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Transition Property Servicing Agreement

This is an actual contract by BEC Funding.

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Sectors: Financial Services
Governing Law: Massachusetts, View Massachusetts State Laws
Effective Date: January 01, 1999
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BEC FUNDING LLC,


as Note Issuer


and


BOSTON EDISON COMPANY,


as Servicer


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


TRANSITION PROPERTY SERVICING AGREEMENT


Dated as of July __, 1999


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


================================================================================ 2
TABLE OF CONTENTS


PAGE
---- ARTICLE I. DEFINITIONS.......................................................................................... 1
Section 1.01 Definitions.................................................................. 1
Section 1.02 Other Definitional Provisions................................................ 6


ARTICLE II. APPOINTMENT AND AUTHORIZATION....................................................................... 7
Section 2.01 Appointment of Servicer; Acceptance of Appointment........................... 7
Section 2.02 Authorization................................................................ 7
Section 2.03 Dominion and Control Over the Transition Property............................ 7


ARTICLE III. BILLING SERVICES................................................................................... 8
Section 3.01 Duties of Servicer........................................................... 8
Section 3.02 Servicing and Maintenance Standards.......................................... 9
Section 3.03 Certificate of Compliance.................................................... 9
Section 3.04 Annual Report by Independent Public Accountants.............................. 10


ARTICLE IV. SERVICES RELATED TO PERIODIC ADJUSTMENTS; REMITTANCES AND RECONCILIATIONS........................... 10
Section 4.01 Periodic Adjustments......................................................... 10
Section 4.02 Limitation of Liability...................................................... 12
Section 4.03 Remittances; Reconciliations................................................. 13


ARTICLE V. THE TRANSITION PROPERTY.............................................................................. 14
Section 5.01 Custody of Transition Property Records....................................... 14
Section 5.02 Duties of Servicer as Custodian.............................................. 14
Section 5.03 Instructions; Authority to Act............................................... 15
Section 5.04 Effective Period and Termination............................................. 15
Section 5.05 Monitoring of Third-Party Suppliers.......................................... 15


ARTICLE VI. THE SERVICER........................................................................................ 16
Section 6.01 Representations and Warranties of Servicer................................... 16
Section 6.02 Indemnities of Servicer...................................................... 17
Section 6.03 Limitation on Liability of Servicer and Others............................... 19
Section 6.04 Merger or Consolidation of, or Assumption of the Obligations of,
Servicer................................................................. 20
Section 6.05 Boston Edison Company Not to Resign as Servicer.............................. 20
Section 6.06 Servicing Compensation....................................................... 21
Section 6.07 Compliance with Applicable Law............................................... 21
Section 6.08 Access to Certain Records and Information Regarding Transition
Property................................................................ 21


-i- 3
PAGE
----
Section 6.09 Appointments................................................................. 22
Section 6.10 No Servicer Advances......................................................... 22
Section 6.11 Maintenance of Operations.................................................... 22


ARTICLE VII. DEFAULT............................................................................................ 22
Section 7.01 Servicer Default............................................................. 22
Section 7.02 Appointment of Successor..................................................... 24
Section 7.03 Waiver of Past Defaults...................................................... 24
Section 7.04 Notice of Servicer Default................................................... 25


ARTICLE VIII. MISCELLANEOUS PROVISIONS.......................................................................... 25
Section 8.01 Amendment.................................................................... 25
Section 8.02 Protection of Title to Trust................................................. 26
Section 8.03 Notices...................................................................... 26
Section 8.04 Assignment................................................................... 26
Section 8.05 Limitations on Rights of Third Parties....................................... 26
Section 8.06 Severability................................................................. 27
Section 8.07 Separate Counterparts........................................................ 27
Section 8.08 Headings..................................................................... 27
Section 8.09 Governing Law................................................................ 27
Section 8.10 Assignment to Note Trustee................................................... 27
Section 8.11 Nonpetition Covenants........................................................ 27
Section 8.12 Limitation of Liability...................................................... 28


-ii- 4
EXHIBITS AND SCHEDULES


Exhibit A Form of Certificate of Compliance


Exhibit B Form of Routine True-Up Letter


Exhibit C Form of Monthly Servicer Certificate


Exhibit D Form of Semiannual Servicer Certificate


Exhibit E Form of Annual Reconciliation


Schedule 4.01(a) Expected Amortization Schedule


Schedule 6.01(f) Proceedings


ANNEXES


Annex I Servicing Procedures


Schedule A to Annex I Additional Servicing Procedures Applicable to TPSs


-iii- 5
This TRANSITION PROPERTY SERVICING AGREEMENT, dated as of July __, 1999, is between BEC Funding LLC, a Delaware limited liability company (the "Note Issuer"), and Boston Edison Company, a Massachusetts corporation.


RECITALS


WHEREAS, pursuant to the Statute and the Financing Order, the Seller and the Note Issuer are concurrently entering into the Sale Agreement pursuant to which the Seller is selling to the Note Issuer the Transition Property created pursuant to the Statute and the Financing Order.


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


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


ARTICLE I. DEFINITIONS


Section 1.01 Definitions. Whenever used in this Agreement, the following words and phrases shall have the following meanings:


"Advice Letter" means any filing made with the DTE by the Servicer on behalf of the Note Issuer to set or adjust the RTC Charge, including the Issuance Advice Letter, a Routine Anniversary True-Up Letter, a Routine True-Up Letter or a Non-Routine True-Up Letter.


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


"Annual Accountant's Report" has the meaning set forth in Section 3.04.


"Applicable TPS" means, with respect to each Customer, the TPS, if any, billing the RTC Charge to that Customer.


"Bills" means each of the regular monthly bills, summary bills and other bills issued to Customers or TPSs by Boston Edison Company on its own behalf and in its capacity as Servicer.


"Certificate of Compliance" has the meaning set forth in Section 3.03.


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"Closing Date" means July __, 1999.


"Customers" means all classes of retail users of the Seller's distribution system within the its geographic service territory as in effect on July 1, 1997.


"Declaration of Trust" means the Declaration of Trust dated as of July __, 1999 by Bank of New York (Delaware), a Delaware banking corporation, as Delaware Trustee, the Massachusetts Development Finance Agency and the Massachusetts Health and Educational Facilities Authority, as the same may be amended and supplemented from time to time.


"Deemed RTC Charge Payments" means the payments in respect of the RTC Charge, which are deemed to have been received by the Servicer, directly or indirectly (including through a TPS), from or on behalf of Customers, calculated in accordance with Annex I hereto.


"DTE" means the Massachusetts Department of Telecommunications and Energy and any successor thereto.


"DTE Regulations" means all regulations, rules, tariffs and laws applicable to public utilities or TPSs, as the case may be, and promulgated by, enforced by or otherwise within the jurisdiction of the DTE.


"Estimated RTC Charge Payments" means the estimated payments in respect of the RTC Charge, which are deemed to have been received by the Servicer, directly or indirectly (including through a TPS), from or on behalf of Customers, calculated in accordance with Annex I hereto.


"Expected Amortization Schedule" means Schedule 4.01(a) hereto.


"Financing Order" means the order of the DTE, DTE-98-118, issued on April 2, 1999, as further clarified by the Order on the Massachusetts Development Finance Agency's and Massachusetts Health and Educational Facilities Authority's Motion for Clarification dated May 21, 1999.


"Financing Order Anniversary Date" means April 2 of each year.


"Insolvency Event" means, with respect to a specified Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable Federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person's affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) the commencement by such Person of a voluntary case under any applicable Federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by


-2- 7 such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due.


"Issuance Advice Letter" means the initial Issuance Advice Letter, dated July __, 1999, filed with the DTE pursuant to the Financing Order.


"Lien" means a security interest, lien, charge, pledge or encumbrance of any kind.


"Losses" has the meaning assigned to that term in Section 6.02(b).


"Monthly Servicer Certificate" has the meaning assigned to that term in Section 4.01(d)(ii).


"Non-Routine Periodic Adjustment" has the meaning set forth in Section 4.01(c)(i).


"Non-Routine True-Up Letter" means an Advice Letter filed with the DTE in accordance with the Financing Order with respect to any Non-Routine Periodic Adjustment, pursuant to which the related Non-Routine Periodic Adjustment will become effective within 60 days after filing of the Non-Routine True-Up Letter, subject to the review and approval of the DTE.


"Note Indenture" means the Note Indenture dated as of July __, 1999, between the Note Issuer and the Note Trustee, as the same may be amended and supplemented from time to time.


"Note Issuer" has the meaning set forth in the preamble to this Agreement.


"Officer's Certificate" means a certificate of the Servicer signed by a Responsible Officer.


"Opinion of Counsel" means one or more written opinions of counsel who may be an employee of or counsel to the party providing such opinion(s) of counsel, which counsel shall be reasonably acceptable to the party receiving such opinion(s) of counsel.


"Periodic Adjustment" means each adjustment to the RTC Charge made pursuant to the terms of the Financing Order and in accordance with Section 4.01 hereof.


"Principal Balance" means, as of any Payment Date, the sum of the outstanding principal amount of the Notes.


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"Projected Principal Balance" means, as of any Payment Date, the sum of the projected outstanding principal amount of the Notes for such Payment Date set forth in the Expected Amortization Schedule.


"Reconciliation Period" means the twelve-month period commencing on January 1 of each year and ending on December 31 of each year; provided, however, that the initial Reconciliation Period shall commence on the Closing Date and end on December 31, 1999.


"Remittance" means each remittance hereunder of Estimated RTC Charge Payments by the Servicer to the Note Trustee.


"Remittance Date" means each Servicer Business Day on which a Remittance is to be made by the Servicer pursuant to Section 4.03.


"Remittance Excess" means the amount, if any, calculated for a particular Reconciliation Period, by which all RTC Charge Collections during such Reconciliation Period exceed Deemed RTC Charge Payments during such Reconciliation Period.


"Remittance Period" means the twelve-month period commencing on March 1 of each year and ending on the last day of February of each year; provided, however, that the initial Remittance Period shall commence on the Closing Date and end on February 29, 2000.


"Remittance Shortfall" means the amount, if any, calculated for a particular Reconciliation Period, by which Deemed RTC Charge Payments during such Reconciliation Period exceed RTC Charge Collections during such Reconciliation Period.


"Required Debt Service" means, for any Remittance Period, the total dollar amount calculated by the Servicer in accordance with Section 4.01(b)(i) as necessary to be remitted to the Collection Account during such Remittance Period (after giving effect to the allocation and distribution of amounts on deposit in the Reserve Subaccount at the time of calculation and which are available for payments on the Notes and including any shortfalls in Required Debt Service for any prior Remittance Period and the required payment or credit of any Remittance Excess or Remittance Shortfall and any Remittances based upon the RTC Charge in effect in the prior Remittance Period that are expected to be realized in such Remittance Period) in order to ensure that, as of the Payment Date immediately following the end of such period, (i) all accrued and unpaid interest on the Notes then due shall have been paid in full, (ii) the Principal Balance of the Notes is equal to the Projected Principal Balance of the Notes for that Payment Date, (iii) the balance on deposit in the Capital Subaccount equals the aggregate Required Capital Level, (iv) the balance on deposit in the Overcollateralization Subaccount equals the aggregate Required Overcollateralization Level and (v) all other fees and expenses due and owing and required or allowed to be paid under Section 8.02 of the Note Indenture as of such date shall have been paid in full; provided, however, that, with respect to any Periodic Adjustment occurring after the last Scheduled Maturity Date for any Notes, the Required Debt Service shall be


-4- 9 calculated to ensure that sufficient amounts will be collected to retire such Notes in full as of the earlier of (x) the next Payment Date and (y) the Final Maturity Date for such Notes.


"Responsible Officer" means the chief executive officer, the president, the vice chairman of the board, any vice president, the treasurer, any assistant treasurer, the clerk, any assistant clerk, the controller or the finance manager of the Servicer.


"Retirement of the Notes" means the day on which the final payment is made to the Note Trustee in respect of the last outstanding Note.


"Routine Anniversary True-Up Letter" means a Routine True-Up Letter filed with the DTE prior to the Financing Order Anniversary Date in respect of an annual Periodic Adjustment. The Routine Anniversary True-Up Letter will become effective on the first calendar day of the next succeeding calendar month after filing, or such date as may be specified in such Routine Anniversary True-Up Letter, so long as such effective date is at least 15 days after the filing of such Routine Anniversary True-Up Letter.


"Routine True-Up Letter" means an Advice Letter filed with the DTE in respect of a Periodic Adjustment, substantially in the form of Exhibit B hereto. The Routine True-Up Letter will become effective on the first calendar day of the next succeeding calendar month after filing, or such date as may be specified in such Routine True-Up Letter, so long as such effective date is at least 15 days after the filing of such Routine True-Up Letter.


"RTC Charge" means the portion (which may become all) of the Seller's Transition Charge designated pursuant to the Financing Order as the RTC Charge, as the same may be adjusted from time to time as provided in the Financing Order.


"RTC Charge Collections" means the Estimated RTC Charge Payments remitted to the Collection Account.


"Sale Agreement" means the Transition Property Sale Agreement dated as of July __, 1999, between Boston Edison Company, as Seller, and the Note Issuer, as the same may be amended and supplemented from time to time.


"Seller" means Boston Edison Company, a Massachusetts corporation, and its permitted successors and assigns under the Sale Agreement.


"Semiannual Servicer Certificate" has the meaning assigned to that term in Section 4.01(d)(iii).


"Servicer" means Boston Edison Company, as the servicer of the Transition Property, or each successor (in the same capacity) pursuant to Section 6.04 or 7.02.


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"Servicer Business Day" means any Business Day on which the Servicer's offices in The Commonwealth of Massachusetts are open for business.


"Servicer Default" means an event specified in Section 7.01.


"Servicing Fee" has the meaning set forth in Section 6.06(a).


"Statute" means Chapter 164 of the Massachusetts Acts of 1997, entitled an Act Relative to Restructuring the Electric Utility Industry in the Commonwealth, Regulating the Provision of Electricity and Other Services, and Promoting Enhanced Consumer Protections Therein.


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


"TPS" means a third party supplier of energy who has entered into a TPS Service Agreement with the Servicer.


"TPS Service Agreement" means an agreement between a third party supplier of energy and the Servicer pursuant to which such third party supplier of energy bills and collects the RTC Charge to and from Customers in accordance with DTE Regulations, the Financing Order and the guidelines described in Schedule A to Annex I.


"Transition Charge" means the "access charge" as defined in Boston Edison Company's Restructuring Settlement Agreement, D.P.U. Docket Nos. 96-100 and 96-23 and subsequent filings with the DTE pursuant thereto.


"Transition Property" means the transition property that exists under Order 7 of the Financing Order and is sold by the Seller to the Note Issuer under the Sale Agreement.


"Transition Property Records" has the meaning assigned to that term in Section 5.01.


"Weighted Average Days Outstanding" means the weighted average number of days Boston Edison Company's monthly retail customer bills remain outstanding during the calendar year immediately preceding the calculation thereof pursuant to Section 4.01(b)(i). For all purposes of this Agreement, the calculation of Weighted Average Days Outstanding pursuant to Section 4.01(b)(i) shall become effective on March 16 of each year. The initial Weighted Average Days Outstanding shall be 45 days until updated pursuant to Section 4.01(b)(i) of this Agreement.


Section 1.02 Other Definitional Provisions.


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


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


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


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


ARTICLE II. APPOINTMENT AND AUTHORIZATION


Section 2.01 Appointment of Servicer; Acceptance of Appointment. Subject to Section 6.05 and Article 7, the Note Issuer hereby appoints the Servicer, and the Servicer hereby accepts such appointment, to perform the Servicer's obligations pursuant to this Agreement on behalf of and for the benefit of the Note Issuer or any assignee thereof in accordance with the terms of this Agreement and applicable law. This appointment and the Servicer's acceptance thereof may not be revoked except in accordance with the express terms of this Agreement.


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


Section 2.03 Dominion and Control Over the Transition Property. Notwithstanding any other provision herein, the Note Issuer shall have dominion and control over the Transition Property, and the Servicer, in accordance with the terms hereof, is acting solely as the servicing agent and custodian for the Note Issuer with respect to the Transition Property and the Transition Property Records. The Servicer shall not take any action that is not authorized by this


-7- 12 Agreement or that shall impair the rights of the Note Issuer in the Transition Property, in each case unless such action is required by applicable law.


ARTICLE III. BILLING SERVICES


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


(a) Duties of Servicer Generally.


(i) General Duties. The Servicer's duties
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