Exhibit 10.1

 

PSNH FUNDING LLC 3,

 

as Issuer

 

and

 

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

 

as Servicer

 

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SERVICING AGREEMENT

 

Dated as of May 8, 2018

 

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TABLE OF CONTENTS

 

ARTICLE 1 DEFINITIONS

1

 

Section 1.01.

Definitions

1

 

Section 1.02.

Other Definitional Provisions

2

ARTICLE 2 APPOINTMENT AND AUTHORIZATION

2

 

Section 2.01.

Appointment of Servicer; Acceptance of Appointment

2

 

Section 2.02.

Authorization

3

 

Section 2.03.

Dominion and Control Over the RRB Property

3

ARTICLE 3 BILLING SERVICES

3

 

Section 3.01.

Duties of Servicer

3

 

Section 3.02.

Servicing and Maintenance Standards

4

 

Section 3.03.

Certificate of Compliance

5

 

Section 3.04.

Annual Report by Independent Public Accountants

6

ARTICLE 4 SERVICES RELATED TO PERIODIC ADJUSTMENTS; REMITTANCES

6

 

Section 4.01.

Periodic Adjustments

6

 

Section 4.02.

Limitation of Liability

9

 

Section 4.03.

Remittances

9

ARTICLE 5 THE RRB PROPERTY

10

 

Section 5.01.

Custody of RRB Property Records

10

 

Section 5.02.

Duties of Servicer as Custodian

10

 

Section 5.03.

Instructions; Authority to Act

12

 

Section 5.04.

Effective Period and Termination

12

 

Section 5.05.

Monitoring of Third Party Suppliers

12

ARTICLE 6 THE SERVICER

12

 

Section 6.01.

Representations and Warranties of Servicer

12

 

Section 6.02.

Indemnities of Servicer

14

 

Section 6.03.

Limitation on Liability of Servicer and Others

16

 

Section 6.04.

Merger or Consolidation of, or Assumption of the Obligations of, Servicer

16

 

Section 6.05.

Public Service Company of New Hampshire Not to Resign as Servicer

17

 

Section 6.06.

Servicing Compensation

18

 

Section 6.07.

Compliance with Applicable Law

18

 

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TABLE OF CONTENTS

(continued)

 

 

Section 6.08.

Access to Certain Records and Information Regarding RRB Property

18

 

Section 6.09.

Appointments

19

 

Section 6.10.

No Servicer Advances

19

 

Section 6.11.

Maintenance of Operations

19

ARTICLE 7 DEFAULT

20

 

Section 7.01.

Servicer Default

20

 

Section 7.02.

Appointment of Successor

21

 

Section 7.03.

Waiver of Past Defaults

22

 

Section 7.04.

Notice of Servicer Default

22

 

Section 7.05.

Cooperation with Successor

22

ARTICLE 8 MISCELLANEOUS PROVISIONS

22

 

Section 8.01.

Amendment

22

 

Section 8.02.

Maintenance of Accounts and Records

23

 

Section 8.03.

Notices

24

 

Section 8.04.

Assignment

25

 

Section 8.05.

Limitations on Rights of Third Parties

25

 

Section 8.06.

Severability

26

 

Section 8.07.

Separate Counterparts

26

 

Section 8.08.

Headings

26

 

Section 8.09.

Governing Law

26

 

Section 8.10.

Assignment to Indenture Trustee

26

 

Section 8.11.

Nonpetition Covenants

26

 

Section 8.12.

Rule 17g-5 Compliance

26

 

Section 8.13.

Protections Afforded to the Indenture Trustee

27

 

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This SERVICING AGREEMENT, dated as of May 8, 2018, is between PSNH Funding LLC
3, a Delaware limited liability company (together with any successor thereto
permitted under the Indenture, as hereinafter defined, the “Issuer”), and Public
Service Company of New Hampshire, a New Hampshire corporation.

 

RECITALS

 

WHEREAS, pursuant to the Financing Act and the Finance Order, the Seller and the
Issuer are concurrently entering into the Sale Agreement pursuant to which the
Seller is selling to the Issuer the RRB Property created pursuant to the
Financing Act and the Finance Order.

 

WHEREAS, in connection with its ownership of the RRB Property and in order to
collect the RRB Charge, the Issuer desires to engage the Servicer to carry out
the functions described herein.  The Servicer currently performs similar
functions for itself with respect to its own charges billed to its Customers. 
In addition, the Issuer desires to engage the Servicer to act on its behalf in
obtaining Periodic Adjustments from the NHPUC.  The Servicer desires to perform
all of these activities on behalf of the Issuer.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

Section 1.01.                          Definitions.  Any capitalized terms used
in this Agreement but not defined herein shall have the meaning given to such
terms in the Indenture.  Whenever used in this Agreement, the following words
and phrases shall have the following meanings:

 

“Agreement” means this Servicing Agreement, together with all Exhibits,
Schedules and Annexes hereto, as the same may be amended and supplemented from
time to time.

 

“Indemnified Person” has the meaning assigned to such term in Section 6.02.

 

“Indenture” means the Indenture dated as of the date hereof between the Issuer
and the Indenture Trustee, as the same may be amended and supplemented from time
to time.

 

“Issuer” has the meaning set forth in the preamble to this Agreement.

 

“Losses” has the meaning assigned to that term in Section 6.02(a).

 

“Officer’s Certificate” means a certificate of the Servicer signed by a
Responsible Officer.

 

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“Responsible Officer” means the chief executive officer, the president, any vice
president, the treasurer, any assistant treasurer, the secretary, the clerk, any
assistant secretary, and assistant clerk, the controller or a director of
corporate finance or cash management of the Servicer.

 

“Servicer” means Public Service Company of New Hampshire, as the servicer of the
RRB Property, or each successor (in the same capacity) pursuant to Section 6.04
or Section 7.02.

 

“Sponsor” means Public Service Company of New Hampshire, in its capacity as
“sponsor” of the Rate Reduction Bonds within the meaning of Regulation AB.

 

“Termination Notice” has the meaning assigned to that term in Section 7.01.

 

Section 1.02.                          Other Definitional Provisions.

 

(a)                                 Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in the Indenture.

 

(b)                                 All terms defined in this Agreement shall
have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.

 

(c)                                  The words “hereof,” “herein,” “hereunder”
and words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement;
Section, Schedule, Exhibit and Annex references contained in this Agreement are
references to Sections, Schedules, Exhibits and Annexes in or to this Agreement
unless otherwise specified; and the term “including” shall mean “including
without limitation.”

 

(d)                                 The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter forms of such terms.

 

ARTICLE 2

 

APPOINTMENT AND AUTHORIZATION

 

Section 2.01.                          Appointment of Servicer; Acceptance of
Appointment.  Subject to Section 6.04 and Article 7, the Issuer hereby appoints
the Servicer, and the Servicer hereby accepts such appointment, to perform the
Servicer’s obligations pursuant to this Agreement on behalf of and for the
benefit of the Issuer or any assignee thereof in accordance with the terms of
this Agreement and applicable law.  This appointment and the Servicer’s
acceptance thereof may not be revoked except in accordance with the express
terms of this Agreement.

 

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Section 2.02.                          Authorization.  With respect to all or
any portion of the RRB Property, the Servicer is authorized and empowered by the
Issuer to (a) execute and deliver, on behalf of itself and/or the Issuer, as the
case may be, any and all instruments, documents or notices, and (b) on behalf of
itself and/or the Issuer, as the case may be, make any filing and participate in
proceedings of any kind with any governmental authorities, including with the
NHPUC.  The Issuer shall execute and/or furnish the Servicer with such documents
as have been prepared by the Servicer or the Administrator for execution by the
Issuer, and with such other documents as may be in the Issuer’s possession, as
the Servicer may determine to be necessary or appropriate to enable it to carry
out its servicing and administrative duties hereunder.  Upon the Servicer’s
written request, the Issuer shall furnish the Servicer with any powers of
attorney or other documents necessary or appropriate to enable the Servicer to
carry out its duties hereunder.

 

Section 2.03.                          Dominion and Control Over the RRB
Property.  Notwithstanding any other provision herein, the Issuer shall have
dominion and control over the RRB Property, and the Servicer, in accordance with
the terms hereof, is acting solely as the servicing agent and custodian for the
Issuer with respect to the RRB Property and the RRB Property Records.  The
Servicer shall not take any action that is not authorized by this Agreement,
that would contravene the Finance Order or that shall impair the rights of the
Issuer or the Indenture Trustee in the RRB Property, in each case unless such
action is required by applicable law or court or regulatory order.

 

ARTICLE 3

 

BILLING SERVICES

 

Section 3.01.                          Duties of Servicer.  The Servicer, as
agent for the Issuer, shall have the following duties:

 

(a)                                 Duties of Servicer Generally.

 

(1)                                 General Duties.  The Servicer’s duties in
general shall include: management, servicing and administration of the RRB
Property; obtaining meter reads, calculating electricity usage (including usage
by Customers of any TPS), billing, collection and posting of all payments in
respect of the RRB Property; responding to inquiries by Customers, the NHPUC, or
any federal, local or other state governmental authorities with respect to the
RRB Property or RRB Charges; delivering Bills to Customers and TPSs,
investigating and handling delinquencies, processing and depositing collections
and making periodic remittances; furnishing periodic reports to the Issuer, the
Indenture Trustee and the Rating Agencies; and taking all necessary action in
connection with Periodic Adjustments as set forth herein.  To the extent allowed
by law and NHPUC Regulations, certain of the duties set forth above may be
performed by TPSs pursuant to TPS Service Agreements.  Without limiting the
generality of this Section 3.01(a)(1), in furtherance of the foregoing, the
Servicer hereby agrees that it shall also have, and shall comply with, the
duties and responsibilities relating to data acquisition,

 

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usage and bill calculation, billing, Customer service functions, collection,
payment processing and remittance set forth in Annex I hereto.

 

(2)                                 NHPUC 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 the Financing Act, the
Finance Order and any NHPUC Regulations as in effect at the time such duties are
to be performed.

 

(b)                                 Reporting Functions.

 

(1)                                 Annual Reconciliation Report.  The Servicer
shall deliver an annual written reconciliation report substantially in the form
of Exhibit E hereto as required by Section 4.03(b) hereof.

 

(2)                                 Notification of Laws and Regulations.  The
Servicer shall promptly notify the Issuer, the Indenture Trustee and the Rating
Agencies in writing of any laws or NHPUC Regulations hereafter promulgated that
have a material adverse effect on the Servicer’s ability to perform its duties
under this Agreement.

 

(3)                                 Other Information.  Upon the reasonable
request of the Issuer, the Indenture Trustee or any Rating Agency, the Servicer
shall provide to such Issuer, Indenture Trustee or such Rating Agency, as the
case may be, any public financial information in respect of the Servicer, or any
material information regarding the RRB Property to the extent it is reasonably
available to the Servicer, as may be reasonably necessary and permitted by law
to enable the Issuer, the Indenture Trustee, or the Rating Agencies to monitor
the Servicer’s performance hereunder.

 

(4)                                 Preparation of Reports to be Filed with the
SEC.  The Servicer shall prepare or cause to be prepared any reports required to
be filed by the Issuer or the Sponsor under the securities laws or other
applicable laws, including, if so required, a copy of (i) each Semi-Annual
Servicer Certificate described in Section 4.01(d)(3) (under Form 10-D or any
other applicable form), (ii) each Certificate of Compliance described in
Section 3.03(a), (iii) any other certificates described in Section 3.03(b) and
(iv) the Annual Accountant’s Report described in Section 3.04 (and any other
attestation required under Regulation AB). In addition, the appropriate officer
or officers of the Servicer shall (in its separate capacity as Sponsor) sign the
Sponsor’s annual report on Form 10-K (and any other applicable SEC or other
reports, attestations, certifications and other documents), to the extent that
the Servicer’s signature is required by, and consistent with, the U.S. federal
securities laws and/or any other applicable law.

 

Section 3.02.                          Servicing and Maintenance Standards.  On
behalf of the Issuer, the Servicer shall (a) manage, service, administer and
make collections in respect of the RRB Property with reasonable care and in
accordance with applicable law, including all applicable NHPUC Regulations and
guidelines, using the same degree of care and diligence that the Servicer
exercises with respect to similar assets for its own account and, if applicable,
for others; (b) follow customary standards, policies and procedures for the
industry in performing its duties as Servicer; (c) use all reasonable efforts,
consistent with

 

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its customary servicing procedures, to bill and collect the RRB Charge; (d) file
all filings under the applicable Uniform Commercial Code or the Financing Act
necessary or desirable to maintain the ownership interest and perfected security
interest of the Issuer and the Indenture Trustee, respectively, in the RRB
Property with the priority required by the Indenture; and (e) comply in all
material respects with all laws and regulations applicable to and binding on it
relating to the RRB Property.  The Servicer shall follow such customary and
usual practices and procedures as it shall deem necessary or advisable in its
servicing of all or any portion of the RRB Property, which, in the Servicer’s
judgment, may include the taking of legal action, at the Issuer’s expense but
subject to the priority of payments set forth in Section 8.02(e) of the
Indenture.

 

Section 3.03.                          Certificate of Compliance.

 

(a)                                 For so long as the Rate Reduction Bonds
remain outstanding, the Servicer shall deliver to the Issuer, the Indenture
Trustee and the Rating Agencies on or before the earlier of (1) March 31 of each
year or (2) with respect to each calendar year during which the Sponsor’s annual
report on Form 10-K is required to be filed in accordance with the Exchange Act
and the rules and regulations thereunder, the date on which such annual report
on Form 10-K is required to be filed in accordance with the Exchange Act and the
rules and regulations thereunder, commencing March 31, 2019, 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, 2019, the
period of time from the date of this Agreement until December 31, 2018) and of
its performance under this Agreement has been made under such Responsible
Officer’s supervision, and (ii) to the best of such Responsible Officer’s
knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement in all material respects throughout such twelve
months (or, in the case of the Certificate of Compliance to be delivered on or
before March 31, 2019 the period of time from the date of this Agreement until
December 31, 2018), or, if there has been a failure to fulfill any such
obligation in any material respect, specifying each such failure known to such
Responsible Officer and the nature and status thereof.

 

(b)                                 The Servicer shall use commercially
reasonable efforts to obtain, from each other party participating in the
servicing function, any additional certifications as to the statements and
assessment required under Item 1122 or Item 1123 of Regulation AB to the extent
required in connection with the filing of the Issuer’s annual report on
Form 10-K; provided, however, that a failure to obtain such certifications shall
not be a breach of the Servicer’s duties hereunder.  The parties acknowledge
that the Indenture Trustee’s certifications shall be limited to the Item 1122
certifications described in Section 6.01(l) of the Indenture.

 

(c)                                  The initial Servicer, in its capacity as
Sponsor, shall post on its or its parent company’s website and cause the Issuer
to file with or furnish to the SEC, in periodic reports and other reports as are
required from time to time under Section 13 or

 

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Section 15(d) of the Exchange Act, the information described in
Section 3.07(g) of the Indenture to the extent such information is reasonably
available to the Sponsor.

 

Section 3.04.                          Annual Report by Independent Public
Accountants.

 

(a)                                 For so long as the Rate Reduction Bonds
remain outstanding, the Servicer, at the Issuer’s expense, shall cause a firm of
independent certified public accountants (which may provide other services to
the Servicer) to prepare, and the Servicer shall deliver to the Issuer, the
Indenture 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
Issuer, the Indenture Trustee and the Rating Agencies, on or before the earlier
of (i) March 31 of each year or (ii) with respect to each calendar year during
which the Sponsor’s annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations thereunder, the
date on which such annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations thereunder,
beginning March 31, 2019, 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, 2019, the period of
time from the date of this Agreement until December 31, 2018), identifying the
results of such procedures and including any exceptions noted. The Annual
Accountant’s Report shall also include any attestation report required under
Item 1122(b) of Regulation AB, as then in effect.

 

(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 Conduct of the American
Institute of Certified Public Accountants or any superseding or amended standard
adopted by the Public Company Accounting Oversight Board.

 

ARTICLE 4

 

SERVICES RELATED TO PERIODIC ADJUSTMENTS;
REMITTANCES

 

Section 4.01.                          Periodic Adjustments.  From time to time,
until the Retirement of the Rate Reduction Bonds, the Servicer shall identify
the need for Periodic Adjustments and shall take all reasonable action to obtain
and implement such Periodic Adjustments, all in accordance with the following:

 

(a)                                 Expected Amortization Schedule.  The
Expected Amortization Schedule is attached hereto as Schedule 4.01(a). If the
Expected Amortization Schedule is revised, the Servicer shall send a copy of
such revised Expected Amortization Schedule to the Issuer, the Indenture Trustee
and the Rating Agencies promptly thereafter.

 

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(b)                                 Routine Periodic Adjustments and Annual
Filings.

 

(1)                                 Annual Routine Periodic Adjustments and
Filings.  For the purpose of preparing an Annual Routine True-Up Letter, the
Servicer shall:  (A) update the assumptions underlying the calculation of the
RRB Charge, including forecasted kWh usage by rate class, the rate of
charge-offs and estimated ongoing transaction costs of the Issuer to the extent
not fixed, for the two Remittance Periods beginning, respectively, on January 1
and July 1 of the year that such Annual Routine True-Up Letter is filed;
(B) update the calculation of Weighted Average Days Outstanding; (C) determine
the Periodic RRB Payment Requirements for such Remittance Periods, based upon
such updated assumptions; and (D) determine the RRB Charge to be charged during
the twelve-month period commencing with the Payment Date immediately following
the filing of such Annual Routine True-Up Letter based upon such Periodic RRB
Payment Requirements.  The Servicer shall file an Annual Routine True-Up Letter
with the NHPUC no later than January 15 of each year.

 

(2)                                 Routine Mid-Year Periodic Adjustments.  The
Servicer shall file a Mid-Year Routine True-Up Letter not later than July 15 of
each year, if the Servicer reasonably projects that Estimated RRB Charge
Payments (without giving effect to the Periodic Adjustments set forth in such
Mid-Year Routine True-Up Letter) will be insufficient to cover the Periodic RRB
Payment Requirements for the Remittance Period beginning on July 1 of such year.

 

(3)                                 Other Routine Periodic Adjustments.  In
addition (a) except during the two Remittance Periods preceding the Final
Maturity Date for the latest maturing Tranche of Rate Reduction Bonds, the
Servicer may (but shall not be required to) file an Other Routine True-Up Letter
not later than the date that is 15 days before the end of any calendar month if
it reasonably projects that Estimated RRB Charge Payments (without giving effect
to the Periodic Adjustments set forth in such Other Routine True-Up Letter) will
be insufficient to cover the Periodic RRB Payment Requirements for the
then-current Remittance Period and (b) during the two Remittance Periods
preceding the Final Maturity Date, if the Servicer reasonably projects that
Estimated RRB Charge Payments (without giving effect to the Periodic Adjustments
set forth in such Other Routine True-Up Letter) will be insufficient to cover
the Periodic RRB Payment Requirements for the then-current Remittance Period,
the Servicer shall file an Other Routine True-Up Letter not later than the date
that is 15 days before the end of the then-current calendar month.

 

(4)                                 Effectiveness of Periodic Adjustments. 
Absent manifest error, the Periodic Adjustments will become effective: (i) in
the case of any Periodic Adjustment contained in any Annual Routine True-Up
Letter, on the ensuing February 1; (ii) in the case of any Periodic Adjustment
contained in any Mid-Year Routine True-Up Letter, on the ensuing August 1; or
(iii) in the case of a Periodic Adjustment related to an Other Routine True-Up
Letter, on the first day of the calendar month following the filing of the
applicable Other Routine True-Up Letter.  The Servicer shall take all reasonable
actions and make all reasonable efforts to secure any Periodic Adjustments.

 

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(c)                                  Non-Routine Periodic Adjustments.

 

(1)                                 Whenever the Servicer determines that the
existing model for calculating the RRB Charge should be amended or revised, the
Servicer shall file a Non-Routine True-Up Letter with the NHPUC designating the
adjustments to such model and any corresponding adjustments to the RRB Charge
(collectively, a “Non-Routine Periodic Adjustment”), subject to the review and
approval of the NHPUC that such adjustment is necessary to ensure the timely
recovery of RRB Costs, with such review and determination to occur within 30
days of such filing.

 

(2)                                 The Servicer shall take all reasonable
actions and make all reasonable efforts to secure any Non-Routine Periodic
Adjustments.

 

(3)                                 The Servicer shall implement any resulting
adjustments to the model and any resulting revised RRB Charge effective upon
review and approval by the NHPUC.

 

(d)                                 Reports.

 

(1)                                 Notification of Advice Letter Filings and
Periodic Adjustments.  Whenever the Servicer files an Advice Letter with the
NHPUC, the Servicer shall send a copy of such filing to the Issuer, the
Indenture Trustee and the Rating Agencies concurrently therewith.  If any
Periodic Adjustment requested in any such Advice Letter filing does not become
effective on the applicable date as provided by the Finance Order, the Servicer
shall notify the Issuer, the Indenture Trustee and the Rating Agencies by the
end of the second Servicer Business Day after such applicable date.

 

(2)                                 Monthly Servicer Certificate.  So long as
any Rate Reduction Bonds are outstanding, not later than fifteen (15) days after
the end of each month after the Rate Reduction Bonds are issued, commencing with
the calendar month ending May 31, 2018, or if such day is not a Servicer
Business Day, the next succeeding Servicer Business Day, the Servicer shall
deliver a written report substantially in the form of Exhibit C hereto (the
“Monthly Servicer Certificate”) to the Issuer, the Trustee and the Rating
Agencies.

 

(3)                                 Semi-Annual Servicer Certificate.  So long
as any Rate Reduction Bonds are outstanding, not later than two Servicer
Business Days immediately preceding each Payment Date, the Servicer shall
deliver a written report substantially in the form of Exhibit D hereto (the
“Semi-Annual Servicer Certificate”) to the Issuer, the Indenture Trustee and the
Rating Agencies.

 

(4)                                 TPS Reports.  The Servicer shall provide to
the Rating Agencies, upon request, any publicly available reports filed by the
Servicer with the NHPUC (or otherwise made publicly available by the Servicer)
relating to TPSs and any other non-confidential and non-proprietary information
relating to TPSs reasonably requested by the Rating Agencies.

 

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Section 4.02.                          Limitation of Liability.

 

(a)                                 The Issuer and the Servicer expressly agree
and acknowledge that:

 

(1)                                 In connection with any Periodic Adjustment,
the Servicer is acting solely in its capacity as the servicing agent hereunder.

 

(2)                                 Neither the Servicer nor the Issuer shall be
responsible in any manner for, and shall have no liability whatsoever as a
result of, any action, decision, ruling or other determination made or not made,
or any delay (other than any delay resulting from the Servicer’s failure to file
for Periodic Adjustments or Non-Routine Periodic Adjustments required by
Section 4.01 in a timely and correct manner or other material breach by the
Servicer of its duties under this Agreement that materially and adversely
affects the RRB Property, any Periodic Adjustments or Non-Routine Periodic
Adjustments), by the NHPUC in any way related to the RRB Property or in
connection with any Periodic Adjustment or Non-Routine Periodic Adjustment, the
subject of any filings under Section 4.01, any proposed Periodic Adjustment or
Non-Routine Periodic Adjustment, or the approval of the RRB Charge and the
adjustments thereto.

 

(3)                                 Except to the extent that the Servicer is
liable under Section 6.02, the Servicer shall have no liability whatsoever
relating to the calculation of the RRB Charge and the adjustments thereto
(including any Non-Routine Periodic Adjustment), including as a result of any
inaccuracy of any of the assumptions made in such calculation regarding expected
forecasted kWh usage by rate class, the rate of charge-offs, Weighted Average
Days Outstanding and estimated ongoing transaction costs of the Issuer, so long
as the Servicer has acted in good faith and 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 Holders, not receiving any
payment, amount or return anticipated or expected in respect of any Rate
Reduction Bond generally.

 

(b)                                 Notwithstanding the foregoing, this
Section 4.02 shall not relieve the Servicer of any liability under Section 6.02
for any misrepresentation by the Servicer under Section 6.01 or for any breach
by the Servicer of its obligations under this Agreement.

 

Section 4.03.                          Remittances.

 

(a)                                 Subject to Section 4.03(b) below, on each
Servicer Business Day, commencing approximately the Weighted Average Days
Outstanding after the date of this Agreement, the Servicer will cause to be made
within two Servicer Business Days of deemed receipt, a wire transfer of
immediately available funds to the Collection Account in an amount equal to the
Estimated RRB Charge Payments (as calculated in accordance with Annex I hereto)
received on such Servicer Business Day and on any prior day that was not a
Servicer Business Day for which a Remittance has not previously been made
(taking into account the Weighted Average Days Outstanding in effect from time
to time).  Prior to or simultaneous with each Remittance to the Collection
Account pursuant to this

 

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Section, the Servicer shall provide written notice to the Indenture Trustee of
each such Remittance (including the exact dollar amount to be remitted).

 

(b)                                 On or before March 1 of each year, 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 Collection Account on the next Servicer
Business Day following such calculation in the amount of such Remittance
Shortfall, or (B) if a Remittance Excess exists, the Servicer may reduce the
amount of Remittances to be made to the Issuer on succeeding Servicer Business
Days in an amount 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 Excess or Remittance Shortfall to the Issuer, the Indenture
Trustee and the Rating Agencies as in Exhibit E.

 

(c)                                  The Servicer agrees and acknowledges that
it holds all Estimated RRB Charge Payments and any other proceeds for RRB
Collateral received by it for the benefit of the Indenture Trustee and the
Holders and that all such amounts will be remitted by the Servicer 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 and interest earnings permitted by Section 6.06.

 

ARTICLE 5

 

THE RRB PROPERTY

 

Section 5.01.                          Custody of RRB Property Records.  To
assure uniform quality in servicing the RRB Property and to reduce
administrative costs, the Issuer hereby revocably appoints the Servicer, and the
Servicer hereby accepts such appointment, to act as the agent of the Issuer as
custodian of any and all documents and records that the Servicer shall keep on
file, in accordance with its customary procedures, relating to the RRB Property,
including copies of the Finance Order and Advice Letters relating thereto and
all documents filed with the NHPUC in connection with any Periodic Adjustment or
Non-Routine Periodic Adjustment and computational records relating thereto
(collectively, the “RRB Property Records”), which are hereby constructively
delivered to the Indenture Trustee, as pledgee of the Issuer with respect to all
RRB Property.

 

Section 5.02.                          Duties of Servicer as Custodian.

 

(a)                                 Safekeeping.  The Servicer shall hold the
RRB Property Records on behalf of the Issuer and the Indenture Trustee and
maintain such accurate and complete accounts, records and computer systems
pertaining to the RRB Property Records on behalf of the Issuer and the Indenture
Trustee as shall enable the Issuer and the Indenture Trustee, as applicable to
comply with this Agreement, the Sale Agreement and the 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

 

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others.  The Servicer shall promptly report to the Issuer, the Indenture Trustee
and the Rating Agencies any failure on its part to hold the RRB Property Records
and maintain its accounts, records and computer systems as herein provided and
promptly take appropriate action to remedy any such failure.  Nothing herein
shall be deemed to require an initial review or any periodic review by the
Issuer or the Indenture Trustee of the RRB Property Records.  The Servicer’s
duties to hold the RRB Property Records on behalf of the Issuer set forth in
this Section 5.02, to the extent such RRB Property Records have not been
previously transferred to a successor Servicer pursuant to Article 7, shall
terminate one year and one day after the earlier of the date on which (i) the
Servicer is succeeded by a successor Servicer in accordance with Article 7 and
(ii) no Rate Reduction Bonds are outstanding.

 

(b)                                 Maintenance of and Access to Records. The
Servicer shall maintain at all times records and accounts that permit the
Servicer to identify RRB Charges billed.  The Servicer shall maintain the RRB
Property Records at PSNH’s corporate offices or at such other office as shall be
specified to the Issuer and the Indenture Trustee by written notice at least 30
days prior to any change in location.  The Servicer shall make available for
inspection to the Issuer, the Indenture Trustee, the NHPUC or their respective
duly authorized representatives, attorneys or auditors the RRB Property Records
at such times during normal business hours as the Issuer, the Indenture Trustee
or the NHPUC shall reasonably request and which do not unreasonably interfere
with the Servicer’s normal operations.

 

(c)                                  Release of Documents.  Upon instruction
from the Indenture Trustee in accordance with the Indenture, the Servicer shall
release any RRB Property Records to the Indenture Trustee, the Indenture
Trustee’s agent or the Indenture Trustee’s designee, as the case may be, at such
place or places as the Indenture Trustee may designate, as soon as practicable.

 

(d)                                 Defending RRB Property Against Claims.  The
Servicer, on behalf of the Issuer and the Holders, shall institute any action or
proceeding necessary to compel performance by the NHPUC or the State of New
Hampshire of any of their obligations or duties under the Financing Act, the
Finance Order or any Advice Letter with respect to any Periodic Adjustment, 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 Financing Act or the Finance Order or the rights of holders
of RRB Property by executive action, legislative enactment or constitutional
amendment or (if such means become available in the future) referendum or
initiative petition that would be adverse to Holders, the Issuer or the
Indenture Trustee.  The costs of any such action shall be payable from RRB
Charge Collections as an Operating Expense in accordance with the priorities set
forth in Section 8.02(e) of the Indenture.  The Servicer’s obligations pursuant
to this Section 5.02 shall survive and continue notwithstanding the fact that
the payment of Operating Expenses pursuant to Section 8.02(e) of the Indenture
may be delayed (it being understood that the Servicer may be required to advance
its own funds to satisfy its obligations hereunder).

 

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(e)                                  Nothing in this Section 5.02 shall affect
the obligation of the Servicer to observe any applicable law (including any
NHPUC Regulations) prohibiting disclosure of information regarding the
Customers, and the failure of the Servicer to provide access to such information
as a result of such obligation shall not constitute a breach of this
Section 5.02.

 

Section 5.03.                          Instructions; Authority to Act.  For so
long as any Rate Reduction Bonds remain outstanding, the Servicer shall be
deemed to have received proper instructions with respect to the RRB Property
Records upon its receipt of written instructions signed by a Responsible Officer
(as defined in the Indenture) of the Indenture Trustee pursuant to the
Indenture.

 

Section 5.04.                          Effective Period and Termination.  The
Servicer’s appointment as custodian shall become effective as of the Closing
Date and shall continue in full force and effect until terminated pursuant to
this Section 5.04.  If any Servicer shall resign as Servicer in accordance with
the provisions of this Agreement or if all of the rights and obligations of any
Servicer shall have been terminated under Section 7.01, the appointment of such
Servicer as custodian shall terminate upon appointment of a successor Servicer,
subject to the approval of the NHPUC, and acceptance by such successor Servicer
of such appointment.

 

Section 5.05.                          Monitoring of Third Party Suppliers. 
From time to time, until the Retirement of the Rate Reduction Bonds, the
Servicer shall, using the same degree of care and diligence that it exercises
with respect to payments owed to it for its own account, implement such
procedures and policies as are necessary to properly enforce the obligations of
each TPS to remit RRB Charges, in accordance with the terms and provisions of
the Finance Order, the TPS Service Agreement and Schedule A to Annex I hereto.

 

ARTICLE 6

 

THE SERVICER

 

Section 6.01.                          Representations and Warranties of
Servicer.  The Servicer makes the following representations and warranties, as
of the Closing Date, and as of such other dates as expressly provided in this
Section 6.01, on which the Issuer is deemed to have relied in entering into this
Agreement relating to the servicing of the RRB Property. The representations and
warranties shall survive the execution and delivery of this Agreement, the sale
of any RRB Property and the pledge thereof to the Indenture Trustee pursuant to
the Indenture.

 

(a)                                 Organization and Good Standing.  The
Servicer is duly organized and validly existing as a corporation in good
standing under the laws of the State of New Hampshire, with the requisite
corporate power and authority to own its properties as such properties are
currently owned and to conduct its business as such business is currently
conducted by it, and has the requisite corporate power and authority to service
the RRB Property and to hold the RRB Property Records as custodian.

 

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(b)                                 Due Qualification.  The Servicer is duly
qualified to do business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business (including the
servicing of the RRB Property as required by this Agreement) shall require such
qualifications, licenses or approvals (except where the failure to so qualify or
obtain such licenses and approvals would not be reasonably likely to have a
material adverse effect on the Servicer’s business, operations, assets, revenues
or properties or adversely affect the servicing of the RRB Property).

 

(c)                                  Power and Authority.  The Servicer has the
requisite corporate power and authority to execute and deliver this Agreement
and to carry out its terms; and the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action on the
part of the Servicer.

 

(d)                                 Binding Obligation.  This Agreement
constitutes a legal, valid and binding obligation of the Servicer enforceable
against it in accordance with its terms, subject to applicable insolvency,
reorganization, moratorium, fraudulent transfer and other laws relating to or
affecting creditors’ rights generally from time to time in effect and to general
principles of equity (including concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether considered in a proceeding in
equity or at law.

 

(e)                                  No Violation.  The consummation of the
transactions contemplated by this Agreement and the fulfillment of the terms
hereof do not: (i) conflict with or result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time) a
default under, the articles of organization or by-laws of the Servicer, or any
material indenture, agreement or other instrument to which the Servicer is a
party or by which it is bound; (ii) result in the creation or imposition of any
Lien upon any of the Servicer’s properties pursuant to the terms of any such
indenture, agreement or other instrument; nor (iii) violate any existing law or
any existing order, rule or regulation applicable to the Servicer of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties, so as to adversely affect the Servicer, the Issuer or the Holders.

 

(f)                                   No Proceedings.  There are no proceedings
pending and, to the Servicer’s knowledge, there are no proceedings threatened
and, to the Servicer’s knowledge, there are no investigations pending or
threatened, before any court, federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Servicer or its properties involving or relating to the Servicer or the Issuer
or, to the Servicer’s knowledge, any other Person: (i) asserting the invalidity
of this Agreement; (ii) seeking to prevent the issuance of the Rate Reduction
Bonds or the consummation of any of the transactions contemplated by this
Agreement or any of the other Basic Documents; (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 or any of the other Basic Documents; or (iv)

 

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seeking to adversely affect the U.S. federal income tax, state income tax or
franchise tax classification of the Rate Reduction Bonds as debt.

 

(g)                                  Approvals.  No approval, authorization,
consent, order or other action of, or filing with, any court, federal or state
regulatory body, administrative agency or other governmental instrumentality is
required in connection with the execution and delivery by the Servicer of this
Agreement, the performance by the Servicer of the transactions contemplated
hereby or the fulfillment by the Servicer of the terms hereof, except those that
have been obtained or made and those that the Servicer is required to make in
the future pursuant to Article 3 or Article 4 hereof and post-closing filings in
connection therewith.

 

(h)                                 Reports and Certificates. Each report and
certificate delivered in connection with any filing made to the NHPUC by the
Issuer with respect to the RRB Charges or Periodic Adjustments will constitute a
representation and warranty by the Servicer that each such report or
certificate, as the case may be, is true and correct in all material respects;
provided, however, that, to the extent any such report or certificate is based
in part upon or contains assumptions, forecasts or other predictions of future
events, the representation and warranty of the Servicer with respect thereto
will be limited to the representation and warranty that such assumptions,
forecasts or other predictions of future events are believed by the Servicer to
be reasonable based upon historical performance (and facts known to the Servicer
on the date such report or certificate is delivered).

 

Section 6.02.                          Indemnities of Servicer.

 

(a)                                 The Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the
Servicer and as expressly provided under this Section 6.02.

 

(b)                                 The Servicer shall indemnify the Issuer and
the Holders (each an “Indemnified Person” for purposes of Sections 6.02(b) and
(d)) for, and defend and hold harmless each such Person from and against, any
and all liabilities, obligations, losses, actual 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 RRB Property Records) or
(ii) the Servicer’s breach in any material respect of any of its representations
or warranties in this Agreement; provided, however, that the Servicer shall not
be liable for any Losses resulting from the willful misconduct or gross
negligence of any such Indemnified Person; and, provided, further, that the
Holders shall be entitled to enforce their rights and remedies against the
Servicer under this Section 6.02(b) solely through a cause of action brought for
their benefit by the Indenture Trustee.

 

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(c)                                  The Servicer shall indemnify and hold
harmless the Indenture Trustee and any of its respective affiliates, officials,
officers, directors, employees, consultants, counsel and agents (each an
“Indemnified Person” for purposes of Section 6.02(c) and (d)) for, and defend
and hold harmless each such Person from and against, any and all Losses imposed
on, incurred by or asserted against any of such Indemnified Persons as a result
of: (i) the Servicer’s willful misconduct or 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 RRB Property Records) or
(ii) the Servicer’s breach in any material respect of any of its representations
or warranties in this Agreement; provided, however, that the Servicer shall not
be liable for any Losses resulting from the willful misconduct or gross
negligence of such Indemnified Person or resulting from a breach of a
representation or warranty made by such Indemnified Person in any of the Basic
Documents that gives rise to the Servicer’s breach.

 

(d)                                 The Servicer shall not be required to
indemnify an Indemnified Person for any amount paid or payable by such
Indemnified Person 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(d), 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, 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, the Servicer shall be
entitled to assume the defense of any such action, proceeding or investigation. 
Upon assumption by the Servicer of the defense of any such action, proceeding or
investigation, the Indemnified Person shall have the right to participate in
such action or proceeding and to retain its own counsel.  The Servicer shall be
entitled to appoint counsel of the Servicer’s choice at the Servicer’s expense
to represent the Indemnified Person in any action, proceeding or investigation
for which a claim of indemnification is made against the Servicer under this
Section 6.02 (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 one local counsel in each relevant
jurisdiction), and the Servicer shall bear the reasonable and documented
out-of-pocket 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

 

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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.  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 (whether or not the
Indemnified Person is an actual or potential party to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of the Indemnified Person from all liability arising out of such claim, action,
suit or proceeding.

 

(e)                                  The right to indemnification under this
Section 6.02 shall survive the resignation or removal of the Indenture Trustee
and/or the termination of this Agreement and shall include reasonable and
documented out-of-pocket fees and expenses of investigation and litigation
(including reasonable and documented out-of-pocket attorneys’ fees and
expenses), except as otherwise provided in this Agreement.

 

(f)                                   For purposes of this Section 6.02, in the
event of the termination of the rights and obligations of Public Service Company
of New Hampshire (or any successor thereto pursuant to Section 6.04) as Servicer
pursuant to Section 7.01, or a resignation by such Servicer pursuant to this
Agreement, such Servicer shall be deemed to be the Servicer pending appointment
of a successor Servicer pursuant to Section 7.02.

 

Section 6.03.                          Limitation on Liability of Servicer and
Others.  Except as otherwise provided under this Agreement, neither the Servicer
nor any of the directors, officers, employees or agents of the Servicer shall be
liable to the Issuer or any other Person for any action taken or for refraining
from the taking of any action pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall not protect the Servicer
or any director, officer, employee or agent of the Servicer against any
liability that would otherwise be imposed by reason of willful misconduct or
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 Indenture
Trustee or on any document of any kind, prima facie properly executed and
submitted by any Person, respecting any matters arising under this Agreement. 
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action relating to the
RRB Property; provided, however, that the Servicer may, in respect of any
proceeding, undertake any action that it is not specifically identified in this
Agreement as a duty of the Servicer but that the Servicer reasonably determines
is necessary or desirable in order to protect the rights and duties of the
Issuer or the Indenture Trustee under this Agreement and the interests of the
Holders and Customers under this Agreement.

 

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

 

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whole, which Person in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Servicer hereunder, shall be the
successor to the Servicer under this Agreement without further act on the part
of any of the parties to this Agreement; provided, however, that (i) immediately
after giving effect to such transaction, no Servicer Default and no event which,
after notice or lapse of time, or both, would become a Servicer Default shall
have occurred and be continuing, (ii) the Servicer shall have delivered to the
Issuer and the Indenture Trustee an Officers’ Certificate stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions precedent provided for in this Agreement
relating to such transaction have been complied with, (iii) the Servicer shall
have delivered to the Issuer and the Indenture Trustee an Opinion of Counsel
stating that, in the opinion of such counsel (A) all conditions precedent to
such consolidation, merger or succession and such agreement of assumption
provided for in this Agreement relating to such transaction have been complied
with and (B) either (1) all filings to be made by the Servicer, including
filings with the NHPUC pursuant to the Financing Act and filings under the
applicable Uniform Commercial Code, have been executed and filed that are
necessary to preserve and protect fully the interests of the Issuer and the
Indenture Trustee in the RRB Property and reciting the details of such filings
or (2) no such action shall be necessary to preserve and protect such interests,
(iv) the Servicer shall have delivered to the Issuer, the Indenture Trustee and
the Rating Agencies an Opinion of Counsel from independent tax counsel stating
that, for U.S. federal income tax purposes, such consolidation, conversion,
merger or succession and such agreement of assumption will not result in a
material adverse U.S. federal income tax consequence to the Issuer or the
Holders and (v) 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.                          Public Service Company of New Hampshire
Not to Resign as Servicer.  Subject to the provisions of Section 6.04, Public
Service Company of New Hampshire shall not resign from the obligations and
duties hereby imposed on it as Servicer under this Agreement except upon either
(a) a determination by Public Service Company of New Hampshire 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 and (ii) the NHPUC shall have approved such
resignation.  Notice of any such determination permitting the resignation of
Public Service Company of New Hampshire shall be communicated to the Issuer, the
Indenture Trustee and the Rating Agencies at the earliest practicable time (and,
if such communication is not in writing, shall be confirmed in writing at the
earliest practicable time) and any such determination that the performance of
Public Service Company of New Hampshire’s duties under this Agreement shall no
longer be permissible under applicable law shall be evidenced by an Opinion of
Counsel to such effect delivered by Public Service Company of New Hampshire to
the Issuer and the Indenture Trustee concurrently with or promptly after such
notice.  No such resignation shall become

 

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effective until a successor Servicer shall have assumed the responsibilities and
obligations of Public Service Company of New Hampshire in accordance with
Section 7.02.

 

Section 6.06.                          Servicing Compensation.

 

(a)                                 In consideration for its services hereunder,
until the collection in full of the RRB Charges, the Servicer shall receive
(x) an annual fee (the “Servicing Fee”) in an amount equal to (i) five
one-hundredths of one percent (0.05%) of the initial principal balance of the
Rate Reduction Bonds for so long as the Servicer is Public Service Company of
New Hampshire or any successor Servicer that bills the RRB Charge concurrently
with other charges for services or (ii) up to six tenths of one percent (0.60%)
of the initial principal balance of the Rate Reduction Bonds for so long as the
Servicer is a successor Servicer that bills the RRB Charge separately to
Customers (which amount shall be determined by a separate agreement between the
Issuer and the Servicer) and (y) an initial fee payable on the Closing Date of
$50,000. The Servicing Fee shall be payable in semi-annual installments on each
Payment Date. The Servicer also shall be entitled to retain as additional
compensation (i) any interest earnings on RRB Charge Collections 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 to the extent consistent with the
Tariff.

 

(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, on each Payment Date in accordance with the priorities
set forth in Section 8.02(e) of the 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 Issuer shall pay all expenses incurred
by the Servicer in connection with its activities hereunder (including any
reasonable and documented out-of-pocket 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 Holders, subject to the priorities set forth in
Section 8.02(e) of the Indenture).

 

Section 6.07.                          Compliance with Applicable Law.  The
Servicer covenants and agrees, in servicing the RRB Property, to comply in all
material respects with all laws applicable to, and binding upon, the Servicer
and relating to such RRB Property the noncompliance with which would have a
material adverse effect on the value of the RRB Property; provided, however,
that the foregoing is not intended to, and shall not, impose any liability on
the Servicer for noncompliance with any law that the Servicer is contesting in
good faith in accordance with its customary standards and procedures.

 

Section 6.08.                          Access to Certain Records and Information
Regarding RRB Property.  The Servicer shall provide to the Holders, the Issuer
and the Indenture

 

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Trustee access to the RRB Property Records in such cases where the Holders, the
Issuer or the Indenture Trustee shall be required by applicable law to be
provided access to such records.  Access shall be afforded without charge, but
only upon reasonable request and during normal business hours at the respective
offices of the Servicer.  Nothing in this Section shall affect the obligation of
the Servicer to observe any applicable law (including any NHPUC Regulation)
prohibiting disclosure of information regarding the Customers, and the failure
of the Servicer to provide access to such information as a result of such
obligation shall not constitute a breach of this Section.

 

Section 6.09.                          Appointments.

 

(a)                                 The Servicer may at any time appoint any
Person to perform all or any portion of its obligations as Servicer hereunder;
provided, however, that the Rating Agency Condition shall have been satisfied in
connection therewith; and, provided, further, that the Servicer shall remain
obligated and be liable under this Agreement for the servicing and administering
of the RRB Property in accordance with the provisions hereof without diminution
of such obligation and liability by virtue of the appointment of such Person and
to the same extent and under the same terms and conditions as if the Servicer
alone were servicing and administering the RRB Property; and, provided, further,
however, that nothing herein (including the Rating Agency Condition) shall
preclude the engagement of any Person to provide lockbox or similar payment
processing services. The fees and expenses of any such Person shall be as agreed
between the Servicer and such Person from time to time and none of the Issuer,
the Indenture Trustee, the Holders or any other Person shall have any
responsibility therefor or right or claim thereto.  Any such appointment shall
not constitute a Servicer resignation under Section 6.05.

 

(b)                                 The Servicer, in carrying out the foregoing
duties or any of its other obligations under this Agreement, may enter into
transactions with or otherwise deal with any of its Affiliates to obtain the
services of such Affiliates as is its current practice; provided, however, that
the terms of any such transactions or dealings shall be no less favorable to the
Issuer than would be available from unaffiliated parties or that would be
available if the Servicer were to hire its own employees to perform such
services.

 

Section 6.10.                          No Servicer Advances.  Except with regard
to Remittances of Estimated RRB Charge Payments, the Servicer shall not make any
advances of interest on or principal of the Rate Reduction Bonds.

 

Section 6.11.                          Maintenance of Operations.  The Servicer
agrees to continue to operate its distribution system to provide service to its
Customers so long as it is acting as the Servicer under this Agreement.

 

19

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ARTICLE 7

 

DEFAULT

 

Section 7.01.                          Servicer Default.  If any one of the
following events (each a “Servicer Default”) shall occur and be continuing:

 

(a)                                 any failure by the Servicer to remit to the
Collection Account on behalf of the Issuer any required Remittance that shall
continue unremedied for a period of five (5) Servicer Business Days after
written notice of such failure is received by the Servicer from the Issuer or
the Indenture Trustee or after discovery of such failure by a Responsible
Officer of the Servicer; or

 

(b)                                 any failure on the part of the Servicer, or
so long as the Servicer is Public Service Company of New Hampshire or an
affiliate thereof, any failure on the part of Public Service Company of New
Hampshire, as the case may be, duly to observe or to perform in any material
respect any other covenants or agreements of the Servicer or Public Service
Company of New Hampshire, as the case may be, set forth in this Agreement (other
than as provided in Section 7.01(a) or Section 7.01(c)) or any other Basic
Document to which it is a party, which failure shall (a) materially and
adversely affect the rights of the Holders and (ii) continue unremedied for a
period of 60 days after (A) the date on which written notice of such failure,
requiring the same to be remedied, shall have been given (I) to the Servicer, or
Public Service Company of New Hampshire, as the case may be, by the Issuer or
(II) to the Servicer, or Public Service Company of New Hampshire, as the case
may be, by the Indenture Trustee or by the Holders of Rate Reduction Bonds
evidencing not less than 25 percent of the Outstanding Amount of the Rate
Reduction Bonds or (B) such failure is discovered by a Responsible Officer of
the Servicer; or

 

(c)                                  any failure by the Servicer duly to perform
its obligations under Section 4.01(b) in the time and manner set forth therein,
which failure continues unremedied for a period of five Business Days;

 

(d)                                 any representation or warranty made by the
Servicer in this Agreement or any other Basic Document, to the extent it is a
party, shall prove to have been incorrect in any material respect when made,
which has a material adverse effect on the Holders and which material adverse
effect continues unremedied for a period of 60 days after written notice of such
failure is received by the Servicer from the Issuer or the Indenture Trustee; or

 

(e)                                  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 Indenture Trustee (acting at the written direction of
the Holders of Rate Reduction Bonds evidencing a majority of the Outstanding
Amount of the Rate Reduction Bonds), or the Holders of Rate Reduction Bonds
evidencing not less than 25 percent of the Outstanding Amount of the Rate
Reduction Bonds, by notice then given in

 

20

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writing to the Servicer (and to the Indenture Trustee if given by the Holders)
(a “Termination Notice”) may terminate all the rights and obligations (other
than the obligations set forth in Section 6.02 and the obligations under
Section 7.02 to continue performing its functions as Servicer until a successor
Servicer is appointed) 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 NHPUC for sequestration and payment of revenues arising
with respect to the RRB Property in accordance with RSA 369-B:7, VI and VIII:
(1) the Holders or the Indenture Trustee; (2) the Issuer or its assignees; or
(3) pledgees or transferees of the RRB Property.  On or after the receipt by the
Servicer of a Termination Notice, and subject to the approval of the NHPUC, all
authority and power of the Servicer under this Agreement, whether with respect
to the Rate Reduction Bonds, the RRB Property, the RRB Charge or otherwise,
shall, without further action, pass to and be vested in such successor Servicer
as may be appointed under Section 7.02; and, without limitation, the Indenture
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
the predecessor Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such Termination
Notice, whether to complete the transfer of the RRB Property Records and related
documents, or otherwise.  The predecessor Servicer shall cooperate with the
successor Servicer, the Issuer and the Indenture Trustee in effecting the
termination of the responsibilities and rights of the predecessor Servicer under
this Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Servicer for remittance, or shall thereafter be received by it with
respect to the RRB Property or the RRB Charge.  In case a successor Servicer is
appointed as a result of a Servicer Default, all reasonable costs and expenses
(including reasonable attorneys’ fees and expenses) incurred in connection with
transferring the RRB Property Records to the successor Servicer and amending
this Agreement to reflect such succession as Servicer pursuant to this
Section shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses.  Termination of Public
Service Company of New Hampshire as Servicer shall not terminate Public Service
Company of New Hampshire’s rights or obligations under the Sale Agreement
(except rights thereunder deriving from its rights as the Servicer hereunder).
All other reasonable costs and expenses incurred in transferring servicing
responsibilities to a successor servicer shall constitute Operating Expenses of
the Issuer.

 

Section 7.02.                          Appointment of Successor.

 

(a)                                 Upon the Servicer’s receipt of a Termination
Notice pursuant to Section 7.01 or the Servicer’s resignation or removal in
accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, and shall be
entitled to receive the requisite portion of the Servicing Fee and reimbursement
of expenses as provided herein, until a successor Servicer shall have assumed in
writing the obligations of the Servicer hereunder as described below.  In the
event of the Servicer’s termination hereunder, the Issuer shall appoint, subject
to the approval of the NHPUC, a successor Servicer, and the successor Servicer
shall accept its appointment by a written assumption.  If within 30 days after

 

21

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the delivery of the Termination Notice, the Issuer shall not have obtained such
a new Servicer, the Indenture Trustee (acting at the written direction of the
Holders of Rate Reduction Bonds evidencing a majority of the Outstanding Amount
of the Rate Reduction Bonds) may appoint (subject to the approval of the NHPUC)
or petition the NHPUC or a court of competent jurisdiction to appoint a
successor Servicer under this Agreement.  A Person shall qualify as a successor
Servicer only if (i) such Person is permitted under NHPUC Regulations to perform
the duties of the Servicer, (ii) the Rating Agency Condition shall have been
satisfied and (iii) such Person assumes in writing the obligations of the
Servicer hereunder or enters into a servicing agreement with the Issuer having
substantially the same provisions as this Agreement.

 

(b)                                 Upon appointment, the successor Servicer
shall be the successor in all respects to the predecessor Servicer and shall be
subject to all the responsibilities, duties and liabilities arising thereafter
relating thereto placed on the predecessor Servicer and shall be entitled to the
Servicing Fee and all the rights granted to the predecessor Servicer by the
terms and provisions of this Agreement.

 

Section 7.03.                          Waiver of Past Defaults.  The Holders of
Rate Reduction Bonds evidencing not less than a majority of the Outstanding
Amount of the Rate Reduction Bonds may, on behalf of all Holders, waive in
writing any default by the Servicer in the performance of its obligations
hereunder and its consequences, except a default in making any required
Remittances to the Collection Account in accordance with this Agreement.  Upon
any such waiver of a past default, such default shall cease to exist, and any
Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement.  No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto.

 

Section 7.04.                          Notice of Servicer Default.  The Servicer
shall deliver to the Issuer, the Indenture Trustee and the Rating Agencies,
promptly after any of its Responsible Officers having obtained actual knowledge
thereof, but in no event later than five Servicer Business Days thereafter,
written notice in an Officer’s 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(b) or Section 7.01(c).

 

Section 7.05.                          Cooperation with Successor.  The Servicer
covenants and agrees with the Issuer that it will, 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, cooperate with the
successor Servicer and provide any requested information as is reasonably
necessary to assist the transition of services under this Agreement and the
Basic Documents to any successor Servicer.

 

22

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ARTICLE 8

 

MISCELLANEOUS PROVISIONS

 

Section 8.01.                          Amendment.

 

(a)                                 This Agreement may be amended in writing by
the Servicer and the Issuer with ten Business Days’ prior written notice given
to the Rating Agencies and the prior written consent of the Indenture Trustee
(which consent shall be given in reliance on an Opinion of Counsel and an
Officer’s Certificate stating that such amendment is permitted or authorized
under and adopted in accordance with the provisions of this Agreement, upon
which the Indenture Trustee may conclusively rely), but without the consent of
any of the Holders, (i) 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 Holders; provided, however, that
such action shall not, as evidenced by an Officer’s Certificate delivered to the
Issuer and the Indenture Trustee, adversely affect in any material respect the
interests of any Holder or (ii) to conform the provisions hereof to the
description of this Agreement in the Prospectus.

 

(b)                                 This Agreement may also be amended in
writing from time to time by the Servicer and the Issuer with the written
consent of the Indenture Trustee and with the written consent of the Holders of
Rate Reduction Bonds evidencing not less than a majority of the Outstanding
Amount of the Rate Reduction Bonds and the satisfaction of the Rating Agency
Condition, 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 Holders.

 

(c)                                  It shall not be necessary for the consent
of Holders 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.

 

(d)                                 Promptly after the execution thereof, the
Issuer shall provide each of the Rating Agencies with a copy of any amendment to
this Agreement.

 

(e)                                  Prior to its consent to any amendment to
this Agreement, the Indenture Trustee shall be entitled to receive and
conclusively rely upon an Officer’s Certificate and Opinion of Counsel complying
with Section 10.01 of the Indenture and stating that such amendment is
authorized or permitted by this Agreement.  The Indenture Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Indenture
Trustee’s own rights, duties or immunities under this Agreement or otherwise.

 

Section 8.02.                          Maintenance of Accounts and Records.

 

(a)                                 The Servicer shall maintain accounts and
records as to the RRB Property accurately and in accordance with its standard
accounting procedures and in sufficient detail to permit reconciliation between
RRB Charges Collections and Deemed RRB Charge Payments.

 

(b)                                 The Servicer shall permit the Issuer and the
Indenture Trustee and its agents at any time during normal business hours, upon
reasonable notice to the

 

23

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Servicer and to the extent it does not unreasonably interfere with the
Servicer’s normal operations, to inspect, audit and make copies of and abstracts
from the Servicer’s records regarding the RRB Property and the RRB Charge. 
Nothing in this Section 8.02(b) shall affect the obligation of the Servicer to
observe any applicable law (including any NHPUC Regulation) prohibiting
disclosure of information regarding the Customers, and the failure of the
Servicer to provide access to such information as a result of such obligation
shall not constitute a breach of this Section 8.02(b).

 

Section 8.03.                          Notices.  Unless otherwise specifically
provided herein, all notices, directions, consents and waivers required under
the terms and provisions of this Agreement shall be in writing and shall be
effective (i) upon receipt when sent through the mails, registered or certified
mail, return receipt requested, postage prepaid, with such receipt to be
effective the date of delivery indicated on the return receipt, (ii) upon
receipt when sent by an overnight courier, (iii) on the date personally
delivered to an authorized officer of the party to which sent or (iv) on the
date transmitted by facsimile or other electronic transmission with a
confirmation of receipt in all cases, addressed as follows:

 

(a)                                 if to the Servicer, to

 

Eversource Energy Service Company,

as agent for Public Service Company of New Hampshire

Corporate Finance, 247 Station Drive

Westwood, MA 02090-9230

Phone: (781) 441-8127 or (781) 441-8153

Email: Emilie.oneil@eversource.com or

Cathy.shannon@eversource.com

 

(b)                                 if to the Issuer, to

 

Public Service Company of New Hampshire

as agent for PSNH Funding LLC 3

780 N. Commercial Street

Manchester, NH 03101

Phone: (781) 441-8127 or (781) 441-8153

Email: Emilie.oneil@eversource.com or Cathy.shannon@eversource.com

 

(c)                                  if to the Indenture Trustee, to

 

The Bank of New York Mellon

101 Barclay Street, 7 West,

New York, New York 10286,

Attention: Asset Backed Securities Unit

Telephone: (212) 815-2483

Email: helen.choi@bnymellon.com

 

(d)                                 if to Fitch, to

 

24

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Fitch Ratings Inc.,

33 Whitehall Street,

New York, New York 10004,

Attention: ABS Surveillance

Telephone: (212) 908-0500,

Email: surveillance-abs-other@fitchratings.com (all such notices to be delivered
to Fitch in writing by email);

 

(e)                                  if to Moody’s, to

 

in the case of Moody’s, to Moody’s Investors Service, Inc.,

ABS/RMBS Monitoring Department,

25th Floor, 7 World Trade Center, 250 Greenwich Street

New York, New York 10007,

Email: servicerreports@moodys.com (all such notices to be delivered to Moody’s
in writing by email);

 

(f)                                   if to S&P, to

 

Standard & Poor’s Ratings Group, Inc., Structured Credit Surveillance, 55 Water
Street,

New York, New York 10041,

Telephone: (212) 438-8991,

Email: servicer_reports@spglobal.com (all such notices to be delivered to S&P in
writing by email).

 

or as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.

 

Section 8.04.                          Assignment.  Notwithstanding anything to
the contrary contained herein, except as provided in Section 6.04 and as
provided in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be assigned by the Servicer.

 

Section 8.05.                          Limitations on Rights of Third Parties. 
The provisions of this Agreement are solely for the benefit of the Servicer, the
Issuer, the Holders, the Indenture Trustee, the State of New Hampshire, the
Treasurer of the State of New Hampshire, agencies of the State of New Hampshire
and the other Persons expressly referred to herein and such Persons shall have
the right to enforce the relevant provisions of this Agreement, except that the
Holders shall be entitled to enforce their rights against the Servicer under
this Agreement solely through a cause of action brought for their benefit by the
Indenture Trustee.  Nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy or
claim in the RRB Property or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.

 

25

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Section 8.06.                          Severability.  Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

Section 8.07.                          Separate Counterparts.  This Agreement
may be executed by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.

 

Section 8.08.                          Headings.  The headings of the various
Articles and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.

 

Section 8.09.                          Governing Law.  This Agreement shall be
construed in accordance with the substantive laws of the State of New Hampshire,
without giving effect to its conflict of law or other principles that would
cause the application of the laws of another jurisdiction, and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.

 

Section 8.10.                          Assignment to Indenture Trustee.  The
Servicer hereby acknowledges and consents to the collateral assignment or pledge
of, or grant of a security interest in, any or all of the Issuer’s rights and
obligations hereunder to the Indenture Trustee for the benefit of the holders of
the Rate Reduction Bonds.

 

Section 8.11.                          Nonpetition Covenants.  Notwithstanding
any prior termination of this Agreement or the Indenture, but subject to the
NHPUC’s right to order the sequestration and payment of revenues arising with
respect to the RRB Property notwithstanding any bankruptcy, reorganization or
other insolvency proceedings with respect to the debtor, pledgor or transferor
of the RRB Property pursuant to RSA 369-B:7, VI and RSA 369-B:7, VIII, the
Servicer, acting solely in its capacity as a creditor of the Issuer, shall not,
prior to the date which is one year and one day after the termination of the
Indenture with respect to the Issuer, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or governmental authority for the
purpose of commencing or sustaining an involuntary case against the Issuer under
any federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of the property of the
Issuer, or ordering the winding up or liquidation of the affairs of the Issuer.

 

Section 8.12.                          Rule 17g-5 Compliance.  The Servicer
agrees that any notice, report, request for satisfaction of the Rating Agency
Condition, document or other information provided by the Servicer to any Rating
Agency under this Agreement or any other Basic Document to which it is a party
for the purpose of determining the initial credit rating of the Rate Reduction
Bonds or undertaking credit rating surveillance of the Rate Reduction Bonds with
any Rating Agency, or satisfy the Rating Agency Condition,

 

26

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shall be substantially concurrently posted by the Servicer on a
password-protected website.

 

Section 8.13.                          Protections Afforded to the Indenture
Trustee.  The parties hereto agree that the Indenture Trustee shall be afforded
all of the rights, protections, immunities, indemnities and privileges afforded
to the Indenture Trustee under the Indenture.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

27

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IN WITNESS WHEREOF, the parties hereto have caused this Servicing Agreement to
be duly executed by their respective officers as of the day and year first above
written.

 

 

PSNH FUNDING LLC 3, as Issuer

 

 

 

 

By:

/s/ Emilie G. O’Neil

 

Name:

Emilie G. O’Neil

 

Title:

Assistant Treasurer

 

 

 

 

 

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, as Servicer

 

 

 

 

By:

/s/ Emilie G. O’Neil

 

Name:

Emilie G. O’Neil

 

Title:

Assistant Treasurer - Corporate Finance and Cash Management

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

CERTIFICATE OF COMPLIANCE

 

The undersigned hereby certifies that he/she is the duly elected and acting
[        ] of Public Service Company of New Hampshire, as servicer (the
“Servicer”) under the Servicing Agreement, dated as of May 8, 2018 (the
“Servicing Agreement”), between the Servicer and PSNH Funding LLC 3 (the
“Issuer”), and further certifies on behalf of the Servicer that:

 

1.                                      In my capacity as [    ] of the
Servicer, I am responsible for assessing the Servicer’s compliance with the
servicing criteria applicable to the Servicer set forth in the Servicing
Agreement and Item 1122(d) of Regulation AB;

 

2.                                      A review of the activities of the
Servicer and of its performance under the Servicing Agreement during the
           months ended December 31, 20[ ] has been made under the supervision
of the undersigned pursuant to Item 1122(d) of Regulation AB and Section 3.03 of
the Servicing Agreement; and

 

3.                                      To the undersigned’s knowledge, based on
such review, the Servicer has fulfilled all of its material obligations in all
material respects under the Servicing Agreement throughout the            months
ended December 31, 20[ ], except as listed on Annex A hereto.

 

4.                                      [    ], a registered public accounting
firm, has issued an attestation report on its assessment of compliance with the
applicable servicing criteria as of December 31, 20[  ] and for the           
months ended December 31, 20[ ].

 

Executed as of this         day of            , 20   .

 

 

By:

 

 

 

Name:

 

 

Title:

 

A-1

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ANNEX A TO EXHIBIT A

 

LIST OF SERVICER DEFAULTS

 

Nature of Default

 

Status

 

 

 

 

 

 

 

 

 

 

A-2

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EXHIBIT B

 

FORM OF ROUTINE TRUE-UP LETTER

 

[Date]

 

[Name]
New Hampshire Public Utilities Commission
21 Fruit Street, Suite 10
Concord, NH 03301

 

Re:                             Order No. 26,099 (“Finance Order”), Docket
No. DE 17-096
Periodic RRB Charge True-Up Mechanism Advice Filing

 

Dear [name]:

 

Pursuant to Order No. 26,099 issued on January 30, 2018 in Docket No. DE 17-096
(the “Finance Order”), Public Service Company of New Hampshire (“PSNH”), as
servicer of the Rate Reduction Bonds (“RRBs”) and on behalf of the RRB trustee
as assignee of PSNH Funding LLC 3 (the special purpose entity, or “the SPE”),
shall apply for adjustment to the RRB Charges annually and at such additional
intervals, if necessary, as may be provided for in the Finance Order.  Any
capitalized terms not defined herein shall have the meanings ascribed thereto in
the Finance Order.

 

PURPOSE

 

This filing establishes the revised RRB Charges to be assessed and collected
from retail users of PSNH’s distribution system within PSNH’s service territory,
whether or not energy is purchased from PSNH or a third party supplier, and
whether or not such distribution system is being operated by PSNH or a successor
distribution company.  The RRB Charges is a usage-based component of the
stranded cost recovery charge on each retail user’s monthly bill until the Total
RRB Payment Requirements are discharged in full.  In the Finance Order, the
Commission authorized PSNH to file Routine True-Up Letters annually and at such
additional intervals, if necessary, as may be provided for in the Finance
Order.  The purpose of such filings and resulting adjusted RRB Charges is to
ensure the timely recovery of revenues sufficient to provide for the payment of
an amount equal to the Periodic RRB Payment Requirements for the upcoming
period, which may include indemnity obligations of the SPE in the RRB
transaction documents for SPE officers and directors, trustee fees and other
liabilities of the SPE.

 

Using the methodology approved by the Commission in the Finance Order, this
filing modifies the variables used in the RRB Charge calculation and provides
the resulting modified RRB Charges.  Table 1 shows the revised assumptions for
each of the variables used in calculating the RRB Charges for Customers
classes.  The assumptions underlying the current RRB Charges were filed in an
Advice Letter, dated [    ].

 

B-1

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TABLE 1
INPUT VALUES FOR RRB CHARGES

 

Forecasted annual kWh sales:

 

Percent of billed amounts expected to be charged-off:

 

Weighted average days sales outstanding:

 

Forecasted ongoing transaction expenses (including any already accrued but
unpaid for the period):

 

Current Excess Funds Subaccount balance:

 

Current Capital Subaccount balance:

 

Initial Capital Subaccount balance:

 

Current RRB outstanding balance:

 

Scheduled RRB outstanding balance at the end of the period:

 

Deferred unpaid RRB principal:

 

Accrued but unpaid RRB interest:

 

The adjusted RRB Charge calculated for retail users in each of the following
rate classifications is as follows:  R =       ¢/kWh;  G =       ¢/kWh;  GV =
      ¢/kWh;  LG =       ¢/kWh;  OL =       ¢/kWh.”

 

EFFECTIVE DATE

 

In accordance with the Finance Order, Routine True-Up Letters for annual RRB
Charges adjustments shall be filed not later than January 15 in each year, with
the resulting upward or downward adjustments to the RRB Charge to be effective —
absent manifest error in the Routine True-Up Letters — on the ensuing
February 1.  In accordance with the Finance Order, a Routine True-Up Letter
shall also be filed not later than July 15 of each year, if the Servicer
reasonably determines that an adjustment to the RRB Charges is necessary to meet
the Periodic RRB Payment Requirements for the Remittance Period beginning on
July 1 of such year, with the resulting upward adjustments to the RRB Charges to
be effective — absent manifest error in such Routine True-Up Letter — on the
ensuing August 1.  In addition, the Finance Order permits (but does not require)
the Servicer to file another Routine True-Up Letter not later than the date that
is 15 days before the end of any calendar month if it reasonably determines that
an adjustment to the RRB Charges is necessary to meet the Periodic RRB Payment
Requirements for the then-current Remittance Period, with the resulting upward
adjustments to the RRB Charges to be effective — absent manifest error in such
Routine True-Up Letter — on the first day of

 

B-2

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the ensuing calendar month. No approval by the Commission is required.
Therefore, these RRB Charges shall be effective as of            .

 

NOTICE

 

Copies of this filing are being furnished to the New Hampshire Public Utilities
Commission and the parties on the attached service list. Notice to the public is
hereby given by filing this Routine True-Up Letter with the Commission and by
keeping this filing open for public inspection at Eversource Energy Service
Company’s office in Westwood, Massachusetts, as agent for Public Services New
Hampshire.

 

B-3

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EXHIBIT C

 

FORM OF MONTHLY SERVICER CERTIFICATE

 

[Date]

 

Pursuant to Section 4.01(d)(2) of the Servicing Agreement, dated as of May 8,
2018 (the “Agreement”), between Public Service Company of New Hampshire, as
servicer (the “Servicer”), and PSNH Funding LLC 3, the Servicer does hereby
certify as follows:

 

Capitalized terms used herein have their respective meanings as set forth in the
Agreement.

 

For the Monthly Period:

 

1.                                      Billings:

 

 

 

Residential

 

Large
General
Service

 

Primary
General
Service

 

General
Service

 

Outdoor
Lighting

a

Monthly kWh Consumption

 

 

 

 

 

 

 

 

 

b

Applicable RRB Charge:

 

 

 

 

 

 

 

 

 

c

Total RRB Charge Amount Billed this Month

 

 

 

 

 

 

 

 

 

d

Cumulative RRB Charge Amount Billed this Calendar Year

 

 

 

 

 

 

 

 

 

 

2.                                      Remittances:

 

a)                                     Total Amount Remitted this Month:

b)                                     Cumulative Amount Remitted this Calendar
Year:

 

3.                                      Draws on Subaccounts:

 

a)                                     Excess Funds Subaccount Draw Amount this
Month:

b)                                     Cumulative Excess Funds Subaccount Draw
Amount this Calendar Year:

c)                                      Capital Subaccount Draw Amount this
Month:

d)                                     Cumulative Capital Subaccount Draw Amount
this Calendar Year:

 

C-1

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Monthly
Servicer Certificate as of the date first written above.

 

 

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, as Servicer

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

C-2

--------------------------------------------------------------------------------

 

EXHIBIT D

 

FORM OF SEMI-ANNUAL SERVICER CERTIFICATE

 

[Date]

 

Pursuant to Section 4.01(d)(3) of the Servicing Agreement, dated as of May 8,
2018 (the “Agreement”), between Public Service Company of New Hampshire, as
servicer (the “Servicer”), and PSNH Funding LLC 3, the Servicer does hereby
certify, for the current Payment Date (          ,    20[  ]) (the “Current
Payment Date”), as follows:

 

Capitalized terms used herein have their respective meanings as set forth in the
Agreement.  References herein to certain sections and subsections are references
to the respective sections of the Agreement.

 

1.                            RRB Charge Collections and Aggregate Amounts
Available for the Current Payment Date:

 

i.

 

Amount Remitted [Month] [Year]

ii.

 

Amount Remitted [Month] [Year]

iii.

 

Amount Remitted [Month] [Year]

iv.

 

Amount Remitted [Month] [Year]

v.

 

Amount Remitted [Month] [Year]

vi.

 

Amount Remitted [Month] [Year]

vii.

 

Total Amount Remitted for this Period (sum of i. through vi. above):

viii.

 

Net Earnings on Collection Account (excluding earnings on Capital Subaccount):

ix.

 

Excess Funds Subaccount Balance:

x.

 

Capital Subaccount Balance:

xi.

 

Expenses Paid to Date:

xii.

 

Collection Account Balance (sum of vii. through x. above less xi. above):

 

2.                            Outstanding Principal Balance as of Prior Payment
Date by Tranche:

 

i.

 

Tranche A-1 Bond Principal Balance Outstanding:

ii.

 

Tranche A-2 Bond Principal Balance Outstanding:

iii.

 

Tranche A-3 Bond Principal Balance Outstanding:

iv.

 

Total Bond Principal Balance:

 

D-1

--------------------------------------------------------------------------------

 

3.                            Required Funding/Payments as of Current Payment
Date

 

a)                   Projected Principal Balances and Payments

 

 

 

 

 

Projected
Principal Balance

 

Semi-Annual
Principal Due

i.

 

Tranche A-1 Bond

 

 

 

 

ii.

 

Tranche A-2 Bond

 

 

 

 

iii.

 

Tranche A-3 Bond

 

 

 

 

iv.

 

Total Projected Principal Amount:

 

 

 

 

 

b)                   Required Interest Payments

 

 

 

 

 

Bond
Interest Rate

 

Days in
Applicable
Period

 

Interest
Due

i.

 

Tranche A-1 Bond

 

 

 

 

 

 

ii.

 

Tranche A-2 Bond

 

 

 

 

 

 

iii.

 

Tranche A-3 Bond

 

 

 

 

 

 

iv.

 

Total Required Interest Amount:

 

 

 

 

 

 

 

c)                    Projected Subaccount Payments and Levels

 

 

 

 

 

Subaccount

 

Projected
Level

 

Funding
Required

i.

 

Capital Subaccount:

 

 

 

 

 

 

ii.

 

Total Subaccount Payments and Levels:

 

 

 

 

 

 

 

4.                            Allocation of Remittances as of Current Payment
Date Pursuant to Section 8.02(d) of Indenture:

 

a)                   Semi-Annual Expenses

 

Net Expense Amount (Payable on Current Payment Date)

 

 

 

i.

 

Indenture Trustee Fees and Expenses (subject to $200,000 cap):

ii.

 

Semi-Annual Servicing Fee:

iii.

 

Semi-Annual Administration Fee:

iv.

 

Operating Expenses:

v.

 

Total Expenses:]

 

D-2

--------------------------------------------------------------------------------

 

b)                   Semi-Annual Interest

 

 

 

 

 

Per $1000 of
Original

 

Aggregate
Principal Amount

i.

 

Tranche A-1 Bond

 

 

 

 

ii.

 

Tranche A-2 Bond

 

 

 

 

iii.

 

Tranche A-3 Bond

 

 

 

 

iv.

 

Total Semi-Annual Interest:

 

 

 

 

 

c)                    Semi-Annual Principal

 

 

 

 

 

Per $1000 of
Original

 

Aggregate
Principal Amount

i.

 

Tranche A-1 Bond

 

 

 

 

ii.

 

Tranche A-2 Bond

 

 

 

 

iii.

 

Tranche A-3 Bond

 

 

 

 

iv.

 

Total Semi-Annual Principal:

 

 

 

 

 

d)                   Other Payments

 

i.

 

Operating Expenses:

ii.

 

Funding of Capital Subaccount (to required amount):

 

e)                    Aggregate Payments Pursuant to Section 8.02(e)(i) of
Indenture

 

i.

 

To Indenture Trustee:

 

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.

 

Tranche A-1 Bond Principal Balance Outstanding:

ii.

 

Tranche A-2 Bond Principal Balance Outstanding:

iii.

 

Tranche A-3 Bond Principal Balance Outstanding:

iv.

 

Total Bond Principal Balance:

 

b)                   Collection Account Balances Outstanding:

 

i.

 

Excess Funds Subaccount:

ii.

 

Capital Subaccount:

iii.

 

Total Subaccount Amount:

 

D-3

--------------------------------------------------------------------------------

 

6.                          Subaccount Draws as of Current Payment Date (if
applicable, pursuant to Section 8.02(e) of Indenture):

 

i.

 

Excess Funds Subaccount:

ii.

 

Capital Subaccount:

iii.

 

Total Subaccount Draws:

 

7.                          Shortfalls in Interest and Principal Payments as of
Current Payment Date (if applicable):

 

a)                  Semi-Annual Interest Shortfall

 

i.

 

Tranche A-1 Bond

ii.

 

Tranche A-2 Bond

iii.

 

Tranche A-3 Bond

iv.

 

Total Semi-Annual Interest Shortfall:

 

b)                  Semi-Annual Principal Shortfall

 

i.

 

Tranche A-1 Bond

ii.

 

Tranche A-2 Bond

iii.

 

Tranche A-3 Bond

iv.

 

Total Semi-Annual Principal Shortfall:

 

8.                          Shortfalls in Required Subaccount Levels as of
Current Distribution Date:

 

i.

 

Capital Subaccount

 

 

 

ii.

 

Total Subaccount Shortfalls:

 

D-4

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Semi-Annual Servicer Certificate as of the date first written above.

 

 

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, as Servicer

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

D-5

--------------------------------------------------------------------------------

 

EXHIBIT E

 

FORM OF ANNUAL RECONCILIATION WITH THE INDENTURE TRUSTEE

 

Pursuant to Section 4.03(b) of the Servicing Agreement, dated as of May 8, 2018,
between Public Service Company of New Hampshire, as servicer (the “Servicer”),
and PSNH Funding LLC 3, the Servicer does hereby certify as follows:

 

For the Reconciliation Period:              to

 

1.                                      Calculation of Remittance Shortfall or
Remittance Excess:

 

 

 

 

 

Total

 

a

 

Billed Revenues

 

 

 

b

 

Charge-Offs

 

 

 

c

 

Actual Charge-Off% (b/a)

 

 

 

d

 

Estimated Charge-Off%

 

 

 

e

 

RRB Charges (gross of charge-off)

 

 

 

f

 

Actual RRB Charge Payments ([100% - c] x e)

 

 

 

g

 

Estimated RRB Charge Payments ([100% - d] x e)

 

 

 

h

 

Remittance Shortfall (f - g, if positive)

 

 

 

i

 

Remittance Excess (g - f, if positive)

 

 

 

 

Executed as of this               day of            .

 

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE,

 

as Servicer

 

 

 

By:

 

 

Name:

 

Title:

 

 

E-1

--------------------------------------------------------------------------------

 

SCHEDULE 4.01(A)

 

Expected Amortization Schedule

 

Outstanding Principal Balance Per Tranche

 

Date

 

Tranche A-1
Balance

 

Tranche A-2
Balance

 

Tranche A-3
Balance

 

Closing Date

 

$

235,900,000.00

 

$

111,600,000.00

 

$

288,163,200.00

 

February 1, 2019

 

$

205,173,077.96

 

$

111,600,000.00

 

$

288,163,200.00

 

August 1, 2019

 

$

183,568,210.89

 

$

111,600,000.00

 

$

288,163,200.00

 

February 1, 2020

 

$

161,963,343.82

 

$

111,600,000.00

 

$

288,163,200.00

 

August 1, 2020

 

$

140,358,476.75

 

$

111,600,000.00

 

$

288,163,200.00

 

February 1, 202

 

$

118,753,609.68

 

$

111,600,000.00

 

$

288,163,200.00

 

August 1, 2021

 

$

97,148,742.61

 

$

111,600,000.00

 

$

288,163,200.00

 

February 1, 2022

 

$

75,543,875.54

 

$

111,600,000.00

 

$

288,163,200.00

 

August 1, 2022

 

$

53,939,008.47

 

$

111,600,000.00

 

$

288,163,200.00

 

February 1, 2023

 

$

32,334,141.40

 

$

111,600,000.00

 

$

288,163,200.00

 

August 1, 2023

 

$

10,729,274.33

 

$

111,600,000.00

 

$

288,163,200.00

 

February 1, 2024

 

$

—

 

$

100,724,407.26

 

$

288,163,200.00

 

August 1, 2024

 

$

—

 

$

79,119,540.19

 

$

288,163,200.00

 

February 1, 2025

 

$

—

 

$

57,514,673.12

 

$

288,163,200.00

 

August 1, 2025

 

$

—

 

$

35,909,806.05

 

$

288,163,200.00

 

February 1, 2026

 

$

—

 

$

14,304,938.98

 

$

288,163,200.00

 

August 1, 2026

 

$

—

 

$

—

 

$

280,863,271.91

 

February 1, 2027

 

$

—

 

$

—

 

$

259,258,404.84

 

August 1, 2027

 

$

—

 

$

—

 

$

237,653,537.77

 

February 1, 2028

 

$

—

 

$

—

 

$

216,048,670.70

 

August 1, 2028

 

$

—

 

$

—

 

$

194,443,803.63

 

February 1, 2029

 

$

—

 

$

—

 

$

172,838,936.56

 

August 1, 2029

 

$

—

 

$

—

 

$

151,234,069.49

 

February 1, 2030

 

$

—

 

$

—

 

$

129,629,202.42

 

August 1, 2030

 

$

—

 

$

—

 

$

108,024,335.35

 

February 1, 2031

 

$

—

 

$

—

 

$

86,419,468.28

 

August 1, 2031

 

$

—

 

$

—

 

$

64,814,601.21

 

February 1, 2032

 

$

—

 

$

—

 

$

43,209,734.14

 

August 1, 2032

 

$

—

 

$

—

 

$

21,604,867.07

 

February 1, 2033

 

$

—

 

$

—

 

$

—

 

 

Annex I-1

--------------------------------------------------------------------------------

 

ANNEX I

 

SERVICING PROCEDURES

 

The Servicer agrees to comply with the following servicing procedures:

 

SECTION 1.  DEFINITIONS

 

(a)                                 Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the Agreement.

 

(b)                                 Whenever used in this Annex I, the following
words and phrases shall have the following meanings:

 

“Billed RRB Charges” means the dollar amounts billed to Customers or the
Applicable TPS in respect of the RRB Charge, whether billed to Customers or the
Applicable TPS by the Servicer or to Customers by a TPS pursuant to a TPS
Service Agreement.

 

“Deemed Charge-Off Percent” means the Servicer’s actual system wide charge-off
percentage.

 

“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 and in accordance
with NHPUC Regulations.  The Servicer shall provide ten days’ prior written
notice to the Rating Agencies of any amendment to the Servicer Policies and
Practices that would adversely affect in any material respect the Holders.

 

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 NHPUC
Regulations; and, provided, further, that the Servicer may obtain usage
measurements from the Applicable TPS for Customers receiving meter reading
services from such TPS if the applicable TPS Service Agreement so provides.

 

Annex I-2

--------------------------------------------------------------------------------

 

(c)                                  Cost of Metering.  The 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 Issuer be entitled to any credit against the Servicing Fee for any
cost savings realized by the Servicer or any TPS as a result of new metering
and/or billing technologies.

 

SECTION 3.  USAGE AND BILL CALCULATION

 

The Servicer shall obtain a calculation of each Customer’s usage (which may be
based on data obtained from such Customer’s meter read or on usage estimates
determined in accordance with applicable NHPUC Regulations) in accordance with
the Servicer Policies and Practices and shall determine therefrom Billed RRB
Charges; provided, however, that in the case of Customers served by a TPS
pursuant to a TPS Service Agreement, the Servicer may obtain usage measurements
from the Applicable TPS for Customers receiving meter reading services from such
TPS if the applicable TPS Service Agreement so provides and shall determine
therefrom Billed RRB Charges.

 

SECTION 4.  BILLING

 

(a)                                 The Servicer shall implement the RRB Charge
as of the Closing Date and shall thereafter bill each Customer or the Applicable
TPS for each Customer’s Billed RRB Charges in accordance with the provisions of
this Section 4.

 

(b)                                 Frequency of Bills; Billing Practices.  In
accordance with the Servicer Policies and Practices, the Servicer shall generate
and issue a Bill to each Customer, or, in the case of a Customer who is being
billed by a TPS, to the Applicable TPS with respect to such Customer’s Billed
RRB Charges.  In the event that the Servicer makes any material modification to
the Servicer Policies and Practices, it shall notify the Issuer, the Indenture
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 Holders.

 

(c)                                  Format.

 

(i)                                     Each Bill to a Customer shall contain a
stranded cost recovery charge that shall include the RRB Charge owed by such
Customer for the applicable billing period.

 

(ii)                                  Each Bill in which the stranded cost
recovery charge is listed as a line item shall contain a statement (as a
footnote) to the effect that all or a portion of the stranded cost recovery
charge is owned by the Issuer and not the Seller.

 

(iii)                               The Servicer shall conform to such
requirements in respect of the format, structure and text of Bills delivered to
Customers and TPSs as applicable NHPUC Regulations shall from time to time
prescribe.  To the extent that Bill format, structure and text are not
prescribed by applicable law or by applicable NHPUC Regulations, the Servicer
shall, subject to clauses (i) and (ii) of this subsection (c), determine the
format,

 

Annex I-3

--------------------------------------------------------------------------------

 

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 NHPUC Regulations.  The Servicer or a
TPS, as applicable, shall pay from its own funds all costs of issuance and
delivery of all Bills that it renders, including printing and postage costs as
the same may increase or decrease from time to time.

 

SECTION 5.  CUSTOMER SERVICE FUNCTIONS

 

The Servicer or a TPS to the extent provided in the applicable TPS Service
Agreement shall handle all Customer inquiries and other Customer service matters
according to the Servicer Policies and Practices.

 

SECTION 6.  COLLECTIONS; PAYMENT PROCESSING; REMITTANCE

 

(a)                                 Collection Efforts, Policies, Procedures.

 

(i)                                     The Servicer shall collect Billed RRB
Charges from Customers and TPSs as and when the same become due in accordance
with such collection procedures as it follows with respect to comparable assets
that it services for itself or others, including the following:

 

(A)                               The Servicer shall prepare and deliver overdue
notices to Customers and TPSs in accordance with applicable NHPUC Regulations
and the Servicer Policies and Practices.

 

(B)                               The Servicer shall deliver past-due and
shut-off notices in accordance with applicable NHPUC Regulations and the
Servicer Policies and Practices.

 

(C)                               The Servicer shall adhere to and carry out
disconnection policies and termination of billing by a TPS pursuant to a TPS
Service Agreement in accordance with RSA 369-B:4, IV, the Finance Order,
applicable NHPUC Regulations and the Servicer Policies and Practices.

 

(D)                               The Servicer may employ the assistance of
collection agents in accordance with applicable NHPUC Regulations and the
Servicer Policies and Practices.

 

(E)                                The Servicer shall apply Customer and TPS
deposits to the payment of delinquent accounts in accordance with applicable
NHPUC Regulations and these Servicing Procedures.

 

Annex I-4

--------------------------------------------------------------------------------

 

(ii)                                  The Servicer may write off any amounts
that it deems uncollectible according so long as any such write-off (A) would be
in accordance with the Servicer Policies and Practices and (B) would comply in
all material respects with applicable law. 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 RRB Charges in such forms and methods and at such
times and places in accordance with the Servicer Policies and Practices.  The
Servicer shall accept payment from TPSs in respect of Billed RRB Charges in such
forms and methods and at such times and places as the Servicer and each TPS
shall mutually agree in accordance with the applicable TPS Service Agreement and
applicable NHPUC Regulations.

 

(b)                                 Payment Processing, Allocation, Priority of
Payments.  The Servicer 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 RRB Charge Collections. 
Prior to remittance on the applicable Remittance Date, the Servicer may invest
RRB Charge Collections at its own risk and for its own benefit, and such
investments and funds shall not be required to be segregated from the other
investments and funds of the Servicer.  The Servicer shall be entitled to retain
as additional compensation any interest earnings on RRB Charge Collections
invested by it.

 

(d)                                 Calculation of Estimated RRB Charge
Payments; Remittances.  In accordance with Section 4.03(a) of the Agreement, the
Servicer shall remit to the Indenture Trustee for deposit in the Collection
Account an amount equal to the product of the Billed RRB 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 RRB
Charge Payments.  Pursuant to Section 4.03(b) of the Agreement, on or before
March 1 of each year, the Servicer shall calculate the amount of Deemed RRB
Charge Payments by multiplying the Billed RRB Charges by one hundred percent
less the Deemed Charge-Off Percent.

 

(e)                                  Remittances.

 

(i)                                     The Issuer shall cause to be established
the Collection Account in the name of the Indenture Trustee in accordance with
Section 8.02 of the Indenture.

 

(ii)                                  The Servicer shall make or cause to be
made Remittances to the Collection Account in accordance with Section 4.03 of
the Agreement.

 

Annex I-5

--------------------------------------------------------------------------------

 

(iii)                               Any change of account or change of
institution affecting the Collection Account shall not take effect until the
Issuer has provided at least fifteen (15) Servicer Business Days written notice
thereof to the Servicer.

 

SECTION 7.  TPSs

 

In the event a TPS performs services pursuant to a TPS Service Agreement, the
Servicer shall comply with the procedures set forth in Schedule A to this Annex
I.

 

Annex I-6

--------------------------------------------------------------------------------

 

SCHEDULE A

 

TO ANNEX I

 

Additional Servicing Procedures Applicable to TPSs

 

1.                                      Establishing TPS Relationship

 

In addition to any actions required by the NHPUC or by applicable law, for each
TPS that is responsible for collecting Billed RRB Charges, the Servicer shall
take the following steps:

 

(a)                                 Maintain adequate records of the payment
arrangement applicable to such TPS;

 

(b)                                 Maintain copies of all Customer requests to
convert to billing by a TPS;

 

(c)                                  Verify with the NHPUC that each TPS is
licensed to supply electricity in New Hampshire;

 

(d)                                 Obtain information from the TPS including,
but not limited to: name, contact, address, telephone facsimile transmission
number and internet address;

 

(e)                                  Maintain and update records of Customers to
permit prompt reversion to dual-billing;

 

(f)                                   Maintain estimates of one month’s maximum
Estimated RRB Charge Payments for each TPS required to post a bond, letter of
credit or cash deposit pursuant to the applicable TPS Service Agreement; and

 

(g)                                  Comply with credit conditions set out in
the Finance Order and applicable TPS Service Agreement.

 

2.                                      Monitoring TPS Obligations

 

(a)                                 The Servicer shall require each TPS to pay
all undisputed and all disputed Billed RRB Charges or make a financial
arrangement for such payment according to the applicable TPS Service Agreement;
and

 

(b)                                 For all TPSs subject to any remittance
option where such TPS is liable for all amounts billed in respect of Customers
served thereby regardless of the amounts received therefrom, the Servicer shall
monitor payment compliance and take all actions permitted by the NHPUC and the
Finance Order in the event of a default in payment.

 

3.                                      Enforcing TPS Obligations

 

The Servicer shall promptly take all actions specified by the Finance Order with
respect to amounts not remitted to the Servicer in accordance with the payment
terms specified by the Finance Order, in addition to any other remedies
available at law.

 

Annex I-7

--------------------------------------------------------------------------------