SF-1/A

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TABLE OF CONTENTS

As filed with the Securities and Exchange Commission on March 23, 2018

REGISTRATION NOS. 333-223108 and 333-223108-01

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Amendment No. 1
to

FORM SF-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (Exact name of registrant, sponsor and depositor as specified in its charter)	PSNH FUNDING LLC 3 (Exact name of registrant and issuing entity as specified in its charter)
New Hampshire (State or other jurisdiction of incorporation or organization)	Delaware (State or other jurisdiction of incorporation or organization)
1-6392 (Commission File Number)
0000315256 (Central Index Key Number)	0001730300 (Central Index Key Number)
02-0181050 (I.R.S. Employer Identification Number)	82-4087442 (I.R.S. Employer Identification Number)
Energy Park 780 North Commercial Street Manchester, New Hampshire 03101-1134 (800) 286-5000 (Address, including zip code, and telephone number, including area code, of depositor's principal executive offices)	C/O Public Service Company of New Hampshire Energy Park 780 North Commercial Street Manchester, New Hampshire 03101-1134 (781) 441-8127 (Address, including zip code, and telephone number, including area code, of issuing entity's principal executive offices)

Gregory B. Butler, Esq.
Executive Vice President and General Counsel
Eversource Energy
56 Prospect Street
Hartford, CT 06103
(800) 286-5000
(Name, address, including zip code, and telephone number, including area code, of agent for service)

With Copies to:
Emilie O'Neil Assistant Treasurer— Corporate Finance and Cash Management Eversource Energy 247 Station Drive Westwood, MA 02090-9230 (781) 441-8127	David Fine Marko Zatylny Patricia Lynch Ropes & Gray LLP 800 Boylston Street Boston, MA 02199 (617) 951-7000	Michael F. Fitzpatrick, Jr. Hunton & Williams LLP 200 Park Avenue New York, NY 10166 (212) 309-1071

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to Be Registered	Amount to Be Registered	Proposed Maximum Offering Price Per Unit	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee
Rate Reduction Bonds, Series 2018-1	$500,000,000	100%	$500,000,000(1)	$62,250(2)

(1)

Estimated pursuant to Rule 457(o) solely for the purpose of calculating the registration fee.

(2)

Previously paid.

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MARCH 23, 2018

PRELIMINARY PROSPECTUS

$                  RATE REDUCTION BONDS, SERIES 2018-1

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

Sponsor, Depositor and Initial Servicer
Central Index Key Number: 0000315256

PSNH FUNDING LLC 3

Issuing Entity
Central Index Key Number: 0001730300

Rate Reduction Bonds, Series 2018-1	Expected Weighted Average Life (Years)	Principal Amount Offered*	Scheduled Final Payment Date	Final Maturity Date	Interest Rate	Initial Price to Public	Underwriting Discounts and Commissions	Proceeds to Issuing Entity (Before Expenses)
Tranche A-1		$			%	$	$	$
Tranche A-2		$			%	$	$	$
Tranche A-3		$			%	$	$	$

*

Principal amounts are approximate and subject to change

           The total price to the public is $        . The total amount of the underwriting discounts and commissions is $        . The total amount of proceeds to PSNH Funding LLC 3 before deduction of expenses (estimated to be $        ) is $        . The distribution frequency is        . The first expected distribution date is         .

           Public Service Company of New Hampshire, as Depositor, is offering $            aggregate principal amount of the Rate Reduction Bonds, Series 2018-1 listed above (each bond designation a Tranche and the Tranches, collectively, the Rate Reduction Bonds, or the RRBs), to be issued by PSNH Funding LLC 3, referred to herein as the Issuing Entity.

           The RRBs are senior secured obligations of the Issuing Entity. The RRBs are supported by the RRB Property, which constitutes a current and irrevocable vested property right of the Issuing Entity under the Finance Order (as defined below), including, without limitation, all right, title and interest of the Issuing Entity in and to all revenues, collections, claims, payments, money or proceeds of or arising from the RRB Charges (as defined below) and to all rights to obtain adjustments to the RRB Charges pursuant to the terms of the Finance Order. The RRB Charges, which are charges authorized pursuant to the Finance Order that will be billed to Customers to recover the RRB Costs, will be used to pay principal, interest and all other amounts payable in connection with the RRBs. Upon the issuance of the RRBs, the RRB Charges may not be revalued or revised by the New Hampshire Public Utilities Commission, or the NHPUC, except as adjusted pursuant to the Periodic Adjustments described herein. The RRB Charges shall be non-bypassable and will be assessed against and collected from all retail Customers taking retail electric service from Public Service Company of New Hampshire, or PSNH, or its successors or assignees under rate schedules approved by the NHPUC. RRB Charges are payable by Customers regardless of who they have chosen as their energy supplier and regardless of whether or not they are self-generating, so long as they are connected to PSNH's distribution system for back-up power. The RRB Property includes the right to mandatory Periodic Adjustments to ensure that the aggregate RRB Charges billed for an applicable period will result in RRB Charge Collections that are sufficient to pay principal and interest on the RRBs and all other required amounts and charges payable in connection with the RRBs. With respect to the foregoing, interest is due on each Payment Date and principal is due upon the Final Maturity Date for each Tranche.

           The RRBs do not constitute a debt, liability or other obligation of, or interest in, PSNH or any of its other affiliates (other than the Issuing Entity). The RRBs will not be insured or guaranteed by PSNH, including in its capacity as Sponsor, Depositor, Seller or Servicer, or by its parent, Eversource Energy, any of their respective affiliates, The Bank of New York Mellon, as the Indenture Trustee, or any other person or entity. The RRBs will be nonrecourse obligations, secured only by the RRB Collateral. The RRBs are not a debt or liability of the State of New Hampshire or any of its political subdivisions, including the NHPUC, and shall not constitute a pledge of the full faith and credit of the State of New Hampshire or its political subdivisions, except, insofar as the State of New Hampshire or any such political subdivision, agency or instrumentality is receiving retail electric service from PSNH or its successor or assignee, such governmental entity will be obligated, in its capacity as a Customer, to pay RRB Charges.

           The RRBs will be issued pursuant to NH Rev. Stat. Chapter 369-B, or the Financing Act, and an irrevocable Finance Order issued by the NHPUC on January 30, 2018 approving the issuance of the RRBs. Under the irrevocable Finance Order, the NHPUC has pledged that it will act, as directed by the Financing Act, to implement the Periodic Adjustments for making any adjustments to the RRB Charges to ensure that the aggregate RRB Charges billed for an applicable period will result in RRB Charge Collections that are sufficient to pay principal of and interest on the RRBs and all other required amounts and charges payable in connection with the RRBs. The NHPUC's obligations under the Financing Act and the Finance Order are irrevocable and the NHPUC shall not have authority, except pursuant to the Periodic Adjustments, to revalue or revise for ratemaking purposes the RRB Costs or the RRB Charge, to determine that the RRB Charge is unjust or unreasonable or in any way to reduce or impair the value of the RRB Property by taking the RRB Charge.

           The RRBs will accrue interest from the date of issuance. The RRBs are scheduled to pay principal and interest semi-annually and sequentially as described herein. The Issuing Entity will pay principal and interest on the RRBs on February 1 and August 1 of each year, beginning on February 1, 2019.

           The RRBs will be payable only from revenues received by the Issuing Entity under the Indenture for the RRBs and funds on deposit in trust accounts relating to the RRBs. These amounts, together with the RRB Property, including the Periodic Adjustments, are the source of funds for the payment of principal of and interest on the RRBs. A Capital Subaccount will hold the Depositor's capital contribution to the Issuing Entity. An Excess Funds Subaccount will hold revenues that are collected but not needed to meet current obligations associated with the RRBs. Credit enhancement for the RRBs will be primarily provided by the Periodic Adjustments, as well as the Capital Subaccount and the ability to collect the RRB Charges beyond the Scheduled Final Payment Date until the Final Maturity Date. The primary purpose of the Excess Funds Subaccount is not to provide credit enhancement for the RRBs. However, amounts in the Excess Funds Subaccount may be used to make debt service payments on the RRBs if needed.

           PSNH is the Depositor, Sponsor, Seller and initial Servicer for the RRBs. PSNH is the sole member and owner of the Issuing Entity's equity interest. PSNH's Central Index Key number is 0000315256. The Issuing Entity's Central Index Key number is 0001730300.

           Investing in the RRBs involves risks. See "Risk Factors" beginning on page 12 to read about factors you should consider before buying the RRBs.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

           The RRBs will be ready for delivery in book-entry form through the facilities of The Depository Trust Company against payment in New York, New York on or about        , 2018.

GOLDMAN SACHS & CO. LLC

The date of this prospectus is            , 2018

TABLE OF CONTENTS

	Page
ABOUT THIS PROSPECTUS	1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	2
PROSPECTUS SUMMARY	3
RISK FACTORS	12
REVIEW OF THE RRB PROPERTY	25
THE FINANCING ACT AND THE FINANCE ORDER	29
DESCRIPTION OF THE ISSUING ENTITY	32
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE—THE DEPOSITOR, SPONSOR, SELLER AND SERVICER	37
DESCRIPTION OF THE RRBs	44
DESCRIPTION OF THE INDENTURE TRUSTEE	65
WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE RRBs	66
ESTIMATED ANNUAL FEES AND EXPENSES	68
THE SALE AGREEMENT	69
THE SERVICING AGREEMENT	78
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS	87
ERISA CONSIDERATIONS	92
BANKRUPTCY AND CREDITORS' RIGHTS ISSUES	96
USE OF PROCEEDS	100
PLAN OF DISTRIBUTION	101
AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	103
RATING INFORMATION	104
OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS	105
WHERE YOU CAN FIND MORE INFORMATION	106
INCORPORATION BY REFERENCE	106
LEGAL PROCEEDINGS	107
LEGAL MATTERS	107
GLOSSARY	108

ABOUT THIS PROSPECTUS

        This prospectus is part of a registration statement filed with the Securities and Exchange Commission, or SEC. This prospectus provides you with a description of the RRBs being offered. You should carefully review this prospectus, any free writing prospectus the Issuing Entity files with the SEC, and the information, if any, contained in the documents referenced in this prospectus under the heading "Where You Can Find More Information."

        References in this prospectus to the Issuing Entity mean PSNH Funding LLC 3, the issuing entity. References to PSNH, the Depositor or the Sponsor refer to Public Service Company of New Hampshire or to any successor thereto. References to the Servicer are to PSNH, and any successor servicer under the Servicing Agreement described in this prospectus. References to the Seller mean PSNH or any successor under the Sale Agreement described in this prospectus. References to the Administrator mean PSNH, or any successor or assignee under the Administration Agreement described in this prospectus. References to the NHPUC are to the New Hampshire Public Utilities Commission. References to the Financing Act are to Chapter 369-B, New Hampshire Revised Statutes. Unless the context otherwise requires, the term Customer means any person or entity purchasing directly or otherwise obtaining or being supplied directly with retail electric service by PSNH for end use consumption, including those served under special contracts. References to a Finance Order, unless the context indicates otherwise, are to the irrevocable Finance Order issued by the NHPUC on January 30, 2018. You can find a glossary of some of the other defined terms used in this prospectus on page 108 of this prospectus.

        This prospectus includes cross-references to other sections in this prospectus to allow you to find further related discussions. You can also find key topics in the table of contents on the preceding pages. Check the table of contents to locate these sections.

        You should rely only on the information contained or incorporated by reference in this prospectus and in any related free writing prospectus the Issuing Entity files with the SEC. Neither the Issuing Entity nor any underwriter, any agent, any dealer, any salesperson or PSNH has authorized anyone else to provide you with any different information. If anyone provides you with different or inconsistent information, you should not rely on it. The RRBs are not being offered in any jurisdiction where the offer or sale is not permitted. The information in this prospectus and any free writing prospectus is current only as of the date of this prospectus.

1

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus includes forward-looking statements, including regarding expectations, estimates and projections about the electric consumption of PSNH's Customers, PSNH's ability to service the RRB Property and collect the RRB Charges, the Issuing Entity's ability to pay back the RRBs, and the NHPUC's adherence to the State Pledge to protect the rights of Holders. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events of performance (often, but not always, through the use of words or phrases such as "will," "are expected to," "will continue," "is anticipated," "believe," "could," "should," "estimated," "may," "plans to," "potential," "projection," "designed to," "intended") are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to important factors included in "Risk Factors" (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could have a significant impact on financial results, and could cause actual results to differ materially from those contained in forward-looking statements made by or on behalf of the Issuing Entity or PSNH, in this prospectus, in presentations, on websites, in response to questions or otherwise.

        The following are some factors, among others, that could cause actual results to differ materially from those expressed or implied by forward looking statements in this prospectus:

•

state and federal legislative, judicial and regulatory actions or developments, including deregulation and restructuring of the electric utility industry, and changes in, or changes in application of, laws or regulations applicable to other aspects of PSNH's business;

•

actions of NRSROs, including downgrading the ratings of the RRBs;

•

the accuracy of the Servicer's forecasts of energy consumption resulting from Customer usage patterns, including energy efficiency efforts and use of alternative energy sources, including self-generation;

•

changes in market demand, including the effect of Customers ceasing to do business or leaving the service territory;

•

the influence of weather and other natural phenomena affecting electric Customer energy usage in the service territory, including the economic, operational and other effects of severe weather, such as ice and snow storms, hurricanes and other natural disasters;

•

the accuracy of the Servicer's estimates of the Customer payment patterns, including the rate of delinquencies and charge-offs;

•

problems with energy generation, transmission or distribution resulting from a change in the market structure of the electric industry, including with respect to PSNH's transition from reliance on its own power generation to reliance on third-party power generators;

•

economic conditions affecting electric Customer energy usage in the service territory;

•

direct or indirect results of cyber attacks, security breaches or other attempts to disrupt the Servicer's business; and

•

acts of war or terrorism, global instability or other catastrophic events affecting electric Customer energy consumption in the service territory.

        Any forward-looking statement speaks only as of the date on which such statement is made, and the Issuing Entity and PSNH do not undertake any obligation to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which such statement is made. New factors emerge from time to time and it is not possible for management of the Issuing Entity and PSNH to predict all of such factors, nor can the Issuing Entity and PSNH assess the impact of each such factor on the business of the Issuing Entity and PSNH or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

2

PROSPECTUS SUMMARY

        This summary highlights some information from this prospectus. Because this is a summary, it does not contain all of the information that may be important to you. You should read this prospectus in its entirety and carefully consider the Risk Factors beginning on page 12 of this prospectus before you decide whether to invest in the RRBs.

Securities offered: Tranche A-1 RRBs, Tranche A-2 RRBs and Tranche A-3 RRBs, constituting all of the Issuing Entity's Rate Reduction Bonds, Series 2018-1, to be issued in the amounts set forth below.

Rate Reduction Bonds, Series 2018-1	Principal Amount
Tranche A-1	$
Tranche A-2	$
Tranche A-3	$

Issuing Entity:	PSNH Funding LLC 3, a special purpose Delaware limited liability company. PSNH is the Issuing Entity's sole member and owns all of its equity interests. The Issuing Entity has no commercial operation and was formed solely to purchase and own the RRB Property, to issue the RRBs and to perform activities incidental thereto. See "Description of the Issuing Entity."
The Depositor, Sponsor, Seller and initial Servicer:	Public Service Company of New Hampshire, a wholly-owned subsidiary of Eversource Energy, is an electric utility company serving approximately 70% of the State of New Hampshire. As of December 31, 2017, PSNH furnished retail electric service to approximately 515,000 retail customers in 211 cities and towns in New Hampshire, covering an area of approximately 5,630 square miles. PSNH's rates and certain other aspects of its business are subject to the jurisdiction of the NHPUC. PSNH, acting as the initial Servicer, and any successor or assignee Servicer, will service the RRB Property securing the Bonds under a Servicing Agreement with the Issuing Entity. See "Public Service Company of New Hampshire—The Depositor, Sponsor, Seller and Servicer" and "The Servicing Agreement."
Indenture Trustee:	The Bank of New York Mellon. See "Description of the Indenture Trustee" for a description of the duties and

3

Diagram of Transaction: The following diagram represents a general summary of the structure of the securities offered, flow of funds and relationships among the parties:

(1)

Net upfront transaction fees and expenses.

Collateral: The RRBs will be secured by the RRB Collateral, which is composed of the RRB Property and the Other Collateral. The RRB Property is a current and irrevocable vested property right of the Issuing Entity under the Finance Order, including, without limitation, all right, title and interest of the Issuing Entity in and to all revenues, collections, claims, payments, money or proceeds of or arising from the RRB Charges authorized pursuant to the Finance Order to recover the RRB Costs and to all rights to obtain adjustments to the RRB Charges pursuant to the terms of the Finance Order.

4

	Credit enhancement for the RRBs will be primarily provided by the Periodic Adjustments, as well as the Capital Subaccount and the ability to collect the RRB Charges beyond the Scheduled Final Payment Date until the Final Maturity Date. The primary purpose of the Excess Funds Subaccount is not to provide credit enhancement for the RRBs. However, amounts in the Excess Funds Subaccount may be used to make debt service payments on the RRBs if needed.
Credit Ratings:	The RRBs are expected to receive credit ratings from at least one NRSRO. Please read "Rating Information" in this prospectus.
Interest Payments:	Interest payable with respect to each Tranche of RRBs will accrue on a 30/360 basis at the interest rate specified for such Tranche in the following table:

Tranche	Interest Rate
Tranche A-1		%
Tranche A-2		%
Tranche A-3		%

Principal Payments:

The Issuing Entity is scheduled to make payments of principal on the Payment Dates and sequentially in accordance with the Expected Amortization Schedule included in this prospectus. Principal for each Tranche is due upon the Final Maturity Date for that Tranche. Failure to pay the entire outstanding principal amount of a Tranche by the Final Maturity Date for such Tranche will result in an Event of Default.

Payment Dates:

February 1 and August 1 of each year beginning February 1, 2019, or if not a Business Day, the next Business Day.

Weighted Average Life:	Tranche	Expected Weighted Average Life
	Tranche A-1
	Tranche A-2
	Tranche A-3

Scheduled Final Payment Date and Final Maturity Date: The Scheduled Final Payment Date and Final Maturity Date for each Tranche of RRBs will be as set forth in the following table:

Tranche	Scheduled Final Payment Date	Final Maturity Date
Tranche A-1
Tranche A-2
Tranche A-3

Optional Redemption:	The Issuing Entity will not be permitted to optionally redeem the RRBs at any time prior to maturity.
Mandatory Redemption:	The Issuing Entity is not required to redeem the RRBs at any time prior to maturity.

5

Priority of Payments:	On each Payment Date, the Indenture Trustee will apply all amounts on deposit in the Collection Account, including all Investment Earnings thereon, in accordance with the Servicer's instructions, in the following priority:
	(1)	payment of the Indenture Trustee's (and its agents' and counsel's) fees, expenses and outstanding indemnity amounts to the Indenture Trustee in an amount not to exceed $200,000 per Payment Date;
	(2)	payment of the Servicing Fee with respect to such Payment Date, plus any unpaid Servicing Fees for prior Payment Dates to the Servicer;
	(3)	payment of the Administration Fee for such Payment Date to the Administrator and the Independent Manager Fee for such Payment Date to the Independent Manager, in each case with any unpaid Administration Fees or Independent Manager Fees from prior Payment Dates;
	(4)	payment of all other ordinary periodic Operating Expenses not described above for such Payment Date to the parties to which such Operating Expenses are owed;
	(5)	payment of Periodic Interest for such Payment Date, including any overdue Periodic Interest (together with, to the extent lawful, interest on such overdue Periodic Interest at the applicable interest rate), with respect to the Rate Reduction Bonds, to the Holders of Rate Reduction Bonds;
	(6)	payment of the principal required to be paid on the Rate Reduction Bonds on the Final Maturity Date or as a result of an acceleration upon an Event of Default to the Holders of Rate Reduction Bonds;
	(7)	payment of Periodic Principal for such Payment Date, including any previously unpaid Periodic Principal, with respect to the Rate Reduction Bonds to the Holders of Rate Reduction Bonds, pro rata if there is a deficiency;
	(8)	payment of any other unpaid Operating Expenses (including any such amounts owed to the Indenture Trustee but unpaid due to the limitation in clause (1) above) and any remaining amounts owed pursuant to the Basic Documents to the parties to which such Operating Expenses or remaining amounts are owed;
	(9)	the amount, if any, by which the Required Capital Level exceeds the amount in the Capital Subaccount (disregarding any Capital Subaccount Investment Earnings) as of such Payment Date shall be allocated to the Capital Subaccount;

6

(10)	other than after the Rate Reduction Bonds have been paid in full and discharged, and all of the other foregoing amounts have been paid in full, together with all amounts due and payable to the Indenture Trustee under the Indenture, the balance, if any, shall be allocated to the Excess Funds Subaccount; and
(11)	after the Rate Reduction Bonds have been paid in full and discharged, and all of the other foregoing amounts are paid in full, together with all amounts due and payable to the Indenture Trustee under the Indenture, (A) the balance of the Capital Subaccount, if any, shall be paid to PSNH and (B) the balance of all other amounts on deposit in the Collection Account (including all amounts then held in the Excess Funds Subaccount), if any, shall be paid to the Issuing Entity, in each case free from the Lien of the Indenture and the Series Supplement.
If on any Payment Date, or, for any amounts payable under clauses (1) through (4) above, on any Business Day, funds on deposit in the General Subaccount are insufficient to make the payments contemplated by clauses (1) through (8) above, the Indenture Trustee shall (i) first, draw from amounts on deposit in the Excess Funds Subaccount, and (ii) second, draw from amounts on deposit in the Capital Subaccount, in each case, up to the amount of such shortfall in order to make the payments contemplated by clauses (1) through (8) above. In addition, if on any Payment Date funds on deposit in the General Subaccount are insufficient to make the allocations contemplated by clause (9) above, the Indenture Trustee shall draw any amounts on deposit in the Excess Funds Subaccount to make such allocations to the Capital Subaccount.
On the second Business Day of each calendar month, and promptly following the payment in full and discharge of the Rate Reduction Bonds, the Indenture Trustee shall pay all Capital Subaccount Investment Earnings to PSNH, in each case, pursuant to a written direction from the Servicer.
On any Business Day upon which the Indenture Trustee receives a written request from the Administrator stating that any Operating Expense payable by the Issuing Entity pursuant to clause (1) through (4) above will become due and payable prior to the next Payment Date, and setting forth the amount and nature of such Operating Expense, as well as any supporting documentation that the Indenture Trustee may reasonably request, the Indenture Trustee, upon receipt of such information, will make payment of such Operating Expenses on or before the date such payment is due from amounts on deposit in the General Subaccount, the Excess Funds Subaccount and the Capital Subaccount, in that order, and only to the extent required to make such payment.

7

Collection Account and Subaccounts:	The Issuing Entity will establish the Collection Account to hold payments arising from the RRB Charge as well as the capital contributions made to the Issuing Entity. The Collection Account will consist of three subaccounts:
	• the General Subaccount;
	• the Capital Subaccount; and
	• the Excess Funds Subaccount.
	Withdrawals from and deposits to these subaccounts will be made as described under "Description of the RRBs—How Funds in the Collection Account will be Allocated."
General Subaccount:	All collections of RRB Charges by the Servicer will be remitted into the General Subaccount. In addition, all amounts in the Collection Account not allocated to any other subaccount will be allocated to the General Subaccount.
Capital Subaccount:	The Capital Subaccount will be funded by PSNH on or prior to the issuance of the RRBs through a capital contribution in an amount to equal to 0.50% of the initial Principal Balance of the RRBs. The Indenture Trustee will draw on amounts in the Capital Subaccount to the extent amounts available in the General Subaccount and the Excess Funds Subaccount are insufficient to pay scheduled payments of principal of and interest on the RRBs and the fees and expenses (including indemnities) relating to servicing and retiring the RRBs. Funds withdrawn from the Capital Subaccount will be replenished on subsequent Payment Dates if payments arising from the RRB Charges exceed amounts required for other uses having a higher priority of payment. When the RRBs have been fully paid, any balance in the Capital Subaccount (including Capital Subaccount Investment Earnings not previously remitted to PSNH) shall belong and be returned to PSNH in its capacity as equityholder of the Issuing Entity.
Excess Funds Subaccount:	The Excess Funds Subaccount will receive deposits of any amounts remaining after payments of interest, scheduled principal, expenses and required deposits into the Capital Subaccount. Amounts on deposit in the Excess Funds Subaccount may be drawn to pay interest, principal and certain expenses if necessary. Any balance in the Excess Funds Subaccount after making all required payments will be applied to RRB Charges and incorporated into the Periodic Adjustments.
Initial RRB Charge as a percentage of customer's total electricity bill:	The initial RRB Charge is expected to represent approximately 6.1% of the total electricity bill, as of January 1, 2018, received by a 600 kWh residential customer of PSNH.

8

Periodic Adjustments to the RRB Charge:	The initial RRB Charge for each class of customers will be finalized prior to issuance of the RRBs and filed with the NHPUC in the Issuance Advice Letter.
	Not later than January 15 of each year while the RRBs are outstanding, the Servicer will file with the NHPUC an Annual Routine True-Up Letter. Under the Annual Routine True-Up Letter, the RRB Charges will be adjusted to ensure that there are adequate funds to meet the Periodic RRB Payment Requirements for the two Remittance Periods beginning, respectively, on the January 1 and July 1 of the year that such letter is filed.
	In addition, if the Servicer, as of July 15 of each year while the RRBs are outstanding, reasonably projects that expected collections of the RRB Charges will be insufficient to meet the Periodic RRB Payment Requirements for the Remittance Period beginning on July 1 of such year, the Servicer will file a Mid-Year Routine True-Up Letter not later than July 15 of such year.
	In addition, (a) except during the two Remittance Periods preceding the Final Maturity Date of the latest maturing Tranche of RRBs, 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 the then-current calendar month if the Servicer reasonably projects that expected collections of the RRB Charges will be insufficient to meet the Periodic RRB Payment Requirements for the then-current Remittance Period and (b) during the two Remittance Periods preceding the Final Maturity Date of the latest maturing Tranche of RRBs, if the Servicer reasonably projects that expected collections of the RRB Charges will be insufficient to meet 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.
	Absent manifest error in a Routine True-Up Letter, the resulting upward or downward adjustments to the RRB Charges will be deemed approved by the NHPUC and effective: (i) in the case of any Annual Routine True-Up Letter, on the ensuing February 1; (ii) in the case of any Mid-Year Routine True-Up Letter, on the ensuing August 1; or (iii) in the case of an Other Routine True-Up Letter, on the first day of the ensuing month.

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Non-bypassable RRB Charges:	The Financing Act provides that the RRB Charges established in the Finance Order will be collected from each Customer of PSNH receiving retail electric service. If a Customer purchases or otherwise obtains retail electric service from any person other than PSNH in whose service territory the Customer is located, including, without limitation, any successor referred to in the Financing Act, subject to NHPUC approval, the Servicer or such new electricity provider or successor shall collect all such charges, including without limitation, the RRB Charges, from the Customer by or on behalf of PSNH with revenues from such RRB Charges being remitted solely for the benefit and repayment of RRBs as a condition to the provision of retail electric service to such Customer.
Servicing Fees:	PSNH, as Servicer, will receive a Servicing Fee equal to 0.05% of the initial Principal Balance of the RRBs. In the event that a successor Servicer is appointed, a higher Servicing Fee of up to approximately 0.60% of the initial Principal Balance of the RRBs may be paid to any successor Servicer that does not concurrently bill the RRB Charges with other charges for service.
Financing Act and the Finance Order:	In June 2000, the New Hampshire General Court enacted 2000 N.H. Laws 249 which, among other things, created a new RSA chapter, RSA Chapter 369-B. RSA Chapter 369-B, the Financing Act, authorized the use of securitization by PSNH to recover certain stranded costs associated with the restructuring of the electric industry in the State of New Hampshire. In July 2015, the Financing Act was amended to provide the NHPUC with the authority to issue the Finance Order authorizing the issuance of RRBs to recover certain stranded costs resulting from the divestiture of some or all of PSNH's generation assets.
	Pursuant to the Financing Act, the NHPUC issued the irrevocable Finance Order on January 30, 2018 to authorize the issuance of the RRBs and to create the RRB Property.
New Hampshire State Pledge:	The State of New Hampshire has pledged, contracted and agreed with the Issuing Entity, as owner of the RRB Property, and the Holders of and the Indenture Trustee for RRBs that neither the state, nor any of its agencies, including the NHPUC, shall limit, alter, amend, reduce or impair the RRB Charge, RRB Property, the Finance Order, and all rights thereunder or ownership thereof or security interest therein until the RRBs, including all principal, interest, premium, costs and arrearages thereon, are fully met and discharged; however nothing in the pledge shall preclude the limitation, alteration, amendment, reduction or impairment if and when adequate provision shall be made by law for the protection of such owner, the Holders and the Indenture Trustees.

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Minimum Denominations:	The Issuing Entity will issue the RRBs in minimum denominations of $100,000 and in integral multiples of $1,000 in excess thereof, although one bond of each Tranche may be of a smaller denomination.
Use of Proceeds:	The net proceeds of this offering are estimated to be approximately $            , after deducting underwriting discounts and commissions and upfront transaction costs. The Issuing Entity will use the net proceeds from the sale of the RRBs to purchase the RRB Property from the Seller. PSNH, the Seller, will apply the proceeds of the sale of the RRB Property in accordance with the Finance Order, as required by the Financing Act. The Finance Order approves proceeds to be applied for the following uses: (i) to pay upfront transaction costs, (ii) to redeem outstanding PSNH debt and (iii) to pay a return of capital to the corporate parent of PSNH.
1940 Act Registration:	The Issuing Entity will be relying on an exclusion or exemption from the definition of "investment company" under the 1940 Act contained in Section 3(c)(5) of the 1940 Act, although there may be additional exclusions or exemptions available to the Issuing Entity. The Issuing Entity is being structured so as not to constitute a "covered fund" for purposes of the Volcker Rule under the Dodd-Frank Act.
Credit Risk Retention:	The bonds are not subject to the 5% risk retention requirements imposed by Section 15G of the Exchange Act.
Tax Considerations:	Interest and original issue discount, if any, on the RRBs, and any gain on the sale of the RRBs, generally will be included in gross income of Holders for federal income tax purposes. Interest and original issue discount, if any, on the RRBs will be exempt from the New Hampshire personal income tax on interest and dividends.
ERISA Considerations:	Pension plans and other investors subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended, or ERISA, and/or the prohibited transaction provisions of Section 4975 of the Internal Revenue Code of 1986, or the Code, may acquire the RRBs subject to specified conditions. The purchase of the RRBs could be treated as indirect prohibited transactions under ERISA and/or Section 4975 of the Code. Accordingly, by purchasing the RRBs, each purchaser will be deemed to represent and warrant that purchase of the RRBs will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.
Expected settlement:	The issuance date will be on or about                              , 2018, settling through DTC, Clearstream Banking, société anonyme, and Euroclear Bank S.A./N.V., as operator of the Euroclear system, without the payment of accrued interest.

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RISK FACTORS

You should consider carefully all the information included in this prospectus, including the following factors, which might negatively impact the Issuing Entity's ability to pay interest on and the principal amount of the RRBs and result in a reduction in the market value of your investment in the RRBs, before you decide whether to invest in the RRBs:

The Issuing Entity might not be able to pay interest and the principal amount of the RRBs, and you might experience payment delays as a result of limited sources of payment for the RRBs and limited credit enhancement.

        You may not receive interest or principal payments or you may suffer material payment delays on your RRBs if the RRB Collateral securing your RRBs is insufficient to pay the accrued interest on and the principal amount of those RRBs in full. The only source of funds for payments of interest on and principal of the RRBs will be the RRB Collateral. The RRB Collateral for the RRBs will be limited to:

•

the RRB Property securing the RRBs, which represents a current and irrevocable vested property right including, without limitation, the right, title and interest of the Issuing Entity in and to all revenues, collections, claims, payments, money or proceeds of or arising from the RRB Charges authorized pursuant to the Finance Order to recover the RRB Costs, and the right to implement the Periodic Adjustments in respect of the RRB Charges;

•

the funds on deposit in the Collection Account, including all subaccounts thereof, held by the Indenture Trustee and the Investment Earnings thereon (other than Capital Subaccount Investment Earnings); and

•

the Issuing Entity's rights under various contracts described in this prospectus.

        The RRBs will not be insured or guaranteed by PSNH, including in its capacity as Sponsor, Depositor, Seller or Servicer, or by its parent, Eversource Energy, any of their respective affiliates, the Indenture Trustee or any other person or entity. The RRBs will be nonrecourse obligations, secured only by the RRB Collateral. The Issuing Entity's failure to pay interest on and the principal amount of the RRBs or delays in payment on the RRBs might result in a reduction in the market value of the RRBs and, therefore, the value of your investment in the RRBs.

        The RRBs do not constitute a debt, liability or other obligation of, or interest in, PSNH or any of its other affiliates (other than the Issuing Entity). The RRBs are not a debt or liability of the State of New Hampshire or any of its political subdivisions, including the NHPUC, and shall not constitute a pledge of the full faith and credit of the State of New Hampshire or any of its political subdivisions.

Risks Associated with Potential Judicial, Legislative or Regulatory Actions

Future legal action might challenge or invalidate the Financing Act or the Finance Order and materially adversely affect your investment.

        The RRB Property is created pursuant to the Financing Act and a Finance Order issued by the NHPUC pursuant to the Financing Act. In June 2000, the New Hampshire General Court enacted 2000 N.H. Laws 249 which, among other things, created a new RSA chapter, RSA Chapter 369-B. RSA Chapter 369-B, the Financing Act, authorized the use of securitization by PSNH to recover certain stranded costs associated with the restructuring of the electric industry in the State of New Hampshire. In July 2015, the Financing Act was amended to provide the NHPUC with the authority to issue the Finance Order authorizing the issuance of RRBs to recover certain stranded costs resulting from the divestiture of some or all of PSNH's generation assets.

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        The Financing Act or any provisions thereof might be directly contested in courts or otherwise become the subject of litigation. In addition, the Finance Order or any provision thereof might be directly contested in courts or otherwise become the subject of litigation. As of the date of this prospectus, no such litigation has arisen; however, the Issuing Entity cannot assure you that a lawsuit challenging the validity of the Financing Act or the Finance Order will not be filed in the future or that, if filed, such lawsuit will not be successful. If an invalidation of any relevant underlying legislative provision or Finance Order provision were to result from such litigation, you might lose some or all of your investment or you might experience delays in recovering your investment. See "The RRB Property and the Financing Act" and "The Finance Order" in this prospectus.

        New Hampshire and other states have passed legislation similar to the Financing Act to authorize recoveries by utilities of specified costs, such as costs associated with deregulation of the electricity market, environmental control costs or hurricane recovery costs, and some of those laws have been challenged by judicial actions or utility commission Proceedings. To date, none of those challenges has succeeded, but future judicial challenges might be made. An unfavorable decision challenging legislation similar to the Financing Act would not automatically invalidate the Financing Act or the Finance Order, but it might provoke a challenge to the Financing Act or the Finance Order, establish a legal precedent for a successful challenge to the Financing Act or the Finance Order or heighten awareness of the political and other risks of the RRBs, and in that way may limit the liquidity and value of the RRBs. Therefore, legal activity in other states might indirectly affect the value of your investment in the RRBs.

Future New Hampshire legislative action might attempt to invalidate the RRBs or the RRB Property.

        Under the Financing Act, the State of New Hampshire has pledged not to limit, alter, amend, reduce or impair the RRB Charges, the RRB Property, the Finance Order, or any rights thereunder or ownership thereof or security interest therein until the RRBs, including all principal, interest, premium costs and arrearages thereon are fully met and discharged, unless adequate provision is made by law for the protection of the owners, Holders and Indenture Trustees of the RRBs, which is referred to as the State Pledge. For a description of the State Pledge, see "The Financing Act and the Finance Order" in this prospectus. Despite the State Pledge, the New Hampshire legislature might attempt to repeal the Financing Act, or attempt to amend the Financing Act, or as described below, the NHPUC might take certain actions that impair the RRB Property.

        Under U.S. and New Hampshire constitutional principles related to the impairment of contracts, the New Hampshire legislature and the NHPUC would generally be prohibited, without paying just compensation, from passing any subsequent law or exercising any legislative powers, as applicable, that would limit, alter, amend, reduce or impair the value of the RRB Property so as to substantially impair the rights of the owners of the RRB Property or the Holders. There have been numerous cases in which legislative or popular concerns with the burden of taxation or government charges have led to adoption of legislation reducing or eliminating taxes or charges that supported bonds or other contractual obligations entered into by public instrumentalities.

        The Issuing Entity cannot assure you that a repeal or amendment of the Financing Act will not be adopted or sought or that any action or refusal to act by the State of New Hampshire will not occur, any of which may constitute a violation of the State Pledge with the owners of the RRB Property and the Holders. If a violation of this pledge occurred, costly and time-consuming litigation might ensue regardless of the outcome of such litigation. Any litigation might materially adversely affect the price of the RRBs and your ability to resell the RRBs and might delay the timing of payments on the RRBs. Moreover, given the lack of controlling judicial precedent directly addressing the RRBs and the State Pledge, the Issuing Entity cannot predict the outcome of any litigation with certainty, and, accordingly, you could experience a delay in receipt of payments on or incur a loss on your investment in the RRBs.

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        Except as described in "The Sale Agreement—Indemnification" in this prospectus, neither the Issuing Entity, PSNH, nor any of its successors, assignees or affiliates will indemnify you for any change in law, including any amendment or repeal of the Financing Act, that might affect the value of the RRBs.

The NHPUC might attempt to take actions which might reduce the value of your investment.

        The NHPUC will continue to regulate many aspects of the electric industry in New Hampshire and may take actions that adversely affect Holders. For example, the NHPUC will:

•

regulate investor-owned electric distribution companies, including PSNH;

•

set requirements for electric generation suppliers and other third parties; and

•

set customer billing guidelines and collection, metering and disclosure requirements for electric distribution companies, electric generation suppliers and other third parties.

        Actions taken by the NHPUC pursuant to the regular exercise of its regulatory powers as described above could adversely affect the ability of the Servicer to collect the RRB Charges on a full and timely basis or impose financial constraints on the Servicer that could lead it to default on its obligations.

        Additionally, the NHPUC could revise or rescind any of its regulations or take other actions relating to the RRB Charges or the RRB Property. Any such change in regulations or other action would be subject to the State Pledge not to limit, alter, amend, reduce or impair the RRB Charges, the RRB Property, the Finance Order, or any rights thereunder or ownership thereof or security interest therein, without making adequate provision for the interests of the Issuing Entity, the Indenture Trustee and the Holders. See "The Financing Act and the Finance Order" in this prospectus. Any such change in regulations or other action also would be subject to the provision of the Financing Act that prohibits the NHPUC from revaluing or revising stranded costs, determining that the RRB Charges are unjust or unreasonable or in any way reducing or impairing the value of the RRB Property or revenues arising from its collection. See "The Financing Act and the Finance Order" in this prospectus. PSNH cannot predict whether the NHPUC will make new regulations, the timing or content of any new NHPUC Regulations or any other actions relating to the RRB Charges or the RRB Property that the NHPUC might take in the future. Future NHPUC Regulations may affect the ratings of the RRBs or their price. Those actions may also affect the rate of collections of RRB Charges and, as a result, the amortization of RRBs and their weighted average lives. As a result, Holders could suffer a loss of their investment.

        PSNH, as Servicer, is required to file with the NHPUC Routine True-Up Letters and Non-Routine True-Up Letters to adjust the RRB Charges. See "The Servicing Agreement—Periodic Adjustment Process" in this prospectus. These adjustments are intended to provide, among other things, for timely payment on the RRBs. Although the Finance Order approves PSNH's routine Periodic Adjustment methodology and provides that routine RRB Charge adjustments will take effect within a specified period of time after the filing of the applicable Routine True-Up Letter, the NHPUC might challenge an adjustment contained in a Routine True-Up Letter or may refuse to permit a routine adjustment to take effect, on the ground that the adjustment contains an error or for some other reason. The NHPUC also might challenge an adjustment contained in a Non-Routine True-Up Letter or might refuse to permit a non-routine adjustment to take effect, on the ground that the adjustment contains an error or for some other reason. Any such challenge or refusal by the NHPUC could cause a delay in the payments on the RRBs.

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The Servicer may not fulfill its obligations to act on behalf of the Holders to protect Holders from actions by the NHPUC or the State of New Hampshire, or the Servicer may be unsuccessful in any such attempt.

        The Servicer will agree in the Servicing Agreement, on behalf of the Holders, to take any action or Proceeding necessary to compel performance by the NHPUC and the State of New Hampshire of any of their obligations or duties under the Financing Act, the Finance Order or any True-Up Letter, including any actions reasonably necessary to block or overturn any attempts to cause a repeal or modification of the Financing Act or the Finance Order or the rights of Holders of the RRB Property by legislative enactment or constitutional amendment that would be adverse to the Holders. The Servicer, however, may not be able to take those actions for a number of reasons, including due to legal or regulatory restrictions, financial constraints and practical difficulties in successfully challenging any such legislative enactment or constitutional amendment. Additionally, any action the Servicer is able to take may not be successful. Any such failure to perform its obligations or to successfully compel performance by the NHPUC or the State of New Hampshire could negatively impact Holders' rights and result in a loss of their investment.

A municipal entity might assert the right to acquire portions of PSNH's electric distribution facilities and avoid payment of the RRB Charges.

        The Financing Act provides that if a municipal entity assumes responsibility for providing electric service to a portion of an electric utility's service territory—an event commonly referred to as municipalization—the NHPUC will, in matters over which the Federal Energy Regulatory Commission, or FERC, does not have jurisdiction or grants jurisdiction to the State of New Hampshire, determine the consequential damages arising from the assumption and establish a recovery mechanism for these damages. These consequential damages include those resulting from the electric utility's stranded investment. The Financing Act also provides that consequential damages are to be allocated between the RRB Charges and other rates and charges in a just and reasonable manner. If a municipalization occurs with respect to a portion of PSNH's service territory accounting for a significant portion of PSNH's revenues or sales, the NHPUC could underestimate future sales by the new municipal electric entity in determining the amount of PSNH's consequential damages under the Financing Act, which could cause shortfalls in RRB Charge Collections and delays in payments to Holders.

Neither the Issuing Entity nor PSNH is obligated to indemnify you for changes in law.

        Neither the Issuing Entity nor PSNH nor any of their successors, assignees or affiliates will indemnify you for any changes in the law, including any federal preemption or repeal or amendment of the Financing Act that might affect the value of your RRBs. Although PSNH or any successor assignee might be required to indemnify the Issuing Entity if legal action based on the law in effect at the time of the issuance of the RRBs invalidates the RRB Property, such indemnification obligations do not apply for any changes in law after the date the RRBs are issued, whether such changes in law are effected by means of any legislative enactment, any constitutional amendment or any final and non-appealable judicial decision. See "The Sale Agreement—Seller Representations and Warranties" and "The Servicing Agreement—Servicing Standards and Covenants" in this prospectus.

Risks Associated with Servicing

Your investment in the RRBs depends on PSNH or its successors or assignees acting as Servicer of the RRB Property.

        PSNH, as Servicer, will be responsible for, among other things, calculating, billing, collecting and posting the RRB Charges from Customers, submitting requests to the NHPUC to adjust these charges, monitoring the RRB Collateral for the RRBs and taking certain actions in the event of non-payment by a Customer. The Indenture Trustee's receipt of collections in respect of the RRB Charges will

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depend in part on the skill and diligence of the Servicer in performing these functions. The systems that the Servicer has in place for RRB Charge billings, collections and postings, as the same may be modified by any applicable current or future NHPUC Regulations, might, in particular circumstances, cause the Servicer to experience difficulty in performing these functions in a timely and accurate manner. In addition, should the Servicer enter into bankruptcy, to the extent permitted by law or a bankruptcy court, it may stop acting as Servicer, resulting in disruption of collection of RRB Charges. If the Servicer fails to make collections for any reason, then the Servicer's payments to the Indenture Trustee in respect of the RRB Charges might be delayed or reduced. In that event, the Issuing Entity's payments on the RRBs might be delayed or reduced.

Changes to billing, collection and posting practices might reduce the value of your investment in the RRBs.

        The Finance Order specifies the methodology for determining the amount of the RRB Charges the Issuing Entity may impose. However, subject to any required NHPUC approval, the Servicer may set its own billing, collection and posting arrangements with Customers from whom it collects RRB Charges, provided that these arrangements comply with any applicable NHPUC customer safeguards and the provisions of the Servicing Agreement. For example, to recover part of an outstanding bill, the Servicer may agree to compromise amounts due or to extend a Customer's payment schedule, including the RRB Charges, so long as such action is in accordance with the Servicer's existing collection policies and complies in all material respects with applicable law. Also, subject to any required NHPUC approval, the Servicer may change billing, collection and posting practices, which might adversely impact the timing and amount of Customer payments and might reduce RRB Charge Collections, thereby limiting the Issuing Entity's ability to make scheduled payments on the RRBs. Separately, the NHPUC might require changes to these practices. Any changes in billing, collection and posting practices or regulations might make it more difficult for the Servicer to collect the RRB Charges and adversely affect the value of your investment in the RRBs.

If the Issuing Entity needs to replace PSNH as the Servicer, the Issuing Entity may experience difficulties finding and using a replacement Servicer.

        Under certain circumstances, PSNH may resign as Servicer, or the Indenture Trustee or certain Holders may remove PSNH as Servicer. See "The Servicing Agreement—Matters Regarding the Servicer" and "The Servicing Agreement—Rights When Servicer Defaults." If PSNH ceases to service the RRB Property related to the RRBs, it might be difficult to find a successor Servicer. Also, any successor Servicer might have less experience and ability than PSNH and might experience difficulties in collecting RRB Charges and determining appropriate adjustments to the RRB Charges and billing and/or payment arrangements may change, resulting in delays or disruptions of collections. A successor Servicer might only be willing to perform such services for fees higher than those approved in the Finance Order or might charge fees that, although permitted under the Finance Order, are substantially higher than the fees paid to PSNH as Servicer. Although a Periodic Adjustment may be required to allow for the increase in fees, there could be a gap between the incurrence of those fees and the implementation of a Periodic Adjustment to adjust for that increase that might adversely affect distributions to Holders. In addition, in the event of the commencement of a case by or against the Servicer under the Bankruptcy Code or similar laws, the Issuing Entity and the Indenture Trustee might be prevented from effecting a transfer of servicing due to operation of the Bankruptcy Code. Any of these factors might delay the timing of payments and reduce the value of your investment.

It might be difficult for successor Servicers to collect the RRB Charges from PSNH's Customers.

        Any successor Servicer may bring an action against a Customer for non-payment of the RRB Charge, but only a successor Servicer that is a successor electric utility may terminate electric service for failure to pay the RRB Charge. A successor Servicer that does not have the threat of termination

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of electric service available to enforce payment of the RRB Charge would need to rely on the successor electric utility to threaten to terminate service for nonpayment of other portions of monthly electric utility bills. This inability might result in higher delinquencies and reduce the value of your investment. Also, a change in the Servicer would cause payment instructions to change, which could lead to a period of disruption in which Customers withhold payment or continue to remit payment according to the former payment instructions, resulting in delays in collection that could result in delays in payments on the RRBs.

Risk Associated with the Unusual Nature of the RRB Property

A shortfall in RRB Charge Payments as a result of inaccurate forecasting or unanticipated delinquencies could lead to payment delays or losses.

        Because the RRB Charges are assessed based on kilowatt-hours, or kWh, of electricity consumed by Customers, a shortfall of payments arising from the RRB Charges could result if the Servicer inaccurately forecasts electricity consumption or underestimates Customer delinquencies or charge-offs when setting the RRB Charges, both initially and at the time of any Periodic Adjustment of the RRB Charges. See "The Servicing Agreement—Periodic Adjustment Process" in this prospectus. A shortfall could cause payments on the RRBs to be made later than expected or not at all. As a result, payments of principal of the RRBs might not be paid according to the Expected Amortization Schedule, which would lengthen the weighted average life of the RRBs. In addition, a change in energy consumption by Customers might also result in payments of principal of the RRBs not being paid by the Final Maturity Date of the RRBs or not being paid at all. For the same reasons, payments of interest on the RRBs could also be delayed or not made. Although the RRB Charge adjustment process is intended to mitigate these risks over the life of the RRBs, the process may not prevent a temporary delay in payment.

        Inaccurate forecasting of electricity consumption by the Servicer could result from, among other things:

•

warmer winters or cooler summers, resulting in less electricity consumption than forecasted;

•

general economic conditions being worse than expected, causing Customers to migrate from PSNH's or a successor distribution company's service territory or reduce their electricity consumption;

•

the occurrence of a natural disaster, such as a blizzard or hurricane, unexpectedly disrupting electrical service and reducing consumption;

•

problems with energy generation, transmission or distribution resulting from a change in the market structure of the electric industry, including with respect to PSNH's transition from reliance on its own power generation to reliance on third-party power generators;

•

Customers accounting for a significant portion of PSNH's revenues or sales ceasing to do business or leaving PSNH's or a successor distribution company's service territory, which may be more likely because the Financing Act prohibits electric utilities from charging or assessing any exit fees on Customers;

•

Customers consuming less electricity because of increased conservation efforts or technological change; or

•

Customers accounting for a significant portion of PSNH's revenues or sales switching to self-generation or co-generation of electric power, which may be more likely because the Financing Act prohibits electric utilities from charging or assessing any exit fees on Customers.

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        Inaccurate forecasting of delinquencies or charge-offs by the Servicer could result from, among other things:

•

unexpected deterioration of the economy, the occurrence of a natural disaster, an act of war or terrorism or other catastrophic events, causing greater charge-offs than expected or forcing PSNH or a successor distribution company to grant additional payment relief to more Customers;

•

a change in law that makes it more difficult for PSNH or a successor distribution company to disconnect nonpaying Customers, or that requires PSNH or a successor distribution company to apply more lenient credit standards in accepting Customers; or

•

the introduction into the energy markets of less creditworthy third-party energy suppliers that are permitted under the Finance Order to collect and remit payments arising from the RRB Charges to the Servicer on behalf of Customers.

Time limitation on assessment of RRB Charges may lead to insufficient revenues to make payments.

        You may experience payment defaults on the RRBs because under the Finance Order the RRB Charges may only be billed and collected for two years after the Final Maturity Date of the latest maturing Tranche of RRBs. See "The Financing Act and the Finance Order" in this prospectus. If the principal of and interest on the RRBs have not been paid in full by the end of the period during which the RRB Charges may be assessed and collected, Holders may suffer a loss of their investment.

Unique nature of RRB Collateral may impair the Indenture Trustee's ability to realize on RRB Collateral.

        If there is an Event of Default on the RRBs and the Indenture Trustee elects or is directed by the Holders to foreclose on the RRB Property, there is likely to be a limited market, if any, for the RRB Property so the Indenture Trustee is unlikely to be able to resell the RRB Property because of its unique nature. Therefore, foreclosure might not be a realistic or practical remedy. Moreover, although principal of the RRBs will be due and payable upon acceleration of the RRBs after an Event of Default, payment of the RRB Charges by Customers likely would not be accelerated and therefore the principal of the RRBs would only be paid as funds become available. If there is an acceleration of the RRBs, all Tranches of the RRBs will be paid pro rata; therefore, some Tranches might be paid earlier than expected and some Tranches might be paid later than expected.

Risks Associated with External Factors Affecting Collections

Storm damage to PSNH's operations might impair payment of the RRBs.

        Severe weather, such as ice and snow storms, hurricanes and other natural disasters, may cause outages and property damage. The potential disruption of PSNH's operations or the operations of power generation facilities owned by third parties from which PSNH purchases power due to storms, natural disasters or other catastrophic events could be substantial. Generation, transmission, distribution and consumption of electricity might be interrupted temporarily, reducing the collections of RRB Charges. There might be longer-lasting adverse effects on residential and commercial development and economic activity in the PSNH service area, which could cause the per-kWh RRB Charges to be greater than expected. Legislative action adverse to the Holders might be taken in response, and such legislation, if challenged as a violation of the State Pledge, might be defended on the basis of public necessity. Please read "The Financing Act and the Finance Order" and "Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions—Future New Hampshire Legislative Action Might Attempt to Invalidate the RRBs or the RRB Property" in this prospectus.

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Technological change might make alternative energy sources more attractive in the future.

        Technological developments and/or tax or other economic incentives might result in the introduction of economically attractive, more fuel-efficient, more environmentally-friendly and/or more cost-effective alternatives to purchasing electricity through a utility's distribution facilities for increasing numbers of Customers. Manufacturers of self-generation facilities may develop smaller-scale, more fuel-efficient on-site generating and/or storage units that can be cost-effective options for a greater number of Customers. Moreover, an increase in self-service power may result if extreme weather conditions cause shortages of grid-supplied energy or if other factors cause grid-supplied energy to be less reliable. Customers who self-generate their electricity must pay the RRB Charges to the extent that such energy, or emergency back-up power, is transmitted through use of a utility's delivery system. Technological developments might allow greater numbers of Customers to reduce or even altogether avoid RRB Charges under such provisions through on-site generation and storage. This might reduce the kilowatt-hours of electric energy delivered to Customers by means of PSNH's transmission and distribution facilities, thereby causing reduced collections and payment delays on the RRBs. In addition, RRB Charges to the remaining Customers would increase, which could increase the risk of charge-offs.

Risks Associated with Potential Bankruptcy Proceedings

        For a detailed discussion of the following risks, please read "Bankruptcy and Creditors' Rights Issues" in this prospectus. In addition, the risk factors enumerated below in this subsection are based on general legal principles and outcomes; each bankruptcy case is factually unique, and the outcome of any bankruptcy case is based upon the application of legal principles to the specific facts of that bankruptcy case.

Bankruptcy of PSNH or any successor or assignee could result in losses or delays in payments on the RRBs.

        The Financing Act provides that as a matter of New Hampshire law:

•

RRB Property may be sold to one or more special purpose financing entities, that is authorized by a finance order to issue rate reduction bonds, acquire the RRB Property, or both on behalf of an electric utility.

•

The sale or transfer of the RRB Property shall be treated as a "true sale" or absolute transfer, if the parties to the transfer expressly so state in the governing documentation, in a transaction approved by a finance order and made in connection with the issuance of the RRBs.

•

The characterization of the transfer of the RRB Property as a "true sale" will not be impaired or negated notwithstanding any contrary treatment of such transfer for accounting, tax or other purposes.

•

The RRB Charges constitute RRB Property within the meaning of the Financing Act and will represent a current and irrevocable vested property right including, without limitation, the right, title and interest of PSNH or the Issuing Entity in and to all revenues, collections, claims, payments, money or proceeds of or arising from the RRB Charges authorized pursuant to the Finance Order to recover the RRB Costs and all rights to obtain adjustments to the RRB Charges pursuant to the terms of the Finance Order, and shall constitute a current and irrevocable vested property right, notwithstanding the fact that the value of such property right may depend upon electricity usage or the performance of certain services.

        These principles are important to maintaining payments on the RRBs in accordance with their terms during any bankruptcy of PSNH. In addition, the transaction has been structured with the objective of keeping the Issuing Entity separate from PSNH in the event of a bankruptcy of PSNH.

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        The Financing Act further provides that the interest of an assignee or pledgee in RRB Property specified in the Finance Order, and in the revenue and collections arising from that property, is not subject to setoff, counterclaim, surcharge, or defense by the electric utility or any other person or in connection with the reorganization, bankruptcy, or other insolvency of the electric utility or any other entity.

        A bankruptcy court generally follows state property law on issues such as those addressed by the four principles described above. However, a bankruptcy court has authority not to follow state law if it determines that the state law is contrary to a paramount federal bankruptcy policy or interest. If a bankruptcy court in a bankruptcy of PSNH refused to enforce one or more of the state property law provisions described above for this reason, the effect of this decision on you as a Holder could be similar to the treatment you would receive in a bankruptcy of PSNH if the RRBs had been issued directly by PSNH, including without limitation possibly causing material delays in payment of, or losses on, your RRBs and possibly materially reducing the value of your investment in the RRBs. Specific examples of possible effects are set forth below. A decision by the bankruptcy court that, despite the separateness of the Issuing Entity from PSNH, the assets and liabilities of the Issuing Entity and those of PSNH should be substantively consolidated would have a similar effect on you as a Holder.

        The Issuing Entity has taken steps together with PSNH, as the Seller, to reduce the risk that in the event PSNH or an affiliate of PSNH were to become the debtor in a bankruptcy case, a court would order that the assets and liabilities of the Issuing Entity would be substantively consolidated with those of PSNH or an affiliate. Such steps include, without limitation, provisions in the LLC Agreement of the Issuing Entity concerning entity separation and requiring an independent manager. Nonetheless, these steps might not be effective, and thus if PSNH or an affiliate of PSNH were to become a debtor in a bankruptcy case, a court may order that the assets and liabilities of the Issuing Entity be consolidated with those of PSNH or the affiliate.

        Additionally, a bankruptcy filing by PSNH could trigger a bankruptcy filing by the Issuing Entity with similar negative consequences for Holders. In a recent bankruptcy case, In re General Growth Properties, Inc., General Growth Properties, Inc., or GGP, filed for bankruptcy together with many of its direct and indirect subsidiaries, including many subsidiaries that were organized as special purpose financing entities. The Southern District of New York bankruptcy court upheld the validity of the filings of these special purpose subsidiaries. Additionally, as part of the original cash collateral motion, the debtors sought approval of a debtor in possession loan to GGP and to GGP Limited Partnership that would be guaranteed by the special purpose entities and secured with second liens on substantially all their assets. As upstream guarantors, the special purpose entities would have received no direct benefit from the loan because the proceeds would have been disbursed to their parent entities. The debtor in possession loan that was ultimately approved by the bankruptcy court did not contain this guarantee or involve a pledge of assets of the special purpose entities. In a subsequent order, the court, while refusing to dismiss the chapter 11 petitions of certain special purpose entities, stated: "The salient point for purposes of these Motions is that the fundamental protections that the Movants negotiated and that the SPE structure represents are still in place and will remain in place during the Chapter 11 cases. This includes protection against the substantive consolidation of the project-level debtors with any other entities." The General Growth case nevertheless serves as a reminder that bankruptcy courts may subordinate legal rights of creditors in the interests of helping debtors reorganize.

        Regardless of whether a bankruptcy court makes any adverse determination with respect to substantive consolidation of the assets and liabilities of the Issuing Entity with PSNH or an affiliate of PSNH, a bankruptcy filing by PSNH or an affiliate of PSNH might cause material delays in payment of, or losses on, your RRBs and might materially reduce the value of your investment in the RRBs.

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        Specific effects of bankruptcy filing by PSNH or an affiliate of PSNH could include:

•

without permission from the bankruptcy court, the Indenture Trustee might be prevented from taking actions against PSNH or recovering or using funds on your behalf or replacing PSNH as the Servicer;

•

the bankruptcy court might order the Indenture Trustee to exchange the RRB Property for other property, which might be more illiquid or of lower value;

•

tax or other government liens on PSNH's property that arose after the transfer of the RRB Property to the Issuing Entity might nevertheless have priority over the Indenture Trustee's lien and might be paid from RRB Charge Collections before payments on your RRBs;

•

the Indenture Trustee's lien might not be properly perfected in RRB Charge Collections that were commingled with other funds of PSNH collected from Customers as of the date of PSNH's bankruptcy, or might not be properly perfected in all of the RRB Property, including, without limitation, if all perfection requirements are not met, and the lien might therefore be set aside in the bankruptcy, with the result that your RRBs would represent only general unsecured claims against PSNH;

•

the bankruptcy court might rule that neither the Issuing Entity's property interest nor the Indenture Trustee's lien extends to RRB Charges in respect of electricity consumed after the commencement of PSNH's bankruptcy case, with the result that your RRBs would represent only general unsecured claims against PSNH;

•

The Issuing Entity and PSNH might be relieved of the obligation to make any payments on your RRBs during the pendency of the bankruptcy case and might be relieved of any obligation to pay interest accruing after the commencement of the case;

•

PSNH might lower the interest rate, extend the maturity date or otherwise alter the terms of your RRBs as part of its plan of reorganization;

•

the bankruptcy court might rule that the RRB Charges should be used to pay a portion of the cost of providing electric service;

•

the bankruptcy court might rule that the remedy provisions of the Sale Agreement are unenforceable, leaving the Issuing Entity with an unsecured claim of actual damages against PSNH which might be expensive and difficult to prove or enforce;

•

the sale of the RRB Property might be construed as a financing and not a sale which might delay or limit payment on your RRBs and potentially deprive you of collateral securing the RRBs;

•

claims against PSNH or any successor or assignee might be limited in the event of a bankruptcy of the Seller;

•

a bankruptcy of PSNH or any successor or assignee could limit the remedies available to the Indenture Trustee;

•

if the Servicer defaults or enters bankruptcy Proceedings, it might be difficult to find a successor Servicer and payments on your RRBs might be temporarily suspended; or

•

if the Servicer enters bankruptcy Proceedings, the collections of the RRB Charges paid by the Servicer during a period of up to one year prior to the commencement of the bankruptcy case might constitute voidable preferences.

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Other Risks Associated with the Purchase of the RRBs

PSNH's obligation to indemnify the Issuing Entity for a breach of a representation or warranty might not be sufficient to protect your investment.

        PSNH will be obligated under the Sale Agreement to indemnify the Issuing Entity and the Indenture Trustee, for itself and on behalf of the Holders, only in specified circumstances. Similarly, PSNH will be obligated under the Servicing Agreement to indemnify the Issuing Entity and the Indenture Trustee, for itself and on behalf of the Holders only in specified circumstances. Please read "The Sale Agreement" and "The Servicing Agreement" in this prospectus.

        Neither the Indenture Trustee nor the Holders will have the right to accelerate payments on the related RRBs as a result of a breach under the Sale Agreement or Servicing Agreement, absent an Event of Default under the Indenture and the Series Supplement as described in "Description of the RRBs—Events of Default; Rights Upon Event of Default." Furthermore, PSNH might not have sufficient funds available to satisfy its indemnification obligations, and the amount of any indemnification paid by PSNH might not be sufficient for you to recover all of your investment in the RRBs. In addition, if PSNH becomes obligated to indemnify Holders, the ratings on the RRBs might be downgraded as a result of the circumstances causing the breach and the fact that Holders will be unsecured creditors of PSNH with respect to any of these indemnification amounts. PSNH will not indemnify any person for any loss, damages, liability, obligation, claim, action, suit or payment resulting solely from a downgrade in the ratings on the RRBs, or for any consequential damages, including any loss of market value of the RRBs resulting from a default or a downgrade of the ratings of the RRBs. Please read "The Sale Agreement—Seller Representations and Warranties and "—Indemnification" in this prospectus.

PSNH may sell property similar to the RRB Property through another affiliated entity in the future.

        PSNH may in the future without your review or approval sell property similar to the RRB Property to one or more entities other than the Issuing Entity in connection with a new issuance of bonds similar to the RRBs or similarly authorized types of bonds. Any new issuance may include terms and provisions that would be unique to that particular issue.

        In the event a Customer does not pay in full all amounts owed under any bill, including RRB Charges, PSNH, as Servicer, is required to allocate any resulting shortfalls in RRB Charges ratably based on the amounts of RRB Charges owing in respect of the RRBs, and the total amounts owed by that Customer. As a result, the Issuing Entity cannot assure you that the issuance of future rate reduction bonds would not cause reductions or delays in payment of your RRBs.

The Issuing Entity is issuing several Tranches of the RRBs.

        The Finance Order authorizes the Issuing Entity to issue one or more Tranches of rate reduction bonds not to exceed the aggregate principal amount of $690,000,000. RRB Charges collected by or for the benefit of PSNH will be allocated among the Tranches of RRBs as set forth in the Expected Amortization Schedule and the priority of payments set forth under "Description of the RRBs—How Funds in the Collection Account Will Be Allocated." However, the Issuing Entity cannot assure you that the existence of multiple Tranches of RRBs would not cause reductions or delays in payment on your RRBs. In addition, some matters relating to the RRBs may require the vote of the Holders of all Tranches of the RRBs. Your interests in these votes might conflict with the interests of the beneficial owners of RRBs of another Tranche and therefore these votes could result in an outcome that is materially unfavorable to you.

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Absence of a secondary market for the RRBs might limit your ability to resell RRBs.

        The underwriters for the RRBs might assist in resales of such RRBs but they are not required to do so. A secondary market for the RRBs might not develop. If a secondary market does develop, it might not continue or there might not be sufficient liquidity to allow you to resell any of your RRBs. The Issuing Entity does not anticipate that any RRBs will be listed on any securities exchange.

The RRBs' credit ratings might affect the market value of your RRBs.

        A downgrading of the credit ratings of the RRBs might have an adverse effect on the market value of the RRBs. Credit ratings might change at any time and an NRSRO has the authority to revise or withdraw its rating based solely upon its own judgment. In addition, any downgrade in the credit ratings of the RRBs may result in the RRBs becoming ineligible to be held by certain funds or investors, which may require such investors to liquidate their investment in the RRBs and result in lower prices and a less liquid market trading market for the RRBs.

The ratings are no indication of the expected rate of payment of principal on the RRBs and the Issuing Entity might pay principal of the RRBs later than expected.

        The RRBs will be rated by one or more established NRSROs. A rating is not a recommendation to buy, sell or hold the RRBs. The ratings merely analyze the probability that the Issuing Entity will repay the total principal amount of the RRBs at their respective Final Maturity Dates (which are later than the expected Scheduled Final Payment Dates) and will make timely interest payments. The ratings are not an indication that the NRSROs believe that principal payments are likely to be paid on time according to the Expected Amortization Schedule. Thus, the Issuing Entity might repay the principal of your RRBs later than you expect, which might materially reduce the value of your investment.

        Under Rule 17g-5 under the Exchange Act, NRSROs providing the issuing entity, sponsor or underwriter with the requisite certification will have access to all information posted on a website by the issuing entity, sponsor or underwriter for the purpose of determining the initial rating and monitoring the rating after the issuance date in respect of the RRBs. As a result, an NRSRO other than the Rating Agencies hired by PSNH may issue ratings on the RRBs, or unsolicited ratings, which may be lower, and could be significantly lower, than the ratings assigned by the Rating Agencies. The unsolicited ratings may be issued prior to, or after, the issuance date in respect of the RRBs. Issuance of any unsolicited rating will not affect the issuance of the RRBs. Issuance of an unsolicited rating lower than the ratings assigned by the Rating Agencies on the RRBs might adversely affect the value of the RRBs and, for regulated entities, could affect the status of the RRBs as a legal investment or the capital treatment of the RRBs. Investors in the RRBs should consult with their legal counsel regarding the effect of the issuance of a rating by an NRSRO other than the Rating Agencies that is lower than the rating of a Rating Agency. None of PSNH, the Issuing Entity, the underwriters or any of their affiliates will have any obligation to inform you of any unsolicited ratings assigned after the date of this prospectus. In addition, if the Issuing Entity or PSNH fail to make available to an NRSRO other than the Rating Agencies any information provided to any Rating Agency for the purpose of assigning or monitoring the ratings on the RRBs, a Rating Agency could withdraw its ratings on the RRBs, which could adversely affect the market value of your RRBs and could limit your ability to resell your RRBs.

Regulatory provisions affecting certain investors could adversely affect the liquidity and the regulatory treatment of investments in the RRBs.

        In Europe, the U.S. and elsewhere there continues to be increased political and regulatory scrutiny of the asset-backed securities industry. This has resulted in a range of regulations which are currently at various stages of implementation and which may have an adverse impact on the regulatory position of

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certain investors in securitizations and/or the incentives for certain investors to hold asset-backed securities, thereby affecting the liquidity of such securities. None of PSNH, the Issuing Entity nor any other party to the transaction of which this offering is a part makes any representation to any prospective investor or purchaser of the RRBs regarding the regulatory treatment of their investment in the RRBs now or at any time in the future. Investors in the RRBs are responsible for analyzing their own regulatory positions and are encouraged to consult their own investment and legal advisors regarding the suitability of the RRBs for investment.

        Among other regulations, investors based in the EU should be aware of the EU risk retention and due diligence requirements which currently apply, or are expected to apply in the future, in respect of various types of EU-regulated investors. Such requirements restrict a relevant investor from (among other things) investing in asset-backed securities unless: (a) that investor is able to demonstrate that it has undertaken certain due diligence in respect of various matters including its securities position, the underlying assets and (in the case of certain types of investors) the relevant sponsor or originator; and (b) the originator, sponsor or original lender in respect of the relevant securitization has explicitly disclosed to the investor that it will retain, on an on-going basis, a net economic interest of not less than 5% in respect of certain specified credit-risk tranches or asset exposures. Failure to comply with one or more of the requirements may result in various penalties, including, in the case of those investors subject to regulatory capital requirements, the imposition of a penal capital charge on the securities acquired by the relevant investor.

        The Issuing Entity and PSNH are of the opinion that the RRBs do not constitute an exposure to a "securitisation position" for the purposes of the EU risk retention and due diligence requirements and that, as such, the EU risk retention and due diligence requirements should not apply to investments in the RRBs. Therefore, neither the Issuing Entity, PSNH nor any other entity has committed to retain a material net economic interest in relation to this transaction.

If the investment of collected RRB Charges and other funds held pursuant to the Indenture and the Series Supplement in the Collection Account results in investment losses or the investments become illiquid, you might receive payment of principal of and interest on the RRBs later than you expect.

        Funds held pursuant to the Indenture and the Series Supplement in the Collection Account will be invested in Eligible Investments. Eligible Investments include money market funds having a rating from Moody's Investors Service, Inc. (or any successor in interest) and S&P Global Ratings (or any successor in interest), of Aaa and AAA, respectively. Although investments in these money market funds have traditionally been viewed as highly liquid with a low probability of principal loss, illiquidity and principal losses have been experienced by investors in certain of these funds as a result of disruptions in the financial markets in recent years. If investment losses or illiquidity are experienced, you might experience a delay in payments of principal and interest and a decrease in the value of your investment in the RRBs.

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REVIEW OF THE RRB PROPERTY

        Pursuant to Regulation AB, PSNH, as Sponsor, has performed a review of the RRB Property underlying the RRBs. As required by Regulation AB, the review was designed and effected to provide reasonable assurance that disclosure regarding the RRB Property is accurate in all material respects. PSNH did not engage a third party in conducting its review but consulted with its legal counsel and structuring agent in conducting its review.

        The RRBs will be secured under the Indenture by the RRB Collateral. The principal asset included within the RRB Collateral is the RRB Property. The RRB Property is a current and irrevocable vested property right of the Issuing Entity under the Finance Order, including, without limitation, all right, title and interest of the Issuing Entity in and to all revenues, collections, claims, payments, money or proceeds of or arising from the RRB Charges authorized pursuant to the Finance Order to recover the RRB Costs and to all rights to obtain adjustments to the RRB Charges pursuant to the terms of the Finance Order. The RRB Charges are non-bypassable and are payable by all Customers taking retail electric service from PSNH or its successors or assignees. RRB Charges are payable by Customers regardless of who they have chosen as their energy supplier and regardless of whether or not they are self-generating, so long as they are connected to PSNH's distribution system for back-up power.

        The RRB Property is not a static pool of assets. The RRB Charges included within the RRB Property are irrevocable and not subject to limitation, alteration, amendment, reduction or impairment or, except for the Periodic Adjustments to correct any overcollections or undercollections, adjustment by further action of the NHPUC. RRB Charges will be adjusted at least annually through an Annual Routine True-Up Letter filed by the Servicer with NHPUC no later than January 15 of each year to ensure that there are adequate funds to meet the Periodic RRB Payment Requirements for the two Remittance Periods beginning, respectively, on January 1 and July 1 of the year that such letter is filed. RRB Charges may be adjusted semi-annually through the filing of a Mid-Year Routine True-Up Letter no later than July 15 of each year if the Servicer reasonably projects that expected collections of the RRB Charges will be insufficient to meet the Periodic RRB Payment Requirements for the Remittance Period beginning on July 1 of such year. In addition, except during the two Remittance Periods preceding the Final Maturity Date of the latest maturing Tranche of RRBs, the Servicer may 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 if the Servicer reasonably projects that expected collections of the RRB Charges will be insufficient to meet the Periodic RRB Payment Requirements for the then-current Remittance Period. During the two Remittance Periods preceding the Final Maturity Date of the latest maturing Tranche of RRBs, if the Servicer reasonably projects that expected collections of the RRB Charges will be insufficient to meet the Periodic RRB Payment Requirements for the then-current Remittance Period, the Servicer will 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. There is no cap on the level of RRB Charges that may be imposed on Customers as a result of the Periodic Adjustments to pay on a timely basis scheduled principal of and interest on the RRBs and other ongoing costs as described under "Description of the RRBs—How Funds in the Collection Account will be Allocated." The RRB Collateral securing payment of the RRBs is described in more detail under "Description of the RRBs—Collateral for the RRBs" in this prospectus.

        In the Finance Order, NHPUC, among other things:

•

established the RRB Charge and authorized PSNH to collect the RRB Charge from all Customers taking retail electric service during the term that the RRBs are outstanding;

•

confirmed that the Holders and the Indenture Trustee will be entitled to rely on and are entitled to the benefit of the State Pledge; and

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•

approved the procedures and methodologies for adjusting the RRB Charges during the term that the RRBs are outstanding to ensure that the expected RRB Charge Collections are sufficient to pay on a timely basis scheduled principal of and interest on the RRBs and other ongoing costs.

        Please read "The Financing Act and the Finance Order" in this prospectus for more detail.

        The characteristics of the RRB Property are unlike the characteristics of assets underlying mortgage and other commercial asset securitizations because the RRB Property is a creature of statute and state regulatory commission proceedings. Because the nature and characteristics of the RRB Property and many elements of the securitization are set forth in and constrained by the Financing Act and the Finance Order, PSNH, as Sponsor, does not select the assets to be securitized in ways common to many securitizations. Moreover, the RRBs do not contain origination or underwriting elements similar to typical mortgage or other loan transactions involved in other forms of asset-backed securities. The Financing Act and the Finance Order require the imposition on, and collection of RRB Charges from, existing and future Customers. Since the RRB Charges are assessed against all such Customers and the Periodic Adjustments adjust for the impact of Customer defaults, the collectability of the RRB Charges is not ultimately dependent upon the credit quality of particular Customers, as would be the case in the absence of the Periodic Adjustments.

        The review by PSNH of the RRB Property underlying the RRBs has involved a number of discrete elements as described in more detail below. PSNH has analyzed and applied the Financing Act's requirements for securitization of qualified costs in seeking approval of the NHPUC for the issuance of the Finance Order and in its proposal with respect to the characteristics of the RRB Property to be created pursuant to the Finance Order. PSNH worked with its counsel and its financial advisor in preparing the petition for a Finance Order and with the NHPUC on the terms of the Finance Order. Moreover, PSNH worked with its counsel, its structuring agent and counsel to the structuring agent and the underwriters in preparing the legal agreements that provide for the terms of the RRBs and the collateral for the RRBs. PSNH has analyzed economic issues and practical issues for the collection of the RRB Charges and the scheduled payment of the RRBs, including the impact of economic factors, potential for disruptions due to weather or catastrophic events and its own forecasts for electricity usage as well as the historic accuracy of its prior forecasts.

        In light of the unique nature of the RRB Property, PSNH has taken (or, prior to the offering of the RRBs, will take) the following actions in connection with its review of the RRB Property and the preparation of the disclosure for inclusion in this prospectus describing the RRB Property, the RRBs and the proposed securitization:

•

reviewed the Financing Act, other relevant provisions of New Hampshire statutes and any applicable NHPUC Regulations as they relate to the RRB Property in connection with the preparation and filing of the application with the NHPUC for the approval of the Finance Order in order to confirm that the application and proposed Finance Order satisfied applicable statutory and regulatory requirements;

•

actively participated in the proceedings before the NHPUC relating to the approval of the Finance Order;

•

compared the process by which the Finance Order was adopted and approved by the NHPUC to the requirements of the Financing Act and any applicable NHPUC Regulations as they relate to the RRB Property to confirm that it met such requirements;

•

compared the proposed terms of the RRBs to the applicable requirements in the Financing Act, other relevant provisions of New Hampshire statutes, the Finance Order and any applicable NHPUC Regulations to confirm that they met such requirements;

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•

prepared and reviewed the agreements to be entered into in connection with the issuance of the RRBs and compared such agreements to the applicable requirements in the Financing Act, other relevant provisions of New Hampshire statutes, the Finance Order and any applicable NHPUC Regulations to confirm that they met such requirements;

•

reviewed the disclosure in this prospectus regarding the Financing Act, other relevant provisions of New Hampshire statutes, the Finance Order and the agreements to be entered into in connection with the issuance of the RRBs, and compared such descriptions to the relevant provisions of the Financing Act, other relevant provisions of New Hampshire statutes, the Finance Order and such agreements to confirm the accuracy of such descriptions;

•

consulted with legal counsel to assess if there is a basis upon which the Holders (or the Indenture Trustee acting on their behalf) could successfully challenge the constitutionality of any legislative action by the State of New Hampshire (including the NHPUC) that could repeal or amend the securitization provisions of the Financing Act that could substantially impair the value of the RRB Property, or substantially reduce, alter or impair the RRB Charges;

•

reviewed the process and procedures in place for it, as Servicer, to perform its obligations under the Servicing Agreement, including billing, collecting and posting the RRB Charges to be provided for under the RRB Property, forecasting RRB Charges, and preparing and filing applications for Periodic Adjustments to the RRB Charges;

•

reviewed the methodology and procedures for the Periodic Adjustments for adjusting RRB Charge levels to meet the scheduled payments on the RRBs and in this context took into account its experience with the NHPUC; and

•

with the assistance of the underwriters, prepared financial models in order to set the initial RRB Charges to be provided for under the RRB Property at a level sufficient to pay on a timely basis scheduled principal of and interest on the RRBs and other ongoing costs.

        In connection with the preparation of such models, PSNH:

•

reviewed (i) the historical electric usage and Customer growth within its service territory and (ii) forecasts of expected electric usage and Customer growth;

•

reviewed its historical collection of RRB Charges with respect to the 2001 and 2002 securitization bonds issued by an affiliate of PSNH and reviewed the resulting payment history and true-up adjustment experience with respect to the 2001 and 2002 bonds; and

•

analyzed the sensitivity of the weighted average life of the RRBs in relation to variances in actual electric usage from forecasted levels and in relation to the Periodic Adjustments in order to assess the probability that the weighted average life of the RRBs may be extended as a result of such variances, and in the context of the Periodic Adjustments for adjustment of RRB Charges to address undercollections or overcollections in light of scheduled payments on the RRBs.

        As a result of this review, PSNH has concluded that:

•

the RRB Property, the Finance Order and the agreements to be entered into in connection with the issuance of the RRBs meet in all material respects the applicable statutory and regulatory requirements;

•

the disclosure in this prospectus regarding the Financing Act, other relevant provisions of New Hampshire statutes, the Finance Order and the agreements to be entered into in connection with the issuance of the RRBs is accurate in all material respects;

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•

the Servicer has adequate processes and procedures in place to perform its obligations under the Servicing Agreement;

•

RRB Charges, as adjusted from time to time as provided in Financing Act and the Finance Order, are expected to generate sufficient revenues to pay on a timely basis scheduled principal of and interest on the RRBs and other ongoing costs; and

•

the design and scope of PSNH's review of the RRB Property as described above is effective to provide reasonable assurance that the disclosure regarding the RRB Property in this prospectus is accurate in all material respects.

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THE FINANCING ACT AND THE FINANCE ORDER

        The Financing Act was enacted into New Hampshire law on June 12, 2000 to provide for the issuance of rate reduction bonds to enable by PSNH to recover certain stranded costs associated with the restructuring of the electric industry in the State of New Hampshire. The Financing Act was subsequently amended on July 9, 2015 to specifically authorize the use of securitization by PSNH to recover certain stranded costs resulting from the divestiture of some or all of PSNH's generation assets.

        The Financing Act authorizes the NHPUC to issue a finance order, which is a regulatory order that approves the recovery of certain costs incurred by PSNH through a securitization. On June 15, 2017, PSNH filed with the NHPUC a petition for a finance order to approve the issuance of RRBs to enable PSNH to recover certain of its stranded costs resulting from the divestiture of its generating assets. An updated and amended version of the petition was filed with the NHPUC on November 13, 2017. On December 6, 2017, the NHPUC held a hearing on PSNH's petition. The petition was supported by the staff of the NHPUC as well as the New Hampshire Office of the Consumer Advocate. No party opposed PSNH's petition or sought to intervene in the matter. On January 30, 2018, the NHPUC issued the Finance Order. Pursuant to New Hampshire law, the Finance Order became final on March 1, 2018. Pursuant to the Financing Act, the Finance Order is irrevocable and is not subject to rescission, alteration or amendment by further action of the NHPUC, except for the Periodic Adjustments to the RRB Charge.

        The Financing Act permits PSNH to recover any RRB Costs through the issuance of the RRBs. The Financing Act defines RRB Costs to include, among other items, expenditures incurred to implement the 2015 Settlement Agreement or other divestitures of some or all of PSNH's generating assets as ordered by the NHPUC. The NHPUC approved the 2015 Settlement Agreement on July 1, 2016 in Docket No. DE 14-238 and subsequently approved the contracts for divestiture of certain of PSNH's generation assets by orders issued on November 28 and 29, 2017 in Docket No. DE 17-124. The Finance Order expressly approved the costs to be securitized through the issuance of the RRBs and found that the entire amount of RRB Costs approved under the Finance Order is eligible to be considered "RRB Costs" within the meaning of RSA 369-B:2, XIV, is reasonable, and is eligible to be funded with the proceeds of the RRBs issued under the authority of the Finance Order.

        The Finance Order authorizes the issuance of the RRBs in one or more series in an aggregate principal amount not to exceed $690,000,000. The Finance Order permits PSNH to determine the final principal amount of RRBs to be issued after the divestiture of the thermal (fossil) generation assets as approved by the NHPUC has been consummated and PSNH has a reasonable basis to calculate its stranded costs, unrecovered deferrals, transaction costs, tax stabilization payments, employee protections and other costs with respect to such divesture. The Finance Order also approves the organization and capitalization of the Issuing Entity, the creation of the RRB Property and the use of proceeds of the RRBs. The Finance Order contains all determinations that are required under the Financing Act, including with respect to the reasonableness of the RRB Charge and the issuance of the Finance Order being consistent with the public interest.

        The Finance Order establishes, among other things, the RRB Charge to recover the stranded costs specified therein. Pursuant to the Financing Act, the RRB Charge is non-bypassable in that Customers must pay the RRB Charge whether or not they receive retail electric service from PSNH or a third party supplier of energy, and whether or not their distribution system is being operated by PSNH or a successor distribution company. The Financing Act provides that the right to collect payments based on the RRB Charge is a property right which may be pledged, assigned or sold in connection with the issuance of RRBs. The Finance Order expressly provides that the sale of the RRB Property will be treated as a true sale, and not as a pledge or other financing, pursuant to the Financing Act. In addition, the Finance Order provides that upon the sale of the RRB Property to the Issuing Entity, the

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Issuing Entity, the Holders and the Indenture Trustee will be entitled to rely on and entitled to the benefit of the State Pledge.

        The RRB Charges are permitted to be adjusted periodically, but not less frequently than annually nor more frequently than monthly, as specified in the Finance Order and are assessed as an amount per kilowatt-hour of electricity usage by a Customer. See "Description of the Servicing Agreement—Periodic Adjustment Process." In addition to the Periodic Adjustments, the Finance Order permits the Issuing Entity to bill and collect RRB Charges for an additional two (2) years beyond the Scheduled Final Payment Date for the latest maturing Tranche of RRBs (or, if earlier, through the date on which the RRB Costs have been fully paid).

        The Finance Order provides that PSNH shall file, for informational purposes, an Issuance Advice Letter relating to the issuance of the RRBs to the NHPUC. The Issuance Advice Letter will establish the final structure and repayment terms of the RRBs, the identity of the Issuing Entity, the total principal amount and pricing of the RRBs, the initial RRB Charges by Customer class to be implemented upon issuance of the RRBs, the capital contribution amount and the actual upfront transaction costs. The filing of the Issuance Advice Letter is not a condition to the effectiveness of the Finance Order or the issuance of the RRBs. In addition, within 90 days following the RRB issuance, and within 60 days of the end of each fiscal quarter thereafter until the proceeds have been applied in full, PSNH shall file with the NHPUC a report showing the use of RRB proceeds in compliance with the Finance Order.

        The Financing Act and the Finance Order provide that the RRBs will not constitute a debt or liability of the State of New Hampshire or of any political subdivision thereof, and will not constitute a pledge of the full faith and credit of the State or any of its political subdivisions. The Finance Order provides that the issuance of the RRBs does not directly, indirectly, or contingently obligate the State of New Hampshire or any political subdivision thereof to make any appropriation for their payment.

        In the Financing Act, the State of New Hampshire has pledged, contracted and agreed with the Issuing Entity, as owner of the RRB Property, and the Holders and the Indenture Trustee that neither the state nor any of its agencies, including the NHPUC, will limit, alter, amend, reduce, or impair the RRB Charges, RRB Property, Finance Order, and all rights thereunder or ownership thereof or security interest therein until the RRBs, including all principal, interest, premium, costs and arrearages thereon, are fully met and discharged, unless adequate provision is made by law for the protection of the Issuing Entity, Holders and the Indenture Trustee. In the Finance Order, the NHPUC approved that the Issuing Entity, Holders and the Indenture Trustee will be entitled to rely on and will be entitled to the benefit of the pledge, contract and agreement set forth above.

Constitutional Matters

        Ropes & Gray LLP expects to deliver an opinion, in connection with the closing of the offering of the Rate Reduction Bonds, as to whether, with respect to United States federal law, a reviewing court of competent jurisdiction, in a properly prepared and presented case, would conclude that: (i) the pledge contained in Section 369-B:6 of the Financing Act constitutes a contractual relationship between the Holders and the State of New Hampshire for purposes of Article I, Section 10 of the United States Constitution; (ii) absent a demonstration by the State of New Hampshire that a substantial impairment of that contract is reasonable and necessary to further a significant and legitimate public purpose, the Holders (or the Indenture Trustee acting on their behalf) could successfully challenge under the federal Contract Clause the constitutionality of any law subsequently enacted, whether by legislation or by voter initiative, determined by such court to limit, alter, impair or reduce the value of the RRB Charge, the RRB Property, the Finance Order and all rights thereunder or ownership thereof or security interest therein, so as to cause a substantial impairment prior to the time that the Rate Reduction Bonds are fully paid and discharged, unless adequate provision shall be made by law for the protection

30

of the Issuing Entity, the Holders and the Indenture Trustee; (iii) although sound and substantial arguments might support the granting of preliminary and permanent injunctive relief to prevent implementation of any law determined to limit, alter, impair or reduce the value of the RRB Charge or the RRB Property in violation of the federal Contract Clause, the decision to do so will be in the discretion of the court requested to take such action, which will be exercised on the basis of the considerations discussed in the opinion; and (iv) the State of New Hampshire would be required to pay just compensation to Holders if the State of New Hampshire, including its agencies, acted in contravention of the pledge contained in Section 369-B:6 of the Financing Act, after the Rate Reduction Bonds are issued, but before they are fully paid, and the action (a) constituted a permanent appropriation of a property interest of Holders in the Rate Reduction Bonds or the RRB Property or denied all economically beneficial or productive use of the RRB Property; (b) destroyed the RRB Property, other than in response to so-called emergency conditions; or (c) substantially limited, altered, impaired or reduced the value of the RRB Property in a manner that inflicts a severe economic impact on such Holders and unduly interferes with their reasonable expectations, unless adequate provision shall be made by law for the protection of the Holders. We will file a copy of the opinion as an exhibit to an amendment to the registration statement of which this prospectus is a part or to one of our periodic filings with the SEC.

        For a discussion of risks associated with potential judicial, legislation or regulatory actions, please read "Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions."

        McLane Middleton, Professional Association expects to deliver an opinion, in connection with closing of the offering of the Rate Reduction Bonds, as whether, with respect to New Hampshire law, a reviewing court of competent jurisdiction, in a properly prepared and presented case, would conclude that: (i) the pledge contained in Section 369-B:6 of the Financing Act constitutes a contractual relationship between the Holders and the State of New Hampshire for purposes of Part 1, Article 23 of the New Hampshire Constitution, or the N.H. Contract Clause; (ii) absent a demonstration by the State of New Hampshire that a substantial impairment of that contract is reasonable and necessary to further a significant and legitimate public purpose, the Holders (or the Indenture Trustee acting on their behalf) could successfully challenge under the N.H. Contract Clause the constitutionality of any law subsequently enacted, determined by such court to limit, alter, impair, amend, or reduce the value of the RRB Property, the RRB Charge, the Finance Order, and all rights thereunder or ownership thereof or security interest therein so as to cause a substantial impairment prior to the time that the Rate Reduction Bonds are fully paid and discharged, unless adequate provision shall be made by law for the protection of the Issuing Entity, the Holders and the Indenture Trustee; (iii) although sound and substantial arguments might support the granting of preliminary and permanent injunctive relief to prevent implementation of any law determined to alter, impair or reduce the value of the RRB Property in violation of the N.H. Contract Clause, the decision to do so will be in the discretion of the court requested to take such action, which will be exercised on the basis of the considerations discussed in the opinion; and (iv) the State of New Hampshire would be required to pay just compensation to Holders if, after the Rate Reduction Bonds are issued, but before they are fully paid, the State of New Hampshire, including its agencies, acted in contravention of the pledge contained in Section 369-B:6 of the Financing Act and the action materially affected a substantial vested property interest of Holders in the Rate Reduction Bonds or the RRB Property and (a) constituted a permanent appropriation of such substantial property interest or denied all economically beneficial or productive use of the RRB Property; (b) destroyed the RRB Property, other than in response to so-called emergency conditions or overriding public policy; or (c) substantially limited, altered, amended, impaired, or reduced the value of the RRB Property in a manner that inflicts a severe economic impact on such Holders and unduly interferes with their reasonable investment expectations and, in some circumstances, was arbitrary and unreasonable, unless adequate provision shall be made by law for the protection of the Holders. We will file a copy of the opinion as an exhibit to an amendment to the registration statement of which this prospectus is a part or to be one of our periodic filings with the SEC.

        For a discussion of risks associated with potential judicial, legislation or regulatory actions, please read "Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions."

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DESCRIPTION OF THE ISSUING ENTITY

General

        The Issuing Entity is a limited liability company organized under the laws of the State of Delaware and will be governed by the LLC Agreement to be entered into upon issuance of the RRBs. PSNH is the Issuing Entity's sole member. The Issuing Entity was formed on January 18, 2018. The Issuing Entity's fiscal year ends on December 31 of each year.

        The Issuing Entity has been organized to serve as a special purpose subsidiary of PSNH, for the limited purpose of acquiring and holding the RRB Property and certain Other Collateral and to issue and sell the RRBs. At the time of the issuance of the RRBs, the Issuing Entity's assets will consist of the RRB Property and the Other Collateral, which includes (i) the rights of the Issuing Entity held under the Basic Documents (ii) the Collection Account and (iii) any Investment Earnings on amounts held by the Issuing Entity, with the exception of Capital Subaccount Investment Earnings. See "Description of the RRBs—Collateral for the RRBs" in this prospectus.

        As of the date of this prospectus, the Issuing Entity has not carried on any business activities and has no operating history. The LLC Agreement has been filed as an exhibit to the registration statement of which this prospectus forms a part.

        On or before the date of issuance of the RRBs, PSNH will make a capital contribution to the Issuing Entity in an amount equal to 0.5% of the initial principal amount of the RRBs which will be held in the Capital Subaccount. When the RRBs have been fully paid, any balance in the Capital Subaccount (including Capital Subaccount Investment Earnings not previously remitted to PSNH) shall belong and be returned to PSNH in its capacity as equityholder of the Issuing Entity (and for the avoidance of doubt will not be credited to PSNH's Customers). In addition, Capital Subaccount Investment Earnings will be remitted to PSNH on a monthly basis.

        The Issuing Entity will enter into a Servicing Agreement under which PSNH, on the Issuing Entity's behalf, will manage, service and administer, and make collections in respect of, the RRB Property. See "The Servicing Agreement" in this prospectus.

        The Issuing Entity's principal place of business is C/O Public Service Company of New Hampshire, Energy Park, 780 North Commercial Street, Manchester, New Hampshire 03101-1134.

Managers and Officers

        Pursuant to the LLC Agreement, the Issuing Entity's business will be managed by a management committee consisting of three or more Managers. The LLC Agreement will require that the Issuing Entity have at least one Independent Manager. The Independent Manager must be a natural person who is familiar with and has experience in asset securitization and meets certain customary independence criteria.

        Consent of the Independent Manager will be required to:

•

amend provisions of fundamental organizational documents which ensure the bankruptcy-remoteness of the Issuing Entity;

•

institute or to consent to the institution of bankruptcy or insolvency Proceedings against the Issuing Entity; and

•

dissolve, liquidate or wind up the Issuing Entity.

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        The following is an expected list of the Issuing Entity's Managers and Officers upon the issuance of the RRBs:

Name	Age		Title	Background
Philip J. Lembo		62	President and Chief Financial Officer	President and Chief Financial Officer of the Issuing Entity since its inception in January 2018. Mr. Lembo has served as Executive Vice President (previously Senior Vice President) and Chief Financial Officer of Eversource Energy since August 2016, and of PSNH since May 2016. He has served as a director of PSNH since May 2016. As the Chief Financial Officer, Mr. Lembo reports directly to Eversource's Chief Executive Officer and is responsible for all executive financial management and oversight of Eversource and PSNH, as well as overall executive responsibility, oversight and management of Eversource's regulatory requirements and rate making activities, supply chain and procurement activities, and all investor communications and relationships with investors and lenders. Previously, Mr. Lembo served as Vice President and Treasurer of Eversource and PSNH from April 2012 to May 2016.
Jay S. Buth		48	Vice President, Controller and Chief Accounting Officer	Vice President, Controller and Chief Accounting Officer of the Issuing Entity since January 2018, and of Eversource Energy and PSNH since April 2012. As the Controller of Eversource, Mr. Buth has executive financial oversight over the internal controls, accounting, tax and financial reporting of Eversource and PSNH. Mr. Buth is a Certified Public Accountant.
Christine L. Vaughan		50	Vice President and Treasurer and Manager	Vice President and Treasurer and a Manager of the Issuing Entity since January 2018; Vice President and Treasurer of Eversource since May 2017; and Vice President-Rates and Regulatory Requirements since April 2012 and Treasurer of PSNH since March 2017. As the Treasurer of Eversource, Ms. Vaughan has executive oversight of Eversource and PSNH's capital structure, liquidity, and financing activities. Ms. Vaughan also has executive oversight for ensuring the compliance with regulatory requirements in the states in which Eversource operates, as well as responsibility for filing of rate and regulatory activities in those states as well. Ms. Vaughan is a Certified Financial Analyst. Based on her experience described above, Ms. Vaughan has the skills and qualifications necessary to serve as a Manager of the Issuing Entity.
Emilie G. O'Neil		57	Assistant Treasurer and Manager	Assistant Treasurer and a Manager of the Issuing Entity since January 2018; Assistant Treasurer of Eversource Energy since May 2017, and Assistant Treasurer-Corporate Finance and Cash Management of PSNH since March 2017. Ms. O'Neil is responsible for assisting the Treasurer is all aspects of the Treasury operations, cash management, rating agency presentations and lender relationships. Previously, Ms. O'Neil served as Director of Corporate Finance and Cash Management for Eversource Service from April 2012 to March 2017. Based on her experience described above, Ms. O'Neil has the skills and qualifications necessary to serve as a Manager of the Issuing Entity.

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Name	Age		Title	Background
Michelle A. Dreyer		46	Independent Manager	Ms. Dreyer will become an Independent Manager of the Issuing Entity upon the issuance of the RRBs. She joined Corporation Service Company in 1999 and has served as a Manager of Independent Director Services at Corporation Service Company since 2005. In that capacity, Ms. Dreyer has gained the experience necessary to be qualified to serve as a Manager of the Issuing Entity.

        No compensation has been paid by the Issuing Entity to any Manager or Officer since the Issuing Entity was formed. The Issuing Entity's Managers and Officers, other than any Independent Manager, are officers, directors or Managers of PSNH or its other affiliates and have not been and will not be separately compensated by the Issuing Entity for their services on the Issuing Entity's behalf. The Issuing Entity will pay the Independent Manager annual fees from its revenues and will reimburse such Independent Manager for reasonable expenses in connection with the RRBs. The LLC Agreement will further provide that, to the fullest extent permitted by law, the Issuing Entity will indemnify the Managers and Officers against any liability incurred in connection with their services as Managers and Officers for the Issuing Entity. The Issuing Entity will pay any indemnification amounts owed to Managers and Officers out of funds in the Collection Account, subject to the priority of payments described in "Description of the RRBs—How Funds in the Collection Account Will Be Allocated" in this prospectus.

Restricted Purposes

        The Issuing Entity has been created for the following limited purposes:

•

to acquire, own, hold, administer, service, and enter into the Basic Documents to which it shall be a party and any other agreements regarding the receipt and servicing of the RRB Property, along with certain other related assets;

•

to enter into, perform and comply with the Sale Agreement, assignment agreements or other agreements providing for the purchase of the RRB Property and related assets by the Issuing Entity; and to enter into, perform and comply with such servicing agreements, administration agreements, collection account agreements and other similar agreements as may be necessary or desirable in connection with such sale agreements;

•

to issue, sell, authorize and deliver the RRBs and to enter into any agreement or document providing for the authorization, issuance, sale and delivery of the RRBs;

•

to manage, collect amounts due on, sell, exchange, assign, pledge, encumber or otherwise deal with all or any part of the RRB Collateral, and, in connection therewith, to accept, collect, hold, sell, exchange or otherwise dispose of evidences of indebtedness or other property received pursuant thereto, including the encumbrance of all of the RRB Collateral as collateral security for the RRBs;

•

to invest proceeds from the RRB Property and its other assets and any capital and income of the Issuing Entity in accordance with the Basic Documents or as otherwise determined by the management committee of the Issuing Entity and not inconsistent with the LLC Agreement or the Basic Documents;

•

to execute any registration statement, offering document or related agreements or disclosures related to the issuance of rate reduction bonds or other instruments secured by the RRB Property; and

•

to engage in any lawful act or activity and to exercise any powers permitted to limited liability companies formed under the laws of the State of Delaware that, in either case, are incidental to and necessary, suitable or convenient for the accomplishment of the above-mentioned purposes.

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        The LLC Agreement of the Issuing Entity will provide that it shall not engage in any activity other than in connection with the foregoing or other than as required or authorized by the terms of the Sale Agreement, any Basic Document or any other agreement referenced above.

The Issuing Entity's Relationship with PSNH

        On the issuance date, PSNH will sell RRB Property to the Issuing Entity pursuant to the Sale Agreement between the Issuing Entity and PSNH. PSNH will service such RRB Property pursuant to a Servicing Agreement between the Issuing Entity and PSNH related to the RRBs. Please read "The Sale Agreement" and "The Servicing Agreement" in this prospectus. PSNH will provide certain administrative services to the Issuing Entity pursuant to an administration agreement.

        The RRBs will be included on the consolidated balance sheet of its parent, PSNH, as required by Generally Accepted Accounting Principles and the SEC Office of Chief Accountant governing corporate financial reporting for investor-owned utilities. The Issuing Entity's RRBs will be treated as debt of PSNH for U.S. federal income tax purposes. See "Material U.S. Federal Income Tax Considerations" in this prospectus. For federal income tax purposes, PSNH will not recognize gross income unless and until PSNH bills Customers for the RRB Charges and only in connection with such billing of Customers for such RRB Charges.

The Issuing Entity is Responsible to the NHPUC

        The Issuing Entity is responsible to the NHPUC to the extent provided in the Basic Documents, the Finance Order and the Financing Act. Specifically, the NHPUC has approved the initial issuance of the RRBs pursuant to the Finance Order and the Servicer will file periodic Advice Letters with the NHPUC to adjust the RRB Charge in order to make scheduled payments of principal and interest on the RRBs.

Continuing Disclosure: SEC Filings

        The Issuing Entity plans to file with the SEC required periodic and current reports related to the RRBs consistent with the disclosure and reporting regime established in Regulation AB and will also post those periodic and current reports at a website associated with the Issuing Entity or its affiliates.

The Issuing Entity is a Separate and Distinct Legal Entity

        The transaction of which this offering is a part is structured so that, in the event of a bankruptcy of PSNH, the Issuing Entity's separate legal existence will be respected and the assets and liabilities of the Issuing Entity will remain separate from the estate of PSNH. The structural elements supporting such separate existence include, without limitation, requirements that the Issuing Entity be adequately capitalized, that PSNH be adequately compensated on an arm's-length basis for the servicing functions it performs in billing, collecting, and remitting the RRB Charges, and that PSNH and the Issuing Entity take certain steps to ensure that creditors are not misled as to their separate existence.

        Under the LLC Agreement, the Issuing Entity may not file a voluntary petition for relief under the Bankruptcy Code without a unanimous vote of its Managers, including the Independent Manager. The Issuing Entity's LLC Agreement will require the Issuing Entity to maintain its existence separate from PSNH including:

•

maintaining an arm's length relationship with PSNH and its affiliates; and

•

holding itself out to the public and all other persons as a legal entity separate from PSNH at all times and to correct any known misunderstandings regarding its separate identity.

        The separateness provisions in the LLC Agreement may not be amended by the Issuing Entity without the affirmative vote of the Independent Manager.

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The Administration Agreement

        PSNH will provide the Issuing Entity with administrative services and office space according to the terms of an administration agreement. Such administrative services will include the preparation and delivery of reports and certificates under the Basic Documents, the maintenance of the Issuing Entity's existence and good standing and other ministerial functions under the Basic Documents. The Administration Agreement requires the Issuing Entity to pay PSNH the annual Administration Fee of $75,000, payable semi-annually, for as long as PSNH provides these services.

Investment Company Act of 1940 and Volcker Rule Matters

        The Issuing Entity will be relying on an exclusion or exemption from the definition of "investment company" under the Investment Company Act of 1940, as amended, or the 1940 Act, contained in Section 3(c)(5) of the 1940 Act, although there may be additional exclusions or exemptions available to the Issuing Entity. As a result of such exclusion, the Issuing Entity will not be subject to regulation as an "investment company" under the 1940 Act.

        In addition, the Issuing Entity is being structured so as not to constitute a "covered fund" for purposes of the Volcker Rule, or the Volker Rule, under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act. As part of the Dodd-Frank Act, federal law prohibits a "banking entity"—which is broadly defined to include banks, bank holding companies and affiliates thereof—from engaging in proprietary trading or holding ownership interests in certain private funds. The definition of "covered fund" in the regulations adopted to implement the Volcker Rule includes (generally) any entity that would be an investment company under the 1940 Act but for the exemption provided under Sections 3(c)(1) or 3(c)(7) thereunder. Because the Issuing Entity will rely on Section 3(c)(5) of the 1940 Act, it will not be considered a "covered fund" within the meaning of the Volcker Rule regulations.

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PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE—THE DEPOSITOR, SPONSOR, SELLER AND SERVICER

        PSNH will be the Seller and initial Servicer of the RRBs and will be the Depositor and Sponsor of the transaction in which RRBs covered by this prospectus are issued. Public Service Company of New Hampshire, a New Hampshire corporation, is a regulated electric utility that serves residential, commercial and industrial Customers in parts of New Hampshire.

        PSNH was incorporated under New Hampshire law in 1926. On January 28, 1988, PSNH filed a voluntary petition for reorganization under the Bankruptcy Code. In April 1990, the United States Bankruptcy Court confirmed a two-step plan of reorganization pursuant to which Northeast Utilities would acquire PSNH. Pursuant to this plan, on May 16, 1991, PSNH emerged from bankruptcy, and on June 5, 1992, PSNH became a wholly owned subsidiary of Northeast Utilities. On February 2, 2015, Northeast Utilities changed its name to Eversource Energy. Eversource Energy is a public utility holding company, whose shares are listed on the New York Stock Exchange.

        PSNH does business as Eversource Energy in its service territory. As of December 31, 2017, PSNH furnished retail franchise electric service to approximately 515,000 Customers in 211 cities and towns in New Hampshire, covering an area of approximately 5,630 square miles. During the year ended December 31, 2017, PSNH billed approximately 7.7 billion kilowatt hours of electricity to its Customers in New Hampshire, resulting in retail electric revenues of approximately $927 million.

        PSNH is subject to regulation by the NHPUC, which, among other things, has jurisdiction over rates, certain dispositions of property and plant, mergers and consolidations, issuances of securities, standards of service and construction and operation of facilities. PSNH is subject to the jurisdiction of FERC, under the Federal Power Act, with respect to license renewals, the transmission of electric energy, accounting, issuance of certain securities and certain other matters.

        Following the sale of the RRB Property to the Issuing Entity, PSNH will have no ownership or other interest in the RRB Property transferred to the Issuing Entity and will have no right to receive any RRB Charges (other than collected as Servicer on the Issuing Entity's behalf). Neither PSNH nor any of its affiliates will purchase any RRBs.

Revenues, Customer Base and Energy Consumption

        The table below sets forth PSNH's electric franchise total retail electric revenues based on categories of Customers in New Hampshire for the years 2013 to 2017:

Total Retail Electric Revenues ($ in 000's)

	2013		2014		2015		2016		2017
Residential Service	$	483,716	$	478,753	$	505,806	$	521,914	$	537,439
Commercial		293,509		299,538		312,918		295,956		297,342
Industrial		71,012		72,624		76,914		70,864		72,371
Other		21,665		37,544		35,103		37,188		19,600
Total	$	869,902	$	888,459	$	930,741	$	925,922	$	926,752

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        The table below sets forth PSNH's Customers by class for the years 2013 to 2017:

Average Number of Customers(1)

Rate Class	2013		2014		2015		2016		2017
Residential Service		424,672		427,109		426,620		430,657		435,447
General Service		74,230		74,414		74,209		74,895		75,528
Primary General Service		1,422		1,391		1,373		1,386		1,396
Large General Service		117		123		123		121		119
Outdoor Lighting		975		963		956		940		815
Total		501,415		503,999		503,280		507,999		513,304

(1)

Amounts may not recalculate due to rounding.

        The table below sets forth PSNH's billed retail delivery sales volume to Customers in New Hampshire for the years 2013 to 2017:

Billed Retail Delivery Sales (GWh)

Rate Class	2013		2014		2015		2016		2017
Residential Service		3,189		3,183		3,197		3,135		3,093
General Service		1,702		1,714		1,743		1,717		1,686
Primary General Service		1,727		1,662		1,658		1,685		1,651
Large General Service		1,247		1,309		1,294		1,294		1,224
Outdoor Lighting		39		39		37		35		31
Total		7,904		7,907		7,930		7,865		7,685

Estimated Consumption and Estimate Variance

        PSNH's calculation of the initial RRB Charges for the Issuing Entity and subsequent adjustments are based on electricity sales estimates. PSNH will use these estimates to calculate and set the RRB Charges at a level intended to generate revenues sufficient to pay interest on and scheduled principal of the RRBs of the Issuing Entity, to pay fees and expenses of servicing and retiring such RRBs and to fund and replenish any deficiencies in the Issuing Entity's Capital Subaccount.

        PSNH conducts sales estimate variance analyses on a regular basis to monitor the accuracy of delivery estimates against recorded consumption. The tables below present the estimates of PSNH's billed retail delivery sales in gigawatt-hours, or GWh, for the years 2013 through 2017. There are 1,000,000 kilowatt-hours in one gigawatt-hour. Each estimate was made in the prior year. For example, the 2013 estimate for residential service of 3,140 gigawatt-hours for PSNH was prepared in 2012.

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Annual Estimated Variances
Billed Retail Delivery Sales (GWh)(1)

Rate Class	2013			2014			2015			2016			2017
Residential Service
Actual		3,189			3,183			3,197			3,135			3,093
Estimated		3,140			3,201			3,202			3,166			3,156
Variance		49			(18	)		(5	)		(32	)		(63	)
Percentage Variance		1.6	%		(0.6	)%		(0.2	)%		(1.0	)%		(2.0	)%
General Service
Actual		1,702			1,714			1,743			1,717			1,686
Estimated		1,677			1,728			1,747			1,733			1,719
Variance		26			(14	)		(5	)		(16	)		(33	)
Percentage Variance		1.5	%		(0.8	)%		(0.3	)%		(1.0	)%		(1.9	)%
Primary General Service
Actual		1,727			1,662			1,658			1,685			1,651
Estimated		1,702			1,677			1,665			1,703			1,681
Variance		25			(15	)		(7	)		(18	)		(30	)
Percentage Variance		1.5	%		(0.9	)%		(0.4	)%		(1.0	)%		(1.8	)%
Large General Service
Actual		1,247			1,309			1,294			1,294			1,224
Estimated		1,229			1,320			1,300			1,307			1,246
Variance		18			(12	)		(6	)		(13	)		(22	)
Percentage Variance		1.5	%		(0.9	)%		(0.4	)%		(1.0	)%		(1.8	)%
Outdoor Lighting
Actual		39			39			37			35			31
Estimated		39			39			38			35			32
Variance		1			(0	)		(0	)		(1	)		(1	)
Percentage Variance		1.4	%		(0	)%		(0	)%		(1.6	)%		(3.1	)%

(1)

Amounts may not recalculate due to rounding.

        Actual consumption depends on several factors, including temperatures and economic conditions. For example, while PSNH's methodology for estimating consumption assumes normal weather conditions, abnormally hot summers or cold winters can add growth in electricity sales, while conversely, abnormally cool summers or warm winters can suppress growth in electricity consumption. Regional economic conditions can also affect consumption as Customers curb electricity consumption to save money, businesses close and Customers migrate to other service territories. Accordingly, variations in conditions will affect the accuracy of any estimate.

Billing and Collections

        The RRB Charges that PSNH, in its capacity as Servicer, estimates to have been collected from PSNH's Customers' electricity bills will be remitted on a daily basis to the Collection Account. PSNH will perform an annual reconciliation of such estimated collections against actual collections, following which remittances to the Collection Account will be adjusted to ensure that the aggregate amount remitted to the Collection Account with respect to the applicable Reconciliation Period will reflect the aggregate amount of actual collections with respect to the RRB Charges attributable to such Reconciliation Period. See "The Servicing Agreement—Remittances to the Collection Account." In addition, under the Finance Order, the NHPUC has approved that it will act, as directed by the Financing Act, to implement the Periodic Adjustments to ensure that the aggregate RRB Charges billed for an applicable period will result in RRB Charge Collections that are sufficient to pay principal

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and interest on the RRBs and all other required amounts and charges payable in connection with the RRBs.

Credit Policy.

        PSNH's credit and collections policies are regulated by the NHPUC. Under the N.H. Code of Administrative Rule, Chapter Puc 1200—Uniform Administration of Utility Customer Relations, PSNH is obligated to provide service to all Customers within its service territory. As a general rule all requests for electric service are processed by phone at PSNH's call center. Customer names are reviewed automatically for prior service before service is established.

        Residential Customers with poor credit history may be required to pay a deposit. Non-residential accounts without a previous satisfactory credit history are required to pay a deposit. The security deposit may be in the form of a cash deposit, surety bond, letter of guarantee and/or an irrevocable letter of credit. A Customer may waive the deposit if they enroll in PSNH's Auto Pay program. The amount of security is normally an estimate of two months' bills.

        According to the NHPUC's regulations, PSNH may refuse to provide service, at any location, to an applicant who is indebted to it for any service previously furnished to the applicant. PSNH will commence service, however, if a reasonable payment plan for the indebtedness is first made between a residential applicant and PSNH, and it may likewise commence service for an industrial or commercial applicant.

Billing Process

        PSNH bills its Customers in 20 billing cycles each month. These billing cycles range from 25 to 38 days, with an average of 30 days. An approximately equal number of bills are distributed each business day. For the year ended December 31, 2017, PSNH mailed out an average of approximately 26,300 bills per billing cycle (i.e., on each business day) to Customers in its various Customer categories.

        Approximately 11,954 residential and small business Customers, which constitute approximately 2.27 percent of PSNH's Customers, choose to be billed using PSNH's budget billing program. For these Customers PSNH determines and bills a monthly budget amount based on the last twelve months of billing history for each account. Budget billing runs on a 12-month cycle from time of enrollment. Month 1 is the first month and month 12 is the settlement month. Customer account actual usage is reviewed and reconciled in month 6 and month 12 of each year and the monthly budget amount is adjusted if necessary. The monthly budget amount may also be adjusted at any other time if the usage changes significantly or if the Customer requests a change in the amount.

        For accounts with potential billing errors, exception reports are generated for manual review. This review examines accounts that have abnormally high or low bills, potential meter-reading errors and possible meter malfunctions.

Collection Process.

        PSNH receives the highest volume of its Customer payments via electronic means (including but not limited to direct debit, Automatic Clearing House, credit card and wire transfers) that are processed through various channels, such as Interactive Voice Response phone payments, Eversource Energy's online payment website and Customers' bank websites. The next highest volume of Customer payments are paper checks received via the U.S. mail, and the smallest volume of Customer payments are received via cash at PSNH contracted walk-in payment agent locations. PSNH considers Customer bills to be delinquent if they are unpaid after the next month's bill is rendered, which is generally 30 days after the billing date. In general, PSNH's collection process begins when balances are unpaid

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for 60 days or more from the billing date for residential Customers or for 30 days or more from the billing date for non-residential Customers. At that time PSNH begins collection activities ranging from delinquency notice mailings, to telephone calls, to personal collection and ending with electricity shutoff. PSNH also uses collection agencies and legal collection experts as needed throughout this process.

        PSNH may change its credit, billing, collections and termination/restoration of service policies and procedures from time to time. It is expected that any such changes would be designed to enhance PSNH's ability to bill and collect Customer charges on a timely basis. Please read "Risk Factors—Risks Associated with Servicing—Changes to billing, collection and posting practices might reduce the value of your investment in the RRBs" in this prospectus.

Restoration of Service

        Before restoring service that has been shut off for non-payment, PSNH has the right to require the payment of all of the following charges:

•

amounts owing on an account including the amount of any past-due balance for charges for which PSNH may disconnect service if they are unpaid and legal notice requirements were met prior to service termination, and a credit deposit, if applicable;

•

any miscellaneous charges associated with the reconnection of service (i.e., reconnection charges and/or returned check charges);

•

any charges assessed for unusual costs incidental to the termination or restoration of service which have resulted from the Customer's action or negligence; and

•

any unpaid closing bills from other accounts in the name of the Customer of record.

        Loss Experience.    The following table sets forth information relating to PSNH's annual net charge-offs (i.e., net of recoveries) for Customers for the years 2013 to 2017:

	2013			2014			2015			2016			2017
Net Charge-Offs ($ in millions)	$	6		$	7		$	8		$	6		$	6
Percentage of Retail Electric Revenues		0.64	%		0.76	%		0.85	%		0.66	%		0.68	%

        From 2013 to 2017 the annual net write-offs for all New Hampshire Customers have remained relatively consistent. During this period, PSNH's annual ratios of net write-offs to electric retail revenues have been between 0.64% and 0.85%. PSNH is not aware of any material factors, other than a slow economy and higher energy prices, that caused these annual ratios to vary.

        PSNH determines a Customer's account to be inactive on the date:

•

the Customer gives notice requesting discontinuance of service;

•

a new Customer applies for service at a location where the Customer of record has not yet discontinued service; or

•

the Customer's service remains off after non-payment.

        PSNH's policy is to charge-off an inactive account to an uncollectable reserve account approximately 120 days after the date the account is determined to be inactive. The effect of all charge-offs and delinquencies will be taken into account in the Periodic Adjustment process.

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        Days Revenue Outstanding.    The following table sets forth information relating to the average number of days Customer electricity bills remained outstanding for the years 2013 through 2017:

	2013		2014		2015		2016		2017
Average number of days outstanding		30		30		32		30		29

Aging Receivables

        The following table sets forth information relating to the aging of PSNH's accounts receivable for all classes of Customers on December 31 for the years 2013 through 2017. This historical information is presented because PSNH's actual accounts receivable aging experience may affect the amounts charged-off, and consequently the total amounts remitted to the Collection Account, that arise from the RRB Charges.

	2013			2014			2015			2016			2017
Accounts Receivable Aging (% of total outstanding) After:
Current		74	%		74	%		69	%		71	%		71	%
31 to 60 days		12	%		12	%		12	%		12	%		11	%
61 to 90 days		5	%		4	%		5	%		5	%		5	%
91 to 120 days		3	%		3	%		4	%		4	%		4	%
121+ days		5	%		7	%		9	%		8	%		9	%

        The accounts receivable aging experience for PSNH has remained relatively consistent with no discernible trend upwards or downwards. PSNH is not aware of any material factors, other than a slow economy and higher energy prices that caused the accounts receivable aging experience to vary.

Settlement Agreements with NHPUC and Asset Divestiture

        On June 10, 2015, PSNH and its parent, Eversource Energy, entered into the 2015 Settlement Agreement. Under the terms of the 2015 Settlement Agreement, PSNH agreed to divest its generation assets, subject to NHPUC approval. On July 1, 2016, the NHPUC approved the 2015 Settlement Agreement in an order that, among other things, instructed PSNH to begin the process to divest its generation assets. On October 11, 2017, PSNH entered into two Purchase and Sale Agreements to sell its thermal and hydro generating assets pursuant to the terms of the 2015 Settlement Agreement. The sale of the thermal generating assets closed on January 10, 2018 and PSNH is targeting to complete the sale of the hydro generating assets by the end of the first quarter of 2018.

Prior Stranded Cost Recovery Securitizations

        PSNH entered into two prior stranded cost recovery securitized financings on April 25, 2001 and January 30, 2002 as servicer and sponsor. The 2001 issuance securitized stranded costs created by the divestiture of a PSNH affiliate's nuclear power station and the 2002 issuance securitized the costs to refinance a number of Public Utility Regulatory Policies Act of 1978 rate order obligations.

Year	Principal Amount		Maturity		Interest Rate			NHPUC Order No.
2001	$	525 million		5/1/2013		4.57 - 6.48	%		23,550
2002	$	50 million		2/1/2008		4.58	%		23,859

        The structure of the transaction in which the RRBs covered by this prospectus will be issued is substantially similar to that employed in prior securitizations engaged in by PSNH pursuant to New Hampshire law. As in the two prior stranded cost recovery securitizations, the current transaction involves the creation by PSNH of a wholly owned special purpose entity as the issuing entity of rate

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reduction bonds. In each of the two prior securitizations, PSNH, pursuant to authorization granted it by the NHPUC in finance orders, created and sold property, namely, the right to impose, bill and receive the stranded cost recovery charges to the applicable special purpose entity, and each such special purpose entity financed the purchase of the property through the issuance of rate reduction bonds. The charges collected from PSNH's Customers' electricity bills in the prior securitizations were remitted to the prior indenture trustee to make payments on the bonds.

        The current transaction includes a Periodic Adjustments to ensure that the aggregate RRB Charges billed for an applicable period will result in RRB Charge Collections that are sufficient to pay principal and interest on the RRBs and all other required amounts and charges payable in connection with the RRBs. In PSNH's prior securitizations, PSNH serviced stranded cost recovery charges that were subject to regular and periodic true-up adjustments following similar processes as in the current transaction, including filing with and review and approval by the NHPUC. In addition, certain subsidiaries of PSNH's parent, Eversource Energy, have serviced other stranded cost recovery securitizations in which customer collections were remitted to the issuing entity on a deemed receipt basis, subject to an annual reconciliation, as will be the case for the remittance of payments in respect of the RRB Charges. See "The Servicing Agreement—Remittances to the Collection Account." In servicing the RRB Property, PSNH will draw upon its prior servicing experience and that of its affiliates with rate reduction bond or similar charges and in calculating and implementing rates and charges under various cost recovery clauses and billing those amounts to customers as a result of the prior securitizations.

        Beyond its experience serving stranded cost recovery charges in connection with its prior securitizations, PSNH has a long history of collecting different charges from its Customers and allocating them accordingly. As an electric utility in New Hampshire, PSNH has over 90 years of experience in collecting similar charges from its Customers, which it will be doing on behalf of the Issuing Entity, as initial Servicer of the RRB Property.

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DESCRIPTION OF THE RRBS

General

        The Issuing Entity will issue $            of the RRBs pursuant to the terms of the Indenture and the Series Supplement to finance the purchase of the RRB Property. The principal amount of RRBs of each Tranche is set forth in the table below. The RRBs will be issued in authorized denominations of $100,000 and in integral multiples of $1,000, except that one RRB of each Tranche may be in a smaller denomination. The RRBs may be issued in one or more Tranches. Tranches of RRBs may differ from each other as to the interest rate, maturity and the timing, sequential order and amount of payments of principal or interest.

Rate Reduction Bonds, Series 2018-1	Principal Amount
Tranche A-1	$
Tranche A-2	$
Tranche A-3	$

Interest and Principal on the RRBs

        Interest will accrue on the Principal Balance of each RRB at the rate set forth below for each Tranche of RRBs in the manner herein. Interest will be payable on each Payment Date, commencing on February 1, 2019. Interest payments will be made from collections of RRB Charges, including amounts available in the Excess Funds Subaccount and, if necessary, the amounts available in the Capital Subaccount.

Tranche	Interest Rate
Tranche A-1		%
Tranche A-2		%
Tranche A-3		%

        Principal of the RRBs of each Tranche will be payable on February 1 and August 1, commencing on February 1, 2019, but only to the extent that amounts in the Collection Account are available, and subject to the other limitations described below, under "—How Funds in the Collection Account will be Allocated." Accordingly, principal of the RRBs may be paid later, but not sooner, than reflected in the Expected Amortization Schedule, except in the case of an acceleration. If principal of any Tranche is not paid in full on the Final Maturity Date for such Tranche, an Event of Default will occur. On any Payment Date, unless an Event of Default has occurred and is continuing and the RRBs have been declared due and payable, the Indenture Trustee will make principal payments on the RRBs only until the outstanding Principal Balances of those RRBs have been reduced to the Principal Balances specified in the applicable Expected Amortization Schedule for that Payment Date. The Indenture Trustee will retain in the Excess Funds Subaccount any collections of RRB Charges in excess of amounts then due and payable in respect of the Issuing Entity's obligations and expenses (all as described under "—How Funds in the Collection Account will be Allocated").

        The expected Sinking Fund Schedule for the RRBs is set forth in the following table:

Payment Date Tranche A-1 Scheduled
Principal Payment Tranche A-2 Scheduled
Principal Payment Tranche A-3 Scheduled
Principal Payment

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        The Expected Amortization Schedule for the RRBs is set forth in the following table:

Payment Date Tranche A-1 Balance Tranche A-2 Balance Tranche A-3 Balance

        The Scheduled Final Payment Date and Final Maturity Date for each Tranche of the RRBs is set forth in the following table:

Tranche	Scheduled Final Payment Date	Final Maturity Date
Tranche A-1
Tranche A-2
Tranche A-3

        The failure to make a scheduled payment of principal on the RRBs because there are not sufficient funds in the Collection Account will not constitute a default or an Event of Default under the Indenture, except for the failure to pay in full the unpaid balance of any Tranche upon the Final Maturity Date for such Tranche. If an Event of Default has occurred and is continuing, then the Indenture Trustee or the Holders of a majority in principal amount of the RRBs then Outstanding may declare the RRBs to be immediately due and payable, in which event the entire unpaid principal amount of the RRBs will become due and payable. Please read "—Events of Default; Rights Upon Event of Default."

        The entire unpaid principal amount of the RRBs will be due and payable (i) on the Final Maturity Date or (ii) if an Event of Default under the Indenture has occurred and is continuing and the Indenture Trustee or the Holders of a majority in principal amount of the RRBs then Outstanding have declared the RRBs to be immediately due and payable.

Collateral for the RRBs

        The Issuing Entity will grant a security interest to the Indenture Trustee, as Indenture Trustee for the benefit of the Secured Parties, all of the Issuing Entity's right, title and interest (whether now owned or hereafter acquired or arising) in and to (collectively, the RRB Collateral):

        (a)   the RRB Property created under and pursuant to the Finance Order and the Financing Act, and transferred by the Seller to the Issuing Entity pursuant to the Sale Agreement (including the right to all revenues, collections, claims, payments, money or proceeds of or arising from the RRB Charge authorized to be imposed and collected pursuant to the Finance Order);

        (b)   the RRB Charge related to the RRB Property;

        (c)   the Sale Agreement and all property and interests in property transferred under the Sale Agreement with respect to the RRB Property and the Rate Reduction Bonds;

        (d)   the Servicing Agreement, the Administration Agreement, any intercreditor agreement and any subservicing, agency, administration or collection agreements executed in connection therewith, to the extent related to the foregoing RRB Property and the Rate Reduction Bonds;

        (e)   the Collection Account, all subaccounts thereof and all amounts of cash, instruments, investment property or other assets on deposit therein or credited thereto from time to time and all financial assets and securities entitlements carried therein or credited thereto;

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        (f)    all rights to compel the Servicer to file for and obtain Periodic Adjustments to the RRB Charge in accordance with RSA 369-B:4, III and the Finance Order;

        (g)   all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, whether such claims, demands, causes and choses in action constitute RRB Property, accounts, general intangibles, instruments, contract rights, chattel paper or proceeds of such items or any other form of property;

        (h)   all accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment property, letters of credit, letters-of-credit rights, money, commercial tort claims and supporting obligations related to the foregoing; and

        (i)    all payments on or under, and all proceeds in respect of, any or all of the foregoing;

provided, however, that the RRB Collateral shall not include: (x) cash that has been released pursuant to the terms of the Indenture, including clause (11) of the priority of payments set forth below under "—How Funds in the Collection Account will be Allocated" following retirement of all Outstanding Rate Reduction Bonds and (y) amounts deposited with the Issuing Entity on the issuance date for payment of costs of issuance with respect to the Rate Reduction Bonds and (z) all Capital Subaccount Investment Earnings (together with any interest earnings thereon). Such amounts described in clauses (x), (y) and (z) above shall not be subject to the restriction on payments set forth in the Indenture. See the last paragraph of "—Issuing Entity's Covenants" below.

Description of Indenture Accounts

Collection Account

        The Issuing Entity will maintain a segregated account for the RRBs, the Collection Account, with an Eligible Institution in the name of the Indenture Trustee. The Collection Account will be under the exclusive control of the Indenture Trustee. The Indenture Trustee will establish three subaccounts in respect of the Collection Account: a General Subaccount, an Excess Funds Subaccount and a Capital Subaccount. For administrative purposes, the subaccounts may (but need not) be established by the Indenture Trustee as separate accounts that will be recognized individually as subaccounts and collectively as the Collection Account. Unless the context indicates otherwise, references in this prospectus to the Collection Account include the Collection Account and each of the subaccounts contained therein.

General Subaccount

        The General Subaccount will hold all funds held in the Collection Account that are not held in the other two subaccounts. The Servicer will remit all RRB Charge Collections to the General Subaccount. On each Payment Date, the Indenture Trustee will draw on amounts in the General Subaccount to pay the Issuing Entity's expenses and to pay interest and make scheduled payments on the RRBs, and to make other payments and transfers in accordance with the terms of the Indenture. Funds in the General Subaccount will be invested in the Eligible Investments.

Excess Funds Subaccount

        The Indenture Trustee, at the direction of the Servicer, will allocate to the Excess Funds Subaccount any amounts on deposit in the General Subaccount available with respect to any Payment Date in excess of amounts necessary to make the payments specified in the Indenture on such Payment Date.

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Capital Subaccount

        In connection with the issuance of the RRBs, the Seller, in its capacity as the sole member of the Issuing Entity, will contribute capital to the Issuing Entity in an amount equal to the Required Capital Level, which will be 0.5% of the initial principal amount of the RRBs. This amount will be funded by the Seller and will be deposited into the Capital Subaccount on the issuance date. In the event that amounts on deposit in the General Subaccount and the Excess Funds Subaccount are insufficient to make scheduled payments of principal of and interest on the RRBs and payments of fees and expenses contemplated by the first eight clauses under "—How Funds in the Collection Account will be Allocated" below, the Indenture Trustee will draw on amounts in the Capital Subaccount to make such payments up to the amount of such insufficiency. In the event of any such withdrawal, RRB Charge Collections available on any subsequent Payment Date that are not necessary to pay scheduled payments of principal of and interest on the RRBs and payments of fees and expenses will be used to replenish any amounts drawn from the Capital Subaccount. If the bonds have been retired as of any Payment Date, the amounts on deposit in the Capital Subaccount (including Capital Subaccount Investment Earnings not previously remitted to PSNH) will be paid to PSNH, free of the lien of the Indenture.

How Funds in the Collection Account will be Allocated

        On each Payment Date, the Indenture Trustee will apply all amounts on deposit in the Collection Account, including all Investment Earnings thereon, in accordance with the Servicer's instructions, in the following priority:

(1)

payment of the Indenture Trustee's (and its agents' and counsel's) fees, expenses and outstanding indemnity amounts to the Indenture Trustee in an amount not to exceed $200,000 per Payment Date;



(2)

payment of the Servicing Fee with respect to such Payment Date, plus any unpaid Servicing Fees for prior Payment Dates, to the Servicer;



(3)

payment of the Administration Fee for such Payment Date to the Administrator and the Independent Manager Fee for such Payment Date to the Independent Manager, in each case with any unpaid Administration Fees or Independent Manager Fees from prior Payment Dates;



(4)

payment of all other ordinary periodic Operating Expenses not described above for such Payment Date to the parties to which such Operating Expenses are owed;



(5)

payment of Periodic Interest for such Payment Date, including any overdue Periodic Interest (together with, to the extent lawful, interest on such overdue Periodic Interest at the applicable interest rate), with respect to the Rate Reduction Bonds to the Holders of Rate Reduction Bonds;



(6)

payment of the principal required to be paid on the Rate Reduction Bonds on the Final Maturity Date or as a result of an acceleration upon an Event of Default to the Holders of Rate Reduction Bonds;



(7)

payment of Periodic Principal for such Payment Date, including any previously unpaid Periodic Principal, with respect to the Rate Reduction Bonds to the Holders of Rate Reduction Bonds, pro rata if there is a deficiency;



(8)

payment of any other unpaid Operating Expenses (including any such amounts owed to the Indenture Trustee but unpaid due to the limitation in clause (1) above) and any remaining amounts owed pursuant to the Basic Documents to the parties to which such Operating Expenses or remaining amounts are owed;

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(9)

the amount, if any, by which the Required Capital Level exceeds the amount in the Capital Subaccount (disregarding any Capital Subaccount Investment Earnings) as of such Payment Date shall be allocated to the Capital Subaccount;



(10)

other than after the Rate Reduction Bonds have been paid in full and discharged, and all of the other foregoing amounts have been paid in full, together with all amounts due and payable to the Indenture Trustee under the Indenture, the balance, if any, shall be allocated to the Excess Funds Subaccount; and



(11)

after the Rate Reduction Bonds have been paid in full and discharged, and all of the other foregoing amounts are paid in full, together with all amounts due and payable to the Indenture Trustee under the Indenture, (A) the balance of the Capital Subaccount, if any, shall be paid to the Member and (B) the balance of all other amounts on deposit in the Collection Account (including all amounts then held in the Excess Funds Subaccount), if any, shall be paid to the Issuing Entity, in each case free from the Lien of the Indenture and the Series Supplement.

        If on any Payment Date, or, for any amounts payable under clauses (1) through (4) above, on any Business Day, funds on deposit in the General Subaccount are insufficient to make the payments contemplated by clauses (1) through (8) above, the Indenture Trustee shall (i) first, draw from amounts on deposit in the Excess Funds Subaccount, and (ii) second, draw from amounts on deposit in the Capital Subaccount, in each case, up to the amount of such shortfall in order to make the payments contemplated by clauses (1) through (8) above. In addition, if on any Payment Date funds on deposit in the General Subaccount are insufficient to make the allocations contemplated by clause (9) above, the Indenture Trustee shall draw any amounts on deposit in the Excess Funds Subaccount to make such allocations to the Capital Subaccount.

        On the second Business Day of each calendar month, and promptly following the payment in full and discharge of the Rate Reduction Bonds, the Indenture Trustee shall pay all Capital Subaccount Investment Earnings to the Member, in each case, pursuant to a written direction from the Servicer.

        On any Business Day upon which the Indenture Trustee receives a written request from the Administrator stating that any Operating Expense payable by the Issuing Entity pursuant to clause (1) through (4) above will become due and payable prior to the next Payment Date, and setting forth the amount and nature of such Operating Expense, as well as any supporting documentation that the Indenture Trustee may reasonably request, the Indenture Trustee, upon receipt of such information, will make payment of such Operating Expenses on or before the date such payment is due from amounts on deposit in the General Subaccount, the Excess Funds Subaccount and the Capital Subaccount, in that order, and only to the extent required to make such payment.

Payments on the RRBs

        The Indenture Trustee will pay on each Payment Date to the Holders of each Tranche of RRBs, to the extent of available funds in the Collection Account, all payments of principal and interest then due. The Indenture Trustee will make each payment other than the final payment with respect to any RRBs to the Holders of record of the RRBs of the applicable Tranche on the Record Date preceding the Payment Date. The Indenture Trustee will make the final payment for each Tranche of RRBs, however, only upon presentation and surrender of the RRBs of that Tranche at the office or agency of the Indenture Trustee specified in the notice given by the Indenture Trustee of the final payment. The Indenture Trustee will deliver notice of the final payment to the Holders no later than five days prior to the final Payment Date, specifying the date set for the final payment and the amount of the payment.

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        At the time, if any, the Issuing Entity issues the RRBs in the form of Definitive RRBs and not to The Depository Trust Company, or DTC, or its nominee, the Indenture Trustee will make payments with respect to that Tranche on a Payment Date or a Special Payment Date by check mailed to each Holder of a Definitive RRB of the Tranche of record on the applicable Record Date at its address appearing on the Rate Reduction Bond Register maintained with respect to the RRBs. Upon written application by a Holder of any Tranche of RRBs in physical form to the Indenture Trustee not later than the applicable Record Date, the Indenture Trustee will make payments by wire transfer to an account maintained by the payee.

        If any Special Payment Date or other date specified for any payments to Holders is not a Business Day, the Indenture Trustee will make payments scheduled to be made on that Special Payment Date or other date on the next Business Day, and no interest will accrue upon the payment during the intervening period.

RRBs Will Be Issued in Book-Entry Form

        The RRBs will be available to investors only in book-entry form. Investors may hold the RRBs through DTC in the United States, Clearstream Banking, société anonyme, or Clearstream, or Euroclear Bank S.A./N.V., as operator of the Euroclear system, or Euroclear, in Europe or in any other manner described herein. An investor may hold the RRBs directly with one of these systems if such Person a participant in the system or indirectly through organizations that are participants.

        Cede & Co., as nominee for DTC, will hold the global RRBs. Clearstream and Euroclear will hold omnibus positions on behalf of the Clearstream customers and Euroclear participants, respectively, through customers' securities accounts in Clearstream's and Euroclear's names on the books of their respective depositaries. These depositaries will, in turn, hold these positions in customers' securities accounts in the depositaries' names on the books of DTC.

        Investors that are not participants or indirect participants but desire to purchase, sell or otherwise transfer ownership of, or other interest in, RRBs may do so only through participants and indirect participants. In addition, investors will receive all payments of principal of and interest on the RRBs from the Indenture Trustee through the participants, who in turn will receive them from DTC. Under a book-entry format, investors may experience some delay in their receipt of payments because payments will be forwarded by the Indenture Trustee to Cede & Co., as nominee for DTC. DTC will forward those payments to its participants, who thereafter will forward them to indirect participants or investors. It is anticipated that the only Holder will be Cede & Co., as nominee of DTC. The Indenture Trustee will not recognize beneficial owners of interest in RRBs held by DTC or its nominee as Holders, as that term is used in the Indenture, and such beneficial owners will be permitted to exercise the rights of Holders only indirectly through the participants, who in turn will exercise the rights of Holders through DTC.

Definitive RRBs

        The Issuing Entity will issue RRBs in registered, certificated form to investors, or their nominees, Definitive RRBs, rather than to DTC, or its nominee, only under the circumstances provided in the Indenture, which will include: (i) the Issuing Entity advising the Indenture Trustee in writing that DTC is no longer willing or able to properly discharge its responsibilities as nominee and depositary with respect to the book-entry bonds and that the Issuing Entity is unable to locate a qualified successor; (ii) the Issuing Entity electing to terminate the book-entry system through DTC, with written notice to the Indenture Trustee; or (iii) after the occurrence of an Event of Default under the Indenture, investors holding a beneficial interest in a majority of the aggregate Outstanding Amount of the RRBs maintained as book-entry bonds advising the Issuing Entity, the Indenture Trustee and DTC in writing

49

that the continuation of a book-entry system through DTC (or a successor) is no longer in the best interests of those investors.

        Upon surrender by DTC of the definitive securities representing the RRBs and instructions for registration, the Issuing Entity will execute and the Indenture Trustee shall authenticate and deliver the RRBs in the form of Definitive RRBs, and thereafter the Indenture Trustee will recognize the registered holders of the Definitive RRBs as Holders under the Indenture. Upon the issuance of Definitive RRBs, the RRBs evidenced by such Definitive RRBs will be transferable directly (and not exclusively on a book-entry basis) and registered holders will deal directly with the Indenture Trustee with respect to transfers, notices and payments.

        Definitive RRBs will be transferable and exchangeable at the offices of the transfer agent and registrar, which initially will be the Indenture Trustee. There will be no service charge for any registration of transfer or exchange, but the transfer agent and registrar may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith.

No Optional Redemption

        The Indenture does not permit an optional redemption of RRBs under any circumstances.

Access of Holders

        Upon written request of any Holder or group of Holders of RRBs evidencing at least 10% of the aggregate Outstanding Amount of the RRBs, the Indenture Trustee will afford the Holder or Holders making such request a copy of a current list of Holders for purposes of communicating with other Holders with respect to their rights under the Indenture; provided, that the Indenture Trustee shall give prior written notice to the Issuing Entity of such request.

Reports to Holders

        At least two business days prior to each Payment Date or Special Payment Date, the Servicer will deliver to the Indenture Trustee, and on or prior to each Payment Date or Special Payment Date the Indenture Trustee will deliver to each Holder, a statement prepared by the Servicer with respect to the payment to be made on the Payment Date, Special Payment Date or other date, as the case may be, setting forth the following information:

•

the amount of the payment to Holders allocable to principal, if any, and interest;

•

the aggregate Outstanding Amount of the RRBs, before and after giving effect to payments allocated to principal reported immediately above;

•

the difference, if any, between the amount specified immediately above and the Outstanding Amount specified in the related Expected Amortization Schedule;

•

any other transfers and payments to be made on such Payment Date or Special Payment Date, including amounts paid to the Indenture Trustee and the Servicer; and

•

the amounts on deposit in the Capital Subaccount and the Excess Funds Subaccount, after giving effect to the foregoing payments.

        Upon the written request of any Holder or the Issuing Entity, within the prescribed period of time for tax reporting purposes after the end of each calendar year during the term of the RRBs, the Indenture Trustee, so long as it is acting as Paying Agent and Rate Reduction Bond Registrar for the RRBs, will deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its U.S. federal income and any applicable local or state tax returns. If the Rate Reduction Bond Registrar and Paying Agent is other than the Indenture Trustee, such Rate Reduction Bond Registrar and Paying Agent, within the prescribed period of time for tax reporting purposes after the end of each calendar year, shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its U.S. federal income and any applicable local or state tax returns.

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Website Disclosure

        The Issuing Entity will, to the extent permitted by and consistent with its legal obligations under applicable law, cause to be posted on a website associated with PSNH, periodic reports containing to the extent such information is reasonably available to it:

•

a statement of any remittances of RRB Charge made to the Indenture Trustee (to be included in a Form 10-D or Form 10-K, or successor forms thereto);

•

the Semi-Annual Servicer's Certificate delivered for the RRBs pursuant to the Servicing Agreement (to be filed with a Form 10-D, Form 10-K or Form 8-K, or successor forms thereto);

•

the Monthly Servicer's Certificate delivered for the RRBs pursuant to the Servicing Agreement;

•

the text (or a link to the website where a reader can find the text) of each Periodic Adjustment filing in respect of the Outstanding RRBs and the results of each such Periodic Adjustment filing;

•

any downgrade in the long-term or short-term credit ratings of the Servicer assigned by the Rating Agencies to a rating that is below investment grade;

•

material legislative or regulatory developments directly relevant to the RRBs (to be filed or furnished in a Form 8-K); and

•

any reports and other information that the Issuing Entity is required to file with the SEC under the Exchange Act.

The Issuing Entity and the Indenture Trustee May Modify the Indenture

Modifications of the Indenture that do not Require Consent of Holders

        From time to time, and without the consent of the Holders (but with prior notice to the Rating Agencies), the Issuing Entity may enter into one or more agreements supplemental to the Indenture with the Indenture Trustee (as authorized by an issuer order) for various purposes described in the Indenture, including:

•

to correct or amplify the description of any property, including the RRB Collateral subject to the lien of the Indenture, or to better assure, convey and confirm to the Indenture Trustee any property subject to the Indenture, or to add additional property;

•

to evidence the succession of another person or entity to the Issuing Entity in accordance with the terms of the Indenture and the assumption by any such successor of the covenants in the Indenture and in the RRBs;

•

to add to the covenants for the benefit of the Secured Parties, or surrender any right or power conferred to the Issuing Entity by the Indenture;

•

to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee;

•

to cure any ambiguity or mistake, to correct or supplement any provision in the Indenture or in any supplemental indenture, including the Series Supplement, that may be inconsistent with any other provision in the Indenture or in any supplemental indenture, including the Series Supplement, provided however, that such action will not, as evidenced by an opinion of counsel provided pursuant to the Indenture (and described therein), adversely affect in any material respect the interests of the Holders;

•

to evidence and provide for the acceptance of the appointment under the Indenture of a successor indenture trustee, Paying Agent, Rate Reduction Bond Registrar or other administrative capacity with respect to the RRBs and to add or change any of the provisions of

51

the Indenture as shall be necessary to facilitate the administration of the trusts thereunder by more than one indenture trustee;

•

to modify, eliminate or add to the provisions of the Indenture to such extent as shall be necessary to effect qualification of the Indenture under the Trust Indenture Act and to add provisions expressly required by the Trust Indenture Act;

•

to evidence the final terms of the RRBs in the Series Supplement;

•

to qualify the RRBs for registration with a Clearing Agency;

•

to satisfy any Rating Agency requirements;

•

to make any amendment to the Indenture or the RRBs relating to the transfer and legending of the RRBs to comply with applicable securities laws; or

•

to conform the text of the Indenture or the RRBs to any provision of this prospectus filed with the SEC with respect to the issuance of the RRBs to the extent that such provision was intended to be a verbatim recitation of a provision of the Indenture or the RRBs;

provided, in each case, that such supplemental indenture shall not, as evidenced by an officer's certificate, cause any material adverse U.S. federal income tax consequence to the Seller, the Issuing Entity, the Managers, the Indenture Trustee or the then existing Holders.

        The Issuing Entity and the Indenture Trustee (as authorized by an issuer order) may also, without the consent of the Holders, enter into one or more other agreements supplemental to the Indenture with the effect of adding, changing or eliminating provisions of the Indenture or modifying the rights of Holders so long as (i) the supplemental agreement does not, as evidenced by an opinion of counsel provided pursuant to the Indenture (and described therein), adversely affect in any material respect the interests of any Holders of the RRBs and (ii) the Rating Agency Condition shall have been satisfied with respect thereto.

Modifications of the Indenture that Require the Approval of Holders

        In addition, the Issuing Entity and the Indenture Trustee (as authorized by an issuer order) may, with the consent of Holders holding a majority of the aggregate Outstanding Amount of the RRBs of each Tranche to be affected (and with prior notice to the Rating Agencies), enter into one or more indentures, supplemental to the Indenture for the purpose of, among other things, adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or modifying in any manner the rights of Holders; provided that no supplement, however, may, without the consent of each Holder of each Tranche affected thereby:

•

change the date of payment of any installment of principal of or premium, if any, or interest on any RRB of such Tranche, or reduce in any manner the principal amount thereof, the interest rate thereon or the premium, if any, with respect thereto;

•

change the provisions of the Indenture and any applicable Series Supplement relating to the application of collections on, or the proceeds of the sale of, the RRB Collateral to payment of principal of or premium, if any, or interest on the RRBs or Tranche, or change the place of payment where, or the currency in which, any RRB or any interest thereon is payable;

•

reduce the percentage of the Outstanding Amount of the RRBs, or of a Tranche thereof, the consent of the Holders of which is required for any supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with any provisions of the Indenture or the waiver of any defaults under the Indenture;

52

•

reduce the percentage of the Outstanding Amount of the RRBs or Tranche the Holders of which are required to direct the Indenture Trustee to direct the issuing entity to sell or liquidate the RRB Collateral;

•

modify the provisions of the Indenture with respect to amendments to the Indenture or the provisions of any of the other Basic Documents requiring consent of Holders to modification thereof, except to increase any percentage specified or to specify that the relevant provisions cannot be modified with the consent of each Holder of each Outstanding RRB affected thereby; or

•

modify any of the provisions of the indenture in a manner so as to affect the calculation of the amount of any payment of interest, principal or premium, if any, payable on any RRB of such Tranche on any Payment Date (including the calculation of any of the individual component of such calculation) or change the Expected Amortization Schedule or Final Maturity Date of any Tranche of RRBs;

•

decrease the Required Capital Level;

•

permit the creation of any lien ranking prior to or on a parity with the Lien of the Indenture with respect to any of the RRB Collateral for the RRBs or Tranche or, except as otherwise permitted or contemplated in the Indenture, terminate the lien of the Indenture on any property at any time subject thereto or deprive the Holder of any RRB of the security provided by the lien of the Indenture;

•

impair the right to institute suit for enforcement of the provisions of the Indenture regarding payment or application of funds.

        Promptly following the execution of any supplement to the Indenture, the Indenture Trustee will furnish either a copy of such supplement or written notice of the substance of the supplement to each Holder of RRBs to which such supplement relates, and a copy of such supplement to each Rating Agency.

Enforcement of the Sale Agreement, the Administration Agreement, the Servicing Agreement, any Intercreditor Agreement and Other Basic Documents

        The Indenture provides that the Issuing Entity will take all lawful actions to enforce its rights under the Sale Agreement, the Administration Agreement, the Servicing Agreement, any intercreditor agreement and the other Basic Documents. The Indenture also provides that, promptly following a default by the Seller under the Sale Agreement, by the Administrator under the Administration Agreement or the occurrence of a Servicer Default under the Servicing Agreement, the Issuing Entity will take all lawful actions necessary to compel or secure the performance and observance by each of the Seller, the Administrator or the Servicer of their respective obligations under or in connection with the Sale Agreement, the Administration Agreement and the Servicing Agreement and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuing Entity under or in connection with such agreements in each case to the extent and in the manner directed by the Indenture Trustee. So long as no Event of Default occurs and is continuing, the Issuing Entity may exercise any and all rights, remedies, powers and privileges lawfully available to it under or in connection with the Sale Agreement, the Administration Agreement, the Servicing Agreement and any intercreditor agreement. However, if the Issuing Entity or the Servicer propose to amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, supplement, termination, waiver or surrender of, the process for adjusting the RRB Charges set forth in the Finance Order or the Servicing Agreement, the Issuing Entity must notify the Ratings Agencies, the Indenture Trustee and the Holders in writing of this proposal (or, upon the Issuing Entity's written request, the Indenture Trustee shall so notify the Holders on the Issuing Entity's behalf). In addition, the Indenture

53

Trustee shall consent to this proposal only with the written consent of the Holders of a majority of the Outstanding Amount of the RRBs.

        If an Event of Default occurs and is continuing, the Indenture Trustee may, and, at the written direction of the Holders of a majority of the Outstanding Amount of all affected Tranches of RRBs, shall exercise all of the Issuing Entity's rights, remedies, powers, privileges and claims against PSNH, the Administrator and the Servicer, under or in connection with the Sale Agreement, the Administration Agreement, the Servicing Agreement and any intercreditor agreement, and any right of the Issuing Entity to take this action shall be suspended.

Issuing Entity's Covenants

        The Issuing Entity may not consolidate with or merge into any other entity, unless:

•

the entity formed by or surviving the consolidation or merger is organized under the laws of the United States or any State;

•

the entity expressly assumes, by a supplemental indenture, the performance or observance of all of the Issuing Entity's agreements and covenants under the Indenture and the Series Supplement;

•

the entity expressly assumes all of the Issuing Entity's obligations and succeeds to all of the Issuing Entity's rights under the Sale Agreement, the Servicing Agreement and any other Basic Document to which the Issuing Entity is a party;

•

no Default or Event of Default under the Indenture has occurred and is continuing immediately after the merger or consolidation;

•

the Rating Agency Condition will have been satisfied with respect to the merger or consolidation;

•

the Issuing Entity has delivered to the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuing Entity, in form and substance reasonably satisfactory to the Indenture Trustee, and which may be based on a ruling from the Internal Revenue Service) to the effect that the consolidation or merger will not result in a material adverse U.S. federal or state income tax consequence to the Issuing Entity, the Indenture Trustee or the then existing Holders;

•

any action as is necessary to maintain the lien and the perfected security interest in the RRB Collateral created by the Indenture and the Series Supplement has been taken, as evidenced by an opinion of counsel of external counsel of the Issuing Entity; and

•

the Issuing Entity has delivered to the Indenture Trustee an officer's certificate and an opinion of counsel of external counsel of the Issuing Entity, each stating that all conditions precedent in the Indenture provided for relating to the transaction have been complied with (including any filing required by the Exchange Act).

        The Issuing Entity may not sell, convey, exchange, transfer or otherwise dispose of any of its properties or assets included in the RRB Collateral to any person or entity, unless:

•

the person or entity acquiring the properties and assets:

•

is a United States citizen or an entity organized under the laws of the United States or any State;

•

expressly assumes, by a supplemental indenture, the performance or observance of all of the Issuing Entity's agreements and covenants under the Indenture and the Series Supplement;

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•

expressly agrees by a supplemental indenture that all right, title and interest so conveyed or transferred will be subject and subordinate to the rights of Holders;

•

unless otherwise specified in the supplemental indenture referred to above, expressly agrees to indemnify, defend and hold the Issuing Entity and the Indenture Trustee harmless against and from any loss, liability or expense arising under or related to the Indenture, the Series Supplement and the RRBs;

•

expressly agrees by means of a supplemental indenture that the person or entity (or if a group of persons or entities, then one specified person or entity) will make all filings with the SEC (and any other appropriate person or entity) required by the Exchange Act in connection with the RRBs; and

•

if such sale, conveyance, exchange, transfer or disposal relates to the Issuing Entity's rights and obligations under the Sale Agreement or the Servicing Agreement, such person or entity assumes all obligations and succeeds to all of the Issuing Entity's rights under the Sale Agreement and the Servicing Agreement, as applicable;

•

no Default or Event of Default under the Indenture has occurred and is continuing immediately after the transactions;

•

the Rating Agency Condition has been satisfied with respect to such transaction;

•

The Issuing Entity has delivered to the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuing Entity, in form and substance reasonably satisfactory to the Indenture Trustee, and which may be based on a ruling from the Internal Revenue Service) to the effect that the disposition will not result in a material adverse U.S. federal or state income tax consequence to the Issuing Entity, the Indenture Trustee or the then-existing Holders;

•

any action as is necessary to maintain the lien and the perfected security interest in the RRB Collateral created by the Indenture and the Series Supplement has been taken as evidenced by an opinion of counsel of external counsel of the Issuing Entity delivered to the Indenture Trustee; and

•

the Issuing Entity has delivered to the Indenture Trustee an officer's certificate and an opinion of counsel of external counsel of the Issuing Entity, each stating that the conveyance or transfer complies with the Indenture and the Series Supplement and all conditions precedent therein provided for relating to the transaction have been complied with (including any filing required by the Exchange Act).

        The Issuing Entity will not, among other things, for so long as any RRBs are outstanding:

•

except as expressly permitted by the Indenture and the other Basic Documents, sell, transfer, exchange or otherwise dispose of any of its assets unless in accordance with the provisions of the Indenture;

•

claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the RRBs (other than amounts properly withheld from such payments under the Code, the Treasury regulations promulgated thereunder or other tax laws) or assert any claim against any present or former Holder by reason of the payment of the taxes levied or assessed upon any part of the RRB Collateral;

•

terminate its existence, or dissolve or liquidate in whole or in part, except in a transaction permitted under the Indenture;

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•

permit the validity or effectiveness of the Indenture or the other Basic Documents to be impaired, or permit the Lien of the Indenture and the Series Supplement to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Rate Reduction Bonds under the Indenture except as may be expressly permitted by the Indenture;

•

permit any Lien (other than the Lien of the Indenture or the Series Supplement) to be created on or extend to or otherwise arise upon or burden the RRB Collateral or any part thereof or any interest therein or the proceeds thereof (other than Permitted Liens);

•

permit the Lien of the Series Supplement not to constitute a valid first priority perfected security interest in the RRB Collateral, subject only to Permitted Liens;

•

enter into any swap, hedge or similar financial instrument;

•

elect to be classified as an association taxable as a corporation for U.S. federal income tax purposes, file any tax return or take any other action or make any election inconsistent with the Issuing Entity's treatment for U.S. federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the Issuing Entity's sole member;

•

change its name, identity or structure or the location of the Issuing Entity's chief executive office unless, prior to the effective date of any such change, the Issuing Entity delivers to the Indenture Trustee (with copies to each Rating Agency) such documents, instruments or agreements, executed by the Issuing Entity, as are necessary to reflect such change and to continue the perfection of the security interest of the Indenture and the Series Supplement;

•

take any action that is subject to the Rating Agency Condition without satisfying the Rating Agency Condition; or

•

except to the extent permitted by applicable law, voluntarily suspend or terminate the Issuing Entity's SEC filing obligations.

        The Issuing Entity may not engage in any business other than financing, purchasing, owning, administering, managing and servicing the RRB Property and the other RRB Collateral and the issuance of the RRBs in the manner contemplated by the Finance Order and the Basic Documents, or certain related activities incidental thereto.

        The Issuing Entity will not issue, incur, assume, guarantee or otherwise become liable for any indebtedness except for the RRBs and any other indebtedness expressly permitted by or arising under the Basic Documents. The Issuing Entity will not, except as contemplated by the Sale Agreement, the Servicing Agreement or the Indenture, make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person. The Issuing Entity will not, except for the acquisition of RRB Property as contemplated by the RRBs and the Basic Documents, make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).

        Except for the release to PSNH of funds as described under "—How Funds in the Collection Account will be Allocated" above, the Issuing Entity will not (i) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to any owner of an interest in the issuing entity or otherwise with respect to any ownership or equity interest or similar security in or of the issuing entity, (ii) redeem, purchase, retire

56

or otherwise acquire for value any such ownership or equity interest or similar security. The Issuing Entity will not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with the Indenture and the other Basic Documents.

Events of Default; Rights Upon Event of Default

        An Event of Default with respect to the RRBs is defined in the Indenture as any one of the following events:

•

default in the payment of any interest on any Rate Reduction Bond when the same becomes due and payable (whether such failure to pay interest is caused by a shortfall in RRB Charge received or otherwise), and such default shall continue for a period of five Business Days;

•

default in the payment of the then unpaid principal of any Rate Reduction Bond of any Tranche on the Final Maturity Date for such Tranche;

•

a default in the observance or performance in any material respect of any of the Issuing Entity's covenants or agreements made in the Indenture (other than defaults described above) and the continuation of any default for a period of 30 days after the earlier of (i) the date that written notice of the default is given to the Issuing Entity by registered or certified mail by the Indenture Trustee or to the Issuing Entity and the Indenture Trustee by the Holders of at least 25% of the Outstanding Amount of the RRBs or (ii) the date that the Issuing Entity had actual knowledge of the default;

•

any representation or warranty made by the Issuing Entity in the Indenture or in any certificate or other writing delivered pursuant to the Indenture or in connection with the Indenture having been incorrect in any material respect as of the time made, and such breach not having been cured within 30 days after the earlier of (i) the date that notice of the breach is given by registered or certified mail to the Issuing Entity by the Indenture Trustee or to the Issuing Entity and the Indenture Trustee by the Holders of at least 25% of the Outstanding Amount of the RRBs or (ii) the date that the Issuing Entity had actual knowledge of the default;

•

certain events of bankruptcy, insolvency, receivership or liquidation; or

•

any act or failure to act by the State of New Hampshire or any of its agencies (including the NHPUC), officers or employees that violates the State Pledge or is not in accordance with the State Pledge.

        If an Event of Default (other than as specified in the sixth bullet point above) should occur and be continuing with respect to the RRBs, the Indenture Trustee or Holders of a majority of the Outstanding Amount of the RRBs may declare the unpaid principal of the RRBs and all accrued and unpaid interest thereon to be immediately due and payable by a notice in writing to the Issuing Entity (and to Indenture Trustee if given by Holders).

        The Holders of a majority of the Outstanding Amount of the RRBs may rescind and annul that declaration and its consequences so long as the Issuing Entity deposits with the Indenture Trustee any past due amounts and expenses of the Indenture Trustee and all Events of Default, other than the nonpayment caused by acceleration, have been cured or waived. Additionally, the Indenture Trustee may exercise all of the Issuing Entity's rights, remedies, powers, privileges and claims against the Seller, the Administrator or the Servicer under or in connection with the Sale Agreement, the Administration Agreement or the Servicing Agreement. If an Event of Default as specified in the sixth bullet above has occurred, the Indenture Trustee, for the benefit of the Secured Parties, shall be entitled and empowered, to the extent permitted by applicable law, to institute or participate in Proceedings necessary to compel performance of or to enforce the State Pledge and to collect any monetary

57

damages incurred by the Holders or the Indenture Trustee as a result of any such Event of Default, and may prosecute any such Proceeding to final judgment or decree.

        If an Event of Default (other than a breach by the State of New Hampshire or any of its agencies of the pledge of the State of New Hampshire as specified in the sixth bullet point above) shall have occurred and be continuing, the Indenture Trustee may, at the written direction of the Holders of a majority of the Outstanding Amount of the RRBs, either sell the RRB Property or elect to have the Issuing Entity maintain possession of all or a portion of such RRB Property and continue to apply RRB Charge Collections as if there had been no declaration of acceleration. In addition, the Indenture Trustee is prohibited from selling the RRB Property following an Event of Default, other than a default in the payment of any principal or a default for five Business Days or more in the payment of any interest on any RRB, unless:

•

the Holders of all the Outstanding RRBs consent to the sale;

•

the proceeds of the sale are sufficient to pay in full the principal of and the accrued interest on the RRBs after taking into account payment of all amounts due prior thereto pursuant to the priorities set forth under "—How Funds in the Collection Account will be Allocated"; or

•

the Indenture Trustee determines that the RRB Collateral will not continue to provide sufficient funds for all payments on the RRBs as they would have become due if the RRBs had not been declared due and payable, and the Indenture Trustee obtains the consent of the Holders of at least two-thirds of the aggregate Outstanding Amount of the RRBs.

        No Holder of any RRB will have the right to institute any Proceeding, to avail itself of any remedies provided in the Financing Act or of the right to foreclose on the RRB Collateral, or otherwise to enforce the lien and security interest on the RRB Collateral or to seek the appointment of a receiver or indenture trustee, or for any other remedy under the Indenture, unless:

•

the Holder previously has given to the Indenture Trustee written notice of a continuing Event of Default;

•

the Holders of a majority of the Outstanding Amount of the RRBs have made written request of the Indenture Trustee to institute the Proceeding in its own name as Indenture Trustee;

•

such Holder or Holders have offered the Indenture Trustee satisfactory indemnity against the costs, expenses and liabilities to be incurred in complying with such request;

•

the Indenture Trustee has for 60 days after its receipt of the notice, request and offer of indemnity, failed to institute the Proceeding; and

•

no direction inconsistent with the written request has been given to the Indenture Trustee during the 60-day period by the Holders of a majority of the Outstanding Amount of the RRBs.

        In the event the Indenture Trustee receives conflicting or inconsistent requests and indemnity from two or more groups of Holders, each group holding less than a majority of the Outstanding Amount of the RRBs, the Indenture Trustee in its sole discretion may file a petition with a court of competent jurisdiction to resolve such conflict or determine what action, if any, shall be taken.

Actions by Holders

        Subject to certain exceptions, the Holders of a majority of the aggregate Outstanding Amount of the RRBs of the affected Tranche or Tranches will have the right to direct the time, method and place

58

of conducting any Proceeding for any remedy available to the Indenture Trustee and exercising any trust or power conferred on the Indenture Trustee under the Indenture; provided, that:

•

the direction is not in conflict with any rule of law or with the Indenture or the Series Supplement;

•

any direction to the Indenture Trustee to sell or liquidate the RRB Collateral shall be by the applicable percentage of the Holders as specified in the Indenture;

•

upon satisfaction of certain conditions outlined in the Indenture, the Indenture Trustee elects to retain the RRB Collateral, then any direction to the Indenture Trustee by Holders representing less than 100% of the Outstanding Amount of RRBs to sell or liquidate the RRB Collateral shall be of no force and effect; and

•

the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with the direction.

        Notwithstanding the foregoing, the Indenture provides that each Holder shall have the absolute and unconditional right (a) to receive payment of (i) the interest, if any, on such RRB on the due dates thereof expressed in such RRB or in the Indenture or (ii) the unpaid principal, if any, of the RRBs on the Final Maturity Date therefor and (b) to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

Resignation or Removal of Indenture Trustee

        The Indenture Trustee may resign at any time upon 30 days' prior written notice to the Issuing Entity (and the Indenture Trustee shall provide such notice to the Holders). The holders of a majority in principal amount of the RRBs then outstanding may remove the Indenture Trustee upon 30 days' prior written notice to the Indenture Trustee and may appoint a successor indenture trustee. The Issuing Entity will remove the Indenture Trustee if the Indenture Trustee:

•

ceases to be eligible under the Trust Indenture Act;

•

ceases to satisfy certain credit standards set forth in the Indenture;

•

becomes a debtor in a bankruptcy proceeding or is adjudicated insolvent or a receiver or other public officer takes charge of the Indenture Trustee or its property;

•

becomes incapable of acting; or

•

fails to provide to the Issuing Entity certain information it reasonably requests that is necessary for the Issuing Entity to satisfy its reporting obligations under the securities laws.

        If the Indenture Trustee resigns or is removed or a vacancy exists in the office of Indenture Trustee for any reason, the Issuing Entity will be obligated promptly to appoint a successor Indenture Trustee eligible under the Indenture, and notice of such appointment is required to be promptly given to each Rating Agency by the successor Indenture Trustee. No resignation or removal of the Indenture Trustee will become effective until acceptance of the appointment by a successor Indenture Trustee. The Issuing Entity is responsible for payment of the expenses associated with any such removal or resignation.

Limitation on Liability of the Indenture Trustee

        The Indenture Trustee shall not be liable for (a) any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee's conduct does not constitute willful misconduct, negligence or bad faith and (b) special, indirect, punitive or consequential loss or damage of any kind whatsoever (including loss of profit)

59

irrespective of whether the Indenture Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. The Indenture Trustee is not bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Indenture Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuing Entity, personally or by agent or attorney at the sole cost of the Issuing Entity, and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

        The Indenture Trustee shall not be responsible for, and does not make any representation (subject to certain exceptions) with respect to, the following:

•

the validity or adequacy of the Indenture or the Rate Reduction Bonds;

•

the Issuing Entity's use of the proceeds from the Rate Reduction Bonds;

•

any statement of the Issuing Entity in the Indenture or in any document issued in connection with the sale of the Rate Reduction Bonds or in the Rate Reduction Bonds other than the Indenture Trustee's certificate of authentication;

•

the form, character, genuineness, sufficiency, value or validity of any of the RRB Collateral or for or in respect of the Rate Reduction Bonds (other than the certificate of authentication for the Rate Reduction Bonds) or the Basic Documents;

•

any liability, duty or obligation to any Holder, other than as expressly provided in the Indenture or the applicable Basic Document;

•

any default or misconduct of the Issuing Entity, the Seller or the Servicer under the Basic Documents or otherwise;

•

the validity of the title of the Issuing Entity to the RRB Collateral;

•

insuring the RRB Collateral;

•

the payment of taxes, charges, assessments or Liens upon the RRB Collateral or otherwise as to the maintenance of the RRB Collateral;

•

ascertaining or inquiring as to the performance or observance of any of the terms of the Indenture or any of the other Basic Documents; or

•

filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the RRB Collateral.

Indemnification of the Indenture Trustee by the Issuing Entity

        The Issuing Entity shall indemnify the Indenture Trustee and its officers, directors, employees and agents (each an Indemnified Person) against any and all cost, damage, loss, liability, tax or expense (including reasonable attorneys' fees and expenses) incurred by it in connection with the administration and the enforcement of the Indenture, the Series Supplement and the other Basic Documents, except for any loss, liability or expense incurred by the Indemnified Person because of its own willful misconduct, negligence or bad faith.

        The Issuing Entity shall not be required to indemnify an Indemnified Person for any amount paid by such Indemnified Person in the settlement of any action, proceeding or investigation without the written consent of the Issuing Entity.

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        With respect to any action, proceeding or investigation brought by a third party for which indemnification is sought, the Issuing Entity is entitled to assume the defense of any such action, proceeding or investigation and the Indemnified Person shall have the right to participate in such action or proceeding and to retain its own counsel. The Issuing Entity shall be entitled to appoint counsel of its own choice; provided, however, that such counsel shall be reasonably satisfactory to the Indemnified Person. The Indemnified Person may employ a separate counsel (including one local counsel in each relevant jurisdiction), and the Issuing Entity 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 Issuing Entity 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 Issuing Entity and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to the Issuing Entity, (iii) the Issuing Entity 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 Issuing Entity authorizes the Indemnified Person to employ separate counsel at the expense of the Issuing Entity.

        The Issuing Entity 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 with respect to which any indemnification is sought under the Indenture, 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.

Annual Report of Indenture Trustee

        If required by the Trust Indenture Act, the Indenture Trustee will be required to deliver each year to all Holders a brief report, within 60 days after March 30 of each year, commencing in March 2019. The report must state, among other things:

•

any change in the Indenture Trustee's eligibility and qualification to continue as the Indenture Trustee under the Indenture;

•

any amounts advanced by it under the Indenture;

•

any change in the amount, interest rate and maturity date of specific indebtedness owing by the Issuing Entity to the Indenture Trustee in the Indenture Trustee's individual capacity;

•

any change in the property and funds physically held pursuant to the Indenture;

•

any release, or release and substitution, of RRB Property subject to the Lien of the Indenture (and the consideration therefor, if any) that has not been previously reported; and

•

any action taken by it that materially affects the RRBs and that has not been previously reported.

Annual Compliance Statement

        The Issuing Entity will deliver annually, to the Indenture Trustee and the Rating Agencies, an officer's statement stating (a) review of activities of the Issuing Entity and performance under the Indenture has been made and (b) to the best of such officer's knowledge, based on such review, the Issuing Entity has complied in all material respects with all conditions and covenants under the Indenture and if there has been any default in compliance with any condition or covenant, specifying each such default and the nature and status thereof.

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Satisfaction and Discharge of Indenture

        The Indenture will cease to be of further effect with respect to the RRBs and the Indenture Trustee, on the Issuing Entity's written demand and at the Issuing Entity's expense, will execute instruments acknowledging satisfaction and discharge of the Indenture with respect to the RRBs, when:

•

either (a) all RRBs that have already been authenticated or delivered, with certain exceptions set forth in the Indenture, have been delivered to the Indenture Trustee for cancellation or (b) either the Scheduled Final Payment Date for RRBs not delivered for cancellation has occurred or will occur within one year and the Issuing Entity has irrevocably deposited or cause to be deposited in trust with the Indenture Trustee cash and/or U.S. government obligations that through the scheduled payments of principal and interest in accordance with their terms are in an amount sufficient to pay principal, interest and premiums, if any, on the RRBs and ongoing transaction costs and all other sums payable by the Issuing Entity with respect to the RRBs when scheduled to be paid and to discharge the entire indebtedness on such RRBs when due;

•

the Issuing Entity has paid all other sums payable by it under the Indenture; and

•

the Issuing Entity has delivered to the Indenture Trustee an officer's certificate, an opinion of counsel and, if required by the Trust Indenture Act or the Indenture Trustee, a certificate from a firm of independent registered public accountants, each stating that there has been compliance with the conditions precedent in the Indenture relating to the satisfaction and discharge of the Indenture.

The Issuing Entity's Legal and Covenant Defeasance Options

        The Issuing Entity may, at any time, terminate all of its obligations under the Indenture, referred to herein as the Legal Defeasance Option, or terminate its obligations to comply with some of the covenants in the Indenture, including some of the covenants described under "—Issuing Entity's Covenants", referred to herein as the Issuing Entity's Covenant Defeasance Option.

        The Issuing Entity may exercise the Legal Defeasance Option notwithstanding its prior exercise of the Covenant Defeasance Option. If the Issuing Entity exercises the Legal Defeasance Option, the RRBs will be entitled to payment only from the funds or other obligations set aside under the Indenture for payment thereof as described below. The RRBs of any Tranche will not be subject to payment through acceleration prior to the Scheduled Final Payment Date for such Tranche. If the Issuing Entity exercises the Legal Defeasance Option, the maturity of the RRBs may not be accelerated because of an Event of Default. If the Issuing Entity exercises the Covenant Defeasance Option, the maturity of the RRBs may not be accelerated because of an Event of Default relating to a default in the observance or performance in any material respect of any of the Issuing Entity's covenants or agreements made in the Indenture (other than default relating to nonpayment of principal and interest on any RRB).

        The Indenture provides that the Issuing Entity may exercise its Legal Defeasance Option or its Covenant Defeasance Option of RRBs only if:

•

the Issuing Entity irrevocably deposits or causes to be irrevocably deposited in trust with the Indenture Trustee cash and/or U.S. government obligations that through the scheduled payments of principal and interest in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the RRBs and ongoing transaction costs and any other sums payable by the Issuing Entity under the Indenture with respect to the RRBs when scheduled to be paid and to discharge the entire indebtedness on the RRBs when due;

•

the Issuing Entity delivers to the Indenture Trustee a certificate from a nationally recognized firm of independent registered public accountants expressing its opinion that the payments of

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principal of and interest on the U.S. government obligations when due and without reinvestment plus any deposited cash will provide cash at times and in sufficient amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) to pay in respect of the RRBs:

•

principal in accordance with the Expected Amortization Schedule therefor;

•

interest when due; and

•

ongoing transaction costs and all other sums payable by the Issuing Entity under the Indenture with respect to the RRBs;

•

in the case of the legal defeasance option, 95 days pass after the deposit is made and during the 95-day period no default relating to events of the Issuing Entity's bankruptcy, insolvency, receivership or liquidation occurs and is continuing at the end of the period;

•

no default has occurred and is continuing on the day of such deposit and after giving effect thereto;

•

in the case of the Legal Defeasance Option, the Issuing Entity delivers to the Indenture Trustee an opinion of the Issuing Entity's external counsel stating that the Issuing Entity has received from, or there has been published by, the IRS a ruling, or since the date of execution of the Indenture, there has been a change in the applicable U.S. federal income tax law, and in either case confirming that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the exercise of the legal defeasance option and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the legal defeasance had not occurred;

•

in the case of the Covenant Defeasance Option, the Issuing Entity delivers to the Indenture Trustee an opinion of the Issuing Entity's external counsel to the effect that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the exercise of the covenant defeasance option and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the covenant defeasance had not occurred;

•

the Issuing Entity delivers to the Indenture Trustee a certificate of one of the Issuing Entity's officers and an opinion of the Issuing Entity's counsel, each stating that all conditions precedent to the legal defeasance option or the covenant defeasance option, as applicable, have been complied with as required by the Indenture; and

•

the Issuing Entity delivers to the Indenture trustee an opinion of counsel of external counsel of the Issuing Entity to the effect that:

•

in a case under the Bankruptcy Code in which PSNH (or any of its Affiliates, other than the Issuing Entity) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PSNH (or any of its Affiliates, other than the Issuing Entity, that deposited the moneys or U.S. government obligations); and

•

in the event PSNH (or any of its Affiliates, other than the Issuing Entity, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PSNH (or any of its Affiliates, other than the Issuing Entity, that deposited the moneys or U.S. Government Obligations) and the Issuing Entity so as to order substantive consolidation under the Bankruptcy Code of the Issuing Entity's assets and liabilities with the assets and liabilities of PSNH or such other Affiliate.

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        Notwithstanding any other condition to defeasance, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Indenture Trustee to apply such moneys or U.S. Government Obligations under the Indenture until principal of and premium, if any, and interest on the Rate Reduction Bonds shall have been paid in accordance with the provisions of the Indenture and the Series Supplement.

No Recourse to Others

        No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuing Entity or the Indenture Trustee on the RRBs or under the Indenture or any certificate or other writing delivered in connection therewith, against (a) any owner of a membership interest in the Issuing Entity (including PSNH) or (b) any shareholder, partner, owner, beneficiary, agent, officer or employee of the Indenture Trustee, the Managers or any owner of a membership interest in the Issuing Entity (including PSNH) in its respective individual capacity, or of any successor or assign of any of them in their respective individual or corporate capacities, except as any such Person may have expressly agreed in writing.

        Notwithstanding any provision of the Indenture or the Series Supplement to the contrary, Holders shall look only to the RRB Collateral with respect to any amounts due to the Holders under the Indenture and the RRBs, and, in the event such RRB Collateral is insufficient to pay in full the amounts owed on the RRBs, shall have no recourse against the Issuing Entity in respect of such insufficiency. Each Holder by accepting an RRB specifically confirms the nonrecourse nature of these obligations and waives and releases all such liability. The waiver and release are part of consideration for issuance of RRBs.

Risk Retention

        This offering of RRBs is a public utility securitization exempt from the risk retention requirements imposed by Section 15G of the Exchange Act.

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DESCRIPTION OF THE INDENTURE TRUSTEE

        The Bank of New York Mellon, a New York banking corporation, is the indenture trustee under the Indenture, to be dated as of the issuance date. Its principal corporate trust office is located at 101 Barclay Street, 7 West, New York, New York 10286, Attention: Corporate Trust Office-PSNH Funding. The Bank of New York Mellon has served and is currently serving as indenture trustee for numerous securitization transactions and programs involving pools of utility recovered costs.

        In the ordinary course of business, The Bank of New York Mellon is named as a defendant in or made a party to pending and potential legal actions. In connection with its role as trustee of certain residential mortgage-backed securitization, or RMBS transactions, The Bank of New York Mellon has been named as a defendant in a number of legal actions brought by RMBS investors. These lawsuits allege that the trustee had expansive duties under the governing agreements, including the duty to investigate and pursue breach of representation and warranty claims against other parties to the RMBS transactions. While it is inherently difficult to predict the eventual outcomes of pending actions, The Bank of New York Mellon denies liability and intends to defend the litigations vigorously.

        The Bank of New York Mellon has provided the above information for purposes of complying with Regulation AB. Other than the above two paragraphs, The Bank of New York Mellon has not participated in the preparation of, and is not responsible for, any information contained in this registration statement.

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WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS
FOR THE RRBS

Weighted Average Life Sensitivity

        Weighted average life refers to the average amount of time from the date of issuance of a security until each dollar of principal of the security has been repaid to the investor. The rate of principal payments on each Tranche of RRBs, the aggregate amount of each interest payment on each Tranche of RRBs and the actual final payment date of each Tranche of RRBs will depend, in part, on actual electricity usage and the rate of delinquencies and write-offs and on the timing of the Servicer's receipt of RRB Charges from Customers. The RRB Charges are required to be adjusted from time to time based in part on the actual rate of RRB Charges collections. However, the Issuing Entity can give no assurance that the Servicer will be able to accurately forecast actual electricity usage and the rate of delinquencies and write-offs or implement adjustments to the RRB Charges that will cause RRB Charge collections to be received at any particular rate. Please read "Risk Factors—Risk Associated with the Unusual Nature of the RRB Property—A shortfall in RRB Charge Payments as a result of inaccurate forecasting or unanticipated delinquencies could lead to payment delays or losses" and "The Servicing Agreement—Periodic Adjustment Process." Changes in the expected weighted average lives of the Tranches of the RRBs in relation to variances in actual energy consumption levels (electric sales) from forecast levels are shown below.

        The RRBs may be retired later than expected. Except in the event of an acceleration of the Expected Amortization Schedule of the RRBs after an Event of Default, however, the RRBs will not be paid at a rate faster than that contemplated in the Expected Amortization Schedule for each Tranche of the RRBs even if the receipt of RRB Charges collections is accelerated. Instead, receipts in excess of the amounts necessary to amortize the RRBs in accordance with the applicable Expected Amortization Schedules to pay interest and ongoing other transaction costs and any other related fees and expenses and to fund deficiencies in the Capital Subaccount of the Collection Account will be allocated to the Excess Funds Subaccount. Amounts on deposit in the Excess Funds Subaccount will be taken into consideration in calculating the next Periodic Adjustment. Acceleration of the RRBs after an Event of Default in accordance with the terms thereof may result in payment of principal earlier than the related Scheduled Final Payment Dates. A payment on a date that is earlier than forecast might result in a shorter weighted average life, and a payment on a date that is later than forecast might result in a longer weighted average life. In addition, if a larger portion of the delayed payments on the RRBs is received in later years, the RRBs may have a longer weighted average life.

Weighted Average Life Sensitivity

		–5% (        Standard Deviations from Mean)		–15% (        Standard Deviations from Mean)
	Expected Weighted Average Life (yrs)
Rate Reduction Bonds		Weighted Average Life (yrs)	Change (Days)	Weighted Average Life (yrs)	Change (Days)
Tranche A-1
Tranche A-2
Tranche A-3

Assumptions

        For the purposes of preparing the above chart, the following assumptions, among others, have been made: (i) the forecast error stays constant over the life of the RRBs and is equal to an overestimate of electricity usage of –5% (        standard deviations from mean) or –15% (         standard deviations from mean); (ii) the Servicer makes timely and accurate filings to make a Periodic Adjustment to the RRB Charges semi-annually; (iii) Customer charge-off rates are held

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constant at approximately        % for the residential service rate class (comprised of approximately            customers as of December 31, 2017), approximately        % for the general service rate class (comprised of approximately            customers as of December 31, 2017), approximately        % for the primary general service rate class (comprised of approximately            customers as of December 31, 2017), approximately        % for the large general service rate class (comprised of approximately             customers as of December 31, 2017) and approximately        % for the outdoor lighting rate class (comprised of approximately            customers as of December 31, 2017); (iv) days sales outstanding are based upon historical averages; (v) operating expenses are equal to projections; (vi) there is no acceleration of the Final Maturity Date of the RRBs; (vii) a permanent loss of all Customers has not occurred; and (viii) the issuance date is                , 2018. There can be no assurance that the weighted average lives of the RRBs will be as shown.

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ESTIMATED ANNUAL FEES AND EXPENSES

        Estimated initial annual fees and expenses payable from RRB Charge Collections are shown below. These fees and expenses will be paid in accordance with the priority of payments set out in "Description of the RRBs—How Funds in the Collection Account will be Allocated."

Recipient	Fees and Expenses Payable
Servicer	$        per annum
Administrator	$75,000 per annum
Indenture Trustee	$3,000 per annum
Legal Fees	$50,000
Accounting and Auditing Fees	$150,000 per annum
Independent Manager	$2,500 per annum
Rating Agency Fees	$57,500 per annum
Miscellaneous	$5,000

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THE SALE AGREEMENT

Sale and Assignment of RRB Property

        On the issuance date the Seller will sell to the Issuing Entity, without recourse its entire right, title and interest in and to the RRB Property. The Issuing Entity will finance the purchase of the RRB Property through the issuance of the RRBs. Pursuant to the Financing Act, the Sale Agreement provides that the sale of the RRB Property shall be treated as an absolute transfer of all of the Seller's right, title, and interest, as in a true sale, and not as a pledge or other financing, of the RRB property, in each case notwithstanding any contrary treatment of such transfer for accounting, tax, or other purposes.

Seller Representations and Warranties

        In the Sale Agreement, the Seller will represent and warrant to the Issuing Entity, among other things, that, as of the issuance date:

•

the Seller 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 and conduct its business as such business is currently conducted by it, and has the requisite corporate power and authority to obtain the Finance Order and to own the RRB Property;

•

the Seller 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 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 Seller's business, operations, assets, revenues or properties);

•

the Seller has the requisite corporate power and authority to execute and deliver the Sale Agreement and to carry out its terms; and the execution, delivery and performance of the Sale Agreement has been duly authorized by all necessary corporate action of the Seller;

•

the Sale Agreement constitutes a legal, valid and binding obligation of the Seller, enforceable against it in accordance with its terms, subject to applicable insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors' or secured parties' 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;

•

the consummation of the transactions contemplated by the Sale Agreement and the fulfillment of the terms thereof 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 Seller, or any material indenture, agreement or other instrument to which the Seller is a party or by which it is bound, (ii) result in the creation or imposition of any Lien upon any of the Seller's properties pursuant to the terms of any such indenture, agreement or other instrument (other than any Lien that may be granted under the Basic Documents or any liens created by the Issuing Entity pursuant to the RSA 369-B:7, VIII) or (iii) violate any existing law or any existing order, rule or regulation applicable to the Seller of any court or of any federal or state regulatory body, administrative agency or other government instrumentality having jurisdiction over the Seller or its properties, so as to adversely affect the Seller, the Issuing Entity or the Holders;

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•

there are no Proceedings pending and, to the Seller's knowledge, there are no Proceedings threatened and, to the Sellers's knowledge, there are no investigations pending or threatened, before any court, federal or state regulatory body, administrative agencies or other governmental instrumentality having jurisdiction over the Seller or its properties involving or relating to the Seller or the Issuing Entity or, to the Seller's knowledge, any other person:

•

asserting the invalidity of the Sale Agreement, any of the other Basic Documents, the RRBs, the Financing Act or the Finance Order;

•

seeking to prevent the issuance of the RRBs or the consummation of any of the transactions contemplated by the Sale Agreement or any other Basic Documents;

•

seeking any determination or ruling that might materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of, the Sale Agreement or any of the other Basic Documents; or

•

seeking to adversely affect the U.S. federal income tax, state income tax or franchise tax classification of the RRBs as debt;

•

no approval, authorization, consent, order or other action of, or filings with, any court, federal or state regulatory body, administrative agency or other government instrumentality, is required in connection with the execution and delivery by the Seller of the Sale Agreement, the performance by the Seller of the transactions contemplated thereby or the fulfillment by the Seller of the terms thereof, except those that have been obtained or made and those that the Seller, in its capacity as Servicer under the Servicing Agreement, is required to make in the future pursuant to the Servicing Agreement and post closing filings required in the connection therewith;

•

no portion of the RRB property has been sold transferred, assigned or pledged or otherwise conveyed by the Seller to any person other than the Issuing Entity and no security agreement, financing statement or equivalent security or lien instrument listing the Seller as debtor covering all or any part of the RRB Property is on file or of record in any jurisdiction, except such as may have been filed, recorded, or made in favor of the Issuing Entity or the Indenture Trustee in connection with the Basic Documents;

•

immediately upon the sale pursuant to the Sale Agreement, the Seller has transferred, sold and conveyed the RRB Property to the Issuing Entity, free and clear of all Liens (including the Lien of the Seller's first mortgage indenture but excluding any Lien created pursuant to RSA 369-B:7, VIII and any Lien that may be granted under the Basic Documents), and pursuant to RSA 369-B:6, V such transfer shall be treated as an absolute transfer of all of the Seller's right, title and interest (as a true sale), and not as a pledge or other financing of, the RRB Property;

•

immediately upon the sale pursuant to the Sale Agreement, the RRB Property shall be validly transferred and sold to the Issuing Entity, and such transfer shall be perfected within the meaning of RSA 369-B:6, VI, the Issuing Entity shall own all such RRB Property free and clear of all Liens (including the Lien of the Seller's first mortgage indenture but excluding any Lien created pursuant to RSA 369-B:7, VIII and any Lien that may be granted under the Basic Documents) and all filings to be made by the Seller (including filings with the NHPUC under the Financing Act) necessary in any jurisdiction to give the Issuing Entity a valid ownership interest in the RRB Property have been made. No further action is required to establish the Issuing Entity's ownership interest. All applicable filings have also been made to the extent required by applicable law in any jurisdiction to perfect the Back-Up Security Interest granted by the Seller to the Issuing Entity.

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•

under the laws of the State of New Hampshire and the United States in effect on the issuance date:

•

the Finance Order pursuant to which the rights and interests of the Seller have been created is in full force and effect and is Final;

•

the Holders are entitled to the protection provided in the Financing Act and, accordingly, the Finance Order is not revocable by the NHPUC;

•

the State of New Hampshire may neither limit nor alter the RRB charge, RRB Property, the Finance Order and all rights thereunder, in a manner that would substantially impair the rights of the Holders, absent a demonstration that an impairment is reasonable and necessary to advance a significant and legitimate public purpose, until the RRBs are fully met and discharged; provided that the State of New Hampshire is not precluded from such limitation or alteration if and when adequate provision is made by law for the protection of the Issuing Entity, the Holders and the Indenture Trustee;

•

except for Periodic Adjustments to the RRB Charge required under the Financing Act and the Finance Order, the NHPUC does not have authority, either by rescinding, altering or amending the Finance Order or otherwise, to revalue or revise for ratemaking purposes the stranded costs or the costs of providing, recovering, financing or refinancing the stranded costs, to determine that the RRB Charge is unjust or unreasonable or in any way to reduce or impair the value of RRB Property either directly or indirectly by taking the RRB Charge into account when setting other rates for the Seller; nor are the amount of revenues arising with respect thereto subject to reduction, impairment, postponement or termination;

•

the process by which the Finance Order was adopted and approved and the Finance Order and the Issuance Advice Letter themselves, comply with all applicable laws, rules and regulations;

•

the Issuance Advice Letter has been filed in accordance with the Finance Order;

•

no other 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 creation or sale of the RRB Property, except those that have been obtained or made and post closing filings required in connection therewith and those that the Seller, in its capacity as Servicer under the Servicing Agreement, is required to make in the future pursuant to the Servicing Agreement; and

•

the State of New Hampshire, in the exercise of its executive or legislative powers, may not repeal or amend the Financing Act or the Finance Order, or take any action in contravention of the pledge by the State of New Hampshire in RSA 369-B:6, II, without paying just compensation to the Holders, as determined by a court of competent jurisdiction, if this action would constitute a permanent appropriation of a substantial property interest of the Holders in the RRB Property and deprive the Holders of their reasonable expectations arising from their investments in the Rate Reduction Bonds;

•

based upon the information available to the Seller on the issuance date, the assumptions used in calculating the initial RRB Charge are reasonable and were made in good faith.

•

upon the effectiveness of the Finance Order:

•

all of the RRB Property constitutes an existing property right;

•

the RRB Property includes the right, title and interest in and to all revenues, collections, claims, payments, money, or proceeds of or arising from the RRB Charge, as adjusted from

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time to time pursuant to the Finance Order, and all rights to obtain adjustments to the RRB Charge pursuant to the Finance Order; and

•

the owner of the RRB Property is legally entitled to collect payments in respect of the RRB Charge in the aggregate sufficient to pay the interest on and principal of the Rate Reduction Bonds, to pay the fees and expenses of servicing the Rate Reduction Bonds, to replenish the Capital Subaccount to the Required Capital Level and to enforce all other material rights conferred in the Finance Order and the Financing Act until the earlier of two years after the Final Maturity Date of the latest maturing Tranche of the RRBs and the date on which the Rate Reduction Bonds are paid in full.

•

the information describing the Seller under the caption "Public Service Company of New Hampshire—The Depositor, Sponsor, Seller and Servicer" in this prospectus is correct in all material respects.

        The representations and warranties shall survive the sale and transfer of RRB Property to the Issuing Entity and the pledge thereof to the Indenture Trustee pursuant to the Indenture.

        Notwithstanding the foregoing, the Seller will not be in breach of any representation or warranty as a result of any change in law occurring after the issuance date, including by means of any legislative enactment, constitutional amendment or (if such means become available in the future) referendum or initiative petition that renders any of the representations or warranties untrue.

        The representations and warranties set forth in the Sale Agreement, insofar as they involve conclusions of law, are made not on the basis that the Seller purports to be a legal expert or to be rendering legal advice, but rather to reflect the parties' good faith understanding of the legal basis on which the parties are entering into the Sale Agreement and the other Basic Documents and the basis on which the Holders are purchasing the Rate Reduction Bonds, and to reflect the parties' agreement that, if such understanding turns out to be incorrect or inaccurate, the Seller will be obligated to indemnify the Issuing Entity and its permitted assigns (to the extent required by and in accordance with the Sale Agreement), and that the Issuing Entity and its permitted assigns will be entitled to enforce any rights and remedies under the Basic Documents on account of such inaccuracy to the same extent as if the Seller had breached any other representations or warranties under the Sale Agreement. Please read "—Indemnification."

        The Seller makes no representation or warranty that amounts collected from the RRB charges will be sufficient to meet payment obligations on the RRBs or assumptions made in calculating the RRB Charge will in fact be realized and the Seller shall not be obligated to reduce, or accept a reduction of, any rates or charges to which it would otherwise be entitled in respect of services rendered or to be rendered to Customers in order to permit the payment of the RRB Charge (other than as provided in the Finance Order with respect to other components of the "stranded cost recovery charge" (as defined in the Financing Act)).

Covenants of the Seller

        In the Sale Agreement, the Seller will be required to abide by, among others, the following covenants:

•

So long as any of the RRBs are outstanding, the Seller (a) will keep in full force and effect its existence, rights and franchises under the laws of the jurisdiction of its organization and (b) will obtain and preserve its qualification to do business, in each case to the extent that in each such jurisdiction such existence or qualification is or shall be necessary to protect the validity and enforceability of the Sale Agreement, the other Basic Documents to which the Seller is a party and each other instrument or agreement necessary or appropriate to the proper administration of the Sale Agreement and the transactions contemplated hereby.

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•

Except for the conveyances under the Sale Agreement or any Lien under RSA 369-B:7, VIII, the Seller will not sell, pledge, assign or transfer, or grant, create, or incur any Lien on, any of the RRB Property, or any interest therein, and the Seller shall defend the right, title and interest of the Issuing Entity and the Indenture Trustee in, to and under the RRB Property against all claims of third parties claiming through or under the Seller. Public Service Company of New Hampshire, in its capacity as Seller, will not at any time assert any Lien against, or with respect to, any of the RRB Property.

•

If the Seller receives any payments in respect of the RRB Charge or the proceeds thereof other than in its capacity as the Servicer, the Seller agrees to pay to the Servicer, on behalf of the Issuing Entity, all payments received by it in respect thereof as soon as practicable after receipt thereof by it. Prior to such remittance by the Servicer, the Seller agrees that such amounts are held in trust by it for the Issuing Entity and the Indenture Trustee.

•

The Seller shall notify the Issuing Entity and the Indenture Trustee promptly after becoming aware of any Lien on any of the RRB Property, other than the conveyances under the Sale Agreement, any Lien under the Basic Documents or any Lien under RSA 369-B:7, VIII.

•

The Seller will comply with its organizational and governing documents and all laws, treaties, rules, regulations and determinations of any governmental instrumentality applicable to it, except to the extent that failure to so comply would not materially adversely affect the Issuing Entity's or the Indenture Trustee's interests in the RRB Property or under any of the Basic Documents to which the Seller is party or the Seller's performance of its obligations under the Sale Agreement or under any of the other Basic Documents to which it is party.

•

So long as any of the RRBs are outstanding:

•

the Seller shall treat such RRBs as debt of the Issuing Entity and not that of the Seller, except for financial accounting or tax reporting purposes;

•

the Seller shall indicate in its financial statements that it is not the owner of the RRB Property and that the Issuing Entity's assets are not available to pay creditors of the Seller or any of its Affiliates (other than the Issuing Entity);

•

the Seller shall disclose the effects of all transactions between the Issuing Entity and the Seller in accordance with generally accepted accounting principles; and

•

the Seller shall not own or purchase any such RRBs.

•

The Seller agrees that, upon the sale by the Seller of RRB Property to the Issuing Entity pursuant to the Sale Agreement:

•

to the fullest extent permitted by law, including the Financing Act and applicable NHPUC Regulations, the Issuing Entity shall have all of the rights originally held by the Seller with respect to the RRB Property, including the right (subject to the terms of the Servicing Agreement) to exercise any and all rights and remedies to collect any amounts payable by any customer or third party supplier in respect of the RRB Property, notwithstanding any objection or direction to the contrary by the Seller; and

•

any payment by any Customer or third party supplier to the Issuing Entity shall discharge that Customer's or third party supplier's obligations in respect of the RRB Property to the extent of such payment, notwithstanding any objection or direction to the contrary by the Seller.

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•

So long as any of the RRB's are outstanding:

•

the Seller shall affirmatively represent that it has sold the RRB Property to the Issuing Entity (other than for financial accounting or tax purposes);

•

the Seller shall not make any statement or reference in respect of the RRB Property that is inconsistent with the Issuing Entity's ownership interest (other than for financial accounting or tax purposes); and

•

the Seller shall not take any action in respect of the RRB Property except solely in its capacity as the Servicer pursuant to the Servicing Agreement or as otherwise contemplated by the Basic Documents.

•

The Seller will execute and file such filings, including filings with the NHPUC pursuant to the Financing Act and UCC filings, and cause to be executed and filed such filings, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the ownership or security interest of the Issuing Entity and the Indenture Trustee in the RRB Property and the Back-Up Security Interest, including all filings required under the Financing Act and the applicable UCC relating to the transfer of the ownership or security interest in the RRB Property by the Seller to the Issuing Entity and the granting of a security interest in the RRB Property by the Issuing Entity to the Indenture Trustee and the Back-Up Security Interest and the continued perfection of such ownership or security interest.

•

The Seller 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 or the Finance Order. The Seller also agrees to take such legal or administrative actions as may be reasonably necessary (i) to protect the Issuing Entity, the Holders, the Indenture Trustee and any of their respective affiliates from claims, state actions or other actions or Proceedings of third parties which, if successfully pursued, would result in a breach of any representation or warranty of the Seller in the Sale Agreement and (ii) to block or overturn any attempts to cause a repeal of, modification of or supplement to the Financing Act, the Finance Order, any Advice Letter, the 2015 Settlement Agreement (to the extent it adversely affects the rights of the Holders or the validity or value of the RRB Property) or the rights of the Holders by executive action, legislative enactment or constitutional amendment that would be adverse to the Issuing Entity, the Indenture Trustee or the Holders. If the Servicer performs its obligations under this covenant in all respects, such performance shall be deemed to constitute performance of the Seller's obligations pursuant to clause (ii) of the immediately preceding sentence.

•

Notwithstanding any prior termination of the Sale 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 Seller pursuant to RSA 369-B:7, VI or RSA 369-B:7, VIII, the Seller shall not, prior to the date which is one year and one day after the termination of the Indenture, petition or otherwise invoke or cause the Issuing Entity to invoke the process of any court or government authority for the purpose of commencing or sustaining an involuntary case against the Issuing Entity under any Federal or state bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, indenture trustee, custodian, sequestrator or other similar official of the Issuing Entity or any substantial part of the property of the Issuing Entity, or ordering the winding up or liquidation of the affairs of the Issuing Entity.

•

So long as any of the RRBs are outstanding, the Seller shall pay, and shall cause each of its subsidiaries to pay, all material taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and

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governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a lien on the RRB Property, provided that no such tax need be paid if the Seller or one of its subsidiaries is contesting the same in good faith by appropriate Proceedings promptly instituted and diligently conducted and if the Seller or such subsidiary has established appropriate reserves as shall be required in conformity with generally accepted accounting principles.

•

The Seller hereby agrees that any New Hampshire tax on income associated with the Issuing Entity, taking into account available credits, will be paid by the Seller.

•

The Seller shall not become a party to any:

•

trade receivables purchase and sale agreement or similar arrangement under with it sells all or any portion of its accounts receivables owing from Customers who are obligated to pay the RRB Charge unless the Indenture Trustee, the Seller and the other parties to such additional arrangement shall have entered into an intercreditor agreement, in the form attached to the Indenture, with such changes as may be agreed among the parties thereto so long as such changes do not materially and adversely affect any Holder's rights in and to any RRB Collateral or otherwise under the Indenture, in connection therewith and the terms of the documentation evidencing such trade receivables purchase and sale arrangement or similar arrangement shall expressly exclude the RRB Property (including the RRB Charge) from any receivables or other assets pledged or sold under such arrangement; or

•

sale agreement selling to any other Affiliate property consisting of charges similar to the RRB charge sold pursuant to the Sale Agreement, payable by Customers pursuant to the Financing Act or similar law, unless the Seller and the other parties to such arrangement shall have entered into such intercreditor agreement in connection with any such agreement or similar arrangement.

•

The Seller will not withdraw the filing of the Issuance Advice Letter with the NHPUC.

•

Promptly after obtaining knowledge of any breach in any material respect of its representations and warranties or covenants in the Sale Agreement, the Seller shall promptly notify the Issuing Entity, the Indenture Trustee, and the Rating Agencies of the breach.

•

Upon the Issuing Entity's request, the Seller will execute and deliver such further instruments and do such further acts as may be necessary to carry out more effectively the provisions and purposes of the Sale Agreement.

Indemnification

        The Seller will indemnify, defend and hold harmless the Issuing Entity, the Indenture Trustee (for itself and for the benefit of the Secured Parties), and any of their respective affiliates, officials, officers, directors, managers, employees, consultants, counsel and agents against:

•

any and all taxes (other than taxes imposed on Holders as a result of their ownership of a Rate Reduction Bond) that may at any time be imposed on or asserted against any such Person under existing law as of the issuance date as a result of the sale of the RRB Property to the Issuing Entity, the Issuing Entity's ownership and assignment of the RRB Property, the issuance and sale by the Issuing Entity of the Rate Reduction Bonds or the other transactions contemplated in the Basic Documents, including any franchise, sales, gross receipts, general corporation, tangible personal property, privilege or license taxes, but excluding any taxes imposed as a result of a failure of such Person to withhold or remit taxes with respect to payments on any Rate Reduction Bond; and

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•

any and all liabilities, obligations, losses, actual damages, payments, claims, costs or expenses of any kind whatsoever, losses, that may be imposed on, incurred by or asserted against each such Person, in each such case, as a result of the Seller's willful misconduct or gross negligence in the performance of its duties or observance of its covenants under the Sale Agreement, or the Seller's breach in any material respect of any of its representations, warranties or covenants contained in the Sale Agreement, except to the extent of losses resulting from the willful misconduct, bad faith or gross negligence of such indemnified person or resulting from a breach of a representation or warranty made by any indemnified person in any of the Basic Documents that gives rise to the Seller's breach.

        Holders shall be entitled to enforce their rights against the Seller under this paragraph solely through a course of action brought on their behalf by the Indenture Trustee.

        The indemnification provided for in the Sale Agreement will survive any repeal of, modification of, supplement to, or judicial invalidation of, the Financing Act or the Finance Order and will survive the resignation or removal of the Indenture Trustee or the termination of the Sale Agreement and will rank in priority with other general, unsecured obligations of the Seller. The Seller shall not indemnify any person or entity otherwise indemnified under the Sale Agreement for any changes in law after the issuance date, whether such changes in law are effected by means of any legislative enactment, any constitutional amendment or any final and non-appealable judicial decision. The indemnification remedies provided in the Sale Agreement are the sole and exclusive remedies against the Seller for breach of its representations and warranties in the Sale Agreement.

Back-Up Security Interest

        The Sale Agreement provides that if the sale, transfer, assignment, setting over and conveyance of the RRB Property to the Issuing Entity is held by any court of competent jurisdiction not to be a true sale as provided in RSA 369-B:6, V, then such sale, transfer, assignment, setting over and conveyance shall be treated as the creation of a security interest in the RRB Property and, without prejudice to its position that it has absolutely transferred all of its rights in the RRB Property to the Issuing Entity, the Seller will grant to the Issuing Entity a security interest, the Back-Up Security Interest, in the RRB Property (including, to the fullest extent permitted by the Financing Act, all revenues, collections, claims, payments, money or proceeds of or arising from the RRB Charge pursuant to the Finance Order) to secure a payment obligation incurred by the Seller in respect of the amount paid by the Issuing Entity to the Seller pursuant to the Sale Agreement.

Amendment

        The Sale Agreement may be amended by the parties thereto, without the consent of the Holders (notwithstanding any provision of any other document that would otherwise require such consent as a precondition of Indenture Trustee consent), but with the 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 the Sale Agreement, upon which the Indenture Trustee may conclusively rely) (i) to cure any ambiguity, to correct or supplement any provision thereof, provided that the action will not, as certified in a certificate of an officer of the Seller delivered to the Indenture Trustee and the Issuing Entity, adversely affect, in any material respect, the interest of any Holders or (ii) to conform to the provisions of the description in the Sale Agreement in this prospectus.

        The Sale Agreement may also be amended from time to time by the Seller and the Issuing Entity, with ten Business Days' prior written notice given to the Rating Agencies and the prior written consent of the Indenture Trustee and the prior written consent of the Holders of Rate Reduction Bonds evidencing not less than a majority of the Outstanding Amount of the Rate Reduction Bonds affected

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thereby, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Sale Agreement or of modifying in any manner the rights of the Holders.

Merger or Consolidation of or Assumption of the Obligations of the Seller

        Any Person (a) into which the Seller may be merged or consolidated, (b) that may result from any merger or consolidation to which the Seller shall be a party or (c) that may succeed to the properties and assets of the Seller substantially as a whole, which Person in the case described in the foregoing clause (c) executes an agreement of assumption to perform every obligation of the Seller under the Sale Agreement, shall be the successor to the Seller under the Sale Agreement without further act on the part of any of the parties to the Sale Agreement; provided, however, that (i) if the Seller is the Servicer, 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 Seller shall have delivered to the Issuing Entity and the Indenture Trustee an officer's certificate stating that such consolidation, merger or succession and such agreement of assumption comply with the relevant provisions of the Sale Agreement and that all conditions precedent, if any, provided for in the Sale Agreement relating to such transaction have been complied with, (iii) the Seller shall have delivered to the Issuing Entity 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 have been complied with, and such agreement of assumption complies with the relevant provisions of the Sale Agreement and (B) either (1) all filings to be made by the Seller, including filings with the NHPUC pursuant to the Financing Act and filings under the applicable UCC, have been executed and filed that are necessary to preserve and protect fully the interests of the Issuing Entity 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 and (iv) the Rating Agencies shall have received prior written notice of such transaction.

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THE SERVICING AGREEMENT

Servicing Procedures

        The Servicer will manage, service and administer, and bill and collect payments arising from, the RRB Property according to the terms of the Servicing Agreement between the Servicer and the Issuing Entity. The Servicer's duties will include responding to inquiries of Customers and the NHPUC regarding the RRB Property and the RRB Charges, calculating electricity usage, accounting for collections, furnishing periodic reports and statements to the Issuing Entity, the Indenture Trustee and the Rating Agencies and periodically adjusting the RRB Charges.

        The Servicer, on behalf of the Issuing Entity and the Holders, will 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. In addition, the Servicer will take legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying in hearings or similar Proceedings, as may be reasonably necessary to block or overturn 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 Issuing Entity or the Indenture Trustee. The cost of any action will be payable from payments arising from the RRB Charge Collections as an expense of the Issuing Entity.

Servicing Standards and Covenants

        The Servicing Agreement will require the Servicer, to follow such customary and usual 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 Issuing Entity's expense but subject to the priority of payments set forth in the Indenture.

        The Servicer will not waive any late payment charge or other fee or charge relating to delinquent payments, nor waive, vary or modify any terms of payments of any amounts payable by a Customer, unless such action:

•

would comply with the Servicer's policies and practices applicable to such duties that the Servicer follows with respect to comparable assets that it services for itself or other, as in effect from time to time and in accordance with regulations of the NHPUC; and

•

would comply in all material respects with applicable law.

        In addition, the Servicer may write off any amounts that it deems uncollectible according to its customary practices.

        In the Servicing Agreement, the Servicer will covenant that, in servicing the RRB Property it will:

•

manage, service, administer and make collections of payments arising from the RRB Property with reasonable care and in compliance with applicable law, including all applicable guidelines of the NHPUC, 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;

•

follow customary standards, policies and procedures for the industry in performing its duties as Servicer;

•

use all reasonable efforts, consistent with its customary servicing procedures, to bill and collect the RRB Charges;

•

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 Issuing Entity and the Indenture Trustee, respectively, in the RRB Property, with the priority required by the Indenture;

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•

comply in all material respects with laws applicable to and binding on it relating to the RRB Property; and

•

submit (i) Annual Routine True-up Letters, (ii) Mid-Year Routine True-Up Letters, if necessary and (iii) Other Routine True-Up Letters, if necessary and (iv) Non-Routine True-Up Letters to the NHPUC seeking an adjustment, if necessary, of the RRB Charges.

Periodic Adjustment Process

        The Financing Act and the Finance Order mandate that Periodic Adjustments to the RRB Charges be made to ensure that the aggregate RRB Charges billed for the applicable period will result in RRB Charge Collections that are sufficient to meet the Periodic RRB Payment Requirements. The Servicer will periodically file Advice Letters with the NHPUC, specifying the new RRB Charges and identifying among other factors the Weighted Average Days Outstanding, the forecasted RRB charge-off percentage and the forecasted kWh billed by rate class.

        The Servicer shall file an Annual Routine True-Up Letter with the NHPUC no later than January 15 of each year. 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 Issuing Entity 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 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.

        In addition (a) except during the two Remittance Periods preceding the Final Maturity Date, 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 for the latest maturing Tranche of RRBs, 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.

        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.

        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, a Non-Routine Periodic Adjustment, subject to the review and approval of the NHPUC that such

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adjustment is necessary to ensure the timely recovery of RRB Costs with such review and determination to occur within 30 days of such filing.

Remittances to Collection Account

        Remittances to the Collection Account will be based on Estimated RRB Charge Payments, which are the payments in respect of the RRB Charge that the Servicer estimates, in accordance with procedures set forth in the Servicing Agreement, that it will receive from Customers on each Servicer Business Day based on actual amounts that were billed to Customers in respect of the RRB Charge, the then-current Weighted Average Days Outstanding and the Servicer's good faith estimate of system wide charge-offs. On each Servicer Business Day, commencing approximately the Weighted Average Days Outstanding after the date of the Servicing 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 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 the Servicing Agreement, the Servicer shall provide written notice to the Indenture Trustee of each such Remittance (including the exact dollar amount to be remitted).

        On or before March 1 of each year, the Servicer will reconcile the amount of Estimated RRB Charge Payments remitted to the Collection Account with the amount of payments in respect of the RRB Charge that are deemed to have been received by the Servicer from Customers based on actual system wide charge-offs. Specifically, 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 Issuing Entity 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 Issuing Entity, the Indenture Trustee and the Rating Agencies.

Servicing Compensation

        The Servicer will be entitled to receive an annual Servicing Fee in an amount equal to:

•

0.05 percent of the initial principal amount of the RRBs; or

•

up to 0.60 percent of the initial Principal Balance of the RRBs if the RRB Charges are being billed separately to Customers by a successor servicer.

        In addition, the Servicer will be entitled to an initial fee payable on the closing date in the amount of $50,000. The Servicer will also be entitled to retain as additional compensation (i) any interest earnings on RRB Charge Collections received by the Servicer and invested by it in accordance with Servicing Agreement, prior to remittance to the Collection Account, and (ii) all late payment charges, if any, collected from Customers or third party suppliers to the extent consistent with the Tariff.

        The Indenture Trustee will pay the Servicing Fee in semi-annual installments (together with any portion of the Servicing Fee that remains unpaid from prior Payment Dates) to the extent of available funds in the Collection Account prior to the payment of any principal of and interest on the RRBs. See "Description of the RRBs—How Funds in the Collection Account will be Allocated."

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Third Party Suppliers

        Although the NHPUC has not authorized third party suppliers to provide electricity metering and billing services relating to retail delivery of electricity, if the NHPUC were to authorize third party suppliers to provide these services, third party suppliers may have the opportunity to bill, collect and remit RRB Charges in the future.

        The NHPUC states in its Finance Order issued to PSNH that it will not permit, approve or require the billing, collection and remittance of the RRB Charges unless the following minimum standards apply:

•

The third party supplier must provide the Servicer, in a timely manner, with access to kilowatt-hour usage information to permit the Servicer to fulfill its obligations under the Servicing Agreement.

•

The Servicer will be entitled, within seven days after a default by a third party supplier in remitting the RRB Charges, to assume responsibility for billing all charges for services provided by the Servicer, including the RRB Charges, or to transfer responsibility to a third party, which must meet the criteria described in the Finance Order.

•

If and so long as a third party supplier does not maintain at least a "BBB" (or the equivalent) long-term unsecured credit rating from Moody's or S&P, a third party supplier will be required to maintain with the Servicer, or as directed by the Servicer, a cash deposit or comparable security equal to one month's maximum estimated collections of payments arising from the RRB Charges, as agreed upon by the Servicer and the third party supplier. In the event of default in the remittance of RRB Charges by a third party supplier, such amount will be included in the Periodic Adjustment of the RRB Charges.

•

The third party supplier must agree to remit the full amount of the RRB Charges it bills to Customers, regardless of whether payments are received from such Customers, within 15 days of the Servicer's bill for such charges.

        The Finance Order also provides that the foregoing minimum standards may be modified in accordance with the terms of RRB financing documents, subject to approval by the NHPUC and confirmation (or deemed confirmation) from the applicable ratings agencies that such change will not result in a suspension, reduction or withdrawal of the then current credit ratings for the RRBs.

Servicer Representations and Warranties

        In the Servicing Agreement, the Servicer will represent and warrant to the Issuing Entity, as of the closing of the issuance of the RRBs, among other things, that:

•

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;

•

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 the Servicing 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);

•

the Servicer has the requisite corporate power and authority to execute and deliver the Servicing Agreement and to carry out its terms; and the execution, delivery and performance of the

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Servicing Agreement have been duly authorized by all necessary corporate action on the part of the Servicer;

•

the Servicing 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;

•

the consummation of the transactions contemplated by the Servicing Agreement and the fulfillment of the terms thereof 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 Issuing Entity or the Holders;

•

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 Issuing Entity or, to the Servicer's knowledge, any other Person: (i) asserting the invalidity of the Servicing Agreement; (ii) seeking to prevent the issuance of the RRBs or the consummation of any of the transactions contemplated by the Servicing 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, the Servicing Agreement or any of the other Basic Documents; or (iv) seeking to adversely affect the U.S. federal income tax, state income tax or franchise tax classification of the RRBs as debt;

•

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 the Servicing Agreement, the performance by the Servicer of the transactions contemplated thereby or the fulfillment by the Servicer of the terms thereof, except those that have been obtained or made and those that the Servicer is required to make in the future pursuant to the Servicing Agreement and post-closing filings in connection therewith; and

•

each report and certificate delivered in connection with any filing made to the NHPUC with respect to the RRB Charges or Periodic Adjustments will constitute a representation and warranty by the Servicer that each report or certificate is true and correct in all material respects, provided that any assumptions, forecasts or predictions of future events therein will be limited to the representation and warranty that such assumptions, forecasts or other predictions are believed by the Servicer to be reasonable based upon historic performance and facts known to the Servicer on the date such report or certificate is delivered.

        In the event of willful misconduct or gross negligence by the Servicer in the performance of its duties or observance of its covenants under the Servicing Agreement or in the event of the Servicer's breach in any material respect of any of the representations and warranties summarized in the preceding paragraph, the Servicer will indemnify, defend and hold harmless the Issuing Entity and the

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Holders against any costs, expenses, losses, claims, actual damages and liabilities incurred as a result of these events. The Holders, however, may only enforce their rights against the Servicer through an action brought by the Indenture Trustee, and the Servicer will not be liable for any costs, expenses, losses, claims, damages or liabilities resulting from the willful misconduct or gross negligence of the indemnified persons.

        In addition, the Servicer will indemnify, defend and hold harmless the Indenture Trustee and any of its respective affiliates, officials, officers, directors, employees, consultants, counsel and agents against any costs, expenses, losses, claims, actual damages and liabilities incurred as a result of the willful misconduct or gross negligence of the Servicer in the performance of its duties or observance of its covenants under the Servicing Agreement or the Servicer's breach in any material respect of any of the representations and warranties summarized above. However, the Servicer will not be liable for any costs, expenses, losses, claims, damages or liabilities resulting from the willful misconduct or gross negligence of any such indemnified person or resulting from a breach of a representation or warranty made by such indemnified person in the Basic Documents that gives rise to the Servicer's breach.

Statements by Servicer

        So long as any Rate Reduction Bonds are outstanding, not later than the Servicer Business Day immediately preceding each Payment Date, the Servicer shall deliver a written report, the Semi-Annual Servicer Certificate, to the Issuing Entity, the Indenture Trustee and the Rating Agencies. The Semi-Annual Servicer Certificate will detail the RRB Charge Collections for the current Payment Date and the balances in the Collection Account available to make the payments to be made as described under "Description of the RRBs—How Funds in the Collection Account Will Be Allocated."

Evidence as to Compliance

        The Servicing Agreement will provide that a firm of independent public accountants, at the Issuing Entity's expense, will furnish to the Issuing Entity, the Indenture Trustee and the Rating Agencies a statement as to compliance by the Servicer with standards relating to the servicing of the RRB Property 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 the Servicing Agreement until December 31, 2018). This report will be provided on or before the earlier of March 31 of each year or, 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, for as long as the RRBs remain outstanding. This report will state that the accounting firm has performed agreed upon procedures in connection with the Servicer's compliance with its obligations under the Servicing Agreement, identifying the results of the procedures and including any exceptions noted. The annual accountant's report will also include any attestation report required under Item 1122(b) of Regulation AB, as then in effect. The report will also indicate that the accounting firm providing the 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.

        The Servicing Agreement will also provide for delivery to the Issuing Entity, the Indenture Trustee and the Rating Agencies of a certificate signed by an officer of the Servicer stating that, to the best of such officer's knowledge, the Servicer has fulfilled all of its obligations under the Servicing Agreement in all material respects throughout the preceding twelve months ended December 31 (or preceding period since the closing date of the issuance of the RRBs in the case of the first certificate) or, if there has been a default in the fulfillment of any obligation in any material respect under the Servicing Agreement, describing each such material default. This certificate of compliance is required to be delivered on or before the earlier of March 31 of each year, or, with respect to each calendar year

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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 any rules and regulations thereunder. This certificate is required to be provided beginning March 31, 2019, and will continue to be provided as long as the RRBs remain outstanding. The Servicer will agree to give the Issuing Entity and the Indenture Trustee notice of Servicer defaults under the Servicing Agreement.

        You may obtain copies of the statements and certificates delivered under the Servicing Agreement by sending a written request addressed to the Indenture Trustee.

Matters Regarding the Servicer

        The Servicing Agreement will provide that PSNH may not resign from its obligations and duties as Servicer under the Servicing Agreement, except when either:

•

PSNH determines that performance of its duties is no longer permissible under applicable law; or

•

(i) the Rating Agency Condition shall have been satisfied and (ii) PSNH shall have received the consent of the NHPUC to such resignation.

        No resignation by PSNH as Servicer will become effective until a successor Servicer has assumed PSNH's servicing obligations and duties under the Servicing Agreement.

        The Servicing Agreement will further provide that neither the Servicer nor any of its directors, officers, employees or agents will be liable to the Issuing Entity or any other person or entity, except as otherwise provided under the Servicing Agreement, for taking any action or for refraining from taking any action under the Servicing Agreement or for errors in judgment. The Servicing Agreement will not protect the Servicer or any of its directors, officers, employees or agents against any liability that would otherwise be imposed by reason of their willful misconduct or gross negligence in the performance of duties under the Servicing Agreement. In addition, the Servicing Agreement will provide that the Servicer is under no obligation to appear in, prosecute or defend any legal action, except as otherwise provided in the Servicing Agreement at the Issuing Entity's expense. The Servicer may, in respect of any Proceeding, undertake any action that is not specifically identified in the Servicing 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 Issuing Entity and the interests of the Holders and Customers.

        Under the circumstances specified in the Servicing Agreement, any entity into which the Servicer may be merged or consolidated, or any entity resulting from any merger or consolidation to which the Servicer is a party, or any entity succeeding to the business of the Servicer or its obligations as Servicer, will be the Servicer under the Servicing Agreement. In each such case, the successor must expressly assume the obligations of the Servicer under the Servicing Agreement. Other than in these cases and in the case of a Servicer resignation as described above, the Servicing Agreement may not be assigned by the Servicer.

Servicer Defaults

        Each of the following will be a Servicer Default under the Servicing Agreement:

•

any failure by the Servicer to remit to the Collection Account on behalf of the Issuing Entity 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 Issuing Entity or the Indenture Trustee or after discovery of such failure by a Responsible Officer of the Servicer;

•

any failure on the part of the Servicer, or so long as the Servicer is PSNH or an affiliate thereof, any failure on the part of PSNH, as the case may be, duly to observe or to perform in any material respect any other covenants or agreements of the Servicer or PSNH, as the case may be, set forth in the Servicing Agreement (other than as provided in the provision above or

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below) 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 (b) 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 PSNH, as the case may be, by the Issuing Entity or (II) to the Servicer, or PSNH, as the case may be, by the Indenture Trustee or by the Holders evidencing not less than 25 percent of the Outstanding Amount of the RRBs or (B) such failure is discovered by a Responsible Officer of the Servicer;

•

any failure by the Servicer duly to perform its obligations in carrying out Periodic Adjustments and in making annual filings as described in the Servicing Agreement in the time and manner set forth therein, which continues unremedied for a period of five Servicer Business Days;

•

any representation or warranty made by the Servicer in the Servicing 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 Issuing Entity or the Indenture Trustee; and

•

events of bankruptcy, insolvency, receivership or liquidation of the Servicer.

Rights When Servicer Defaults

        If a Servicer Default remains unremedied, either the Indenture Trustee or Holders evidencing not less than 25 percent of the Outstanding Amount of the RRBs may terminate by notice to the Servicer all the rights and obligations of the Servicer (other than the Servicer's indemnity obligations and the Servicer's obligations to continue performing its functions as Servicer until a successor is appointed) under the Servicing Agreement. A successor Servicer appointed by the Issuing Entity, subject to the approval of the NHPUC, and with the Indenture Trustee's consent, will succeed to all the responsibilities, duties and liabilities of the Servicer under the Servicing Agreement upon its assuming in writing the obligations of the Servicer thereunder. If the Issuing Entity has not obtained a successor Servicer within 30 days after a termination notice has been delivered to the defaulting Servicer, the Indenture Trustee may appoint (upon the approval of the NHPUC), or petition the NHPUC or a court of competent jurisdiction for the appointment of, a successor Servicer. In order to qualify as a successor Servicer, such entity must be permitted to perform the duties of a Servicer under the NHPUC Regulations, the Rating Agency Condition must be satisfied and the successor Servicer must assume in writing the obligations of the Servicer under the Servicing Agreement or enter into a substantially similar servicing agreement with the Issuing Entity. The Indenture Trustee may make arrangements for compensation to be paid to the successor Servicer.

        In addition, when the Servicer defaults, each of the following will be entitled to apply to the NHPUC for sequestration and payment of revenues arising from the RRB Property:

•

the Holders (subject to the provisions of the Indenture) and the Indenture Trustee;

•

the Issuing Entity or its assignees; and

•

pledgees or transferees, including transferees under the Financing Act, of the RRB Property.

        If, however, a bankruptcy trustee or similar official has been appointed for the Servicer, and no Servicer Default other than an appointment of a bankruptcy trustee or similar official has occurred, the bankruptcy trustee or similar official may have the power to prevent the Indenture Trustee or the Holders from effecting a transfer of servicing.

Waiver of Past Defaults

        Holders evidencing at least a majority in of the Outstanding Amount of the RRBs, on behalf of all Holders, may waive any default by the Servicer in the performance of its obligations under the Servicing Agreement and may waive the consequences of any default, except a default in making any

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required remittances to the Collection Account under the Servicing Agreement. The Servicing Agreement provides that no waiver will impair the Holder's rights relating to subsequent defaults.

Successor Servicer

        If for any reason a third party assumes the role of the Servicer under the Servicing Agreement, the Servicing Agreement will require the predecessor Servicer to cooperate with the Issuing Entity, the Indenture Trustee and the successor Servicer in terminating the Servicer's rights and responsibilities under the Servicing Agreement, including the transfer to the successor Servicer of all cash amounts then held by the predecessor Servicer for remittance or subsequently acquired and providing any requested information reasonably necessary to assist the transition of services under the Servicing Agreement and related documents to any successor Servicer. The Servicing Agreement will provide that, 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 all relevant records to the successor Servicer and amending the Servicing Agreement to reflect such succession as Servicer shall be paid by the predecessor Servicer upon presentation of reasonable documentation of such costs and expenses. All other reasonable costs and expenses incurred in transferring servicing responsibilities to a successor Servicer shall be paid by the Issuing Entity.

Amendment

        The Servicing Agreement may be amended by the parties thereto, without the consent of the Holders (notwithstanding any provision of any other document that would otherwise require such consent as a precondition of Indenture Trustee consent), but with the 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 the Servicing Agreement, upon which the Indenture Trustee may conclusively rely), and notice to the Rating Agencies, to cure any ambiguity, to correct or supplement any provision thereof or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of that agreement or of modifying in any manner the rights of the Holders, provided that the action will not, as certified in a certificate of an officer of the Servicer delivered to the Indenture Trustee and the Issuing Entity, adversely affect, in any material respect, the interest of any Holders. The Servicing Agreement may also be amended by the Servicer and the Issuing Entity with the consent of the Indenture Trustee and the Holders evidencing at least a majority of the Outstanding Amount of the RRBs and 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 the agreement or of modifying in any manner the rights of the Holders.

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

General

        The following is a general discussion of the material U.S. federal income tax consequences of the purchase, ownership and disposition of the RRBs. This discussion further assumes the RRBs are held as capital assets within the meaning of Section 1221 of the Internal Revenue Code. The discussion does not address the tax consequences for investors in light of their personal investment circumstances, nor does it purport to deal with all considerations applicable to certain types of investors subject to special treatment under the U.S. federal income tax laws (e.g., banks, financial institutions, partnerships or other pass-through entities, expatriates or former long-term residents of the United States, persons subject to the alternative minimum tax, persons subject to the 3.8% Medicare contribution tax on net investment income, individual retirement accounts or other tax-deferred accounts, broker-dealers, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, insurance companies, real estate investment trusts, regulated investment companies, "controlled foreign corporations," "passive foreign investment companies," persons that hold RRBs as a position in a "straddle," or as part of a synthetic security or "hedge," "conversion transaction," "constructive sale" or other integrated investment, persons that have a "functional currency" other than the U.S. dollar, Non-U.S. Holders, except as described below, and tax-exempt organizations). This summary also does not address the tax consequences to Holders of the RRBs under state, local or foreign tax laws or under any U.S. federal estate or gift tax laws. By acquiring RRBs, however, a Holder agrees to treat the RRBs as debt to the extent consistent with applicable state, local and other tax law unless otherwise required by appropriate taxing authorities.

        This summary is based on current provisions of the Code, the U.S. Treasury regulations promulgated and proposed thereunder, judicial decisions and published administrative rulings and pronouncements of the Internal Revenue Service, the IRS, and interpretations thereof. PSNH has not and will not seek any rulings from the IRS with respect to the matters discussed below. All of these authorities and interpretations are subject to change, and any change may apply retroactively and affect the accuracy of the opinions, statements and conclusions set forth in this discussion.

        For purposes of this discussion, a U.S. Holder means a beneficial owner of RRBs that, for U.S. federal income tax purposes, is (i) a U.S. citizen or individual resident of the United States, (ii) a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source, (iv) a trust if (A) a court in the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) it has a valid election in place to be treated as a U.S. person or (v) a person otherwise subject to net U.S. federal income taxation on its worldwide income. As used herein, a Non-U.S. Holder means a beneficial owner of RRBs that, for U.S. federal income tax purposes, is an individual, corporation, estate or trust and is not a U.S. Holder.

        If an entity or arrangement treated as a partnership for U.S. federal income tax purposes is a Holder of RRBs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Persons holding RRBs through a partnership or other entity classified as a partnership for U.S. income tax purposes are urged to consult their own tax advisors.

        ALL PROSPECTIVE INVESTORS ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF RRBS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY FOREIGN, STATE, LOCAL OR OTHER TAX LAWS.

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Taxation of the Issuing Entity and Characterization of the RRBs

        Concurrent with the issuance of the RRBs, Ropes & Gray LLP, as special tax counsel to the Issuing Entity and PSNH, expects to deliver its opinion that based upon the Code, the U.S. Treasury regulations promulgated thereunder, and Revenue Procedure 2005-62, for U.S. federal income tax purposes (i) the issuance of the RRBs will be a "qualifying securitization" within the meaning of Revenue Procedure 2005-62, (ii) the Issuing Entity will not be treated as a taxable entity separate and apart from PSNH, (iii) the RRBs will be treated as obligations of PSNH as expressly set forth in Section 6.02 of Revenue Procedure 2005-62 and (iv) PSNH will not be treated as recognizing gross income upon the issuance of the RRBs. By acquiring RRBs, a beneficial owner agrees to treat the RRB as debt for U.S. federal income tax purposes. This opinion is based on certain representations made by the Issuing Entity and PSNH and on the application of current law to the facts as established by the Indenture and other relevant documents and assumes compliance with the Indenture and such other documents as in effect on the date of issuance of the RRBs.

Tax Consequences to U.S. Holders

Interest

        The Issuing Entity expects that the RRBs will not be issued with more than a de minimis amount of original issue discount, or OID, for U.S. federal income tax purposes. Thus, stated interest on the RRBs generally will be taxable to a U.S. Holder as ordinary income at the time it is paid or accrued in accordance with such U.S. Holder's method of accounting for U.S. federal income tax purposes. If, however, the issue price of the RRBs is less than their stated principal amount and the difference is equal to or more than a de minimis amount (as set forth in the applicable U.S. Treasury regulations), U.S. Holders will be required to include the difference in income as OID as it accrues in accordance with the constant yield method (as set forth in the applicable U.S. Treasury regulations). The remainder of this discussion assumes that the RRBs will not be treated as issued with OID.

Information Reporting and Backup Withholding

        In general, information reporting requirements will apply to certain payments of principal and interest on the RRBs and to the proceeds from the sale of the RRBs unless the recipient is an exempt recipient. In addition, backup withholding at a current rate of 28% will apply to the payments if a U.S. Holder fails to provide its taxpayer identification number, a certificate of exempt status or otherwise comply with the applicable requirements of the U.S. backup withholding rules.

        Backup withholding is not an additional tax. Any amounts withheld from payments to a U.S. Holder under the backup withholding rules will be allowed as a credit against such U.S. Holder's U.S. federal income tax liability and may entitle the U.S. Holder for a refund; provided that the required information is timely furnished to the IRS. U.S. Holders should consult their own tax advisors regarding the application of backup withholding in their particular situation, the availability of an exemption from backup withholding and the procedure for obtaining such an exemption, if available.

Sale, Exchange or Retirement

        On a sale, exchange or retirement of RRBs, a U.S. Holder generally will recognize taxable gain or loss equal to the difference between the amount of cash plus the fair market value of any property received (other than any amount received attributable to accrued but unpaid interest on the RRBs not previously included in income, which will be taxable as ordinary income) and the U.S. Holder's adjusted tax basis in the RRB. A U.S. Holder's adjusted tax basis in the RRBs generally is the U.S. Holder's cost decreased by the amount of any payments other than qualified stated interest received on the RRBs. Any gain or loss will generally be capital gain or loss and generally will be long-term capital gain or loss if the RRB was held for more than one year at the time of sale, exchange or retirement.

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Long-term capital gains of non-corporate U.S. Holders may be eligible for reduced rates of taxation. The deductibility of capital losses by both corporate and non-corporate U.S. Holders is subject to limitations.

Tax Consequences to Non-U.S. Holders

        The rules governing U.S. federal income taxation of Non-U.S. Holders are complex. Non-U.S. Holders should consult their own tax advisors to determine the effect of U.S. federal, state, local and non-U.S. income tax laws, as well as treaties, with regard to an investment in the RRBs, including any reporting requirements.

Interest

        Subject to the discussion below concerning backup withholding and FATCA, a Non-U.S. Holder generally will not be subject to U.S. federal withholding tax on interest received in respect of the RRBs, provided that such Non-U.S. Holder (i) does not own, actually or constructively, 10% or more of the total combined voting power of PSNH or the Issuing Entity, (ii) is not a controlled foreign corporation for U.S. federal income tax purposes directly or indirectly related to PSNH or the Issuing Entity within the meaning of section 881(c)(3)(C) of the Code, (iii) is not a bank whose receipt of interest on the RRBs is described in section 881(C)(3)(A) of the Code, and (iv) satisfies certain certification requirements under penalties of perjury (generally through the provision of a properly completed and executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable).

        A Non-U.S. Holder that qualifies for the exemption from withholding described above, the Portfolio Interest Exemption, generally will not be subject to U.S. federal income tax on interest received in respect of the RRBs unless such interest is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States (and, if an applicable tax treaty so requires, is attributable to the conduct of a trade or business through a permanent establishment or fixed base in the United States). A Non-U.S. Holder that is subject to U.S. federal income tax on interest under the rules described in the preceding sentence will not be subject to U.S. federal withholding tax on any such interest that might otherwise be subject to U.S. withholding tax, if such Non-U.S. Holder satisfies certain certification requirements under penalties of perjury (generally through the provision of a properly completed and executed IRS Form W-8ECI).

        The gross amount of payments of interest that do not qualify for the Portfolio Interest Exemption generally will be subject to U.S. income withholding tax at a rate of 30% unless (i) the Non-U.S. Holder provides a properly completed IRS Form W-8BEN or W-8BEN-E (or successor form), as applicable, establishing an exemption from or reduction in withholding under an applicable tax treaty or (ii) the Non-U.S. Holder establishes that such interest is effectively connected with the conduct of a U.S. trade or business by such Non-U.S. Holder and the Non-U.S. Holder provides a properly completed IRS Form W-8ECI (or successor form).

        If interest or other income received with respect to RRBs is effectively connected with a U.S. trade or business conducted by a Non-U.S. Holder (and, if an applicable tax treaty so requires, is attributable to the conduct of a trade or business through a permanent establishment or fixed base in the United States), the Non-U.S. Holder generally will be subject to U.S. federal income tax on such interest or other income in the same manner as if it were a U.S. Holder. In addition, if the Non-U.S. Holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% of its effectively connected earnings and profits for the taxable year, subject to certain adjustments, unless reduced or eliminated by an applicable tax treaty. Even though such effectively connected income is subject to U.S. federal income tax, and may be subject to the branch profits tax, it is not subject to U.S. federal withholding tax if the Non-U.S. Holder satisfies the certification requirements described above.

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Sale, Exchange or Retirement

        Subject to the discussions of backup withholding and FATCA below, a Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax on gain realized on the sale or exchange of the RRBs, unless:

•

the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year and certain other conditions are met; or

•

the gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States).

        Except to the extent that an applicable income tax treaty otherwise provides, generally a Non-U.S. Holder will be taxed in the same manner as a U.S. Holder with respect to gain that is effectively connected with the Non-U.S. Holder's conduct of a U.S. trade or business. A corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional branch profits tax at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty) on any effectively connected gain on the RRBs. A Non-U.S. Holder who is both an individual present in the United States for 183 days or more in the taxable year and meets certain other conditions will be subject to U.S. federal income tax at a rate of 30% (or at a reduced rate under an applicable income tax treaty) on the amount by which capital gains from U.S. sources (including gains from the sale or other disposition of the RRBs) exceed capital losses allocable to U.S. sources. To claim the benefit of an applicable income tax treaty, a Non-U.S. Holder may be required to file an income tax return and disclose its position under the U.S. Treasury regulations concerning treaty-based return positions.

Information Reporting and Backup Withholding

        Generally, the amount of interest paid to a Non-U.S. Holder and the amount of tax, if any, withheld with respect to those payments must be reported to the IRS and to the Non-U.S. Holder. Copies of the information returns reporting such interest payments and any withholding may also be made available to the tax authorities in the country in which the Non-U.S. Holder resides under the provisions of an applicable tax treaty.

        In general, a Non-U.S. Holder will not be subject to backup withholding with respect to payments of interest on the RRBs that are made to the Non-U.S. Holder, provided that the Non-U.S. Holder has provided certification that such Non-U.S. Holder is a Non-U.S. Holder, and the payor does not have actual knowledge or reason to know that the Non-U.S. Holder is a United States person as defined under the Code.

        Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other disposition (including a retirement or redemption) of RRBs within the United States or conducted through certain U.S.-related financial intermediaries, unless the Non-U.S. Holder certifies to the payor under penalties of perjury that it is a Non-U.S. Holder and the payor does not have actual knowledge or reason to know that the Non-U.S. Holder is a United States person as defined under the Code, or the Non-U.S. Holder otherwise establishes an exemption.

        Backup withholding is not an additional tax. Any amounts withheld from a payment to a Non-U.S. Holder under the backup withholding rules will be allowed as a credit against such Non-U.S. Holder's U.S. federal income tax liability and may entitle such Non-U.S. Holder to a refund; provided that the required information is timely furnished to the IRS. Non-U.S. Holders should consult their tax advisors regarding the application of information reporting and backup withholding in their particular situations, the availability of an exemption from backup withholding and the procedure for obtaining such an exemption, if available.

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The Foreign Account Tax Compliance Act (FATCA)

        Pursuant to Sections 1471 through 1474 of the Code (commonly referred to as FATCA), U.S. Treasury regulations thereunder, and administrative guidance, issuers of certain indebtedness and equity instruments and their agents, as applicable, are required to withhold 30% of any interest with respect to such instruments, and, on or after January 1, 2019, 30% of the gross proceeds, including the return of principal, from the sale or other disposition (including any redemption) of those instruments, in each case, paid to (i) a foreign financial institution (whether such foreign financial institution is the beneficial owner or an intermediary) unless such institution enters into an agreement with the U.S. government to collect and report to the U.S. government, on an annual basis, information with respect to its U.S. accountholders and meets certain other specified requirements (or, in certain circumstances, complies with similar reporting requirements of the non-U.S. government in the jurisdiction in which it is organized or located under an intergovernmental agreement between such non-U.S. government and the U.S. government) or (ii) a non-financial foreign entity (whether such non-financial foreign entity is the beneficial owner or an intermediary) unless such entity certifies that it does not have any "substantial United States owners" or provides certain information regarding the entity's "substantial United States owners" and such entity meets certain other specified requirements. FATCA generally will apply to all withholdable payments without regard to whether the beneficial owner of the payment is a U.S. person or would otherwise be entitled to an exemption from imposition of withholding tax pursuant to an applicable tax treaty with the United States or U.S. domestic law.

        Non-U.S. Holders should consult their own tax advisors regarding the possible implications of this legislation and whether it may be relevant to such Non-U.S. Holder's acquisition, ownership and disposition of the RRBs.

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ERISA CONSIDERATIONS

This discussion is based on current provisions of ERISA and the Internal Revenue Code, existing and currently proposed regulations under ERISA and the Code, the legislative history of ERISA and the Code, existing administrative rulings of the United States Department of Labor, the DOL, and reported judicial decisions. No assurance can be given that legislative, judicial or administrative changes will not affect the accuracy of any statements herein with respect to transactions entered into or contemplated prior to the effective date of such changes. This discussion does not purport to deal with all aspects of ERISA or the Internal Revenue Code or, to the extent not preempted, any state laws.

General

        ERISA and the Code impose certain requirements on employee benefit plans subject to ERISA and/or Section 4975 of the Code and on persons or entities that are fiduciaries with respect to such plans. For purposes of this discussion, Plans refers to employee benefit plans (as defined in Section 3(3) of ERISA) subject to Title I of ERISA, plans (as defined in Section 4975(e)(1) of the Code) subject to Section 4975 of the Code (which includes plans that provide retirement income, including individual retirement accounts and annuities and Keogh plans) and entities, including collective investment funds and insurance company general or separate accounts, that may be deemed to hold the assets of the foregoing by virtue of such employee benefit plans' or plans' investment in such entities. Any person who exercises any discretionary authority or control over the administration of a Plan or the management or disposition of the assets of such a Plan, or who renders investment advice for a fee or other compensation to such a Plan, is generally considered to be a fiduciary of the Plan under ERISA. Investments by Plans are subject to ERISA's general fiduciary requirements, including the requirement of investment prudence and diversification and the requirement that a Plan's investments be made in accordance with the documents governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law (as defined below).

        Governmental plans, certain church plans and certain non-U.S. plans, while not subject to the fiduciary responsibility or prohibited transaction provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to federal, state, local or other laws or regulations that are substantially similar to Title I of ERISA or Section 4975 of the Code, collectively, Similar Laws. Accordingly, any fiduciary of such plans must determine whether purchasing the RRBs is permitted under any such Similar Law.

        Section 404(a)(1) of ERISA sets forth a general standard of behavior and restrictions for fiduciaries of Plans subject to Title I of ERISA. It requires that a fiduciary discharge its duties with respect to such an Plan (i) solely in the interest of the participants and beneficiaries of such Plan, (ii) for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the Plan, (iii) in accordance with a prudent-man rule (that is, "with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims"), (iv) by diversifying the investments of the Plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so, and (v) in accordance with the documents governing the Plan insofar as they are consistent with ERISA. Prior to investing in the RRBs, a fiduciary of a Plan or other employee benefit plan that is subject to Similar Law should take into account, among other considerations, whether the fiduciary has the authority to make the investment; the composition of the Plan's portfolio with respect to diversification by type of asset; the Plan's funding objectives; the tax effects of the investment; and whether, under the general fiduciary standards of ERISA or other applicable laws, including investment prudence and diversification, an investment in the RRBs is appropriate for the Plan, taking into account the Plan's particular circumstances and all of the facts and circumstances of the investment, including the Plan's investment policy, the role that the investment plays in the Plan's portfolio, whether the investment is

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designed reasonably to further the Plan's purposes, an examination of the risk and return factors, the liquidity and current return of the total portfolio relative to the anticipated cash flow needs of the Plan, and the projected return of the total portfolio relative to the Plan's funding objectives.

        Section 406 of ERISA and Section 4975 of the Code also prohibit a broad range of transactions involving the assets of a Plan and persons or entities that have certain specified relationships to the Plan, referred to as "parties in interest" (as defined under ERISA) or "disqualified persons" (as defined under the Code), unless a statutory or administrative exemption is available. For purposes of this discussion, Parties in Interest include both parties in interest under ERISA and disqualified persons under the Code. A Party in Interest who engages in a prohibited transaction may be subject to excise taxes and/or other liabilities under ERISA and the Code, and the transaction may have to be rescinded.

Regulation of Assets Included in a Plan

        A fiduciary's investment of the assets of a Plan in the RRBs may cause the Issuing Entity's assets to be deemed assets of such Plan. The DOL regulations at 29 CFR Section 2510.3-101 as modified by Section 3(42) of ERISA, collectively, the Plan Asset Regulations, provide that the underlying assets of corporations, partnerships, trusts and certain other entities in which a Plan makes an "equity" investment will be deemed for purposes of ERISA to be assets of the investing Plan in certain circumstances. In such a case, the fiduciary making such an investment for the Plan could be deemed to have delegated his or her asset management responsibility, the underlying assets and properties could be subject to ERISA's reporting and disclosure requirements, and transactions involving the underlying assets and properties could be subject to the fiduciary responsibility requirements of ERISA and the prohibited transaction provisions of ERISA and Section 4975 of the Code. If the Issuing Entity's assets were deemed to constitute Plan Assets pursuant to the plan asset regulations, transactions the Issuing Entity enters into, or have entered into, in the ordinary course of business may not be permitted under the ERISA fiduciary responsibility rules or may otherwise constitute non-exempt prohibited transactions under Section 406 of ERISA and/or Section 4975 of the Code. The extent to which the RRBs are owned by or on behalf of Plans will not be monitored. Fiduciaries of a Plan considering an investment in the RRBs should consider, among other things, the classification of the RRBs as debt or equity for purposes of ERISA.

Prohibited Transaction Exemptions

        The acquisition or holding of the RRBs by or on behalf of a Plan could give rise to a prohibited transaction if the Issuing Entity or the Indenture Trustee, PSNH, any other Servicer, any underwriter or certain of their affiliates is or becomes a Party in Interest with respect to the investing Plan. Before purchasing any RRBs by or on behalf of, or with assets of, a Plan, you should consider whether the purchase and holding of the RRBs might result in a prohibited transaction under ERISA or the Code and, if so, whether any prohibited transaction exemption might apply to the purchase and holding of the RRBs.

        If you are a fiduciary of a Plan or any other person or entity proposing to purchase the RRBs on behalf of or using assets of, a Plan, before purchasing any RRBs, you should consider the availability of one of the DOL's prohibited transaction class exemptions, referred to as PTCEs, or one of the statutory exemptions provided by ERISA or Section 4975 of the Code, which include:

•

PTCE 75-1, relating to transactions effected by certain broker-dealers, reporting dealers and banks;

•

PTCE 84-14, relating to transactions effected by a "qualified professional asset manager";

•

PTCE 90-1, relating to transactions involving insurance company separate accounts;

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•

PTCE 91-38, relating to transactions involving bank collective investment funds;

•

PTCE 95-60, relating to transactions involving insurance company general accounts;

•

PTCE 96-23, relating to transactions effected by an "in-house asset manager"; and

•

the statutory service provider exemption provided under Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code, relating to certain transactions between Plans and certain Parties in Interest that are not fiduciaries with respect to the transaction.

        The Issuing Entity cannot provide any assurance that any of these class exemptions or statutory exemptions will apply with respect to any particular investment in the RRBs by, on behalf of or using assets of, a Plan or, even if it were deemed to apply, that any exemption would apply to all transactions that may occur in connection with the investment.

        The DOL has promulgated a final regulation, the ERISA Investment Advice Regulation, which is applicable beginning on June 9, 2017. The ERISA Investment Advice Regulation re-defines the circumstances under which a person will be considered a fiduciary for purposes of ERISA and Section 4975 of the Code by virtue of providing investment advice to a benefit plan subject to ERISA or a plan subject to Section 4975 of the Code, a Covered Plan. Under the ERISA Investment Advice Regulation, a person who makes a "recommendation" regarding the acquisition, holding or disposition of securities or investment property or the management of securities or investment property and receives direct or indirect fees or other compensation as a result of dealing with a Covered Plan, plan participant or beneficiary, plan fiduciary or IRA owner, is generally considered a fiduciary unless an exemption applies. One such exemption is for advice rendered to certain independent fiduciaries with financial expertise, including certain banks, insurance carriers, investment advisers, broker-dealers and independent fiduciaries (excluding IRA owners) that hold, or have under management or control, total assets of at least $50 million. The Issuing Entity, the Indenture Trustee, PSNH, any other Servicer, the Paying Agents, the underwriters and their affiliates, collectively, the Issuer Parties, do not intend to act as fiduciaries under the ERISA Investment Advice Regulation with respect to any Covered Plan's decision to purchase the RRBs and no information or communication from any Issuer Party (either alone or in conjunction with any other information of communication) should be construed as a recommendation within the meaning of the ERISA Investment Advice Regulation. Notwithstanding this intention, any and all information provided herein (or provided by any Issuer Party prior to or subsequent to the delivery of this prospectus, including following the purchase of RRBs by a Covered Plan) to any Covered Plan or any Covered Plan fiduciary that is determined to constitute "investment advice," or a "recommendation," within the meaning of the ERISA Investment Advice Regulation is provided solely on the basis that the recipient is, or is represented by, an independent fiduciary that satisfies the criteria set forth in 29 C.F.R. § 2510.3-21(c)(1). The information provided herein is intended to be used solely by the recipient in considering the investment opportunity described herein and may not be used for any other reason, personal or otherwise. The scope and applicability of the ERISA Investment Advice Regulation and related exemptions may change further, and Covered Plan fiduciaries are advised to keep themselves informed.

        Each purchaser and Holder of an RRB will be deemed to have represented, warranted and agreed by virtue of its acquisition and holding of an RRB on each day from and including the date of its purchase of the RRBs through and including the date of disposition of any such RRB that: (i) either (a) it is not and is not acting on behalf of, or using assets of, a Plan or any governmental, church or non-U.S. plan that is subject to any Similar Law, or (b) its acquisition, holding and disposition of the RRBs or any interest therein will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code pursuant to one or more applicable statutory or administrative exemptions (or in the case of a governmental, church or non-U.S. plan that is subject to Similar Law, will not result in a violation of such Similar Law), and if it is or is acting on behalf of a Plan which is subject to ERISA or Section 4975 of the Code, the decision to purchase the RRBs has

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been made by a duly authorized fiduciary, each, a Plan Fiduciary, who is independent of the Issuing Entity, the underwriters and their respective affiliates, which Plan Fiduciary (1) is a fiduciary under ERISA or the Code, or both, with respect to the decision to purchase the RRBs, (2) is not the individual retirement account, or IRA, owner (in the case of a purchaser which is an IRA), (3) is capable of evaluating investment risks independently, both in general and with regard to the prospective investment in the RRBs, (4) has exercised independent judgment in evaluating whether to invest the assets of such Plan in the RRBs, and (5) is either a bank, an insurance carrier, a registered investment adviser, a registered broker-dealer or an independent fiduciary with at least $50 million of assets under management or control (as described in 29 C.F.R. § 2510.3-21(c)(1)); (ii) neither the Issuing Entity, the underwriters nor any of their respective affiliates is a fiduciary (within the meaning of Section 3(21) of ERISA or Section 4975 of the Code or, with respect to a governmental, church or non-U.S. plan, any definition of "fiduciary" under Similar Law) with respect to the acquirer or transferee in connection with any purchase or holding of the RRBs, or as a result of any exercise by the Issuing Entity or any of its affiliates of any rights in connection with the RRBs, and no advice provided by the Issuing Entity, the underwriters or any of their respective affiliates has been provided in connection with, or formed a primary basis for, any investment decision by or on behalf of the acquirer or transferee in connection with the RRBs and the transactions contemplated with respect to the RRBs and (iii) the acquirer or transferee has been informed of the existence and nature of the foregoing parties' financial interests in its acquisition of the RRBs.

        THE ISSUING ENTITY, PSNH AND THE INDENTURE TRUSTEE, AND THEIR RESPECTIVE AFFILIATES, SHALL BE ENTITLED TO CONCLUSIVELY RELY UPON THE TRUTH AND ACCURACY OF THE FOREGOING REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY ACQUIRERS AND TRANSFEREES OF ANY RRBS WITHOUT FURTHER INQUIRY.

Consultation with Counsel

        If you are a fiduciary of a Plan or of a governmental, church or non-U.S. plan subject to Similar Law or any other person or entity that proposes to purchase the RRBs on behalf of, or with assets of, a Plan or a governmental, church or non-U.S. plan subject to Similar Law, you should consult with your legal counsel as to the potential applicability of the plan asset regulations, the general fiduciary responsibility provisions of ERISA, the prohibited transaction provisions of ERISA and the Code to any such investment and the availability of any prohibited transaction exemption in connection with any investment and/or the applicability of any Similar Law.

        The sale of RRBs to a Plan or any plan subject to Similar Law is in no respect a representation by the Issuing Entity, the Indenture Trustee, PSNH, any other Servicer or any underwriter that this investment meets all relevant legal requirements for investments by plans generally or any particular plan or that this investment is appropriate for plans generally or any particular plan. Purchasers of the RRBs have the exclusive responsibility for ensuring that their acquisition, holding, and disposition of the RRBs complies with their fiduciary duties set forth in ERISA, the Code and any applicable Similar Law and does not violate the prohibited transaction rules of ERISA, the Code or any applicable Similar Law.

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BANKRUPTCY AND CREDITORS' RIGHTS ISSUES

Challenge to True Sale Treatment

        PSNH will represent and warrant that the transfer of the RRB Property in accordance with the Sale Agreement constitutes a true and valid sale and assignment of the RRB Property by PSNH to the Issuing Entity. It will be a condition to the issuance of the RRBs that PSNH will take the appropriate actions under the Financing Act, including filing a notice of transfer of an interest in the RRB Property, to perfect this sale. The Financing Act provides that the sale, conveyance, assignment, or other transfer of RRB Property by an electric utility that the parties have in the governing documentation expressly stated to be a sale or other absolute transfer is an absolute transfer and true sale of, and not a pledge of or secured transaction relating to, the transferor's right, title, and interest in, to, and under the RRB Property, notwithstanding any contrary treatment of such transfer for accounting, tax or other purposes. The Issuing Entity and PSNH will treat such a transaction as a sale under applicable law. However, the Issuing Entity expects that RRBs will be reflected as debt on PSNH's consolidated financial statements. In addition, the Issuing Entity anticipates that the RRBs will be treated as obligations of PSNH for U.S. federal income tax purposes. Please read "Material U.S. Federal Income Tax Considerations."

        In the event of a bankruptcy of a party to the Sale Agreement, if a party in interest in the bankruptcy were to take the position that the transfer of the RRB Property to the Issuing Entity pursuant to that Sale Agreement was a financing transaction and not a true sale under applicable creditors' rights principles, there can be no assurance that a court would not adopt such a position. Even if a court did not ultimately recharacterize the transaction as a financing transaction, the mere commencement of a bankruptcy of PSNH and the attendant possible uncertainty surrounding the treatment of the transaction could result in delays in payments on the RRBs and adversely affect the value of the RRBs.

        In that regard, the Issuing Entity notes the Memorandum Opinion dated February 5, 2001, issued by the bankruptcy court in In re LTV Steel Company, Inc. The LTV Steel proceeding involved a debtor, LTV Steel Company, Inc., or LTV, which had previously entered into securitization arrangements with respect both to its inventory and its accounts receivable. On filing for bankruptcy, the debtor filed an emergency motion seeking use of the cash collections from the securitized assets on the basis that the sales were nothing more than disguised financings. The debtor and the agent for the financial institutions that invested in the two securitizations agreed to an interim order for the use of such cash collateral.

        The LTV Steel memorandum opinion was issued in response to the motion of one of the investors in the accounts receivable securitization to modify the interim order on the basis that the receivables transferred in the accounts receivable securitization were not property of the debtor's estate. The bankruptcy court, while not determining the fact-intensive issue as to whether the inventory and receivables transferred were property of the estate (which determination required further discovery and an evidentiary hearing), did find that LTV "...has at least some equitable interest in the inventory and receivables, and that this interest is property of the debtor's estate. . . . sufficient to support the entry of the interim cash collateral order." The court based its decision in large part on its view of the equities of the case. The court noted in particular that failure to enter the interim cash collateral order "...would put an immediate end to debtor's business, would put thousands of people out of work, would deprive 100,000 retirees of needed medical benefits, and would have more far reaching economic effects on the geographic areas where debtor does business" while the interim order protected the securitization financing parties by its adequate protection provisions.

        LTV and the securitization investors subsequently settled their dispute over the terms of the interim order, and the bankruptcy court entered a final order in which the parties admitted and the court found that the prepetition transactions constituted true sales. The court did not otherwise

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overrule its earlier ruling. The LTV Steel memorandum opinion serves as an example of the pervasive equity powers of bankruptcy courts and the importance that such courts may ascribe to the goal of reorganization, particularly where assets sold are integral to the ongoing operations of the debtor's business.

        Further, the Issuing Entity is aware of at least one decision where a court, despite clear statutory language to the contrary, determined that a factoring agreement denominated as a true sale was in fact a secured loan and recharacterized the transaction as such. In Reaves Brokerage Co. v. Sunbelt Fruit & Vegetable Co., the United States Court of Appeals for the Fifth Circuit, after analyzing the substance of a receivables factoring agreement, held, at least in the context of a claim brought under the federal Perishable Agricultural Commodities Act, or PACA, that the factoring agreement evidenced a secured loan rather than a sale.

        In finding the transaction a loan and not a sale, the court dismissed the parties' characterization of the factoring agreement as a sale and evaluated its substantive elements. The court reached its holding despite Texas's adoption of a non-uniform provision of revised Article 9 of the UCC, Section 9.109(e), which provides, in relevant part, that "the parties' characterization of a transaction as a sale of such assets shall be conclusive that the transaction is a sale and is not a secured transaction." Instead, the court looked exclusively to the substance of the transaction.

        The Reaves court did, however, stress that its decision was guided primarily by the federal policies behind PACA which "mandate protection of suppliers of fresh fruit and other perishable commodities," and the court "express[ed] no opinion on the proper construction of factoring agreements in non-PACA contexts."

        The Issuing Entity and PSNH have attempted to mitigate the impact of a possible recharacterization of a sale of RRB Property as a financing transaction under applicable creditors' rights principles. The Sale Agreement will provide that if the transfer of the applicable RRB Property is thereafter recharacterized by a court as a financing transaction and not a true sale, the transfer by PSNH will be deemed to have granted to the Issuing Entity on behalf of the Issuing Entity and on behalf of the Indenture Trustee a first priority security interest in all of PSNH's right, title and interest in, to and under the RRB Property and all proceeds thereof. In addition, the Sale Agreement will authorize the filing of a notice of security interest in the RRB Property and the proceeds thereof as RRB Collateral in accordance with the Financing Act. As a result of this filing, the Issuing Entity would, in the event of a recharacterization, be a secured creditor of PSNH and entitled to recover against the RRB Collateral or its value. This does not, however, eliminate the risk of payment delays or reductions and other adverse effects caused by a PSNH or a PSNH affiliate bankruptcy, as discussed under "Risks Associated with Potential Bankruptcy Proceedings" above. Further, if, for any reason, an RRB property notice is not filed under the Financing Act and the Issuing Entity fails to perfect its interest in the RRB Property, and the transfer is thereafter deemed not to constitute a true sale, the Issuing Entity would be an unsecured creditor of PSNH.

        The Financing Act provides that to the extent the Financing Act conflicts with Article 9 of the New Hampshire Uniform Commercial Code, the Financing Act governs the creation, granting, perfection and enforcement of liens and security interests in RRB Property. Under the Financing Act, a security interest in the RRB Property is valid and enforceable against the Issuing Entity and third parties, subject to the rights of any third parties holding security interests in the RRB Property, and attaches when all of the following have take place: (i) the Finance Order became effective in accordance with the Financing Act; (ii) value has been given by the pledgees of the RRB Property (in this case, the Holders) and (iii) the pledgor has signed a security agreement covering the RRB Property (in this case, the Issuing Entity has signed the Indenture and the Series Supplement). A valid and enforceable security interest in the RRB Property is perfected when it has attached and when financing statements have been filed in accordance with Article 9 of the New Hampshire Uniform

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Commercial Code, naming the pledgor (here, the Issuing Entity) as "debtor" and identifying the RRB Property.

Consolidation of the Issuing Entity and PSNH

        If PSNH were to become a debtor in a bankruptcy case, a party in interest might attempt to substantively consolidate the assets and liabilities of the Issuing Entity with those of PSNH. The Issuing Entity and PSNH have taken steps to attempt to minimize this risk. Please read "Description of the Issuing Entity" in this prospectus. However, no assurance can be given that if PSNH were to become a debtor in a bankruptcy case, a court would not order that the assets and liabilities of the Issuing Entity be substantively consolidated with those of PSNH. Substantive consolidation would result in payment of the claims of the beneficial owners of the RRBs to be subject to substantial delay and to adjustment in timing and amount under a plan of reorganization in the bankruptcy case.

Status of RRB Property as Present Property

        PSNH will represent in the Sale Agreement, and the Financing Act provides, that the RRB Property sold pursuant to such Sale Agreement constitutes a present property right on the date that it is first transferred to the Issuing Entity in connection with the issuance of the RRBs. Nevertheless, no assurance can be given that, in the event of a bankruptcy of PSNH a court would not rule that the applicable RRB Property comes into existence only as Customers use electricity.

        If a court were to accept the argument that the applicable RRB Property comes into existence only as Customers use electricity, no assurance can be given that a security interest in favor of the Holders would attach to the RRB Charges in respect of electricity consumed after the commencement of the bankruptcy case or that the RRB Property relating to such RRB Charges has been sold to the Issuing Entity. If it were determined that such RRB Property had not been sold to the Issuing Entity, then the Issuing Entity would have an unsecured claim against PSNH with respect to such RRB Property. In addition, whether or not a court determined that the applicable RRB Property had been sold to the Issuing Entity pursuant to a Sale Agreement, no assurances can be given that a court would not rule that any RRB Charges relating to electricity consumed after the commencement of the bankruptcy could not be transferred to the Issuing Entity or the Indenture Trustee and/or that the security interest in favor of the Holders did not attach to such RRB Charges. If so, there would be delays and/or reductions in payments on the RRBs.

        In addition, in the event of a bankruptcy of PSNH, a party in interest in the bankruptcy could assert that the Issuing Entity should pay, or that the Issuing Entity should be charged for, a portion of PSNH's costs associated with the distribution of the electricity, usage of which gave rise to the RRB Charge receipts used to make payments on the RRBs.

        Regardless of whether PSNH is the debtor in a bankruptcy case, if a court were to accept the argument that RRB Property sold pursuant to the Sale Agreement comes into existence only as Customers use electricity, a tax or government lien or other nonconsensual lien on property of PSNH arising before that RRB Property came into existence could have priority over the Issuing Entity's interest in that RRB Property. Adjustments to the RRB Charges may be available to mitigate this exposure, although there may be delays in implementing these adjustments.

Estimation of Claims; Challenges to Indemnity Claims

        If PSNH were to become a debtor in a bankruptcy case, claims, including indemnity claims, by the Issuing Entity or the Indenture Trustee against PSNH, as Seller, under the Sale Agreement and the other documents executed in connection therewith would be unsecured claims and would be subject to being discharged in the bankruptcy case. In addition, a party in interest in the bankruptcy may request that the bankruptcy court estimate any contingent claims that the Issuing Entity or the Indenture

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Trustee have against PSNH. That party may then take the position that these claims should be estimated at zero or at a low amount because the contingency giving rise to these claims is unlikely to occur. If a court were to hold that the indemnity provisions were unenforceable, the Issuing Entity or the Indenture Trustee, as applicable, would be left with a claim for actual damages against PSNH based on breach of contract principles. The actual amount of these damages would be subject to estimation and/or calculation by the court.

        No assurances can be given as to the result of any of the above-described actions or claims. Furthermore, no assurance can be given as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving PSNH.

Enforcement of Rights by the Indenture Trustee

        Upon an Event of Default under the Indenture or the Series Supplement, the Indenture Trustee may enforce the security interest in the RRB Property sold pursuant to the Sale Agreement in accordance with the terms of the Indenture and the Series Supplement. Upon application by (i) the Indenture Trustee, (ii) the Issuing Entity or its assignees or (iii) the Holders or transferees of the RRB Property, the NHPUC will order the sequestration and payment to or for the benefit of the Issuing Entity, the Indenture Trustee, the Holders or any such other party of all revenues arising with respect to the RRB Property. There can be no assurance, however, that the NHPUC would issue this order after a bankruptcy filing by PSNH or the Issuing Entity in light of the automatic stay provisions of Section 362 of the Bankruptcy Code. Following a bankruptcy filing, the Indenture Trustee or the Holders may under the Indenture seek an order from the bankruptcy court lifting the automatic stay, or request that the NHPUC seek relief from the automatic stay, in either case to permit the NHPUC to issue the sequestration and payment order. There can be no assurance that (i) a bankruptcy court would lift the stay and/or (ii) the NHPUC, or any other governing body, would issue the sequestration and payment order.

Bankruptcy of the Servicer

        The Servicer is entitled to commingle the RRB Charges that it receives with its own funds until each date on which the Servicer is required to remit funds to the Indenture Trustee as specified in the Servicing Agreement. The Financing Act provides that the priority of a lien and security interest created under the Financing Act is not impaired by the commingling of funds arising from RRB Charges with other funds. In the event of a bankruptcy of the Servicer, a party in interest in the bankruptcy might assert, and a court might rule, that the RRB Charges commingled by the Servicer with its own funds and held by the Servicer, prior to and as of the date of bankruptcy were property of the Servicer as of that date, and are therefore property of the Servicer's bankruptcy estate, rather than property of the Issuing Entity. If the court so rules, then the court would likely rule that the Indenture Trustee has only a general unsecured claim against the Servicer for the amount of commingled RRB Charges held as of that date and could not recover the commingled RRB Charges held as of the date of the bankruptcy.

        In addition, if a challenge were raised concerning the ownership of the commingled RRB Charges, the automatic stay arising upon the bankruptcy of the Servicer could delay the Indenture Trustee from receiving the commingled RRB Charges held by the Servicer as of the date of the bankruptcy until the court determines ownership or grants relief from the stay. Such a court ruling could be substantially delayed. Therefore, a challenge concerning the ownership of the commingled RRB Charges could have adverse consequences for the RRBs even if the court ultimate rules in favor of the Indenture Trustee.

        A bankruptcy of the Servicer could result in other adverse consequences for the RRBs. Should the Servicer enter into bankruptcy, it may be permitted to stop acting as Servicer, resulting in disruption of collection of RRB Charges and payment of the RRBs. Additionally, while the Issuing Entity has the right, subject to the approval of the NHPUC and the consent of the Indenture Trustee, to appoint a successor Servicer in the event of a default by the Servicer under the Servicing Agreement with respect to RRBs, the automatic stay in effect during a Servicer bankruptcy might delay or prevent a successor Servicer's replacement of the Servicer. Even if a successor Servicer may be appointed and may replace the Servicer, a successor Servicer may be difficult to obtain and may not be capable of performing all of the duties that PSNH as Servicer was capable of performing.

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USE OF PROCEEDS

        The net proceeds of this offering are estimated to be approximately $        , after deducting underwriting discounts and commissions and upfront transaction costs. The Issuing Entity will use the net proceeds from the sale of the RRBs to purchase the RRB Property from PSNH. PSNH will apply the proceeds of the sale of the RRB Property in accordance with the Finance Order, as required by the Financing Act. The Finance Order approves proceeds to be applied for the following uses: (i) to pay upfront transaction costs, (ii) to redeem outstanding PSNH debt and (iii) to pay a return of capital to the corporate parent of PSNH.

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PLAN OF DISTRIBUTION

        Subject to the terms and conditions in the Underwriting Agreement among the Issuing Entity, PSNH and the underwriters, for whom Goldman Sachs & Co. LLC is acting as representative, the Issuing Entity has agreed to sell to the underwriters, and the underwriters have severally agreed to purchase, the principal amount of the RRBs listed opposite each underwriter's name below:

Underwriter	Tranche A-1	Tranche A-2	Tranche A-3	Total
Goldman Sachs & Co. LLC	$	$	$	$
Total	$	$	$	$

The Underwriters' Sales Price for the RRBs

        The RRBs sold by the underwriters to the public will be initially offered at the prices to the public set forth on the cover of this prospectus. The underwriters propose initially to offer the RRBs to dealers at such prices, less a selling concession not to exceed the percentage listed below for each Tranche. The underwriters may allow, and dealers may reallow, a discount not to exceed the percentage listed below for each Tranche.

	Selling Concession		Reallowance Discount
Tranche A-1		%		%
Tranche A-2		%		%
Tranche A-3		%		%

        After the initial public offering, the public offering prices, selling concessions and reallowance discounts may change.

Various Types of Underwriter Transactions That May Affect the Price of the RRBs

        The underwriters may engage in overallotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids with respect to the RRBs in accordance with Regulation M under the Exchange Act. Overallotment transactions involve syndicate sales in excess of the offering size, which create a syndicate short position. Stabilizing transactions are bids to purchase the RRBs, which are permitted, so long as the stabilizing bids do not exceed a specific maximum price. Syndicate covering transactions involve purchases of the RRBs in the open market after the distribution has been completed in order to cover syndicate short positions. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the RRBs originally sold by the syndicate member are purchased in a syndicate covering transaction. These overallotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids may cause the prices of the RRBs to be higher than they would otherwise be. None of the Issuing Entity, PSNH, the Indenture Trustee, the Issuing Entity's Managers or any of the underwriters represents that the underwriters will engage in any of these transactions or that these transactions, if commenced, will not be discontinued without notice at any time. Neither the Issuing Entity nor PSNH has entered into any arrangement with any underwriter under which an underwriter may purchase additional RRBs in connection with this offering.

        The underwriters and their affiliates have in the past provided, and may in the future from time to time provide, investment banking and general financing and banking services to PSNH and its affiliates for which they have in the past received, and in the future may receive, customary fees. In addition,

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each underwriter may from time to time take positions in the RRBs. Goldman Sachs & Co. LLC, as structuring agent, has rendered certain structuring services to the Issuing Entity. See "Certain Relationships and Related Transactions." In accordance with FINRA Rule 5110, both of these amounts and the reimbursement of the financial advisor's expenses are deemed underwriting compensation in connection with the offering.

        The Issuing Entity and PSNH have agreed to indemnify the underwriters against some liabilities, including liabilities under the Securities Act, as amended, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

        The underwriters are offering the RRBs, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters, including the validity of the RRBs and other conditions contained in the Underwriting Agreement, such as receipt of ratings confirmations, officer's certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject offers in whole or in part.

        The Issuing Entity expects to deliver the RRBs against payment for the RRBs on or about the date specified in the last paragraph of the cover page of this prospectus, which will be the             business day following the date of pricing of the RRBs. Since trades in the secondary market generally settle in two business days, purchasers who wish to trade RRBs on the date of pricing or the succeeding        business days will be required, by virtue of the fact that the RRBs initially will settle in T         , to specify alternative settlement arrangements to prevent a failed settlement.

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AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        The Issuing Entity is a wholly-owned subsidiary of PSNH. PSNH is a wholly-owned operating subsidiary of Eversource Energy. One of the underwriters, Goldman Sachs & Co. LLC, also served as structuring agent to PSNH in connection with the structuring of the RRBs and will receive a $250,000 fee for such services. Each of the Sponsor, the Depositor and Goldman Sachs & Co. LLC may maintain other banking relationships in the ordinary course with The Bank of New York Mellon.

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RATING INFORMATION

        The Issuing Entity expects that the RRBs will be rated by one or more NRSRO. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning NRSRO. Each rating should be evaluated independently of any other rating. No person or entity is obligated to maintain the rating on any bonds and, accordingly, the Issuing Entity can give no assurance that the ratings assigned to any Tranche of the RRBs upon initial issuance will not be lowered or withdrawn by an NRSRO at any time thereafter. If a rating of any Tranche of the RRBs is lowered or withdrawn, the liquidity of this Tranche of the RRBs may be adversely affected. In general, ratings address credit risk and do not represent any assessment of any particular rate of principal payments on the RRBs other than the payment in full of each Tranche of the RRBs by the Final Maturity Date or Tranche Final Maturity Date, as well as the timely payment of interest.

        Under Rule 17g-5 under the Exchange Act, NRSROs providing the Servicer with the requisite certification will have access to all information posted on a website by the Servicer for the purpose of determining the initial rating and monitoring the rating after the issuance date in respect of the RRBs. As a result, an NRSRO other than the Rating Agencies may issue unsolicited ratings on the RRBs, which may be lower, and could be significantly lower, than the ratings assigned by the Rating Agencies. The unsolicited ratings may be issued prior to, or after, the issuance date in respect of the RRBs. Issuance of any unsolicited rating will not affect the issuance of the RRBs. Issuance of an unsolicited rating lower than the ratings assigned by the Rating Agencies on the RRBs might adversely affect the value of the RRBs and, for regulated entities, could affect the status of the RRBs as a legal investment or the capital treatment of the RRBs. Investors in the RRBs should consult with their legal counsel regarding the effect of the issuance of a rating by an NRSRO other than the Rating Agencies that is lower than the rating of the Rating Agencies.

        A portion of the fees paid by the Issuing Entity to any Rating Agency is contingent upon the issuance of the RRBs. In addition to the fees paid by the Issuing Entity to such Rating Agency or Rating Agencies at closing, the Issuing Entity will pay a fee to such Rating Agency or Rating Agencies for ongoing surveillance for so long as the RRBs are outstanding. However, no Rating Agency is under any obligation to continue to monitor or provide a rating on the RRBs.

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OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS

Notice to Prospective Investors in Canada

        The RRBs may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the RRBs must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

        Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

        Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

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WHERE YOU CAN FIND MORE INFORMATION

        This prospectus is part of a registration statement the Issuing Entity and PSNH have filed with the SEC relating to the RRBs. This prospectus describes the material terms of some of the documents that have been filed or will be filed as exhibits to the registration statement. However, this prospectus does not contain all of the information contained in the registration statement and the exhibits. Any statements contained in this prospectus concerning the provisions of any document filed as an exhibit to the registration statement or otherwise filed with the SEC is qualified in its entirety by reference to the respective exhibit.

        Information filed with the SEC can be inspected at the SEC's Internet site located at http://www.sec.gov. You may also read and copy the registration statement, the exhibits and any other documents filed with the SEC at the SEC's Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549 on official business days between the hours of 10:00 am and 3:00 pm. You may obtain further information regarding the operation of the SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330.

        The Securities Act file numbers are 333-223108 and 333-223108-01.

        You may also obtain a copy of filings with the SEC at no cost from PSNH. PSNH's website address is www.eversource.com. PSNH makes available through its website a link to the SEC's EDGAR website (http://www.sec.gov/edgar/searchedgar/companysearch.html). Information contained on PSNH's website or that can be accessed through the website is not incorporated into and does not constitute a part of this registration statement. Printed copies of these reports may be obtained free of charge by writing to the Issuing Entity's Investor Relations Department at Eversource Energy, 107 Selden Street, Berlin, CT 06037.

        The Issuing Entity and PSNH will also file with the SEC all periodic and current reports that are required to be filed under the Exchange Act and the rules, regulations or orders of the SEC thereunder. Under the Indenture, the Issuing Entity may voluntarily suspend or terminate filing obligations with the SEC, to the extent it becomes permitted by applicable law.

INCORPORATION BY REFERENCE

        The SEC allows the Issuing Entity and PSNH to "incorporate by reference" into this prospectus information the Issuing Entity and PSNH file with the SEC. This means disclosure of important information may be made by referring you to the documents containing the information. The information incorporated by reference is considered to be part of this prospectus, unless such information is updated or superseded by the information that the Issuing Entity or PSNH files subsequently that is incorporated by reference into this prospectus. The Issuing Entity is incorporating by reference any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering, excluding any information that is furnished to and not filed with the SEC. These reports will be filed under the Issuing Entity's and PSNH's name, as applicable. In addition, these reports will be posted on a website associated with the Issuing Entity or its affiliates, currently located at www.eversource.com. Any statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in any separately filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute part of this prospectus.

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LEGAL PROCEEDINGS

        From time to time, the Issuing Entity and PSNH may be subject to various legal proceedings and claims that arise in the course of their business activities. Although the results of litigation and claims cannot be predicted with certainty, as of the date of this prospectus, the Issuing Entity and PSNH do not believe they are party to any claim or litigation, the outcome of which, if determined adversely to the Issuing Entity or PSNH, would individually or in the aggregate be reasonably expected to be material to Holders. Regardless of the outcome, litigation can have an adverse impact on the Issuing Entity and PSNH because of defense and settlement costs, diversion of management resources and other factors.

LEGAL MATTERS

        Certain legal matters relating to the RRBs, including material U.S. federal income tax matters, will be passed on by Ropes & Gray LLP, counsel to PSNH and the Issuing Entity. Certain other legal matters relating to the RRBs will be passed on by McLane Middleton, P.A., New Hampshire counsel to PSNH, Richards, Layton & Finger, P.A., Delaware counsel to the Issuing Entity, and by Hunton & Williams LLP, counsel to the underwriters.

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GLOSSARY

        As used in this prospectus the terms below have the following meanings:

        "2015 Settlement Agreement" means the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement, as amended approved by the NHPUC in Order No. 25,920 dated July 1, 2016 in Docket No. DE 14-238.

        "Administration Agreement" means the Administration Agreement, dated as of the closing date, by and between PSNH and the Issuing Entity.

        "Advice Letter" means any filing made with the NHPUC by the Servicer on behalf of the Issuing Entity to set or adjust the RRB Charge, including the Issuance Advice Letter, an Annual Routine True-Up Letter, a Mid-Year Routine True-Up Letter, an Other Routine True-Up Letter or a Non-Routine True-Up Letter.

        "Affiliate" means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such specified Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

        "Annual Routine True-Up Letter" means a letter filed with the NHPUC not later than January 15 of each year, in respect of an annual Periodic Adjustment pursuant to the Servicing Agreement.

        "Bankruptcy Code" means Title 11 of the United States Code, as amended.

        "Basic Documents" means the Indenture, the Administration Agreement, the Sale Agreement, the Certificate of Formation, the LLC Agreement, the Servicing Agreement, the Series Supplement, the Letter of Representations, the Underwriting Agreement and all other documents and certificates delivered in connection therewith.

        "Book-Entry Rate Reduction Bonds" means any Rate Reduction Bonds issued in book-entry form; provided, however, that, after the occurrence of a condition whereupon book-entry registration and transfer are no longer permitted and Definitive Rate Reduction Bonds are to be issued to the Holder of such Rate Reduction Bonds, such Rate Reduction Bonds shall no longer be "Book-Entry Rate Reduction Bonds."

        "Business Day" means any day other than a Saturday, a Sunday or a day on which banking institutions in Manchester, New Hampshire or New York, New York are, or DTC or the Corporate Trust Office is, authorized or obligated by law, regulation or executive order to be closed.

        "Capital Subaccount Investment Earnings" shall mean, as of any Business Day, the sum of (a) an amount equal to investment earnings since the previous distribution of Capital Subaccount Investment Earnings (or, in the case of the first such distribution, since the issuance date) on the sum of (x) the Required Capital Level (or, if less, the amount of funds in the Capital Subaccount on the most recent Payment Date after giving effect to any replenishment of the Capital Subaccount described under clause (ix) of the priority of payments set forth under "Description of the RRBs—How Funds in the Collection Account will be Allocated") and (y) any investment earnings on the amount described in clause (x) plus (b) any such amounts not paid on the date of any prior distribution of Capital Subaccount Investment Earnings.

        "Certificate of Formation" means the Certificate of Formation filed with the Secretary of State of the State of Delaware on January 18, 2018 pursuant to which the Issuing Entity was formed.

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        "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act.

        "Code" or "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended.

        "Corporate Trust Office" means the office of the Indenture Trustee at which, at any particular time, its corporate trust business shall be administered, which office as of the issuance date is located at 101 Barclay Street, 7 West, New York, New York 10286, Attention: Asset Backed Securities Unit, Telephone: (212) 815-2483, Email: helen.choi@bnymellon.com, or at such other address as the Indenture Trustee may designate from time to time by notice to the Holders of Rate Reduction Bonds and the Issuing Entity, or the principal corporate trust office of any successor trustee designated by like notice.

        "Customers" means any person or entity within PSNH's franchise service territory purchasing directly or otherwise obtaining or being supplied directly with retail electric service for end use consumption, including those served under special contract.

        "Deemed RRB Charge Payments" means the payments in respect of the RRB 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 the Servicing Agreement.

        "Eligible Institution" means:

        (a)   the corporate trust department of the Indenture Trustee, so long as any of the securities of the Indenture Trustee has a credit rating from each Rating Agency that is providing a credit rating of the securities of the Indenture Trustee at such time in one of its generic rating categories that signifies investment grade; or

        (b)   a depository institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank) (i) that has either (A) a long-term issuer rating of "AA–" or higher by S&P and "A2" or higher by Moody's or equivalent rating by Fitch or (B) a short-term issuer rating of "A-1+" or higher by S&P and "P-1" or higher by Moody's and "F1+" or higher by Fitch or any other long-term, short-term or certificate of deposit rating acceptable to the Rating Agencies, and (ii) whose deposits are insured by the Federal Deposit Insurance Corporation.

If so qualified under clause (b) of this definition, the Indenture Trustee may be considered an Eligible Institution for the purposes of clause (a) of this definition.

        "Eligible Investments" means instruments or investment property that evidence:

        (a)   direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United States of America;

        (b)   demand or time deposits of, unsecured certificates of deposit of, money market deposit accounts of, or bankers' acceptances issued by, any depository institution (including the Indenture Trustee, acting in its commercial capacity) incorporated or organized under the laws of the United States of America or any State thereof and subject to supervision and examination by U.S. federal or state banking authorities, so long as the commercial paper or other short-term debt obligations of such depository institution are, at the time of deposit, rated at least "A-1" and "P-1" or their equivalents by each of S&P, Moody's and Fitch or such lower rating as will not result in the downgrading or withdrawal of the ratings of the Rate Reduction Bonds;

        (c)   commercial paper (including commercial paper of the Indenture Trustee, acting in its commercial capacity, and other than commercial paper of PSNH or any of its Affiliates), which at the time of purchase is rated at least "A-1" and "P-1" or their equivalents by each of S&P,

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Moody's and Fitch or such lower rating as will not result in the downgrading or withdrawal of the ratings of the Rate Reduction Bonds;

        (d)   investments in money market funds having a rating in the highest investment category granted thereby (including funds for which the Indenture Trustee or any of its Affiliates is investment manager or advisor) from Moody's, S&P and Fitch;

        (e)   repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or its agencies or instrumentalities, entered into with Eligible Institutions;

        (f)    repurchase obligations with respect to any security or whole loan entered into with an Eligible Institution or with a registered broker/dealer acting as principal and that meets the ratings criteria set forth below:

          (i)  a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Exchange Act (any such broker/dealer being referred to in this definition as a "broker/dealer"), the unsecured short-term debt obligations of which are rated at least "P-1" by Moody's and "A-1+" by S&P and "F1+" by Fitch at the time of entering into such repurchase obligation; or

         (ii)  an unrated broker/dealer, acting as principal, that is a wholly-owned subsidiary of a non-bank or bank holding company the unsecured short-term debt obligations of which are rated at least "P-1" by Moody's and "A-1+" by S&P and "F1+" by Fitch at the time of purchase so long as the obligations of such unrated broker/dealer are unconditionally guaranteed by such non-bank or bank holding company; and

        (g)   any other investment permitted by each of the Rating Agencies;

in each case maturing not later than the Business Day preceding the next Payment Date or Special Payment Date, if applicable (for the avoidance of doubt, investments in money market funds or similar instruments that are redeemable on demand shall be deemed to satisfy the foregoing requirement). Notwithstanding the foregoing: (1) no securities or investments that mature in 30 days or more shall be "Eligible Investments" unless the issuer thereof has either a short-term unsecured debt rating of at least "P-1" from Moody's or a long-term unsecured debt rating of at least "A2" from Moody's and also has a long-term unsecured debt rating of at least "A+" from S&P; (2) no securities or investments described in clauses (b) through (d) above that have maturities of more than 30 days but less than or equal to 3 months shall be "Eligible Investments" unless the issuer thereof has a long-term unsecured debt rating of at least "A1" from Moody's and a short-term unsecured debt rating of at least "P-1" from Moody's; and (3) no securities or investments described in clauses (b) through (d) above that have maturities of more than 3 months shall be "Eligible Investments" unless the issuer thereof has a long-term unsecured debt rating of at least "Aa3" from Moody's and a short-term unsecured debt rating of at least "P1" from Moody's.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

        "Estimated RRB Charge Payments" means the estimated payments in respect of the RRB 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 the Servicing Agreement.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended.

        "Expected Amortization Schedule" means, with respect to any Tranche, the expected amortization schedule related thereto set forth in the Series Supplement.

        "Federal Book-Entry Regulations" means 31 C.F.R. Part 357 et seq. (Department of Treasury).

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        "Final" means, with respect to the Finance Order, that the Finance Order has become final, that the Finance Order is not being appealed and that the time for filing an appeal thereof has expired.

        "Final Maturity Date" means, with respect to each Tranche of Rate Reduction Bonds, the final maturity date therefor as specified in the Series Supplement.

"Fitch" means Fitch Ratings, Inc. References to Fitch are effective so long as Fitch is a Rating Agency.

        "Governmental Authority" means any nation or government, any U.S. federal, state, local or other political subdivision thereof and any court, administrative agency or other instrumentality or entity exercising executive, legislative, judicial, regulatory or administrative functions of government.

        "Holder" means the Person in whose name a Rate Reduction Bond is registered on the Rate Reduction Bond Register.

        "Indenture" means the Indenture, dated as of the issuance date, by and between the Issuing Entity and The Bank of New York Mellon, a New York banking corporation, as Indenture Trustee and as Securities Intermediary.

        "Independent Manager" means each person appointed as an "Independent Manager" of the Issuing Entity pursuant to the LLC Agreement.

        "Independent Manager Fee" means the fee payable to the Independent Manager pursuant to the LLC Agreement.

        "Investment Earnings" means all investment earnings on funds deposited in the Collection Account net of losses and investment expenses other than Capital Subaccount Investment Earnings.

        "Issuance Advice Letter" means the initial Issuance Advice Letter filed with the NHPUC pursuant to the Finance Order.

        "Letter of Representations" means any applicable agreement between the Issuing Entity and the applicable Clearing Agency, with respect to such Clearing Agency's rights and obligations (in its capacity as a Clearing Agency) with respect to any Book-Entry Rate Reduction Bonds.

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

        "LLC Agreement" means the Amended and Restated Limited Liability Company Agreement of PSNH Funding LLC 3, dated as of the issuance date.

        "Manager" means each manager of the Issuing Entity under the LLC Agreement.

        "Member" means Public Service Company of New Hampshire d/b/a Eversource Energy, or any successor thereto.

        "Mid-Year Routine True-Up Letter" means a letter filed with the NHPUC not later than July 15 of each year in respect of a mid-year Periodic Adjustment.

        "Monthly Servicer's Certificate" means a written report delivered by the Servicer to the Issuing Entity, the Indenture Trustee, and the Rating Agencies not later than fifteen (15) days after the end of each month after the RRBs are issued.

        "Moody's" means Moody's Investors Service, Inc. References to Moody's are effective so long as Moody's is a Rating Agency.

        "NHPUC 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 NHPUC.

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        "Non-Routine True-Up Letter" means a letter filed with the NHPUC in accordance with the Finance Order with respect to any Non-Routine Periodic Adjustment.

        "NRSRO" means a nationally recognized statistical rating organization.

        "NY UCC" means the Uniform Commercial Code as in effect on the issuance date in the State of New York.

        "Operating Expenses" means all unreimbursed fees, costs and out-of-pocket expenses of the Issuing Entity, including all amounts owed by the Issuing Entity to the Indenture Trustee (including indemnities, legal fees and expenses) or any Manager, the Servicing Fee and other amounts owed to the Servicer pursuant to the Servicing Agreement, the Administration Fee and other amounts owed to the Administrator pursuant to the Administration Agreement, legal and accounting fees, Rating Agency and related fees (e.g. website provider fees) and any franchise or other taxes owed by the Issuing Entity.

        "Other Routine True-Up Letter" means a letter filed with the NHPUC by the Servicer 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.

        "Outstanding" means, as of the date of determination, all Rate Reduction Bonds theretofore authenticated and delivered under the Indenture, except:

        (a)   Rate Reduction Bonds theretofore canceled by the Rate Reduction Bond Registrar or delivered to the Rate Reduction Bond Registrar for cancellation;

        (b)   Rate Reduction Bonds or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Indenture Trustee or any Paying Agent in trust for the Holders of such Rate Reduction Bonds; and

        (c)   Rate Reduction Bonds in exchange for which or in lieu of which other Rate Reduction Bonds have been issued pursuant to the Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Rate Reduction Bonds are held by a Protected Purchaser;

provided, that, in determining whether the Holders of the requisite Outstanding Amount of the Rate Reduction Bonds or any Tranche thereof have given any request, demand, authorization, direction, notice, consent or waiver under any Basic Document, Rate Reduction Bonds owned by the Issuing Entity, the Member, the Seller, the Servicer or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding (unless one or more such Persons owns 100% of such Rate Reduction Bonds), except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Rate Reduction Bonds that the Indenture Trustee actually knows to be so owned shall be so disregarded. Rate Reduction Bonds owned by any Holder that have been pledged as security for any obligations may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee's right to act with respect to such Rate Reduction Bonds and that the pledgee is not the Issuing Entity, the Member, the Seller, the Servicer or any Affiliate of any of the foregoing Persons.

        "Outstanding Amount" means the aggregate principal amount of all Rate Reduction Bonds, or, if the context requires, all Rate Reduction Bonds of a Tranche, Outstanding at the date of determination.

        "Paying Agent" means, with respect to the Indenture, the Indenture Trustee and any other Person appointed as a paying agent for the Rate Reduction Bonds pursuant to the Indenture.

        "Payment Date" means, with respect to any Tranche of Rate Reduction Bonds, the dates specified in the Series Supplement; provided, that if any such date is not a Business Day, the Payment Date shall be the Business Day succeeding such date.

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        "Periodic Adjustment" means each adjustment to the RRB Charges made pursuant to the terms of the Finance Order and in accordance with the Servicing Agreement.

        "Periodic Interest" means, with respect to any Payment Date, the periodic interest for such Payment Date as specified under "Description of the RRBs—Interest and Principal on the RRBs."

        "Periodic Principal" means, with respect to any Payment Date, the excess, if any, of the Outstanding Amount of Rate Reduction Bonds over the outstanding principal balance specified for such Payment Date on the Expected Amortization Schedule.

        "Periodic RRB Payment Requirements" means, with respect to any Remittance Period, the total dollar amount calculated by the Servicer as necessary to be remitted to the Collection Account during such Remittance Period (after giving effect to (a) the allocation and distribution of amounts on deposit in the Excess Funds Subaccount at the time of calculation and which are available for payments on the Rate Reduction Bonds, (b) any shortfalls in the coverage of the Periodic RRB Payment Requirements for any prior Remittance Period, (c) the required payment or credit of any Remittance Excess or Remittance Shortfall during such Remittance Period and (d) any Remittances based upon the RRB Charge in effect in the prior Remittance Period that are expected to be realized in such Remittance Period) in order to ensure that, as of the Payment Date immediately following the end of such Remittance Period, (i) all accrued and unpaid interest on the Rate Reduction Bonds then due shall have been paid in full, (ii) the Principal Balance of the Rate Reduction Bonds is equal to the Projected Principal Balance of the Rate Reduction Bonds for that Payment Date, (iii) the balance on deposit in the Capital Subaccount equals the aggregate Required Capital Level, and (iv) all other fees, expenses and indemnities due and owing and required or allowed to be paid under "Description of the RRBs—How Funds in the Collection Account will be Allocated" as of such date shall have been paid in full.

        "Permitted Lien" means any of (a) the Lien created by the Indenture and the Series Supplement, (b) tax liens arising by operation of law with respect to amounts not yet due or any amounts which are being contested in good faith by appropriate proceedings and (c) the Back-Up Security Interest.

        "Person" means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or Governmental Authority.

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

        "Proceeding" means any suit in equity, action at law or other judicial or administrative proceeding.

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

        "Protected Purchaser" has the meaning specified in Section 8-303 of the UCC.

        "Rate Reduction Bond Register" means a register which provides for the registration of the RRBs and the registration of transfers of the RRBs.

        "Rate Reduction Bond Registrar" means the Indenture Trustee, acting as the agent of the Issuing Entity for the purpose of maintaining the Rate Reduction Bond Register and registering the RRBs and transfers of the RRBs in accordance with the Indenture.

        "Rating Agency" means, with respect to any Tranche of Rate Reduction Bonds, any of Moody's, S&P or Fitch that provides a rating with respect to the Rate Reduction Bonds. If no such organization (or successor) is any longer in existence, "Rating Agency" shall be an NRSRO or other comparable Person designated by the Issuing Entity, notice of which designation shall be given to the Indenture Trustee and the Servicer.

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        "Rating Agency Condition" means with respect to any action, that each Rating Agency shall have been given ten Business Days' prior written notice thereof and that each of the Rating Agencies shall have notified the Servicer, the Issuing Entity and the Indenture Trustee in writing that such action will not result in a suspension, reduction or withdrawal of the then current rating by such Rating Agency of any Tranche of the Rate Reduction Bonds; provided that if within such ten Business Day period, any Rating Agency (other than S&P) has neither replied to such notification nor responded in a manner that indicates that such Rating Agency is reviewing and considering the notification, then (a) the Issuing Entity shall be required to confirm that such Rating Agency has received the Rating Agency Condition request and, if it has, promptly request the related Rating Agency Condition confirmation and (b) if the Rating Agency neither replies to such notification nor responds in a manner that indicates it is reviewing and considering the notification within five Business Days following such second request, the applicable Rating Agency Condition requirement shall not be deemed to apply to such Rating Agency. For the purposes of this definition, any confirmation, request, acknowledgment or approval that is required to be in writing may be in the form of electronic mail or a press release (which may contain a general waiver of a Rating Agency's right to review or consent).

        "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 issuance date and end on December 31, 2018.

        "Record Date" means one Business Day prior to the applicable Payment Date.

        "Regulation AB" means the SEC's Asset Backed Securities regulations under 17 CFR Part 229, Subpart 229.1100 et seq.

        "Remittance" means each remittance of Estimated RRB Charge Payments by the Servicer to the Indenture Trustee.

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

        "Remittance Period" means each six-month period (x) commencing on January 1 and ending on June 30 and (y) commencing on July 1 and ending on December 31; provided, that the initial Remittance Period shall commence on the issuance date.

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

        "Responsible Officer" means, with respect to: (a) the Issuing Entity, any Manager or any duly authorized officer; (b) the Indenture Trustee, any officer within the Corporate Trust Office of such trustee (including any Vice President, any Assistant Vice President, any Assistant Secretary or any other officer of the Indenture Trustee customarily performing functions similar to those performed by persons who at the time shall be such officers, respectively, and that has direct responsibility for the administration of the Indenture and also, with respect to a particular matter, any other officer to whom such matter is referred to because of such officer's knowledge and familiarity with the particular subject); (c) any corporation (other than the Indenture Trustee), 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; (d) any partnership, any general partner thereof; and (e) any other Person (other than an individual), any duly authorized officer or member of such Person, as the context may require, who is authorized to act in matters relating to such Person.

114

        "Routine True-Up Letter" means, as the context requires, an Annual Routine True-Up Letter, a Mid-Year Routine True-Up Letter or an Other Routine True-Up Letter.

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

        "RRB Charge Payments" means the payments made by Customers based on the RRB Charges.

"RRB Costs" means certain expenditures incurred by PSNH to implement the 2015 Settlement Agreement and all other "RRB Costs" (as defined in the Financing Act), each as approved in the Finance Order.

        "RRB Property Records" means any and all documents and records kept on file by the Servicer, 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 the Periodic Adjustment or Non-Routine Periodic Adjustment and computational records relating thereto.

        "S&P" means S&P Global Ratings. References to S&P are effective so long as S&P is a Rating Agency.

        "Sale Agreement" means the Purchase and Sale Agreement dated as of the issuance date between PSNH, as Seller, and the Issuing Entity, as the same may be amended and supplemented from time to time.

        "Scheduled Final Payment Date" means, with respect to each Tranche of Rate Reduction Bonds, the date when all interest and principal is scheduled to be paid with respect to that Tranche in accordance with the Expected Amortization Schedule, as specified in the Series Supplement. For the avoidance of doubt, the Scheduled Final Payment Date with respect to any Tranche shall be the last Scheduled Payment Date set forth in the Expected Amortization Schedule relating to such Tranche. The "last Scheduled Final Payment Date" means the Scheduled Final Payment Date of the latest maturing Tranche of Rate Reduction Bonds.

        "Scheduled Payment Date" means, with respect to each Tranche of Rate Reduction Bonds, each Payment Date on which principal for such Tranche is to be paid in accordance with the Expected Amortization Schedule for such Tranche.

        "Secured Parties" means the Indenture Trustee and the Holders.

        "Securities Act" means the Securities Act of 1933, as amended.

        "Securities Intermediary" means The Bank of New York Mellon, a New York banking corporation, solely in the capacity of a "securities intermediary" as defined in the NY UCC and Federal Book-Entry Regulations or any successor securities intermediary under the Indenture.

        "Semi-Annual Servicer's Certificate" means a written report delivered by the Servicer to the Issuing Entity, the Indenture Trustee, and the Ratings Agencies, no later than the Servicer Business Day immediately preceding each Payment Date, so long as any RRBs are outstanding.

        "Series Supplement" means the indenture supplemental to the Indenture that authorizes the issuance of the Rate Reduction Bonds.

        "Servicer Business Day" means any Business Day on which the Servicer's offices in the State of New Hampshire are open for business.

        "Servicing Agreement" means the Servicing Agreement, dated as of the issuance date, by and between the Issuing Entity and PSNH, and acknowledged and accepted by the Indenture Trustee.

115

        "Special Payment Date" means the date on which, with respect to any Tranche of Rate Reduction Bonds, any payment of principal of or interest (including any interest accruing upon default) on, or any other amount in respect of, the Rate Reduction Bonds of such Tranche that is not actually paid within five days of the Payment Date applicable thereto is to be made by the Indenture Trustee to the Holders.

        "State" means the State of New Hampshire.

        "State Pledge" means the pledge of the State of New Hampshire under RSA 369-B:6, II of the Financing Act in which the State of New Hampshire pledged, contracted and agreed with the owner of the RRB Property and the Holders of and the Indenture Trustee for the RRBs that neither the State, nor any of its agencies, including the NHPUC, will limit, alter, amend, reduce or impair the RRB Charges, RRB Property, the Finance Order, or any rights thereunder, or ownership thereof or security interest therein, until the RRBs, including all principal, interest, premium, costs and arrearages thereon, are fully met and discharged, unless adequate provision is made by law for the protection of the owner, Holders and the Indenture Trustee.

        "Tariff" means PSNH's then-current "Tariff For Electric Delivery Service," NHPUC No. 9, as approved by the NHPUC.

        "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 RRB Charge to and from Customers in accordance with NHPUC Regulations, the Finance Order and the guidelines described in the Servicing Agreement.

        "Tranche" means any one of the groupings of Rate Reduction Bonds differentiated by amortization schedule, interest rate or sinking fund schedule, as specified in the Series Supplement.

        "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force on the issuance date, unless otherwise specifically provided.

        "UCC" means, unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time.

        "Underwriting Agreement" means the Underwriting Agreement, dated            , by and among PSNH, the representatives of the underwriters named therein and the Issuing Entity.

        "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and that are not callable at the option of the issuer thereof.

        "Weighted Average Days Outstanding" means the weighted average number of days PSNH's monthly retail Customer bills remain outstanding during the 12-month period ended for the quarter immediately preceding the calculation thereof. The calculation of Weighted Average Days Outstanding shall become effective on February 1 of each year. The initial Weighted Average Days Outstanding shall be    days until updated as described in "The Servicing Agreement—Periodic Adjustment Process".

116

$            RATE REDUCTION BONDS,

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

Depositor, Sponsor and Initial Servicer

PSNH FUNDING LLC 3

Issuing Entity

PROSPECTUS

GOLDMAN SACHS & CO. LLC

        Through and including        , 2018 (the 90th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and when offering an unsold allotment or subscription.

PART II

Information Not Required in Prospectus

Item 12.    Other Expenses of Issuance and Distribution

        The following table sets forth the various expenses expected to be incurred by the registrants in connection with the issuance and distribution of the securities being registered by this prospectus, other than underwriting discounts and commissions. All amounts are estimated except the Securities and Exchange Commission registration fee.

Securities and Exchange Commission registration fee	$	62,250
Printing and engraving expenses			*
Indenture Trustee fees and expenses		2,500
Legal fees and expenses			*
Accounting fees and expenses			*
Rating Agencies' fees and expenses			*
Structuring agent fees and expenses			*
Miscellaneous fees and expenses			*
Total	$		*

*

To be included in amendment to this Registration Statement

Item 13.    Indemnification of Directors and Officers

        Section 18-108 of the Delaware Limited Liability Company Act provides that subject to such standards and restrictions, if any, as are set forth in its limited liability company agreement, a limited liability company may and has the power to indemnify and hold harmless any member or other person from and against any and all claims and demands whatsoever. Section 10.1 of the LLC Agreement of the Issuing Entity provides that the Issuing Entity shall, to the fullest extent permitted by law, indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Issuing Entity) by reason of the fact that he is or was a director, manager, officer, employee or agent of the Issuing Entity, or is or was serving at the request of the Issuing Entity as a manager, director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, against any and all losses, liabilities, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with action, suit, proceeding or in enforcing such person's right to indemnification hereunder, in each case, actually and reasonably incurred by such Person, if such Person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Issuing Entity, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such conduct was unlawful; provided that such Person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such Person's fraud, gross negligence or willful misconduct. Section 10.06 of the LLC Agreement of the Issuing Entity provides that expenses incurred in defending or investigating a threatened or pending action, suit or proceeding may be paid by the Issuing Entity in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the manager, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Issuing Entity as authorized in the LLC Agreement.

        The New Hampshire Business Corporation Act provides that a corporation may indemnify an individual made a party to a proceeding because he is or was a director against liability incurred in the proceeding if: (1) he conducted himself in good faith; and (2) he reasonably believed (i) in the case of

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conduct in his official capacity with the corporation, that his conduct was in its best interests; and (ii) in all other cases, that his conduct was at least not opposed to its best interests; and (3) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of the final disposition of the proceeding if: (1) the director furnishes the corporation a written affirmation of his good faith belief that he has met the standard of conduct described in the preceding sentence; and (2) the director furnishes the corporation an undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he did not meet the standard of conduct; and (3) a determination is made that the facts then known to those making the determination would not preclude indemnification. Unless a corporation's articles of incorporation provide otherwise, the corporation may indemnify and advance expense to an officer, employee or agent of the corporation who is not a director to the same extent as to a director. The Issuing Entity believes that its officers and managers who are also officers and non-independent directors of PSNH are serving the Issuing Entity in those capacities at PSNH's request and are therefore entitled, although the matter is not entirely free from doubt, to indemnification from PSNH to the same extent as the directors of PSNH. A corporation may not indemnify a director (x) in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (y) in connection with any other proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him. Unless limited by its articles of incorporation, a New Hampshire corporation shall indemnify a director or officer who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he is or was a director or officer of the corporation against reasonable expenses incurred by him in connection with the proceeding.

        Article IX of the PSNH bylaws provides that the corporation shall, to the extent legally permissible, indemnify each of its directors and officers (including persons who serve at its request as directors, officers or trustees of another organization in which it has any interest, as a shareholder, creditor or otherwise) against expenses, including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees, reasonably incurred by such person in connection with the defense or disposition of any action, suit or other proceeding, whether civil, criminal, administrative or investigative, in which such person may be involved or with which such person may be threatened, while in office or thereafter, by reason of such person's being or having been such a director, officer or trustee; provided, however, that determinations with respect to indemnification and reimbursement of a person (unless ordered by a court) shall be made: (a) by the board of directors of PSNH acting by a majority vote or action of a disinterested quorum of directors, or if such quorum is unobtainable, as directed by majority vote of the board of directors or action of a duly designated committee comprised of two or more disinterested directors; or (b) by independent legal counsel; or (c) by the holders of a majority of the outstanding stock at the time entitled to vote for directors, voting as a single class; or (d) otherwise in accordance with the terms of Article IX. Expenses, including counsel fees, reasonably incurred by any director or officer in connection with the defense or disposition of any such action, suit or other proceeding may be paid from time to time by the corporation in advance of the final disposition thereof upon receipt of any undertaking by or on behalf of such director or officer then required by applicable law. If PSNH fails timely to make any payment pursuant to the advancement or reimbursement provisions and a director or officer commences an action or proceeding to recover such payment, PSNH shall be obligated to reimburse the legal fees and other expenses of such action or proceeding if the director or officer prevails in such action or proceeding. The right of indemnification shall not be exclusive of or affect any other rights to which any director or officer may be entitled. As used in Article IX, the terms "director" and "officer" include their respective heirs, executors, administrators and legal representatives, an "interested" director or officer is one against whom in such capacity the proceedings in question or another

II-2

proceeding on the same or similar grounds is then pending, and the term "PSNH" shall include any legal successor to PSNH, including any corporation which acquires all or substantially all of the assets of PSNH in one or more transactions.

        PSNH also maintains an insurance policy that insures its directors and officers against certain liabilities.

        Eversource Energy, PSNH's parent company, has liability insurance policies in force insuring the trustees and officers of Eversource Energy against certain liabilities. Such policies insure the directors and officers of PSNH and the non-Independent Managers and the officers of the Issuing Entity.

Item 14.    Exhibits

        List of Exhibits

EXHIBIT NO.		DESCRIPTION OF EXHIBIT
	1.1	Form of Underwriting Agreement**
	3.1	Certificate of Formation of PSNH Funding LLC 3*
	3.2	Form of Amended and Restated Limited Liability Company Agreement of PSNH Funding LLC 3
	4.1	Form of Indenture between PSNH Funding LLC 3 and the Indenture Trustee (including forms of the RRBs)
	5.1	Opinion of Ropes & Gray LLP with respect to legality**
	8.1	Opinion of Ropes & Gray LLP with respect to federal tax matters**
	10.1	Form of Servicing Agreement between PSNH Funding LLC 3 and Public Service Company of New Hampshire, as Servicer
	10.2	Form of Purchase and Sale Agreement between PSNH Funding LLC 3 and Public Service Company of New Hampshire, as Seller
	10.3	Form of Administration Agreement between PSNH Funding LLC 3 and Public Service Company of New Hampshire, as Administrator
	21.1	List of Subsidiaries*
	23.1	Consent of Ropes & Gray LLP (included as part of its opinions filed as Exhibit 5.1 and 8.1)**
	23.2	Consent of McLane Middleton, P.A.**
	24.1	Power of Attorney (Public Service Company of New Hampshire)***
	24.2	Power of Attorney (PSNH Funding LLC 3)***
	25.1	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York Mellon*
	99.1	Finance Order*
	99.2	Form of Opinion of Ropes & Gray LLP with respect to U.S. constitutional matters**
	99.3	Form of Opinion of McLane Middleton, P.A. with respect to New Hampshire constitutional matters**

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EXHIBIT NO.		DESCRIPTION OF EXHIBIT
	99.4	Consent of Manager Nominee*

*

Previously filed with the Registration Statement on Form SF-1 of the Public Service Company of New Hampshire and PSNH Funding LLC 3 (File Nos. 333-223108 and 333-223108-01) filed on February 20, 2018

**

To be filed by amendment

***

Included on the signature pages of the Registration Statement on Form SF-1 of the Public Service Company of New Hampshire and PSNH Funding LLC 3 (File Nos. 333-223108 and 333-223108-01) on February 20, 2018

Item 15.    Undertakings

        The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Issuing Entity's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, each registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by a registrant of expenses incurred or paid by a director, officer or controlling person of such registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, each registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

        The undersigned registrants hereby undertake that:

        (1)   For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

        (2)   For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        The undersigned registrants hereby undertake to file an application for the purpose of determining the eligibility of the Indenture Trustee to act under Subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form SF-1 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston, State of Massachusetts, on the 23rd day of March, 2018.

Public Service Company of New Hampshire
By:	/s/ JAY S. BUTH
	Name:	Jay S. Buth
	Title:	Vice President, Controller and Chief Accounting Officer

        Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

* James J. Judge		Chairman and a Director (principal executive officer)	March 23, 2018
* Werner J. Schweiger		Chief Executive Officer and a Director	March 23, 2018
* Philip J. Lembo		Executive Vice President and Chief Financial Officer and a Director (principal financial officer)	March 23, 2018
* Gregory B. Butler		Executive Vice President and General Counsel and a Director	March 23, 2018
/s/ JAY S. BUTH Jay S. Buth		Vice President, Controller and Chief Accounting Officer (principal accounting officer)	March 23, 2018
*By:	/s/ JAY S. BUTH Jay S. Buth Attorney-in-fact

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form SF-1 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston, State of Massachusetts, on the 23rd day of March, 2018.

PSNH Funding LLC 3
By:	/s/ JAY S. BUTH
	Name:	Jay S. Buth
	Title:	Vice President, Controller and Chief Accounting Officer

        Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

* Philip J. Lembo		President (principal executive officer) and Chief Financial Officer (principal financial officer)	March 23, 2018
/s/ JAY S. BUTH Jay S. Buth		Vice President, Controller and Chief Accounting Officer (principal accounting officer)	March 23, 2018
* Christine L. Vaughan		Vice President and Treasurer and a Manager	March 23, 2018
* Emilie G. O'Neil		Assistant Treasurer and a Manager	March 23, 2018
*By:	/s/ JAY S. BUTH Jay S. Buth Attorney-in-fact

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EX-3.2

Exhibit 3.2

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

OF

PSNH FUNDING LLC 3,

a Delaware Limited Liability Company,

is made and is effective as of [ · ], 2018

by

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

d/b/a EVERSOURCE ENERGY,

a New Hampshire Corporation

TABLE OF CONTENTS

			Page
ARTICLE 1 DEFINITIONS			1
	Section 1.01	Definitions	1
ARTICLE 2 FORMATION AND BUSINESS OF THE COMPANY			4
	Section 2.01	Formation	4
	Section 2.02	Name	4
	Section 2.03	Principal Office	4
	Section 2.04	Registered Agent and Registered Office	4
	Section 2.05	Purpose	4
	Section 2.06	Separate Existence	5
	Section 2.07	Limitation on Certain Activities	8
	Section 2.08	No State Law Partnership	8
	Section 2.09	Address of the Member	8
ARTICLE 3 TERM			8
	Section 3.01	Commencement	8
	Section 3.02	Continuation	9
ARTICLE 4 CAPITAL CONTRIBUTIONS			9
	Section 4.01	Capital Contribution	9
	Section 4.02	Capital Account	9
	Section 4.03	Return of Capital Account	9
ARTICLE 5 ALLOCATIONS; BOOKS			9
	Section 5.01	Allocations of Income and Loss	9
	Section 5.02	Books of Account	10
	Section 5.03	Distributions	10
ARTICLE 6 MANAGEMENT OF THE COMPANY			10
	Section 6.01	Management of Company	10
	Section 6.02	Withdrawal of Manager	10
	Section 6.03	Duties of Managers	10
	Section 6.04	Removal of Manager	11
	Section 6.05	Quorum: Acts of the Management Committee	11
	Section 6.06	Officers	11

i

TABLE OF CONTENTS
(Cont’d)

	Section 6.07	Special Members	11
ARTICLE 7 DISSOLUTION, LIQUIDATION AND WINDING-UP			12
	Section 7.01	Dissolution	12
	Section 7.02	Accounting	13
	Section 7.03	Certificate of Cancellation	13
	Section 7.04	Winding Up	13
	Section 7.05	Order of Payment of Liabilities Upon Dissolution	13
	Section 7.06	Limitations on Payments Made in Dissolution	13
ARTICLE 8 TRANSFER AND ASSIGNMENT			14
	Section 8.01	Transfer of Membership Interests	14
	Section 8.02	Admission of Transferee as Member	14
ARTICLE 9 GENERAL PROVISIONS			14
	Section 9.01	Notices	14
	Section 9.02	Controlling Law	15
	Section 9.03	Execution of Counterparts	15
	Section 9.04	Severability	15
	Section 9.05	Entire Agreement	15
	Section 9.06	Amendments to Organizational Documents	15
	Section 9.07	Paragraph Headings	16
	Section 9.08	Gender, Etc.	16
	Section 9.09	Limited Liability	16
	Section 9.10	Assurances	16
	Section 9.11	Enforcement by Independent Manager	16
	Section 9.12	Waiver of Partition; Nature of Interest	16
ARTICLE 10 INDEMNIFICATION			16
	Section 10.01	Indemnification	16
	Section 10.02	Indemnification for Suits by or in Right of Company	17
	Section 10.03	Authorization	17
	Section 10.04	Good Faith	18
	Section 10.05	Court Action	18
	Section 10.06	Expenses	18
	Section 10.07	Non-Exclusivity	18

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TABLE OF CONTENTS
(Cont’d)

Section 10.08	Insurance	19
Section 10.09	Consolidation/Merger	19
Section 10.10	Heirs, Executors, and Administrators	19
Section 10.11	Non-Petition	19

iii

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
PSNH FUNDING LLC 3

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of PSNH FUNDING LLC 3, a Delaware limited liability company (the “Company”), is made and is effective as of the Closing Date (as defined below) by PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, a New Hampshire corporation d/b/a EVERSOURCE ENERGY, as the sole member of the Company (the “Member”).

WHEREAS, the Member has caused to be filed a Certificate of Formation with the Secretary of State of Delaware (the “Secretary”) to organize the Company under and pursuant to the Act (as herein defined) and has entered into a Limited Liability Company Agreement of the Company, dated as of January 18, 2018 (the “Original LLC Agreement”);

WHEREAS, the Member desires to enter into this Agreement to amend and restate the Original LLC Agreement in its entirety;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Member, intending to be legally bound, hereby amend and restate the Original LLC Agreement in its entirety and agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01Definitions.  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:

“Act” shall mean the Delaware Limited Liability Company Act, Del.  Code Ann.  tit.  6, § 18-101 et seq., as the same may hereafter be amended from time to time.

“Agreement” shall mean this Amended and Restated Limited Liability Company Agreement of the Company, as amended, modified, supplemented or restated from time to time in accordance with the terms hereof.

“Bankruptcy” means, with respect to any Person, (A) if such Person (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature, or (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (B) if 120 days after the commencement of any proceeding

against the Person seeking reorganization, arrangement, composition, readjustment, liquidation, or similar relief under any statute, law or regulation, the proceeding has not been dismissed, or if within 90 days after the appointment without such Person’s consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated.  The foregoing definition of “Bankruptcy” is intended to replace and shall supersede and replace the definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the Act.

“Capital Account” shall mean the account established in accordance with Section 4.02.

“Capital Contribution” shall mean, with respect to the Member, the amount of cash and the value of any property contributed to the Company.

“Cause” means, with respect to an Independent Manager, (i) acts or omissions by such Independent Manager that constitute willful disregard of, or bad faith or gross negligence with respect to, such Independent Manager’s duties under this Agreement, (ii) that such Independent Manager has engaged in or has been charged with, or has been convicted of, fraud or other acts constituting a crime under any law applicable to such Independent Manager, (iii) that such Independent Manager is unable to perform his or her duties as Independent Manager due to death, disability or incapacity, or (iv) that such Independent Manager no longer meets the definition of Independent Manager.

“Certificate” shall mean the Certificate of Formation of the Company filed with the Secretary on January 18, 2018 as described in Section 2.01 and as amended, modified, supplemented, or restated from time to time.

“Closing Date” means [          ], 2018.

“Company” shall have the meaning assigned to such term in the preamble hereto.

“Event of Bankruptcy” shall mean, with respect to the Company, that the Company shall (i) institute proceedings to be adjudicated bankrupt or insolvent, (ii) consent to the institution of bankruptcy or insolvency proceedings against it, (iii) file a voluntary bankruptcy petition or any other petition seeking or consenting to reorganization or relief under any applicable federal or state law relating to bankruptcy, (iv) consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of such Person or a substantial part of its property, (v) make a general assignment for the benefit of creditors or (vi) admit in writing its inability to pay its debts generally as they become due.

“GAAP” shall mean generally accepted accounting principles in effect in the United States from time to time.

“Indenture” shall mean that certain Indenture to be entered into between the Company, as issuer, and a trustee, as amended, supplemented or modified from time to time.

“Independent Manager” shall mean a natural person who is employed by a nationally-recognized company that routinely provides professional Independent Managers and has experience with asset securitization and is not at

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the time of appointment, has not been at any time preceding such appointment and is not during the term of such appointment (other than as incidental to such person’s role as Independent Manager): (i) a member, stockholder, partner, director, manager, officer or employee of any member of the PSNH Affiliated Group (other than the Company and any such member of the PSNH Affiliated Group that is a bankruptcy-remote special purpose entity formed or to be formed in connection with any securitization transaction on behalf of any member of the PSNH Affiliated Group); provided that that the indirect or beneficial ownership of stock of any member of the PSNH Affiliated Group through a mutual fund or similar diversified investment vehicle with respect to which the owner does not have discretion or control over the investments held by such diversified investment vehicle shall not preclude such owner from being an Independent Manager; (ii) a customer, supplier (other than a nationally-recognized company that routinely provides professional Independent Managers and other corporate services to the Company, the Member or any of its Affiliates in the ordinary course of its business) or other person who derives more than two percent (2%) of its purchases or revenues from its activities with the Company or any member of the PSNH Affiliated Group; (iii) a member of the family of any such member, stockholder, partner, director, manager, officer, employee, customer or supplier; (iv) a trustee in bankruptcy for any member of the PSNH Affiliated Group; or (v) a Person that controls (whether directly or indirectly) any Person set forth in clauses (i) through (iv) above.

“Management Agreement” shall mean the agreement or agreements of the members of the Management Committee, each in the form attached hereto as Exhibit A.  The Management Agreement shall be deemed incorporated into, and part of, this Agreement.

“Management Committee” shall mean a committee composed of at least three and no more than five Managers, at least one of whom must qualify as an Independent Manager at all times upon and after the acquisition by the Company of RRB Property until the Indenture has been discharged in accordance with its terms.  At all times after the acquisition by the Company of RRB Property until the Indenture has been discharged in accordance with its terms, the Company shall be without authority to take the actions specified herein as requiring the unanimous vote or consent of the Management Committee absent the currently effective appointment of at least one Independent Manager to the Management Committee.

“Manager” shall mean a member of the Management Committee and a manager within the meaning of the Act.

“Member” shall have the meaning assigned to such term in the preamble hereto, and shall include any additional or substitute member of the Company, each in its capacity as a member of the Company; provided that the term “Member” shall not include the Special Member.

“Membership Interest” shall mean the limited liability company interest of the Member in the Company.

“Officer” shall mean an officer of the Company as appointed and serving in accordance with Section 6.06.

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“PSNH Affiliated Group” shall mean the Member and any Affiliate of the Member (other than the Company).

“Secretary” shall have the meaning assigned to such term in the first recital of this Agreement.

“Special Member” means, upon such person’s admission to the Company as member pursuant to Section 6.07, a person acting as Independent Manager, in such person’s capacity as a member of the Company.

ARTICLE 2

FORMATION AND BUSINESS OF THE COMPANY

Section 2.01Formation.  The Company has been organized as a Delaware limited liability company under and pursuant to the Act by the filing of the Certificate with the Secretary by Emilie G. O’Neil, as an “authorized person” under the Act.  Upon the filing of the Certificate with the Secretary, and another certificate to qualify the Company to do business in the State of New Hampshire, her powers as an “authorized person” ceased, and each Officer, acting singly, thereupon became and shall continue as a designated “authorized person” of the Company.  An Officer shall execute, deliver and file any other certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in any jurisdiction in which the Company may wish to conduct business.  To the extent that the rights or obligations of the Member are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control.

Section 2.02Name.  The name of the Company shall be PSNH Funding LLC 3.

Section 2.03Principal Office.  The location of the principal place of business of the Company shall be at such location as shall be provided from time to time by the Administrator under the Administration Agreement.

Section 2.04Registered Agent and Registered Office.  The registered agent of the Company shall be the initial registered agent named in the Certificate or such other Person or Persons as the Member may designate from time to time in the manner provided by the Act.  The registered office of the Company required by the Act to be maintained in the State of Delaware shall be the initial registered office named in the Certificate or such other office (which need not be a place of business of the Company) as the Member may designate from time to time in the manner provided by the Act.

Section 2.05Purpose.  The Company is intended to qualify as a “financing entity” as defined in RSA 369-B:2, VI.  As such, the purpose for which the Company is formed is limited solely to the following activities:

(a)to acquire, own, hold, administer and service the RRB Property, and enter into the Basic Documents to which it shall be a party and any other agreements regarding the receipt and servicing of the RRB Property, along with certain other related assets;

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(b)to enter into, perform and comply with the Sale Agreement, assignment agreements or other agreements providing for the purchase of the RRB Property and related assets by the Company; and to enter into, perform and comply with such servicing agreements, administration agreements, collection account agreements and other similar agreements as may be necessary or desirable in connection with such sale agreements;

(c)to issue, sell, authorize and deliver the Rate Reduction Bonds and to enter into any agreement or document providing for the authorization, issuance, sale and delivery of the Rate Reduction Bonds;

(d)to manage, collect amounts due on, sell, exchange, assign, pledge, encumber or otherwise deal with all or any part of the RRB Collateral, and, in connection therewith, to accept, collect, hold, sell, exchange or otherwise dispose of evidences of indebtedness or other property received pursuant thereto, including the encumbrance of all of the RRB Collateral as collateral security for the Rate Reduction Bonds;

(e)to invest proceeds from the RRB Property and its other assets and any capital and income of the Company in accordance with the Basic Documents or as otherwise determined by the Management Committee and not inconsistent with this Agreement or the Basic Documents;

(f)to execute any registration statement, offering document or related agreements or disclosures related to the issuance of rate reduction bonds or other instruments secured by the RRB Property; and

(g)to engage in any lawful act or activity and to exercise any powers permitted to limited liability companies formed under the laws of the State of Delaware that, in either case, are incidental to and necessary, suitable or convenient for the accomplishment of the above-mentioned purposes.

The Company shall not engage in any activity other than in connection with the foregoing or other than as required or authorized by the terms of the Sale Agreement, any Basic Document or any other agreement referenced above.  The Company shall have all powers reasonably necessary or convenient to effect the foregoing purposes, including all powers granted under the Act.  The Company, and any Officer or Manager, on behalf of the Company, and the Member may enter into the Basic Documents and the Rate Reduction Bonds and perform their respective obligations under the Basic Documents and the Rate Reduction Bonds and all documents, agreements, certificates or financing statements contemplated thereby or related thereto, all without any further act, vote or approval of the Member, the Management Committee, any Manager or other person or entity, notwithstanding any other provision of this Agreement, the Act, or other applicable law, rule or regulation.  The authorization set forth in the preceding sentence shall not be deemed a restriction on the power and authority of any Officer or Manager, including any Independent Manager, to enter into other agreements or documents on behalf of the Company, to the extent permitted hereunder.

Section 2.06Separate Existence.  The Company, and the Member and the Management Committee on behalf of the Company, shall:

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(a)Maintain in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware and obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement necessary or appropriate to the proper administration hereof and to permit and effectuate the undertakings contemplated hereby.

(b)Hold itself out to the public and all other persons as a legal entity separate from the Member at all times, and correct any known misunderstandings regarding its separate identity.

(c)Maintain its own deposit account or accounts separate from those of any member of the PSNH Affiliated Group.

(d)Maintain an arm’s length relationship with its Affiliates and the PSNH Affiliated Group.

(e)Pay the salaries of its own employees, if any, and maintain a sufficient number of employees in light of its contemplated business operations, or, if there are no such employees, ensure that, to the extent that it shares the same officers or other employees with the Member or any member of the PSNH Affiliated Group, the salaries of, and the expenses related to providing benefits to, such officers and other employees shall be separately noted in its books and records and fairly allocated among such entities, and each such entity shall bear its fair share of the salary and benefit costs associated with all such common officers and employees.

(f)Pay all of its operating expenses incurred by it from the assets of the Company, and ensure that, to the extent that it jointly contracts with the Member or any member of the PSNH Affiliated Group to do business with vendors or service providers or to share overhead expenses, the costs incurred in so doing shall be allocated fairly among such entities, and each such entity shall bear its fair share of such costs.

(g)Maintain a principal executive and administrative office through which its business is conducted separate from those of the Member and any Affiliate of the PSNH Affiliated Group.  To the extent that the Company and the Member or any Affiliate of the PSNH Affiliated Group have offices in contiguous or shared space, there shall be fair and appropriate allocation of overhead costs among them, and each such entity shall bear its fair share of such expenses.

(h)Observe all necessary, appropriate and customary formalities required by its organizational documents and applicable law, including, but not limited to, holding all regular and special meetings including meetings of the Management Committee, appropriate to authorize all action on behalf of the Company, keeping all resolutions or consents necessary to authorize actions taken or to be taken, maintaining accurate and separate books, records and accounts, including, but not limited to, payroll and intercompany transaction accounts, and keeping its financial statements separate and apart from, and not consolidated with, those of any other Person; provided, however, that the Company may be included in the consolidated financial

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statements of the PSNH Affiliated Group so long as it is shown as a separate member of such group.

(i)Cause to have prepared and filed its own tax returns, if any, as may be required under applicable law, to the extent (1) not part of a consolidated group filing a consolidated return or returns or (2) not treated as a division for tax purposes of another taxpayer, and pay any taxes so required to be paid under applicable law.

(j)At all times vest the management of the Company in the Management Committee and, from and after the entry into the Sale Agreement and the acquisition of any RRB Property and until the Indenture has been discharged in accordance with its terms, ensure that its Management Committee shall at all times include at least one Independent Manager.

(k)Refrain from commingling its assets with those of the Member or any member of the PSNH Affiliated Group (except as contemplated by the Sale Agreement, the Servicing Agreement, the Administration Agreement or any other Basic Document).

(l)Refrain from making any loan or advance to, owning, or acquiring any stock or securities of any Person, including any member of the PSNH Affiliated Group, except as permitted in the Basic Documents.

(m)Act solely in its own name and through its own Officers and agents, and no member of the PSNH Affiliated Group shall be appointed to act as agent of the Company, except as expressly contemplated by the Basic Documents, in which case the capacity of such agent shall be clearly identified.

(n)Ensure that no member of the PSNH Affiliated Group shall advance funds to the Company, or otherwise guaranty debts of the Company, except as provided in the Basic Documents; provided, however, that the Member may make contributions to the capital of the Company.

(o)Not enter into any guaranty, or otherwise become liable, with respect to any obligation of any member of the PSNH Affiliated Group and not hold itself out, or permit itself to be held out, as having agreed to pay or as being liable for the debts of the Member or any other member of the PSNH Affiliated Group.

(p)Comply with all restrictions on its business and operations as set forth in Sections 2.05 and 2.07.

(q)Not pledge its assets for the benefit of any member of the PSNH Affiliated Group.

(r)Use separate stationery, invoices and checks.

(s)Maintain adequate capital in light of its contemplated business operations.

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Section 2.07Limitation on Certain Activities.  Notwithstanding any other provisions of this Agreement, the Company, and the Member or Management Committee on behalf of the Company, shall not:

(a)engage in any business or activity other than as set forth in Article 2 hereof;

(b)without the affirmative vote of the Member and the affirmative vote of all of the Managers, including, until the date that is one year and one day from the date that the Indenture has been discharged in accordance with its terms, each Independent Manager, initiate any Event of Bankruptcy with respect to the Company or take any action in furtherance of any such Event of Bankruptcy;

(c)merge or consolidate with any other Person or, except to the extent permitted by the Basic Documents, sell all or substantially all of its assets or acquire all or substantially all of the assets or capital stock or other ownership interest of any other Person;

(d)form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other);

(e)incur any indebtedness (other than the indebtedness incurred under the Rate Reduction Bonds and the Basic Documents), assume or guarantee any indebtedness of any other Person or pledge its assets for the benefit of any other Person (other than the pledge of assets contemplated by the Basic Documents); or

(f)to the fullest extent permitted by law, execute any dissolution, liquidation, or winding up of the Company unless there are no Rate Reduction Bonds remaining outstanding and the Indenture has been discharged in accordance with its terms and without the affirmative vote of the Member and the affirmative vote of all Managers, including, until such time as the Indenture has been discharged in accordance with its terms, each Independent Manager.

Section 2.08No State Law Partnership.  No provisions of this Agreement (including, without limitation, the provisions of Article 6) shall be deemed or construed to constitute a partnership (including, without limitation, a limited partnership) or joint venture, or the Member a partner or joint venturer of or with any Manager or the Company, for any purposes.

Section 2.09Address of the Member.  The address of the Member is set on Exhibit B hereto, as amended from time to time, attached hereto and made a part hereof.

ARTICLE 3

TERM

Section 3.01Commencement.  The Company’s term commenced upon the filing of the Certificate with the Secretary on January 18, 2018.  The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate as provided in the Act.

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Section 3.02Continuation.  Notwithstanding any provision of this Agreement, a Bankruptcy of the Member or Special Member will not cause the Member or Special Member, respectively, to cease to be a member of the Company, and upon the occurrence of such an event, the Company shall continue without dissolution.  Notwithstanding any other provision of this Agreement, the Member waives any right it might have under the Act to agree in writing to dissolve the Company upon the occurrence of a Bankruptcy of the Member or Special Member or the occurrence of an event which causes the Member or Special Member to cease to be a member of the Company.

ARTICLE 4

CAPITAL CONTRIBUTIONS

Section 4.01Capital Contribution.  The Member shall be permitted to make Capital Contributions in cash or property to the Company on such terms and conditions as may be agreed to by the Member from time to time.  The amounts so contributed by the Member shall be credited to the Member’s capital account, as provided in Section 4.02 below.  The Member shall have a Membership Interest of one hundred percent (100%) of the Company.

Section 4.02Capital Account.  The Company shall establish an individual Capital Account for the Member (the “Capital Account”).

Section 4.03Return of Capital Account.  The Member shall, subject to the Act, be entitled to the return of its Capital Contribution and the payment of any Capital Subaccount Investment Earnings to the extent permitted in the Indenture, the Finance Order and the Basic Documents.

ARTICLE 5

ALLOCATIONS; BOOKS

Section 5.01Allocations of Income and Loss.

(a)Book Allocations.  The net income and net loss of the Company shall be allocated entirely to the Capital Account of the Member.

(b)Tax Allocations.  Because the Company is not making (and will not make) an election to be treated as an association taxable as a corporation under Section 301.7701-3(a) of the U.S. Treasury Regulations, and because the Company is a business entity that has a single owner and is not a corporation, it shall be disregarded as an entity separate from its owner for federal income tax purposes under Section 301.7701-3(b)(1) of the U.S. Treasury Regulations and shall not take any action inconsistent with such treatment.  Accordingly, all items of income, gain, loss, deduction and credit of the Company for all taxable periods will be treated for federal income tax purposes, and for state and local income and other tax purposes to the extent permitted by applicable law, as realized or incurred directly by the Member.  To the extent not so permitted, all items of income, gain, loss, deduction and credit of the Company shall be allocated entirely to the Member.

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Section 5.02Books of Account.  At all times during the continuance of the Company, the Company shall maintain or cause to be maintained full, true, complete and correct books of account in accordance with GAAP, using the fiscal year and taxable year of the Member.  In addition, the Company shall keep all records required to be kept pursuant to the Act.

Section 5.03Distributions.  The Company may make distributions to the Member from time to time upon the unanimous vote of the Management Committee.  Notwithstanding the foregoing, the Company shall distribute all Capital Subaccount Investment Earnings to the Member upon the release of such funds pursuant to Section 8.02(g) of the Indenture. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to the Member on account of its interest in the Company if such distribution would violate the Act or any other applicable law or any of the Basic Documents.

ARTICLE 6

MANAGEMENT OF THE COMPANY

Section 6.01Management of Company.  Except as otherwise provided in this Agreement, the property and business of the Company shall be controlled and managed by the Management Committee, composed of Managers appointed by the Member.  Notwithstanding the last sentence of Section 18-402 of the Act, except as provided in this Agreement, a Manager may not bind the Company.  Prior to the entry into the Sale Agreement and the acquisition of any RRB Property, the Member shall appoint at least one Independent Manager.  The Company shall pay each Independent Manager an annual fee as agreed to between the Company and each Independent Manager (the “Independent Manager Fee”).  Each Manager, including each Independent Manager, is hereby deemed to be a “manager” within the meaning of Section 18-101(10) of the Act.

Section 6.02Withdrawal of Manager.  Any Manager (other than any Independent Manager) may resign as a Manager of the Company by delivering notice of such resignation to the Member. Notwithstanding anything herein to the contrary, until such time as the Indenture has been discharged in accordance with its terms, an Independent Manager may not withdraw or resign as a Manager of the Company unless the Member has previously or concurrently with such resignation appointed a replacement Independent Manager. In the event that an Independent Manager withdraws, resigns or is removed as Independent Manager, unless the Indenture has been discharged in accordance with its terms, the Member shall appoint, as soon as reasonably practicable, a successor Independent Manager.  Promptly following any resignation or replacement of any Independent Manager, the Member shall give written notice to each applicable Rating Agency of any such resignation or replacement.

Section 6.03Duties of Managers.  To the fullest extent permitted by applicable law, including without limitation Section 18-1101(c) of the Act, the Managers (including the Independent Manager) shall consider only the interests of the Company, including its creditors, in acting or otherwise voting on the matters referred to in this Agreement. To the fullest extent permitted by law, except for duties to the Company as set forth in the immediately preceding sentence (including duties to the Member and the Company’s creditors solely to the extent of

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their respective economic interests in the Company, but excluding (i) all other interests of the Member, (ii) the interests of other Affiliates of the Company, and (iii) the interests of any group of Affiliates of which the Company is a part), the Managers shall not have any fiduciary duties to the Member or any other Person bound by this Agreement. Each Manager shall execute and deliver the Management Agreement.

Section 6.04Removal of Manager.  Any Manager (other than any Independent Manager) may be removed at any time, with or without cause, upon the written election of the Member. Unless the Indenture Trustee shall have consented in writing (such consent not to be unreasonably withheld or delayed) or the Indenture has been discharged in accordance with its terms, an Independent Manager may not be removed by the Member except for Cause; provided that any Independent Manager’s unwillingness to approve an Event of Bankruptcy shall not, in and of itself, constitute “Cause” for removal or expulsion of the Independent Manager.

Section 6.05Quorum: Acts of the Management Committee.  At all meetings of the Management Committee, a majority of the Managers shall constitute a quorum for the transaction of business and, except as otherwise provided in any other provision of this Agreement, the act of a majority of the Managers present at any meeting at which there is a quorum shall be the act of the Management Committee.  If a quorum shall not be present at any meeting of the Management Committee, the Managers present at such meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.  The Managers may participate in meetings of the Management Committee by means of telephone conference or similar communications equipment that allows all persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in person at the meeting.  If all the participants are participating by telephone conference or similar communications equipment, the meeting shall be deemed to be held at the principal place of business of the Company.  Any action required or permitted to be taken at any meeting of the Management Committee or any committee thereof may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken shall be signed by the Managers having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all Managers entitled to vote thereon were present and voted.

Section 6.06Officers.  The Member or the Management Committee may, from time to time as it deems advisable, appoint officers of the Company (the “Officers”) and assign in writing titles (including, without limitation, President, Vice President, Secretary, and Treasurer) to any such person.  Unless the Member decides otherwise, if the title is one commonly used for officers of a business corporation formed under the Delaware General Corporation Law the assignment of such title shall constitute the delegation to such person of the authorities and duties that are normally associated with that office.  Any delegation pursuant to this Section 6.06 may be revoked at any time by the Member or the Management Committee.  The initial Officers shall be those individuals listed on Exhibit C attached hereto.

Section 6.07Special Members.  Upon the occurrence of any event that causes the Member to cease to be a member of the Company (other than upon the continuation of the Company without dissolution without (i) an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee pursuant to

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Sections 8.01 and 8.02, or (ii) the resignation of the Member and the admission of an additional member of the Company), each person acting as an Independent Manager shall, without any action of any Person and simultaneously with the Member ceasing to be a member of the Company, automatically be admitted to the Company as a Special Member and shall continue the Company without dissolution.  No Special Member may resign from the Company or transfer its rights as Special Member unless (i) a successor Special Member has been admitted to the Company as Special Member by executing a counterpart to this Agreement, and (ii) such successor has also accepted its appointment as Independent Manager pursuant to this Agreement; provided, however, the Special Members shall automatically cease to be members of the Company upon the admission to the Company of a substitute Member.  Each Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of Company assets.  Pursuant to Section 18-301 of the Act, a Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company.  A Special Member, in its capacity as Special Member, may not bind the Company.  Except as required by any mandatory provision of the Act, each Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to the Company, including, without limitation, the merger, consolidation or conversion of the Company.  In order to implement the admission to the Company of each Special Member, each person acting as an Independent Manager shall agree in writing to be bound by the provisions of this Section 6.07.  Prior to its admission to the Company as Special Member, each person acting as an Independent Manager shall not be a member of the Company.

ARTICLE 7

DISSOLUTION, LIQUIDATION AND WINDING-UP

Section 7.01Dissolution.  The Company shall be dissolved and its affairs shall be wound up upon the occurrence of the earliest of the following events:

(a)subject to Section 2.07, the election to dissolve the Company made in Writing by the Member and each Manager, including (until such time as the Indenture has been discharged in accordance with its terms) each Independent Manager, as permitted by the Basic Documents;

(b)the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company unless the business of the Company is continued without dissolution in a manner permitted by this Agreement or the Act; or

(c)the entry of a decree of judicial dissolution of the Company pursuant to Section 18-802 of the Act.

Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company or that causes the Member to cease to be a member of the Company (other than upon continuation of the Company without dissolution upon (i) an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee pursuant to Sections 8.01 and 8.02, or (ii) the resignation of the

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Member and the admission of an additional member of the Company), to the fullest extent permitted by law, the personal representative of such member is hereby authorized to, and shall, within 90 days after the occurrence of the event that terminated the continued membership of such member in the company, agree in writing (i) to continue the Company and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of such member in the Company.

Section 7.02Accounting.  In the event of the dissolution, liquidation and winding up of the Company, a proper accounting shall be made of the Capital Account of the Member and of the net income or net loss of the Company from the date of the last previous accounting to the date of dissolution.

Section 7.03Certificate of Cancellation.  As soon as possible following the occurrence of any of the events specified in Section 7.01 and the completion of the winding up of the Company, the person or entity winding up the business and affairs of the Company shall cause to be executed a Certificate of Cancellation of the Certificate in such form as shall be prescribed by the Secretary and file the Certificate of Cancellation of the Certificate as required by the Act.

Section 7.04Winding Up.  Upon the occurrence of any event specified in Section 7.01, the Company shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors in accordance with the Act.  The Member shall be responsible for overseeing the winding up and liquidation of the Company, shall take full account of the liabilities of the Company and its assets, shall either cause its assets to be sold or distributed, and if sold as promptly as is consistent with obtaining the fair market value thereof, shall cause the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed as provided in Section 7.06.

Section 7.05Order of Payment of Liabilities Upon Dissolution.  After satisfaction (whether by payment thereof or the making of reasonable provisions for the payment thereof) of all debts and liabilities of the Company, including all contingent, conditional or unmatured liabilities of the Company, including, without limitation, debts and liabilities to the Member in the event it is a creditor of the Company to the extent otherwise permitted by law, the remaining assets shall be distributed in cash or in kind to the Member.

Section 7.06Limitations on Payments Made in Dissolution.  Except as otherwise specifically provided in this Agreement, the Member shall be entitled to look solely to the assets of the Company for the return of its positive Capital Account balance and shall have no recourse for its Capital Contribution and/or share of net income (upon dissolution or otherwise) against any Manager or the Management Committee.

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ARTICLE 8

TRANSFER AND ASSIGNMENT

Section 8.01Transfer of Membership Interests.

(a)The Member may transfer its Membership Interest, but the transferee shall not be admitted as a member except in accordance with Section 8.02.  Until the transferee is admitted as a member, the Member shall continue to be the sole member of the Company and to be entitled to exercise any rights or powers of the Member with respect to the Membership Interest transferred, and the transferee shall have only the rights of an assignee to the extent such rights have been assigned.

(b)Any purported transfer of any Membership Interest in violation of the provisions of this Agreement shall be wholly void and shall not effectuate the transfer contemplated thereby.  Notwithstanding anything contained herein to the contrary, the Member may not transfer any Membership Interest in violation of any provision of this Agreement or in violation of any applicable Federal or state securities laws.

Section 8.02Admission of Transferee as Member.  A transferee of a Membership Interest desiring to be admitted as a member must execute a counterpart of, or an agreement adopting, this Agreement and shall not be admitted without the unanimous affirmative vote of the Management Committee, which vote must, until such time as the Indenture has been discharged in accordance with its terms, include the affirmative vote of each Independent Manager.  Upon admission of the transferee as a member, the transferee shall have, to the extent of the Membership Interest transferred, the rights and powers and shall be subject to the restrictions and liabilities of the Member under this Agreement and the Act.  Notwithstanding anything in this Agreement to the contrary, any successor to the Member by merger or consolidation in compliance with the Basic Documents shall, without further act, be the Member hereunder, and such merger or consolidation shall not constitute a transfer for purposes of this Agreement.

ARTICLE 9

GENERAL PROVISIONS

Section 9.01Notices.  Unless otherwise specifically provided herein, all notices, directions, consents and waivers required under the terms and provisions of this Agreement shall be in English and in writing, and any such notice, direction, consent or waiver may be given by United States mail, courier service, facsimile transmission or electronic mail or any other customary means of communication, and any such notice, direction, consent or waiver shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid, to the appropriate party at its address set forth on Exhibit B hereto.  The address of any party hereto may be changed by a notice in writing given in accordance with the provisions of this Section 9.01.

14

Section 9.02Controlling Law.  This Agreement and all questions relating to its validity, interpretation, performance and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the State of Delaware, notwithstanding any conflict-of-laws doctrines of such state or other jurisdiction to the contrary.

Section 9.03Execution of Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.  This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

Section 9.04Severability.  The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

Section 9.05Entire Agreement.  This Agreement contains the entire understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written, except as herein contained.

Section 9.06Amendments to Organizational Documents.

(a)This Agreement may not be altered, amended or repealed except pursuant to a written agreement executed and delivered by the Member.  Notwithstanding the preceding sentence, until such time as the Indenture has been discharged in accordance with its terms, the Company shall not adopt a new limited liability company agreement or alter, amend or repeal any provision of Sections 2.05, 2.06, 2.07, 3.02, 6.02, 6.04, 6.07, 7.01, 8.02, 9.06 and 9.11 of this Agreement or the definitions of “Bankruptcy”, “Cause”, “Event of Bankruptcy”, “Independent Manager”, “Management Committee” or “Special Member” (collectively, the “Special Purpose Provisions”) without the unanimous affirmative vote of the Management Committee, which vote must include the affirmative vote of each Independent Manager.

(b)So long as any of the Rate Reduction Bonds are outstanding, the Company and the Member shall give written notice to each Rating Agency of any amendment to this Agreement. So long as any of the Rate Reductions Bonds are outstanding, the effectiveness of any amendment to the Special Purpose Provisions shall be subject to the Rating Agency notice conditions set forth in the Basic Documents (other than any amendment which is necessary (i) to cure any ambiguity or (ii) to correct or supplement any such provision in a manner consistent with the intent of this Agreement).

(c)The Company’s power to alter, amend or repeal the Certificate shall be vested in the Member.

15

Upon obtaining the approval of any amendment, supplement or restatement of the Certificate, the Company shall cause a Certificate of Amendment or Amended and Restated Certificate to be prepared, executed and filed in accordance with the Act.

Section 9.07Paragraph Headings.  The paragraph headings in this Agreement are for convenience and they form no part of this Agreement and shall not affect its interpretation.

Section 9.08Gender, Etc.  Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.  The term “including” shall mean “including, but not limited to.”

Section 9.09Limited Liability.  Except as otherwise expressly provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and neither the Member nor any Manager or Officer shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being the Member or a Manager or Officer of the Company.  To the extent permitted by applicable law, no Manager or Officer shall be personally liable to the Company for monetary damages for breach of the duty of care as an Officer or a Manager for any act taken or omission made in good faith and without willful misconduct.

Section 9.10Assurances.  The Member shall hereafter execute and deliver such further instruments and do such further acts and things as may be reasonably required or useful to carry out the intent and purpose of this Agreement and as are not inconsistent with the terms hereof.

Section 9.11Enforcement by Independent Manager.  This Agreement, (including without limitation, Sections 2.05, 2.06, 2.07, 3.02, 6.02, 6.04, 6.07, 7.01, 8.02, 9.06 and 9.11) shall be enforceable against the Member by any Independent Manager in accordance with its terms.  The Independent Managers are intended beneficiaries of this Agreement.

Section 9.12Waiver of Partition; Nature of Interest.  Except as otherwise expressly provided in this Agreement, to the fullest extent permitted by law, the Member hereby irrevocably waives any right or power that the Member might have to cause the Company or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the assets of the Company, to compel any sale of all or any portion of the assets of the Company pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of the Company.  The Member shall not have any interest in any specific assets of the Company, and the Member shall not have the status of a creditor with respect to any distribution pursuant to Section 5.03 hereof.  The Membership Interest of the Member in the Company is personal property.

ARTICLE 10

INDEMNIFICATION

Section 10.01Indemnification.  Subject to Section 10.03 of this Article, the Company shall, to the fullest extent permitted by law, indemnify any person who was or is a

16

party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that he is or was a director, manager, officer, employee or agent of the Company, or is or was serving at the request of the Company as a manager, director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, against any and all losses, liabilities, expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement in connection with action, suit, proceeding or in enforcing such person’s right to indemnification hereunder, in each case, actually and reasonably incurred by such Person, if such Person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such conduct was unlawful; provided that such Person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such Person’s fraud, gross negligence or willful misconduct.

Section 10.02Indemnification for Suits by or in Right of Company.  Subject to Section 10.03 of this Article, the Company shall, to the fullest extent permitted by law, indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was a director, manager, officer, employee or agent of the Company, or is or was serving at the request of the Company as a manager, director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise against losses, liabilities, expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement of such action or suit or enforcing such person’s right to indemnification hereunder, in each case, actually and reasonably incurred by such Person, if such Person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company; provided that such Person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such Person’s fraud, gross negligence or willful misconduct. No indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the Court of Chancery or such other court shall deem proper.

Section 10.03Authorization.  Any indemnification under this Article (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the manager, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 10.01 or Section 10.02, of this Article, as the case may be.  Such determination may be made (i) by independent legal counsel to the Company in a written opinion or (ii) by the Member.  To the extent, however, that a manager, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such Person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such Person in connection therewith, without the necessity of authorization in the specific case.

17

Section 10.04Good Faith.  For purposes of any determination under Sections 10.03 or 9.09 of this Agreement, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the Company or of the Servicer or Administrator or of another enterprise, or on information supplied to him by the officers of the Company or of the Servicer or Administrator or of another enterprise in the course of their duties, or on the advice of legal counsel for the Company or of the Servicer or Administrator or of another enterprise or on information or records given or reports made to the Company or of the Servicer or Administrator or of another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company or of the Servicer or Administrator or of another enterprise.  The term “another enterprise” as used in this Section 10.04 shall mean any corporation, partnership, limited liability company, joint venture, trust or other enterprise of which such person is or was serving at the request of the Company as a manager, director, officer, employee or agent.  The provisions of this Section 10.04 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 10.01 or 10.02 of this Article, as the case maybe.

Section 10.05Court Action.  Notwithstanding any contrary determination in the specific case under Section 10.03 of this Article, and notwithstanding the absence of any determination thereunder, any manager, officer, employee or agent may apply to any court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 10.01 and 10.02 of this Article.  The basis of such indemnification by a court shall be a determination by such court that indemnification of the manager, officer, employee or agent is proper in the circumstances because he has met the applicable standards of conduct set forth in Section 10.01 and 10.02 of this Article, as the case may be.  Notice of any application for indemnification pursuant to this Section 10.05 shall be given to the Company promptly upon the filing of such application.

Section 10.06Expenses.  Expenses incurred in defending or investigating a threatened or pending action, suit or proceeding may be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the manager, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Company as authorized in this Article.

Section 10.07Non-Exclusivity.  The indemnification and advancement of expenses provided by or granted pursuant to this Article shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, contract, vote or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, it being the policy of the Company that indemnification of the persons specified in Sections 10.01 and 10.02 of this Article shall be made to the fullest extent permitted by law.  The provisions of this Article shall not be deemed to preclude the indemnification of any person who is not specified in Section 10.01 or 10.02 of this Article but who the Company has the power or obligation to indemnify under the provisions of the Act, or otherwise.

18

Section 10.08Insurance.  The Company may purchase and maintain insurance on behalf of any person who is or was a manager, officer, employee or agent of the Company, or is or was serving at the request of the Company as a manager, director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise against any liability asserted against him/her and incurred by him/her in any such capacity, or arising out of his/her status as such, whether or not the Company would have the power or the obligation to indemnify him against such liability under the provisions of this Article.

Section 10.09Consolidation/Merger.  For purposes of this Article, references to “the Company” shall include, in addition to the Company, any constituent company (including any constituent of a constituent) absorbed in a consolidation or merger that, if its separate existence had continued, would have had the power and authority to indemnify its managers, directors, officers, and employees or agents, so that any person who is or was a manager, director, officer, employee or agent of such constituent company, or is or was serving at the request of such constituent company as a manager, director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article with respect to the resulting or surviving company as he would have with respect to such constituent company if its separate existence had continued.

Section 10.10Heirs, Executors, and Administrators.  The indemnification and advancement of expenses provided by, or granted pursuant to, this Article shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a manager, director, office, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 10.11Non-Petition.  Notwithstanding any prior termination of this Agreement or the Indenture, neither the Member nor any Manager (including any Independent Manager) shall, prior to the date which is one year and one day after the termination of the Indenture, petition or otherwise invoke or cause the Company to invoke the process of any court or government authority for the purpose of commencing or sustaining an involuntary case against the Company under any Federal or state bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

19

IN WITNESS WHEREOF, the Member hereto has executed this Agreement or caused this Agreement to be executed on its behalf as of the Closing Date.

PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE d/b/a EVERSOURCE ENERGY
By:
	Name:
	Title:

S-1

EXHIBIT A
Management Agreement

[Date]

PSNH Funding LLC 3
c/o Public Service Company of New Hampshire
780 North Commercial Street

Manchester NH, 03101

Re:Management Agreement — PSNH Funding LLC 3

Ladies and Gentlemen:

For good and valuable consideration, each of the undersigned persons, who have been designated as members of the management committee of PSNH Funding LLC 3, a Delaware limited liability company (the “Company”), in accordance with the Amended and Restated Limited Liability Company Agreement of the Company, dated as of [·], 2018, as it may be amended or restated from time to time (the “LLC Agreement”), hereby agrees:

1To accept such person’s rights and authority as a member of the Management Committee (as defined in the LLC Agreement) under the LLC Agreement, to perform and discharge such person’s duties and obligations as a member of the Management Committee under the LLC Agreement, that such rights, authority, duties and obligations under the LLC Agreement shall continue until such person’s successor as a member of the Management Committee is designated or until such person’s resignation or removal as a member of the Management Committee in accordance with the LLC Agreement, and to be bound by the provisions of the LLC Agreement (including, with respect to an Independent Manager, Section 6.07 thereof).  A member of the Management Committee is designated as a “manager” of the Company within the meaning of the Delaware Limited Liability Company Act.

2.THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

3.This Management Agreement may be executed in any number of counterparts, each of which shall be deemed as original and all of which together shall constitute a single instrument.

A-1

IN WITNESS WHEREOF, the undersigned have executed this Management Agreement as of the day and year first above written.

Emilie O’Neil	Christine Vaughan
Michelle Dreyer

A-2

EXHIBIT B
Notice Address of Member

NAME OF MEMBER	NOTICE ADDRESS
Public Service Company of New Hampshire	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-1

EXHIBIT C
Officers

Philip J. Lembo	President and Chief Financial Officer
Jay S. Buth	Vice President, Controller and Chief Accounting Officer
Christine L. Vaughan	Vice President and Treasurer
Richard J. Morrison	Secretary
Emilie O’Neil	Assistant Treasurer

C-1

EX-4.1

Exhibit 4.1

INDENTURE

by and between

PSNH Funding LLC 3,

Issuer

and

THE BANK OF NEW YORK MELLON,

Indenture Trustee and Securities Intermediary

Dated as of [        ], 2018

TABLE OF CONTENTS

	Page
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION; INCORPORATION BY REFERENCE	2
SECTION 1.01. Definitions and Rules of Construction	2
SECTION 1.02. Incorporation by Reference of Trust Indenture Act	2
ARTICLE II THE RATE REDUCTION BONDS	2
SECTION 2.01. Form	3
SECTION 2.02. Denominations of Rate Reduction Bonds	3
SECTION 2.03. Execution, Authentication and Delivery	4
SECTION 2.04. Temporary Rate Reduction Bonds	5
SECTION 2.05. Registration; Registration of Transfer and Exchange of Rate Reduction Bonds	5
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Rate Reduction Bonds	7
SECTION 2.07. Persons Deemed Owner	7
SECTION 2.08. Payment of Principal, Premium, if any, and Interest; Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights Preserved	8
SECTION 2.09. Cancellation	9
SECTION 2.10. Outstanding Amount; Authentication and Delivery of Rate Reduction Bonds	9
SECTION 2.11. Book-Entry Rate Reduction Bonds	12
SECTION 2.12. Notices to Clearing Agency	13
SECTION 2.13. Definitive Rate Reduction Bonds	13
SECTION 2.14. CUSIP Number	14
SECTION 2.15. Letter of Representations	14
SECTION 2.16. Tax Treatment	14
SECTION 2.17. State Pledge	15
SECTION 2.18. Security Interests	15
ARTICLE III COVENANTS	16
SECTION 3.01. Payment of Principal, Premium, if any, and Interest	16
SECTION 3.02. Maintenance of Office or Agency	17
SECTION 3.03. Money for Payments To Be Held in Trust	17

i

SECTION 3.04. Existence	18
SECTION 3.05. Protection of RRB Collateral	19
SECTION 3.06. Opinions as to RRB Collateral	19
SECTION 3.07. Performance of Obligations; Servicing; SEC Filings	20
SECTION 3.08. Certain Negative Covenants	23
SECTION 3.09. Annual Statement as to Compliance	24
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms	24
SECTION 3.11. Successor or Transferee	26
SECTION 3.12. No Other Business	26
SECTION 3.13. No Borrowing	26
SECTION 3.14. Servicer’s Obligations	27
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities	27
SECTION 3.16. Capital Expenditures	27
SECTION 3.17. Restricted Payments	27
SECTION 3.18. Notice of Events of Default	27
SECTION 3.19. Further Instruments and Acts	27
SECTION 3.20. Inspection	27
SECTION 3.21. Sale Agreement, Servicing Agreement and Administration Agreement Covenants	28
SECTION 3.22. Taxes	30
SECTION 3.23. Notices from Holders	30
SECTION 3.24. Volcker Rule	30
ARTICLE IV SATISFACTION AND DISCHARGE; DEFEASANCE	30
SECTION 4.01. Satisfaction and Discharge of Indenture; Defeasance	30
SECTION 4.02. Conditions to Defeasance	32
SECTION 4.03. Application of Trust Money	33
SECTION 4.04. Repayment of Moneys Held by Paying Agent	34
ARTICLE V REMEDIES	34
SECTION 5.01. Events of Default	34
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment	36
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee	36
SECTION 5.04. Remedies; Priorities	38

ii

SECTION 5.05. Optional Preservation of the RRB Collateral	39
SECTION 5.06. Limitation of Suits	40
SECTION 5.07. Unconditional Rights of Holders To Receive Principal and Interest	41
SECTION 5.08. Restoration of Rights and Remedies	41
SECTION 5.09. Rights and Remedies Cumulative	41
SECTION 5.10. Delay or Omission Not a Waiver	41
SECTION 5.11. Control by Holders	41
SECTION 5.12. Waiver of Past Defaults	42
SECTION 5.13. Undertaking for Costs	42
SECTION 5.14. Waiver of Stay or Extension Laws	43
SECTION 5.15. Action on Rate Reduction Bonds	43
ARTICLE VI THE INDENTURE TRUSTEE	43
SECTION 6.01. Duties of Indenture Trustee	43
SECTION 6.02. Rights of Indenture Trustee	45
SECTION 6.03. Individual Rights of Indenture Trustee	47
SECTION 6.04. Indenture Trustee’s Disclaimer	47
SECTION 6.05. Notice of Defaults	47
SECTION 6.06. Reports by Indenture Trustee to Holders	48
SECTION 6.07. Compensation and Indemnity	49
SECTION 6.08. Replacement of Indenture Trustee and Securities Intermediary	50
SECTION 6.09. Successor Indenture Trustee by Merger	51
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee	52
SECTION 6.11. Eligibility; Disqualification	53
SECTION 6.12. Preferential Collection of Claims Against Issuer	53
SECTION 6.13. Representations and Warranties of Indenture Trustee	53
SECTION 6.14. Annual Report by Independent Registered Public Accountants	54
SECTION 6.15. Custody of RRB Collateral	54
ARTICLE VII HOLDERS’ LISTS AND REPORTS	55
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of Holders	55
SECTION 7.02. Preservation of Information; Communications to Holders	55
SECTION 7.03. Reports by Issuer	55

iii

SECTION 7.04. Reports by Indenture Trustee	56
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES	56
SECTION 8.01. Collection of Money	56
SECTION 8.02. Collection Account	57
SECTION 8.03. General Provisions Regarding the Collection Account	60
SECTION 8.04. Release of RRB Collateral	61
SECTION 8.05. Opinion of Counsel	62
SECTION 8.06. Reports by Independent Registered Public Accountants	62
ARTICLE IX SUPPLEMENTAL INDENTURES	63
SECTION 9.01. Supplemental Indentures Without Consent of Holders	63
SECTION 9.02. Supplemental Indentures with Consent of Holders	65
SECTION 9.03. Execution of Supplemental Indentures	66
SECTION 9.04. Effect of Supplemental Indenture	66
SECTION 9.05. Conformity with Trust Indenture Act	67
SECTION 9.06. Reference in Rate Reduction Bonds to Supplemental Indentures	67
ARTICLE X MISCELLANEOUS	67
SECTION 10.01. Compliance Certificates and Opinions, etc.	67
SECTION 10.02. Form of Documents Delivered to Indenture Trustee	69
SECTION 10.03. Acts of Holders	70
SECTION 10.04. Notices, etc., to Indenture Trustee, Issuer and Rating Agencies	70
SECTION 10.05. Notices to Holders; Waiver	71
SECTION 10.06. Conflict with Trust Indenture Act	72
SECTION 10.07. Successors and Assigns	72
SECTION 10.08. Severability	72
SECTION 10.09. Benefits of Indenture	73
SECTION 10.10. Legal Holidays	73
SECTION 10.11. GOVERNING LAW	73
SECTION 10.12. Counterparts	73
SECTION 10.13. Recording of Indenture	73
SECTION 10.14. No Recourse to Issuer	73
SECTION 10.15. Basic Documents	74
SECTION 10.16. No Petition	74

iv

SECTION 10.17. Securities Intermediary	74
SECTION 10.18. Rule 17g-5 Compliance	75
SECTION 10.19. Submission to Non-Exclusive Jurisdiction; Waiver of Jury Trial	75
SECTION 10.20. Certain Tax Laws	76

EXHIBITS

Exhibit AForm of Rate Reduction Bonds

Exhibit BForm of Series Supplement

Exhibit CServicing Criteria to be Addressed by Indenture Trustee in Assessment of Compliance

Exhibit DForm of Intercreditor Agreement

APPENDIX

Appendix A          Definitions and Rules of Construction

v

TRUST INDENTURE ACT CROSS REFERENCE TABLE

TRUST INDENTURE ACT SECTION		INDENTURE SECTION
310	(a)(1)	6.11
	(a)(2)	6.11
	(a)(3)	6.10(b)(i)
	(a)(4)	Not applicable
	(a)(5)	6.11
	(b)	6.11
311	(a)	6.12
	(b)	6.12
312	(a)	7.01 and 7.02
	(b)	7.02(b)
	(c)	7.02(c)
313	(a)	7.04
	(b)(1)	7.04
	(b)(2)	7.04
	(c)	7.03(a) and 7.04
	(d)	Not applicable
314	(a)	3.09, 4.01 and 7.03(a)
	(b)	3.06 and 4.01
	(c)(1)	2.10, 4.01, 8.04(b) and 10.01(a)
	(c)(2)	2.10, 4.01, 8.04(b) and 10.01(a)
	(c)(3)	2.10, 4.01 and 10.01(a)
	(d)	2.10, 8.04(b) and 10.01
	(e)	10.01(a)
	(f)	10.01(a)
315	(a)	6.01(b)(i) and 6.01(b)(ii)

vi

	(b)	6.05
	(c)	6.01(a)
	(d)	6.01(c)(i), 6.01(c)(ii) and 6.01(c)(iii)
	(e)	5.13
316	(a) (last sentence)	Appendix A — definition of “Outstanding”
	(a)(1)(A)	5.11
	(a)(1)(B)	5.12
	(a)(2)	Not applicable
	(b)	5.07
	(c)	Appendix A — definition of “Record Date”
317	(a)(1)	5.03(a)
	(a)(2)	5.03(c)(iv)
	(b)	3.03
318	(a)	10.06
	(b)	10.06
	(c)	10.06

THIS CROSS REFERENCE TABLE SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE PART OF THIS INDENTURE.

vii

This INDENTURE, dated as of [           ], 2018, is by and between PSNH FUNDING  LLC 3, a Delaware limited liability company, and THE BANK OF NEW YORK MELLON, a New York banking corporation, in its capacity as trustee for the benefit of the Secured Parties and in its separate capacity as a securities intermediary.

In consideration of the mutual agreements herein contained, each party hereto agrees as follows for the benefit of the other party hereto and each of the Holders:

RECITALS OF THE ISSUER

The Issuer has duly authorized the execution and delivery of this Indenture and the creation and issuance of the Rate Reduction Bonds issuable hereunder, which will be of substantially the tenor set forth herein and in the Series Supplement.

The Rate Reduction Bonds shall be non-recourse obligations and shall be secured by and payable solely out of the proceeds of the RRB Property and the other RRB Collateral as provided herein. If and to the extent that such proceeds of the RRB Property and the other RRB Collateral are insufficient to pay all amounts owing with respect to the Rate Reduction Bonds, then, except as otherwise expressly provided hereunder, the Holders shall have no Claim in respect of such insufficiency against the Issuer or the Indenture Trustee, and the Holders, by their acceptance of the Rate Reduction Bonds, waive any such Claim.

All things necessary to (a) make the Rate Reduction Bonds, when executed by the Issuer and authenticated and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, valid obligations, and (b) make this Indenture a valid agreement of the Issuer, in each case, in accordance with their respective terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

That the Issuer, in consideration of the premises herein contained and of the purchase of the Rate Reduction Bonds by the Holders and of other good and lawful consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure, equally and ratably without prejudice, priority or distinction, except as specifically otherwise set forth in this Indenture, the Series Supplement and the Rate Reduction Bonds, the payment of the Rate Reduction Bonds, the payment of all other amounts due under or in connection with this Indenture (including all fees, expenses, counsel fees and other amounts due and owing to the Indenture Trustee) and the performance and observance of all of the covenants and conditions contained herein or in the Rate Reduction Bonds, has hereby executed and delivered this Indenture and does hereby and by the Series Supplement will convey, grant, assign, transfer and pledge, in each case, in and unto the Indenture Trustee, its successors and assigns forever, for the benefit of the Secured Parties, all and singular the property described in the Series Supplement (such property herein referred to as the “RRB Collateral”). The Series Supplement will more particularly describe the obligations of the Issuer secured by the RRB Collateral.

AND IT IS HEREBY COVENANTED, DECLARED AND AGREED between the parties hereto that all Rate Reduction Bonds are to be issued, countersigned and delivered and that all of the RRB Collateral is to be held and applied, subject to the further covenants, conditions, releases, uses and trusts hereinafter set forth, and the Issuer, for itself and any

successor, does hereby covenant and agree to and with the Indenture Trustee and its successors in said trust, for the benefit of the Secured Parties, as follows:

ARTICLE I

DEFINITIONS AND RULES OF CONSTRUCTION; INCORPORATION BY REFERENCE

SECTION 1.01.  Definitions and Rules of Construction.

Capitalized terms used but not otherwise defined in this Indenture shall have the respective meanings given to such terms in Appendix A, which is hereby incorporated by reference into this Indenture as if set forth fully in this Indenture. Not all terms defined in Appendix A are used in this Indenture but shall apply when incorporated by reference in other Basic Documents. The rules of construction set forth in Appendix A shall apply to this Indenture and are hereby incorporated by reference into this Indenture as if set forth fully in this Indenture.

SECTION 1.02.  Incorporation by Reference of Trust Indenture Act.

Whenever this Indenture refers to a provision of the Trust Indenture Act, that provision is incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings:

“indenture securities” means the Rate Reduction Bonds.

“indenture security holder” means a Holder.

“indenture to be qualified” means this Indenture.

“indenture trustee” or “institutional trustee” means the Indenture Trustee.

“obligor” on the indenture securities means the Issuer and any other obligor on the indenture securities.

All other Trust Indenture Act terms used in this Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

ARTICLE II

THE RATE REDUCTION BONDS

SECTION 2.01.  Form.

The Rate Reduction Bonds and the Indenture Trustee’s certificate of authentication shall be in substantially the forms set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or by the Series Supplement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be

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determined by the officers executing the Rate Reduction Bonds, as evidenced by their execution of the Rate Reduction Bonds.

The Rate Reduction Bonds shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing the Rate Reduction Bonds, as evidenced by their execution of the Rate Reduction Bonds.

Each Rate Reduction Bond shall be dated the date of its authentication. The terms of the Rate Reduction Bonds set forth in Exhibit A are part of the terms of this Indenture.

SECTION 2.02.  Denominations of Rate Reduction Bonds.

The Rate Reduction Bonds shall be issuable in the Authorized Denominations specified in the Series Supplement.

The Rate Reduction Bonds may, at the election of and as authorized by a Responsible Officer of the Issuer, be issued in one or more Tranches, and shall be designated generally as the “Rate Reduction Bonds, Series 2018-1” of the Issuer, with such further particular designations added or incorporated in such title for the Rate Reduction Bonds of any particular Tranche as a Responsible Officer of the Issuer may determine. Each Rate Reduction Bond shall bear the designation so selected for the Tranche to which it belongs. All Rate Reduction Bonds shall be identical in all respects except for the denominations thereof, the Holder thereof, the numbering thereon and the legends thereon, unless the Rate Reduction Bonds are comprised of one or more Tranches, in which case all Rate Reduction Bonds of the same Tranche shall be identical in all respects except for the denominations thereof, the Holder thereof, the numbering thereon, the legends thereon and the CUSIP number thereon. All Rate Reduction Bonds of a particular Tranche shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture.

The Rate Reduction Bonds shall be created by the Series Supplement authorized by a Responsible Officer of the Issuer, which Series Supplement shall specify and establish the terms and provisions thereof, including the following (which terms and provisions may differ as between Tranches):

(a)designation of any Tranches thereof;

(b)the principal amount (and, if more than one Tranche is issued, the respective principal amounts of such Tranches);

(c)the Bond Interest Rate;

(d)the Payment Dates;

(e)the Scheduled Final Payment Date(s);

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(f)the Final Maturity Date(s);

(g)the issuance date;

(h)the Authorized Denominations;

(i)the Expected Amortization Schedule(s);

(j)the place or places for the payment of interest, principal and premium, if any;

(k)any additional Secured Parties;

(l)the RRB Collateral securing such Rate Reduction Bonds;

(m)whether or not the Rate Reduction Bonds are to be Book-Entry Rate Reduction Bonds and the extent to which Section 2.11 should apply; and

(n)any other terms of the Rate Reduction Bonds (or Tranches thereof) that are not inconsistent with the provisions of this Indenture.

SECTION 2.03.  Execution, Authentication and Delivery.

The Rate Reduction Bonds shall be executed on behalf of the Issuer by any of its Responsible Officers. The signature of any such Responsible Officer on the Rate Reduction Bonds may be manual or facsimile.

Rate Reduction Bonds bearing the manual or facsimile signature of individuals who were Responsible Officers of the Issuer at the time of execution shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of the Rate Reduction Bonds or did not hold such offices at the date of the Rate Reduction Bonds.

At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Rate Reduction Bonds executed by the Issuer to the Indenture Trustee pursuant to an Issuer Order for authentication; and the Indenture Trustee shall authenticate and deliver the Rate Reduction Bonds as provided in this Indenture.

No Rate Reduction Bond shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Rate Reduction Bond a certificate of authentication substantially in the form provided for therein executed by the Indenture Trustee by the manual or facsimile signature of one of its authorized signatories, and such certificate upon any Rate Reduction Bond shall be conclusive evidence, and the only evidence, that such Rate Reduction Bond has been duly authenticated and delivered hereunder.

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SECTION 2.04.  Temporary Rate Reduction Bonds.

Pending the preparation of Definitive Rate Reduction Bonds pursuant to Section 2.13, the Issuer may execute, and upon receipt of an Issuer Order the Indenture Trustee shall authenticate and deliver, Temporary Rate Reduction Bonds that are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the Definitive Rate Reduction Bonds in lieu of which they are issued and with such variations not inconsistent with the terms of this Indenture as the officers executing the Rate Reduction Bonds may determine, as evidenced by their execution of the Rate Reduction Bonds.

If Temporary Rate Reduction Bonds are issued, the Issuer will cause Definitive Rate Reduction Bonds to be prepared without unreasonable delay. After the preparation of Definitive Rate Reduction Bonds, the Temporary Rate Reduction Bonds shall be exchangeable for Definitive Rate Reduction Bonds upon surrender of the Temporary Rate Reduction Bonds at the office or agency of the Issuer to be maintained as provided in Section 3.02, without charge to the Holder. Upon surrender for cancellation of any one or more Temporary Rate Reduction Bonds, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Rate Reduction Bonds of authorized denominations. Until so delivered in exchange, the Temporary Rate Reduction Bonds shall in all respects be entitled to the same benefits under this Indenture as Definitive Rate Reduction Bonds.

SECTION 2.05.  Registration; Registration of Transfer and Exchange of Rate Reduction Bonds.

The Issuer shall cause to be kept a register (the “Rate Reduction Bond Register”) in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Rate Reduction Bonds and the registration of transfers of Rate Reduction Bonds. The Indenture Trustee, acting solely for this purpose as the agent of the Issuer, shall be “Rate Reduction Bond Registrar” for the purpose of maintaining the Rate Reduction Bond Register and registering the Rate Reduction Bonds and transfers of Rate Reduction Bonds as herein provided. Upon any resignation of any Rate Reduction Bond Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Rate Reduction Bond Registrar. It is intended that the Rate Reduction Bonds are at all times maintained in “registered form” within the meaning of Section 163(f), 871(h)(2) and 881(c)(2) of the Code and any related regulations (and any other relevant or successor provisions of the Code or associated Treasury regulations).

If a Person other than the Indenture Trustee is appointed by the Issuer as Rate Reduction Bond Registrar, the Issuer will give the Indenture Trustee prompt written notice of the appointment of such Rate Reduction Bond Registrar and of the location, and any change in the location, of the Rate Reduction Bond Register, and the Indenture Trustee shall have the right to inspect the Rate Reduction Bond Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee shall have the right to rely conclusively upon a certificate executed on behalf of the Rate Reduction Bond Registrar by a Responsible Officer thereof as to the names and addresses of the Holders and the principal amounts and number of the Rate Reduction Bonds (separately stated by Tranche).

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Upon surrender for registration of transfer of any Rate Reduction Bond at the office or agency of the Issuer to be maintained as provided in Section 3.02, provided that the requirements of Section 8-401 of the UCC are met, the Issuer shall execute, and the Indenture Trustee shall authenticate and the Holder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, one or more new Rate Reduction Bonds in any Authorized Denominations, of the same Tranche and aggregate principal amount.

At the option of the Holder, Rate Reduction Bonds may be exchanged for other Rate Reduction Bonds in any Authorized Denominations, of the same Tranche and aggregate principal amount, upon surrender of the Rate Reduction Bonds to be exchanged at such office or agency as provided in Section 3.02. Whenever any Rate Reduction Bonds are so surrendered for exchange, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute, and, upon any such execution, the Indenture Trustee shall authenticate and the Holder shall obtain from the Indenture Trustee, the Rate Reduction Bonds that the Holder making the exchange is entitled to receive.

All Rate Reduction Bonds issued upon any registration of transfer or exchange of other Rate Reduction Bonds shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Rate Reduction Bonds surrendered upon such registration of transfer or exchange.

Every Rate Reduction Bond presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by: (a) in the case of a transfer, a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an institution that is a member of: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) such other signature guaranty program acceptable to the Indenture Trustee; and (b) in any case, such other documents as the Indenture Trustee may require.

No service charge shall be made to a Holder for any registration of transfer or exchange of Rate Reduction Bonds, but the Issuer or the Indenture Trustee may require payment of a sum sufficient to cover any tax or other governmental charge or any fees or expenses of the Indenture Trustee that may be imposed in connection with any registration of transfer or exchange of Rate Reduction Bonds, other than exchanges pursuant to Section 2.04 or Section 2.06 not involving any transfer.

The preceding provisions of this Section 2.05 notwithstanding, the Issuer shall not be required to make, and the Rate Reduction Bond Registrar need not register, transfers or exchanges of any Rate Reduction Bond that has been submitted within 15 days preceding the due date for any payment with respect to such Rate Reduction Bond until after such due date has occurred.

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SECTION 2.06.  Mutilated, Destroyed, Lost or Stolen Rate Reduction Bonds.

If (a) any mutilated Rate Reduction Bond is surrendered to the Indenture Trustee or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Rate Reduction Bond and (b) there is delivered to the Indenture Trustee such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Rate Reduction Bond Registrar or the Indenture Trustee that such Rate Reduction Bond has been acquired by a Protected Purchaser, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute, and, upon the Issuer’s written request, the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Rate Reduction Bond, a replacement Rate Reduction Bond of like Tranche, tenor and principal amount, bearing a number not contemporaneously outstanding; provided, however, that, if any such destroyed, lost or stolen Rate Reduction Bond, but not a mutilated Rate Reduction Bond, shall have become or within fifteen days shall be due and payable, instead of issuing a replacement Rate Reduction Bond, the Issuer may pay such destroyed, lost or stolen Rate Reduction Bond when so due or payable without surrender thereof. If, after the delivery of such replacement Rate Reduction Bond or payment of a destroyed, lost or stolen Rate Reduction Bond pursuant to the proviso to the preceding sentence, a Protected Purchaser of the original Rate Reduction Bond in lieu of which such replacement Rate Reduction Bond was issued presents for payment such original Rate Reduction Bond, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Rate Reduction Bond (or such payment) from the Person to whom it was delivered or any Person taking such replacement Rate Reduction Bond from such Person to whom such replacement Rate Reduction Bond was delivered or any assignee of such Person, except a Protected Purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection therewith.

Upon the issuance of any replacement Rate Reduction Bond under this Section 2.06, the Issuer and/or the Indenture Trustee may require the payment by the Holder of such Rate Reduction Bond of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee and the Rate Reduction Bond Registrar) in connection therewith.

Every replacement Rate Reduction Bond issued pursuant to this Section 2.06 in replacement of any mutilated, destroyed, lost or stolen Rate Reduction Bond shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Rate Reduction Bond shall be found at any time or enforced by any Person, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Rate Reduction Bonds duly issued hereunder.

The provisions of this Section 2.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Rate Reduction Bonds.

SECTION 2.07.  Persons Deemed Owner.

Prior to due presentment for registration of transfer of any Rate Reduction Bond, the Issuer, the Indenture Trustee, the Rate Reduction Bond Registrar and any agent of the Issuer

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or the Indenture Trustee shall treat the Person in whose name any Rate Reduction Bond is registered (as of the day of determination) as the owner of such Rate Reduction Bond for the purpose of receiving payments of principal of and premium, if any, and interest on such Rate Reduction Bond and for all other purposes whatsoever, whether or not such Rate Reduction Bond be overdue, and none of the Issuer, the Indenture Trustee or any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary.

SECTION 2.08.  Payment of Principal, Premium, if any, and Interest; Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights Preserved.

(a)The Rate Reduction Bonds shall accrue interest as provided in the Series Supplement at the applicable Bond Interest Rate, and such interest shall be payable on each applicable Payment Date. Any installment of interest, principal or premium, if any, payable on any Rate Reduction Bond that is punctually paid or duly provided for on the applicable Payment Date shall be paid to the Person in whose name such Rate Reduction Bond (or one or more Predecessor Rate Reduction Bonds) is registered on the Record Date for such Payment Date by wire transfer to an account maintained by such Holder in accordance with payment instructions delivered to the Indenture Trustee by such Holder, and, with respect to Book-Entry Rate Reduction Bonds, payments will be made by wire transfer in immediately available funds to the account designated by the Holder of the applicable Global Rate Reduction Bond unless and until such Global Rate Reduction Bond is exchanged for Definitive Rate Reduction Bonds (in which event payments shall be made as provided above) and except for the final installment of principal and premium, if any, payable with respect to such Rate Reduction Bond on a Payment Date, which shall be payable as provided below.

(b)The principal of each Rate Reduction Bond of each Tranche shall be paid, to the extent funds are available therefor in the Collection Account, in installments on each Payment Date in accordance with the Expected Amortization Schedule specified in the Series Supplement; provided, that installments of principal not paid when scheduled to be paid in accordance with the Expected Amortization Schedule shall be paid on the next succeeding Payment Date to the extent of money available for such purpose pursuant to Section 8.02(e). Failure to pay principal in accordance with such Expected Amortization Schedule because moneys are not available pursuant to Section 8.02 to make such payments shall not constitute a Default or Event of Default under this Indenture; provided, however, that failure to pay the entire unpaid principal amount of the Rate Reduction Bonds of a Tranche upon the Final Maturity Date for the Rate Reduction Bonds of such Tranche shall constitute an Event of Default under this Indenture as set forth in Section 5.01. Notwithstanding the foregoing, the entire unpaid principal amount of the Rate Reduction Bonds shall be due and payable, if not previously paid, on the date on which an Event of Default shall have occurred and be continuing, if the Indenture Trustee or the Holders of the Rate Reduction Bonds representing a majority of the Outstanding Amount of the Rate Reduction Bonds have declared the Rate Reduction Bonds to be immediately due and payable in the manner provided in Section 5.02. All payments of principal and premium, if any, on the Rate Reduction Bonds shall be made pro rata to the Holders entitled thereto unless otherwise provided in the Series Supplement. The Indenture Trustee shall notify the Person in whose name a Rate Reduction Bond is registered at the close of business on the Record Date preceding the Payment Date on which the Issuer expects that the final installment of principal of and premium, if any, and interest on such Rate Reduction Bond will be paid. Such notice shall be

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delivered no later than five days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of such Rate Reduction Bond and shall specify the place where such Rate Reduction Bond may be presented and surrendered for payment of such installment.

(c)If interest on the Rate Reduction Bonds is not paid when due, such defaulted interest shall be paid (plus interest on such defaulted interest at the applicable Bond Interest Rate to the extent lawful) to the Persons who are Holders on a subsequent Special Record Date, which date shall be at least 1 Business Day prior to the Special Payment Date. The Issuer shall fix or cause to be fixed any such Special Record Date and Special Payment Date, and, at least ten days before any such Special Record Date, the Issuer shall deliver to each affected Holder a notice that states the Special Record Date, the Special Payment Date and the amount of defaulted interest (plus interest on such defaulted interest) to be paid.

SECTION 2.09.  Cancellation.

All Rate Reduction Bonds surrendered for payment, registration of transfer or exchange shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee for cancellation any Rate Reduction Bonds previously authenticated and delivered hereunder that the Issuer may have acquired in any manner whatsoever, and all Rate Reduction Bonds so delivered shall be promptly canceled by the Indenture Trustee. No Rate Reduction Bonds shall be authenticated in lieu of or in exchange for any Rate Reduction Bonds canceled as provided in this Section 2.09, except as expressly permitted by this Indenture. All canceled Rate Reduction Bonds may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time.

SECTION 2.10.  Outstanding Amount; Authentication and Delivery of Rate Reduction Bonds.

The aggregate Outstanding Amount of Rate Reduction Bonds that may be authenticated and delivered under this Indenture shall not exceed the aggregate principal amount of Rate Reduction Bonds that are authorized under the Series Supplement.

Rate Reduction Bonds created and established by the Series Supplement may at any time be executed by the Issuer and delivered to the Indenture Trustee for authentication and thereupon the same shall be authenticated and delivered by the Indenture Trustee upon Issuer Request and upon delivery by the Issuer to the Indenture Trustee, and receipt by the Indenture Trustee, or the causing to occur by the Issuer, of the following; provided, however, that compliance with the following conditions and delivery of the following documents shall only be required in connection with the original issuance of the Rate Reduction Bonds:

(a)Issuer Action. An Issuer Order authorizing and directing the authentication and delivery of the Rate Reduction Bonds by the Indenture Trustee and specifying the principal amount of Rate Reduction Bonds to be authenticated.

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(b)Authorizations. Copies of (i) the Finance Order, which shall be in full force and effect and be Final, (ii) certified resolutions of the Managers or Member of the Issuer authorizing the execution and delivery of the Series Supplement and the execution, authentication and delivery of the Rate Reduction Bonds and (iii) a Series Supplement duly executed by the Issuer.

(c)Opinions. An opinion or opinions, portions of which may be delivered by one or more counsel for the Issuer, portions of which may be delivered by one or more counsel for the Servicer, and portions of which may be delivered by one or more counsel for the Seller, dated the Closing Date, in each case subject to the customary exceptions, qualifications and assumptions contained therein, to the collective effect, that (i) all conditions precedent provided for in this Indenture relating to (A) the authentication and delivery of the Issuer’s Rate Reduction Bonds and (B) the execution of the Series Supplement to this Indenture dated as of the date of this Indenture have been complied with and (ii) the execution of the Series Supplement to this Indenture dated as of the date of this Indenture is permitted by this Indenture; together with the other Opinions of Counsel described in Sections 9(d) through 9(r) of the Underwriting Agreement (other than Section 9(h) thereof) relating to the Issuer’s Rate Reduction Bonds.

(d)The RRB Collateral. The Issuer shall have made or caused to be made all filings with the NHPUC and the Secretary of State of the State of New Hampshire pursuant to the Finance Order and the Financing Act and all other filings necessary to perfect the Grant of the RRB Collateral to the Indenture Trustee and the Lien of this Indenture.

(e)Certificates of the Issuer and the Seller.

(i)  An Officer’s Certificate from the Issuer, dated as of the Closing Date:

(A)to the effect that (1) the Issuer is not in Default under this Indenture and that the issuance of the Rate Reduction Bonds will not result in any Default or in any breach of any of the terms, conditions or provisions of or constitute a default under the Finance Order or any indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer is a party or by which it or its property is bound or any order of any court or administrative agency entered in any Proceeding to which the Issuer is a party or by which it or its property may be bound or to which it or its property may be subject, (2) all conditions precedent provided in this Indenture relating to the execution, authentication and delivery of the Rate Reduction Bonds and the execution of the Series Supplement have been complied with, (3) the Issuer has duly authorized the execution and delivery of this Indenture and the Series Supplement and the execution and delivery of the Rate Reduction Bonds and (4) the Series Supplement complies with the requirements of Section 2.02;

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(B)to the effect that the Issuer has not assigned any interest or participation in the RRB Collateral except for the Grant contained in this Indenture and the Series Supplement; the Issuer has the power and right to Grant the RRB Collateral to the Indenture Trustee as security hereunder and thereunder; and the Issuer, subject to the terms of this Indenture, has Granted to the Indenture Trustee a security interest in all of its right, title and interest in and to such RRB Collateral, such security interest has been perfected by all necessary actions and is prior to all other Liens (subject to Permitted Liens) and that the RRB Collateral is free and clear of any Lien arising as a result of actions of the Issuer or through the Issuer, except Permitted Liens;

(C)to the effect that the Issuer has appointed the firm of Independent registered public accountants as contemplated in Section 8.06;

(D)to the effect that the Sale Agreement, the Servicing Agreement and the Administration Agreement are, to the knowledge of the Issuer (and assuming such agreements are enforceable against all parties thereto other than the Issuer and PSNH), in full force and effect and, to the knowledge of the Issuer, that no party is in default of its obligations under such agreements; and

(E)certifying that the Rate Reduction Bonds have received the ratings from the Rating Agencies required by the Underwriting Agreement as a condition to the issuance of the Rate Reduction Bonds.

(ii)  An officer’s certificate from the Seller, dated as of the Closing Date, to the effect that:

(A)immediately prior to the conveyance of the RRB Property to the Issuer pursuant to the Sale Agreement: the Seller was the original and the sole owner of such RRB Property, free and clear of any Lien; the Seller had not assigned any interest or participation in such RRB Property and the proceeds thereof other than to the Issuer pursuant to the Sale Agreement; the Seller has the power, authority and right to own, sell and assign such RRB Property and the proceeds thereof to the Issuer; and the Seller, subject to the terms of the Sale Agreement, has validly sold and assigned to the Issuer all of its right, title and interest in and to such RRB Property and the proceeds thereof, free and clear of any Lien (other than Permitted Liens) and such sale and assignment is a true and absolute sale and conveyance and has been perfected;

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(B)immediately prior to the conveyance of the RRB Property to the Issuer pursuant to the Sale Agreement, the attached copy of the Finance Order creating such RRB Property is true and complete and is in full force and effect; and

(C)an amount equal to the Required Capital Level has been deposited or caused to be deposited by the Seller with the Indenture Trustee for crediting to the Capital Subaccount.

(f)Accountant’s Certificate or Letter. One or more certificates or letters, addressed to the Issuer, of a firm of Independent registered public accountants of recognized national reputation to the effect that (i) such accountants are Independent with respect to the Issuer within the meaning of this Indenture and are independent public accountants within the meaning of the standards of the Public Company Accounting Oversight Board and (ii) with respect to the RRB Collateral, they have applied such procedures as instructed by the addressees of such certificate or letter.

(g)Requirements of Series Supplement. Such other funds, accounts, documents, certificates, agreements, instruments or opinions as may be required by the terms of the Series Supplement.

SECTION 2.11.  Book-Entry Rate Reduction Bonds.

Unless the Series Supplement provides otherwise, all of the Rate Reduction Bonds shall be issued in Book-Entry Form, and the Issuer shall execute and the Indenture Trustee shall, in accordance with this Section 2.11 and the Issuer Order, authenticate and deliver one or more Global Rate Reduction Bonds, evidencing the Rate Reduction Bonds, which (a) shall be an aggregate original principal amount equal to the aggregate original principal amount of the Rate Reduction Bonds to be issued pursuant to the Issuer Order, (b) shall be registered in the name of the Clearing Agency therefor or its nominee, which shall initially be Cede & Co., as nominee for The Depository Trust Company, the initial Clearing Agency, (c) shall be delivered by the Indenture Trustee pursuant to such Clearing Agency’s or such nominee’s instructions and (d) shall bear a legend substantially to the effect set forth in Exhibit A.

Each Clearing Agency designated pursuant to this Section 2.11 must, at the time of its designation and at all times while it serves as Clearing Agency hereunder, be a “clearing agency” registered under the Exchange Act and any other applicable statute or regulation.

No Holder of Rate Reduction Bonds issued in Book-Entry Form shall receive a Definitive Rate Reduction Bond representing such Holder’s interest in any of the Rate Reduction Bonds, except as provided in Section 2.13. Unless (and until) certificated, fully registered Rate Reduction Bonds (the “Definitive Rate Reduction Bonds”) have been issued to the Holders pursuant to Section 2.13 or pursuant to the Series Supplement relating thereto:

(i)  the provisions of this Section 2.11 shall be in full force and effect;

(ii)  the Issuer, the Servicer, the Paying Agent, the Rate Reduction Bond Registrar and the Indenture Trustee may deal with the Clearing Agency for

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all purposes (including the making of distributions on the Rate Reduction Bonds and the giving of instructions or directions hereunder) as the authorized representative of the Holders;

(iii)  to the extent that the provisions of this Section 2.11 conflict with any other provisions of this Indenture, the provisions of this Section 2.11 shall control;

(iv)  the rights of Holders shall be exercised only through the Clearing Agency and the Clearing Agency Participants and shall be limited to those established by law and agreements between such Holders and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Letter of Representations, unless and until Definitive Rate Reduction Bonds are issued pursuant to Section 2.13, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal of and interest on the Book-Entry Rate Reduction Bonds to such Clearing Agency Participants; and

(v)  whenever this Indenture requires or permits actions to be taken based upon instruction or directions of the Holders evidencing a specified percentage of the Outstanding Amount of Rate Reduction Bonds, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from the Holders and/or the Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Rate Reduction Bonds and has delivered such instructions to a Responsible Officer of the Indenture Trustee.

SECTION 2.12.  Notices to Clearing Agency.

Unless and until Definitive Rate Reduction Bonds shall have been issued to Holders pursuant to Section 2.13, whenever notice, payment or other communications to the holders of Book-Entry Rate Reduction Bonds is required under this Indenture, the Indenture Trustee, the Servicer and the Paying Agent, as applicable, shall give all such notices and communications specified herein to be given to Holders to the Clearing Agency.

SECTION 2.13.  Definitive Rate Reduction Bonds.

If (a) (i) the Issuer advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities under any Letter of Representations and (ii) the Issuer is unable to locate a qualified successor Clearing Agency, (b) the Issuer, at its option, advises the Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or (c) after the occurrence of an Event of Default hereunder, Holders holding Rate Reduction Bonds aggregating a majority of the aggregate Outstanding Amount of Rate Reduction Bonds maintained as Book-Entry Rate Reduction Bonds advise the Indenture Trustee, the Issuer and the Clearing Agency (through the Clearing Agency Participants) in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Holders, the Issuer shall notify the

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Clearing Agency, the Indenture Trustee and all such Holders in writing of the occurrence of any such event and of the availability of Definitive Rate Reduction Bonds to the Holders requesting the same. Upon surrender to the Indenture Trustee of the Global Rate Reduction Bonds by the Clearing Agency accompanied by registration instructions from such Clearing Agency for registration, the Issuer shall execute, and the Indenture Trustee shall authenticate and deliver, Definitive Rate Reduction Bonds in accordance with the instructions of the Clearing Agency. None of the Issuer, the Rate Reduction Bond Registrar, the Paying Agent or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions. Upon the issuance of Definitive Rate Reduction Bonds, the Indenture Trustee shall recognize the Holders of the Definitive Rate Reduction Bonds as Holders hereunder.

Definitive Rate Reduction Bonds will be transferable and exchangeable at the offices of the Rate Reduction Bond Registrar.

SECTION 2.14.  CUSIP Number.

The Issuer in issuing any Rate Reduction Bonds may use a “CUSIP” number and, if so used, the Indenture Trustee shall use the CUSIP number provided to it by the Issuer in any notices to the Holders thereof as a convenience to such Holders; provided, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Rate Reduction Bonds and that reliance may be placed only on the other identification numbers printed on the Rate Reduction Bonds. The Issuer shall promptly notify the Indenture Trustee in writing of any change in the CUSIP number with respect to any Rate Reduction Bond.

SECTION 2.15.  Letter of Representations.

The Issuer shall comply with the terms of each Letter of Representations applicable to the Issuer.

SECTION 2.16.  Tax Treatment.

The Issuer and the Indenture Trustee, by entering into this Indenture, and the Holders and any Persons holding a beneficial interest in any Rate Reduction Bond, by acquiring any Rate Reduction Bond or interest therein, (a) express their intention that, solely for the purposes of U.S. federal income taxes and, to the extent consistent with applicable state, local and other tax law, solely for the purposes of state, local and other taxes, the Rate Reduction Bonds qualify under applicable tax law as indebtedness of PSNH secured by the RRB Collateral and (b) solely for the purposes of U.S. federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes, so long as any of the Rate Reduction Bonds are outstanding, agree to treat the Rate Reduction Bonds as indebtedness of PSNH secured by the RRB Collateral unless otherwise required by appropriate taxing authorities.

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SECTION 2.17.  State Pledge.

Under the laws of the State of New Hampshire in effect on the Closing Date, pursuant to RSA 369-B:6 of the Financing Act, the State of New Hampshire has pledged, contracted and agreed with the owner of the RRB Property, Holders and the Indenture Trustee that neither the State of New Hampshire, nor any of its agencies, including the NHPUC, shall limit, alter, amend, reduce, or impair the RRB Charge, RRB Property, Finance Order, and all rights thereunder or ownership thereof or security interest therein until the Rate Reduction Bonds, including all principal, interest, premium (if any), costs and arrearages thereon, are fully met and discharged; provided that nothing contained in this paragraph shall preclude the limitation, alteration, amendment, reduction, or impairment if and when adequate provision shall be made by law for the protection of the owner of the RRB Property, Holders and the Indenture Trustee.

The Issuer hereby acknowledges that the purchase of any Rate Reduction Bond by a Holder or the purchase of any beneficial interest in a Rate Reduction Bond by any Person and the Indenture Trustee’s obligations to perform hereunder are made in reliance on such agreement and pledge by the State of New Hampshire.

SECTION 2.18.  Security Interests.

The Issuer hereby makes the following representations and warranties on the date of this Indenture and on each date on which any funds in the Collection Account (other than Capital Subaccount Investment Earnings) are distributed to the Issuer or otherwise released from the Lien of the Indenture:

(a)Other than the security interests granted to the Indenture Trustee pursuant to this Indenture, the Issuer has not pledged, granted, sold, conveyed or otherwise assigned any interests or security interests in the RRB Collateral and, to the knowledge of the Issuer, no security agreement, financing statement or equivalent security or Lien instrument listing the Issuer as debtor covering all or any part of the RRB Collateral is on file or of record in any jurisdiction, except (x) such as may have been filed, recorded or made by the Issuer in favor of the Indenture Trustee on behalf of the Secured Parties in connection with this Indenture or (y) as are being contested in good faith by appropriate proceedings.

(b)This Indenture, together with the Series Supplement, constitutes a valid and continuing lien on, and security interest in, the RRB Collateral in favor of the Indenture Trustee on behalf of the Secured Parties, which lien and security interest has been perfected by all necessary actions, is prior to all other Liens (subject to Permitted Liens) and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing.

(c)The Issuer has good and marketable title to the RRB Collateral free and clear of any Lien of any Person other than Permitted Liens.

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(d)All of the RRB Collateral constitutes RRB Property or accounts, deposit accounts, investment property or general intangibles (as each such term is defined in the UCC), except that proceeds of the RRB Collateral may also take the form of instruments or money.

(e)The Issuer has taken, or caused the Servicer to take, all action necessary to perfect the security interest in the RRB Collateral granted to the Indenture Trustee, for the benefit of the Secured Parties.

(f)The Issuer has filed (or has caused the Servicer to file) all appropriate financing statements in the proper filing offices in the appropriate jurisdictions under applicable law in order to perfect the security interest in the RRB Collateral granted to the Indenture Trustee.

(g)The Issuer is not aware of any judgment or tax lien filings against the Issuer except for any judgment or tax lien filing which is being contested in good faith through appropriate proceedings.

(h)The Collection Account (including all subaccounts thereof) constitutes a “securities account” and/or a “deposit account” within the meaning of the UCC.

(i)The Issuer has taken all steps necessary to cause the Securities Intermediary of each such securities account to identify in its records the Indenture Trustee as the Person having a security entitlement against the Securities Intermediary in such securities account, no Collection Account is in the name of any Person other than the Indenture Trustee, and the Issuer has not consented to the Securities Intermediary of the Collection Account to comply with entitlement orders of any Person other than the Indenture Trustee.

(j)All of the RRB Collateral constituting investment property has been credited to the Collection Account or a subaccount thereof, and the Securities Intermediary for the Collection Account has agreed to treat all assets credited to the Collection Account (other than cash) as “financial assets” within the meaning of the UCC.

(k)The Indenture Trustee has a first priority perfected security interest (subject to Permitted Liens) in the Collection Account, all funds and financial assets on deposit therein, and all securities entitlements relating thereto.

The representations and warranties set forth in this Section 2.18 shall survive the execution and delivery of this Indenture.

ARTICLE III

COVENANTS

SECTION 3.01.  Payment of Principal, Premium, if any, and Interest.

The principal of and premium, if any, and interest on the Rate Reduction Bonds shall be duly and punctually paid by the Issuer, or the Servicer on behalf of the Issuer, in accordance with the terms of the Rate Reduction Bonds, the Series Supplement and this

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Indenture; provided, that, except on a Final Maturity Date or upon the acceleration of the Rate Reduction Bonds following the occurrence of an Event of Default, the Issuer shall only be obligated to pay the principal of the Rate Reduction Bonds on each Payment Date therefor to the extent moneys are available for such payment pursuant to Section 8.02. Amounts properly withheld under the Code, the Treasury regulations promulgated thereunder or other tax laws by any Person from a payment to any Holder of interest or principal or premium, if any, shall be considered as having been paid by the Issuer to such Holder for all purposes of this Indenture.

SECTION 3.02.  Maintenance of Office or Agency.

The Issuer shall initially maintain in the Borough of Manhattan, The City of New York, an office or agency where Rate Reduction Bonds may be surrendered for registration of transfer or exchange. The Issuer shall give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency. The Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes, and the Corporate Trust Office of the Indenture Trustee shall serve as the offices provided above in this Section 3.02. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders may be made at the office of the Indenture Trustee located at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders.

SECTION 3.03.  Money for Payments To Be Held in Trust.

As provided in Section 8.02(a), all payments of amounts due and payable with respect to any Rate Reduction Bonds that are to be made from amounts withdrawn from the Collection Account pursuant to Section 8.02(d) shall be made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from the Collection Account for payments with respect to any Rate Reduction Bonds shall be paid over to the Issuer except as provided in this Section 3.03 and Section 8.02.

Each Paying Agent shall meet the eligibility criteria set forth for any Indenture Trustee under Section 6.11. The Issuer will cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.03, that such Paying Agent will:

(a)hold all sums held by it for the payment of amounts due with respect to the Rate Reduction Bonds in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided;

(b)give the Indenture Trustee and the Rating Agencies written notice of any Default by the Issuer of which it has actual knowledge in the making of any payment required to be made with respect to the Rate Reduction Bonds;

(c)at any time during the continuance of any such Default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent;

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(d)immediately, with notice to the Rating Agencies, resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Rate Reduction Bonds if at any time the Paying Agent determines that it has ceased to meet the standards required to be met by a Paying Agent at the time of such determination; and

(e)comply with all requirements of the Code, the Treasury regulations promulgated thereunder and other tax laws with respect to the withholding from any payments made by it on any Rate Reduction Bonds of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith.

The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and, upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money.

Subject to applicable laws with respect to escheatment of funds, any money held by the Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Rate Reduction Bond and remaining unclaimed for two years after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer upon receipt of an Issuer Request; and, subject to Section 10.14, the Holder of such Rate Reduction Bond shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Indenture Trustee or such Paying Agent, at the request of the Issuer, shall, at the expense of the Issuer, cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. The Indenture Trustee may also adopt and employ, at the expense of the Issuer, any other reasonable means of notification of such repayment (including mailing notice of such repayment to Holders whose right to or interest in moneys due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Holder).

SECTION 3.04.  Existence.

The Issuer shall keep in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other State or of the United States of America, in which case the Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the other Basic Documents, the Rate Reduction Bonds, the RRB Collateral and each other instrument or agreement referenced herein or therein.

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SECTION 3.05.  Protection of RRB Collateral.

The Issuer shall from time to time execute and deliver all such supplements and amendments hereto and all filings with the NHPUC, the Secretary of State of the State of Delaware or the Secretary of State of the State of New Hampshire pursuant to the Finance Order or to the Financing Act and all financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action necessary or advisable, to:

(a)maintain or preserve the Lien (and the priority thereof) of this Indenture and the Series Supplement or carry out more effectively the purposes hereof;

(b)perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture and the Series Supplement;

(c)enforce any of the RRB Collateral;

(d)preserve and defend title to the RRB Collateral and the rights of the Indenture Trustee and the Holders in such RRB Collateral against the Claims of all Persons, including the challenge by any party to the validity or enforceability of the Finance Order, the RRB Property or any proceeding relating thereto and institute any action or proceeding necessary to compel performance by the NHPUC or the State of New Hampshire of any of its obligations or duties under the Financing Act, the State Pledge, or the Finance Order; or

(e)pay any and all taxes levied or assessed upon all or any part of the RRB Collateral.

The Indenture Trustee is specifically permitted and authorized but not required to file financing statements covering the RRB Collateral, including financing statements that describe the RRB Collateral as “all assets” or “all personal property” of the Issuer and/or reflecting RSA 369-B:7 of the Financing Act, it being understood that in no event shall the Indenture Trustee be responsible for filing any such financing statements.

SECTION 3.06.  Opinions as to RRB Collateral.

(a)On the Closing Date, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer either stating that, in the opinion of such counsel, such action has been taken with respect to the recording and filing of this Indenture, any indentures supplemental hereto and any other requisite documents, and with respect to the execution and filing of any filings with the NHPUC, the Secretary of State of the State of Delaware or the Secretary of State of the State of New Hampshire pursuant to the Financing Act and the Finance Order, financing statements and continuation statements, as are necessary to perfect the Lien and the security interest created by this Indenture and the Series Supplement, and, based on a review of a current report of a search of the appropriate governmental filing office, no other financing statement has been filed under the applicable Uniform Commercial Code, or stating that, in the opinion of such counsel, no such action is necessary to make effective such Lien.

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(b)Within 90 days after the beginning of each calendar year beginning with the calendar year beginning January 1, 2019, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of the Issuer either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents, and with respect to the execution and filing of any filings with the NHPUC, the Secretary of State of the State of Delaware or the Secretary of State of the State of New Hampshire pursuant to the Financing Act and the Finance Order, financing statements and continuation statements, as are necessary to maintain the Lien and the perfected security interest created by this Indenture and the Series Supplement, or stating that, in the opinion of such counsel, no such action is necessary to maintain the perfection of such Lien. Such Opinion of Counsel shall also describe the recording, filing, rerecording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and the execution and filing of any filings with the NHPUC, the Secretary of State of the State of Delaware or the Secretary of State of the State of New Hampshire, financing statements and continuation statements that will, in the opinion of such counsel, be required within the 12-month period following the date of such opinion to maintain the Lien and the perfected security interest created by this Indenture and the Series Supplement.

(c)Prior to, or concurrently with, the effectiveness of any amendment to the Sale Agreement, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer either (i) stating that, in the opinion of such counsel, all filings, including UCC financing statements and other filings with the NHPUC, the Secretary of State of the State of Delaware or the Secretary of State of the State of New Hampshire pursuant to the Financing Act or the Finance Order have been executed and filed that are necessary to continue the perfection of the Lien of the Issuer and the Indenture Trustee in the RRB Property and the RRB Collateral, respectively, and the proceeds thereof, or (ii) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such Lien.

SECTION 3.07.  Performance of Obligations; Servicing; SEC Filings.

(a)The Issuer (i) shall diligently pursue any and all actions to enforce its rights under each instrument or agreement included in the RRB Collateral and (ii) shall not take any action and shall use its reasonable best efforts not to permit any action to be taken by others that would release any Person from any of such Person’s covenants or obligations under any such instrument or agreement or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except, in each case, as expressly provided in this Indenture, the Series Supplement, the Sale Agreement, the Servicing Agreement, any Intercreditor Agreement or such other instrument or agreement.

(b)The Issuer may contract with other Persons selected with due care to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee herein or in an Officer’s Certificate shall be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Administrator and the Servicer to assist the Issuer in performing its duties under this Indenture.

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(c)The Issuer shall punctually perform and observe all of its obligations and agreements contained in this Indenture, the Series Supplement, the other Basic Documents and the instruments and agreements included in the RRB Collateral, including filing or causing to be filed all filings with the NHPUC, the Secretary of State of the State of Delaware or the Secretary of State of the State of New Hampshire pursuant to the Financing Act or the Finance Order and all UCC financing statements and all continuation statements required to be filed by it by the terms of this Indenture, the Series Supplement, the Sale Agreement and the Servicing Agreement in accordance with and within the time periods provided for herein and therein.

(d)If the Issuer shall have knowledge of the occurrence of a Servicer Default under the Servicing Agreement, the Issuer shall, if notice has not already been provided by the Servicer pursuant to Section 7.04 of the Servicing Agreement, promptly give written notice thereof to the Indenture Trustee and the Rating Agencies and shall specify in such notice the response or action, if any, the Issuer has taken or is taking with respect to such Servicer Default. If a Servicer Default shall arise from the failure of the Servicer to perform any of its duties or obligations under the Servicing Agreement with respect to the RRB Property, the RRB Collateral or the RRB Charge, the Issuer shall take all reasonable steps available to it to remedy such failure.

(e)As promptly as possible after the giving of notice of termination to the Servicer and the Rating Agencies of the Servicer’s rights and powers pursuant to Section 7.01 of the Servicing Agreement, the Indenture Trustee may and shall, at the written direction of the Holders evidencing a majority of the Outstanding Amount of the Rate Reduction Bonds, appoint a successor Servicer (the “Successor Servicer”), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Issuer and the Indenture Trustee. A Person shall qualify as a Successor Servicer only if such Person satisfies the requirements of the Servicing Agreement. If, within 30 days after the delivery of the notice referred to above, a new Servicer shall not have been appointed, the Indenture Trustee may petition the NHPUC or a court of competent jurisdiction to appoint a Successor Servicer. In connection with any such appointment, the Issuer may make such arrangements for the compensation of such Successor Servicer as it and such successor shall agree, subject to the limitations set forth in Section 8.02 and in the Servicing Agreement.

(f)Upon any termination of the Servicer’s rights and powers pursuant to the Servicing Agreement, the Indenture Trustee shall promptly notify the Issuer, the Holders and the Rating Agencies. As soon as a Successor Servicer is appointed, the Indenture Trustee shall notify the Issuer, the Holders and the Rating Agencies of such appointment, specifying in such notice the name and address of such Successor Servicer.

(g)The Issuer shall (or shall cause the Sponsor to) post on its website (which for this purpose may be the website of any direct or indirect parent company of the Issuer) and, to the extent consistent with the Issuer’s and the Sponsor’s obligations under applicable law, file with or furnish to the SEC in periodic reports and other reports as are required from time to time under Section 13 or Section 15(d) of the Exchange Act, the following information (other than any such information filed with the SEC and publicly available to investors unless the Issuer specifically requests such items to be posted) with respect to the Outstanding Rate Reduction Bonds, in each case to the extent such information is reasonably available to the Issuer:

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(i)statements of any remittances of RRB Charge made to the Indenture Trustee (to be included in a Form 10-D or Form 10-K, or successor forms thereto);

(ii)the Semi-Annual Servicer’s Certificate as required to be submitted pursuant to the Servicing Agreement (to be filed with a Form 10-D, Form 10-K or Form 8-K, or successor forms thereto);

(iii)the Monthly Servicer’s Certificate as required to be submitted pursuant to the Servicing Agreement;

(iv)the text (or a link to the website where a reader can find the text) of each filing of a Periodic Adjustment and the results of each such filing;

(v)any downgrade in the long-term or short-term credit ratings of the Servicer assigned by the Rating Agencies to a rating that is below investment grade;

(vi)material legislative or regulatory developments directly relevant to the Outstanding Rate Reduction Bonds (to be filed or furnished in a Form 8-K); and

(vii)any reports and other information that the Issuer is required to file with the SEC under the Exchange Act.

Notwithstanding the foregoing, nothing herein shall preclude the Issuer from voluntarily suspending or terminating its filing obligations as Issuer with the SEC to the extent permitted by applicable law. Any such report or information delivered to the Indenture Trustee for purposes of this Section 3.07(g) is for informational purposes only, and the Indenture Trustee’s receipt of any such report or information shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants hereunder (as to which the Indenture Trustee is entitled to conclusively rely on an Officer’s Certificate).

(h)The Issuer shall direct the Indenture Trustee to post on the Indenture Trustee’s website for investors (based solely on information set forth in the Semi-Annual Servicer’s Certificate) with respect to the Outstanding Rate Reduction Bonds, to the extent such information is set forth in the Semi-Annual Servicer’s Certificate, a statement showing the balance of Outstanding Rate Reduction Bonds that reflects the actual payments made on the Rate Reduction Bonds during the applicable period.

The address of the Indenture Trustee’s website for investors is https://gctinvestorreporting.bnymellon.com. The Indenture Trustee shall immediately notify the Issuer, the Holders and the Rating Agencies of any change to the address of the website for investors.

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SECTION 3.08.  Certain Negative Covenants.

So long as any Rate Reduction Bonds are Outstanding, the Issuer shall not:

(a)except as expressly permitted by this Indenture and the other Basic Documents, sell, transfer, convey, exchange or otherwise dispose of any of the properties or assets of the Issuer, including those included in the RRB Collateral, unless in accordance with Article V;

(b)claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the Rate Reduction Bonds (other than amounts properly withheld from such payments under the Code, the Treasury regulations promulgated thereunder or other tax laws) or assert any claim against any present or former Holder by reason of the payment of the taxes levied or assessed upon any part of the RRB Collateral, other than as set forth in this Indenture;

(c)terminate its existence or dissolve or liquidate in whole or in part, except in a transaction permitted by Section 3.10;

(d)(i) permit the validity or effectiveness of this Indenture or the other Basic Documents to be impaired, or permit the Lien of this Indenture and the Series Supplement to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Rate Reduction Bonds under this Indenture except as may be expressly permitted hereby, (ii) permit any Lien (other than the Lien of this Indenture or the Series Supplement) to be created on or extend to or otherwise arise upon or burden the RRB Collateral or any part thereof or any interest therein or the proceeds thereof (other than Permitted Liens) or (iii) permit the Lien of the Series Supplement not to constitute a valid first priority perfected security interest in the RRB Collateral, subject only to Permitted Liens;

(e)enter into any swap, hedge or similar financial instrument;

(f)elect to be classified as an association taxable as a corporation for U.S. federal income tax purposes or otherwise take any action, file any tax return or make any election inconsistent with the treatment of the Issuer, for U.S. federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the sole owner of the Issuer;

(g)change its name, identity or structure or the location of its chief executive office, unless prior to the effective date of any such change the Issuer delivers to the Indenture Trustee (with copies to the Rating Agencies) such documents, instruments or agreements, executed by the Issuer, as are necessary to reflect such change and to continue the perfection of the security interest of this Indenture and the Series Supplement;

(h)take any action that is subject to a Rating Agency Condition without satisfying the Rating Agency Condition; or

(i)except to the extent permitted by applicable law, voluntarily suspend or terminate its filing obligations with the SEC as described in Section 3.07(g).

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SECTION 3.09.  Annual Statement as to Compliance.

The Issuer will deliver to the Indenture Trustee and the Rating Agencies not later than March 31 of each year (commencing with March 31, 2019), an Officer’s Certificate stating, as to the Responsible Officer signing such Officer’s Certificate, that:

(a)a review of the activities of the Issuer during the preceding 12 months ended December 31 (or, in the case of the first such Officer’s Certificate, since the Closing Date) and of performance under this Indenture has been made; and

(b)to the best of such Responsible Officer’s knowledge, based on such review, the Issuer has complied in all material respects with all conditions and covenants under this Indenture throughout such 12-month period (or such shorter period in the case of the first such Officer’s Certificate), or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to such Responsible Officer and the nature and status thereof.

SECTION 3.10.  Issuer May Consolidate, etc., Only on Certain Terms.

(a)The Issuer shall not consolidate or merge with or into any other Person, unless:

(i)the Person (if other than the Issuer) formed by or surviving such consolidation or merger shall (A) be a Person organized and existing under the laws of the United States of America or any State, (B) expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance reasonably satisfactory to the Indenture Trustee, the performance or observance of every agreement and covenant of this Indenture and the Series Supplement on the part of the Issuer to be performed or observed, all as provided herein and in the Series Supplement, and (C) assume all obligations and succeed to all rights of the Issuer under the Sale Agreement, the Servicing Agreement and each other Basic Document to which the Issuer is a party;

(ii)immediately after giving effect to such merger or consolidation, no Default or Event of Default shall have occurred and be continuing;

(iii)the Rating Agency Condition shall have been satisfied with respect to such merger or consolidation;

(iv)the Issuer shall have delivered to the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to the Indenture Trustee, and which may be based on a ruling from the Internal Revenue Service) to the effect that the consolidation or merger will not result in a material adverse U.S. federal or state income tax consequence to the Issuer, the Indenture Trustee or the then-existing Holders;

(v)any action as is necessary to maintain the Lien and the perfected security interest in the RRB Collateral created by this Indenture and the Series Supplement shall

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have been taken as evidenced by an Opinion of Counsel of external counsel of the Issuer delivered to the Indenture Trustee; and

(vi)the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel of the Issuer each stating that such consolidation or merger and such supplemental indenture comply with this Indenture and the Series Supplement and that all conditions precedent herein provided for in this Section 3.10(a) with respect to such transaction have been complied with (including any filing required by the Exchange Act).

(b)Except as specifically provided herein, the Issuer shall not sell, convey, exchange, transfer or otherwise dispose of any of its properties or assets included in the RRB Collateral, to any Person, unless:

(i)the Person that acquires the properties and assets of the Issuer, the conveyance or transfer of which is hereby restricted, (A) shall be a United States citizen or a Person organized and existing under the laws of the United States of America or any State, (B) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance reasonably satisfactory to the Indenture Trustee, the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein and in the Series Supplement, (C) expressly agrees by means of such supplemental indenture that all right, title and interest so sold, conveyed, exchanged, transferred or otherwise disposed of shall be subject and subordinate to the rights of Holders, (D) unless otherwise provided in the supplemental indenture referred to in Section 3.10(b)(i)(B), expressly agrees to indemnify, defend and hold harmless the Issuer and the Indenture Trustee against and from any loss, liability or expense arising under or related to this Indenture, the Series Supplement and the Rate Reduction Bonds, (E) expressly agrees by means of such supplemental indenture that such Person (or if a group of Persons, then one specified Person) shall make all filings with the SEC (and any other appropriate Person) required by the Exchange Act in connection with the Rate Reduction Bonds and (F) if such sale, conveyance, exchange, transfer or disposal relates to the Issuer’s rights and obligations under the Sale Agreement or the Servicing Agreement, assumes all obligations and succeeds to all rights of the Issuer under the Sale Agreement and the Servicing Agreement, as applicable;

(ii)immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

(iii)the Rating Agency Condition shall have been satisfied with respect to such transaction;

(iv)the Issuer shall have delivered to the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to the Indenture Trustee, and which may be based on a ruling from the Internal Revenue Service) to the effect that the disposition will not

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result in a material adverse U.S. federal or state income tax consequence to the Issuer, the Indenture Trustee or the then-existing Holders;

(v)any action as is necessary to maintain the Lien and the perfected security interest in the RRB Collateral created by this Indenture and the Series Supplement shall have been taken as evidenced by an Opinion of Counsel of external counsel of the Issuer delivered to the Indenture Trustee; and

(vi)the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel of the Issuer each stating that such sale, conveyance, exchange, transfer or other disposition and such supplemental indenture comply with this Indenture and the Series Supplement and that all conditions precedent herein provided for in this Section 3.10(b) with respect to such transaction have been complied with (including any filing required by the Exchange Act).

SECTION 3.11.  Successor or Transferee.

(a)Upon any consolidation or merger of the Issuer in accordance with Section 3.10(a), the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein.

(b)Except as set forth in Section 6.07 with respect to any right of the Indenture Trustee to compensation or reimbursement arising, or any right of an Indemnified Person to indemnification arising from events occurring, prior to the date of such disposition, upon a sale, conveyance, exchange, transfer or other disposition of all the assets and properties of the Issuer in accordance with Section 3.10(b), the Issuer will be released from every covenant and agreement of this Indenture and the other Basic Documents to be observed or performed on the part of the Issuer with respect to the Rate Reduction Bonds and the RRB Property immediately following the consummation of such acquisition upon the delivery of written notice to the Indenture Trustee from the Person acquiring such assets and properties stating that the Issuer is to be so released.

SECTION 3.12.  No Other Business.

The Issuer shall not engage in any business other than financing, purchasing, owning, administering, managing and servicing the RRB Property and the other RRB Collateral and the issuance of the Rate Reduction Bonds in the manner contemplated by the Finance Order and this Indenture and the other Basic Documents and activities incidental thereto.

SECTION 3.13.  No Borrowing.

The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the Rate Reduction Bonds and any other indebtedness expressly permitted by or arising under the Basic Documents.

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SECTION 3.14.  Servicer’s Obligations.

The Issuer shall enforce the Servicer’s compliance with and performance of all of the Servicer’s material obligations under the Servicing Agreement.

SECTION 3.15.  Guarantees, Loans, Advances and Other Liabilities.

Except as otherwise contemplated by the Sale Agreement, the Servicing Agreement or this Indenture, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person.

SECTION 3.16.  Capital Expenditures.

Other than the purchase of RRB Property from the Seller on the Closing Date, the Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).

SECTION 3.17.  Restricted Payments.

Except as provided in Section 8.02(e)(xi), Section 8.02(g) and Section 8.04(c), the Issuer shall not, directly or indirectly, (a) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to any owner of an interest in the Issuer or otherwise with respect to any ownership or equity interest or similar security in or of the Issuer or (b) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or similar security. The Issuer will not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with this Indenture and the other Basic Documents.

SECTION 3.18.  Notice of Events of Default.

The Issuer agrees to give the Indenture Trustee and the Rating Agencies prompt written notice of each Default or Event of Default hereunder as provided in Section 5.01.

SECTION 3.19.  Further Instruments and Acts.

Upon request of the Indenture Trustee (it being understood that the Indenture Trustee does not have any affirmative duties under this covenant), the Issuer shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture and to maintain the first priority perfected security interest of the Indenture Trustee in the RRB Collateral.

SECTION 3.20.  Inspection.

The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee, during the Issuer’s normal business hours, to examine all

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the books of account, records, reports and other papers of the Issuer, to make copies and extracts therefrom and to discuss the Issuer’s affairs, finances and accounts with the Issuer’s officers, employees and Independent registered public accountants; provided, however, that, except during the continuance of an Event of Default, only one such inspection shall be permitted in any calendar year. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. Notwithstanding anything herein to the contrary, the preceding sentence shall not be construed to prohibit (a) disclosure of any and all information that is or becomes publicly known, or information obtained by the Indenture Trustee from sources other than the Issuer, provided such parties are rightfully in possession of such information, (b) disclosure of any and all information (i) if required to do so by any applicable statute, law, rule or regulation, (ii) pursuant to any subpoena, civil investigative demand or similar demand or request of any court or regulatory authority exercising its proper jurisdiction, (iii) in any preliminary or final prospectus, registration statement or other document a copy of which has been filed with the SEC, (iv) to any affiliate, independent or internal auditor, agent, employee or attorney of the Indenture Trustee having a need to know the same, provided that such parties agree to be bound by the confidentiality provisions contained in this Section 3.20, or (v) to any Rating Agency or (c) any other disclosure authorized by the Issuer.

SECTION 3.21.  Sale Agreement, Servicing Agreement and Administration Agreement Covenants.

(a)The Issuer agrees to take all such lawful actions to enforce its rights under the Sale Agreement, the Servicing Agreement, the Administration Agreement, any Intercreditor Agreement and the other Basic Documents, and to compel or secure the performance and observance by the Seller, the Servicer, the Administrator and PSNH of each of their respective obligations to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement, the Administration Agreement, any Intercreditor Agreement and the other Basic Documents in accordance with the terms thereof. Subject to Section 3.21(b) and Section 3.21(f), the Issuer may exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement, the Administration Agreement and any Intercreditor Agreement.

(b)If an Event of Default has occurred and is continuing, the Indenture Trustee may, and at the direction (which direction shall be in writing) of Holders of a majority of the Outstanding Amount of the Rate Reduction Bonds of all Tranches affected thereby shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, PSNH, the Administrator and the Servicer, as the case may be, under or in connection with the Sale Agreement, the Servicing Agreement, the Administration Agreement and any Intercreditor Agreement, including the right or power to take any action to compel or secure performance or observance by the Seller, PSNH, the Administrator or the Servicer of each of their obligations to the Issuer thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale Agreement, the Servicing Agreement, the Administration Agreement and any Intercreditor Agreement, and any right of the Issuer to take such action shall be suspended.

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(c)Except as set forth in Section 3.21(d), the Administration Agreement, the Sale Agreement, the Servicing Agreement and any Intercreditor Agreement may be amended in accordance with the provisions thereof, so long as either (x) the Rating Agency Condition is satisfied in connection therewith or (y) notice of such amendment has been provided to the Ratings Agencies in accordance with the applicable Basic Document, at any time and from time to time, without the consent of the Holders of the Rate Reduction Bonds, but with the consent of the Indenture Trustee; provided, that the Indenture Trustee shall provide such consent upon receipt of an Officer’s Certificate of the Issuer evidencing either (x) satisfaction of such Rating Agency Condition or (y) notice of such amendment has been provided to the Ratings Agencies in accordance with the applicable Basic Document and an Opinion of Counsel stating that such amendment is permitted or authorized under and adopted in accordance with the provisions of such Basic Document, in each case, upon which the Indenture Trustee may conclusively rely.

(d)If the Issuer, the Seller, PSNH, the Administrator, the Servicer or any other party to the respective agreement proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, waiver, supplement, termination or surrender of, (x) the terms of the Sale Agreement, the Administration Agreement, the Servicing Agreement or any Intercreditor Agreement, or waive timely performance or observance by the Seller, PSNH, the Administrator, the Servicer or any other party under the Sale Agreement, the Administration Agreement, the Servicing Agreement or any Intercreditor Agreement, in each case in such a way as would materially and adversely affect the interests of any Holder of Rate Reduction Bonds, or (y) the process for Periodic Adjustments set forth in the Finance Order or Section 4.01 of the Servicing Agreement, the Issuer shall first notify the Rating Agencies of the proposed amendment, modification, waiver, supplement, termination or surrender and shall promptly notify the Indenture Trustee and the Holders of the Rate Reduction Bonds in writing of the proposed amendment, modification, waiver, supplement, termination or surrender (or, pursuant to an Issuer Request, the Indenture Trustee shall so notify the Holders of the Rate Reduction Bonds on the Issuer’s behalf). The Indenture Trustee shall consent to such proposed amendment, modification, waiver, supplement, termination or surrender only if the consent of the Holders of a majority of the Outstanding amount of the Rate Reduction Bonds has been obtained and (x) in the case of any amendment, modification, waiver, supplement, termination or surrender of the Servicing Agreement, the Administration agreement and any Intercreditor Agreement, the Rating Agency Condition is satisfied and (y) in the case of any amendment, modification, waiver, supplement, termination or surrender of the Sale Agreement, ten Business Days’ prior written notice of such proposed amendment, modification, waiver, supplement, termination or surrender has been given to the Rating Agencies. If any such amendment, modification, waiver, supplement, termination or surrender shall be so consented to by the Indenture Trustee or such Holders, the Issuer agrees to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as shall be necessary or appropriate in the circumstances.

(e)Promptly following a default by the Seller under the Sale Agreement, by the Administrator under the Administration Agreement or by any party under any Intercreditor Agreement, or the occurrence of a Servicer Default under the Servicing Agreement, and at the Issuer’s expense, the Issuer agrees to take all such lawful actions necessary to compel or secure the performance and observance by each of the Seller, the Administrator or the Servicer, and by such party to any Intercreditor Agreement, of their obligations under and in accordance with the

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Sale Agreement, the Servicing Agreement, the Administration Agreement and any Intercreditor Agreement, as the case may be, in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with such agreements in each case to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of any default to the Seller, the Administrator or the Servicer, respectively, thereunder and the institution of legal or administrative actions or Proceedings to compel or secure performance of their obligations under the Sale Agreement, the Servicing Agreement, the Administration Agreement or any Intercreditor Agreement, as applicable.

SECTION 3.22.  Taxes.

So long as any of the Rate Reduction Bonds are Outstanding, the Issuer shall pay all taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the RRB Collateral; provided, that no such tax need be paid if the Issuer is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the Issuer has established appropriate reserves as shall be required in conformity with generally accepted accounting principles. The Issuer shall give notice to the Indenture Trustee of the filing of any tax lien which is being contested by the Issuer pursuant to the preceding sentence.

SECTION 3.23.  Notices from Holders.

The Issuer shall promptly transmit any notice received by it from the Holders to the Indenture Trustee.

SECTION 3.24.  Volcker Rule.

The Issuer shall not be a “covered fund” under the regulations adopted to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly known as the “Volcker Rule.”

ARTICLE IV

SATISFACTION AND DISCHARGE; DEFEASANCE

SECTION 4.01.  Satisfaction and Discharge of Indenture; Defeasance.

(a)This Indenture shall cease to be of further effect with respect to the Rate Reduction Bonds, and the Indenture Trustee, on reasonable written demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Rate Reduction Bonds, when:

(i)Either:

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(A)all Rate Reduction Bonds theretofore authenticated and delivered (other than (1) Rate Reduction Bonds that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.06 and (2) Rate Reduction Bonds for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in the last paragraph of Section 3.03) have been delivered to the Indenture Trustee for cancellation; or

(B)either (1) the Scheduled Final Payment Date has occurred with respect to all Rate Reduction Bonds not theretofore delivered to the Indenture Trustee for cancellation or (2) the Rate Reduction Bonds will be due and payable on their respective Scheduled Final Payment Dates within one year, and, in any such case, the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Rate Reduction Bonds not theretofore delivered to the Indenture Trustee for cancellation, Ongoing Transaction Costs and all other sums payable hereunder by the Issuer with respect to the Rate Reduction Bonds when scheduled to be paid and to discharge the entire indebtedness on the Rate Reduction Bonds when due;

(ii)the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer; and

(iii)the Issuer has delivered to the Indenture Trustee an Officer’s Certificate, an Opinion of Counsel and (if required by the Trust Indenture Act) an Independent Certificate from a firm of registered public accountants, each meeting the applicable requirements of Section 10.01(a) and each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to the Rate Reduction Bonds have been complied with.

(b)Subject to Section 4.01(c) and Section 4.02, the Issuer at any time may terminate (i) all its obligations under this Indenture with respect to the Rate Reduction Bonds (“Legal Defeasance Option”) or (ii) its obligations under Section 3.04, Section 3.05, Section 3.06, Section 3.07, Section 3.08, Section 3.09, Section 3.10, Section 3.12, Section 3.13, Section 3.14, Section 3.15, Section 3.16, Section 3.17, Section 3.18, Section 3.19, Section 3.20, Section 3.21, Section 3.22, Section 3.23 and Section 3.24 and the operation of Section 5.01(c) with respect to the Rate Reduction Bonds (“Covenant Defeasance Option”). The Issuer may exercise the Legal Defeasance Option with respect to the Rate Reduction Bonds notwithstanding its prior exercise of the Covenant Defeasance Option.

If the Issuer exercises the Legal Defeasance Option, the maturity of the Rate Reduction Bonds may not be accelerated because of an Event of Default. If the Issuer exercises the Covenant Defeasance Option, the maturity of the Rate Reduction Bonds may not be accelerated because of an Event of Default specified in Section 5.01(c).

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Upon satisfaction of the conditions set forth herein to the exercise of the Legal Defeasance Option or the Covenant Defeasance Option with respect to the Rate Reduction Bonds, the Indenture Trustee, on reasonable written demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of the obligations that are terminated pursuant to such exercise.

(c)Notwithstanding Section 4.01(a) and Section 4.01(b), (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Rate Reduction Bonds, (iii) rights of Holders to receive payments of principal, premium, if any, and interest, (iv) Section 4.03 and Section 4.04, (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.07 and the obligations of the Indenture Trustee under Section 4.03) and (vi) the rights of Holders as beneficiaries hereof with respect to the property deposited with the Indenture Trustee payable to all or any of them, each shall survive until this Indenture or certain obligations hereunder have been satisfied and discharged pursuant to Section 4.01(a) or Section 4.01(b). Thereafter the obligations in Section 6.07 and Section 4.04 shall survive.

SECTION 4.02.  Conditions to Defeasance.

The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to the Rate Reduction Bonds only if:

(a)the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Rate Reduction Bonds not therefore delivered to the Indenture Trustee for cancellation and Ongoing Transaction Costs and all other sums payable hereunder by the Issuer with respect to the Rate Reduction Bonds when scheduled to be paid and to discharge the entire indebtedness on the Rate Reduction Bonds when due;

(b)the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. Government Obligations when due and without reinvestment plus any deposited cash will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Rate Reduction Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) Ongoing Transaction Costs and all other sums payable hereunder by the Issuer with respect to the Rate Reduction Bonds;

(c)in the case of the Legal Defeasance Option, 95 days pass after the deposit is made and during the 95-day period no Default specified in Section 5.01(e) or Section 5.01(f) occurs that is continuing at the end of the period;

(d)no Default has occurred and is continuing on the day of such deposit and after giving effect thereto;

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(e)in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel to the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Rate Reduction Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred;

(f)in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel to the Issuer to the effect that the Holders of the Rate Reduction Bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;

(g)the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent to the Legal Defeasance Option or the Covenant Defeasance Option, as applicable, have been complied with as required by this Article IV; and

(h)the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that: (i) in a case under the Bankruptcy Code in which PSNH (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PSNH (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PSNH (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PSNH (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PSNH or such other Affiliate.

Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Indenture Trustee to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Rate Reduction Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

SECTION 4.03.  Application of Trust Money.

All moneys or U.S. Government Obligations deposited with the Indenture Trustee pursuant to Section 4.01 or Section 4.02 shall be held in trust and applied by it, in accordance with the provisions of the Rate Reduction Bonds and this Indenture, to the payment, either directly or through any Paying Agent, as the Indenture Trustee may determine, (i) to the Holders of the particular Rate Reduction Bonds for the payment of which such moneys have

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been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, premium, if any, and interest or (ii) to any other Persons to whom such payments are owed, Ongoing Transaction Costs and all other sums payable hereunder by the Issuer; but such moneys need not be segregated from other funds except to the extent required herein or in the Servicing Agreement or required by law. Notwithstanding anything to the contrary in this Article IV, the Indenture Trustee shall deliver or pay to the Issuer from time to time upon Issuer Request any moneys or U.S. Government Obligations held by it pursuant to Section 4.02 that, in the opinion of a nationally recognized firm of Independent registered public accountants expressed in a written certification thereof delivered to the Indenture Trustee (and not at the cost or expense of the Indenture Trustee), are in excess of the amount thereof that would be required to be deposited for the purpose for which such moneys or U.S. Government Obligations were deposited.

SECTION 4.04.  Repayment of Moneys Held by Paying Agent.

In connection with the satisfaction and discharge of this Indenture or the Covenant Defeasance Option or Legal Defeasance Option with respect to the Rate Reduction Bonds, all moneys then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 3.03 and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

ARTICLE V

REMEDIES

SECTION 5.01.  Events of Default.

“Event of Default” means any one or more of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a)default in the payment of any interest on any Rate Reduction Bond when the same becomes due and payable (whether such failure to pay interest is caused by a shortfall in RRB Charge received or otherwise), and such default shall continue for a period of five Business Days;

(b)default in the payment of the then unpaid principal of any Rate Reduction Bond of any Tranche on the Final Maturity Date for such Tranche;

(c)default in the observance or performance in any material respect of any covenant or agreement of the Issuer made in this Indenture (other than defaults specified in Section 5.01(a) or Section 5.01(b)), and such default shall continue or not be cured, for a period of 30 days after the earlier of (i) the date that there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25 percent of the Outstanding Amount of the Rate Reduction Bonds, a written notice specifying such default and requiring it to be remedied and stating that such notice

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is a “Notice of Default” hereunder or (ii) the date that the Issuer has actual knowledge of the default;

(d)any representation or warranty of the Issuer made in this Indenture or in any certificate or other writing delivered pursuant hereto or in connection herewith proving to have been incorrect in any material respect as of the time when the same shall have been made, and the circumstance or condition in respect of which such representation or warranty was incorrect shall not have been eliminated or otherwise cured, within 30 days after the earlier of (i) the date that there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least twenty-five (25) percent of the Outstanding Amount of the Rate Reduction Bonds, a written notice specifying such incorrect representation or warranty and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder or (ii) the date the Issuer has actual knowledge of the default;

(e)the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer or any substantial part of the RRB Collateral in an involuntary case or proceeding under any applicable U.S. 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 of the Issuer or for any substantial part of the RRB Collateral, or ordering the winding-up or liquidation of the Issuer’s affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days;

(f)the commencement by the Issuer of a voluntary case under any applicable U.S. federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an involuntary case or proceeding under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the RRB Collateral, or the making by the Issuer of any general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts become due, or the taking of action by the Issuer in furtherance of any of the foregoing; or

(g)any act or failure to act by the State of New Hampshire or any of its agencies (including the Commission), officers or employees that violates the State Pledge or is not in accordance with the State Pledge.

The Issuer shall deliver to a Responsible Officer of the Indenture Trustee and to the Rating Agencies, within five Business Days after a Responsible Officer of the Issuer has knowledge of the occurrence thereof, written notice in the form of an Officer’s Certificate of any event (i) that is an Event of Default under Section 5.01(a), Section 5.01(b), Section 5.01(f) or Section 5.01(g) or (ii) that with the giving of notice, the lapse of time, or both, would become an Event of Default under Section 5.01(c), Section 5.01(d) or Section 5.01(e), including, in each case, the status of such Default or Event of Default and what action the Issuer is taking or proposes to take with respect thereto.

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SECTION 5.02.  Acceleration of Maturity; Rescission and Annulment.

If an Event of Default (other than an Event of Default under Section 5.01(g)) should occur and be continuing, then and in every such case the Indenture Trustee or the Holders representing a majority of the Outstanding Amount of the Rate Reduction Bonds may declare the Rate Reduction Bonds to be immediately due and payable, by a notice in writing to the Issuer (and to the Indenture Trustee if given by Holders), and upon any such declaration the unpaid principal amount of the Rate Reduction Bonds, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable.

At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this Article V provided, the Holders representing a majority of the Outstanding Amount of the Rate Reduction Bonds, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences if:

(a)the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay:

(i)all payments of principal of and premium, if any, and interest on all Rate Reduction Bonds due and owing at such time as if such Event of Default had not occurred and was not continuing and all other amounts that would then be due hereunder or upon the Rate Reduction Bonds if the Event of Default giving rise to such acceleration had not occurred; and

(ii)all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel; and

(b)all Events of Default, other than the nonpayment of the principal of the Rate Reduction Bonds that has become due solely by such acceleration, have been cured or waived as provided in Section 5.12.

No such rescission shall affect any subsequent default or impair any right consequent thereto.

SECTION 5.03.  Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.

(a)If an Event of Default under Section 5.01(a) or Section 5.01(b) has occurred and is continuing, subject to Section 10.16, the Indenture Trustee, in its own name and as trustee of an express trust, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and, subject to the limitations on recourse set forth herein, may enforce the same against the Issuer or other obligor upon the Rate Reduction Bonds and collect in the manner provided by law out of the RRB Collateral and the proceeds thereof, the whole amount then due and payable on the Rate Reduction Bonds for principal, premium, if any, and interest, with interest upon the overdue principal and premium, if any, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of interest, at the respective rate borne by the Rate Reduction Bonds or the applicable Tranche and in addition thereto such further amount as shall

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be sufficient to cover the costs and expenses of collection, including the reasonable and documented compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and external counsel.

(b)If an Event of Default (other than Event of Default under Section 5.01(g)) occurs and is continuing, the Indenture Trustee shall, as more particularly provided in Section 5.04, proceed to protect and enforce its rights and the rights of the Holders, by such appropriate Proceedings as the Indenture Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture and the Series Supplement or by law, including foreclosing or otherwise enforcing the Lien on the RRB Collateral securing the Rate Reduction Bonds or applying to a court of competent jurisdiction for sequestration of revenues arising with respect to the RRB Property.

(c)If an Event of Default under Section 5.01(e) or Section 5.01(f) has occurred and is continuing, the Indenture Trustee, irrespective of whether the principal of any Rate Reduction Bonds shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section 5.03, shall be entitled and empowered, by intervention in any Proceedings related to such Event of Default or otherwise:

(i)to file and prove a claim or claims for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Rate Reduction Bonds and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence, willful misconduct or bad faith) and of the Holders allowed in such Proceedings;

(ii)unless prohibited by applicable law and regulations, to vote on behalf of the Holders in any election of a trustee in bankruptcy, a standby trustee or Person performing similar functions in any such Proceedings;

(iii)to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Holders and of the Indenture Trustee on their behalf; and

(iv)to file such other papers and documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Holders allowed in any judicial proceeding relative to the Issuer, its creditors and its property;

and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Holders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to such

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Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence, willful misconduct or bad faith.

(d)Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Rate Reduction Bonds or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of any Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.

(e)All rights of action and of asserting claims under this Indenture, or under any of the Rate Reduction Bonds, may be enforced by the Indenture Trustee without the possession of any of the Rate Reduction Bonds or the production thereof in any trial or other Proceedings relative thereto, and any such action or proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Rate Reduction Bonds.

(f)In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Holders of the Rate Reduction Bonds, and it shall not be necessary to make any Holder a party to any such Proceedings.

SECTION 5.04.  Remedies; Priorities.

(a)If an Event of Default (other than an Event of Default under Section 5.01(g)) shall have occurred and be continuing, the Indenture Trustee may do one or more of the following (subject to Section 5.05):

(i)institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Rate Reduction Bonds or under this Indenture with respect thereto, whether by declaration of acceleration or otherwise, and, subject to the limitations on recovery set forth herein, enforce any judgment obtained, and collect from the Issuer or any other obligor moneys adjudged due, upon the Rate Reduction Bonds;

(ii)institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the RRB Collateral;

(iii)exercise any remedies of a secured party under the UCC, the Financing Act or any other applicable law and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Holders of the Rate Reduction Bonds;

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(iv)at the written direction of the Holders of a majority of the Outstanding Amount of the Rate Reduction Bonds, either sell the RRB Collateral or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law, or elect that the Issuer maintain possession of all or a portion of the RRB Collateral pursuant to Section 5.05 and continue to apply the RRB Charge Collection as if there had been no declaration of acceleration; and

(v)exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, the Administrator or the Servicer under or in connection with, and pursuant to the terms of, the Sale Agreement, the Administration Agreement or the Servicing Agreement;

provided, however, that the Indenture Trustee may not sell or otherwise liquidate any portion of the RRB Collateral following such an Event of Default, other than an Event of Default described in Section 5.01(a) or Section 5.01(b), unless (A) the Holders of 100 percent of the Outstanding Amount of the Rate Reduction Bonds consent thereto, (B) the proceeds of such sale or liquidation distributable to the Holders are sufficient to discharge in full all amounts then due and unpaid upon the Rate Reduction Bonds for principal, premium, if any, and interest after taking into account payment of all amounts due prior thereto pursuant to the priorities set forth in Section 8.02(e) or (C) the Indenture Trustee determines that the RRB Collateral will not continue to provide sufficient funds for all payments on the Rate Reduction Bonds as they would have become due if the Rate Reduction Bonds had not been declared due and payable, and the Indenture Trustee obtains the written consent of Holders of at least two-thirds of the Outstanding Amount of the Rate Reduction Bonds. In determining such sufficiency or insufficiency with respect to clause (B) above and clause (C) above, the Indenture Trustee may, but need not, obtain and conclusively rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the RRB Collateral for such purpose.

(b)If an Event of Default under Section 5.01(g) shall have occurred and be continuing, the Indenture Trustee, for the benefit of the Secured Parties, shall be entitled and empowered, to the extent permitted by applicable law, to institute or participate in Proceedings necessary to compel performance of or to enforce the State Pledge and to collect any monetary damages incurred by the Holders or the Indenture Trustee as a result of any such Event of Default, and may prosecute any such Proceeding to final judgment or decree. Such remedy shall be the only remedy that the Indenture Trustee may exercise if the only Event of Default that has occurred and is continuing is an Event of Default under Section 5.01(g).

(c)If the Indenture Trustee collects any money pursuant to this Article V, it shall pay out such money in accordance with the priorities set forth in Section 8.02(e).

SECTION 5.05.  Optional Preservation of the RRB Collateral.

If the Rate Reduction Bonds have been declared to be due and payable under Section 5.02 following an Event of Default and such declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may, but need not, elect to maintain possession of all or a portion of the RRB Collateral. It is the desire of the parties hereto and the

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Holders that there be at all times sufficient funds for the payment of principal of and premium, if any, and interest on the Rate Reduction Bonds, and the Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the RRB Collateral. In determining whether to maintain possession of the RRB Collateral or sell or liquidate the same, the Indenture Trustee may, but need not, obtain and conclusively rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the RRB Collateral for such purpose.

SECTION 5.06.  Limitation of Suits.

No Holder of any Rate Reduction Bond shall have any right to institute any Proceeding, judicial or otherwise, to avail itself of any remedies provided in the Financing Act or to avail itself of the right to foreclose on the RRB Collateral or otherwise enforce the Lien and the security interest on the RRB Collateral with respect to this Indenture and the Series Supplement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

(a)such Holder previously has given written notice to the Indenture Trustee of a continuing Event of Default;

(b)the Holders of a majority of the Outstanding Amount of the Rate Reduction Bonds have made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder;

(c)such Holder or Holders have offered to the Indenture Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in complying with such request;

(d)the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings; and

(e)no direction inconsistent with such written request has been given to the Indenture Trustee during such 60-day period by the Holders of a majority of the Outstanding Amount of the Rate Reduction Bonds;

it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided.

In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders, each representing less than a majority of the Outstanding Amount of the Rate Reduction Bonds, the Indenture Trustee in its sole discretion may file a petition with a court of competent jurisdiction to resolve such conflict or determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture.

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SECTION 5.07.  Unconditional Rights of Holders To Receive Principal and Interest.

Notwithstanding any other provisions in this Indenture, the Holder of any Rate Reduction Bond shall have the right, which is absolute and unconditional, (a) to receive payment of (i) the interest, if any, on such Rate Reduction Bond on the due dates thereof expressed in such Rate Reduction Bond or in this Indenture or (ii) the unpaid principal, if any, of the Rate Reduction Bonds on the Final Maturity Date therefor and (b) to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

SECTION 5.08.  Restoration of Rights and Remedies.

If the Indenture Trustee or any Holder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Holder, then and in every such case the Issuer, the Indenture Trustee and the Holders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Holders shall continue as though no such Proceeding had been instituted.

SECTION 5.09.  Rights and Remedies Cumulative.

No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 5.10.  Delay or Omission Not a Waiver.

No delay or omission of the Indenture Trustee or any Holder to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Holders, as the case may be.

SECTION 5.11.  Control by Holders.

The Holders of a majority of the Outstanding Amount of the Rate Reduction Bonds of an affected Tranche or Tranches shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Rate Reduction Bonds of such Tranche or Tranches or exercising any trust or power conferred on the Indenture Trustee with respect to such Tranche or Tranches; provided, that:

(a)such direction shall not be in conflict with any rule of law or with this Indenture or the Series Supplement;

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(b)any direction to the Indenture Trustee to sell or liquidate any RRB Collateral shall be by applicable percentage of Holders set forth in Section 5.04;

(c)if the conditions set forth in Section 5.05 have been satisfied and the Indenture Trustee elects to retain the RRB Collateral pursuant to Section 5.05, then any direction to the Indenture Trustee by Holders representing less than 100 percent of the Outstanding Amount of the Rate Reduction Bonds to sell or liquidate the RRB Collateral shall be of no force and effect; and

(d)the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction;

provided, however, that the Indenture Trustee’s duties shall be subject to Section 6.01, and the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Holders not consenting to such action (it being understood that the Indenture Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders).

SECTION 5.12.  Waiver of Past Defaults.

Prior to the declaration of the acceleration of the maturity of the Rate Reduction Bonds as provided in Section 5.02, the Holders representing a majority of the Outstanding Amount of the Rate Reduction Bonds of an affected Tranche may waive any past Default or Event of Default and its consequences except a Default (a) in payment of principal of or premium, if any, or interest on any of the Rate Reduction Bonds or (b) in respect of a covenant or provision hereof that cannot be modified or amended without the consent of the Holder of each Rate Reduction Bond of all Tranches affected. In the case of any such waiver, the Issuer, the Indenture Trustee and the Holders shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.

Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.

SECTION 5.13.  Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Rate Reduction Bond by such Holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable and documented attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.13 shall not apply to (a) any suit instituted by the Indenture Trustee,

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(b) any suit instituted by any Holder, or group of Holders, in each case holding in the aggregate more than ten percent of the Outstanding Amount of the Rate Reduction Bonds or (c) any suit instituted by any Holder for the enforcement of the payment of (i) interest on any Rate Reduction Bond on or after the due dates expressed in such Rate Reduction Bond and in this Indenture or (ii) the unpaid principal, if any, of any Rate Reduction Bond on or after the Final Maturity Date therefor.

SECTION 5.14.  Waiver of Stay or Extension Laws.

The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon or plead or, in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

SECTION 5.15.  Action on Rate Reduction Bonds.

The Indenture Trustee’s right to seek and recover judgment on the Rate Reduction Bonds or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the Lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Holders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the RRB Collateral or any other assets of the Issuer.

ARTICLE VI

THE INDENTURE TRUSTEE

SECTION 6.01.  Duties of Indenture Trustee.

(a)If an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(b)Except during the continuance of an Event of Default:

(i)the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee; and

(ii)in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and

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conforming to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c)The Indenture Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(i)this Section 6.01(c) does not limit the effect of Section 6.01(b);

(ii)the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts;

(iii)the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it hereunder; and

(iv)no provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayments of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it.

(d)Every provision of this Indenture that in any way relates to the Indenture Trustee is subject to Section 6.01(a), Section 6.01(b) and Section 6.01(c).

(e)The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer.

(f)Money held in trust by the Indenture Trustee need not be segregated from other funds held by the Indenture Trustee except to the extent required by law or the terms of this Indenture, the Sale Agreement, the Servicing Agreement or the Administration Agreement.

(g)Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section 6.01 and to the provisions of the Trust Indenture Act.

(h)In the event that the Indenture Trustee is also acting as Paying Agent or Rate Reduction Bond Registrar hereunder, the protections of this Article VI shall also be afforded to the Indenture Trustee in its capacity as Paying Agent or Rate Reduction Bond Registrar.

(i)Except for the express duties of the Indenture Trustee with respect to the administrative functions set forth in the Basic Documents, the Indenture Trustee shall have no obligation to administer, service or collect RRB Property or to maintain, monitor or otherwise supervise the administration, servicing or collection of the RRB Property.

(j)Under no circumstance shall the Indenture Trustee be liable for any indebtedness of the Issuer, the Servicer or the Seller evidenced by or arising under the Rate Reduction Bonds or the Basic Documents.

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(k)Commencing with March 15, 2019, on or before March 15th of each fiscal year ending December 31, so long as the Issuer is required to file Exchange Act reports, the Indenture Trustee shall (i) deliver to the Issuer a report (in form and substance reasonably satisfactory to the Issuer and addressed to the Issuer and signed by an authorized officer of the Indenture Trustee) regarding the Indenture Trustee’s assessment of compliance, during the preceding fiscal year ended December 31, with each of the applicable servicing criteria specified on Exhibit C as required under Rule 13a-18 and Rule 15d-18 under the Exchange Act and Item 1122 of Regulation AB and (ii) deliver to the Issuer a report of an Independent registered public accounting firm reasonably acceptable to the Issuer that attests to and reports on, in accordance with Rule 1-02(a)(3) and Rule 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act, the assessment of compliance made by the Indenture Trustee and delivered pursuant to Section 6.01(k)(i).

SECTION 6.02.  Rights of Indenture Trustee.

(a)In the absence of bad faith, the Indenture Trustee may conclusively rely and shall be fully protected in relying on any document believed by it to be genuine and to have been signed or presented by the proper person. The Indenture Trustee need not investigate any fact or matter stated in such document.

(b)Before the Indenture Trustee acts or refrains from acting, it may require and shall be entitled to receive an Officer’s Certificate or an Opinion of Counsel (at no cost or expense to the Indenture Trustee) that such action is required or permitted hereunder. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.

(c)The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee, and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it hereunder. The Indenture Trustee shall give prompt written notice to the Issuer, in which case the Issuer shall then give prompt written notice to the Rating Agencies, of the appointment of any such agent, custodian or nominee to whom it delegates any of its express duties under this Indenture; provided, that the Indenture Trustee shall not be obligated to give such notice (i) if the Issuer or the Holders have directed the Indenture Trustee to appoint such agent, custodian or nominee (in which event the Issuer shall give prompt notice to the Rating Agencies of any such direction), (ii) of the appointment of any agents, custodians or nominees made at any time that an Event of Default on account of non-payment of principal or interest on the Rate Reduction Bonds or bankruptcy or insolvency of the Issuer has occurred and is continuing or (iii) of the appointment of any agents, custodians or nominees acting or exercising ministerial duties or powers hereunder (i.e. minor non-substantive procedural or operational acts not involving the exercise of judgment).

(d)The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee’s conduct does not constitute willful misconduct, negligence or bad faith.

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(e)The Indenture Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Rate Reduction Bonds shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

(f)The Indenture Trustee shall be under no obligation to take any action or exercise any of the rights or powers vested in it by this Indenture or any other Basic Document, or to institute, conduct or defend any litigation hereunder or thereunder or in relation hereto or thereto, at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture and the Series Supplement or otherwise, unless it shall have received security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred.

(g)Any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request or an Issuer Order.

(h)The Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Indenture Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer, and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

(i)In no event shall the Indenture Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including loss of profit) irrespective of whether the Indenture Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(j)In no event shall the Indenture Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, it being understood that the Indenture Trustee shall use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

(k)The rights, privileges, protections, immunities and benefits given to the Indenture Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Indenture Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

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(l)The Indenture Trustee may request that the Issuer deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

SECTION 6.03.  Individual Rights of Indenture Trustee.

The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Rate Reduction Bonds and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Indenture Trustee. Any Paying Agent, Rate Reduction Bond Registrar, co-registrar or co-paying agent or agent appointed under Section 3.02 may do the same with like rights. However, the Indenture Trustee must comply with Section 6.11 and Section 6.12.

SECTION 6.04.  Indenture Trustee’s Disclaimer.

(a)The Indenture Trustee shall not be responsible for and makes no representation (other than as set forth in Section 6.13) as to the validity or adequacy of this Indenture or the Rate Reduction Bonds, it shall not be accountable for the Issuer’s use of the proceeds from the Rate Reduction Bonds, and it shall not be responsible for any statement of the Issuer in this Indenture or in any document issued in connection with the sale of the Rate Reduction Bonds or in the Rate Reduction Bonds other than the Indenture Trustee’s certificate of authentication. The Indenture Trustee shall not be responsible for the form, character, genuineness, sufficiency, value or validity of any of the RRB Collateral (or for the perfection or priority of the Liens thereon), or for or in respect of the Rate Reduction Bonds (other than the certificate of authentication for the Rate Reduction Bonds) or the Basic Documents, and the Indenture Trustee shall in no event assume or incur any liability, duty or obligation to any Holder, other than as expressly provided in this Indenture or the applicable Basic Document. The Indenture Trustee shall not be liable for the default or misconduct of the Issuer, the Seller or the Servicer under the Basic Documents or otherwise, and the Indenture Trustee shall have no obligation or liability to perform the obligations of such Persons.

(b)The Indenture Trustee shall not be responsible for (i) the validity of the title of the Issuer to the RRB Collateral, (ii) insuring the RRB Collateral or (iii) the payment of taxes, charges, assessments or Liens upon the RRB Collateral or otherwise as to the maintenance of the RRB Collateral. The Indenture Trustee shall have no duty to ascertain or inquire as to the performance or observance of any of the terms of this Indenture or any of the other Basic Documents. The Indenture Trustee shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the RRB Collateral.

SECTION 6.05.  Notice of Defaults.

If a Default occurs and is continuing, the Indenture Trustee shall deliver to each Rating Agency and each Holder notice of the Default within ten Business Days after written notice of such Default was received by a Responsible Officer of the Indenture Trustee (provided that the Indenture Trustee shall give the Rating Agencies prompt notice of any payment default

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in respect of the Rate Reduction Bonds after written notice of such Default was received by a Responsible Officer of the Indenture Trustee). Except in the case of a Default in payment of principal of and premium, if any, or interest on any Rate Reduction Bond, the Indenture Trustee may withhold the notice of the Default if and so long as a committee of its Responsible Officers in good faith determines that withholding such notice is in the interests of Holders. In no event shall the Indenture Trustee be deemed to have knowledge of a Default unless a Responsible Officer of the Indenture Trustee shall have received written notice thereof.

SECTION 6.06.  Reports by Indenture Trustee to Holders.

(a)So long as Rate Reduction Bonds are Outstanding and the Indenture Trustee is the Rate Reduction Bond Registrar and Paying Agent, upon the written request of any Holder or the Issuer, within the prescribed period of time for tax reporting purposes after the end of each calendar year, the Indenture Trustee shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its U.S. federal income and any applicable local or state tax returns. If the Rate Reduction Bond Registrar and Paying Agent is other than the Indenture Trustee, such Rate Reduction Bond Registrar and Paying Agent, within the prescribed period of time for tax reporting purposes after the end of each calendar year, shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its U.S. federal income and any applicable local or state tax returns.

(b)On or prior to each Payment Date or Special Payment Date therefor, the Indenture Trustee will deliver to each Holder of the Rate Reduction Bonds on such Payment Date or Special Payment Date a statement as provided and prepared by the Servicer, which will include (to the extent applicable) the following information (and any other information so specified in the Series Supplement) as to the Rate Reduction Bonds with respect to such Payment Date or Special Payment Date or the period since the previous Payment Date, as applicable:

(i)the amount of the payment to Holders allocable to principal, if any;

(ii)the amount of the payment to Holders allocable to interest;

(iii)the aggregate Outstanding Amount of the Rate Reduction Bonds, before and after giving effect to any payments allocated to principal reported under Section 6.06(b)(i);

(iv)the difference, if any, between the amount specified in Section 6.06(b)(iii) and the Outstanding Amount specified in the related Expected Amortization Schedule;

(v)any other transfers and payments to be made on such Payment Date or Special Payment Date, including amounts paid to the Indenture Trustee and to the Servicer; and

(vi)the amounts on deposit in the Capital Subaccount (other than Capital Subaccount Investment Earnings) and the Excess Funds Subaccount, after giving effect to the foregoing payments.

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(c)The Issuer shall send a copy of each of the Certificate of Compliance delivered to it pursuant to Section 3.03 of the Servicing Agreement and the Annual Accountant’s Report delivered to it pursuant to Section 3.04 of the Servicing Agreement to the Rating Agencies, the Indenture Trustee and to the Servicer for posting on the 17g-5 Website in accordance with Rule 17g-5 under the Exchange Act. A copy of such certificate and report may be obtained by any Holder by a request in writing to the Indenture Trustee.

SECTION 6.07.  Compensation and Indemnity.

(a)The Issuer shall pay to the Indenture Trustee from time to time reasonable compensation for its services as may be agreed between the Issuer and the Indenture Trustee. The Indenture Trustee’s compensation shall not, to the extent permitted by law, be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee’s agents, counsel, accountants and experts.

(b)The Issuer shall indemnify and hold harmless the Indenture Trustee and its officers, directors, employees and agents (each an “Indemnified Person”) against any and all cost, damage, loss, liability, tax or expense (including reasonable attorneys’ fees and expenses) incurred by it in connection with the administration and the enforcement of this Indenture, the Series Supplement and the other Basic Documents and the Indenture Trustee’s rights, powers and obligations under this Indenture, the Series Supplement and the other Basic Documents and the performance of its duties hereunder and thereunder and obligations under or pursuant to this Indenture, the Series Supplement and the other Basic Documents other than any tax on the compensation of the Indenture Trustee for its services as Indenture Trustee. The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by any Indemnified Person through the Indenture Trustee’s or any other Indemnified Person’s own willful misconduct, negligence or bad faith. The Issuer 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 Issuer, 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 Issuer under this Section 6.07(b), notify the Issuer in writing of such involvement.  Failure by an Indemnified Person to so notify the Issuer shall relieve the Issuer from the obligation to indemnify and hold harmless such Indemnified Person under this Section 6.07(b), only to the extent that the Issuer 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 6.07(b), the Issuer shall be entitled to assume the defense of any such action, proceeding or investigation.  Upon assumption by the Issuer 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 Issuer shall be entitled to appoint counsel of the Issuer’s choice at the Issuer’s expense to represent the Indemnified Person in any action, proceeding or investigation for which a claim of indemnification is made against the Issuer under this Section 6.07(b) (in which case the Issuer shall not thereafter be responsible for the fees and

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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 Issuer’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 Issuer 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 Issuer 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 Issuer and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to the Issuer, (iii) the Issuer 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 Issuer shall authorize the Indemnified Person to employ separate counsel at the expense of the Issuer.  The Issuer 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 6.07(b) (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.

The payment obligations to the Indenture Trustee pursuant to this Section 6.07(b) shall survive the discharge of this Indenture and the Series Supplement or the earlier resignation or removal of the Indenture Trustee. When the Indenture Trustee incurs expenses after the occurrence of a Default specified in Section 5.01(e) or Section 5.01(f) with respect to the Issuer, the expenses are intended to constitute expenses of administration under the Bankruptcy Code or any other applicable U.S. federal or state bankruptcy, insolvency or similar law.

SECTION 6.08.  Replacement of Indenture Trustee and Securities Intermediary.

(a)The Indenture Trustee may resign at any time upon 30 days’ prior written notice (or such shorter period as the Issuer may agree) to the Issuer (and the Indenture Trustee shall provide such notice to the Holders) subject to Section 6.08(c). The Holders of a majority of the Outstanding Amount of the Rate Reduction Bonds may remove the Indenture Trustee upon 30 days’ prior written notice to the Indenture Trustee. The Issuer shall remove the Indenture Trustee if:

(i)the Indenture Trustee fails to comply with Section 6.11;

(ii)the Indenture Trustee is adjudged a bankrupt or insolvent;

(iii)a receiver or other public officer takes charge of the Indenture Trustee or its property;

(iv)the Indenture Trustee otherwise becomes incapable of acting; or

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(v)the Indenture Trustee fails to provide to the Issuer any information reasonably requested by the Issuer pertaining to the Indenture Trustee and necessary for the Issuer or the Sponsor to comply with its respective reporting obligations under the Exchange Act and Regulation AB and such failure is not resolved to the Issuer’s and the Sponsor’s mutual satisfaction within a reasonable period of time.

Any removal or resignation of the Indenture Trustee shall also constitute a removal or resignation of the Securities Intermediary.

(b)If the Indenture Trustee gives notice of resignation or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall promptly appoint a successor Indenture Trustee and Securities Intermediary.

(c)A successor Indenture Trustee shall deliver a written acceptance of its appointment as the Indenture Trustee and as the Securities Intermediary to the retiring Indenture Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee and Securities Intermediary, as applicable, under this Indenture and the other Basic Documents. No resignation or removal of the Indenture Trustee pursuant to this Section 6.08 shall become effective until acceptance of the appointment by a successor Indenture Trustee having the qualifications set forth in Section 6.11. Notice of any such appointment shall be promptly given to each Rating Agency by the successor Indenture Trustee. The successor Indenture Trustee shall deliver a notice of its succession to Holders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee.

(d)If a successor Indenture Trustee does not take office within 60 days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount of the Rate Reduction Bonds may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.

(e)If the Indenture Trustee fails to comply with Section 6.11, any Holder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee.

(f)Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.08, the Issuer’s obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee.

SECTION 6.09.  Successor Indenture Trustee by Merger.

If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Indenture Trustee; provided, however, that, if such successor Indenture Trustee is not eligible under Section 6.11, then the successor Indenture Trustee shall be

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replaced in accordance with Section 6.08. Notice of any such event shall be promptly given to each Rating Agency by the successor Indenture Trustee.

In case at the time such successor or successors by merger, conversion, consolidation or transfer shall succeed to the trusts created by this Indenture any of the Rate Reduction Bonds shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee and deliver the Rate Reduction Bonds so authenticated; and, in case at that time any of the Rate Reduction Bonds shall not have been authenticated, any successor to the Indenture Trustee may authenticate the Rate Reduction Bonds either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force that it is anywhere in the Rate Reduction Bonds or in this Indenture provided that the certificate of the Indenture Trustee shall have.

SECTION 6.10.  Appointment of Co-Trustee or Separate Trustee.

(a)Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the trust created by this Indenture or the RRB Collateral may at the time be located, the Indenture Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the trust created by this Indenture or the RRB Collateral, and to vest in such Person or Persons, in such capacity and for the benefit of the Secured Parties, such title to the RRB Collateral, or any part hereof, and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Holders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08. Notice of any such appointment shall be promptly given to each Rating Agency by the Indenture Trustee.

(b)Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:

(i)all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the RRB Collateral or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee;

(ii)no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and

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(iii)          the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee.

(c)           Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then-separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee.

(d)           Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or its attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

SECTION 6.11.  Eligibility; Disqualification.

The Indenture Trustee shall at all times satisfy the requirements of Section 310(a)(1) of the Trust Indenture Act, Section 310(a)(5) of the Trust Indenture Act and Section 26(a)(1) of the Investment Company Act. The Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and shall have a long-term debt rating from each of Moody’s and S&P in one of its generic rating categories that signifies investment grade. The Indenture Trustee shall comply with Section 310(b) of the Trust Indenture Act; provided, however, that there shall be excluded from the operation of Section 310(b)(1) of the Trust Indenture Act any indenture or indentures under which other securities of the Issuer are outstanding if the requirements for such exclusion set forth in Section 310(b)(1) of the Trust Indenture Act are met.

SECTION 6.12.  Preferential Collection of Claims Against Issuer.

The Indenture Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. An Indenture Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent indicated therein.

SECTION 6.13.  Representations and Warranties of Indenture Trustee.

The Indenture Trustee hereby represents and warrants that:

(a)           the Indenture Trustee is a banking corporation validly existing and in good standing under the laws of the State of New York; and

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(b)           the Indenture Trustee has full power, authority and legal right to execute, deliver and perform its obligations under this Indenture and the other Basic Documents to which the Indenture Trustee is a party and has taken all necessary action to authorize the execution, delivery and performance of obligations by it of this Indenture and such other Basic Documents.

SECTION 6.14.  Annual Report by Independent Registered Public Accountants.

The Indenture Trustee hereby covenants that it will cooperate fully with the firm of Independent registered public accountants performing the procedures required under Section 3.04 of the Servicing Agreement, it being understood and agreed that the Indenture Trustee will so cooperate in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.

SECTION 6.15.  Custody of RRB Collateral.

The Indenture Trustee shall hold such of the RRB Collateral (and any other collateral that may be granted to the Indenture Trustee) as consists of instruments, deposit accounts, negotiable documents, money, goods, letters of credit and advices of credit in the State of New York. The Indenture Trustee shall hold such of the RRB Collateral as constitute investment property through the Securities Intermediary (which, as of the date hereof, is The Bank of New York Mellon). The initial Securities Intermediary hereby agrees (and each future Securities Intermediary shall agree) with the Indenture Trustee that (a) such investment property shall at all times be credited to a securities account of the Indenture Trustee, (b) the Securities Intermediary shall treat the Indenture Trustee as entitled to exercise the rights that comprise each financial asset credited to such securities account, (c) all property credited to such securities account (other than cash) shall be treated as a financial asset, (d) the Securities Intermediary shall comply with entitlement orders originated by the Indenture Trustee without the further consent of any other Person, (e) the Securities Intermediary will not agree with any Person other than the Indenture Trustee to comply with entitlement orders originated by such other Person, (f) such securities accounts and the property credited thereto shall not be subject to any Lien or right of set-off in favor of the Securities Intermediary or anyone claiming through it (other than the Indenture Trustee) and (g) such agreement shall be governed by the laws of the State of New York. The Indenture Trustee shall hold any RRB Collateral consisting of money in a deposit account and shall act as the “bank” for purposes of perfecting the security interest in such deposit account. Terms used in the preceding two sentences that are defined in the UCC and not otherwise defined herein shall have the meaning set forth in the UCC. Except as permitted by this Section 6.15 or elsewhere in this Indenture, the Indenture Trustee shall not hold RRB Collateral through an agent or a nominee.

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ARTICLE VII

HOLDERS’ LISTS AND REPORTS

SECTION 7.01.  Issuer To Furnish Indenture Trustee Names and Addresses of Holders.

The Issuer will furnish or cause to be furnished to the Indenture Trustee (a) not more than five days after the earlier of (i) each Record Date and (ii) six months after the last Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Holders as of such Record Date, and (b) at such other times as the Indenture Trustee may request in writing, within 30 days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than ten days prior to the time such list is furnished; provided, however, that, so long as the Indenture Trustee is the Rate Reduction Bond Registrar, no such list shall be required to be furnished.

SECTION 7.02.  Preservation of Information; Communications to Holders.

(a)           The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.01 and the names and addresses of Holders received by the Indenture Trustee in its capacity as Rate Reduction Bond Registrar. The Indenture Trustee may destroy any list furnished to it as provided in Section 7.01 upon receipt of a new list so furnished.

(b)           Holders may communicate pursuant to Section 312(b) of the Trust Indenture Act with other Holders with respect to their rights under this Indenture or under the Rate Reduction Bonds. In addition, upon the written request of any Holder or group of Holders of Outstanding Rate Reduction Bonds evidencing at least 10 percent of the Outstanding Amount of the Rate Reduction Bonds, the Indenture Trustee shall afford the Holder or Holders making such request a copy of a current list of Holders for purposes of communicating with other Holders with respect to their rights hereunder; provided, that the Indenture Trustee gives prior written notice to the Issuer of such request.

(c)           The Issuer, the Indenture Trustee and the Rate Reduction Bond Registrar shall have the protection of Section 312(c) of the Trust Indenture Act.

SECTION 7.03.  Reports by Issuer.

(a)           The Issuer shall:

(i)            so long as the Issuer or the Sponsor is required to file such documents with the SEC, provide to the Indenture Trustee, within 15 days after the Issuer is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) that the Issuer or the Sponsor may be required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act;

(ii)           provide to the Indenture Trustee and file with the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such additional information, documents and reports with respect to compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and

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(iii)          supply to the Indenture Trustee (and the Indenture Trustee shall deliver to all Holders described in Section 313(c) of the Trust Indenture Act), such summaries of any information, documents and reports required to be filed by the Issuer pursuant to Section 7.03(a)(i) and Section 7.03(a)(ii) as may be required by rules and regulations prescribed from time to time by the SEC.

Except as may be provided by Section 313(c) of the Trust Indenture Act, the Issuer may fulfill its obligation to provide the materials described in this Section 7.03(a) by providing such materials in electronic format.

Delivery of such reports, information and documents to the Indenture Trustee is for informational purposes only and the Indenture Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants hereunder (as to which the Indenture Trustee is entitled to rely exclusively on Officer’s Certificates).

(b)           Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of each year and the Issuer will promptly notify the Indenture Trustee regarding any change in the fiscal year.

SECTION 7.04.  Reports by Indenture Trustee.

If required by Section 313(a) of the Trust Indenture Act, within 60 days after March 30 of each year, commencing with March 30, 2019, the Indenture Trustee shall deliver to each Holder as required by Section 313(c) of the Trust Indenture Act a brief report dated as of such date that complies with Section 313(a) of the Trust Indenture Act. The Indenture Trustee also shall comply with Section 313(b) of the Trust Indenture Act; provided, however, that the initial report so issued shall be delivered not more than 12 months after the initial issuance of the Rate Reduction Bonds.

A copy of each report at the time of its delivery to Holders shall be filed by the Servicer with the SEC and each stock exchange, if any, on which the Rate Reduction Bonds are listed. The Issuer shall notify the Indenture Trustee in writing if and when the Rate Reduction Bonds are listed on any stock exchange.

ARTICLE VIII

ACCOUNTS, DISBURSEMENTS AND RELEASES

SECTION 8.01.  Collection of Money.

Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture and the other Basic Documents. The Indenture Trustee shall apply all such money received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the RRB

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Collateral, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, subject to Article VI, including the institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V.

SECTION 8.02.  Collection Account.

(a)           Prior to the Closing Date, the Issuer shall open or cause to be opened with the Securities Intermediary located at the Indenture Trustee’s office located at the Corporate Trust Office, or at another Eligible Institution, one or more segregated trust accounts in the Indenture Trustee’s name for the deposit of RRB Charge Collections and all other amounts received with respect to the RRB Collateral (the “Collection Account”). There shall be established by the Indenture Trustee in respect of the Collection Account three subaccounts: a general subaccount (the “General Subaccount”); an excess funds subaccount (the “Excess Funds Subaccount”); and a capital subaccount (the “Capital Subaccount” and, together with the General Subaccount and the Excess Funds Subaccount, the “Subaccounts”). For administrative purposes, the Subaccounts may be established by the Securities Intermediary as separate accounts. Such separate accounts will be recognized individually as a Subaccount and collectively as the “Collection Account”. Prior to or concurrently with the issuance of Rate Reduction Bonds, the Member shall deposit into the Capital Subaccount an amount equal to the Required Capital Level. All amounts in the Collection Account not allocated to any other subaccount shall be allocated to the General Subaccount. Prior to the initial Payment Date, all amounts in the Collection Account (other than funds deposited into the Capital Subaccount up to the Required Capital Level and any Capital Subaccount Investment Earnings) shall be allocated to the General Subaccount. All references to the Collection Account shall be deemed to include reference to all subaccounts contained therein. Withdrawals from and deposits to each of the foregoing subaccounts of the Collection Account shall be made as set forth in Section 8.02(d) and Section 8.02(e). The Collection Account shall at all times be maintained in an Eligible Account and will be under the sole dominion and exclusive control of the Indenture Trustee, through the Securities Intermediary, and only the Indenture Trustee shall have access to the Collection Account for the purpose of making deposits in and withdrawals from the Collection Account in accordance with this Indenture. Funds in the Collection Account shall not be commingled with any other moneys. All moneys deposited from time to time in the Collection Account, all deposits therein pursuant to this Indenture and all investments made in Eligible Investments as directed in writing by the Issuer with such moneys, including all income or other gain from such investments other than Capital Subaccount Investment Earnings, shall be held by the Securities Intermediary in the Collection Account as part of the RRB Collateral as herein provided. The Securities Intermediary shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or its date of redemption or the failure of the Issuer or the Servicer to provide timely written investment direction.

(b)           The Securities Intermediary hereby confirms that (i) the Collection Account is, or at inception will be established as, a “securities account” as such term is defined in Section 8-501(a) of the UCC, (ii) it is a “securities intermediary” (as such term is defined in Section 8-102(a)(14) of the UCC) and is acting in such capacity with respect to such accounts, (iii) the Indenture Trustee for the benefit of the Secured Parties is the sole “entitlement holder”

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(as such term is defined in Section 8-102(a)(7) of the UCC) with respect to such accounts and (iv) no other Person shall have the right to give “entitlement orders” (as such term is defined in Section 8-102(a)(8)) with respect to such accounts. The Securities Intermediary hereby further agrees that each item of property (whether investment property, financial asset, security, instrument or cash) received by it will be credited to the Collection Account. Such property, other than cash, shall be treated by it as a “financial asset” within the meaning of Section 8-102(a)(9) of the UCC. The Indenture Trustee shall hold any RRB Collateral consisting of money in the Collection Account and hereby confirms that for such purpose, the Collection Account is a “deposit account” within the meaning of Section 9-102(a)(29).  The Indenture Trustee further confirms that for purposes of perfecting the security interest in such deposit account, it shall act as the “bank” within the meaning of Section 9-102(a)(8) of the UCC. Notwithstanding anything to the contrary, the State of New York shall be deemed to be the jurisdiction of the Securities Intermediary for purposes of Section 8-110 of the UCC and of the Indenture Trustee acting as the “bank” for purposes of Section 9-304(a) of the UCC, and the Collection Account (as well as the securities entitlements related thereto) shall be governed by the laws of the State of New York.

(c)           The Indenture Trustee shall have sole dominion and exclusive control over all moneys in the Collection Account through the Securities Intermediary and shall apply such amounts therein as provided in this Section 8.02.

(d)           RRB Charge Collections shall be deposited in the General Subaccount as provided in Section 4.03 of the Servicing Agreement. All deposits to and withdrawals from the Collection Account, all allocations to the subaccounts of the Collection Account and any amounts to be paid to the Servicer under Section 8.02(e) shall be made by the Indenture Trustee in accordance with the written instructions provided by the Servicer in the Monthly Servicer’s Certificate or the Semi-Annual Servicer’s Certificate.

(e)           On each Payment Date, the Indenture Trustee shall apply all amounts on deposit in the Collection Account, including all Investment Earnings thereon, in accordance with the Semi-Annual Servicer’s Certificate, in the following priority:

(i)            payment of the Indenture Trustee’s (and its agents’ and counsel’s) fees, expenses and outstanding indemnity amounts to the Indenture Trustee (subject to Section 6.07) in an amount not to exceed $200,000 per Payment Date;

(ii)           payment of the Servicing Fee with respect to such Payment Date, plus any unpaid Servicing Fees for prior Payment Dates to the Servicer;

(iii)          payment of the Administration Fee for such Payment Date to the Administrator and the Independent Manager Fee for such Payment Date to the Independent Manager, in each case with any unpaid Administration Fees or Independent Manager Fees from prior Payment Dates;

(iv)          payment of all other ordinary periodic Operating Expenses not described above for such Payment Date to the parties to which such Operating Expenses are owed;

(v)           payment of Periodic Interest for such Payment Date, including any overdue Periodic Interest (together with, to the extent lawful, interest on such overdue

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Periodic Interest at the applicable Bond Interest Rate), with respect to the Rate Reduction Bonds to the Holders of Rate Reduction Bonds;

(vi)          payment of the principal required to be paid on the Rate Reduction Bonds on the Final Maturity Date or as a result of an acceleration upon an Event of Default to the Holders of Rate Reduction Bonds;

(vii)         payment of Periodic Principal for such Payment Date, including any previously unpaid Periodic Principal, with respect to the Rate Reduction Bonds to the Holders of Rate Reduction Bonds, pro rata if there is a deficiency;

(viii)        payment of any other unpaid Operating Expenses (including any such amounts owed to the Indenture Trustee but unpaid due to the limitation in Section 8.02(e)(i)) and any remaining amounts owed pursuant to the Basic Documents to the parties to which such Operating Expenses or remaining amounts are owed;

(ix)          the amount, if any, by which the Required Capital Level exceeds the amount in the Capital Subaccount (disregarding any Capital Subaccount Investment Earnings) as of such Payment Date shall be allocated to the Capital Subaccount;

(x)           other than after the Rate Reduction Bonds have been paid in full and discharged, and all of the other foregoing amounts have been paid in full, together with all amounts due and payable to the Indenture Trustee under this Indenture, the balance, if any, shall be allocated to the Excess Funds Subaccount; and

(xi)          after the Rate Reduction Bonds have been paid in full and discharged, and all of the other foregoing amounts are paid in full, together with all amounts due and payable to the Indenture Trustee under Section 6.07 or otherwise, (A) the balance of the Capital Subaccount, if any, shall be paid to the Member and (B) the balance of all other amounts on deposit in the Collection Account (including all amounts then held in the Excess Funds Subaccount), if any, shall be paid to the Issuer, in each case free from the Lien of this Indenture and the Series Supplement.

All payments to the Holders of the Rate Reduction Bonds pursuant to Section 8.02(e)(v), Section 8.02(e)(vi) and Section 8.02(e)(vii) shall be made to such Holders pro rata based on the respective amounts of interest and/or principal owed, unless, in the case of Rate Reduction Bonds comprised of two or more Tranches, the Series Supplement provides otherwise. Payments in respect of principal of and premium, if any, and interest on any Tranche of Rate Reduction Bonds will be made on a pro rata basis among all the Holders of such Tranche. In the case of an Event of Default, then, in accordance with Section 5.04(c), in respect of any application of moneys pursuant to Section 8.02(e)(v) or Section 8.02(e)(vi), moneys will be applied pursuant to Section 8.02(e)(v) and Section 8.02(e)(vi), as the case may be, in such order, on a pro rata basis, based upon the interest or the principal owed.

(f)            If on any Payment Date, or, for any amounts payable under Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii) and Section 8.02(e)(iv), on any Business Day, funds on deposit in the General Subaccount are insufficient to make the payments contemplated by Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii), Section 8.02(e)(iv), Section

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8.02(e)(v), Section 8.02(e)(vi), Section 8.02(e)(vii) and Section 8.02(e)(viii), the Indenture Trustee shall (i) first, draw from amounts on deposit in the Excess Funds Subaccount, and (ii) second, draw from amounts on deposit in the Capital Subaccount, in each case, up to the amount of such shortfall in order to make the payments contemplated by Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii), Section 8.02(e)(iv), Section 8.02(e)(v), Section 8.02(e)(vi), Section 8.02(e)(vii) and Section 8.02(e)(viii). In addition, if on any Payment Date funds on deposit in the General Subaccount are insufficient to make the allocations contemplated by Section 8.02(e)(ix), the Indenture Trustee shall draw any amounts on deposit in the Excess Funds Subaccount to make such allocations to the Capital Subaccount.

(g)           On the second Business Day of each calendar month, and promptly following the payment in full and discharge of the Rate Reduction Bonds, the Indenture Trustee shall pay all Capital Subaccount Investment Earnings to the Member, in each case, pursuant to a written direction from the Servicer.

(h)           On any Business Day upon which the Indenture Trustee receives a written request from the Administrator stating that any Operating Expense payable by the Issuer (but only as described in Section 8.02(e)(i), Section 8.02(e)(ii), Section 8.02(e)(iii) and Section 8.02(e)(iv)) will become due and payable prior to the next Payment Date, and setting forth the amount and nature of such Operating Expense, as well as any supporting documentation that the Indenture Trustee may reasonably request, the Indenture Trustee, upon receipt of such information, will make payment of such Operating Expenses on or before the date such payment is due from amounts on deposit in the General Subaccount, the Excess Funds Subaccount and the Capital Subaccount, in that order, and only to the extent required to make such payment.

SECTION 8.03.  General Provisions Regarding the Collection Account.

(a)           So long as no Default or Event of Default shall have occurred and be continuing, all or a portion of the funds in the Collection Account shall be invested in Eligible Investments and reinvested by the Indenture Trustee upon Issuer Order; provided, however, that such Eligible Investments shall not mature or be redeemed later than the Business Day prior to the next Payment Date or Special Payment Date, if applicable, for the Rate Reduction Bonds. All income or other gain from investments of moneys deposited in the Collection Account shall be deposited by the Indenture Trustee in the Collection Account, and any loss resulting from such investments shall be charged to the Collection Account (it being understood that all income or gain from investments of moneys deposited in the Capital Subaccount shall be credited to the Capital Subaccount, and any loss resulting from such investments shall be charged to the Capital Subaccount). The Issuer will not direct the Indenture Trustee to make any investment of any funds or to sell any investment held in the Collection Account unless the security interest Granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of Counsel (at the Issuer’s cost and expense) to such effect. In no event shall the Indenture Trustee be liable for the selection of Eligible Investments or for investment losses incurred thereon. The Indenture Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or its date of redemption or the failure of the

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Issuer or the Servicer to provide timely written investment direction. The Indenture Trustee shall have no obligation to invest or reinvest any amounts held hereunder in the absence of written investment direction pursuant to an Issuer Order.

(b)           Subject to Section 6.01(c), the Indenture Trustee shall not in any way be held liable by reason of any insufficiency in the Collection Account resulting from any loss on any Eligible Investment included therein except for losses attributable to the Indenture Trustee’s failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms.

(c)           If (i) the Issuer shall have failed to give written investment directions for any funds on deposit in the Collection Account to the Indenture Trustee by 11:00 a.m. New York City time (or such other time as may be agreed by the Issuer and Indenture Trustee) on any Business Day or (ii) an Event of Default shall have occurred and be continuing with respect to the Rate Reduction Bonds but the Rate Reduction Bonds shall not have been declared due and payable pursuant to Section 5.02, then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in such Collection Account in Eligible Investments specified in the most recent written investment directions delivered by the Issuer to the Indenture Trustee; provided, that if the Issuer has never delivered written investment directions to the Indenture Trustee, the Indenture Trustee shall (x) invest or reinvest such funds at the direction of the Holders of a majority of the Outstanding Amount of the Rate Reduction Bonds, if such direction has been provided, or (y) not invest or reinvest such funds in any investments.

(d)           The parties hereto acknowledge that the Servicer may, pursuant to the Servicing Agreement, select Eligible Investments on behalf of the Issuer.

(e)           Except as otherwise provided hereunder or agreed in writing among the parties hereto, the Issuer shall retain the authority to institute, participate and join in any plan of reorganization, readjustment, merger or consolidation with respect to the issuer of any Eligible Investments held hereunder, and, in general, to exercise each and every other power or right with respect to each such asset or investment as Persons generally have and enjoy with respect to their own assets and investment, including power to vote upon any Eligible Investments.

SECTION 8.04.  Release of RRB Collateral.

(a)           The Servicer, may collect, sell or otherwise dispose of written-off receivables, at any time and from time to time in the ordinary course of business, without any notice to, or release or consent by, the Indenture Trustee, but only as and to the extent permitted by the Basic Documents; provided, however, that any and all proceeds of such dispositions shall become RRB Collateral and be deposited to the General Subaccount immediately upon receipt thereof by the Issuer or any other Person, including the Servicer. Without limiting the foregoing, the Servicer, may, at any time and from time to time without any notice to, or release or consent by, the Indenture Trustee, sell or otherwise dispose of any RRB Collateral previously written-off as a defaulted or uncollectible account in accordance with the terms of the Servicing Agreement and the requirements of the proviso in the preceding sentence.

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(b)           The Indenture Trustee may, and when required by the provisions of this Indenture shall, execute instruments to release property from the Lien of this Indenture, or convey the Indenture Trustee’s interest in the same, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys. The Indenture Trustee shall release property from the Lien of this Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer Request accompanied by an Officer’s Certificate, an Opinion of Counsel of external counsel of the Issuer (at the Issuer’s cost and expense) and (if required by the Trust Indenture Act) Independent Certificates in accordance with Section 314(c) of the Trust Indenture Act and Section 314(d)(1) of the Trust Indenture Act meeting the applicable requirements of Section 10.01.

(c)           The Indenture Trustee shall, at such time as there are no Rate Reduction Bonds Outstanding and all sums payable to the Indenture Trustee pursuant to Section 6.07 or otherwise have been paid, release any remaining portion of the RRB Collateral that secured the Rate Reduction Bonds from the Lien of this Indenture and release to the Issuer or any other Person entitled thereto any funds or investments then on deposit in or credited to the Collection Account.

SECTION 8.05.  Opinion of Counsel.

The Indenture Trustee shall receive at least seven days’ notice (or such shorter period as the Indenture Trustee may agree) when requested by the Issuer to take any action pursuant to Section 8.04, accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, as a condition to such action, an Opinion of Counsel of external counsel of the Issuer, in form and substance satisfactory to the Indenture Trustee, concluding that all conditions precedent to the taking of such action have been complied with and that such action will not impair the perfection or priority of the security interest in the remaining RRB Collateral; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the RRB Collateral. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action.

SECTION 8.06.  Reports by Independent Registered Public Accountants.

As of the Closing Date, the Issuer shall appoint a firm of Independent registered public accountants of recognized national reputation for purposes of preparing and delivering the reports or certificates of such accountants required by this Indenture and the Series Supplement. The Issuer shall permit such accountants reasonable access to its books and records for purposes of preparing and delivering the reports and certificates of such accountants required by this Indenture and the Series Supplement. In the event such firm requires the Indenture Trustee to agree to the procedures performed by such firm, the Issuer hereby directs the Indenture Trustee in writing to so agree, it being understood and agreed that the Indenture Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures. Upon any

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resignation by, or termination by the Issuer of, such firm, the Issuer shall provide written notice thereof to the Indenture Trustee and shall promptly appoint a successor thereto that shall also be a firm of Independent registered public accountants of recognized national reputation. If the Issuer shall fail to appoint a successor to a firm of Independent registered public accountants that has resigned or been terminated within 30 days after such resignation or termination, the Issuer shall promptly notify the Indenture Trustee of such failure in writing. If the Issuer shall not have appointed a successor within fifteen days thereafter, the Indenture Trustee shall promptly appoint a successor firm of Independent registered public accountants of recognized national reputation; provided, that the Indenture Trustee shall have no liability with respect to such appointment. The fees of such Independent registered public accountants and its successor shall be payable by the Issuer as an Operating Expense.

ARTICLE IX

SUPPLEMENTAL INDENTURES

SECTION 9.01.  Supplemental Indentures Without Consent of Holders.

(a)           Without the consent of the Holders of any Rate Reduction Bonds but with prior notice to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in force at the date of the execution thereof), for any of the following purposes:

(i)            to correct or amplify the description of any property, including the RRB Collateral, at any time subject to the Lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the Lien of this Indenture and the Series Supplement, or to subject to the Lien of this Indenture and the Series Supplement additional property;

(ii)           to evidence the succession, in compliance with the applicable provisions hereof, of another Person to the Issuer, and the assumption by any such successor of the covenants of the Issuer herein and in the Rate Reduction Bonds;

(iii)          to add to the covenants of the Issuer, for the benefit of the Secured Parties, or to surrender any right or power herein conferred upon the Issuer;

(iv)          to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee;

(v)           to cure any ambiguity or mistake, to correct or supplement any provision herein or in any supplemental indenture, including the Series Supplement, that may be inconsistent with any other provision herein or in any supplemental indenture, including the Series Supplement, or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture; provided, that such action shall not, as evidenced by an Opinion of Counsel provided pursuant to (and as described under) Section 10.01(a) hereof, adversely affect in any material respect the interests of the Holders of the Rate Reduction Bonds;

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(vi)          to evidence and provide for the acceptance of the appointment hereunder by a successor trustee, Paying Agent, Bond Registrar or other administrative capacity with respect to the Rate Reduction Bonds and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI;

(vii)         to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the Trust Indenture Act and to add to this Indenture such other provisions as may be expressly required by the Trust Indenture Act;

(viii)        to evidence the final terms of the Rate Reduction Bonds in the Series Supplement;

(ix)          to qualify the Rate Reduction Bonds for registration with a Clearing Agency;

(x)           to satisfy any Rating Agency requirements;

(xi)          to make any amendment to this Indenture or the Rate Reduction Bonds relating to the transfer and legending of the Rate Reduction Bonds to comply with applicable securities laws; or

(xii)         to conform the text of this Indenture or the Rate Reduction Bonds to any provision of the registration statement filed by the Issuer with the SEC with respect to the issuance of the Rate Reduction Bonds to the extent that such provision was intended to be a verbatim recitation of a provision of this Indenture or the Rate Reduction Bonds;

provided, in each case, that such supplemental indenture, as evidenced by an Officer’s Certificate, shall not cause any material adverse U.S. federal income tax consequence to the Seller, the Issuer, the Managers, the Indenture Trustee or the then existing Holders.

The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained.

(b)           The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may also, without the consent of any of the Holders of the Rate Reduction Bonds, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Rate Reduction Bonds under this Indenture; provided, however, that (i) such action shall not, as evidenced by the Opinion of Counsel provided pursuant to (and as described under) Section 10.01(a) hereof, adversely affect in any material respect the interests of the Holders and (ii) the Rating Agency Condition shall have been satisfied with respect thereto.

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SECTION 9.02.  Supplemental Indentures with Consent of Holders.

The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with prior notice to the Rating Agencies and with the consent of the Holders of a majority of the Outstanding Amount of the Rate Reduction Bonds of each Tranche to be affected, by Act of such Holders delivered to the Issuer and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Rate Reduction Bonds under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Rate Reduction Bond of each Tranche affected thereby:

(i)            change the date of payment of any installment of principal of or premium, if any, or interest on any Rate Reduction Bond of such Tranche, or reduce the principal amount thereof, the interest rate thereon or premium, if any, with respect thereto;

(ii)           change the provisions of this Indenture and the Series Supplement relating to the application of collections on, or the proceeds of the sale of, the RRB Collateral to payment of principal of or premium, if any, or interest on the Rate Reduction Bonds, or change any place of payment where, or the currency in which, any Rate Reduction Bond or the interest thereon is payable;

(iii)          reduce the percentage of the Outstanding Amount of the Rate Reduction Bonds or of a Tranche thereof, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with any provisions of this Indenture or the waiver of any defaults under this Indenture;

(iv)          reduce the percentage of the Outstanding Amount of the Rate Reduction Bonds or Tranche thereof required to direct the Indenture Trustee to direct the Issuer to sell or liquidate the RRB Collateral pursuant to Section 5.04;

(v)           modify any provision of this Section 9.02 or the provisions of any other Basic Documents similarly specifying the rights of the Holders to consent to modification thereof, except to increase any percentage specified herein or to provide that the relevant provisions of this Indenture or the other Basic Documents referenced in this Section 9.02 cannot be modified or waived without the consent of the Holder of each Outstanding Rate Reduction Bond affected thereby;

(vi)          modify any of the provisions of this Indenture in such manner as to affect the calculation of the amount of any payment of interest, principal or premium, if any, due on any Rate Reduction Bond on any Payment Date (including the calculation of any of the individual components of such calculation) or change the Expected Amortization Schedule or Final Maturity Date of any Tranche of Rate Reduction Bonds;

(vii)         decrease the Required Capital Level;

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(viii)        permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any part of the Rate Reduction Bond Collateral or, except as otherwise permitted or contemplated herein, terminate the Lien of this Indenture on any property at any time subject hereto or deprive the Holder of any Rate Reduction Bond of the security provided by the Lien of this Indenture; or

(ix)          impair the right to institute suit for the enforcement of the provisions of this Indenture regarding payment or application of funds.

It shall not be necessary for any Act of Holders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section 9.02, the Issuer shall deliver to the Rating Agencies a copy of such supplemental indenture and to the Holders of the Rate Reduction Bonds to which such supplemental indenture relates either a copy of such supplemental indenture or a notice setting forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to deliver such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

SECTION 9.03.  Execution of Supplemental Indentures.

In executing any supplemental indenture permitted by this Article IX or the modifications thereby of the trust created by this Indenture, the Indenture Trustee shall be fully protected in relying upon an Officer’s Certificate and Opinion of Counsel stating that the execution of such supplemental indenture is authorized and permitted by this Indenture and all conditions precedent, if any, provided for in this Indenture relating to such supplemental indenture or modification have been satisfied. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise. All fees and expenses in connection with any such supplemental indenture shall be paid by the requesting party.

SECTION 9.04.  Effect of Supplemental Indenture.

Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to each Tranche of Rate Reduction Bonds affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

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SECTION 9.05.  Conformity with Trust Indenture Act.

Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the Trust Indenture Act as then in effect so long as this Indenture shall then be qualified under the Trust Indenture Act.

SECTION 9.06.  Reference in Rate Reduction Bonds to Supplemental Indentures.

Rate Reduction Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Issuer or the Indenture Trustee shall so determine, new Rate Reduction Bonds so modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Rate Reduction Bonds.

ARTICLE X

MISCELLANEOUS

SECTION 10.01.  Compliance Certificates and Opinions, etc.

(a)           Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee (i) an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of Counsel stating that in the opinion of such counsel such action is authorized and permitted and all such conditions precedent, if any, have been complied with; provided that any Opinion of Counsel delivered in connection with a supplemental indenture entered into pursuant to Section 9.01(b) shall be delivered by a firm of nationally recognized counsel of the Issuer experienced in structured finance transactions (which may be supported as to factual (including financial and capital markets) matters by any relevant certificates and other documents necessary or advisable in the judgment of counsel delivering such opinion) and (iii) (if required by the Trust Indenture Act) an Independent Certificate from a firm of registered public accountants meeting the applicable requirements of this Section 10.01, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished.

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(i)            a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto;

(ii)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

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(iii)          a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv)          a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with.

(b)           Prior to the deposit of any RRB Collateral or other property or securities with the Indenture Trustee that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 10.01(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such deposit) to the Issuer of the RRB Collateral or other property or securities to be so deposited.

(c)           Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signer thereof as to the matters described in Section 10.01(b), the Issuer shall also deliver to the Indenture Trustee an Independent Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or release since the commencement of the then-current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to Section 10.01(b) and this Section 10.01(c), is ten percent or more of the Outstanding Amount of the Rate Reduction Bonds, but such a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to the Issuer as set forth in the related Officer’s Certificate is less than the lesser of (A) $25,000 or (B) one percent of the Outstanding Amount of the Rate Reduction Bonds.

(d)           Whenever any property or securities are to be released from the Lien of this Indenture other than pursuant to Section 8.02(e), the Issuer shall also furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such release) of the property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof.

(e)           Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signatory thereof as to the matters described in Section 10.01(d), the Issuer shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value of the property or securities with respect thereto, or securities released from the Lien of this Indenture (other than pursuant to Section 8.02(e)) since the commencement of the then-current calendar year, as set forth in the certificates required by Section 10.01(d) and this Section 10.01(e), equals 10 percent or more of the Outstanding Amount of the Rate Reduction Bonds, but such certificate need not be furnished in the case of any release of property or securities if the fair value thereof as set forth in the related Officer’s Certificate is less than the lesser of (A) $25,000 or (B) one percent of the then Outstanding Amount of the Rate Reduction Bonds.

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(f)            Notwithstanding any other provision of this Section 10.01, the Indenture Trustee may (A) collect, liquidate, sell or otherwise dispose of the RRB Property and the other RRB Collateral as and to the extent permitted or required by the Basic Documents and (B) make cash payments out of the Collection Account as and to the extent permitted or required by the Basic Documents.

(g)           Any Officer’s Certificate, Issuer Order or Issuer Request required or permitted to be delivered pursuant to this Indenture or the other Basic Documents may be signed by a Responsible Officer of the Administrator on behalf of the Issuer.

SECTION 10.02.  Form of Documents Delivered to Indenture Trustee.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any such certificate of a Responsible Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer or the Issuer stating that the information with respect to such factual matters is in the possession of the Servicer or the Issuer, unless such Responsible Officer or counsel, as the case may be, knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer’s compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely conclusively upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

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SECTION 10.03.  Acts of Holders.

(a)           Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing, and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section 10.03.

(b)           The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient.

(c)           The ownership of Rate Reduction Bonds shall be proved by the Rate Reduction Bond Register.

(d)           Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Rate Reduction Bonds shall bind the Holder of every Rate Reduction Bond issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Rate Reduction Bond.

SECTION 10.04.  Notices, etc., to Indenture Trustee, Issuer and Rating Agencies.

Any notice, report or other communication given hereunder 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)       in the case of 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;

(b)       in the case of the Indenture Trustee, to the Corporate Trust Office;

(c)           in the case of Fitch, to Fitch Ratings Inc., 33 Whitehall Street, New York, New York 10004, Attention: ABS Surveillance, Telephone: (212) 908-0500, Email: to surveillance-abs-other@fitchratings.com (all such notices to be delivered to Fitch in writing by email);

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(d)       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); and

(e)       in the case of 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).

Each party hereto may, by notice given in accordance herewith to the other party or parties hereto, designate any further or different address to which subsequent notices, reports and other communications shall be sent.

The Indenture Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured e-mail, pdf, facsimile transmission or other similar unsecured electronic methods, provided, however, that the Indenture Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing.  If the Issuer elects to give the Indenture Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Indenture Trustee in its discretion elects to act upon such instructions, the Indenture Trustee’s understanding of such instructions shall be deemed controlling in the absence of negligence, bad faith or willful misconduct. The Indenture Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction in the absence of negligence, bad faith or willful misconduct of the Indenture Trustee. The Issuer agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Indenture Trustee, including without limitation the risk of the Indenture Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties, in each case in the absence of negligence, bad faith or willful misconduct of the Indenture Trustee.

Notwithstanding any other provision of this Indenture or any Rate Reduction Bond, where this Indenture or any Rate Reduction Bond provides for notice of any event or any other communication (including any notice of redemption or repurchase) to a holder of a Global Rate Reduction Bond (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary (or its designee) pursuant to the standing instructions from the Depositary or its designee, including by electronic mail in accordance with accepted practices at the Depositary.

SECTION 10.05.  Notices to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid to each Holder affected by such event, at such Holder’s address as it appears on the Rate Reduction Bond Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is

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given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.

In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event of Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice.

Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder and shall not under any circumstance constitute a Default or Event of Default.

SECTION 10.06.  Conflict with Trust Indenture Act.

If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

The provisions of Sections 310 through 317 of the Trust Indenture Act that impose duties on any Person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein.

SECTION 10.07.  Successors and Assigns.

All covenants and agreements in this Indenture and the Rate Reduction Bonds by the Issuer shall bind its successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors.

SECTION 10.08.  Severability.

Any provision in this Indenture or in the Rate Reduction Bonds 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 remainder of such provision (if any) or the remaining provisions hereof (unless such construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

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SECTION 10.09.  Benefits of Indenture.

Nothing in this Indenture or in the Rate Reduction Bonds, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders, and any other party secured hereunder, and any other Person with an ownership interest in any part of the RRB Collateral, any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 10.10.  Legal Holidays.

In any case where the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Rate Reduction Bonds or this Indenture) payment need not be made on such date, but may be made on the next Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date.

SECTION 10.11.  GOVERNING LAW.

This Indenture shall be governed by and construed in accordance with the laws of the State of New York; provided, that, except as set forth in Section 8.02(b) hereof, the creation, attachment and perfection of any Liens created hereunder in RRB Property, and all rights and remedies of the Indenture Trustee and the Holders with respect to the RRB Property, shall be governed by the laws of the State of New Hampshire.

SECTION 10.12.  Counterparts.

This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

SECTION 10.13.  Recording of Indenture.

If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel at the Issuer’s cost and expense to the effect that such recording is necessary either for the protection of the Holders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture and the Series Supplement.

SECTION 10.14.  No Recourse to Issuer.

No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Rate Reduction Bonds or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (a) any owner of a membership interest in the Issuer (including PSNH) or (b) any shareholder, partner, owner, beneficiary, agent, officer or employee of the Indenture Trustee, the Managers or any owner of a membership interest in the Issuer (including PSNH) in its respective individual capacity, or of any successor or assign of any of them in their respective individual or corporate capacities, except as any such Person may have expressly agreed in writing. Notwithstanding any provision of this Indenture or the Series Supplement to the contrary, Holders shall look only to the RRB

73

Collateral with respect to any amounts due to the Holders hereunder and under the Rate Reduction Bonds and, in the event such RRB Collateral is insufficient to pay in full the amounts owed on the Rate Reduction Bonds, shall have no recourse against the Issuer in respect of such insufficiency. Each Holder by accepting a Rate Reduction Bond specifically confirms the nonrecourse nature of these obligations and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Rate Reduction Bonds.

SECTION 10.15.  Basic Documents.

The Indenture Trustee is hereby authorized to execute and deliver any other Basic Document that it is requested to acknowledge, including, upon receipt of an Issuer Request, an Intercreditor Agreement, so long as any such Intercreditor Agreement is substantially in the form of Exhibit D hereto, with such changes as may be agreed among the parties thereto so long as such changes do not materially and adversely affect any Holder’s rights in and to any RRB Collateral or otherwise hereunder. Such request shall be accompanied by an Opinion of Counsel, upon which the Indenture Trustee may rely conclusively with no duty of independent investigation or inquiry, to the effect that all conditions precedent for the execution of an Intercreditor Agreement have been satisfied.  Any Intercreditor Agreement shall be binding on the Holders.

SECTION 10.16.  No Petition.

The Indenture Trustee, by entering into this Indenture, and each Holder, by accepting a Rate Reduction Bond (or interest therein) issued hereunder, hereby covenant and agree that they shall not, prior to the date that is one year and one day after the termination of this Indenture, acquiesce, petition or otherwise invoke or cause the Issuer or any Manager to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer under any bankruptcy or insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property, or ordering the dissolution, winding up or liquidation of the affairs of the Issuer. Nothing in this Section 10.16 shall preclude, or be deemed to estop, such Holder or the Indenture Trustee (a) from taking or omitting to take any action prior to such date in (i) any case or proceeding voluntarily filed or commenced by or on behalf of the Issuer under or pursuant to any such law or (ii) any involuntary case or proceeding pertaining to the Issuer that is filed or commenced by or on behalf of a Person other than such Holder or the Indenture Trustee, as the case may be, and is not joined in by such Holder or the Indenture Trustee, as the case may be, (or any Person to which such Holder, if applicable, shall have assigned, transferred or otherwise conveyed any part of the obligations of the Issuer hereunder) under or pursuant to any such law or (b) from commencing or prosecuting any legal action that is not an involuntary case or proceeding under or pursuant to any such law against the Issuer or any of its properties.

SECTION 10.17.  Securities Intermediary.

The Securities Intermediary, in acting under this Indenture, is entitled to all rights, benefits, protections, immunities and indemnities accorded to The Bank of New York

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Mellon, a New York banking corporation, in its capacity as Indenture Trustee under this Indenture.

SECTION 10.18.  Rule 17g-5 Compliance.

(a)           The Indenture Trustee agrees that any notice, report, request for satisfaction of the Rating Agency Condition, document or other information provided by the Indenture Trustee to any Rating Agency under this Indenture or any other Basic Document to which it is a party for the purpose of determining or confirming the credit rating of the Rate Reduction Bonds or undertaking credit rating surveillance of the Rate Reduction Bonds shall be provided, substantially concurrently, to the Servicer for posting on a password-protected website (the “17g-5 Website”). The Servicer shall be responsible for posting all of the information on the 17g-5 Website.

(b)           The Indenture Trustee will not be responsible for creating or maintaining the 17g-5 Website, posting any information to the 17g-5 Website or assuring that the 17g-5 Website complies with the requirements of this Indenture, Rule 17g-5 under the Exchange Act or any other law or regulation. In no event shall the Indenture Trustee be deemed to make any representation in respect of the content of the 17g-5 Website or compliance by the 17g-5 Website with this Indenture, Rule 17g-5 under the Exchange Act or any other law or regulation. The Indenture Trustee shall have no obligation to engage in or respond to any oral communications with respect to the transactions contemplated hereby, any transaction documents relating hereto or in any way relating to the Rate Reduction Bonds or for the purposes 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 any of its respective officers, directors or employees. The Indenture Trustee shall not be responsible or liable for the dissemination of any identification numbers or passwords for the 17g-5 Website, including by the Servicer, the Rating Agencies, a nationally recognized statistical rating organization (“NRSRO”), any of their respective agents or any other party. Additionally, the Indenture Trustee shall not be liable for the use of the information posted on the 17g-5 Website, whether by the Servicer, the Rating Agencies, an NRSRO or any other third party that may gain access to the 17g-5 Website or the information posted thereon.

SECTION 10.19.  Submission to Non-Exclusive Jurisdiction; Waiver of Jury Trial.

Each of the Issuer, the Indenture Trustee and each Holder, by accepting Rate Reduction Bond (or interest therein) issued hereunder, hereby irrevocably submits to the non-exclusive jurisdiction of any New York State court sitting in The Borough of Manhattan in The City of New York or any U.S. federal court sitting in The Borough of Manhattan in The City of New York in respect of any suit, action or proceeding arising out of or relating to this Indenture and the Rate Reduction Bonds and irrevocably accepts for itself and in respect of its respective property, generally and unconditionally, jurisdiction of the aforesaid courts. Each of the Issuer, the Indenture Trustee and each Holder, by accepting Rate Reduction Bond (or interest therein) issued hereunder, irrevocably waives, to the fullest extent that it may effectively do so under applicable law, trial by jury.

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SECTION 10.20.  Certain Tax Laws.

In order to comply with applicable tax laws, rules and regulations (inclusive of directives, guidelines and interpretations promulgated by competent authorities) in effect from time to time to which a foreign financial institution, issuer, trustee, paying agent, holder or other institution is or has agreed to be subject related to the Basic Documents, the Issuer agrees (i) to provide to the Indenture Trustee information about the transaction that is within the possession of the Issuer and reasonably requested by the Indenture Trustee to assist the Indenture Trustee in determining whether it has tax-related obligations under applicable tax laws and (ii) that the Indenture Trustee shall be entitled to make any withholding or deduction from payments under the Basic Documents to the extent necessary to comply with such applicable tax laws, rules and regulations (inclusive of directives, guidelines and interpretations promulgated by competent authorities) for which the Indenture Trustee shall not have any liability.

{SIGNATURE PAGE FOLLOWS}

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IN WITNESS WHEREOF, the Issuer, the Indenture Trustee and the Securities Intermediary have caused this Indenture to be duly executed by their respective officers thereunto duly authorized and duly attested, all as of the day and year first above written.

PSNH FUNDING LLC 3,
as Issuer
By:
	Name:
	Title:
THE BANK OF NEW YORK MELLON,
not in its individual capacity but solely as Indenture Trustee and as Securities Intermediary
By:
	Name:
	Title:

Signature Page to Indenture

STATE OF NEW HAMPSHIRE	)
ss.
COUNTY OF HILLSBOROUGH	)

The foregoing instrument was acknowledged before me this      day of [        ], 2018, by [             ], [             ] of PSNH FUNDING LLC 3, a Delaware limited liability company, on behalf of the company.

	, Notary Public
{Seal}	State of New Hampshire, County of Hillsborough
	My Commission Expires:
	Acting in the County of Hillsborough

STATE OF NEW YORK		)
ss.
COUNTY OF NEW YORK	)

The foregoing instrument was acknowledged before me this      day of [        ], 2018, by [           ], [          ] of THE BANK OF NEW YORK MELLON, as Indenture Trustee and Securities Intermediary, a New York banking corporation, on behalf of the bank.

Notary Public, State of New York

No.                                

Qualified in New York County

Certificate Filed in New York County

Commission Expires

EXHIBIT A

FORM OF RATE REDUCTION BOND

See attached.

A-1

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO THE NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON OR ENTITY IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

No. {     }	$	{          }
Tranche {  }	CUSIP No.:	{          }

THE PRINCIPAL OF THIS TRANCHE {  } SENIOR SECURED RATE REDUCTION BOND, SERIES 2018-1 (THIS “RATE REDUCTION BOND”) WILL BE PAID IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS RATE REDUCTION BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE. THE HOLDER OF THIS RATE REDUCTION BOND HAS NO RECOURSE TO THE ISSUER HEREOF AND AGREES TO LOOK ONLY TO THE RRB COLLATERAL, AS DESCRIBED IN THE INDENTURE, FOR PAYMENT OF ANY AMOUNTS DUE HEREUNDER. ALL OBLIGATIONS OF THE ISSUER OF THIS RATE REDUCTION BOND UNDER THE TERMS OF THE INDENTURE WILL BE RELEASED AND DISCHARGED UPON PAYMENT IN FULL HEREOF OR AS OTHERWISE PROVIDED IN SECTION 3.10(b) OR ARTICLE IV OF THE INDENTURE. THE HOLDER OF THIS RATE REDUCTION BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE DATE THAT IS ONE YEAR AND ONE DAY AFTER THE PAYMENT IN FULL OF THIS RATE REDUCTION BOND, IT WILL NOT INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST, THE ISSUER ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS OR OTHER SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED STATES OR ANY STATE OF THE UNITED STATES. NOTHING IN THIS PARAGRAPH SHALL PRECLUDE, OR BE DEEMED TO ESTOP, SUCH HOLDER (A) FROM TAKING OR OMITTING TO TAKE ANY ACTION PRIOR TO SUCH DATE IN (I) ANY CASE OR PROCEEDING VOLUNTARILY FILED OR COMMENCED BY OR ON BEHALF OF THE ISSUER UNDER OR PURSUANT TO ANY SUCH LAW OR (II) ANY INVOLUNTARY CASE OR PROCEEDING PERTAINING TO THE ISSUER THAT IS FILED OR COMMENCED BY OR ON BEHALF OF A PERSON OTHER THAN SUCH HOLDER AND IS NOT JOINED IN BY SUCH HOLDER (OR ANY PERSON TO WHICH SUCH HOLDER SHALL HAVE ASSIGNED, TRANSFERRED OR OTHERWISE

1

CONVEYED ANY PART OF THE OBLIGATIONS OF THE ISSUER HEREUNDER) UNDER OR PURSUANT TO ANY SUCH LAW OR (B) FROM COMMENCING OR PROSECUTING ANY LEGAL ACTION THAT IS NOT AN INVOLUNTARY CASE OR PROCEEDING UNDER OR PURSUANT TO ANY SUCH LAW AGAINST THE ISSUER OR ANY OF ITS PROPERTIES.

NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF NEW HAMPSHIRE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF PRINCIPAL OF, OR INTEREST ON, THIS RATE REDUCTION BOND.

PSNH FUNDING LLC 3
SENIOR SECURED RATE REDUCTION BONDS, SERIES 2018-1, TRANCHE {  }

BOND INTEREST RATE		ORIGINAL PRINCIPAL AMOUNT		SCHEDULED FINAL PAYMENT DATE		FINAL MATURITY DATE
{    }	%	$	{          }	$	{          }	{         }, 20{  }
{    }	%	$	{          }	$	{          }	{         }, 20{  }
{    }	%	$	{          }	$	{          }	{         }, 20{  }

PSNH FUNDING LLC 3, a limited liability company created under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to {          }, or registered assigns, the Original Principal Amount shown above in semi-annual installments on the Payment Dates and in the amounts specified below or, if less, the amounts determined pursuant to Section 8.02 of the Indenture, in each year, commencing on the date determined as provided below and ending on or before the Final Maturity Date shown above and to pay interest, at the Bond Interest Rate shown above, on each {          } and {          } or, if any such day is not a Business Day, the next Business Day, commencing on {          }, 20{  } and continuing until the earlier of the payment in full of the principal hereof and the Final Maturity Date (each, a “Payment Date”), on the principal amount of this Rate Reduction Bond. Interest on this Rate Reduction Bond will accrue for each Payment Date from the most recent Payment Date on which interest has been paid to but excluding such Payment Date or, if no interest has yet been paid, from the date of issuance. Interest will be computed on the basis of {          }. Such principal of and interest on this Rate Reduction Bond shall be paid in the manner specified below.

The principal of and interest on this Rate Reduction Bond are payable in such currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Rate Reduction Bond shall be applied first to interest due and payable on this Rate Reduction Bond as provided above and then to the unpaid principal of and premium, if any, on this Rate Reduction Bond, all in the manner set forth in the Indenture.

Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Rate Reduction Bond shall not be

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entitled to any benefit under the Indenture referred to below or be valid or obligatory for any purpose.

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Responsible Officer.

Date: {          }, 20{  }	PSNH FUNDING LLC 3,
	as Issuer
	By:
		Name:
		Title:

4

INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

Dated: {          }, 20{  }

This is one of the Tranche {  } Senior Secured Rate Reduction Bonds, Series 2018-1, designated above and referred to in the within-mentioned Indenture.

THE BANK OF NEW YORK MELLON,
as Indenture Trustee
By:
	Name:
	Title:

5

This Senior Secured Rate Reduction Bond, Series 2018-1 is one of a duly authorized issue of Senior Secured Rate Reduction Bonds, Series 2018-1 of the Issuer (herein called the “Bonds”), which Bonds are issuable in one or more Tranches. The Bonds consist of {  } Tranches, including the Tranche {  } Senior Secured Rate Reduction Bonds, Series 2018-1, which include this Senior Secured Rate Reduction Bond, Series 2018-1 (herein called the “Rate Reduction Bonds”), all issued and to be issued under that certain Indenture dated as of [         ], 2018 (as supplemented by the Series Supplement (as defined below), the “Indenture”), between the Issuer and The Bank of New York Mellon, in its capacity as indenture trustee (the “Indenture Trustee”, which term includes any successor indenture trustee under the Indenture) and in its separate capacity as a securities intermediary (the “Securities Intermediary”, which term includes any successor securities intermediary under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Holders of the Bonds. For purposes herein, “Series Supplement” means that certain Series Supplement dated as of [         ], 2018 between the Issuer and the Indenture Trustee. All terms used in this Rate Reduction Bond that are defined in the Indenture, as amended, restated, supplemented or otherwise modified from time to time, shall have the meanings assigned to such terms in the Indenture.

All Tranches of Bonds are and will be equally and ratably secured by the RRB Collateral pledged as security therefor as provided in the Indenture.

The principal of this Rate Reduction Bond shall be payable on each Payment Date only to the extent that amounts in the Collection Account are available therefor, and only until the outstanding principal balance thereof on the preceding Payment Date (after giving effect to all payments of principal, if any, made on the preceding Payment Date) has been reduced to the principal balance specified in the Expected Amortization Schedule that is attached to the Series Supplement as Schedule A, unless payable earlier because an Event of Default shall have occurred and be continuing and the Indenture Trustee or the Holders representing a majority of the Outstanding Amount of the Bonds have declared the Bonds to be immediately due and payable in accordance with Section 5.02 of the Indenture (unless such declaration shall have been rescinded and annulled in accordance with Section 5.02 of the Indenture). However, actual principal payments may be made in lesser than expected amounts and at later than expected times as determined pursuant to Section 8.02 of the Indenture. The entire unpaid principal amount of this Rate Reduction Bond shall be due and payable on the Final Maturity Date hereof. Notwithstanding the foregoing, the entire unpaid principal amount of the Bonds shall be due and payable, if not then previously paid, on the date on which an Event of Default shall have occurred and be continuing and the Indenture Trustee or the Holders of the Bonds representing a majority of the Outstanding Amount of the Bonds have declared the Rate Reduction Bonds to be immediately due and payable in the manner provided in Section 5.02 of the Indenture (unless such declaration shall have been rescinded and annulled in accordance with Section 5.02 of the Indenture). All principal payments on the Rate Reduction Bonds shall be made pro rata to the Holders of the Rate Reduction Bonds entitled thereto based on the respective principal amounts of the Rate Reduction Bonds held by them.

Payments of interest on this Rate Reduction Bond due and payable on each Payment Date, together with the installment of principal or premium, if any, shall be made by

6

check mailed first-class, postage prepaid, to the Person whose name appears as the Registered Holder of this Rate Reduction Bond (or one or more Predecessor Rate Reduction Bonds) on the Rate Reduction Bond Register as of the close of business on the Record Date or in such other manner as may be provided in the Indenture or the Series Supplement, except that (a) upon application to the Indenture Trustee by any Holder owning a Global Rate Reduction Bond, payment will be made by wire transfer to an account maintained by such Holder, and (b) if this Rate Reduction Bond is held in Book-Entry Form, payments will be made by wire transfer in immediately available funds to the account designated by the Holder of the applicable Global Rate Reduction Bond evidencing this Rate Reduction Bond unless and until such Global Rate Reduction Bond is exchanged for Definitive Rate Reduction Bonds (in which event payments shall be made as provided above) and except for the final installment of principal and premium, if any, payable with respect to this Rate Reduction Bond on a Payment Date, which shall be payable as provided below. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Rate Reduction Bond Register as of the applicable Record Date without requiring that this Rate Reduction Bond be submitted for notation of payment. Any reduction in the principal amount of this Rate Reduction Bond (or any one or more Predecessor Rate Reduction Bonds) effected by any payments made on any Payment Date shall be binding upon all future Holders of this Rate Reduction Bond and of any Rate Reduction Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then-remaining unpaid principal amount of this Rate Reduction Bond on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Holder hereof as of the Record Date preceding such Payment Date by notice mailed no later than five days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of this Rate Reduction Bond and shall specify the place where this Rate Reduction Bond may be presented and surrendered for payment of such installment.

The Issuer shall pay interest on overdue installments of interest at the Bond Interest Rate to the extent lawful.

This Rate Reduction Bond is a “rate reduction bond” as such term is defined in the Financing Act. Principal and interest due and payable on this Rate Reduction Bond are payable from and secured primarily by RRB Property created and established by the Finance Order obtained from the New Hampshire Public Utilities Commission pursuant to the Financing Act. RRB Property includes the right to all revenues, collections, claims, payments, money or proceeds of or arising from the RRB Charge authorized to be imposed and collected pursuant to the Finance Order.

Under the laws of the State of New Hampshire in effect on the Closing Date, pursuant to RSA 369-B:6, the State of New Hampshire has pledged, contracted and agreed with the owners of RRB Property, Holders and Indenture Trustee that neither the State of New Hampshire, nor any of its agencies, including the Commission, shall limit, alter, amend, reduce, or impair the RRB Charge, RRB Property, Finance Order, and all rights thereunder or ownership thereof or security interest therein until the Rate Reduction Bonds, including all principal, interest, premium (if any), costs and arrearages thereon, are fully met and discharged.

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The Issuer hereby acknowledges that the purchase of this Rate Reduction Bond by the Holder hereof or the purchase of any beneficial interest herein by any Person are made in reliance on the foregoing pledge.

As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Rate Reduction Bond may be registered on the Rate Reduction Bond Register upon surrender of this Rate Reduction Bond for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by, (a) in the case of a transfer, a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) such other signature guaranty program acceptable to the Indenture Trustee, and (b) in any case, such other documents as the Indenture Trustee may require, and thereupon one or more new Rate Reduction Bonds of Authorized Denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Rate Reduction Bond, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange, other than exchanges pursuant to Section 2.04 or Section 2.06 of the Indenture not involving any transfer.

Each Holder, by acceptance of a Rate Reduction Bond, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Rate Reduction Bonds or under the Indenture or any certificate or other writing delivered in connection therewith, against (a) any owner of a membership interest in the Issuer (including PSNH) or (b) any shareholder, partner, owner, beneficiary, agent, officer or employee of the Indenture Trustee, the Managers or any owner of a membership interest in the Issuer (including PSNH) in its respective individual or corporate capacities, or of any successor or assign of any of them in their individual or corporate capacities, except as any such Person may have expressly agreed in writing. Each Holder by accepting a Rate Reduction Bond specifically confirms the nonrecourse nature of these obligations and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Rate Reduction Bonds.

Prior to the due presentment for registration of transfer of this Rate Reduction Bond, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee shall treat the Person in whose name this Rate Reduction Bond is registered (as of the day of determination) as the owner hereof for the purpose of receiving payments of principal of and premium, if any, and interest on this Rate Reduction Bond and for all other purposes whatsoever, whether or not this Rate Reduction Bond be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Rate Reduction Bonds under the Indenture at any time by the Issuer with the consent of the Holders representing a majority of the Outstanding Amount of all Rate

8

Reduction Bonds at the time outstanding of each Tranche to be affected. The Indenture also contains provisions permitting the Holders representing specified percentages of the Outstanding Amount of the Rate Reduction Bonds, on behalf of the Holders of all the Rate Reduction Bonds, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Rate Reduction Bond (or any one of more Predecessor Rate Reduction Bonds) shall be conclusive and binding upon such Holder and upon all future Holders of this Rate Reduction Bond and of any Rate Reduction Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Rate Reduction Bond. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Rate Reduction Bonds issued thereunder.

The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Issuer on this Rate Reduction Bond and (b) certain restrictive covenants and the related Events of Default, upon compliance by the Issuer with certain conditions set forth in the Indenture, which provisions apply to this Rate Reduction Bond.

The term “Issuer” as used in this Rate Reduction Bond includes any successor to the Issuer under the Indenture.

The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Holders under the Indenture.

The Rate Reduction Bonds are issuable only in registered form in denominations as provided in the Indenture and the Series Supplement subject to certain limitations therein set forth.

This Rate Reduction Bond, the Indenture and the Series Supplement shall be construed in accordance with the laws of the State of New York; provided, that the creation, attachment and perfection of any Liens created under the Indenture in RRB Property, and all rights and remedies of the Indenture Trustee and the Holders with respect to the RRB Property, shall be governed by the laws of the State of New Hampshire.

No reference herein to the Indenture and no provision of this Rate Reduction Bond or of the Indenture shall alter or impair the obligation, which is absolute and unconditional, to pay the principal of and interest on this Rate Reduction Bond at the times, place and rate and in the currency herein prescribed.

The Issuer and the Indenture Trustee, by entering into the Indenture, and the Holders and any Persons holding a beneficial interest in any Rate Reduction Bond, by acquiring any Rate Reduction Bond or interest therein, (a) express their intention that, solely for the purpose of U.S. federal income taxes and, to the extent consistent with applicable state, local and other tax law, solely for the purpose of state, local and other taxes, the Rate Reduction Bonds qualify under applicable tax law as indebtedness of the sole owner of the Issuer secured by the RRB Collateral and (b) solely for purposes of U.S. federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes,

9

so long as any of the Rate Reduction Bonds are outstanding, agree to treat the Rate Reduction Bonds as indebtedness of the sole owner of the Issuer secured by the RRB Collateral unless otherwise required by appropriate taxing authorities.

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ABBREVIATIONS

The following abbreviations, when used above on this Rate Reduction Bond, shall be construed as though they were written out in full according to applicable laws or regulations.

TEN COM	as tenants in common
TEN ENT	as tenants by the entireties
JT TEN	as joint tenants with right of survivorship and not as tenants in common
UNIF GIFT MIN ACT		Custodian
	(Custodian)		(minor)
	Under Uniform Gifts to Minor Act		(                    )
			(State)

Additional abbreviations may also be used though not in the above list.

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ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

(name and address of assignee)

the within Rate Reduction Bond and all rights thereunder, and hereby irrevocably constitutes and appoints             , attorney, to transfer said Rate Reduction Bond on the books kept for registration thereof, with full power of substitution in the premises.

Dated:
	Signature Guaranteed:

The signature to this assignment must correspond with the name of the registered owner as it appears on the within Rate Reduction Bond in every particular, without alteration, enlargement or any change whatsoever.

NOTE: Signature(s) must be guaranteed by an institution that is a member of: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other signature guaranty program acceptable to the Indenture Trustee.

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EXHIBIT B

FORM OF SERIES SUPPLEMENT

See attached.

B-1

This SERIES SUPPLEMENT, dated as of [          ], 2018 (this “Supplement”), is by and between PSNH FUNDING LLC 3, a limited liability company created under the laws of the State of Delaware (the “Issuer”), and The Bank of New York Mellon, a New York banking corporation (“Bank”), in its capacity as indenture trustee (the “Indenture Trustee”) for the benefit of the Secured Parties under the Indenture dated as of [         ], 2018, by and between the Issuer and The Bank of New York Mellon, in its capacity as Indenture Trustee and in its separate capacity as a securities intermediary (the “Indenture”).

PRELIMINARY STATEMENT

Section 9.01 of the Indenture provides, among other things, that the Issuer and the Indenture Trustee may at any time enter into an indenture supplemental to the Indenture for the purposes of authorizing the issuance by the Issuer of the Rate Reduction Bonds and specifying the terms thereof. The Issuer has duly authorized the creation of the Rate Reduction Bonds with an initial aggregate principal amount of ${          } to be known as Senior Secured Rate Reduction Bonds, Series 2018-1 (the “Rate Reduction Bonds”), and the Issuer and the Indenture Trustee are executing and delivering this Supplement in order to provide for the Rate Reduction Bonds.

All terms used in this Supplement that are defined in the Indenture, either directly or by reference therein, have the meanings assigned to them therein, except to the extent such terms are defined or modified in this Supplement or the context clearly requires otherwise. In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Indenture, the terms and provisions of this Supplement shall govern.

GRANTING CLAUSE

The Issuer hereby Grants to the Indenture Trustee, as Indenture Trustee for the benefit of the Secured Parties of the Rate Reduction Bonds, all of the Issuer’s right, title and interest (whether now owned or hereafter acquired or arising) in and to (a) the RRB Property, (b) all RRB Charge related to the RRB Property, (c) the Sale Agreement and all property and interests in property transferred under the Sale Agreement with respect to the RRB Property and the Rate Reduction Bonds, (d) the Servicing Agreement, the Administration Agreement, any Intercreditor Agreement and any subservicing, agency, administration or collection agreements executed in connection therewith, to the extent related to the foregoing RRB Property and the Rate Reduction Bonds, (e) the Collection Account, all subaccounts thereof and all amounts of cash, instruments, investment property or other assets on deposit therein or credited thereto from time to time and all financial assets and securities entitlements carried therein or credited thereto, (f) all rights to compel the Servicer to file for and obtain periodic adjustments to the RRB Charge in accordance with RSA 369-B:4, III and the Finance Order, (g) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, whether such claims, demands, causes and choses in action constitute RRB Property, accounts, general intangibles, instruments, contract rights, chattel paper or proceeds of such items or any other form of property, (h) all accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment property, letters of credit, letters-of-credit rights, money, commercial tort claims and supporting obligations related to the foregoing, and (i) all

1

payments on or under, and all proceeds in respect of, any or all of the foregoing, it being understood that the following do not constitute RRB Collateral: (x) cash that has been released pursuant to the terms of the Indenture, including Section 8.02(e)(xi) following retirement of all Outstanding Rate Reduction Bonds and (y) amounts deposited with the Issuer on the Closing Date, for payment of costs of issuance with respect to the Rate Reduction Bonds and (z) all Capital Subaccount Investment Earnings (together with any interest earnings thereon), it being understood that such amounts described in clause (x), clause (y) and clause (z) above shall not be subject to Section 3.17 of the Indenture.

The foregoing Grant is made in trust to secure the Secured Obligations equally and ratably without prejudice, priority or distinction, except as expressly provided in the Indenture, to secure compliance with the provisions of the Indenture with respect to the Rate Reduction Bonds, all as provided in the Indenture and to secure the performance by the Issuer of all of its obligations under the Indenture. The Indenture and this Supplement constitute a security agreement within the meaning of the Financing Act and under the UCC to the extent that the provisions of the UCC are applicable hereto.

The Indenture Trustee, as indenture trustee on behalf of the Secured Parties of the Rate Reduction Bonds, acknowledges such Grant and accepts the trusts under this Supplement and the Indenture in accordance with the provisions of this Supplement and the Indenture.

SECTION 1. Designation. The Rate Reduction Bonds shall be designated generally as the Rate Reduction Bonds{, and further denominated as Tranches {  } through {  }}.

SECTION 2. Initial Principal Amount; Bond Interest Rate; Scheduled Final Payment Date; Final Maturity Date. The Rate Reduction Bonds {of each Tranche} shall have the initial principal amount, bear interest at the rates per annum (the “Bond Interest Rate”) and shall have the Scheduled Final Payment Dates and the Final Maturity Dates set forth below:

{Tranche}	Initial Principal Amount		Bond Interest Rate		Scheduled Final Payment Date	Final Maturity Date
{  }	$	{          }	{    }	%	{     }, 20{  }	{     }, 20{  }
{  }	$	{          }	{    }	%	{     }, 20{  }	{     }, 20{  }
{  }	$	{          }	{    }	%	{     }, 20{  }	{     }, 20{  }

The Bond Interest Rate shall be computed on the basis of a 360-day year of twelve 30-day months.

SECTION 3. Authentication Date; Payment Dates; Expected Amortization Schedule for Principal; Periodic Interest; Book-Entry Rate Reduction Bonds; Waterfall Caps.

(a)Authentication Date. The Rate Reduction Bonds that are authenticated and delivered by the Indenture Trustee to or upon the order of the Issuer on [         ], 2018 (the “Closing Date”) shall have as their date of authentication [         ], 2018.

2

(b)Payment Dates. The “Payment Dates” for the Rate Reduction Bonds are {          } and {          } of each year or, if any such date is not a Business Day, the next Business Day, commencing on {          }, 20{  } and continuing until the earlier of repayment of the Rate Reduction Bonds in full and the Final Maturity Date.

(c)Expected Amortization Schedule for Principal. Unless an Event of Default shall have occurred and be continuing, on each Payment Date, the Indenture Trustee shall distribute to the Holders of record as of the related Record Date amounts payable pursuant to Section 8.02(e) of the Indenture as principal, in the following order and priority: {(1) to the holders of the Tranche {  } Rate Reduction Bonds, until the Outstanding Amount of such Tranche of Rate Reduction Bonds thereof has been reduced to zero; (2) to the holders of the Tranche {  } Rate Reduction Bonds, until the Outstanding Amount of such Tranche of Rate Reduction Bonds thereof has been reduced to zero; and (3) to the holders of the Tranche {  } Rate Reduction Bonds, until the Outstanding Amount of such Tranche of Rate Reduction Bonds thereof has been reduced to zero; provided, however, that in no event shall a principal payment pursuant to this Section 3(c) on any Tranche on a Payment Date be greater than the amount necessary to reduce the Outstanding Amount of such Tranche of Rate Reduction Bonds to the amount specified in the Expected Amortization Schedule that is attached as Schedule A hereto for such Tranche and Payment Date}.

(d)Periodic Interest. “Periodic Interest” will be payable on {each Tranche of} the Rate Reduction Bonds on each Payment Date in an amount equal to one-half of the product of (i) the applicable Bond Interest Rate and (ii) the Outstanding Amount of the {related Tranche of} Rate Reduction Bonds as of the close of business on the preceding Payment Date after giving effect to all payments of principal made to the Holders of the {related Tranche of} Rate Reduction Bonds on such preceding Payment Date; provided, however, that, with respect to the initial Payment Date, or if no payment has yet been made, interest on the outstanding principal balance will accrue from and including the Closing Date to, but excluding, the following Payment Date.

(e)Book-Entry Rate Reduction Bonds. The Rate Reduction Bonds shall be Book-Entry Rate Reduction Bonds, and the applicable provisions of Section 2.11 of the Indenture shall apply to the Rate Reduction Bonds.

SECTION 4. Authorized Denominations. The Rate Reduction Bonds shall be issuable in denominations of {$100,000 and integral multiples of $1,000 in excess thereof, except for one bond, which may be a smaller denomination} (the “Authorized Denominations”).

SECTION 5. Delivery and Payment for the Rate Reduction Bonds; Form of the Rate Reduction Bonds. The Indenture Trustee shall deliver the Rate Reduction Bonds to the Issuer when authenticated in accordance with Section 2.03 of the Indenture. The Rate Reduction Bonds {of each Tranche} shall be in the form of Exhibit A to the Indenture.

SECTION 6. Ratification of Indenture. As supplemented by this Supplement, the Indenture is in all respects ratified and confirmed and the Indenture, as so supplemented by this Supplement, shall be read, taken and construed as one and the same instrument. This Supplement

3

amends, modifies and supplements the Indenture only insofar as it relates to the Rate Reduction Bonds.

SECTION 7. Counterparts. This Supplement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.

SECTION 8. Governing Law. This Supplement shall be governed by and construed in accordance with the laws of the State of New York; provided, that, except as set forth in Section 8.02(b) of the Indenture, the creation, attachment and perfection of any Liens created under the Indenture in RRB Property, and all rights and remedies of the Indenture Trustee and the Holders with respect to the RRB Property, shall be governed by the laws of the State of New Hampshire.

SECTION 9. Issuer Obligation. No recourse may be taken directly or indirectly by the Holders with respect to the obligations of the Issuer on the Rate Reduction Bonds, under the Indenture or this Supplement or any certificate or other writing delivered in connection herewith or therewith, against (a) any owner of a beneficial interest in the Issuer (including PSNH) or (b) any shareholder, partner, owner, beneficiary, officer, director, employee or agent of the Indenture Trustee, the Managers or any owner of a beneficial interest in the Issuer (including PSNH) in its individual capacity, or of any successor or assign of any of them in their respective individual or corporate capacities, except as any such Person may have expressly agreed. Each Holder by accepting a Rate Reduction Bond specifically confirms the nonrecourse nature of these obligations and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Rate Reduction Bonds.

SECTION 10. Indenture Trustee Disclaimer. The Indenture Trustee is not responsible for the validity or sufficiency of this Supplement or for the recitals contained herein.

SECTION 11. Submission to Non-Exclusive Jurisdiction; Waiver of Jury Trial. Each of the Issuer, the Indenture Trustee and each Holder, by accepting Rate Reduction Bond (or interest therein) issued hereunder, hereby irrevocably submits to the non-exclusive jurisdiction of any New York State court sitting in The Borough of Manhattan in The City of New York or any U.S. federal court sitting in The Borough of Manhattan in The City of New York in respect of any suit, action or proceeding arising out of or relating to this Supplement and the Rate Reduction Bonds and irrevocably accepts for itself and in respect of its respective property, generally and unconditionally, jurisdiction of the aforesaid courts. Each of the Issuer, the Indenture Trustee and each Holder, by accepting Rate Reduction Bond (or interest therein) issued hereunder, irrevocably waives, to the fullest extent that it may effectively do so under applicable law, trial by jury.

4

IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Supplement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

PSNH FUNDING LLC 3,
as Issuer
By:
	Name:
	Title:
THE BANK OF NEW YORK MELLON,
not in its individual capacity but solely as Indenture Trustee and as Securities Intermediary
By:
	Name:
	Title:

5

SCHEDULE A

TO SERIES SUPPLEMENT

EXPECTED AMORTIZATION SCHEDULE

OUTSTANDING PRINCIPAL BALANCE

Date	Tranche {  }		Tranche {  }		Tranche {  }
Closing Date	$	{          }	$	{          }	$	{          }
{          }, 20{  }	$	{          }	$	{          }	$	{          }
{          }, 20{  }	$	{          }	$	{          }	$	{          }
{          }, 20{  }	$	{          }	$	{          }	$	{          }

6

EXHIBIT {  }

TO SERIES SUPPLEMENT

FORM OF {TRANCHE {  } OF} RATE REDUCTION BONDS

{          }

7

EXHIBIT C

SERVICING CRITERIA TO BE ADDRESSED
BY INDENTURE TRUSTEE IN ASSESSMENT OF COMPLIANCE

Regulation AB Reference	Servicing Criteria	Applicable Indenture Trustee Responsibility
	General Servicing Considerations
1122(d)(1)(i)	Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements.
1122(d)(1)(ii)	If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party’s performance and compliance with such servicing activities.
1122(d)(1)(iii)	Any requirements in the transaction agreements to maintain a back-up servicer for the pool assets are maintained.
1122(d)(1)(iv)	A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements.
1122(d)(1)(v)	Aggregation of information, as applicable, is mathematically accurate and the information conveyed accurately reflects the information.
	Cash Collection and Administration
1122(d)(2)(i)	Payments on pool assets are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days following receipt, or such other number of days specified in the transaction agreements.	X
1122(d)(2)(ii)	Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel.	X
1122(d)(2)(iii)	Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements.
1122(d)(2)(iv)	The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements.	X
1122(d)(2)(v)	Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, “federally insured depository institution” with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) under the Exchange Act.
1122(d)(2)(vi)	Unissued checks are safeguarded so as to prevent unauthorized access.
1122(d)(2)(vii)	Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations are: (A) mathematically accurate; (B) prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements.
	Investor Remittances and Reporting
1122(d)(3)(i)	Reports to investors, including those to be filed with the SEC, are maintained in accordance with the transaction agreements and applicable SEC requirements. Specifically, such reports: (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the SEC as required by its rules and regulations; and (D) agree with investors’ or the trustee’s records as to the total unpaid principal balance and number of pool assets serviced by the servicer.
1122(d)(3)(ii)	Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements.	X
1122(d)(3)(iii)	Disbursements made to an investor are posted within two business days to the servicer’s investor records, or such other number of days specified in the transaction agreements.	X

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Regulation AB Reference	Servicing Criteria	Applicable Indenture Trustee Responsibility
1122(d)(3)(iv)	Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements.	X
	Pool Asset Administration
1122(d)(4)(i)	Collateral or security on pool assets is maintained as required by the transaction agreements or related pool asset documents.	X
1122(d)(4)(ii)	Pool assets and related documents are safeguarded as required by the transaction agreements.
1122(d)(4)(iii)	Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements.
1122(d)(4)(iv)	Payments on pool assets, including any payoffs, made in accordance with the related pool asset documents are posted to the servicer’s obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related pool asset documents.
1122(d)(4)(v)	The servicer’s records regarding the pool assets agree with the servicer’s records with respect to an obligor’s unpaid principal balance.
1122(d)(4)(vi)	Changes with respect to the terms or status of an obligor’s pool assets (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents.
1122(d)(4)(vii)	Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements.
1122(d)(4)(viii)	Records documenting collection efforts are maintained during the period a pool asset is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entity’s activities in monitoring delinquent pool assets, including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g., illness or unemployment).
1122(d)(4)(ix)	Adjustments to interest rates or rates of return for pool assets with variable rates are computed based on the related pool asset documents.
1122(d)(4)(x)	Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds are analyzed, in accordance with the obligor’s pool asset documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable pool asset documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related pool assets, or such other number of days specified in the transaction agreements.
1122(d)(4)(xi)	Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the servicer at least 30 calendar days prior to these dates, or such other number of days specified in the transaction agreements.
1122(d)(4)(xii)	Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the servicer’s funds and not charged to the obligor, unless the late payment was due to the obligor’s error or omission.
1122(d)(4)(xiii)	Disbursements made on behalf of an obligor are posted within two business days to the obligor’s records maintained by the servicer, or such other number of days specified in the transaction agreements.
1122(d)(4)(xiv)	Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction agreements.
1122(d)(4)(xv)	Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements.

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EXHIBIT D

FORM OF INTERCREDITOR AGREEMENT

See attached.

FORM OF INTERCREDITOR AGREEMENT

This INTERCREDITOR AGREEMENT (this “Agreement”) is made as of [date], by and among:

(a)Public Service Company of New Hampshire (in its individual capacity, the “Company”), in its separate capacity as the Receivables Servicer (as defined below), in its separate capacity as the initial servicer of, and collection agent, with respect to, the RRB Property referred to below (including any successor in such capacity, the “Initial Property Servicer”);

(b)PSNH Funding LLC 3, a Delaware limited liability company (the “Initial Bond Issuer”);

(c)Bank of New York Mellon, a New York banking corporation, in its capacity as indenture trustee (including any successor in such capacity, the “Initial Bond Trustee”) under the Initial Indenture referred to below;

(d)[insert name of affiliated purchaser of Receivables] (“Buyer”), a [          ] corporation; and

(e)[insert name of agent or trustee acting as representative of third-party receivables purchasers or lenders], as [Administrative Agent][Trustee] (in such capacity, and including any successor agent, the “Administrative Agent”) for the [Receivables Purchasers][Lenders] referred to below;

WHEREAS, pursuant to the terms of that certain [describe purchase agreement whereby Buyer acquires Receivables from Company] (as it may hereafter from time to time be further amended, restated or modified and as supplemented from time to time, the “Purchase Agreement”), between Buyer and the Company, the Company has sold and may hereafter sell to Buyer all of the Company’s right, title and interest in and to certain [Outstanding Receivables] and [Collections] (as such terms are defined in the Purchase Agreement, which terms do not include Initial Customer Charges, as defined below, or collections thereof; and the Outstanding Receivables, Collections thereof, related property and all proceeds of the foregoing are collectively referred to herein as the “Receivables”); and

WHEREAS, pursuant to that certain [describe agreement whereby Receivables Purchasers acquire security and/or ownership interests in the Receivables from the Buyer] (as it may hereafter from time to time be further amended, restated or modified and as supplemented from time to time, the “[Receivables Purchase Agreement](1)”), by and among the Buyer, the Receivables Servicer, the Administrative Agent and the financial institutions and other entities party thereto as [purchasers][lenders] (such [purchasers][lenders] and the Administrative Agent

(1)  If additional financing take the form of a loan and a grant of a security interest, the term “Receivables Purchase Agreement” may be changed throughout to “Receivables Financing Agreement” or another appropriate term.

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being collectively referred to as the “[Receivables Purchasers](2)”), Buyer has [sold and may hereafter sell undivided interests in][granted a security interest in] the Receivables to the Administrative Agent for the benefit of the Receivables Purchasers; and

WHEREAS, pursuant to the terms of the Purchase Agreement, the Receivables Purchase Agreement and that certain [describe any agency or similar agreement comprising part of the receivables purchase documents] (as it may hereafter from time to time be further amended, restated or modified and as supplemented from time to time, the “Agency Agreement”, and together with the Purchase Agreement and the Receivables Purchase Agreement, collectively, the “Receivables Agreements”), the Company has been appointed as a servicer (the “Receivables Servicer”) and collection agent and has agreed to provide certain servicing and collection functions with respect to the Receivables;

WHEREAS, pursuant to the terms of that certain Purchase and Sale Agreement, dated as of [date] (as it may hereafter from time to time be amended, restated or modified, the “Initial Sale Agreement”), between the Initial Bond Issuer and the Company in its capacity as seller, the Company has sold to the Initial Bond Issuer certain assets known as “RRB Property” which includes the right to impose, charge and collect “RRB Charges” as each such term is defined or as otherwise used in RSA 369-B:2 and the Finance Order (as defined in the Initial Indenture) (such RRB Property, the “Initial Customer Property” and such RRB Charges, the “Initial Customer Charges”);

WHEREAS, pursuant to the terms of that certain Indenture dated as of [date] (as it may hereafter from time to time be amended, restated or modified and as supplemented by the Series Supplement and any other supplemental indenture, the Series Supplement and Indenture, as supplemented, being collectively referred to herein as the “Initial Indenture”), between the Initial Bond Issuer and the Initial Bond Trustee, the Initial Bond Issuer, among other things, has granted to the Initial Bond Trustee a security interest in certain of its assets, including the Initial Customer Property, to secure, among other things, the notes issued pursuant to the Initial Indenture (the “Initial Rate Reduction Bonds”);

WHEREAS, pursuant to the terms of that certain Servicing Agreement dated as of [date] (as it may hereafter from time to time be amended, restated or modified, the “Initial Servicing Agreement,” and the Initial Servicing Agreement, together with the Initial Sale Agreement and the Initial Indenture, the “Initial Bond Agreements”), between the Initial Bond Issuer and the Initial Property Servicer, the Initial Property Servicer has agreed to provide for the benefit of the Initial Bond Issuer certain servicing and collection functions with respect to the Initial Customer Charges;

WHEREAS, the Receivables and the Initial Customer Charges will be invoiced collectively on the bills sent to the Company’s New Hampshire retail customers (the “Customers”), which Customers are obligated to pay both the Receivables and the Initial

(2)  If additional financing take the form of a loan and a grant of a security interest, the term “Receivables Purchasers” may be changed throughout to “Receivables Lenders” or another appropriate term.

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Customer Charges, and the parties hereto wish to agree upon their respective rights relating to the Receivables and the Initial Customer Property and any bank accounts into which collections of the foregoing may be deposited, as well as other matters of common interest to them which arise under or result from the coexistence of the Initial Bond Agreements and the Receivables Agreements;

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

SECTION 1.Acknowledgment of Ownership Interests and Security Interests.

(f)Each of the parties hereto hereby acknowledges the ownership interest of the Initial Bond Issuer in the Initial Customer Property, including the Initial Customer Charges and the revenues, collections, claims, rights, payments, money and proceeds arising therefrom, and the security interests granted therein in favor of the Initial Bond Trustee for the benefit of itself and the holders of the Initial Rate Reduction Bonds.  Each of the parties hereto hereby acknowledges the ownership interest and security interests of the Buyer and the Receivables Purchasers in the Receivables and the revenues, collections, claims, rights, payments, money and proceeds arising therefrom.  The parties hereto agree that the Initial Customer Property and the Receivables each shall constitute separate property rights notwithstanding that they may be evidenced by a single bill.  The Company further agrees that it will not include the Initial Customer Property in calculating the amount of the Receivables sold or to be sold under the Receivables Agreements.  Accordingly, the Receivables Purchasers and the Receivables Servicer each acknowledge that, notwithstanding anything in the Receivables Agreements to the contrary, none of such parties has any interest in the Initial Customer Property, and each of the Initial Bond Trustee, the Initial Bond Issuer and the Initial Property Servicer further acknowledge that, notwithstanding anything in the Initial Bond Agreements to the contrary, none of such parties has any interest in the Receivables.

(g)Each of the Administrative Agent and the Buyer hereby releases all liens and security interests of any kind whatsoever which the Administrative Agent or Buyer may hold or obtain in the Initial Customer Property. Each of the Administrative Agent and Buyer agrees, upon the reasonable request of the Company or the Initial Bond Trustee, to execute and deliver to the Initial Bond Trustee such UCC partial release statements and other documents and instruments, and to do such other acts and things, as the Company or the Initial Bond Trustee may reasonably request in order to evidence the release provided for in this Section 1(b) and/or to execute and deliver to the Initial Bond Trustee UCC financing statement amendments to exclude the Initial Customer Property from the assets covered by any existing UCC financing statements relating to the Receivables; provided, however, that failure to execute and deliver any such partial release statements, financing statement amendments, documents or instruments, or to do such acts and things, shall not affect or impair the release provided for in this Section 1(b).

(c)Each of the Initial Bond Issuer and the Initial Bond Trustee hereby releases all liens and security interests of any kind whatsoever which either of them may hold or obtain in the Receivables. Each of the Initial Bond Issuer and the Initial Bond Trustee agrees, upon the reasonable request of the Administrative Agent or Buyer, to execute and deliver to the

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Administrative Agent or Buyer, as applicable, such UCC partial release statements and other documents and instruments, and to do such other acts and things, as the Administrative Agent or Buyer may reasonably request in order to evidence the release provided for in this Section 1(c) and/or to execute and deliver to the Administrative Agent or Buyer, as applicable, UCC financing statement amendments to exclude such Receivables from the assets covered by any existing UCC financing statements relating to the Initial Customer Property; provided, however, that failure to execute and deliver any such partial release statements, financing statement amendments, documents or instruments, or to do such acts and things, shall not affect or impair the release provided for in this Section 1(c).

SECTION 2.Deposit Accounts.

(a)The parties hereto each acknowledge that collections with respect to the Initial Customer Property and the Receivables may from time to time be deposited into one or more designated accounts of the Company or the Buyer (the “Deposit Accounts”) and that such Deposit Accounts may be subject to a security interest of the Administrative Agent and account control agreements among the Company, the Buyer, the Administrative Agent and the applicable account bank.  Subject to Section 4, the Company, in its capacity as a collection agent with respect to each of the Initial Customer Property and the Receivables, agrees to:

(i)maintain the collections in the Deposit Accounts for the benefit of the Initial Property Servicer, the Initial Bond Trustee, the Initial Bond Issuer, the Receivables Servicer, the Buyer, the Administrative Agent and the Receivables Purchasers, as their respective interests may appear;

(ii)allocate and remit funds from the Deposit Accounts, whether or not commingled, (x) in the case of collections relating to the Initial Customer Property, at the times and in the manner specified in the Initial Bond Agreements to the Initial Bond Trustee; and (y) in the case of collections relating to the Receivables, allocate and remit funds to the Receivables Purchasers and the Buyer at the times and in the manner specified in the Receivables Agreements; provided, that:

(A)to the extent the combined amounts of remittance are insufficient to satisfy amounts owed in respect of the Initial Customer Charges and the Receivables, such allocation and remittances shall be made [on a pro rata basis as between the Initial Customer Charges and the Receivables based on the respective amounts of such Initial Customer Charges and Receivables then due and owing or as otherwise required by the New Hampshire Public Utilities Commission](3);

(B)late payment penalties of the Receivables and the Initial Customer Charges shall be allocated (x) to the Initial Bond Trustee, if such late payment penalties are allocable to the Initial Customer Charges and are not allowed to be retained by the Company under the Initial Bond Agreements, (y) to the

(3)  If the New Hampshire Public Utilities Commission requires that insufficient funds be allocated among the Initial Customer Charges and the Receivables according to another method, the bracketed text may be replaced with a summary of the PUC’s requirements.

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Receivables Purchasers to the extent that any such late payment penalties are included in the Receivables sold to the Receivables Purchasers, and (z) otherwise to the Company; and

(C)to the extent the Administrative Agent has exercised exclusive control over any Deposit Account, it shall allocate the funds on deposit therein related to the Initial Customer Property in accordance with the information provided to it by the Company and consistent with this Section 2, and shall remit such collections related to the Initial Customer Property at the direction of the Initial Bond Trustee; and

(iii)maintain records as to the amounts deposited into the Deposit Accounts, the amounts remitted therefrom and the allocation as provided above in this subsection (a).

(b)The Initial Bond Trustee, the Initial Bond Issuer, the Buyer and the Receivables Purchasers shall each have the right to require an accounting of collections, deposits, allocations and remittances by the Company relating to the Deposit Accounts.  Because of difficulties inherent in allocating collections on a daily basis, the Initial Property Servicer may implement  estimates for the purposes of determining the amount of collections which are allocable to the Initial Customer Property, which allocations will be subject to annual reconciliations in accordance with the terms of the Initial Bond Agreements but will otherwise be deemed conclusive, subject to reconciliation as provided in the following sentences; provided that unless an Event of Default (as defined in the Initial Indenture and any corresponding term in the Receivables Purchase Agreement) has occurred and is continuing, the Company shall only be required to prepare one such accounting during any fiscal year.  In the event that the estimated remittances to the Initial Bond Issuer for any calendar year are less than the actual amounts of Initial Customer Charge collections, the Initial Bond Issuer shall look to the Initial Property Servicer for any such shortfall and shall have no claims against the Receivables Purchasers for such amounts.   In the event that the estimated remittances to the Initial Bond Issuer are greater than the actual amounts of Initial Customer Charge collections, the Initial Property Servicer shall have the right, in accordance with the terms of the Initial Bond Agreements, to net an amount equal to such excess collections out of monies otherwise to be paid to the Initial Bond Issuer, and the Receivables Purchasers acknowledge that they shall look solely to the Initial Property Servicer for such excess collections and shall have no claims against the Initial Bond Issuer for such funds.  Notwithstanding the foregoing, nothing in this paragraph shall prohibit any party from netting any such reconciliation payments owing by such party (the “remitting party”) to another party (the “receiving party”) against the amounts to be paid hereunder to the remitting party by such receiving party.

(c)The Initial Bond Trustee and the Initial Bond Issuer waive any interest in deposits to the Deposit Accounts to the extent that they are properly allocable to Collections with respect to Receivables, and the Administrative Agent and Buyer waive any interest in deposits to the Deposit Accounts to the extent that they are properly allocable to Initial Customer Charges. Each of the parties hereto acknowledges the respective ownership and

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security interests of the others in amounts on deposit in the Deposit Accounts to the extent of their respective interests as described in this Agreement.

(d)In no event may the Initial Bond Trustee take any action with respect to the Initial Customer Charges in a manner that would result in the Initial Bond Trustee obtaining possession of, or any control over, Collections of Receivables or any Deposit Account.  In the event that the Initial Bond Trustee obtains possession of any Collections related to the Receivables, the Initial Bond Trustee shall notify the Administrative Agent of such fact, shall hold such Collections in trust and shall promptly deliver them to the Administrative Agent upon request.  Except as contemplated by this Section 2 with respect to the Administrative Agent’s exercise of control over the Deposit Accounts, in no event may the Administrative Agent or Buyer take any action with respect to the collection of Receivables in a manner that would result in the Administrative Agent or Buyer, as applicable, obtaining possession of, or any control over, collections of Initial Customer Charges. In the event that the Administrative Agent or Buyer obtains possession of any collections of Initial Customer Charges, the Administrative Agent or Buyer, as applicable, shall notify the Initial Bond Trustee of such fact, shall hold such collections in trust and shall promptly deliver them to the Initial Bond Trustee upon request.

SECTION 3.Time or Order of Attachment.  The acknowledgments contained in Sections 1 and 2 are applicable irrespective of the time or order of attachment or perfection of security or ownership interests or the time or order of filing or recording of financing statements or mortgages or filings under applicable law.

SECTION 4.Servicing.

(a)Pursuant to Section 2, the Company, in its role as collection agent hereunder, shall allocate and remit funds received from Customers for the benefit of the Initial Bond Issuer, the Initial Bond Trustee, the Buyer and the Receivables Purchasers, respectively, and shall control the movement of such funds out of the Deposit Accounts in accordance with the terms of this Agreement.  To the extent permitted under the Initial Indenture or the Receivables Purchase Agreement, the Company may appoint a successor servicer or sub-servicer to act in any of its respective capacities under this Agreement so long as such successor servicer or sub-servicer has executed joinder documentation agreeing to act in such capacity and to be bound by the terms of this Agreement.

(b)In the event that the Initial Bond Trustee is entitled to and desires to exercise its right, pursuant to the Initial Bond Agreements, to replace the Company as Initial Property Servicer, or in the event that the Receivables Purchasers are entitled to and desire to exercise their right to replace the Company as Receivables Servicer, and therefore to terminate the role of the Company as the Initial Property Servicer or as Receivables Servicer, as applicable, hereunder, the party desiring to exercise such right shall promptly give written notice to the other (the “Servicer Notice”) in accordance with the notice provisions of this Agreement and consult with the other with respect to the Person who would replace the Company in its capacity as Initial Property Servicer or as Receivables Servicer.  Any successor to the Company in either of its capacities shall be agreed to by the Initial Bond Trustee and the Administrative Agent within ten (10) Business Days of the date of the Servicer Notice, and such successor shall be subject to

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satisfaction of the Rating Agency Condition (as defined below) and otherwise satisfy the provisions of the Initial Servicing Agreement and the Receivables Agreements.  For the avoidance of doubt, (i) the removal of the Company as the Initial Property Servicer shall not automatically cause the removal of the Company as the Receivables Servicer, (ii) the removal of the Company as the Receivables Servicer shall not automatically cause the removal of the Company as the Initial Property Servicer and (iii) the roles of Initial Property Servicer and Receivables Servicer may be held by different Persons so long as each such Person has agreed to be bound by the provisions of this Agreement. “Business Day” means any day other than a Saturday, Sunday, or any holiday for national banks or any New York banking corporation in Manchester, New Hampshire or New York, New York.  Any Person named as replacement collection agent in accordance with this Section 4 is referred to herein as a “Replacement Collection Agent.”  The parties hereto agree that any entity succeeding to the rights of the Company in its capacity as Initial Property Servicer or as Receivables Servicer  hereunder shall execute customary joinder documentation agreeing to act in such capacity and to be bound by the terms of this Agreement.

(c)Anything in this Agreement to the contrary notwithstanding, any action taken by the Initial Bond Trustee or the Administrative Agent to appoint a Replacement Collection Agent pursuant to this Section 4 shall be subject to the Rating Agency Condition.  For the purposes of this Agreement, the “Rating Agency Condition” has the meaning set forth in the Initial Indenture.  The parties hereto acknowledge and agree that the approval or the consent of the rating agencies which is required in order to satisfy the Rating Agency Condition is not subject to any standard of commercial reasonableness, and the parties are bound to satisfy this condition whether or not the rating agencies are unreasonable or arbitrary.

SECTION 5.Sharing of Information.  The parties hereto agree to cooperate with each other and make available to each other or any Replacement Collection Agent any and all records and other data relevant to the Initial Customer Property and the Receivables which they may from time to time possess or receive from the Company, the Initial Property Servicer or the Receivables Servicer or any successor hereto or thereto, including, without limitation, any and all computer programs, data files, documents, instruments, files and records and any receptacles and cabinets containing the same.  The Company hereby consents to the release of information regarding the Company pursuant to this Section 5.

SECTION 6.No Joint Venture; No Fiduciary Obligations; Etc..

(a)Nothing herein contained shall be deemed as effecting a joint venture among any of the Company, the Initial Bond Issuer, the Initial Bond Trustee, the Initial Property Servicer, the Administrative Agent, the Receivables Servicer and the Buyer.

(b)Neither Buyer nor the Administrative Agent is the agent of, or owes any fiduciary obligation to, the Initial Bond Trustee, the Initial Bond Issuer, the bondholders or any other party under this Agreement.  Each of the Initial Bond Trustee (on behalf of itself and the bondholders), the Initial Bond Issuer and the Company hereby waives any right that it may now have or hereafter acquire to make any claim against Buyer or the Administrative Agent, in their respective capacities as such, on the basis of any such fiduciary obligation hereunder.  Neither the Initial Bond Trustee nor the Initial Bond Issuer is the agent of, or owes any fiduciary

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obligation to, Buyer or the Administrative Agent or any other party under this Agreement.  Each of the Administrative Agent, the Company and Buyer hereby waives any right that it may now have or hereafter acquire to make any claim against the Initial Bond Trustee or the Initial Bond Issuer on the basis of any such fiduciary obligation hereunder.

(c)Notwithstanding anything herein to the contrary, none of Buyer, the Administrative Agent, the Initial Bond Trustee or the Initial Bond Issuer shall be required to take any action that exposes it to personal liability or that is contrary to the Initial Indenture, the Servicing Agreement, any Receivables Agreement or applicable law.

(d)None of Buyer, the Administrative Agent, the Initial Bond Trustee or the Initial Bond Issuer nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own negligence, bad faith or willful misconduct.  Without limiting the foregoing, each of Buyer, the Administrative Agent, the Initial Bond Trustee and the Initial Bond Issuer: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any party and shall not be responsible to any party for any statements, warranties or representations made by any other party in connection with this Agreement or any other agreement; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other agreement on the part of any other party; and (iv) shall incur no liability under or in respect of this Agreement by acting upon any writing (which may be by facsimile or other electronic transmission) believed by it in good faith to be genuine and signed or sent by the proper party or parties.

SECTION 7.Method of Adjustment and Allocation.  Each of the parties hereto acknowledges that the Initial Property Servicer will adjust, calculate and allocate payments of Initial Customer Charges in accordance with Section 4.01 of the Initial Servicing Agreement and Section 6 of Annex 1 of the Initial Servicing Agreement in the form attached thereto, and each of the parties hereto hereby acknowledges that neither the Administrative Agent nor any other Receivables Purchasers shall be deemed or required under this Agreement to have any knowledge of or responsibility for the terms of such documents or any such adjustment, calculation and allocation.  Accordingly, each of the Receivables Purchasers (i) may, solely for the purposes of this Agreement, conclusively rely on the accuracy of the calculations of the Initial Property Servicer in making such adjustments, calculations and allocations.  Such acknowledgement shall not relieve the Receivables Servicer of any of its obligations to make payments in accordance with the terms of the Receivables Agreements, nor shall it relieve the Initial Property Servicer of its obligations under the Initial Servicing Agreement.

SECTION 8.Termination.  This Agreement shall terminate upon the payment in full of the Initial Rate Reduction Bonds, or, if earlier, the termination of the Receivables Agreements as to the Company and the release of the Company from all further obligations thereunder, except that the understandings and acknowledgements contained in Sections 1, 2, 3 and 15 shall survive the termination of this Agreement.

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SECTION 9.Governing Law; Jurisdiction; Waiver of Jury Trial.

(a)THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(b)Each of the parties hereto hereby irrevocably submits to the non-exclusive jurisdiction of any New York state court sitting in the Borough of Manhattan in The City of New York or any U.S. federal court sitting in the Borough of Manhattan in The City of New York in respect of any suit, action or proceeding arising out of or relating to this Agreement and irrevocably accepts for itself and in respect of its respective property, generally and unconditionally, jurisdiction of the aforesaid courts; and each party hereto agrees to, and irrevocably waives any objection based on forum non conveniens or venue not to, appear in such state or U.S. federal court located in the Borough of Manhattan.

(c)EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

SECTION 10.Further Assurances.  Each of the parties hereto agrees to execute any and all agreements, instruments, financing statements, releases and any and all other documents reasonably requested by any of the other parties hereto in order to effectuate the intent of this Agreement.  In each case where a release is to be given pursuant to this Agreement, the term release shall include any documents or instruments necessary to effect a release, as contemplated by this Agreement.  All releases, subordinations and other instruments submitted to the executing party are to be prepared at the expense of the Company.  Notwithstanding anything herein to the contrary, the Initial Bond Trustee shall not be required to execute any such agreements, instruments, releases or other documents unless directed to do so by an “Issuer Order,” as such term is defined in the Initial Indenture.

SECTION 11.Limitation on Rights of Others.  This Agreement is solely for the benefit of the parties hereto, the holders of the Initial Rate Reduction Bonds and the Receivables Purchasers, and no other person or entity shall have any rights, benefits, priority or interest under or because of the existence of this Agreement.

SECTION 12.Amendments.  In the event that (x) the Company hereafter causes any property (“Additional Customer Property”) consisting of the right to impose specified charges on Customers to be created and sold and pledged by the buyer thereof for the benefit of bondholders pursuant to any finance order of the New Hampshire Public Utilities Commission, and the Company acts as servicer for the bonds issued pursuant to such finance order, or (y) the Company enters into any new receivables program in which the Company participates as a seller or as a servicer or sub-servicer of receivables, then, in either such event, upon the written request of the Company, the other parties hereto agree that this Agreement may be amended and restated (i) to add as parties hereto the relevant issuer of such additional bonds, the indenture trustee therefor, and the servicer of such Additional Customer Property and/or the relevant lenders or purchasers and servicers under such additional receivables program, as the case may be, and (ii) to reflect the rights and obligations of the parties with respect to such new receivables purchases

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on terms substantially similar to the rights and obligations of the Receivables Servicer, the Administrative Agent and the Receivables Purchasers hereunder and (iii) to reflect the rights and obligations of the parties with respect to any such Additional Customer Property on terms substantially similar to the rights and obligations of the Initial Bond Issuer, the Initial Bond Trustee and the Initial Servicer hereunder; provided that no such amendment shall be effective unless (x) evidenced by a written instrument signed by the parties hereto and such additional parties and (y) the Rating Agency Condition shall have been satisfied with respect thereto and provided, further, that no party hereto shall be required to execute any such amended agreement on terms which are materially more disadvantageous to it or to the holders of the Initial Rate Reduction Bonds (in the case of the Initial Bond Trustee) or to the Receivables Purchasers (in the case of the Administrative Agent) than the terms contained herein.  In addition, the Initial Bond Trustee shall not be required to execute any such amendment unless directed to do so by an “Issuer Order,” as such term is defined in the Initial Indenture.

SECTION 13.Severability.  The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.  If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the remainder of this Agreement and the application of such provision to other Persons, or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

SECTION 14.Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument.  Delivery of an executed counterpart of a signature page to this Agreement by telecopier or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 15.Nonpetition Covenant.

(a)Notwithstanding any prior termination of this Agreement or the Initial Indenture, each of the parties covenants that it shall not, prior to the date which is one year and one day after payment in full of the last outstanding Initial Rate Reduction Bonds, acquiesce, petition or otherwise invoke or cause the Initial Bond Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Initial Bond 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 Initial Bond Issuer or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Initial Bond Issuer. Nothing in this Section 15 shall preclude, or be deemed to estop, any party hereto (a) from taking or omitting to take any action prior to such date in (i) any case or proceeding voluntarily filed or commenced by or on behalf of the Initial Bond Issuer under or pursuant to any such law or (ii) any involuntary case or proceeding pertaining to the Initial Bond Issuer that is filed or commenced by or on behalf of a Person other

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than the Initial Bond Trustee, as the case may be, and is not joined in by the Initial Bond Trustee, as the case may be, under or pursuant to any such law or (b) from commencing or prosecuting any legal action that is not an involuntary case or proceeding under or pursuant to any such law against the Initial Bond Issuer or any of its properties.

(b)Notwithstanding any prior termination of this Agreement or the Receivables Purchase Agreement, each of the parties hereto other than the Administrative Agent hereby covenants and agrees that it shall not, prior to the date which is one year and one day after the termination of the Receivables Purchase Agreement and the payment in full of all amounts owing by Buyer thereunder, acquiesce, petition or otherwise invoke or cause Buyer to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against Buyer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Buyer or any substantial part of the property of Buyer, or ordering the winding up or liquidation of the affairs of Buyer.

SECTION 16.Trustees.  Bank of New York Mellon, as Initial Bond Trustee, in acting hereunder, is entitled to all rights, benefits, protections, immunities and indemnities accorded to it under the Initial Indenture.

SECTION 17.Notices, Etc..  Any notice provided or permitted by this Agreement to be made upon, given or furnished to or filed with any party hereto shall be shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing by facsimile transmission, first-class mail or overnight delivery service to the applicable party at its address set forth on Exhibit A hereto or, as to any party, at such other address as shall be designated by such party by written notice to the other parties hereto.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, as Company, as Initial Property Servicer, as Receivables Servicer and as a collection agent
By:
	Name:
	Title:
PSNH FUNDING LLC 3
By:
	Name:
	Title:
[NAME], as Buyer
By:
	Name:
	Title:
BANK OF NEW YORK MELLON, as Initial Bond Trustee
By:
	Name:
	Title:
[Insert Admin Agent name], as Administrative Agent
By:
	Name:
	Title:

Signature Page to

Intercreditor Agreement

EXHIBIT A

NOTICE ADDRESSES

Public Service Company of New Hampshire

Energy Park
780 North Commercial Street
Manchester, New Hampshire 03101-1134
Telephone: (800) 286-5000

PSNH Funding LLC 3

C/O Public Service Company of New Hampshire
Energy Park
780 North Commercial Street
Manchester, New Hampshire 03101-1134
Telephone: (781) 441-8127

[Buyer]

[Address]

Attention:

Telephone:

Facsimile:

[Administrative Agent]

[Address]

Attention:

Telephone:

Facsimile:

Bank of New York Mellon

101 Barclay Street, 7 West

New York, New York 10286

Attention: Asset Backed Securities Unit,

Telephone: (212) 815-5331

Facsimile: (212) 815-2830

Signature Page to

Intercreditor Agreement

APPENDIX A

DEFINITIONS AND RULES OF CONSTRUCTION

A.Defined Terms. The following terms have the following meanings:

“17g-5 Website” is defined in Section 10.18(a) of the Indenture.

“2015 Settlement Agreement” means the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement, as amended approved by the NHPUC in Order No. 25,920 dated July 1, 2016 in Docket No. DE 14-238.

“Act” is defined in Section 10.03(a) of the Indenture.

“Administration Agreement” means the Administration Agreement, dated as of the Closing Date, by and between PSNH and the Issuer.

“Administration Fee” is defined in Section 3.01 of the Administration Agreement.

“Administrator” means PSNH, as Administrator under the Administration Agreement, or any successor Administrator to the extent permitted under the Administration Agreement.

“Advice Letter” means any filing made with the NHPUC by the Servicer on behalf of the Issuer to set or adjust the RRB Charge, including the Issuance Advice Letter, an Annual Routine True-Up Letter, a Mid-Year Routine True-Up Letter, an Other Routine True-Up Letter or a Non-Routine True-Up Letter.

“Affiliate” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such specified Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Annual Accountant’s Report” is defined in Section 3.04(a) of the Servicing Agreement.

“Annual Routine True-Up Letter” means a letter filed with the NHPUC, substantially in the form of Exhibit B to the Servicing Agreement, not later than January 15 of each year, in respect of an annual Periodic Adjustment pursuant to Section 4.01(b)(1) of the Servicing Agreement.

“Applicable TPS” means, with respect to each Customer, the TPS, if any, billing the RRB Charge to that Customer.

“Authorized Denomination” means, with respect to any Rate Reduction Bond, the authorized denomination therefor specified in the Series Supplement, which shall be at least

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$100,000 and, except as otherwise provided in the Series Supplement, integral multiples of $1,000 in excess thereof, except for one bond which may be a smaller denomination.

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

“Basic Documents” means the Indenture, the Administration Agreement, the Sale Agreement, the Certificate of Formation, the LLC Agreement, the Servicing Agreement, the Series Supplement, the Letter of Representations, the Underwriting Agreement and all other documents and certificates delivered in connection therewith.

“Bills” means each of the regular monthly bills, summary bills and other bills issued to Customers or TPSs by PSNH on its own behalf and in its capacity as Servicer.

“Bond Interest Rate” means, with respect to any Tranche of Rate Reduction Bonds, the rate at which interest accrues on the Rate Reduction Bonds of such Tranche, as specified in the Series Supplement.

“Book-Entry Form” means, with respect to any Rate Reduction Bond, that such Rate Reduction Bond is not certificated and the ownership and transfers thereof shall be made through book entries by a Clearing Agency as described in Section 2.11 of the Indenture and the Series Supplement pursuant to which such Rate Reduction Bond was issued.

“Book-Entry Rate Reduction Bonds” means any Rate Reduction Bonds issued in Book-Entry Form; provided, however, that, after the occurrence of a condition whereupon book-entry registration and transfer are no longer permitted and Definitive Rate Reduction Bonds are to be issued to the Holder of such Rate Reduction Bonds, such Rate Reduction Bonds shall no longer be “Book-Entry Rate Reduction Bonds.”

“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in Manchester, New Hampshire or New York, New York are, or DTC or the Corporate Trust Office is, authorized or obligated by law, regulation or executive order to be closed.

“Capital Subaccount” is defined in Section 8.02(a) of the Indenture.

“Capital Subaccount Investment Earnings” shall mean, as of any Business Day, the sum of (a) an amount equal to investment earnings since the previous distribution of Capital Subaccount Investment Earnings pursuant to Section 8.02(g) of the Indenture (or, in the case of the first such distribution, since the Closing Date) on the sum of (x) the Required Capital Level (or, if less, the amount of funds in the Capital Subaccount on the most recent Payment Date after giving effect to any replenishment of the Capital Subaccount pursuant to Section 8.02(e)(ix) of the Indenture) and (y) any investment earnings on the amount described in clause (x) plus (b) any such amounts not paid on the date of any prior distribution of Capital Subaccount Investment Earnings.

“Certificate of Compliance” means the certificate referred to in Section 3.03(a) of the Servicing Agreement and substantially in the form of Exhibit E to the Servicing Agreement.

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“Certificate of Formation” means the Certificate of Formation filed with the Secretary of State of the State of Delaware on January 18, 2018 pursuant to which the Issuer was formed.

“Claim” means a “claim” as defined in Section 101(5) of the Bankruptcy Code.

“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act.

“Clearing Agency Participant” means a securities broker, dealer, bank, trust company, clearing corporation or other financial institution or other Person for whom from time to time a Clearing Agency effects book entry transfers and pledges of securities deposited with such Clearing Agency.

“Closing Date” means [          ], 2018, the date on which the Rate Reduction Bonds are originally issued in accordance with Section 2.10 of the Indenture and the Series Supplement.

“Code” means the Internal Revenue Code of 1986.

“Collection Account” is defined in Section 8.02(a) of the Indenture.

“Corporate Trust Office” means the office of the Indenture Trustee at which, at any particular time, its corporate trust business shall be administered, which office as of the Closing Date is located at 101 Barclay Street, 7 West, New York, New York 10286, Attention: Asset Backed Securities Unit, Telephone: (212) 815-2483, Email: helen.choi@bnymellon.com, or at such other address as the Indenture Trustee may designate from time to time by notice to the Holders of Rate Reduction Bonds and the Issuer, or the principal corporate trust office of any successor trustee designated by like notice.

“Covenant Defeasance Option” is defined in Section 4.01(b) of the Indenture.

“Customers” means any person or entity within PSNH’s franchise service territory purchasing directly or otherwise obtaining or being supplied directly with retail electric service for end use consumption, including those served under special contract.

“Deemed RRB Charge Payments” means the payments in respect of the RRB 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 to the Servicing Agreement.

“Default” means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.

“Definitive Rate Reduction Bonds” is defined in Section 2.11 of the Indenture.

“Delaware UCC” means the Uniform Commercial Code as in effect on the Closing Date in the State of Delaware.

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“DTC” means The Depository Trust Company.

“Eligible Account” means a segregated trust account with an Eligible Institution.

“Eligible Institution” means:

(a)the corporate trust department of the Indenture Trustee, so long as any of the securities of the Indenture Trustee has a credit rating from each Rating Agency that is providing a credit rating of the securities of the Indenture Trustee at such time in one of its generic rating categories that signifies investment grade; or

(b)a depository institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank) (i) that has either (A) a long-term issuer rating of “AA-” or higher by S&P and “A2” or higher by Moody’s or equivalent rating by Fitch or (B) a short-term issuer rating of “A-1+” or higher by S&P and “P-1” or higher by Moody’s and “F1+” or higher by Fitch or any other long-term, short-term or certificate of deposit rating acceptable to the Rating Agencies, and (ii) whose deposits are insured by the Federal Deposit Insurance Corporation.

If so qualified under clause (b) of this definition, the Indenture Trustee may be considered an Eligible Institution for the purposes of clause (a) of this definition.

“Eligible Investments” means instruments or investment property that evidence:

(a)direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United States of America;

(b)demand or time deposits of, unsecured certificates of deposit of, money market deposit accounts of, or bankers’ acceptances issued by, any depository institution (including the Indenture Trustee, acting in its commercial capacity) incorporated or organized under the laws of the United States of America or any State thereof and subject to supervision and examination by U.S. federal or state banking authorities, so long as the commercial paper or other short-term debt obligations of such depository institution are, at the time of deposit, rated at least “A-1” and “P-1” or their equivalents by each of S&P, Moody’s and Fitch or such lower rating as will not result in the downgrading or withdrawal of the ratings of the Rate Reduction Bonds;

(c)commercial paper (including commercial paper of the Indenture Trustee, acting in its commercial capacity, and other than commercial paper of PSNH or any of its Affiliates), which at the time of purchase is rated at least “A-1” and “P-1” or their equivalents by each of S&P, Moody’s and Fitch or such lower rating as will not result in the downgrading or withdrawal of the ratings of the Rate Reduction Bonds;

(d)investments in money market funds having a rating in the highest investment category granted thereby (including funds for which the Indenture Trustee or any of its Affiliates is investment manager or advisor) from Moody’s, S&P and Fitch;

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(e)repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or its agencies or instrumentalities, entered into with Eligible Institutions;

(f)repurchase obligations with respect to any security or whole loan entered into with an Eligible Institution or with a registered broker/dealer acting as principal and that meets the ratings criteria set forth below:

·a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Exchange Act (any such broker/dealer being referred to in this definition as a “broker/dealer”), the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s and “A-1+” by S&P and “F1+” by Fitch at the time of entering into such repurchase obligation; or

·an unrated broker/dealer, acting as principal, that is a wholly-owned subsidiary of a non-bank or bank holding company the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s and “A-1+” by S&P and “F1+” by Fitch at the time of purchase so long as the obligations of such unrated broker/dealer are unconditionally guaranteed by such non-bank or bank holding company; and

(g)any other investment permitted by each of the Rating Agencies;

in each case maturing not later than the Business Day preceding the next Payment Date or Special Payment Date, if applicable (for the avoidance of doubt, investments in money market funds or similar instruments that are redeemable on demand shall be deemed to satisfy the foregoing requirement). Notwithstanding the foregoing: (1) no securities or investments that mature in 30 days or more shall be “Eligible Investments” unless the issuer thereof has either a short-term unsecured debt rating of at least “P-1” from Moody’s or a long-term unsecured debt rating of at least “A2” from Moody’s and also has a long-term unsecured debt rating of at least “A+” from S&P; (2) no securities or investments described in clauses (b) through (d) above that have maturities of more than 30 days but less than or equal to 3 months shall be “Eligible Investments” unless the issuer thereof has a long-term unsecured debt rating of at least “A1” from Moody’s and a short-term unsecured debt rating of at least “P-1” from Moody’s; and (3) no securities or investments described in clauses (b) through (d) above that have maturities of more than 3 months shall be “Eligible Investments” unless the issuer thereof has a long-term unsecured debt rating of at least “Aa3” from Moody’s and a short-term unsecured debt rating of at least “P1” from Moody’s.

“Estimated RRB Charge Payments” means the estimated payments in respect of the RRB 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 of the Servicing Agreement.

“Event of Default” is defined in Section 5.01 of the Indenture.

“Excess Funds Subaccount” is defined in Section 8.02(a) of the Indenture.

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“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Expected Amortization Schedule” means, with respect to any Tranche, the expected amortization schedule related thereto set forth in the Series Supplement.

“Federal Book-Entry Regulations” means 31 C.F.R. Part 357 et seq. (Department of Treasury).

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Servicer from three federal funds brokers of recognized standing selected by it.

“Final” means, with respect to the Finance Order, that the Finance Order has become final, that the Finance Order is not being appealed and that the time for filing an appeal thereof has expired.

“Final Maturity Date” means, with respect to each Tranche of Rate Reduction Bonds, the final maturity date therefor as specified in the Series Supplement.

“Finance Order” means the financing order issued by the NHPUC to PSNH on January 30, 2018, Docket No. DE 17-096, authorizing the creation of the RRB Property.

“Financing Act” means Chapter 369-B, New Hampshire Revised Statutes.

“Fitch” means Fitch Ratings, Inc. References to Fitch are effective so long as Fitch is a Rating Agency.

“General Subaccount” is defined in Section 8.02(a) of the Indenture.

“Global Rate Reduction Bond” means a Rate Reduction Bond to be issued to the Holders thereof in Book-Entry Form, which Global Rate Reduction Bond shall be issued to the Clearing Agency, or its nominee, in accordance with Section 2.11 of the Indenture and the Series Supplement.

“Governmental Authority” means any nation or government, any U.S. federal, state, local or other political subdivision thereof and any court, administrative agency or other instrumentality or entity exercising executive, legislative, judicial, regulatory or administrative functions of government.

“Grant” means to mortgage, pledge, and grant a lien upon, and a security interest in, the RRB Collateral pursuant to the Indenture and the Series Supplement. A Grant of the RRB Collateral shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for payments in respect of the RRB Collateral and all other moneys

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payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the granting party or otherwise and generally to do and receive anything that the granting party is or may be entitled to do or receive thereunder or with respect thereto.

“Holder” means the Person in whose name a Rate Reduction Bond is registered on the Rate Reduction Bond Register.

“Indenture” means the Indenture, dated as of the Closing Date, by and between the Issuer and The Bank of New York Mellon, a New York banking corporation, as Indenture Trustee and as Securities Intermediary.

“Indenture Trustee” means The Bank of New York Mellon, a New York banking corporation, as indenture trustee for the benefit of the Secured Parties, or any successor indenture trustee for the benefit of the Secured Parties, under the Indenture.

“Independent” means, when used with respect to any specified Person, that such specified Person (a) is in fact independent of the Issuer, the Seller, the Servicer and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Issuer, the Seller, the Servicer or any Affiliate of any of the foregoing Persons and (c) is not connected with the Issuer, the Seller, the Servicer or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director (other than as an independent director or manager) or person performing similar functions.

“Independent Certificate” means a certificate to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 10.01 of the Indenture, made by an Independent appraiser or other expert appointed by an Issuer Order, and such certificate shall state that the signer has read the definition of “Independent” in the Indenture and that the signer is Independent within the meaning thereof.

“Independent Manager” is defined in Section 1.01 of the LLC Agreement.

“Independent Manager Fee” is defined in Section 6.01(a) of the LLC Agreement.

“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 specified Person or any substantial part of its property in an involuntary case under any applicable U.S. federal or state bankruptcy, insolvency or other similar law in effect as of the Closing Date or thereafter, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such specified Person or for any substantial part of its property, or ordering the winding-up or liquidation of such specified 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 specified Person of a voluntary case under any applicable U.S. federal or state bankruptcy, insolvency or other similar law in effect as of the Closing Date or thereafter, or the consent by such specified Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such specified Person to the appointment of or taking

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possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such specified Person or for any substantial part of its property, or the making by such specified Person of any general assignment for the benefit of creditors, or the failure by such specified Person generally to pay its debts as such debts become due, or the taking of action by such specified Person in furtherance of any of the foregoing.

“Intercreditor Agreement” means, as the context may require, any intercreditor agreement that the Seller, the Servicer, the Issuer and the Indenture Trustee enter into with either (i) the investors in any future accounts receivable or similar financing arrangement in substantially the form of Exhibit D to the Indenture concerning receivables payable by Customers or (ii) the trustee for any holders of bonds issued by Affiliates of PSNH which are backed by property consisting of charges payable by Customers pursuant to the Financing Act or any similar law, collections of which receivables or other charges will be commingled with the RRB Charge Collections, in each case subject to the terms of Section 10.15 of the Indenture.

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“Investment Earnings” means all investment earnings on funds deposited in the Collection Account net of losses and investment expenses other than Capital Subaccount Investment Earnings.

“Issuance Advice Letter” means the initial Issuance Advice Letter, dated [          ], filed with the NHPUC pursuant to the Finance Order.

“Issuer” means PSNH Funding  LLC 3, a Delaware limited liability company, named as such in the Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the Trust Indenture Act, each other obligor on the Rate Reduction Bonds.

“Issuer Order” means a written order signed in the name of the Issuer by any one of its Responsible Officers and delivered to the Indenture Trustee or Paying Agent, as applicable.

“Issuer Request” means a written request signed in the name of the Issuer by any one of its Responsible Officers and delivered to the Indenture Trustee or Paying Agent, as applicable.

“Legal Defeasance Option” is defined in Section 4.01(b) of the Indenture.

“Letter of Representations” means any applicable agreement between the Issuer and the applicable Clearing Agency, with respect to such Clearing Agency’s rights and obligations (in its capacity as a Clearing Agency) with respect to any Book-Entry Rate Reduction Bonds.

“Lien” means a security interest, lien, mortgage, charge, pledge, claim or encumbrance of any kind.

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“LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of PSNH Funding LLC 3, dated as of the Closing Date.

“Manager” means each manager of the Issuer under the LLC Agreement.

“Member” has the meaning specified in the first paragraph of the LLC Agreement.

“Mid-Year Routine True-Up Letter” means a letter filed with the NHPUC, substantially in the form of Exhibit B to the Servicing Agreement, pursuant to Section 4.01(b)(2) of the Servicing Agreement in respect of a mid-year Periodic Adjustment.

“Monthly Servicer’s Certificate” is defined in Section 4.01(d)(2) of the Servicing Agreement.

“Moody’s” means Moody’s Investors Service, Inc. References to Moody’s are effective so long as Moody’s is a Rating Agency.

“New Hampshire UCC” means the Uniform Commercial Code as in effect on the Closing Date in the State of New Hampshire.

“NHPUC” means the New Hampshire Public Utilities Commission and any successor thereto.

“NHPUC 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 NHPUC.

“Non-Routine Periodic Adjustment” has the meaning set forth in Section 4.01(c)(1) of the Servicing Agreement.

“Non-Routine True-Up Letter” means a letter filed with the NHPUC in accordance with the Finance Order with respect to any Non-Routine Periodic Adjustment pursuant to Section 4.01(c)(1) of the Servicing Agreement.

“NRSRO” is defined in Section 10.18(b) of the Indenture.

“NY UCC” means the Uniform Commercial Code as in effect on the Closing Date in the State of New York.

“Officer’s Certificate” means a certificate signed by a Responsible Officer of the Issuer under the circumstances described in, and otherwise complying with, the applicable requirements of Section 10.01 of the Indenture, and delivered to the Indenture Trustee.

“Ongoing Transaction Costs” means the Transaction Costs described as such in the Finance Order, including the Operating Expenses and any indemnity obligations that are anticipated to be payable under the Basic Documents.

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“Operating Expenses” means all unreimbursed fees, costs and out-of-pocket expenses of the Issuer, including all amounts owed by the Issuer to the Indenture Trustee (including indemnities, legal fees and expenses) or any Manager, the Servicing Fee and other amounts owed to the Servicer pursuant to the Servicing Agreement, the Administration Fee and other amounts owed to the Administrator pursuant to the Administration Agreement, legal and accounting fees, Rating Agency and related fees (e.g. website provider fees) and any franchise or other taxes owed by the Issuer.

“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.

“Other Routine True-Up Letter” means a letter filed with the NHPUC, substantially in the form of Exhibit B to the Servicing Agreement, pursuant to Section 4.01(b)(3) thereto.

“Outstanding” means, as of the date of determination, all Rate Reduction Bonds theretofore authenticated and delivered under the Indenture, except:

(a)Rate Reduction Bonds theretofore canceled by the Rate Reduction Bond Registrar or delivered to the Rate Reduction Bond Registrar for cancellation;

(b)Rate Reduction Bonds or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Indenture Trustee or any Paying Agent in trust for the Holders of such Rate Reduction Bonds; and

(c)Rate Reduction Bonds in exchange for which or in lieu of which other Rate Reduction Bonds have been issued pursuant to the Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Rate Reduction Bonds are held by a Protected Purchaser;

provided, that, in determining whether the Holders of the requisite Outstanding Amount of the Rate Reduction Bonds or any Tranche thereof have given any request, demand, authorization, direction, notice, consent or waiver under any Basic Document, Rate Reduction Bonds owned by the Issuer, the Member, the Seller, the Servicer or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding (unless one or more such Persons owns 100% of such Rate Reduction Bonds), except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Rate Reduction Bonds that the Indenture Trustee actually knows to be so owned shall be so disregarded. Rate Reduction Bonds owned by any Holder that have been pledged as security for any obligations may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee’s right to act with respect to such Rate Reduction Bonds and that the pledgee is not the Issuer, the Member, the Seller, the Servicer or any Affiliate of any of the foregoing Persons.

“Outstanding Amount” means the aggregate principal amount of all Rate Reduction Bonds, or, if the context requires, all Rate Reduction Bonds of a Tranche, Outstanding at the date of determination.

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“Paying Agent” means, with respect to the Indenture, the Indenture Trustee and any other Person appointed as a paying agent for the Rate Reduction Bonds pursuant to the Indenture.

“Payment Date” means, with respect to any Tranche of Rate Reduction Bonds, the dates specified in the Series Supplement; provided, that if any such date is not a Business Day, the Payment Date shall be the Business Day succeeding such date.

“Periodic Adjustment” means each adjustment to the RRB Charges made pursuant to the terms of the Finance Order and in accordance with Section 4.01 of the Servicing Agreement.

“Periodic Interest” means, with respect to any Payment Date, the periodic interest for such Payment Date as specified in the Series Supplement.

“Periodic Principal” means, with respect to any Payment Date, the excess, if any, of the Outstanding Amount of Rate Reduction Bonds over the outstanding principal balance specified for such Payment Date on the Expected Amortization Schedule.

“Periodic RRB Payment Requirements” means, with respect to any Remittance Period, the total dollar amount calculated by the Servicer as necessary to be remitted to the Collection Account during such Remittance Period (after giving effect to (a) the allocation and distribution of amounts on deposit in the Excess Funds Subaccount at the time of calculation and which are available for payments on the Rate Reduction Bonds, (b) any shortfalls in the coverage of the Periodic RRB Payment Requirements for any prior Remittance Period, (c) the required payment or credit of any Remittance Excess or Remittance Shortfall during such Remittance Period and (d) any Remittances based upon the RRB Charge in effect in the prior Remittance Period that are expected to be realized in such Remittance Period) in order to ensure that, as of the Payment Date immediately following the end of such Remittance Period, (i) all accrued and unpaid interest on the Rate Reduction Bonds then due shall have been paid in full, (ii) the Principal Balance of the Rate Reduction Bonds is equal to the Projected Principal Balance of the Rate Reduction Bonds for that Payment Date, (iii) the balance on deposit in the Capital Subaccount equals the aggregate Required Capital Level, and (iv) all other fees, expenses and indemnities due and owing and required or allowed to be paid under Section 8.02 of the Indenture as of such date shall have been paid in full.

“Permitted Lien” means any of (a) the Lien created by the Indenture and the Series Supplement, (b) tax liens arising by operation of law with respect to amounts not yet due or any amounts which are being contested in good faith by appropriate proceedings and (c) the Back-Up Security Interest (as defined in the Sale Agreement).

“Permitted Successor” is defined in Section 5.02 of the Sale Agreement.

“Person” means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or Governmental Authority.

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“Predecessor Rate Reduction Bond” means, with respect to any particular Rate Reduction Bond, every previous Rate Reduction Bond evidencing all or a portion of the same debt as that evidenced by such particular Rate Reduction Bond, and, for the purpose of this definition, any Rate Reduction Bond authenticated and delivered under Section 2.06 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Rate Reduction Bond shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Rate Reduction Bond.

“Principal Balance” means, as of any Payment Date, the sum of the outstanding principal amount of the Rate Reduction Bonds.

“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.

“Projected Principal Balance” means, as of any Payment Date, the sum of the projected outstanding principal amount of the Rate Reduction Bonds for such Payment Date set forth in the Expected Amortization Schedule.

“Protected Purchaser” has the meaning specified in Section 8-303 of the UCC.

“PSNH” means Public Service Company of New Hampshire.

“Rate Reduction Bond Register” is defined in Section 2.05 of the Indenture.

“Rate Reduction Bond Registrar” is defined in Section 2.05 of the Indenture.

“Rate Reduction Bonds” means the rate reduction bonds authorized by the Finance Order and issued under the Indenture and Series Supplement.

“Rating Agency” means, with respect to any Tranche of Rate Reduction Bonds, any of Moody’s, S&P or Fitch that provides a rating with respect to the Rate Reduction Bonds. If no such organization (or successor) is any longer in existence, “Rating Agency” shall be a nationally recognized statistical rating organization or other comparable Person designated by the Issuer, notice of which designation shall be given to the Indenture Trustee and the Servicer.

“Rating Agency Condition” means with respect to any action, that each Rating Agency shall have been given ten Business Days’ prior written notice thereof and that each of the Rating Agencies shall have notified the Servicer, the Issuer and the Indenture Trustee in writing that such action will not result in a suspension, reduction or withdrawal of the then current rating by such Rating Agency of any Tranche of the Rate Reduction Bonds; provided that if within such ten Business Day period, any Rating Agency (other than S&P) has neither replied to such notification nor responded in a manner that indicates that such Rating Agency is reviewing and considering the notification, then (a) the Issuer shall be required to confirm that such Rating Agency has received the Rating Agency Condition request and, if it has, promptly request the related Rating Agency Condition confirmation and (b) if the Rating Agency neither replies to such notification nor responds in a manner that indicates it is reviewing and considering the notification within five Business Days following such second request, the applicable Rating Agency Condition requirement shall not be deemed to apply to such Rating Agency. For the purposes of this definition, any confirmation, request, acknowledgment or

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approval that is required to be in writing may be in the form of electronic mail or a press release (which may contain a general waiver of a Rating Agency’s right to review or consent).

“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, 2018.

“Record Date” means one Business Day prior to the applicable Payment Date.

“Registered Holder” means the Person in whose name a Rate Reduction Bond is registered on the Rate Reduction Bond Register.

“Regulation AB” means the SEC’s Asset Backed Securities regulations under 17 CFR Part 229, Subpart 229.1100 et seq.

“Remittance” means each remittance of Estimated RRB Charge Payments by the Servicer to the Indenture Trustee.

“Remittance Date” means each Servicer Business Day on which a Remittance is to be made by the Servicer pursuant to Section 4.03 of the Servicing Agreement.

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

“Remittance Period” means each six-month period (x) commencing on January 1 and ending on June 30 and (y) commencing on July 1 and ending on December 31; provided, that the initial Remittance Period shall commence on the Closing Date.

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

“Required Capital Level” means an amount of capital equal to 0.5% of the initial principal amount of the Rate Reduction Bonds.

“Responsible Officer” means, with respect to: (a) the Issuer, any Manager or any duly authorized officer; (b) the Indenture Trustee, any officer within the Corporate Trust Office of such trustee (including any Vice President, any Assistant Vice President, any Assistant Secretary or any other officer of the Indenture Trustee customarily performing functions similar to those performed by persons who at the time shall be such officers, respectively, and that has direct responsibility for the administration of the Indenture and also, with respect to a particular matter, any other officer to whom such matter is referred to because of such officer’s knowledge and familiarity with the particular subject); (c) any corporation (other than the Indenture Trustee), 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; (d) any partnership, any

A-13

general partner thereof; and (e) any other Person (other than an individual), any duly authorized officer or member of such Person, as the context may require, who is authorized to act in matters relating to such Person.

“Retirement of the Rate Reduction Bonds” means the day on which the final payment is made to the Indenture Trustee in respect of the last outstanding Rate Reduction Bond.

“Routine True-Up Letter” means, as the context requires, an Annual Routine True-Up Letter, a Mid-Year Routine True-Up Letter or an Other Routine True-Up Letter.

“RRB Charge” means the portion (which may become all) of the Seller’s “stranded cost recovery charge” designated pursuant to the Finance Order and RSA 369-B:2, XIII as the RRB Charge, as the same may be adjusted from time to time as provided in the Finance Order.

“RRB Charge Collections” means the Estimated RRB Charge Payments remitted to the Collection Account.

“RRB Collateral” is defined in the preamble of the Indenture.

“RRB Property” means the RRB Property established by the Finance Order, representing a current and irrevocable vested property right whether or not the revenues and proceeds arising with respect to the RRB Charges had accrued at the time of the Finance Order, including, without limitation, all right, title, and interest in and to all revenues, collections, claims, payments, money, or proceeds of or arising from or constituting (a) the RRB Charges (including the initial RRB Charges set forth in the Issuance Advice Letter, as such charges may be adjusted from time to time pursuant to the Servicing Agreement) and (b) all rights to obtain Periodic Adjustments and Non-Routine Periodic Adjustments to the RRB Charges in accordance with the Finance Order and the Servicing Agreement.

“RRB Property Records” has the meaning assigned to that term in Section 5.01 of the Servicing Agreement.

“S&P” means S&P Global Ratings. References to S&P are effective so long as S&P is a Rating Agency.

“Sale Agreement” means the Purchase and Sale Agreement dated as of the Closing Date between PSNH, as Seller, and the Issuer, as the same may be amended and supplemented from time to time.

“Scheduled Final Payment Date” means, with respect to each Tranche of Rate Reduction Bonds, the date when all interest and principal is scheduled to be paid with respect to that Tranche in accordance with the Expected Amortization Schedule, as specified in the Series Supplement. For the avoidance of doubt, the Scheduled Final Payment Date with respect to any Tranche shall be the last Scheduled Payment Date set forth in the Expected Amortization Schedule relating to such Tranche. The “last Scheduled Final Payment Date” means the Scheduled Final Payment Date of the latest maturing Tranche of Rate Reduction Bonds.

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“SEC” means the Securities and Exchange Commission.

“Secured Obligations” means the payment of principal of and premium, if any, interest on, and any other amounts owing in respect of, the Rate Reduction Bonds and all fees, expenses, counsel fees and other amounts due and payable to the Indenture Trustee.

“Secured Parties” means the Indenture Trustee and the Holders.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Intermediary” means The Bank of New York Mellon, a New York banking corporation, solely in the capacity of a “securities intermediary” as defined in the NY UCC and Federal Book-Entry Regulations or any successor securities intermediary under the Indenture.

“Seller” means PSNH, and its permitted successors and assigns under the Sale Agreement.

“Semi-Annual Servicer’s Certificate” is defined in Section 4.01(d)(3) of the Servicing Agreement.

“Series Supplement” means the indenture supplemental to the Indenture in the form attached as Exhibit B to the Indenture that authorizes the issuance of the Rate Reduction Bonds.

“Servicer” means PSNH, as the servicer of the RRB Property, or each successor (in the same capacity) pursuant to Section 6.04 or Section 7.02 of the Servicing Agreement.

“Servicer Business Day” means any Business Day on which the Servicer’s offices in the State of New Hampshire are open for business.

“Servicer Default” is defined in Section 7.01 of the Servicing Agreement.

“Servicer Policies and Practices” means, with respect to the Servicer’s duties under Annex I to the Servicing Agreement, 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 and, if applicable, others.

“Servicing Agreement” means the Servicing Agreement, dated as of the Closing Date, by and between the Issuer and PSNH, and acknowledged and accepted by the Indenture Trustee.

“Servicing Fee” is defined in Section 6.06(a) of the Servicing Agreement.

“Special Payment Date” means the date on which, with respect to any Tranche of Rate Reduction Bonds, any payment of principal of or interest (including any interest accruing upon default) on, or any other amount in respect of, the Rate Reduction Bonds of such Tranche

A-15

that is not actually paid within five days of the Payment Date applicable thereto is to be made by the Indenture Trustee to the Holders.

“Special Record Date” means, with respect to any Special Payment Date, the close of business on the first day (whether or not a Business Day) preceding such Special Payment Date.

“Sponsor” means PSNH, in its capacity as “sponsor” of the Rate Reduction Bonds within the meaning of Regulation AB.

“State” means any one of the fifty states of the United States of America or the District of Columbia.

“State Pledge” means the pledge of the State of New Hampshire under RSA 369-B:6, II of the Financing Act in which the State of New Hampshire pledged, contracted and agreed with the owner of the RRB Property and the Holders of and the Indenture Trustee for the RRBs that neither the State, nor any of its agencies, including the NHPUC, will limit, alter, amend, reduce or impair the RRB Charges, RRB Property, the Finance Order, or any rights thereunder, or ownership thereof or security interest therein, until the RRBs, including all principal, interest, premium, costs and arrearages thereon, are fully met and discharged, unless adequate provision is made by law for the protection of the owner, Holders and the Indenture Trustee.

“Subaccounts” is defined in Section 8.02(a) of the Indenture.

“Successor Servicer” is defined in Section 3.07(e) of the Indenture.

“Tariff” means PSNH’s then-current “Tariff For Electric Delivery Service,” NHPUC No. 9, as approved by the NHPUC.

“Temporary Rate Reduction Bonds” means Rate Reduction Bonds executed and, upon the receipt of an Issuer Order, authenticated and delivered by the Indenture Trustee pending the preparation of Definitive Rate Reduction Bonds pursuant to Section 2.04 of the Indenture.

“Termination Notice” is defined in Section 7.01 of the Servicing Agreement.

“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 RRB Charge to and from Customers in accordance with NHPUC Regulations, the Finance Order and the guidelines described in Schedule A to Annex I of the Servicing Agreement.

“Tranche” means any one of the groupings of Rate Reduction Bonds differentiated by amortization schedule, interest rate or sinking fund schedule, as specified in the Series Supplement.

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“Transaction Costs” means all RRB costs as defined in RSA 369-B:2, XIV allowed to be recovered by PSNH under the Finance Order.

“Trust Indenture Act” means the Trust Indenture Act of 1939 as in force on the Closing Date, unless otherwise specifically provided.

“UCC” means, unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time.

“Underwriters” means the underwriters who purchase Rate Reduction Bonds of any Tranche from the Issuer and sell such Rate Reduction Bonds in a public offering.

“Underwriting Agreement” means the Underwriting Agreement, dated [            ], by and among PSNH, the representatives of the several Underwriters named therein and the Issuer.

“U.S. Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and that are not callable at the option of the issuer thereof.

“Weighted Average Days Outstanding” means the weighted average number of days PSNH’s monthly retail Customer bills remain outstanding during the 12-month period ended for the quarter immediately preceding the calculation thereof pursuant to Section 4.01(b)(1) of the Servicing Agreement. For all purposes of the Servicing Agreement, the calculation of Weighted Average Days Outstanding pursuant to Section 4.01(b)(1) thereof shall become effective on February 1 of each year. The initial Weighted Average Days Outstanding shall be [  ] days until updated pursuant to Section 4.01(b)(1) of the Servicing Agreement.

B.Rules of Construction. Unless the context otherwise requires, in each Basic Document in which this Appendix A is incorporated by reference:

(a)All accounting terms not specifically defined herein shall be construed in accordance with United States generally accepted accounting principles. To the extent that the definitions of accounting terms in any Basic Document are inconsistent with the meanings of such terms under generally accepted accounting principles or regulatory accounting principles, the definitions contained in such Basic Document shall control.

(b)The term “including” means “including without limitation”, and other forms of the verb “include” have correlative meanings.

(c)All references to any Person shall include such Person’s permitted successors and assigns, and any reference to a Person in a particular capacity excludes such Person in other capacities.

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(d)Unless otherwise stated in any of the Basic Documents, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and each of the words “to” and “until” means “to but excluding”.

(e)The words “hereof”, “herein” and “hereunder” and words of similar import when used in any Basic Document shall refer to such Basic Document as a whole and not to any particular provision of such Basic Document. References to Articles, Sections, Appendices and Exhibits in any Basic Document are references to Articles, Sections, Appendices and Exhibits in or to such Basic Document unless otherwise specified in such Basic Document.

(f)The various captions (including the tables of contents) in each Basic Document are provided solely for convenience of reference and shall not affect the meaning or interpretation of any Basic Document.

(g)The definitions contained in this Appendix A apply equally to the singular and plural forms of such terms, and words of the masculine, feminine or neuter gender shall mean and include the correlative words of other genders.

(h)Unless otherwise specified, references to an agreement or other document include references to such agreement or document as from time to time amended, restated, reformed, supplemented or otherwise modified in accordance with the terms thereof (subject to any restrictions on such amendments, restatements, reformations, supplements or modifications set forth in such agreement or document) and include any attachments thereto.

(i)References to any law, rule, regulation or order of a Governmental Authority shall include such law, rule, regulation or order as from time to time in effect, including any amendment, modification, codification, replacement or reenactment thereof or any substitution therefor.

(j)The word “will” shall be construed to have the same meaning and effect as the word “shall”.

(k)The word “or” is not exclusive.

(l)All terms defined in the relevant Basic Document to which this Appendix A is attached shall have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein.

(m)A term has the meaning assigned to it.

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EX-10.1

Exhibit 10.1

PSNH FUNDING LLC 3,

as Issuer

and

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

as Servicer

SERVICING AGREEMENT

Dated as of [   ]

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

i

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			23
	Section 8.01.	Amendment	23
	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

ii

This SERVICING AGREEMENT, dated as of [    ], 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.

“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.

2

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 [          ], 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.

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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

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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

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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.

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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

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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

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(d)if to Fitch, to

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.

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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

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]

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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:

Name:

Title:

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, as Servicer

By:

Name:

Title:

S-1

EXHIBIT A

CERTIFICATE OF COMPLIANCE

The undersigned hereby certifies that he/she is the duly elected and acting [        ] of Public Service Company of New Hampshire, as servicer (the “Servicer”) under the Servicing Agreement, dated as of [     ] (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

ANNEX A TO EXHIBIT A

LIST OF SERVICER DEFAULTS

Nature of Default Status

A-2

EXHIBIT B

FORM OF ROUTINE TRUE-UP LETTER

[Date]

[Name]
New Hampshire Public Utilities Commission
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

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

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

EXHIBIT C

FORM OF MONTHLY SERVICER CERTIFICATE

[Date]

Pursuant to Section 4.01(d)(2) of the Servicing Agreement, dated as of [   ] (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:

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EXHIBIT D

FORM OF SEMI-ANNUAL SERVICER CERTIFICATE

[Date]

Pursuant to Section 4.01(d)(3) of the Servicing Agreement, dated as of [   ] (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:(1)

ii.Total Bond Principal Balance:

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.Total Projected Principal Amount:

(1)  Note to Draft: Additional Tranches to be added throughout this exhibit as necessary.

D-1

b)Required Interest Payments

	Bond Interest Rate	Days in Applicable Period	Interest Due
i.Tranche A-1 Bond
ii.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:]

b)Semi-Annual Interest

	Per $1000 of Original	Aggregate Principal Amount
i.Tranche A-1 Bond
ii.Total Semi-Annual Interest:

D-2

c)Semi-Annual Principal

	Per $1000 of Original	Aggregate Principal Amount
i.Tranche A-1 Bond
ii.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.Total Bond Principal Balance:

b)Collection Account Balances Outstanding:

i.Excess Funds Subaccount:

ii.Capital Subaccount:

iii.Total Subaccount Amount:

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.Total Semi-Annual Interest Shortfall:

D-3

b)Semi-Annual Principal Shortfall

i.Tranche A-1 Bond

ii.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           ,  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

Schedule 4.01(a)-1

ANNEX I

SERVICING PROCEDURES

The Servicer agrees to comply with the following servicing procedures:

SECTION 1.  DEFINITIONS

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

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

“Billed RRB Charges” means the dollar amounts billed to Customers or the 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 II-1

(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,

E-2

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.

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(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.

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(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.

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SCHEDULE A

TO ANNEX I

Additional Servicing Procedures Applicable to TPSs

1.Establishing TPS Relationship

In addition to any actions required by the 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.

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EX-10.2

Exhibit 10.2

PURCHASE AND SALE AGREEMENT

between

PSNH FUNDING LLC 3

Issuer

and

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

Seller

Dated as of [ ], 2018

TABLE OF CONTENTS

		Page
ARTICLE 1 DEFINITIONS		3
Section 1.01.	Definitions	3
Section 1.02.	Other Definitional Provisions	4
ARTICLE 2 CONVEYANCE OF RRB PROPERTY		4
Section 2.01.	Conveyance of RRB Property	4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER		5
Section 3.01.	Organization and Good Standing	5
Section 3.02.	Due Qualification	5
Section 3.03.	Power and Authority	5
Section 3.04.	Binding Obligation	5
Section 3.05.	No Violation	5
Section 3.06.	No Proceedings	6
Section 3.07.	Approvals	6
Section 3.08.	The RRB Property	6
Section 3.09.	Limitations on Representations and Warranties	8
ARTICLE 4 COVENANTS OF THE SELLER		9
Section 4.01.	Existence	9
Section 4.02.	No Liens	9
Section 4.03.	Delivery of Collections	9
Section 4.04.	Notice of Liens	9
Section 4.05.	Compliance with Law	9
Section 4.06.	Covenants Related to Rate Reduction Bonds and RRB Property	9
Section 4.07.	Protection of Title	10
Section 4.08.	Nonpetition Covenants	11
Section 4.09.	Taxes	11
Section 4.10.	Intercreditor Agreement	12
Section 4.11.	Issuance Advice Letter	12
Section 4.12.	Notice of Breach to Rating Agencies, etc.	12
Section 4.13.	Further Assurances	12
ARTICLE 5 THE SELLER		12
Section 5.01.	Liability of Seller; Indemnities	12

i

Section 5.02.	Merger or Consolidation of or Assumption of the Obligations of Seller	14
Section 5.03.	Limitation on Liability of Seller and Others	15
ARTICLE 6 MISCELLANEOUS PROVISIONS		15
Section 6.01.	Amendment	15
Section 6.02.	Notices	16
Section 6.03.	Assignment	17
Section 6.04.	Limitations on Rights of Third Parties	17
Section 6.05.	Severability	18
Section 6.06.	Separate Counterparts	18
Section 6.07.	Headings	18
Section 6.08.	Governing Law	18
Section 6.09.	Assignment to Indenture Trustee	18
Section 6.10.	Waivers	18
Section 6.11.	Protections Afforded to the Indenture Trustee	18

ii

This PURCHASE AND SALE AGREEMENT, dated as of [  ], 2018, is between PSNH Funding LLC 3, a Delaware limited liability company (the “Issuer”), and Public Service Company of New Hampshire, a New Hampshire corporation (together with its successors in interest to the extent permitted hereunder, the “Seller”).

RECITALS

WHEREAS, the Issuer desires to purchase the RRB Property created pursuant to the Financing Act and the Finance Order;

WHEREAS, the Seller is willing to sell the RRB Property to the Issuer;

WHEREAS, the Issuer, in order to finance the purchase of the RRB Property, will issue the Rate Reduction Bonds under the Indenture (as defined herein);

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, 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 capitalized terms shall have the following meanings:

“Agreement” means this Purchase and Sale Agreement, as amended and supplemented from time to time.

“Back-Up Security Interest” has the meaning specified in Section 2.01.

“Closing Date” means [    ], 2018.

“Indenture” means the Indenture dated as of the Closing Date between the Issuer and the Indenture Trustee, as amended and supplemented from time to time.

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

“Losses” has the meaning specified in Section 5.01(c).

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

“Person” means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.

“Prospectus” means the prospectus dated [  ], 2018 offering the Rate Reduction Bonds.

“Seller” has the meaning set forth in the preamble of this Agreement.

Section 1.02.Other Definitional Provisions.

(a)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.

(b)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 and Exhibit references contained in this Agreement are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” shall mean “including without limitation”.

(c)The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.

ARTICLE 2

CONVEYANCE OF RRB PROPERTY

Section 2.01.Conveyance of RRB Property.  In consideration of the Issuer’s delivery to or upon the order of the Seller of $[  ], the Seller does hereby irrevocably sell, transfer, assign, set over and otherwise convey to the Issuer, without recourse or warranty, except as specifically set forth herein, all right, title and interest of the Seller in and to the RRB Property (such sale, transfer, assignment, setting over and conveyance of the RRB Property includes, to the fullest extent permitted by the Financing Act, the assignment of all revenues, collections, claims, payments, money or proceeds of or arising from the RRB Charge pursuant to the Finance Order and all rights to obtain adjustments to such RRB Charge pursuant to the terms of the Financing Act and the Finance Order) and copies of all books and records related thereto.  Such sale, transfer, assignment, setting over and conveyance is hereby expressly stated to be a sale and, pursuant to RSA 369-B:6, V, shall be treated as an absolute transfer of all of the Seller’s right, title and interest in, as a true sale, and not as a pledge or other financing of, the RRB Property.  If such sale, transfer, assignment, setting over and conveyance is held by any court of competent jurisdiction not to be a true sale as provided in RSA 369-B:6, V, then such sale, transfer, assignment, setting over and conveyance shall be treated as the creation of a security interest in the RRB Property and, without prejudice to its position that it has absolutely transferred all of its rights in the RRB Property to the Issuer, the Seller hereby grants to the Issuer a security interest in the RRB Property (including, to the fullest extent permitted by the Financing Act, all revenues, collections, claims, payments, money or proceeds of or arising from the RRB Charge pursuant to the Finance Order) to secure a payment obligation incurred by the Seller in respect of the amount paid by the Issuer to the Seller pursuant to this Agreement (the “Back-Up Security Interest”).  Such sale, transfer, assignment, setting over and conveyance of the RRB Property includes the right to use the Seller’s computer software system to access and create copies of all books and records related to the RRB Property.

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER

Subject to Section 3.09 hereof, the Seller makes the following representations and warranties, as of the Closing Date, on which the Issuer has relied in acquiring the RRB Property. The representations and warranties shall survive the sale and transfer of RRB Property to the Issuer and the pledge thereof to the Indenture Trustee pursuant to the Indenture.

Section 3.01.Organization and Good Standing.  The Seller 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 obtain the Finance Order and to own the RRB Property.

Section 3.02.Due Qualification.  The Seller 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 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 Seller’s business, operations, assets, revenues or properties).

Section 3.03.Power and Authority.  The Seller 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 Seller.

Section 3.04.Binding Obligation.  This Agreement constitutes a legal, valid and binding obligation of the Seller enforceable against it in accordance with its terms, subject to applicable insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors’ or secured parties’ 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.

Section 3.05.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 Seller, or any material indenture, agreement or other instrument to which the Seller is a party or by which it is bound; (ii) result in the creation or imposition of any Lien upon any of the Seller’s properties pursuant to the terms of any such indenture, agreement or other instrument (other than any Lien that may be granted under the Basic Documents or any Lien created pursuant to RSA 369-B:7, VIII); or (iii) violate any existing law or any existing order, rule or regulation applicable to the Seller of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or its properties, so as to adversely affect the Seller, the Issuer or the Holders.

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Section 3.06.No Proceedings.  There are no proceedings pending and, to the Seller’s knowledge, there are no proceedings threatened and, to the Seller’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 Seller or its properties involving or relating to the Seller or the Issuer or, to the Seller’s knowledge, any other Person: (i) asserting the invalidity of this Agreement, any of the other Basic Documents, the Rate Reduction Bonds, the Financing Act or the Finance Order, (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 Seller of its obligations under, or the validity or enforceability of, this Agreement or any of the other Basic Documents or (iv) seeking to adversely affect the U.S. federal income tax, state income tax or franchise tax classification of the Rate Reduction Bonds as debt.

Section 3.07.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 Seller of this Agreement, the performance by the Seller of the transactions contemplated hereby of the fulfillment by the Seller of the terms hereof, except those that have been obtained or made and those that the Seller, in its capacity as Servicer under the Servicing Agreement, is required to make in the future pursuant to the Servicing Agreement and post closing filings required in connection therewith.

Section 3.08.The RRB Property.

(a)Title.  It is the intention of the parties hereto that the transfer and assignment herein contemplated constitute a sale of the RRB Property from the Seller to the Issuer and that no interest in, or title to, the RRB Property shall be part of the Seller’s estate in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law.  No portion of the RRB Property has been sold, transferred, assigned, pledged or otherwise conveyed by the Seller to any Person other than the Issuer and no security agreement, financing statement or equivalent security or lien instrument listing the Seller as debtor covering all or any part of the RRB Property is on file or of record in any jurisdiction, except such as may have been filed, recorded or made in favor of the Issuer or the Indenture Trustee in connection with the Basic Documents.  On the Closing Date, immediately upon the sale hereunder, the Seller has transferred, sold and conveyed the RRB Property to the Issuer, free and clear of all Liens (including the Lien of the Seller’s first mortgage indenture but excluding any Lien created pursuant to RSA 369-B:7, VIII and any Lien that may be granted under the Basic Documents), and pursuant to RSA 369-B:6, V such transfer shall be treated as an absolute transfer of all of the Seller’s right, title and interest (as a true sale), and not as a pledge or other financing of, the RRB Property.

(b)Transfer Filings.  On the Closing Date, immediately upon the sale hereunder, the RRB Property shall be validly transferred and sold to the Issuer and such transfer shall be perfected within the meaning of RSA 369-B:6, VI, the Issuer shall own all such RRB Property free and clear of all Liens (including the Lien of the Seller’s first mortgage indenture but excluding any Lien created pursuant to RSA 369-B:7, VIII and any Lien that may be granted

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under the Basic Documents) and all filings to be made by the Seller (including filings with the NHPUC under the Financing Act) necessary in any jurisdiction to give the Issuer a valid ownership interest in the RRB Property have been made.  No further action is required to establish the Issuer’s ownership interest.  All applicable filings have also been made to the extent required by applicable law in any jurisdiction to perfect the Back-Up Security Interest granted by the Seller to the Issuer.

(c)Finance Order and Issuance Advice Letter; Other Approvals.  On the Closing Date, under the laws of the State of New Hampshire and the United States in effect on the Closing Date, (i) the Finance Order pursuant to which the RRB Property has been created is in full force and effect and is Final; (ii) the Holders are entitled to the protections of the Financing Act and, accordingly, the Finance Order is not revocable by NHPUC; (iii) the State of New Hampshire may neither limit nor alter the RRB Charge, RRB Property, the Finance Order and all rights thereunder, in a manner that would substantially impair the rights of the Holders, absent a demonstration that an impairment is reasonable and necessary to advance a significant and legitimate public purpose, until the Rate Reduction Bonds, together with accrued interest, are fully met and discharged; provided that the State of New Hampshire is not precluded from such limitation or alteration if and when adequate provision is made by law for the protection of the Issuer, the Holders and the Indenture Trustee; (iv) except for periodic adjustments to the RRB Charge required under the Financing Act and the Finance Order, the NHPUC does not have authority, either by rescinding, altering or amending the Finance Order or otherwise, to revalue or revise for ratemaking purposes the stranded costs or the costs of providing, recovering, financing or refinancing the stranded costs, to determine that the RRB Charge is unjust or unreasonable or in any way to reduce or impair the value of RRB Property either directly or indirectly by taking the RRB Charge into account when setting other rates for the Seller; nor are the amount of revenues arising with respect thereto subject to reduction, impairment, postponement or termination; (v) the process by which the Finance Order was adopted and approved, and the Finance Order and Issuance Advice Letter themselves, comply with all applicable laws, rules and regulations; (vi) the Issuance Advice Letter has been filed in accordance with the Finance Order; (vii) no other 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 creation or sale of the RRB Property, except those that have been obtained or made and post closing filings required in connection therewith and those that the Seller, in its capacity as Servicer under the Servicing Agreement, is required to make in the future pursuant to the Servicing Agreement; and (viii) the State of New Hampshire, in the exercise of its executive or legislative powers, may not repeal or amend the Financing Act or the Finance Order, or take any action in contravention of the pledge by the State of New Hampshire in RSA 369-B:6, II, without paying just compensation to the Holders, as determined by a court of competent jurisdiction, if this action would constitute a permanent appropriation of a substantial property interest of the Holders in the RRB Property and deprive the Holders of their reasonable expectations arising from their investments in the Rate Reduction Bonds.

(d)Assumptions.  On the Closing Date, based upon the information available to the Seller on the Closing Date, the assumptions used in calculating the initial RRB Charge are reasonable and were made in good faith.  Notwithstanding the foregoing, the Seller makes no

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representation or warranty that the assumptions used in calculating such RRB Charge will in fact be realized.

(e)Creation of RRB Property.  Upon the effectiveness of the Finance Order: (i) all of the RRB Property constitutes an existing property right; (ii) the RRB Property includes the right, title and interest in and to all revenues, collections, claims, payments, money, or proceeds of or arising from the RRB Charge, as adjusted from time to time pursuant to the Finance Order, and all rights to obtain adjustments to the RRB Charge pursuant to the Finance Order; and (iii) the owner of the RRB Property is legally entitled to collect payments in respect of the RRB Charge in the aggregate sufficient to pay the interest on and principal of the Rate Reduction Bonds, to pay the fees and expenses of servicing the Rate Reduction Bonds, to replenish the Capital Subaccount to the Required Capital Level and to enforce all other material rights conferred in the Finance Order and the Financing Act until the earlier of two years after the Final Maturity Date of the latest maturing Tranche of the Rate Reduction Bonds and the date on which the Rate Reduction Bonds are paid in full.  Notwithstanding the foregoing, the Seller makes no representation or warranty that any amounts actually collected in respect of the RRB Charge will in fact be sufficient to meet payment obligations with respect to the Rate Reduction Bonds (other than as provided in the Finance Order with respect to other components of the “stranded cost recovery charge” (as defined in the Financing Act)).

(f)Prospectus.  As of the date hereof, the information describing the Seller under the caption “Public Service Company of New Hampshire — The Depositor, Sponsor, Seller and Servicer” in the Prospectus is correct in all material respects.

(g)Nature of Representations and Warranties. The representations and warranties set forth in this Section 3.08, insofar as they involve conclusions of law, are made not on the basis that the Seller purports to be a legal expert or to be rendering legal advice, but rather to reflect the parties’ good faith understanding of the legal basis on which the parties are entering into this Agreement and the other Basic Documents and the basis on which the Holders are purchasing the Rate Reduction Bonds, and to reflect the parties’ agreement that, if such understanding turns out to be incorrect or inaccurate, the Seller will be obligated to indemnify the Issuer and its permitted assigns (to the extent required by and in accordance with Section 5.01), and that the Issuer and its permitted assigns will be entitled to enforce any rights and remedies under the Basic Documents on account of such inaccuracy to the same extent as if the Seller had breached any other representations or warranties hereunder.

Section 3.09.Limitations on Representations and Warranties.  Notwithstanding any other provisions of this Agreement, the Seller will not be in breach of any representation or warranty as a result of a change in law by means of a legislative enactment or constitutional amendment or (if such means become available in the future) referendum or initiative petition.  Notwithstanding anything to the contrary in this Agreement, the Seller makes no representation or warranty that any amounts actually collected in respect of the RRB Charge will in fact be sufficient to meet payment obligations with respect to the Rate Reduction Bonds or that the assumptions used in calculating the RRB Charge will in fact be realized nor shall the Seller be obligated to reduce, or accept a reduction of, any rates or charges to which it would otherwise be entitled in respect of services rendered or to be rendered to customers in order to permit the

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payment of the RRB Charge (other than as provided in the Finance Order with respect to other components of the “stranded cost recovery charge” (as defined in the Financing Act)).

ARTICLE 4

COVENANTS OF THE SELLER

Section 4.01.Existence.  Subject to Section 5.02, so long as any of the Rate Reduction Bonds are outstanding, the Seller (a) will keep in full force and effect its existence, rights and franchises under the laws of the jurisdiction of its organization and (b) will obtain and preserve its qualification to do business, in each case to the extent that in each such jurisdiction such existence or qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the other Basic Documents to which the Seller is a party and each other instrument or agreement necessary or appropriate to the proper administration of this Agreement and the transactions contemplated hereby.

Section 4.02.No Liens.  Except for the conveyances hereunder or any Lien under RSA 369-B:7, VIII, the Seller will not sell, pledge, assign or transfer, or grant, create, or incur any Lien on, any of the RRB Property, or any interest therein, and the Seller shall defend the right, title and interest of the Issuer and the Indenture Trustee in, to and under the RRB Property against all claims of third parties claiming through or under the Seller.  Public Service Company of New Hampshire, in its capacity as Seller, will not at any time assert any Lien against, or with respect to, any of the RRB Property.

Section 4.03.Delivery of Collections.  If the Seller receives any payments in respect of the RRB Charge or the proceeds thereof other than in its capacity as the Servicer, the Seller agrees to pay to the Servicer, on behalf of the Issuer, all payments received by it in respect thereof as soon as practicable after receipt thereof by it. Prior to such remittance to the Servicer, the Seller agrees that such amounts are held in trust by it for the Issuer and the Indenture Trustee.

Section 4.04.Notice of Liens.  The Seller shall notify the Issuer and the Indenture Trustee promptly after becoming aware of any Lien on any of the RRB Property, other than the conveyances hereunder, any Lien under the Basic Documents or any Lien under RSA 369-B:7, VIII.

Section 4.05.Compliance with Law.  The Seller hereby agrees to comply with its organizational and governing documents and all laws, treaties, rules, regulations and determinations of any governmental instrumentality applicable to it, except to the extent that failure to so comply would not materially adversely affect the Issuer’s or the Indenture Trustee’s interests in the RRB Property or under any of the Basic Documents to which the Seller is party or the Seller’s performance of its obligations hereunder or under any of the other Basic Documents to which it is party.

Section 4.06.Covenants Related to Rate Reduction Bonds and RRB Property.

(a)So long as any of the Rate Reduction Bonds are outstanding, the Seller shall treat the Rate Reduction Bonds as debt of the Issuer and not of the Seller, except for financial accounting or tax reporting purposes.

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(b)So long as any of the Rate Reduction Bonds are outstanding, the Seller shall indicate in its financial statements that it is not the owner of the RRB Property and that the assets of the Issuer are not available to pay creditors of the Seller or any of its Affiliates (other than the Issuer).

(c)So long as any of the Rate Reduction Bonds are outstanding, the Seller shall disclose the effects of all transactions between the Seller and the Issuer in accordance with generally accepted accounting principles.

(d)So long as any of the Rate Reduction Bonds are outstanding, the Seller shall not own or purchase any Rate Reduction Bonds.

(e)The Seller agrees that, upon the sale by the Seller of the RRB Property to the Issuer pursuant to this Agreement, (i) to the fullest extent permitted by law, including the Financing Act and applicable NHPUC Regulations, the Issuer shall have all of the rights originally held by the Seller with respect to the RRB Property, including the right (subject to the terms of the Servicing Agreement) to exercise any and all rights and remedies to collect any amounts payable by any customer or third party supplier in respect of the RRB Property, notwithstanding any objection or direction to the contrary by the Seller and (ii) any payment by any customer or third party supplier to the Issuer shall discharge such customer’s or third party supplier’s obligations in respect of the RRB Property to the extent of such payment, notwithstanding any objection or direction to the contrary by the Seller.

(f)So long as any of the Rate Reduction Bonds are outstanding, (i) (A) the Seller shall affirmatively represent that it has sold the RRB Property to the Issuer (other than for financial accounting or tax reporting purposes), and (B) the Seller shall not make any statement or reference in respect of the RRB Property that is inconsistent with the ownership thereof by the Issuer (other than for financial accounting or tax reporting purposes), and (ii) the Seller shall not take any action in respect of the RRB Property except solely in its capacity as the Servicer thereof pursuant to the Servicing Agreement or as otherwise contemplated by the Basic Documents.

Section 4.07.Protection of Title.  The Seller shall execute and file such filings, including filings with the NHPUC pursuant to the Financing Act and UCC filings, and cause to be executed and filed such filings, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the ownership or security interest of the Issuer and the Indenture Trustee in the RRB Property and the Back-Up Security Interest, including all filings required under the Financing Act and the applicable UCC relating to the transfer of the ownership or security interest in the RRB Property by the Seller to the Issuer and the granting of a security interest in the RRB Property by the Issuer to the Indenture Trustee and the Back-Up Security Interest and the continued perfection of such ownership or security interest.  The Seller shall deliver (or cause to be delivered) to the Issuer and the Indenture Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing.  The Seller 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 or the Finance Order, and the Seller agrees to take such legal or administrative actions, including defending against or instituting and pursuing legal actions and

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appearing or testifying at hearings or similar proceedings, as may be reasonably necessary (i) to protect the Issuer, the Holders, the Indenture Trustee and any of their respective affiliates, officials, officers, directors, employees, consultants, counsel and agents from claims, state actions or other actions or proceedings of third parties which, if successfully pursued, would result in a breach of any representation set forth in Article III or (ii) to block or overturn any attempts to cause a repeal of, modification of or supplement to the Financing Act, the Finance Order, any Advice Letter, the 2015 Settlement Agreement (to the extent it adversely affects the rights of the Holders or the validity or value of the RRB Property) or the rights of the Holders by executive action, legislative enactment or constitutional amendment that would be adverse to the Issuer, the Indenture Trustee or the Holders.  If the Servicer performs its obligations under Section 5.02(d) of the Servicing Agreement in all respects, such performance shall be deemed to constitute performance of the Seller’s obligations pursuant to clause (ii) of the immediately preceding sentence. In such event, the Seller agrees to assist the Servicer as reasonably necessary to perform its obligations under Section 5.02(d) of the Servicing Agreement in all respects.  The costs of any such actions or proceedings 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 Seller’s obligations pursuant to this Section 4.07 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 Seller may be required to advance its own funds to satisfy its obligations hereunder).

Section 4.08.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 Seller pursuant to RSA 369-B:7, VI or RSA 369-B:7, VIII, the Seller shall not, prior to the date which is one year and one day after the termination of the Indenture, petition or otherwise invoke or cause the Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining an involuntary case against the Issuer under any Federal or state bankruptcy, insolvency or similar law, 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 4.09.Taxes.

(a)So long as any of the Rate Reduction Bonds are outstanding, the Seller shall, and shall cause each of its subsidiaries to, pay all material taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the RRB Property; provided that no such tax need be paid if the Seller or one of its subsidiaries is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the Seller or such subsidiary has established appropriate reserves as shall be required in conformity with generally accepted accounting principles.

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(b)The Seller hereby agrees that any New Hampshire tax on income associated with the Issuer, taking into account available credits, will be paid by the Seller.

Section 4.10.Intercreditor Agreement.  The Seller shall not become a party to any (i) trade receivables purchase and sale agreement or similar arrangement under which it sells all or any portion of its accounts receivables owing from Customers who are obligated to pay the RRB Charge unless the Indenture Trustee, the Seller and the other parties to such additional arrangement shall have entered into an Intercreditor Agreement, substantially in the form of Exhibit D to the Indenture, with such changes as may be agreed among the parties thereto so long as such changes do not materially and adversely affect any Holder’s rights in and to any RRB Collateral or otherwise under the Indenture, in connection therewith and the terms of the documentation evidencing such trade receivables purchase and sale arrangement or similar arrangement shall expressly exclude the RRB Property (including the RRB Charge) from any receivables or other assets pledged or sold under such arrangement or (ii) sale agreement selling to any other Affiliate property consisting of charges similar to the RRB charge sold pursuant to this Agreement, payable by Customers pursuant to the Financing Act or any similar law, unless the Seller and the other parties to such arrangement shall have entered into such Intercreditor Agreement in connection with any agreement or similar arrangement described in this Section 4.10.

Section 4.11.Issuance Advice Letter.  The Seller hereby agrees not to withdraw the filing of the Issuance Advice Letter with the NHPUC.

Section 4.12.Notice of Breach to Rating Agencies, etc.  Promptly after obtaining knowledge thereof, in the event of a breach in any material respect (without regard to any materiality qualifier contained in such representation, warranty or covenant) of any of the Seller’s representations, warranties or covenants contained herein, the Seller shall promptly notify the Issuer, the Indenture Trustee and the Rating Agencies of such breach. For the avoidance of doubt, any breach that would adversely affect scheduled payments on the Rate Reduction Bonds will be deemed to be a material breach for purposes of this Section 4.12.

Section 4.13.Further Assurances.  Upon the request of the Issuer, the Seller shall execute and deliver such further instruments and do such further acts as may be reasonably necessary to carry out the provisions and purposes of this Agreement.

ARTICLE 5

THE SELLER

Section 5.01.Liability of Seller; Indemnities.

(a)The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement.

(b)The Seller shall indemnify the Issuer and the Indenture Trustee (for the benefit of the Secured Parties) and any of their respective affiliates, officials, officers, directors, managers, employees, consultants, counsel and agents (each an “Indemnified Person” for purposes of Sections 5.01(b), (c) and (e)) for, and defend and hold harmless each such

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Indemnified Person from and against, any and all taxes (other than taxes imposed on Holders as a result of their ownership of a Rate Reduction Bond) that may at any time be imposed on or asserted against any such Person under existing law as of the Closing Date as a result of the sale of the RRB Property to the Issuer,  the Issuer’s ownership and assignment of the RRB Property, the issuance and sale by the Issuer of the Rate Reduction Bonds or the other transactions contemplated in the Basic Documents, including any franchise, sales, gross receipts, general corporation, tangible personal property, privilege or license taxes, but excluding any taxes imposed as a result of a failure of such Person to withhold or remit taxes with respect to payments on any Rate Reduction Bond, it being understood that the Holders shall be entitled to enforce their rights against the Seller under this Section 5.01(b) solely through a cause of action brought for their benefit by the Indenture Trustee.

(c)The Seller shall indemnify the Indemnified Persons 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 each such Person, in each such case, as a result of (i) the Seller’s willful misconduct or gross negligence in the performance of its duties or observance of its covenants under this Agreement or (ii) the Seller’s breach in any material respect of any of its representations, warranties or covenants contained in this Agreement, except to the extent of Losses resulting from the willful misconduct, bad faith or gross negligence of such Indemnified Person or resulting from a breach of a representation or warranty made by any Indemnified Person in any of the Basic Documents that gives rise to the Seller’s breach.

(d)Indemnification under Section 5.01(b) and Section 5.01(c) shall include reasonable and documented out-of-pocket fees and expenses of investigation and litigation (including reasonable and documented attorneys’ fees and expenses), except as otherwise expressly provided in this Agreement.

(e)The Seller shall not be required to indemnify any 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 Seller, 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 Seller under this Section 5.01, notify the Seller in writing of such involvement.  Failure by an Indemnified Person to so notify the Seller shall relieve the Seller from the obligation to indemnify and hold harmless such Indemnified Person under this Section 5.01, only to the extent that the Seller 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 5.01, the Seller shall be entitled to assume the defense of any such action, proceeding or investigation.  Upon assumption by the Seller 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 Seller shall be entitled to appoint counsel of the Seller’s choice at the Seller’s expense to represent the Indemnified Person in any action, proceeding or investigation for which a claim of indemnification is made against the Seller under this Section 5.01 (in which case the Seller shall not thereafter be responsible for the fees and expenses of any separate

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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 Seller’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 Seller 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 Seller 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 Seller and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to the Seller, (iii) the Seller 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 Seller shall authorize the Indemnified Person to employ separate counsel at the expense of the Seller.  The Seller 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 5.01 (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.

(f)The Seller shall indemnify the Servicer (if the Servicer is not the Seller) for the costs of any action instituted by the Servicer pursuant to Section 5.02(d) of the Servicing Agreement that are not paid as Operating Expenses in accordance with the priorities set forth in Section 8.02(e) of the Indenture.

(g)The remedies provided in this Agreement are the sole and exclusive remedies against the Seller for breach of its representations and warranties in this Agreement.

(h)Indemnification under this Section 5.01 shall survive any repeal of, modification of, or supplement to, or judicial invalidation of, the Financing Act or the Financing Order and shall survive the resignation or removal of the Indenture Trustee or the termination of this Agreement and will rank in priority with other general, unsecured obligations of the Seller. The Seller shall not indemnify any party under this Section 5.01 for any changes in law after the Closing Date, whether such changes in law are effected by means of any legislative enactment, any constitutional amendment or any final and non-appealable judicial decision.

Section 5.02.Merger or Consolidation of or Assumption of the Obligations of Seller.  Any Person (a) into which the Seller may be merged or consolidated, (b) that may result from any merger or consolidation to which the Seller shall be a party or (c) that may succeed to the properties and assets of the Seller substantially as a whole, which Person in the case described in the foregoing clause (c) executes an agreement of assumption to perform every obligation of the Seller hereunder, shall be the successor to the Seller under this Agreement without further act on the part of any of the parties to this Agreement; provided, however, that (i) if the Seller is the Servicer, 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 Seller shall have delivered to the Issuer and the Indenture Trustee an Officer’s Certificate stating that such

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consolidation, merger or succession and such agreement of assumption comply with this Section and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with, (iii) the Seller 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 have been complied with and such agreement of assumption complies with the relevant provisions of this Agreement and (B) either (1) all filings to be made by the Seller, including filings with the NHPUC pursuant to the Financing Act and filings under the applicable UCC, 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 and (iv) the Rating Agencies shall have received prior written notice of such transaction.  When any Person acquires the properties and assets of the Seller substantially as a whole and becomes the successor to the Seller in accordance with the terms of this Section 5.02 and execution by such successor of an agreement of assumption to perform every obligation of the Seller hereunder, then upon satisfaction of all of the other conditions of this Section 5.02, the Seller shall automatically and without further notice be released from all of its obligations hereunder.

Section 5.03.Limitation on Liability of Seller and Others.  The Seller and any director, officer, employee or agent of the Seller may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person, respecting any matters arising hereunder. Subject to Section 4.08, the Seller shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its obligations under this Agreement and that in its opinion may involve it in any expense or liability.

ARTICLE 6

MISCELLANEOUS PROVISIONS

Section 6.01.Amendment.  This Agreement may be amended by the Seller 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; 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.

This Agreement may also be amended from time to time by the Seller and the Issuer, with ten Business Days’ prior written notice given to the Rating Agencies and the prior written consent of the Indenture Trustee and the prior written consent of the Holders of Rate Reduction Bonds evidencing not less than a majority of the Outstanding Amount of the Rate Reduction Bonds affected thereby, for the purpose of adding any provisions to or changing in any manner

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or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Holders.

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.

Prior to the execution of any amendment to this Agreement, the Indenture Trustee shall be entitled to receive and rely upon an Officer’s Certificate and Opinion of Counsel complying with Section 10.01 of the Indenture and stating that the execution of 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 6.02.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 Seller:

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,

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

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Telephone: (212) 815-2483

Email: helen.choi@bnymellon.com

(d)if to Moody’s, to

Moody’s Investors Service, Inc.

ABS/RMBS Monitoring Department

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

New York, NY 10007

Facsimile:(212)553-0573

Telephone:(212)553-3686

Email: servicerreports@moodys.com

(e)if to S&P, to

Standard & Poor’s Ratings Group, Inc.

55 Water Street,

New York, NY 10041

Attention: Structured Credit Surveillance

Facsimile:(212) 438-2664

Telephone:(212) 438-8991

Email: servicer_reports@spglobal.com

(f)if to Fitch, to Fitch, Inc.

33 Whitehall Street,

New York, NY 10004

Attention: ABS Surveillance

Facsimile:(212) 514-9879

Telephone:(212) 908-0500

E-mail: surveillance-abs-other@fitchratings.com

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

Section 6.03.Assignment.  Notwithstanding anything to the contrary contained herein, except as provided in Section 5.02, this Agreement may not be assigned by the Seller.

Section 6.04.Limitations on Rights of Third Parties.  The provisions of this Agreement are solely for the benefit of the Seller, the Issuer, the Holders, the Indenture Trustee 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 Seller 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

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Property or under or in respect of this Agreement or any covenants, conditions or provisions contained herein.

Section 6.05.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 6.06.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 6.07.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 6.08.Governing Law.  This Agreement shall be construed in accordance with the laws of the State of New Hampshire, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

Section 6.09.Assignment to Indenture Trustee.  The Seller 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 6.10.Waivers.  Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the party or parties entitled to the benefit thereof; provided, however, that no such waiver delivered by the Issuer shall be effective unless the Indenture Trustee has given its prior written consent thereto. Any such waiver shall be validly and sufficiently authorized for the purposes of this Agreement if, as to any party, it is authorized in writing by an authorized representative of such party, with prompt written notice of any such waiver to be provided to the Rating Agencies. The failure of any party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, not in any way to affect the validity of this Agreement or any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

Section 6.11.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]

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

PSNH FUNDING LLC 3,
Issuer
	Name:
	Title:
By:
		Name:
		Title:
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE,
Seller
By:
		Name:
		Title:

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EX-10.3

Exhibit 10.3

ADMINISTRATION AGREEMENT

This Administration Agreement, dated as of [•], is made by and 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 d/b/a Eversource Energy, a New Hampshire corporation, as Administrator (together with its permitted successors or assigns as administrator hereunder, the “Administrator”).

RECITALS

A.WHEREAS, the Issuer is issuing the Rate Reduction Bonds pursuant to the Indenture dated as of the date hereof (as amended, modified or supplemented from time to time in accordance with the provisions thereof, the “Indenture”; capitalized terms used herein and not defined herein shall have the meanings assigned such terms in the Indenture), between the Issuer and The Bank of New York Mellon, as Indenture Trustee (in such capacity, together with its successors and assigns permitted under the Indenture, the “Indenture Trustee”).

B.WHEREAS, the Issuer has entered into certain agreements in connection with the issuance of the RRBs, including (i) a Purchase and Sale Agreement dated as of the date hereof (as amended, modified or supplemented from time to time in accordance with the provisions thereof, the “Sale Agreement”), between the Issuer and Public Service Company of New Hampshire, as Seller (in such capacity, the “Seller”), (ii) a Servicing Agreement dated as of the date hereof (as amended, modified or supplemented from time to time in accordance with the provisions thereof, the “Servicing Agreement”), between the Issuer and Public Service Company of New Hampshire, as Servicer (in such capacity, together with its successors and assigns permitted under the Servicing Agreement, the “Servicer”), (iii) an Underwriting Agreement dated as of [•] (as amended, modified or supplemented from time to time in accordance with the provisions thereof, the “Underwriting Agreement”), among the Issuer, Public Service Company of New Hampshire, and the Underwriters named therein, and (iv) the Indenture (the Sale Agreement, the Servicing Agreement, the Underwriting Agreement and the Indenture are hereinafter referred to collectively as the “Related Agreements”);

C.WHEREAS, pursuant to the Related Agreements, the Issuer is required to perform certain duties in connection with the Rate Reduction Bonds and the collateral therefor pledged pursuant to the Indenture (the “RRB Collateral”) and to maintain its existence and comply with applicable laws;

D.WHEREAS, the Issuer has no employees and does not intend to hire any employees, and consequently desires to have the Administrator perform certain duties of the Issuer referred to in the preceding clause, and to provide such additional services consistent with the terms of this Agreement and the Related Agreements as the Issuer may from time to time request; and

E.WHEREAS, the Administrator has the capacity to provide the services and the facilities required hereby and is willing to perform such services and provide such facilities for the Issuer on the terms set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

ARTICLE I.

Duties of Administrator

Section 1.01.Appointment of Administrator: Acceptance of Appointment.  The Issuer hereby appoints the Administrator, and the Administrator hereby accepts such appointment, to perform the Administrator’s obligations pursuant to this Agreement on behalf of and for the benefit of the Issuer in accordance with the terms of this Agreement and applicable law.

Section 1.02.Duties with Respect to the Related Agreements.

(a)The Administrator agrees to perform all its duties as Administrator hereunder in accordance with the terms of this Agreement and applicable law.  In addition, the Administrator shall consult with the Issuer regarding the Issuer’s duties under the Related Agreements.  In furtherance of the foregoing, the Administrator shall take all appropriate action that it is the duty of the Issuer to take pursuant to the Indenture including, without limitation, such of the foregoing as are required with respect to the following matters under the Indenture (references are to sections of the Indenture):

(1)the preparation of or obtaining of the Rate Reduction Bonds and of any other Issuer documents and instruments required for authentication of the Rate Reduction Bonds, if any, and delivery of the same to the Indenture Trustee for authentication (Sections 2.03 and 2.10);

(2)the duty to cause the Rate Reduction Bond Register to be kept and, during any period of time when the Indenture Trustee is not the Rate Reduction Bond Registrar, to give the Indenture Trustee notice of any appointment of a new Rate Reduction Bond Registrar and the location, or change in location, of the Rate Reduction Bond Register (Section 2.05);

(3)the fixing or causing to be fixed of any special record date and the notification of each affected Holder with respect to special record dates, payment dates, and the amount of defaulted interest (plus interest on such defaulted interest) to be paid, if any (Section 2.08(c));

(4)the preparation, obtaining or filing of the instruments, opinions and certificates and other documents required for the release of RRB Collateral (Section 8.04);

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(5)the duty to cause each newly appointed Paying Agent (other than the Indenture Trustee), if any, to deliver to the Indenture Trustee the instrument specified in the Indenture regarding its agreement with the Indenture Trustee (Section 3.03);

(6)the direction to any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent (Section 3.03);

(7)the preparation and filing of all documents and instruments necessary to maintain the Issuer’s existence, rights and franchises as a limited liability company under the laws of the State of Delaware (unless the Issuer becomes, or any successor Issuer under the Indenture is or becomes, organized under the laws of any other State or of the United States of America, in which case the Administrator will prepare and file all documents and instruments necessary to maintain such Issuer’s existence, rights and franchises under the laws of such other jurisdiction) (Section 3.04);

(8)the obtaining and preservation of the Issuer’s qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of the Indenture, the Rate Reduction Bonds, the RRB Collateral and each other instrument or agreement included in the RRB Collateral (Section 3.04);

(9)the preparation of all supplements and amendments to the Indenture, filings with the NHPUC pursuant to the Financing Act, financing statements, continuation statements, instruments of further assurance and other instruments, in accordance with Section 3.05 of the Indenture, necessary to protect the RRB Collateral (Section 3.05);

(10)the obtaining of the Opinions of Counsel and the delivery of such Opinions of Counsel, in accordance with Section 3.06 of the Indenture, as to the RRB Collateral (Section 3.06);

(11)the identification to the Indenture Trustee in an Officer’s Certificate of any Person (other than the Administrator and the Servicer) with whom the Issuer has contracted to perform its duties under the Indenture (Section 3.07(b));

(12)[reserved];

(13)the annual preparation and delivery of an Officer’s Certificate to the Indenture Trustee and the Rating Agencies as to compliance with conditions and covenants under the Indenture (Section 3.09);

(14)the preparation and obtaining of documents and instruments required for the release of the Issuer from its obligations under the Indenture (Section 3.11(b));

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(15)promptly after a Responsible Officer of the Administrator has actual knowledge thereof, the delivery of written notice to the Indenture Trustee and the Rating Agencies of each Event of Default under the Indenture, each Servicer Default by the Servicer under and as defined in the Servicing Agreement and each default by the Seller of its obligations under the Sale Agreement (Sections 3.07(d) and 3.21);

(16)the preparation of or obtaining of an Officer’s Certificate, an Opinion of Counsel and Independent Certificate relating to (i) the satisfaction and discharge of the Indenture under Section 4.01 of the Indenture or (ii) the exercise of the Legal Defeasance Option or the Covenant Defeasance Option under Section 4.02 of the Indenture (Sections 4.01 and 4.02);

(17)during any period when the Indenture Trustee is not the Rate Reduction Bond Registrar, the furnishing to the Indenture Trustee of a list of the names and addresses of Holders as required of the Issuer under Section 7.01 of the Indenture (Section 7.01);

(18)to the extent not required to be performed by the Servicer, the preparation and, after execution by the Issuer or the Indenture Trustee (as the case may be), the filing with the Securities and Exchange Commission (the “SEC”) and the Indenture Trustee of the annual reports and of the information, documents and other reports required to be filed on a periodic basis with, and summaries thereof as may be required by rules and regulations prescribed by, the SEC and the transmission of such summaries, as necessary, to the Indenture Trustee (Section 7.03);

(19)the notification of the Indenture Trustee if and when the Rate Reduction Bonds are listed on any stock exchange (Section 7.04);

(20)the opening of one or more segregated trust accounts in the Indenture Trustee’s name, the preparation of Issuer Orders, and the obtaining of Opinions of Counsel and the taking of all other actions necessary with respect to investment and reinvestment of funds in the Collection Account, the making of written requests to the Indenture Trustee for Operating Expenses due and payable before any Payment Date and the making of Issuer Requests to obtain the release of excess funds from the Capital Subaccount (Sections 8.02 and 8.03);

(21)the preparation of Issuer Requests and Officers’ Certificates and the obtaining of an Opinion of Counsel and Independent Certificates, if necessary, for the release of the RRB Collateral (Sections 8.04, 8.05 and 8.06);

(22)the preparation of Issuer Orders and the obtaining of Officer’s Certificates with respect to the execution of supplemental indentures (Sections 9.01 and 9.02);

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(23)if required by the Indenture Trustee or the Issuer, the preparation of new Rate Reduction Bonds conforming to any supplemental indenture (Section 9.06);

(24)[reserved];

(25)the preparation of all Officer’s Certificates and obtaining of all Opinions of Counsel and Independent Certificates, if necessary, with respect to any requests by the Issuer to the Indenture Trustee to take any action under the Indenture (Section 10.01);

(26)the preparation or obtainment and delivery of Officer’s Certificates and Independent Certificates, if necessary, in connection with the deposit of any property with the Indenture Trustee that is to be made the basis for the release of property from the lien of the Indenture (Section 10.01(b));

(27)the recording of the Indenture, if applicable, and the obtaining of an Opinion of Counsel in connection therewith (Section 10.13); and

(28)the obtaining of evidence that the Rating Agency Condition shall have been satisfied whenever required to be obtained under the Indenture or other Related Agreement.

(b)The Administrator shall also take all appropriate action that it is the duty of the Issuer to take pursuant to the Underwriting Agreement including, without limitation, the following matters (references are to sections of the Underwriting Agreement):

(1)to the extent not already delivered, the delivery, upon request, to the Representatives (used in this section as defined in the Underwriting Agreement) and counsel for the Underwriters under the Underwriting Agreement (the “Underwriters”), of copies of the Registration Statement (used in this section as defined in the Underwriting Agreement), (Section 8(a)(i));

(2)the delivery to the Underwriters, as soon as practicable after the date of the Underwriting Agreement, of as many copies of the Pricing Prospectus (used in this section as defined in the Underwriting Agreement) and Final Prospectus (used in this section as defined in the Underwriting Agreement) as the Underwriters may reasonably request (Section 8(a)(ii));

(3)the filing of the Final Prospectus with the SEC pursuant to Rule 424 of the Securities Act within the time period specified therein, the notification to the Underwriters of any stop order issued by the SEC suspending the effectiveness of the Registration Statement or the institution of any proceedings therefor of which the Issuer shall have received notice, and the use of every reasonable effort to prevent the issuance of any such stop order or, if issued, the obtainment as soon as possible of the withdrawal thereof by the SEC (Section 8(a)(iii));

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(4)(A) preparing and furnishing to the Underwriters a reasonable number of copies of an amendment or amendments to the Pricing Package or the Final Prospectus or (B) making an appropriate filing pursuant to Section 13 or Section 15 of the Exchange Act to amend the Pricing Package or the Final Prospectus so that, as amended, neither the Pricing Package nor the Final Prospectus will contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Pricing Package or the Final Prospectus is delivered to a purchaser (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), not misleading (Section 8(a)(iv));

(5)the furnishing of such proper information as may be lawfully required and any other necessary cooperation in qualifying the Rate Reduction Bonds for offer and sale under the blue-sky laws of the states of the United States as the Representatives may designate; (Section 8(a)(v));

(6)the furnishing of documents or the taking of other actions by the Issuer on or after the Closing Date, the delivery of such documents and the taking of such actions as reasonably requested by any Rating Agency to obtain the credit ratings set forth in Section 9(v) of the Underwriting Agreement (Section 8(a)(viii);

(7)the filing with the SEC, and to the extent permitted by and consistent with the Issuer’s obligations under applicable law, the publication on the website associated with the Issuer’s parent, of such periodic reports, if any, as are required from time to time under Section 13 or Section 15(d) of the Exchange Act and the inclusion, to the extent permitted by and consistent with the Issuer’s obligations under applicable law, in any periodic or other reports to be filed with the SEC or posted on the website of the Issuer’s parent, such information as required by Section 3.07(g) of the Indenture with respect to the Rate Reduction Bonds (Section 8(a)(ix));

(8)the furnishing to the Representatives, if and to the extent not posted on the Issuer or its affiliate’s website, (A) as soon as available, a copy of each report of the Issuer filed with the SEC under the Exchange Act or mailed to the bondholders, (B) upon request, a copy of any filings with the NHPUC pursuant to the Finance Order including, but not limited to, any annual, semi-annual or more frequent true-up adjustment filings, and (C) from time to time, any information (other than confidential or proprietary information) concerning the Issuer as the Representatives (as defined in the Under may reasonably request (Section 8(a)(xi)); and

(9)compliance with the 17g-5 Representations (used in this section as defined in the Underwriting Agreement) other than (x) any noncompliance of the 17g-5 Representations that would not reasonably be expected to have a material adverse effect on the rating of the Rate Reduction Bonds or the Rate Reduction Bonds, or (y) any noncompliance arising from the breach by an Underwriter of

6

the representations and warranties and covenants set forth in Section 13 of the Underwriting Agreement (Section 8(a)(xii).

Section 1.03.Additional Duties.

(a)In addition to the duties of the Administrator set forth above, the Administrator shall perform such calculations and shall prepare for execution by the Issuer or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Issuer to prepare, file, obtain or deliver pursuant to the Related Agreements, and at the request of the Issuer shall take all appropriate action with respect to the foregoing that it is the duty of the Issuer to take pursuant to the Related Agreements.  Subject to Section 5.01 of this Agreement, and in accordance with the directions of the Issuer, the Administrator shall administer, perform or supervise the performance of such other activities in connection with the RRB Collateral and the Related Agreements as are not covered by any of the foregoing provisions and as are expressly requested by the Issuer and are reasonably within the capability of the Administrator.

(b)In carrying out the foregoing duties or any of its other obligations under this Agreement, the Administrator may enter into transactions with or otherwise deal with any of its Affiliates; provided, however, that the terms of any such transactions or dealings shall be, in the Administrator’s reasonable opinion, no less favorable to the Issuer than would be available from unaffiliated parties.

Section 1.04.Non-Ministerial Matters.

(a)With respect to matters that in the reasonable judgment of the Administrator are non-ministerial, the Administrator shall not take any action unless the Administrator shall have notified the Issuer of the proposed action and the Issuer shall have consented.  For the purpose of the preceding sentence, “non-ministerial matters” shall include, without limitation:

(1)the amendment of, or any supplement to, the Indenture;

(2)the initiation of any claim or lawsuit by the Issuer and the compromise of any action, claim or lawsuit brought by or against the Issuer (other than in connection with the collection of the RRB Charge);

(3)the amendment, change or modification of the Related Agreements;

(4)the appointment of successor Rate Reduction Bond Registrars, successor Paying Agents and successor Indenture Trustees pursuant to the Indenture or the appointment of successor Administrators or successor Servicers, or the consent to the assignment by the Rate Reduction Bond Registrar, Paying Agent or Indenture Trustee of its obligations under the Indenture; and

(5)the removal of the Indenture Trustee.

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(b)Notwithstanding anything to the contrary in this Agreement, the Administrator shall not be obligated to, and hereby agrees that it shall not, take any action that the Issuer directs the Administrator not to take on its behalf.

Section 1.05.Records.  The Administrator shall maintain appropriate books of account and records relating to services performed hereunder, which books of account and records shall be accessible for inspection by the Issuer and the Indenture Trustee at any time during normal business hours.

ARTICLE II.

Facilities

Section 2.01.Facilities.  During the term of this Agreement, the Administrator shall make available to or provide the Issuer with such facilities as are necessary to conduct the business of the Issuer and to comply with the terms of the Related Agreements.  Such facilities shall include office space to serve as the principal place of business of the Issuer.  Such office space will be located at 780 North Commercial Street, Manchester, New Hampshire 03101.  All facilities provided to the Issuer hereunder shall be provided without warranty of any kind.

ARTICLE III.

Compensation

Section 3.01.Compensation.  As compensation for the performance of the Administrator’s obligations under this Agreement, including the provision of facilities pursuant to Section 2.01 and as compensation of Persons serving as managers of the Issuer (other than the Independent Managers), the Administrator shall be entitled to an annual fee of $75,000, payable semi-annually on each Payment Date as defined in Section 1.01(a) of the Indenture.  In addition, the Issuer shall reimburse the Administrator for all filing fees and expenses and all reasonable legal fees, fees of outside auditors and other out-of-pocket expenses incurred by the Administrator in the course of performing its duties hereunder.  The Administrator’s compensation and other expenses payable hereunder shall be paid from the Collection Account pursuant to Section 8.02(d) of the Indenture, and the Administrator shall have no recourse against the Issuer for payment of such amounts other than in accordance with Section 8.02 of the Indenture.

ARTICLE IV.

Additional Information

Section 4.01.Additional Information To Be Furnished to Issuer.  The Administrator shall furnish to the Issuer from time to time such additional information regarding the RRB Collateral as the Issuer shall reasonably request.

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ARTICLE V.

Miscellaneous Provisions

Section 5.01.Independence of Administrator.  For all purposes of this Agreement, the Administrator shall be an independent contractor and shall not be subject to the supervision of the Issuer with respect to the manner in which it accomplishes the performance of its obligations hereunder.  Unless expressly authorized by the Issuer, the Administrator shall have no authority to act for or represent the Issuer in any way and shall not otherwise be deemed an agent of the Issuer.

Section 5.02.No Joint Venture.  Nothing contained in this Agreement shall (a) constitute the Administrator and the Issuer as members of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, (b) be construed to impose any liability as such on any of them or (c) be deemed to confer on any of them any express, implied or apparent authority to incur any obligation or liability on behalf of the others.

Section 5.03.Other Activities of Administrator.  Nothing herein shall prevent the Administrator or its Affiliates from engaging in other businesses or, in its sole discretion, from acting in a similar capacity as an administrator for any other Person even though such Person may engage in business activities similar to those of the Issuer.

Section 5.04.Term of Agreement: Resignation and Removal of Administrator.

(a)This Agreement shall continue in force for one year and one day after the retirement of all Rate Reduction Bonds issued pursuant to the Indenture.

(b)Subject to Sections 5.04(e) and 5.04(f), the Administrator may resign its duties hereunder by providing the Issuer with at least 60 days prior written notice.

(c)Subject to Sections 5.04(e) and 5.04(f), the Issuer may remove the Administrator without cause by providing the Administrator and the Rating Agencies with at least 60 days prior written notice.

(d)Subject to Sections 5.04(e) and 5.04(f), at the sole option of the Issuer, the Administrator may be removed immediately upon written notice of termination from the Issuer to the Administrator and the Rating Agencies if any of the following events shall occur:

(1)the Administrator shall default in the performance of any of its duties under this Agreement and, after notice of such default, shall not cure such default within ten days (or, if such default is curable but cannot be cured in such time, shall (A) fail to give within ten days such assurance of cure as shall be reasonably satisfactory to the Issuer and (B) fail to cure such default within 30 days thereafter);

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(2)a court having jurisdiction in the premises shall enter a decree or order for relief, and such decree or order shall not have been vacated within 60 days, in respect of the Administrator in any involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for the Administrator or any substantial part of its property or order the winding-up or liquidation of its affairs; or

(3)the Administrator shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator or similar official for the Administrator or any substantial part of its property, shall consent to the taking of possession by any such official of any substantial part of its property, shall make any general assignment for the benefit of creditors or shall fail generally to pay its debts as they become due.

The Administrator agrees that if any of the events specified in clause (2) or (3) of this Section shall occur, it shall give written notice thereof to the Issuer and the Indenture Trustee as soon as practicable but in any event within seven days after the happening of such event.

(e)No resignation or removal of the Administrator pursuant to this Section 5.04 shall be effective until (1) a successor Administrator shall have been appointed by the Issuer and (2) such successor Administrator shall have agreed in writing to be bound by the terms of this Agreement or another agreement substantially similar to this Agreement in the same manner as the Administrator is bound hereunder.

(f)The appointment of any successor Administrator shall be effective only after satisfaction of the Rating Agency Condition with respect to the proposed appointment.

Section 5.05.Action upon Termination, Resignation or Removal.  Promptly upon the effective date of termination of this Agreement pursuant to Section 5.04(a) or the resignation or removal of the Administrator pursuant to Sections 5.04(b), 5.04(c), or 5.04(d), respectively, the Administrator shall be entitled to be paid all fees accruing to it and expenses accrued by it in the performance of its duties hereunder through the date of such termination, resignation or removal, to the extent permitted under Article III.  The Administrator shall forthwith upon such termination pursuant to Section 5.04(a) deliver to the Issuer all property and documents of or relating to the Collateral then in the custody of the Administrator.  In the event of the resignation or removal of the Administrator pursuant to Sections 5.04(b), 5.04(c), or 5.04(d), respectively, the Administrator shall cooperate with the Issuer and take all reasonable steps requested to assist the Issuer in making an orderly transfer of the duties of the Administrator.

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Section 5.06.Notices.  Unless otherwise specifically provided herein, all notices, directions, consents and waivers required under the terms and provisions of this Administration Agreement shall be in English and in writing, and any such notice, direction, consent or waiver may be given by United States mail, courier service, facsimile transmission or electronic mail or any other customary means of communication, and any such notice, direction, consent or waiver shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid:

(a)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
E-Mail: Emilie.oneil@eversource.com or

Cathy.shannon@eversource.com;

(b)if to the Administrator, 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

(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

or to such other address as any party shall have provided to the other parties in writing.

Section 5.07.Amendments. This Agreement may be amended in writing by the Administrator and the Issuer, and with the 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 (notwithstanding any

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provision of any other document that would otherwise require such consent as a precondition of Indenture Trustee consent), 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 Indenture Trustee, adversely affect in any material respect the interests of any Holders.

This Agreement may also be amended in writing from time to time by the Administrator and the Issuer with the written consent of the Indenture Trustee and 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 subject to 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; provided, however, that no such amendment shall increase or reduce in any manner the amount of, or accelerate or delay the timing of, RRB Charge Collections without the consent of the Holders of all the outstanding Rate Reduction Bonds.

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.

Promptly after the execution of any such amendment and the requisite consents, if any, the Administrator shall furnish written notification of the substance of such amendment to the Indenture Trustee and each of the Rating Agencies.

Prior to its consent to any amendment to this Agreement, the Indenture Trustee shall be entitled to receive and 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 5.08.Successors and Assigns.  This Agreement may not be assigned by the Administrator unless such assignment is previously consented to in writing by the Issuer and the Indenture Trustee and is subject to the satisfaction of the Rating Agency Condition in respect thereof.  An assignment with such consent and satisfaction, if accepted by the assignee, shall bind the assignee hereunder in the same manner as the Administrator is bound hereunder.  Notwithstanding the foregoing, this Agreement may be assigned by the Administrator without the consent of the Issuer and the Indenture Trustee to a corporation or other organization that is a successor (by merger, consolidation or purchase of assets) to the Administrator, provided that such successor organization executes and delivers to the Issuer and the Indenture Trustee an agreement in which such corporation or other organization agrees to be bound hereunder by the terms of said assignment in the same manner as the Administrator is bound hereunder and

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the Rating Agency Condition is satisfied.  Subject to the foregoing, this Agreement shall bind any successors or assigns of the parties hereto.

Section 5.09.Limitations on Rights of Others.  The provisions of this Agreement are solely for the benefit of the Administrator, the Issuer, the Indenture Trustee and the Holders.  The Holders shall be entitled to enforce their rights and remedies against the Administrator under this agreement solely through a cause of action brought for their benefit by the Indenture Trustee and 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, except for the indemnities specifically provided in Section 5.15.  The Persons listed in this section as having the benefit of this Agreement and the Indemnified Persons listed in Section 5.15 shall have rights of enforcement with respect to their respective rights in, to and under this Agreement.

Section 5.10.GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW HAMPSHIRE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

Section 5.11.Headings.  The section headings hereof have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement.

Section 5.12.Counterparts.  This Agreement may be executed in counterparts, each of which when so executed shall together constitute but one and the same agreement.

Section 5.13.Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall 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 5.14.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 Seller of the RRB Property pursuant to RSA 369-B:7, VI and RSA 369-B:7, VIII, the Administrator, 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 government 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,

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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 5.15.Indemnification. The Administrator shall indemnify the Issuer and the Indenture Trustee and their respective officials, officers, directors, managers, employees, consultants, counsel and agents (each an “Indemnified Person”) for, and defend and hold harmless each such Person from and against, any and all liabilities, obligations, claims, losses, actual damages, payments, costs or expenses of any kind whatsoever (“Losses”) that may be imposed on, incurred by or asserted against any such Person as a result of the Administrator’s willful misconduct or gross negligence in the performance of its duties or observance of its covenants under this Agreement; provided, however, that the Administrator shall not be liable for any Losses resulting from the willful misconduct or gross negligence of such Indemnified Person. The Holders shall be entitled to enforce their rights and remedies against the Administrator under this indemnification solely through a cause of action brought for their benefit by the Indenture Trustee.  The Administrator 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 Administrator, 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 Administrator under this Section 5.15, notify the Administrator in writing of such involvement.  Failure by an Indemnified Person to so notify the Administrator shall relieve the Administrator from the obligation to indemnify and hold harmless such Indemnified Person under this Section 5.15 only to the extent that the Administrator 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 5.15, the Administrator shall be entitled to assume the defense of any such action, proceeding or investigation.  Upon assumption by the Administrator 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 Administrator shall be entitled to appoint counsel of the Administrator’s choice at the Administrator’s expense to represent the Indemnified Person in any action, proceeding or investigation for which a claim of indemnification is made against the Administrator under this Section 5.15 (in which case the Administrator 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 Administrator’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 jurisdiction), and the Administrator 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 Administrator 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 Administrator and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or

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additional to those available to the Administrator, (iii) the Administrator 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 Administrator shall authorize the Indemnified Person to employ separate counsel at the expense of the Administrator.  The Administrator 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 5.15 (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.  The indemnities contained in this Section 5.15 shall survive the resignation or removal of the Indenture Trustee or the termination of this Agreement.

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IN WITNESS WHEREOF, the parties have caused this Administration Agreement to be duly executed and delivered under seal as of the day and year first above written.

PSNH FUNDING LLC 3, as Issuer
By:
	Name:
	Title:
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, as Administrator
By:
	Name:
	Title:

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