports to Noteholders and Certificateholders).
Section 6.07 Compliance with Applicable Law. The Servicer covenants and
agrees, in servicing the Transition Property, to comply in all material respects
with all laws applicable to, and binding upon, the Servicer and relating to such
Transition Property the noncompliance with
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which would have a material adverse effect on the value of the Transition
Property; provided, however, that the foregoing is not intended to, and shall
not, impose any liability on the Servicer for noncompliance with any law that
the Servicer is contesting in good faith in accordance with its customary
standards and procedures.
Section 6.08 Access to Certain Records and Information Regarding
Transition Property. The Servicer shall provide to the Noteholders, the Note
Trustee and the Certificate Trustee access to the Transition Property Records in
such cases where the Noteholders, the Note Trustee and the Certificate Trustee
shall be required by applicable law to be provided access to such records.
Access shall be afforded without charge, but only upon reasonable request and
during normal business hours at the respective offices of the Servicer. Nothing
in this Section shall affect the obligation of the Servicer to observe any
applicable law (including any DTE 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. 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; and, provided, further, that the Servicer shall remain
obligated and be liable under this Agreement for the servicing and administering
of the Transition Property in accordance with the provisions hereof without
diminution of such obligation and liability by virtue of the appointment of such
Person and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Transition Property; and,
provided, further, however, that nothing herein (including the Rating Agency
Condition) shall preclude the execution by the Servicer of a TPS Service
Agreement with any TPS pursuant to applicable DTE Regulations. Notwithstanding
anything to the contrary in this Agreement, the parties hereto acknowledge and
agree that the initial Servicer has appointed Cash Management Services to
process U.S. mail payments from Customers and that such appointment is hereby
permitted hereunder. The fees and expenses of any such Person shall be as agreed
between the Servicer and such Person from time to time and none of the Note
Issuer, the Note Trustee, the Noteholders or any other Person shall have any
responsibility therefor or right or claim thereto. Any such appointment shall
not constitute a Servicer resignation under Section 6.05.
Section 6.10 No Servicer Advances. Except with respect to Remittances
of Estimated RTC Charge Payments, the Servicer shall not make any advances of
interest on or principal of the Notes or the Certificates.
Section 6.11 Maintenance of Operations. The Servicer agrees to continue
to operate its distribution system to provide service to its customers so long
as it is acting as the Servicer under this Agreement.
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ARTICLE VII. DEFAULT
Section 7.01 Servicer Default. If any one of the following events (each
a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to remit to the Collection
Account on behalf of the Note Issuer any required Remittance that shall
continue unremedied for a period of five (5) Business Days after
written notice of such failure is received by the Servicer from the
Note Issuer or the Note Trustee; or
(b) any failure on the part of the Servicer duly to observe or
to perform in any material respect any other covenants or agreements of
the Servicer set forth in this Agreement, which failure shall (a)
materially and adversely affect the rights of the Noteholders and (ii)
continue unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given (A) to the Servicer by the Note Issuer or (B) to
the Servicer by the Note Trustee or by the Holders of Notes evidencing
not less than 25 percent of the Outstanding Amount of the Notes; or
(c) any representation or warranty made by the Servicer in
this Agreement shall prove to have been incorrect in any material
respect when made, which has a material adverse effect on the
Noteholders and which material adverse effect continues unremedied for
a period of 60 days after written notice of such failure is received by
the Servicer from the Note Issuer or the Note Trustee; 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 Note Trustee, or the Holders of
Notes evidencing not less than 25 percent of the Outstanding Amount of
the Notes, by notice then given in writing to the Servicer (and to the
Note Trustee if given by the Noteholders) (a "Termination Notice") may
terminate all the rights and obligations (other than the obligations
set forth in Section 6.02 hereof) of the Servicer under this Agreement.
In addition, upon a Servicer Default described in Section 7.01(a), each
of the following shall be entitled to apply to the DTE for
sequestration and payment of revenues arising with respect to the
Transition Property: (1) the Certificateholders and the Certificate
Trustee as beneficiary of any statutory lien permitted by the Statute;
(2) the Note Issuer or its assignees; (3) the Certificate Issuer or (4)
pledgees or transferees, including transferees under Section 1H(f) of
the Statute, of the Transition Property. On or after the receipt by the
Servicer of a Termination Notice, and subject to the approval of the
DTE, all authority and power of the Servicer under this Agreement,
whether with respect to the Notes, the Transition Property, the RTC
Charge or otherwise, shall, without further action, pass to and be
vested in such successor Servicer as may be appointed under Section
7.02; and, without limitation, the Note
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Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the predecessor Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the
purposes of such Termination Notice, whether to complete the transfer
of the Transition Property Records and related documents, or otherwise.
The predecessor Servicer shall cooperate with the successor Servicer,
the Note Issuer and the Note Trustee in effecting the termination of
the responsibilities and rights of the predecessor Servicer under this
Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held
by the predecessor Servicer for remittance, or shall thereafter be
received by it with respect to the Transition Property or the RTC
Charge. In case a successor Servicer is appointed as a result of a
Servicer Default, all reasonable costs and expenses (including
reasonable attorneys' fees and expenses) incurred in connection with
transferring the Transition Property Records to the successor Servicer
and amending this Agreement to reflect such succession as Servicer
pursuant to this Section shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses.
Section 7.02 Appointment of Successor.
(a) Upon the Servicer's receipt of a Termination Notice
pursuant to Section 7.01 or the Servicer's resignation or removal in
accordance with the terms of this Agreement, the predecessor Servicer
shall continue to perform its functions as Servicer under this
Agreement, and shall be entitled to receive the requisite portion of
the Servicing Fee and reimbursement of expenses as provided herein,
until a successor Servicer shall have assumed in writing the
obligations of the Servicer hereunder as described below. In the event
of the Servicer's termination hereunder, the Note Issuer shall appoint,
subject to the approval of the DTE, a successor Servicer with the Note
Trustee's prior written consent thereto (which consent shall not be
unreasonably withheld), and the successor Servicer shall accept its
appointment by a written assumption in form reasonably acceptable to
the Note Issuer and the Note Trustee. If within 30 days after the
delivery of the Termination Notice, the Note Issuer shall not have
obtained such a new Servicer, the Note Trustee may petition the DTE 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 DTE Regulations to perform the
duties of the Servicer, (ii) the Rating Agency Condition shall have
been satisfied and (iii) such Person enters into a servicing agreement
with the Note Issuer having substantially the same provisions as this
Agreement.
(b) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer and shall be
subject to all the responsibilities, duties and liabilities arising
thereafter relating thereto placed on the predecessor Servicer and
shall be entitled to the Servicing Fee and all the rights granted to
the predecessor Servicer by the terms and provisions of this Agreement.
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Section 7.03 Waiver of Past Defaults. The Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes may, on behalf
of all Noteholders, waive in writing any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a default
in making any required Remittances to the Collection Account in accordance with
this Agreement. Upon any such waiver of a past default, such default shall cease
to exist, and any Servicer Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereto.
Section 7.04 Notice of Servicer Default. The Servicer shall deliver to
the Note Issuer, the Note Trustee, the Certificate Trustee and the Rating
Agencies, promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Default under Section 7.01(a) or (b).
ARTICLE VIII. MISCELLANEOUS PROVISIONS
Section 8.01 Amendment. This Agreement may be amended in writing by the
Servicer and the Note Issuer with ten Business Days' prior written notice given
to the Rating Agencies and the prior written consent of the Note Trustee (which
consent shall not be unreasonably withheld), but without the consent of any of
the Noteholders, to cure any ambiguity, to correct or supplement any provisions
in this Agreement or for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions in this Agreement or of
modifying in any manner the rights of the Noteholders; provided, however, that
such action shall not, as evidenced by an Officer's Certificate delivered to the
Note Issuer and the Note Trustee, adversely affect in any material respect the
interests of any Noteholder.
This Agreement may also be amended in writing from time to time by the
Servicer and the Note Issuer with ten Business Days' prior written notice given
to the Rating Agencies and the prior written consent of the Note Trustee (which
consent shall not be unreasonably withheld) and the prior written consent of the
Holders of Notes evidencing not less than a majority of the Outstanding Amount
of the Notes, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Noteholders; provided, however, that any amendment
of the provisions of Sections 4.01 or 4.03 of this Agreement shall satisfy the
Rating Agency Condition (except that with respect to Moody's it shall be
sufficient to provide ten days prior notice).
It shall not be necessary for the consent of Noteholders pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof.
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Prior to its consent to any amendment to this Agreement, the Note
Trustee shall be entitled to receive and conclusively rely upon an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Agreement. The Note Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Note Trustee's own rights, duties or immunities
under this Agreement or otherwise.
Section 8.02 Protection of Title to Trust.
(a) The Servicer shall maintain accounts and records as to the
Transition Property accurately and in accordance with its standard
accounting procedures and in sufficient detail to permit reconciliation
between RTC Charge Collections and Deemed RTC Charge Payments.
(b) The Servicer shall permit the Note Trustee and its agents
at any time during normal business hours, upon reasonable notice to the
Servicer and to the extent it does not unreasonably interfere with the
Servicer's normal operations, to inspect, audit and make copies of and
abstracts from the Servicer's records regarding the Transition Property
and the RTC Charge. Nothing in this Section 8.02(b) shall affect the
obligation of the Servicer to observe any applicable law (including any
DTE 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. All demands, notices and communications upon or
to the Servicer, the Note Issuer, the Note Trustee, the Certificate Trustee or
the Rating Agencies under this Agreement shall be in writing and personally
delivered, sent by overnight mail or sent by telecopy or other similar form of
rapid transmission, and shall be deemed to have been duly given upon receipt (a)
in the case of the Servicer, to Boston Edison Company, at 000 Xxxxxxxx Xxxxxx,
Xxxxxx, XX 00000, Attention: [________]; (b) in the case of the Note Issuer, to
it at 000 Xxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, XX 00000, Attention: Xxxxxx X.
Xxxxxx, Xx.; (c) in the case of the Note Trustee, to it at the Corporate Trust
Office; (d) in the case of the Certificate Trustee, to it at [_______],
Attention: [_______]; (e) in the case of Moody's, to Xxxxx'x Investors Service,
Inc., ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; (f)
in the case of Standard & Poor's, to Standard & Poor's Corporation, 00 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Asset Backed
Surveillance Department; (g) in the case of Fitch, to Fitch IBCA, Inc., Xxx
Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, XX 00000, Attention: Commercial Asset-Backed
Securities; (h) in the case of Duff & Xxxxxx, to Xxxx & Xxxxxx Credit Rating
Co., 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention of Asset-Backed
Monitoring Group; or (i) as to each of the foregoing, at such other address as
shall be designated by written notice to the other parties.
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Section 8.04 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 6.04 and as provided in the
provisions of this Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by the Servicer.
Section 8.05 Limitations on Rights of Third Parties. The provisions of
this Agreement are solely for the benefit of the Servicer, the Note Issuer, the
Note Trustee and the other Persons expressly referred to herein and such Persons
shall have the right to enforce the relevant provisions of this Agreement.
Nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Transition Property or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
Section 8.06 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 8.07 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 8.08 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 8.09 Governing Law. This Agreement shall be construed in
accordance with the substantive laws of The Commonwealth of Massachusetts,
without giving effect to its conflict of law or other principles that would
cause the application of the laws of another jurisdiction, and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.
Section 8.10 Assignment to Note Trustee. The Servicer hereby
acknowledges and consents to the collateral assignment of any or all of the Note
Issuer's rights and obligations hereunder to the Note Trustee for the benefit of
the holders of the Notes and to the further assignment of the Note Trustee's
rights and obligations under the Note Indenture to the Certificate Trustee for
the benefit of the holders of the Certificates.
Section 8.11 Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement or the Note Indenture, but subject to the DTE's
right to order the sequestration and payment of revenues arising with respect to
the Transition Property notwithstanding any bankruptcy, reorganization or other
insolvency proceedings with respect to the debtor, pledgor or transferor of the
Transition Property pursuant to Sections 1H(d)(5) and 1H(e) of the Statute, the
Servicer shall not, prior to the date which is one year and one day after the
termination of the
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Note Indenture with respect to the Note Issuer, petition or otherwise invoke or
cause the Note Issuer or the Trust to invoke the process of any court or
governmental authority for the purpose of commencing or sustaining a case
against the Note Issuer or the Trust under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Note Issuer or
the Trust or any substantial part of the property of the Note Issuer or the
Trust, or ordering the winding up or liquidation of the affairs of the Note
Issuer or the Trust.
Section 8.12 Limitation of Liability of Note Trustee. Notwithstanding
anything contained herein to the contrary, this Agreement has been accepted by
The Bank of New York not in its individual capacity but solely as Note Trustee
on behalf of the Holders of the Notes, in the exercise of the powers and
authority conferred and vested in it, and in no event shall The Bank of New York
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Note Issuer hereunder or in any of the certificates,
notices, or agreements delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Note Issuer.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
BEC FUNDING LLC
By:_____________________________________
Name:
Title:
BOSTON EDISON COMPANY
By:_____________________________________
Name:
Title:
Acknowledged and Accepted:
BANK OF NEW YORK,
not in its individual capacity
but solely as Note Trustee
By:________________________________
Name:
Title:
S-1
34
EXHIBIT A
CERTIFICATE OF COMPLIANCE
The undersigned hereby certifies that he/she is the duly elected and
acting [________] of Boston Edison Company, as servicer (the "Servicer"), under
the Transition Property Servicing Agreement dated as of July __, 1999 (the
"Servicing Agreement") between the Servicer and BEC Funding LLC (the "Note
Issuer"), and further certifies on behalf of the Servicer that:
1. A review of the activities of the Servicer and of its performance
under the Servicing Agreement during the [twelve] months ended December 31,
[___] 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 [twelve] months ended December 31, [___],
except for those material defaults in the fulfillment of material obligations
listed on Annex A hereto.
Executed as of this _______ day of ___________ .
[BOSTON EDISON COMPANY],
as Servicer
By:_______________________________________
Name:
Title:
35
ANNEX A TO EXHIBIT A
LIST OF SERVICER DEFAULTS
The following material defaults known to the undersigned occurred
during the [year] ended December 31, _____:
Nature of Default Status
----------------- ------
36
EXHIBIT B
FORM OF ROUTINE TRUE-UP LETTER
[Date]
ADVICE ____________
DEPARTMENT OF TELECOMMUNICATIONS AND ENERGY (THE "DEPARTMENT") OF THE
COMMONWEALTH OF MASSACHUSETTS
SUBJECT: Periodic RTC Charge True-Up Mechanism Advice Filing
Pursuant to D.T.E. Docket No. 98-118 (the "Financing Order"), Boston Edison
Company ("Boston Edison") as servicer of the RRBs or any successor Servicer and
on behalf of the trustee as assignee of the special purpose entity (the "SPE")
may apply for adjustment to the RTC Charge on each anniversary of the date of
the Financing Order and at such additional intervals as may be provided for in
the Financing Order. Any capitalized terms not defined herein shall have the
meanings ascribed thereto in the Financing Order.
PURPOSE
This filing establishes the revised RTC Charge to be assessed and collected from
all classes of retail users of Boston Edison's distribution system within the
geographic service territory as in effect on July 1, 1997, whether or not energy
is purchased from Boston Edison or any TPS, and whether or not such distribution
system is being operated by Boston Edison or a successor distribution company.
The RTC Charge is a usage-based component of the transition charge on each
retail user's monthly xxxx and may include in the future a component of any exit
fee collected pursuant to X.X. x. 164, Section 1G(g) until the Total RRB Payment
Requirements are discharged in full. In the Financing Order, the Department
authorized Boston Edison to file Routine True-Up Letters prior to each
anniversary of the date of the Financing Order and at such additional intervals,
if necessary, as provided for in the Financing Order. Boston Edison, or a
successor Servicer, is authorized to file periodic RTC Charge adjustments to the
extent necessary to ensure the timely recovery of revenues sufficient to provide
for the payment of an amount equal to the sum of the Periodic RRB Payment
Requirements (as defined in the Financing Order) for the upcoming year, which
may include indemnity obligations of the SPE in the RRB transaction documents
for SPE officers and directors, trustee fees, liabilities of the special purpose
trust and liabilities to the underwriters related to the underwriting of the
RRBs. Routine True-Up Letter filings are those where Boston Edison uses the
methodology approved by the Department in the Financing Order to adjust upward
or downward the existing RTC Charge.
37
Using the methodology approved by the Department in the Financing Order, this
filing modifies the variables used in the RTC Charge calculation and provides
the resulting modified RTC Charge. Table I shows the revised assumptions for
each of the variables used in calculating the RTC Charge for retail users. The
assumptions underlying the current RTC Charges were filed in an Issuance Advice
Letter, dated _____________.
Table I below shows the current assumptions for each of the variables used in
the RTC Charge calculation.
TABLE I
INPUT VALUES FOR RTC CHARGE
a) Most recent Payment Date for which payment data is available ("Measure
Date")
b) Last Payment Date related to this Remittance Period ("Target Date")
c) Annual ongoing transaction expenses to be paid through Target Date
d) Unpaid ongoing transaction expenses following payments on Measure Date
e) Required annual overcollateralization amount
f) Overcollateralization Subaccount deficiency following payments on
Measure Date
g) Capital Subaccount deficiency following payments on Measure Date
h) Expected annual RRB principal payments through Target Date
i) Unpaid RRB principal payments following payments on Measure Date
j) Interest payments on outstanding principal to be paid through Target
Date
k) Unpaid interest following payments on Measure Date
l) Total annual revenue requirement (sum of c. - k. above)
m) Amounts on deposit in Reserve Subaccount following payments on Measure
Date
n) Collections expected to be realized in this Remittance Period from
prior RTC Charge
o) Required Debt Service (l. - m. - n.)
p) KWh consumption on which RTC Charge is expected to be billed and
collected in this Remittance Period
q) Adjusted RTC Charge for retail users ((cent)/kWh) (o. / p.)
TABLE II
INPUT VALUES FOR WEIGHTED AVERAGE DAYS OUTSTANDING
a) Weighted Average Days Sales Outstanding (WAD)
b) WAD: Percent of billed amounts collected in current month:
c) WAD: Percent of billed amounts collected in second month:
d) WAD: Percent of billed amounts collected in third month:
e) WAD: Percent of billed amounts collected in fourth month:
f) WAD: Percent of billed amounts collected in fifth month:
g) Annual charge-offs for most recent Reconciliation Period:
38
EFFECTIVE DATE
In accordance with the Financing Order, Routine True-Up Letters for annual RTC
Charge adjustments shall be filed prior to the anniversary of the Financing
Order or more frequently, if necessary, with the resulting changes to be
effective no sooner than 15 days after the filing of this Routine True-Up
Letter. No resolution by the Department is required. Therefore, these RTC
Charges shall be effective as of [ ].
NOTICE
Copies of this filing are being furnished to the parties on the attached service
list. Notice to the public is hereby given by filing and keeping this filing
open for public inspection at Boston Edison's corporate headquarters.
Executed as of this _____________ day of ___________.
[BOSTON EDISON COMPANY]
as Servicer
By:_________________________
Name:
Title:
39
EXHIBIT C
FORM OF MONTHLY SERVICER CERTIFICATE
Pursuant to Section 4.01(d)(ii) of the Transition Property Servicing
Agreement dated as of [ ], 1999 between Boston Edison Company (the
"Servicer") and BEC Funding LLC, the Servicer does hereby certify as follows:
For the Monthly Period:_____________
1. XXXXXXXX:
a) Monthly kWh Consumption: 0.00
b) Applicable RTC Charge: 0.00
c) Total RTC Charge Amount Billed this Month: 0.00
2. REMITTANCES:
a) Total Amount Remitted this Month: 0.00
Executed as of this _____________ day of ___________.
[BOSTON EDISON COMPANY]
as Servicer
By:_________________________
Name:
Title:
40
EXHIBIT D
FORM OF SEMIANNUAL SERVICER CERTIFICATE
Pursuant to Section 4.01(d)(iii) of the Transition Property Servicing
Agreement dated as of [_______], 1999 (the "Agreement") between Boston Edison
Company, as Servicer and BEC Funding LLC, as Note Issuer, the Servicer does
hereby certify 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. RTC CHARGE COLLECTIONS ALLOCABLE AND AGGREGATE AMOUNTS AVAILABLE FOR
THE CURRENT PAYMENT DATE:
i. Amount Remitted [Month] [Year] $0.00
ii. Amount Remitted [Month] [Year] 0.00
iii. Amount Remitted [Month] [Year] 0.00
iv. Amount Remitted [Month] [Year] 0.00
v. Amount Remitted [Month] [Year] 0.00
vi. Amount Remitted [Month] [Year] 0.00
vii. Amount Remitted [Month] [Year] 0.00
viii. Amount Remitted [Month] [Year] 0.00
ix. Amount Remitted [Month] [Year] 0.00
x. TOTAL AMOUNT REMITTED FOR THIS PERIOD (SUM OF i. THROUGH ix. ABOVE): 0.00
xi. Net Earnings on Collection Account: 0.00
xii. GENERAL SUBACCOUNT BALANCE (SUM OF x. AND xi. ABOVE): 0.00
xiii. Reserve Subaccount Balance 0.00
xiv. Overcollateralization Subaccount Balance 0.00
xv. Capital Subaccount Balance 0.00
xvi. COLLECTION ACCOUNT BALANCE (SUM OF xiii. THROUGH xv. ABOVE): 0.00
2. OUTSTANDING PRINCIPAL BALANCE AS OF PRIOR PAYMENT DATE BY TRANCHE:
i. Class A-1 Principal Balance Outstanding Note/Cert: $0.00
ii. Class A-2 Principal Balance Outstanding Note/Cert: 0.00
iii. Class A-3 Principal Balance Outstanding Note/Cert: 0.00
iv. Class A-4 Principal Balance Outstanding Note/Cert: 0.00
v. Class A-5 Principal Balance Outstanding Note/Cert: 0.00
vi. TOTAL NOTE PRINCIPAL BALANCE: 0.00
41
3. REQUIRED FUNDING/PAYMENTS AS OF CURRENT PAYMENT DATE:
a) PROJECTED PRINCIPAL BALANCES AND PAYMENTS
Projected Semi-Annual
Principal Balance Principal Due
i. Class A-1 Note/Cert $0.00 $0.00
ii. Class A-2 Note/Cert 0.00 0.00
Iii Class A-3 Note/Cert 0.00 0.00
iv. Class A-4 Note/Cert 0.00 0.00
v. Class A-5 Note/Cert 0.00 0.00
vi. TOTAL PROJECTED PRINCIPAL AMOUNT: 0.00 0.00
b) REQUIRED INTEREST PAYMENTS
Note/Cert Days in Interest
Interest Rate Applicable Period Due
i. Class A-1 Note/Cert 0.00% 000 $0.00
ii. Class A-2 Note/Cert 0.00 000 0.00
iii. Class A-3 Note/Cert 0.00 000 0.00
iv. Class A-4 Note/Cert 0.00 000 0.00
v. Class A-5 Note/Cert 0.00 000 0.00
vi. TOTAL REQUIRED INTEREST AMOUNT: 0.00 000 0.00
c) PROJECTED SUBACCOUNT PAYMENTS AND LEVELS
Subaccount Projected Level Funding Required
i. Capital Subaccount: $0.00 $0.00
ii. Overcollateralization Subaccount: 0.00 0.00
iii. TOTAL SUBACCOUNT PAYMENTS AND LEVELS: 0.00 0.00
4. ALLOCATION OF REMITTANCES AS OF CURRENT PAYMENT DATE PURSUANT TO
SECTION 8.02(d) OF NOTE INDENTURE:
a) SEMIANNUAL EXPENSES
Expense Amount
i. Note, Delaware and Certificate Trustee Fees: $0.00
ii. Semiannual Servicing Fee: 0.00
iii. Semiannual Administration Fee: 0.00
iv. Operating Expenses (subject to $100,000 cap): 0.00
v. TOTAL EXPENSES: 0.00
42
b) SEMIANNUAL INTEREST
Per $1000 of Original
Aggregate Principal Amount
i. Class A-1 Note/Cert $0.00 $0.00
ii. Class A-2 Note/Cert 0.00 0.00
Iii Class A-3 Note/Cert 0.00 0.00
iv. Class A-4 Note/Cert 0.00 0.00
v. Class A-5 Note/Cert 0.00 0.00
vi. TOTAL SEMIANNUAL INTEREST: 0.00 0.00
c) SEMIANNUAL PRINCIPAL
Per $1000 of Original
Aggregate Principal Amount
i. Class A-1 Note/Cert $0.00 $0.00
ii. Class A-2 Note/Cert 0.00 0.00
Iii Class A-3 Note/Cert 0.00 0.00
iv. Class A-4 Note/Cert 0.00 0.00
v. Class A-5 Note/Cert 0.00 0.00
vi. TOTAL SEMIANNUAL PRINCIPAL: 0.00 0.00
d) OTHER PAYMENTS
i. Operating Expenses (in excess of $100,000): $0.00
ii. Funding of Capital Subaccount (to required amount): 0.00
iii. Funding of Overcollateralization Subaccount (to required level): 0.00
iv. Deposits to Reserve Subaccount: 0.00
v. Interest earnings on Capital Account Released to Note Issuer: 0.00
5. OUTSTANDING PRINCIPAL BALANCE AND COLLECTION ACCOUNT BALANCE AS OF
CURRENT PAYMENT DATE (AFTER GIVING EFFECT TO PAYMENTS TO BE MADE ON
SUCH DISTRIBUTION DATE):
a) PRINCIPAL BALANCE OUTSTANDING:
i. Class A-1 Principal Balance Outstanding Note/Cert: $0.00
ii. Class A-2 Principal Balance Outstanding Note/Cert: 0.00
iii. Class A-3 Principal Balance Outstanding Note/Cert: 0.00
iv. Class A-4 Principal Balance Outstanding Note/Cert: 0.00
v. Class A-5 Principal Balance Outstanding Note/Cert: 0.00
vi. TOTAL NOTE/CERT PRINCIPAL BALANCE: 0.00
43
b) COLLECTION ACCOUNT BALANCES OUTSTANDING:
i. Capital Subaccount: $0.00
ii. Overcollateralization Subaccount: 0.00
iii. Reserve Subaccount: 0.00
iv. TOTAL SUBACCOUNT AMOUNT: 0.00
6. SUB-ACCOUNT DRAWS AS OF CURRENT PAYMENT DATE (IF APPLICABLE, PURSUANT
TO SECTION 8.02(e) OF NOTE INDENTURE):
i. Capital Subaccount: $0.00
ii. Overcollateralization Subaccount: 0.00
iii. Reserve Subaccount: 0.00
iv. TOTAL SUBACCOUNT DRAWS: 0.00
7. SHORTFALLS IN INTEREST AND PRINCIPAL PAYMENTS AS OF CURRENT PAYMENT
DATE (IF APPLICABLE):
a) SEMIANNUAL INTEREST SHORTFALL
i. Class A-1 Note/Cert $0.00
ii. Class A-2 Note/Cert 0.00
Iii Class A-3 Note/Cert 0.00
iv. Class A-4 Note/Cert 0.00
v. Class A-5 Note/Cert 0.00
vi. TOTAL SEMIANNUAL INTEREST SHORTFALL: 0.00
b) SEMIANNUAL PRINCIPAL SHORTFALL
i. Class A-1 Note/Cert $0.00
ii. Class A-2 Note/Cert 0.00
Iii Class A-3 Note/Cert 0.00
iv. Class A-4 Note/Cert 0.00
v. Class A-5 Note/Cert 0.00
vi. TOTAL SEMIANNUAL PRINCIPAL SHORTFALL: 0.00
8. SHORTFALLS IN REQUIRED SUBACCOUNT LEVELS AS OF CURRENT DISTRIBUTION DATE:
i. Capital Subaccount: $0.00
ii. Overcollateralization Subaccount: 0.00
iii. TOTAL SUBACCOUNT SHORTFALLS: 0.00
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IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Semiannual Servicer Certificate this ___ day of ____, ____.
BOSTON EDISON COMPANY, as Servicer
By:__________________________________
Name:
Title:
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EXHIBIT E
FORM OF ANNUAL RECONCILIATION
Pursuant to Section 4.03(b) of the Transition Property Servicing
Agreement dated as of July __, 1999 between Boston Edison Company (the
"Servicer") and BEC Funding LLC, the Servicer does hereby certify as follows:
For the Reconciliation Period:_____________ to _____________
1. CALCULATION OF REMITTANCE SHORTFALL OR REMITTANCE EXCESS:
a) System wide Billed Revenues: $0.00
b) System wide Charge-Offs: 0.00
c) System wide Charge-Off % (b. / a.): 0.00%
d) RTC Charge-off adjustment factor: [67.00]%
e) "Charge-Off Percent" (c. x d.): 0.00%
f) "Estimated RTC Charge-Off Percent": 0.67%
g) kWh Consumption ([Jan. 1] - [Mar. 31]): 0.00
h) RTC Charge ([Jan. 1] - [Mar. 31]): $0.00
i) Billed RTC Charges ([Jan. 1] - [Mar. 31]) (g x h): $0.00
j) kWh Consumption ([Apr. 1] - [Dec. 31]): 0.00
k) RTC Charge ([Apr. 1] - [Dec. 31]): $0.00
l) Billed RTC Charges ([Apr. 1] - [Dec. 31]) (j x k): $0.00
m) Deemed RTC Charge Payments ([100% - e.] x [i. + l.]): $0.00
n) Estimated RTC Charge Payments ([100% - f.] x [i. + l.]): $0.00
o) Remittance Shortfall (m. - n., if positive) $0.00
p) Remittance Excess (n. - m., if positive): $0.00
Executed as of this _____________ day of ___________.
[BOSTON EDISON COMPANY]
as Servicer
By:_________________________
Name:
Title:
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SCHEDULE 4.01(a)
Expected Amortization Schedule
Outstanding Principal Balance
Payment Date Class[ ] Total
------------ -------- -----
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SCHEDULE 6.01(f)
Proceedings
1. [Describe relevant proceedings]
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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 RTC Charges" means the dollar amounts billed to Customers or
the Applicable TPS in respect of the RTC Charge, whether billed to Customers or
the Applicable TPS by the Servicer or to Customers by a TPS pursuant to a TPS
Service Agreement.
"Deemed Charge-Off Percent" means the Servicer's actual system wide
charge-off percentage, as adjusted for estimates of partially paid bills (which
are deemed to have paid the RTC Charge in full).
"Estimated Charge-Off Percent" means the Servicer's good faith estimate
of the Deemed Charge-Off Percent.
"Servicer Policies and Practices" means, with respect to the Servicer's
duties under this Annex I, the policies and practices of the Servicer applicable
to such duties that the Servicer follows with respect to comparable assets that
it services for itself or others, as in effect from time to time.
SECTION 2. DATA ACQUISITION
(a) Installation and Maintenance of Meters. Except to the extent that a
TPS is responsible for such services pursuant to a TPS Service Agreement, the
Servicer shall cause to be installed, replaced and maintained meters in
accordance with the Servicer Policies and Practices.
(b) Meter Reading. In accordance with the Servicer Policies and
Practices, the Servicer shall obtain usage measurements for each Customer;
provided, however, that the Servicer may determine any Customer's usage on the
basis of estimates in accordance with applicable DTE 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.
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(c) Cost of Metering. The Note Issuer shall not be obligated to pay any
costs associated with the metering duties set forth in this Section 2, including
the costs of installing, replacing and maintaining meters, nor shall the Note
Issuer be entitled to any credit against the Servicing Fee for any cost savings
realized by the Servicer or any TPS as a result of new metering and/or billing
technologies.
SECTION 3. USAGE AND 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 DTE Regulations) in
accordance with the Servicer Policies and Practices and shall determine
therefrom Billed RTC 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 RTC Charges.
SECTION 4. BILLING
(a) The Servicer shall implement the RTC Charge as of the Closing Date
and shall thereafter xxxx each Customer or the Applicable TPS for each
Customer's Billed RTC Charges in accordance with the provisions of this Section
4.
(b) Frequency of Bills; Billing Practices. In accordance with the
Servicer Policies and Practices, the Servicer shall generate and issue a 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 RTC Charges. In the
event that the Servicer makes any material modification to the Servicer Policies
and Practices, it shall notify the Note Issuer, the Note Trustee, the
Certificate Trustee and the Rating Agencies as soon as practicable, and in no
event later than 60 Servicer Business Days after such modification goes into
effect; provided, however, that the Servicer may not make any modification that
will materially adversely affect the Certificateholders.
(c) Format.
(i) [Each Xxxx to a Customer shall contain or be deemed to
contain a Transition Charge that shall include the RTC Charge owed by such
Customer for the applicable billing period.]
(ii) [Each Xxxx shall contain a statement (as a footnote) to
the effect that all or a portion of the Transition Charge is owned by the Note
Issuer and not the Seller.]
(iii) The Servicer shall conform to such requirements in
respect of the format, structure and text of Bills delivered to Customers and
TPSs as applicable DTE Regulations shall
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from time to time prescribe. To the extent that Xxxx format, structure and text
are not prescribed by applicable law or by applicable DTE Regulations, the
Servicer shall, subject to clauses (i) and (ii) of this subsection (c),
determine the format, structure and text of all Bills in accordance with its
reasonable business judgment, the Servicer Policies and Practices and historical
practice.
(d) Delivery. Except as provided in the next sentence, the Servicer
shall deliver all Bills to Customers (i) by United States mail in such class or
classes as are consistent with the Servicer Policies and Practices or (ii) by
any other means, whether electronic or otherwise, that the Servicer may from
time to time use in accordance with the Servicer Policies and Practices. In the
case of Customers that have elected to be billed by a TPS, the Servicer shall
deliver all Bills to the Applicable TPSs by such means as are mutually agreed
upon by the Servicer and the Applicable TPS in the TPS Service Agreement and
which are consistent with DTE 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 extent provided in the applicable TPS Service
Agreement shall handle all Customer inquiries and other Customer service matters
according to the Servicer Policies and Practices.
SECTION 6. COLLECTIONS; PAYMENT PROCESSING; REMITTANCE
(a) Collection Efforts, Policies, Procedures.
(i) The Servicer shall collect Billed RTC 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 DTE Regulations and
the Servicer Policies and Practices.
(B) The Servicer shall deliver past-due and shut-off
notices in accordance with applicable DTE Regulations and the Servicer Policies
and Practices.
(C) The Servicer shall adhere to and carry out
disconnection policies and termination of billing by a TPS pursuant to a TPS
Service Agreement in accordance with Sections 116, 124-124I of the Statute or
successor provisions, applicable DTE Regulations and the Servicer Policies and
Practices.
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(D) The Servicer may employ the assistance of
collection agents in accordance with applicable DTE 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 DTE
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 and (B) would comply in all material respects with
applicable law.
(iii) The Servicer shall accept payment from Customers in
respect of Billed RTC 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 RTC 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 DTE Regulations.
(b) Payment Processing, Allocation, Priority of Payments. The Servicer
shall post all payments received to Customer or TPS accounts as promptly as
practicable, and, in any event, substantially all payments shall be posted no
later than two Servicer Business Days after receipt.
(c) Investment of Estimated RTC Charge Payments Received. Prior to
remittance on the applicable Remittance Date, the Servicer may invest Estimated
RTC 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 Estimated RTC Charge
Payments invested by it.
(d) Calculation of Estimated RTC Charge Payments and Deemed RTC Charge
Payments; Remittances. In accordance with Section 4.03(a) of the Agreement, the
Servicer shall remit to the Note Trustee for deposit in the Collection Account
an amount equal to the product of the Billed RTC Charges for a particular
billing date multiplied by one hundred percent less the Estimated Charge-Off
Percent. Such product shall constitute the amount of Estimated RTC Charge
Payments. Pursuant to Section 4.03(b) of the Agreement, on or before March 31 of
each year, the Servicer shall calculate the amount of Deemed RTC Charge Payments
by multiplying the Billed RTC Charges by one hundred percent less the Deemed
Charge-Off Percent.
(e) Remittances.
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(i) The Note Issuer shall cause to be established the
Collection Account in the name of the Note Trustee in accordance with Section
8.02 of the Note Indenture.
(ii) The Servicer shall make or cause to be made Remittances
to the Collection Account in accordance with Section 4.03 of the Agreement.
(iii) Any change of account or change of institution affecting
the Collection Account shall not take effect until the Note Issuer has provided
at least fifteen (15) Servicer Business Days written notice thereof to the
Servicer.
SECTION 7. TPSs
In the event a TPS performs services pursuant to a TPS Service
Agreement, the Servicer shall comply with the procedures set forth in Schedule A
to this Annex I.
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SCHEDULE A
TO ANNEX I
Additional Servicing Procedures Applicable to TPSs
1. Establishing TPS Relationship
In addition to any actions required by the DTE or by applicable law,
for each TPS that is responsible for collecting Billed RTC 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 DTE that each TPS is licensed to supply
electricity in Massachusetts;
(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 Estimated RTC Charge
Payments for each TPS required to post a bond, letter of
credit or cash deposit pursuant to the applicable TPS Service
Agreement; and
(g) Comply with credit conditions set out in the Financing Order
and applicable TPS Service Agreement.
2. Monitoring TPS Obligations
(a) The Servicer shall require each TPS to pay all undisputed and
all disputed Billed RTC 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 DTE and the Financing Order in the
event of a default in payment.
3. Enforcing TPS Obligations
The Servicer shall promptly take all actions specified by the Financing
Order with respect to amounts not remitted to the Servicer in accordance with
the payment terms specified by the Financing Order, in addition to any other
remedies available at law.
6
