EXHIBIT B.1
U.S. $40,000,000
RECEIVABLES PURCHASE AGREEMENT
Dated as of May 22, 1997
Among
WMECO RECEIVABLES CORPORATION,
as the Seller
and
WESTERN MASSACHUSETTS ELECTRIC COMPANY
as initial Servicer
and
MONTE ROSA CAPITAL CORPORATION
as the Purchaser
and
UNION BANK OF SWITZERLAND, NEW YORK BRANCH
as the Agent
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms 1
1.02. Other Terms 22
1.03. Computation of Time Periods 22
ARTICLE II
THE RECEIVABLES FACILITY
2.01. Purchases and Maintenance of Percentage Interests 23
2.02. Termination or Reduction of the Purchase Limit 25
2.03. Percentage Interests 25
2.04. Selection of Purchase Periods 25
2.05. Non-Liquidation Settlement Procedures 26
2.06. Liquidity Shortfall Event; Partial Liquidations 26
2.07. Liquidation Settlement Procedures 27
2.08. Deemed Collections of Receivables 28
2.09. Payments and Computations, Etc. 29
2.10. Fees 30
2.11. Breakage Fee and Indemnity 30
2.12. Sharing of Payments, Etc. 31
2.13. Eurodollar Rate Protection; Illegality 31
2.14. Increased Costs; Capital Adequacy 33
2.15. Taxes 34
2.16. Security Interest 36
ARTICLE III
CONDITIONS OF PURCHASES
3.01. Conditions Precedent to Initial Purchase 36
3.02. Conditions Precedent to All Purchases and Reinvestments 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Seller 37
4.02. Representations and Warranties of the Servicer 41
ARTICLE V
GENERAL COVENANTS OF THE SELLER, WMECO AND THE SERVICER
5.01. General Seller Covenants 42
5.02. Servicer Covenants 47
5.03. Separate Corporate Existence of the Seller 49
ARTICLE VI
ADMINISTRATION, COLLECTION AND MONITORING OF RECEIVABLES
6.01. Appointment and Designation of the Servicer 51
6.02. Collection of Receivables by the Servicer; Extensions and
Amendments of Receivables 52
6.03. Distribution and Application of Collections 53
6.04. Segregation of Collections 53
6.05. Other Rights of the Agent 53
6.06. Records; Maintenance of General Trial Balance; Audits 54
6.07. Receivables Reporting 55
6.08 Collections 55
6.09. UCC Matters; Protection and Perfection of Percentage Interests 56
6.10. Obligations of the Seller with Respect to Receivables 58
ARTICLE VII
EVENTS OF TERMINATION
7.01. Events of Termination 58
ARTICLE VIII
THE AGENT
8.01. Authorization and Action 61
8.02. UCC Filings 62
8.03. Agent's Reliance, Etc. 62
8.04. Agent and Affiliates 63
8.05. Purchase Decision 63
8.06. Indemnification 63
8.07. Successor Agent 64
ARTICLE IX
INDEMNIFICATION
9.01. Indemnities by the Seller 64
9.02 Indemnities by WMECO 67
ARTICLE X
MISCELLANEOUS
10.01. Amendments and Waivers 68
10.02. Notices, Etc. 69
10.03. No Waiver; Remedies 69
10.04. Binding Effect; Assignability 69
10.05. Term of this Agreement 70
10.06. GOVERNING LAW; SUBMISSION TO JURISDICTION 70
10.07. Costs, Expenses and Taxes 71
10.08. No Proceedings 72
10.09. Execution in Counterparts; Severability; Integration 72
10.10. WAIVER OF TRIAL BY JURY 73
10.11. Section Headings 73
10.12. Confidentiality 73
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE I Condition Precedent Documents
SCHEDULE II Intentionally Omitted
SCHEDULE III Tradenames, Fictitious Names and "Doing Business
As" Names
SCHEDULE IV Location of the Seller's Chief Executive Office, Principal
Place of Business and Books and Records
EXHIBITS
EXHIBIT A Form of Assignment and Acceptance
EXHIBIT B Methodology re: Unbilled Receivables
EXHIBIT C-1 Form of Bank Notice for Lock-Box Bank
EXHIBIT C-2 Form of Bank Notice for bank at which the Collection Account
is maintained
EXHIBIT D Form of Investor Report
EXHIBIT E-1 Forms of Opinions of Internal Counsel for WMECO
EXHIBIT E-2 Form of Opinion of Outside Counsel for WMECO
EXHIBIT E-3 Form of Opinion of Outside Counsel for the Seller
EXHIBIT F Form of Officer's Certificate
THIS RECEIVABLES PURCHASE AGREEMENT (the "Agreement") is made as of May 22,
1997, among:
(1) WMECO RECEIVABLES CORPORATION, a Connecticut corporation (the "Seller");
(2) WESTERN MASSACHUSETTS ELECTRIC COMPANY, a Massachusetts corporation, as
initial Servicer hereunder ("WMECO");
(3) MONTE ROSA CAPITAL CORPORATION, a Delaware corporation (the
"Purchaser"); and
(4) UNION BANK OF SWITZERLAND, NEW YORK BRANCH ("UBS"), as agent (the
"Agent").
IT IS AGREED as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. (a) Certain capitalized terms used
throughout this Agreement are defined above or in this Section 1.01.
(b) As used in this Agreement and its Exhibits, the following terms shall
have the following meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined).
"Active Receivable" means a Receivable which is not an Inactive Receivable.
"Adverse Claim" means a lien, security interest, charge, encumbrance or other
right or claim of any Person.
"Affected Party" has the meaning assigned to that term in Section 2.14.
"Affiliate" when used with respect to a Person means any other Person
controlling, controlled by or under common control with such Person;
provided, however, that neither the Agent, UBS, any of UBS's branches or
agencies, the Purchaser nor any subsidiary of the Purchaser, shall be deemed
to be an affiliate of the Seller or of WMECO.
"Agent's Account" means a special account (account number USDDAC1 282626) in
the name of the Agent maintained at the Agent's main office at New York, New
York or such other account as may be designated from time to time by the
Agent upon at least five Business Days' prior written notice to the Seller
and the Servicer.
"Alternative Rate" means, with respect to any Percentage Interest for any
Purchase Period, an interest rate per annum equal to the Eurodollar Rate;
provided, however, that the "Alternative Rate" for such Percentage Interest
for such Purchase Period shall be the Base Rate in effect from time to time
during such Purchase Period if (i) such Purchase Period is a period of 1 to
29 days or (ii) the Purchase Price allocated to such Percentage Interest is
less than $1,000,000; and provided, further, that at all times following the
occurrence of an Event of Termination, the "Alternative Rate" shall be the
sum of (a) the Base Rate in effect from time to time, plus (b) 2.0%.
"Assignment and Acceptance" means an assignment and acceptance entered into
by an Owner and an assignee pursuant to Section 10.04, substantially in the
form of Exhibit A.
"Bank Notice" means a notice (a) from the Seller or WMECO to any Lock-Box
Bank, in substantially the form of Exhibit C-1 or in such other form as is
acceptable to the Agent, or (b) from the Purchaser to the bank at which the
Collection Account is maintained, in substantially the form of Exhibit C-2 or
in such other form as is acceptable to the Agent.
"Base Rate" means, on any date, a fluctuating rate of interest per annum
equal to the highest of:
(a) the Prime Rate;
(b) 0.50% above the latest three-week moving average of secondary market
morning offering rates in the United States for three-month certificates of
deposit of major United States money market banks, such three-week moving
average being determined weekly on each Monday (or, if such day is not a
Business Day, on the next succeeding Business Day) for the three-week period
ending on the previous Friday by the Agent on the basis of such rates
reported by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by the Agent
from three New York certificate of deposit dealers of recognized standing
selected by the Agent, in either case, adjusted to the nearest 1/4 of one
percent or, if therein is no nearest 1/4 of one percent, to the next higher
1/4 of one percent; and
(c) the Federal Funds Rate, plus 0.50%.
"Benefit Plan" means any employee benefit plan as defined in Section 3(2) of
ERISA in respect of which the Seller or WMECO or any ERISA Affiliate of the
Seller or WMECO is, or at any time during the immediately preceding six years
was, an "employer" as defined in Section 3(5) of ERISA.
"Breakage Fee" has the meaning assigned to that term in Section 2.11.
"Business Day" means a day of the year (other than a Saturday or a Sunday) on
which (i) banks are required to be open in New York City and (ii) if the term
"Business Day" is used in connection with the Eurodollar Rate, dealings in
Dollar deposits are carried on in the London interbank Eurodollar market.
"Change in Late Stage Delinquencies" means the amount, computed as of each
Cut-Off Date as follows:
(i) determine the sum of (A) the Outstanding Balance of Active Receivables
which remain unpaid for more than 120 days past the original billing date
plus (B) the Outstanding Balance for Inactive Receivables which remain unpaid
for a period up to 30 days past the final billing date (hereinafter referred
to as "Late Stage Delinquencies");
(ii) determine the average Late Stage Delinquencies for the twelve most
recent months, as calculated in the twelve most recent Investor Reports;
(iii) subtract the amount determined pursuant to clause (ii) from the amount
determined pursuant to clause (i), which amount shall be the "Change in Late
Stage Delinquencies" for such Cut-Off Date;
provided, that if the amount determined pursuant to clause (iii) is less than
zero, the Change in Late Stage Delinquencies for such Cut-Off Date shall
equal zero.
"Change of Control" means (a) the failure of WMECO to own directly,
beneficially and of record, free and clear of all Adverse Claims, one hundred
percent (100%) of the outstanding shares of capital stock of the Seller on a
fully diluted basis; or (b) any Person, or two or more Persons acting in
concert, shall acquire beneficial ownership (within the meaning of Rule 13d-3
of the Securities and Exchange Commission) of 20% or more of the outstanding
voting shares of WMECO.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning assigned to that term in Section 2.16.
"Collateral Trustee" means that Person acting as "Trustee" under (and as
defined in) the Security Agreement.
"Collection Account" means the account number 9369390302 maintained at Fleet
Bank N.A. in the name of the Purchaser, or such other account as is
designated as the Collection Account pursuant to Section 4.01(j).
"Collection Date" means the date following the Termination Date on which all
Percentage Interests have been reduced to zero in accordance with Section
2.03(a) and the Agent and the Owners have received all amounts due to them in
connection with this Agreement.
"Collections" means, with respect to any Receivable, all cash collections and
other cash proceeds of such Receivable, including, without limitation, all
cash proceeds of Related Security with respect to such Receivable, any
collection of such Receivable deemed to have been received pursuant to
Section 2.08 and all payments required to be made by the Seller pursuant to
Section 2.06 or the last sentence of Section 2.08.
"Commercial Paper Note" means any promissory note issued by the Purchaser
having an original maturity of 270 days or less (including the date of
issuance thereof).
"Concentration Limit" means, for any Reported Group on any Cut-Off Date, 2.0%
(or, if an Obligor identified in clause (i) of the definition of "Reported
Group" has a long term credit rating of at least AA- by Standard & Poor's and
Aa3 by Moody's, the Concentration Limit for such Obligor's Reported Group
shall mean 100%) of the Purchase Limit on such Cut-Off Date or such other
amount or percentage ("Special Concentration Limit") for any such Reported
Group designated by the Agent in a writing delivered to the Seller from time
to time.
"Coverage Ratio" means, on any date of determination, the ratio of (x) the
sum of (i) the Net Receivables Pool Balance plus (ii) the available funds on
deposit in the Collection Account to (y) the sum of the Utilized Amounts for
all Percentage Interests, in each case, as of such date.
"CP Disruption Event" means, at any time for any reason whatsoever, the
Purchaser shall be unable to raise, or shall be precluded or prohibited from
raising, funds through the issuance of Commercial Paper Notes in the United
States' commercial paper market at such time.
"CP Rate" means with respect to any Purchase Period for any Percentage
Interest, the per annum rate equivalent to the "weighted average cost" (as
defined below) related to the issuance of Commercial Paper Notes that are
allocated, in whole or in part, by the Purchaser (or by the Agent) to fund or
maintain such Percentage Interest, all other Percentage Interests held by the
Purchaser hereunder and all interests in receivables or other financial
assets of "Other Pool Sellers" (as defined below) held by the Purchaser;
provided, however, that if any component of such rate is a discount rate, in
calculating the "CP Rate" for such Percentage Interest for such Purchase
Period, the Purchaser shall for such component use the rate resulting from
converting such discount rate to an interest bearing equivalent rate per
annum. As used in this definition, (i) "Other Pool Sellers' means all other
sellers which transfer interests (including security interests) in
receivables or other financial assets to the Purchaser to the extent that
such interests in receivables or other financial assets are aggregated with
the Percentage Interests held by the Purchaser hereunder and funded on a
pooled basis by the Purchaser, and (ii) the Purchaser's "weighted average
cost" shall consist of (x) the actual interest rate paid to purchasers of the
Commercial Paper Notes (which rate shall reflect and give effect to the
commissions of placement agents and dealers in respect of the Commercial
Paper Notes, to the extent such commissions are allocated, in whole or in
part, to such Commercial Paper Notes by the Purchaser (or by the Agent)), (y)
the costs associated with the issuance of Commercial Paper Notes, and (z) the
cost of other borrowings by the Purchaser (other than under any Liquidity
Agreement), including to fund small or odd dollar amounts that are not easily
accommodated in the commercial paper market; and provided, further, that at
all times following the occurrence of an Event of Termination, the "CP Rate"
for any Percentage Interest shall be the Alternative Rate in effect from time
to time.
"Credit and Collection Policy" means those credit and collection policies and
practices of WMECO and the Seller relating to Receivables, as delivered to
the Agent prior to the date hereof, as modified in compliance with this
Agreement.
"Cut-Off Date" means the last day of a calendar month.
"Dealer Fees" means with respect to any Purchase Period for any Percentage
Interest, the rate set forth in a fee letter executed among the Seller, the
Agent and the Purchaser.
"Debt" of any Person means (i) indebtedness of such Person for borrowed
money, (ii) obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) obligations (other than ordinary trade
payables) of such Person to pay the deferred purchase price of property or
services, (iv) obligations of such Person as lessee under leases which shall
have been or should be, in accordance with GAAP, recorded as capital leases,
(v) obligations secured by an Adverse Claim upon property or assets owned by
such Person, even though such Person has not assumed or become liable for the
payment of such obligations and (vi) obligations of such Person under direct
or indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to in clauses (i) through (iv) above.
"Defaulted Receivable" means a Receivable: (i) as to which, with respect to
Active Receivables, any payment, or part thereof, remains unpaid for more
than 90 days from the billing date for such payment, (ii) as to which, the
Obligor thereon shall generally not be able to pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors,
or any proceeding shall be instituted by or against such Obligor seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property, or (iii) which,
consistent with the Credit and Collection Policy, has been or should be
written off as uncollectible on the books of WMECO or the Seller.
"Delinquency Ratio" means the ratio (expressed as a percentage) computed as
of each Cut-Off Date by dividing (i) the aggregate Outstanding Balance of all
Receivables that became Delinquent Receivables during the month ending on
such Cut-Off Date, by (ii) the aggregate Outstanding Balance of all
Receivables on such date.
"Delinquent Receivable" means an Active Receivable that is not a Defaulted
Receivable and as to which any payment or part thereof remains unpaid for
more than 60 days from the original billing date for such payment.
"Designated Obligor" means, at any time, each Obligor; provided, however,
that any Obligor shall cease to be a Designated Obligor upon three Business
Days' notice from the Agent to the Seller.
"Dilution Factors" means, with respect to the Receivables, any credits,
rebates, discounts, allowances, disputes, chargebacks, allowances for early
payments and other allowances or adjustments granted in accordance with the
usual practices of WMECO and the Seller.
"Dilution Ratio" means the ratio (expressed as a percentage) computed as of
each Cut-Off Date by dividing (i) the aggregate reduction as a result of any
of the Dilution Factors in the aggregate original principal balance of the
Receivables during such month, by (ii) the amount of Collections (other than
deemed Collections) received during such month.
"Dilution Reserve Percentage" means, on any day for any Percentage Interest,
the greater of (i) 1.00% and (ii) 2.0 times the average Dilution Ratio for
the three consecutive months ending on the most recent Cut-Off Date.
"Dividend" means any dividend or distribution (in cash, property or
obligations) on any shares of any class of the Seller's capital stock or
warrants, options or other rights with respect to shares of any class of the
Seller's capital stock.
"Dollars" or "$" means lawful money of the United States.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which is a Designated Obligor, is a United States
resident, and is not an Affiliate of any of the parties hereto;
(ii) which is not a Defaulted Receivable, a Delinquent Receivable, an
Inactive Receivable or a Hardship Receivable; and if such Receivable is owed
by an Obligor in a Reported Group, the Obligors in such Reported Group are
not the Obligors of any Defaulted Receivables or of any Delinquent
Receivables in the aggregate amount of 25% or more of the aggregate
Outstanding Balance of all Receivables of Obligors in such Reported Group;
(iii) which (A) is required to be paid in full immediately
upon the Obligor's receipt of the original invoice therefor, (B) constitutes
the legal, valid and binding obligation of the Obligor of such Receivable,
enforceable against such Obligor in accordance with its terms and (C) is not
subject to any right of rescission, dispute, offset, counterclaim or defense
whatsoever;
(iv) (A) which is an "account" within the meaning of Section 9-106 of
the UCC of all applicable jurisdictions, (B) which has been invoiced by WMECO
unless such Receivable is an Unbilled Receivable, (C) as to which all action
required to be taken in connection therewith by WMECO for the Obligor to
become obligated to pay the same has been taken, except that Unbilled
Receivables shall not have been invoiced, (D) is denominated and payable only
in Dollars in the United States and (E) no portion of which is payable on
account of sales, excise or similar taxes;
(v) which arises in the ordinary course of WMECO's business in connection
with the sale of electricity and/or related services;
(vi) the sale, assignment or transfer of which by WMECO to the Seller or by
the Seller to the Purchaser (including, without limitation, the sale of an
undivided percentage interest therein) does not contravene or conflict with
any applicable laws, rules or regulations or any contractual or other
restriction, limitation or encumbrance or require the consent of any Person;
(vii) which has not been compromised, adjusted or modified (including
by extension of time or payment or the granting of any discounts, allowances
or credits) for reasons related to the credit of the Obligor of such
Receivable;
(viii) which, together with any contract related thereto, does not
contravene in any material respect any laws, rules or regulations applicable
thereto (including, without limitation, laws, rules and regulations relating
to truth in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect to
which no party to any contract related thereto, if applicable, is in
violation of any such law, rule or regulation in any material respect;
(ix) which (A) satisfies all applicable requirements of the Credit and
Collection Policy and (B) complies with such other criteria and requirements
as the Agent may from time to time specify to the Seller following thirty
days' notice;
(x) as to which the Agent has not notified the Seller that the Agent
has determined, in its sole discretion, that such Receivable (or class of
Receivables) is not acceptable for purchase hereunder;
(xi) which is neither evidenced by any promissory note, draft, bond,
debenture or other instrument nor payable pursuant to any contract which
creates a security interest in goods;
(xii) the Obligor of which is located outside of Indiana, Minnesota or
New Jersey unless WMECO, the Servicer and the Seller have qualified to do
business in such state or has filed a Notice of Business Activities Report or
equivalent report with such state for the then current year; and
(xiii) which is free and clear from all liens (other than liens expressly
permitted by this Agreement) and (except as provided herein) as to which the
Seller has good and marketable title.
"ERISA" means, on any day, the U.S. Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means (i) any corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Code) as the Seller or WMECO; (ii) a trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of
the Code) with the Seller or WMECO or (iii) a member of the same affiliated
service group (within the meaning of Section 414(m) of the Code) as the
Seller or WMECO, any corporation described in clause (i) above or any trade
or business described in clause (ii) above.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" means, with respect to any Percentage Interest for any
Purchase Period, the per annum rate of interest determined by the Agent to be
equal to the sum of (a) 0.85% and (b) the rate (rounded upward, if necessary,
to the nearest whole multiple of 1/16th of one percent per annum) for
deposits in Dollars for a period approximating such Purchase Period which
appears on the Reuters Screen LIBO Page as of 11:00 A.M. (London time) on the
second Business Day before (and for value on) the first day of such Purchase
Period, divided by the remainder of one minus the Eurodollar Reserve
Percentage (expressed as a decimal) applicable during such Purchase Period.
"Eurodollar Reserve Percentage" means, with respect to any Purchase Period
for any Percentage Interest, the reserve percentage (rounded upwards, if
necessary, to the nearest 1/16th of one percent per annum) applicable during
such Purchase Period (or, if more than one such percentage shall be so
applicable during such Purchase Period, the daily average of such percentages
for those days in such Purchase Period during which any such percentages
shall be in effect) under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for banks or
other financial institutions subject to such regulations with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities
having a term equal to such Purchase Period.
"Event of Termination" has the meaning assigned to that term in Section 7.01.
"Excess Government Exposure" means, at any time, the excess (if any) of (x)
the aggregate Outstanding Balance of Receivables owed by Obligors that are
governments or governmental subdivisions or agencies, over (y) 6.0% of the
aggregate Purchase Limit at such time.
"Excess Reported Group Exposure" means at any time the amount computed as
follows:
(i) for each Reported Group, determine the excess (if any) of (x) the
aggregate Outstanding Balance of Eligible Receivables owed by Obligors in
such Reported Group as of the most recent Cut-Off Date, over (y) the
Concentration Limit for such Reported Group, determined as of such Cut-Off
Date, and
(ii) determine the sum of the amounts determined pursuant to clause (i) with
respect to all Reported Groups, which sum shall be the "Excess Reported Group
Exposure".
"Excluded Representations" means (i) the last sentence of Section 5.1(e) of
the Purchase and Sale Agreement and (ii) the last sentence of Section 5.1(f)
of the Purchase and Sale Agreement.
"Excluded Taxes" means, with respect to any Person, (i) net income taxes
imposed on such Person by the United States, (ii) net income and franchise
taxes imposed on such Person by the jurisdiction in which such Person is
organized or maintains its booking office for the transactions contemplated
hereby, or (iii) net income or franchise taxes imposed on such Person by a
political subdivision of the jurisdictions referred to in clause (ii).
"Federal Funds Rate" means, for any period, a fluctuating per annum interest
rate for each day during such period equal to the weighted average of the
rates quoted on overnight Federal funds transactions with UBS for such day by
three Federal funds brokers of recognized standing selected by it.
"GAAP" means, at any particular time, generally accepted accounting
principles as in effect at such time in the United States of America,
consistently applied.
"General Trial Balance" means the accounts receivable trial balance computer
tape, containing (i) a list of Obligors and the invoiced Receivables
respectively owed by such Obligors, (ii) the aged Outstanding Balances of
each such Obligor's Receivables, determined as of the most recent Cut-Off
Date, and (iii) the aggregate balances of Unbilled Receivables owed by
Obligors, as allocated to WMECO's residential, commercial or industrial
classes and determined as of the most recent Cut-Off Date, in substantially
the form delivered by WMECO to the Agent in connection with its September 11,
1996 Receivables Purchase and Sale Agreement.
"Gross Charge-Off Ratio" means, on any day, the ratio (expressed as a
percentage) determined by dividing (i) the Outstanding Balance of Receivables
which, consistent with the Credit and Collection Policy, were or should have
been written off the books of WMECO or the Seller as uncollectible during the
month ending on the most recent Cut-Off Date, by (ii) the amount of
Collections (other than deemed Collections) received during such month.
"Gross Loss Proxy" means, on any day, the sum of (i) the Outstanding Balance
of Receivables which, consistent with the Credit and Collection Policy, were
or should have been written off the books of WMECO or the Seller as
uncollectible during the month ending on the most recent Cut-Off Date plus
(ii) the Change in Late Stage Delinquencies as of such Cut-Off Date.
"Gross Loss Proxy Ratio" means, on any day, the ratio (expressed as a
percentage) determined by dividing (i) the Gross Loss Proxy calculated as of
the most recent Cut-Off Date, by (ii) the Outstanding Balance of Receivables
billed during the month ending five months prior to such Cut-Off Date.
"Hardship Receivable" means a Receivable with respect to an account which
WMECO has classified as "hardship" in accordance with the Credit and
Collection Policy.
"Holder" has the meaning assigned thereto in Section 10.12(b).
"Inactive Receivable" means a Receivable owed by an Obligor whose electrical
service has been discontinued by WMECO and to which WMECO has rendered a
final xxxx.
"Independent Director" means an individual who (i) is not a stockholder
(whether direct, indirect or beneficial), customer or supplier of WMECO or
any of its affiliates; (ii) is not a director, officer, employee, affiliate
or associate of WMECO or any of its affiliates (other than the Seller and a
special purpose, bankruptcy remote subsidiary of The Connecticut Light and
Power Company formed (or to be formed) in connection with the securitization
of that company's trade receivables); (iii) is not a person related to any
person referred to in clauses (i) or (ii); (iv) is not a trustee, conservator
or receiver for any affiliates of WMECO; and (v) has (A) prior experience as
an independent director for a corporation whose charter documents required
the unanimous consent of all independent directors thereof before such
corporation could consent to the institution of bankruptcy or insolvency
proceedings against it or could file a petition seeking relief under any
applicable federal or state law relating to bankruptcy and (B) at least three
years of employment experience with one or more entities that provide, in the
ordinary course of their respective businesses, advisory, management or
placement services to issuers of securitization or structured finance
instruments, agreements or securities.
"Investor Report" means a report, in substantially the form of Exhibit D,
furnished by the Servicer to the Agent for each Owner pursuant to Section
6.07.
"Issuer" means any Person whose principal business consists of issuing
commercial paper notes, medium-term promissory notes or other securities
(including, without limitation, the Commercial Paper Notes) to fund its
acquisition and maintenance of receivables, accounts, instruments, chattel
paper, general intangibles and other similar assets.
"Liquidation Servicing Fee" means, for any Percentage Interest at any time,
an amount equal to the product of (i) the Purchase Price of such Percentage
Interest and (ii) the product of (A) the highest percentage per annum of the
Servicing Fee set forth in Section 2.10(b) and (B) a fraction, the numerator
of which equals 2.0 times the Weighted Average Maturity and the denominator
of which equals 360.
"Liquidation Yield" means, for any Percentage Interest on any date, an amount
equal to the product of (i) the Purchase Price of such Percentage Interest
and (ii) the product of (A) highest Yield Rate applicable to any Percentage
Interest (or, if higher, the Base Rate for such Percentage Interest) on such
date and (B) a fraction, the numerator of which equals 2.0 times the Weighted
Average Maturity and the denominator of which equals 360 (or, if using the
Base Rate as the applicable Yield Rate, 365 or (in the case of a leap year)
366).
"Liquidity Agreement" means any credit agreement, loan agreement, stand-by
credit agreement or loan agreement, letter of credit facility or other
instrument, document or agreement providing for loans, advances or other
extensions of credit from certain Liquidity Lenders parties thereto to the
Purchaser to either provide liquidity support for the Commercial Paper Notes
issued by the Purchaser in connection with this Agreement or to fund the
acquisition and/or maintenance by the Purchaser of Percentage Interests.
"Liquidity Facility Termination Date" means any day upon which the
commitments of the Liquidity Lenders to make loans, advances or other
extensions of credit to the Purchaser under or pursuant to any Liquidity
Agreement to which such Liquidity Lenders are parties shall be terminated for
any reason (whether at the stated maturity or earlier) or shall otherwise
cease to be in full force and effect.
"Liquidity Lender" means any of the financial institutions from time to time
parties to, and extending credit commitments to the Purchaser under, any
Liquidity Agreement.
"Liquidity Shortfall Event" means the occurrence of any of the following
events: (i) any Liquidity Lender defaults on, or is unable for any reason
whatsoever to perform in respect of, its commitment under the Liquidity
Agreement to which it is a party; or (ii) any Liquidity Lender shall cease to
be rated at least A-1+ by Standard & Poor's and P-1 by Moody's, and such
downgraded Liquidity Lender has not been replaced or substituted by a
Replacement Bank within 30 days after such Liquidity Lender was so
downgraded.
"Lock-Box Account" means an account maintained at a Lock-Box Bank for the
purpose of receiving Collections in accordance with Section 6.08.
"Lock-Box Bank" means any of the banks or other financial institutions
designated by the Agent, following an Event of Termination, to receive
payments in respect of Receivables.
"Loss Horizon Ratio" means the ratio (expressed as a percentage) computed as
of each Cut-Off Date by dividing (i) the sum of (A) the Outstanding Balance
of Receivables billed during the three months ending on such Cut-Off Date
plus (B) the product of 0.50 times the Outstanding Balance of Receivables
billed during the month ending three months prior to such Cut-Off Date, by
(ii) the Outstanding Balance of Eligible Receivables as of such Cut-Off Date.
"Loss Reserve" means, at any time for any Percentage Interest, an amount
equal to
LRP x (PP + YR)
1 - LRP
where:
LRP = the Loss Reserve Percentage for such Percentage Interest at such
time.
PP = the Purchase Price of such Percentage Interest at such time.
YR = the Yield Reserve for such Percentage Interest at such time.
"Loss Reserve Percentage" means, on any day for any Percentage Interest, the
greatest of (i) the product of (A) the Gross Loss Proxy Ratio calculated as
of the most recent Cut-Off Date, times (B) the Loss Horizon Ratio as of the
most recent Cut-Off Date, (C) times 2.00, (ii) five times the percentage
which the Concentration Limit (without giving effect to any Special
Concentration Limit) bears to the then aggregate Purchase Price of all
Percentage Interests and (iii) 10%.
"Loss-to-Liquidation Ratio" means the ratio (expressed as a percentage)
computed as of each Cut-Off Date by dividing (i) the aggregate Outstanding
Balance of all Receivables that became Defaulted Receivables during the month
ending on such Cut-Off Date, by (ii) the aggregate amount of Collections
actually received during such month.
"Material Adverse Effect" means a material adverse effect on (i) the
operations of the Seller, WMECO or the Servicer, (ii) the ability of the
Seller, WMECO or the Servicer to perform its obligations hereunder or under
any other Transaction Document or (iii) the credit quality, enforceability or
collectibility of the Receivables.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or
the immediately preceding five years contributed to by the Seller, WMECO or
any ERISA Affiliate on behalf of its employees.
"Net Receivables Pool Balance" means, at any time, (i) the aggregate
Outstanding Balance of all Eligible Receivables at such time, minus (ii) the
Excess Reported Group Exposure, minus (iii) the Excess Government Exposure.
"Obligor" means a Person obligated to make payments to WMECO, which
obligation arises in connection with WMECO's sale of electricity and/or
related services.
"Original Balance" means, for any Receivable, the original principal balance
of such Receivable at its creation.
"Outstanding Balance" means for any Receivable at any time, the then
outstanding principal balance thereof; provided, that the Outstanding Balance
of any Unbilled Receivables shall be calculated in accordance with Exhibit B.
"Owner" means, with respect to each Percentage Interest, upon its purchase,
the Purchaser; provided, however, that upon any assignment thereof pursuant
to Section 10.04, the assignee shall be the Owner of such Percentage Interest
(or portion thereof) so assigned, and the assignor shall cease to be the
Owner of such Percentage Interest (or portion thereof) so assigned.
"Parent" means Northeast Utilities, a Massachusetts business trust.
"Payment Center" means a retail outlet or other company that accepts payments
from Obligors in respect of Receivables, provided that (i) such outlet or
entity has been instructed to deposit such payments on each day to an account
of a payment intermediary, and (ii) such payment intermediary shall have
agreed to wire such payments on each day to the Collection Account (and to no
other account).
"Percentage Interest" means, at any time, an undivided percentage ownership
interest at such time in (i) each and every Receivable existing on the date
such Percentage Interest shall have been purchased and in each and every
Receivable existing or arising after such date but prior to the Termination
Date, (ii) all Related Security with respect to each such Receivable, (iii)
all Collections with respect to each such Receivable, (iv) the Seller's
rights and remedies under the Purchase and Sale Agreement, and (v) all
proceeds of any of the foregoing. Such undivided percentage interest for
such Percentage Interest shall be computed by dividing the Utilized Amount of
such Percentage Interest at such time by the Net Receivables Pool Balance at
such time. Each Percentage Interest shall be determined from time to time
pursuant to the provisions of Section 2.03(a).
"Person" means an individual, partnership, corporation (including a business
trust), limited liability company, joint stock company, bank, financial
institution, trust, unincorporated association, joint venture, government (or
any agency or political subdivision thereof) or other entity.
"Prime Rate" means the per annum rate of interest announced publicly by UBS
in New York, New York as its prime rate, such rate to change as and when such
announced rate changes. The Prime Rate is not intended to be the lowest rate
of interest charged by UBS in connection with extensions of credit to
debtors.
"Public Disclosure Documents" means (i) WMECO's Annual Report on Form 10-K
for the year ending December 31, 1996, (ii) WMECO's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997 and (iii) Parent's reports on Form
8-K dated January 17, 1997, January 20, 1997, February 20, 1997, February 28,
1997, March 19, 1997 and April 11, 1997.
"Purchase and Sale Agreement" means the Purchase and Sale Agreement, dated as
of May 22, 1997, among the Seller and WMECO, as the same may be amended,
supplemented or modified from time to time with the prior written consent of
the Agent.
"Purchase Limit" means at any time $40,000,000, as such amount may be reduced
pursuant to Section 2.02 or Section 2.06(a); provided, however, that at all
times on and after the Termination Date, the "Purchase Limit" shall mean the
aggregate Purchase Price for all Percentage Interests.
"Purchase Period" means, with respect to any Percentage Interest, a period
selected by the Agent, after consultation with the Owner(s) of such
Percentage Interest; provided, however, that:
(a) with respect to any Percentage Interest the purchase or maintenance of
which is funded other than through the issuance of Commercial Paper Notes,
the Purchase Period shall be any number of days up to (and including) 29 or
one, two or three months; and
(b) with respect to any Percentage Interest the purchase or maintenance of
which is funded through the issuance of Commercial Paper Notes, the Purchase
Period shall be any number of days up to (and including) 270;
Each Purchase Period in respect of any Percentage Interest shall commence,
initially, on the date of purchase by the Purchaser of such Percentage
Interest and thereafter on the last day of the immediately preceding Purchase
Period. Notwithstanding anything contained herein to the contrary (i) any
Purchase Period which would otherwise end on a day which is not a Business
Day shall be extended to the immediately succeeding Business Day; provided,
however, that if Yield in respect of such Percentage Interest allocated to
such Purchase Period is computed by reference to the Eurodollar Rate and such
succeeding Business Day is in the next calendar month, then such Purchase
Period shall end on the immediately preceding Business Day, (ii) any Purchase
Period which commences before the Termination Date and would otherwise end on
a date occurring after the Termination Date shall end on the Termination
Date, (iii) any Purchase Period as to which Yield accrues at the CP Rate may
be terminated at the election of, and upon notice thereof to the Seller and
each Owner of the Percentage Interests allocated thereto by, the Agent at any
time upon the occurrence and during the continuance of any CP Disruption
Event, and (iv) whenever any Purchase Period as to which Yield accrues at the
Eurodollar Rate commences on the last Business Day in a month or on a day for
which there is no numerical corresponding day in the month in which such
Purchase Period ends, such Purchase Period shall end on the last Business Day
of the month in which such Purchase Period ends.
"Purchase Price" of any Percentage Interest means the amount paid to the
Seller for such Percentage Interest at the time of its acquisition by a
Purchaser pursuant to Section 2.01, reduced from time to time by Collections
received and distributed to the Owners on account of such Purchase Price
pursuant to Sections 2.06 or 2.07 or the last sentence of Section 2.08;
provided, however, that such Purchase Price of such Percentage Interest shall
not be reduced by any distribution of any portion of Collections if at any
time such distribution is rescinded or must be returned for any reason.
"Purchaser" means Monte Rosa Capital Corporation or, upon the assignment of
all of its rights, title, interests, obligations and liabilities as the
Purchaser hereunder in accordance with Section 10.04 (or, in the case of any
subsequent Purchaser, upon the assignment of all of such subsequent
Purchaser's rights, title, interests, obligations and liabilities as the
Purchaser hereunder in accordance with Section 10.04), such other Issuer to
which such assignment was so made; provided, however, that upon any such
assignment by any Issuer (including Monte Rosa Capital Corporation) of all of
its rights, title, interests, obligations and liabilities as the Purchaser
hereunder, such Issuer shall cease to be the Purchaser hereunder.
"Receivable" has the meaning set forth in Appendix A to the Purchase and Sale
Agreement.
"Records" means all documents, books, records and other information
(including without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) maintained by the
Seller, WMECO or the Servicer with respect to the Receivables and the related
Obligors.
"Reinvested Collections" has the meaning assigned to that term in Section
2.05.
"Reinvestment Termination Date" means that Business Day which the Seller
designates as the Reinvestment Termination Date by notice to the Agent at
least three Business Days prior to such Business Day or, if any of the
conditions precedent in Section 3.02 are not satisfied, that Business Day
which the Agent designates as the Reinvestment Termination Date by notice to
the Seller at least one Business Day prior to such Business Day.
"Related Security" means with respect to any Receivable:
(i) all of the Seller's right, title and interest in the Purchase and Sale
Agreement and under each other Transaction Document;
(ii) all security interests or liens and the Seller's interest in the
property subject thereto from time to time purporting to secure payment of
such Receivable, whether pursuant to a contract related to such Receivable or
otherwise;
(iii) the assignment to the Agent, for the benefit of any Owner, of all UCC
financing statements covering any collateral securing payment of such
Receivable;
(iv) all guarantees, letters of credit, indemnities, warranties, insurance
policies and proceeds and premium refunds thereof and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Receivable whether pursuant to a contract related to such
Receivable or otherwise;
(v) all Records; and
(vi) all proceeds of the foregoing.
"Replacement Bank" has the meaning assigned to that term in Section 2.06(a).
"Reported Group" means, on any Cut-Off Date, the Obligors identified by the
following process, as described in the most recent Investor Report:
(i) in the Investor Reports delivered in each July and January of each year,
WMECO shall indicate each of the ten Obligors that, as of the preceding April
30 or October 31, as the case may be, were billed for the highest aggregate
amounts of Receivables during the twelve month period ending on such date;
(ii) for each Obligor described in clause (i), WMECO shall, to the best of
its knowledge and ability in accordance with its practices and procedures in
effect on the date hereof, identify those of such Obligor's Affiliates that
are also Obligors (determined as of such Cut-Off Date); and
(iii) group each Obligor described in clause (i) with its Affiliates
described in clause (ii), each of which groups shall collectively constitute
a "Reported Group".
"Required Rating" means at any time BB by Standard & Poor's and Ba2 by
Moody's.
"Required Owners" means, at any time, those Owners owning Percentage
Interests, the aggregate outstanding Purchase Price of which exceeds 50% of
the aggregate outstanding Purchase Price of all Percentage Interests
outstanding hereunder.
"Restricted Payments" has the meaning set forth in Section 5.01(j).
"Reuters Screen LIBO Page" means the display page so designated as page
"LIBO" on the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBO page on such service for the purpose of displaying London
interbank offered rates of major banks).
"Scheduled Termination Date" means September 4, 2001.
"Security Agreement" means that certain Collateral Trust and Security
Agreement of even date herewith among the Purchaser and the Collateral
Trustee, as the same may be amended, supplemented or otherwise modified from
time to time.
"Security Deposit" means a deposit of money by an Obligor with (or for the
account of) WMECO to secure the payment of the Receivables owed by such
Obligor.
"Seller Confidential Information" means information regarding the operations
or financial condition of Parent, WMECO, the Seller or their respective
subsidiaries (including, without limitation, information regarding the
Obligors and the Receivables).
"Servicer" means at any time the Person then authorized pursuant to Article
VI to service, administer and collect Receivables.
"Servicer Default" means the Agent, in its reasonable discretion, determines
that an event has occurred that would reasonably materially and adversely
affect (i) the Servicer's operations, (ii) the Servicer's ability to service
the Receivables or (iii) the credit quality, collectibility or enforceability
of the Receivables.
"Servicing Fee" means a fee equal to one percent (1.0%) per annum of the
average daily amount of the aggregate Outstanding Balance of the Receivables
(as determined by the Agent). Such fee shall be allocated among the
Percentage Interests on each day proportionately according to the Purchase
Price for each Percentage Interest. Such fee shall be payable for the period
from the date hereof until the latest of (i) the Termination Date, (ii) the
date on which all Percentage Interests are reduced to zero, payable on the
last day of each Purchase Period for such Percentage Interest, or (iii) the
date on which all Receivables sold or contributed under the Purchase and Sale
Agreement have been collected or written off; provided, however, that, upon
three Business Days' notice to the Agent, the Servicer (if other than WMECO
or an Affiliate of WMECO) may elect to be paid, as such fee, another
percentage per annum of the average daily amount of Purchase Price of each
Percentage Interest, but in no event in excess of 110% of the costs and
expenses referred to in Section 6.03.
"Servicing Fee Reserve" means, with respect to any Percentage Interest at any
time, the sum of (i) the Liquidation Servicing Fee for such Percentage
Interest at such time, plus (ii) the unpaid Servicing Fee relating to such
Percentage Interest accrued to such time.
"Servicing Fee Reserve Percentage" means, on any day for any Percentage
Interest, the ratio (expressed as a percentage) computed by dividing (i) the
Servicing Fee Reserve related to such Percentage Interest by (ii) the
Purchase Price for such Percentage Interest.
"Settlement Date" means, with respect to any Purchase Period for any
Percentage Interest, the last day of such Purchase Period.
"Special Concentration Limit" has the meaning assigned to that term in the
definition of "Concentration Limit".
"Standard & Poor's" means Standard & Poor's Rating Services, a division of
The XxXxxx-Xxxx Companies, Inc.
"Subject Party" has the meaning assigned thereto in Section 10.12(b).
"Termination Date" means the earliest of (i) the Reinvestment Termination
Date, (ii) the date of termination of the Purchase Limit pursuant to Section
2.02, (iii) the date of the declaration or automatic occurrence of the
Termination Date pursuant to Section 7.01, (iv) the occurrence of a Liquidity
Facility Termination Date, and (v) the Scheduled Termination Date.
"Total Reserve Percentage" means, on any day for any Percentage Interest, the
sum of (i) the Loss Reserve Percentage for such Percentage Interest at such
time, (ii) the Dilution Reserve Percentage for such Percentage Interest at
such time, (iii) the Yield Reserve Percentage for such Percentage Interest at
such time and (iv) the Servicing Fee Reserve Percentage for such Percentage
Interest at such time.
"Total Reserves" means, at any time for any Percentage Interest, an amount
equal to
TRP x (PP + YR)
1 - LRP
where:
TRP = the Total Reserve Percentage for such Percentage Interest at such
time.
LRP = the Loss Reserve Percentage for such Percentage Interest at such
time.
PP = the Purchase Price of such Percentage Interest at such time.
YR = the Yield Reserve for such Percentage Interest at such time.
"Transaction Documents" has the meaning set forth in Appendix A to the
Purchase and Sale Agreement.
"Transition Event" means the occurrence of any of the following: (i) an
Event of Termination, (ii) the reduction of the Coverage Ratio to below 102%,
(iii) the Termination Date, and (iv) WMECO's senior secured debt shall be
rated BB or lower by Standard & Poor's or Ba2 or lower by Moody's.
"UCC" means the Uniform Commercial Code as from time to time in effect in the
specified jurisdiction.
"Unbilled Receivable" means a bona fide, enforceable obligation of a customer
for the customer's metered use of electricity that will be billed by WMECO or
the Servicer during WMECO's next monthly billing cycle for that customer.
"United States" means the United States of America.
"Unmatured Termination Event" means an event which, with the giving of notice
or lapse of time or both, will become an Event of Termination.
"Utilized Amount" means, for any Percentage Interest at any time, the sum of
(i) the aggregate Purchase Price of such Percentage Interest at such time and
(ii) the Total Reserves for such Percentage Interest at such time.
"Weighted Average Maturity" means on any day, the number of days equal to (i)
30.0 times (ii) the average of the aggregate Outstanding Balances of
Receivables on the two most recent Cut-Off Dates, divided by (iii) Newly
Generated Receivables. For purposes of this definition, "Newly Generated
Receivables" means, on any day, the amount equal to the sum of (i) the
Outstanding Balance of Receivables billed during the month ending on the most
recent Cut-Off Date, plus (ii) the difference between (A) the Outstanding
Balance of Unbilled Receivables as of the most recent Cut-Off Date minus (B)
the Outstanding Balance of Unbilled Receivables as of the second most recent
Cut-Off Date.
"WMECO" means Western Massachusetts Electric Company, a Massachusetts
corporation, and its permitted successors and assigns.
"WMECO Obligations" has the meaning set forth in Appendix A to the Purchase
and Sale Agreement.
"WRC Purchase Price" has the meaning set forth in Appendix A to the Purchase
and Sale Agreement.
"Yield" means for each Percentage Interest during any Purchase Period, the
product of
YRT x PP x ED
DIY
where:
PP = the Purchase Price of such Percentage Interest during such Purchase
Period,
ED = the actual number of days elapsed during such Purchase Period,
YRT = the Yield Rate for such Percentage Interest for such Purchase
Period, and
DIY = the number of days in the year for purposes of calculating Yield,
which number shall be 360 in all cases other than if the applicable Yield
Rate for such Percentage Interest shall be the Base Rate, in which case, such
number shall be 365 or, in the case of a leap year, 366, and
provided, however, that (i) no provision of this Agreement shall require the
payment or permit the collection of Yield in excess of the maximum permitted
by applicable law and (ii) Yield for any Percentage Interest shall not be
considered paid by any distribution if at any time such distribution is
rescinded or must otherwise be returned for any reason.
"Yield Rate" for any Purchase Period for any Percentage Interest means:
(i) to the extent the purchase or the maintenance of such Percentage
Interest is funded other than through the issuance of Commercial Paper Notes,
a rate equal to the applicable Alternative Rate for such Purchase Period, and
(ii) to the extent the purchase or maintenance of such Percentage Interest
is funded through the issuance of Commercial Paper Notes, a rate equal to the
CP Rate, as applicable, for such Purchase Period;
provided, however, that notwithstanding anything contained herein to the
contrary, upon the assignment of any Percentage Interest (or any portion
thereof) by the Purchaser to any other Owner, the Yield Rate at which such
Percentage Interest shall thereafter accrue Yield shall be the Alternative
Rate.
"Yield Reserve" means, for any Percentage Interest at any time, the sum of
(i) the Liquidation Yield for such Percentage Interest, and (ii) the
aggregate amount of all Yield accrued and to accrue during any applicable
Purchase Period (as determined by the Agent in good faith) with respect to
such Percentage Interest.
"Yield Reserve Percentage" means, on any day for any percentage Interest, the
ratio (expressed as a percentage) computed by dividing (i) the Yield Reserve
related to such Percentage Interest by (ii) the Purchase Price for such
Percentage Interest.
SECTION 1.02. Other Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. All terms used in Article
9 of the UCC in the State of New York, and not specifically defined herein,
are used herein as defined in such Article 9.
SECTION 1.03. Computation of Time Periods. Unless otherwise stated in this
Agreement, 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 the
words "to" and "until" each mean "to but excluding."
ARTICLE II
THE RECEIVABLES FACILITY
SECTION 2.01. Purchases and Maintenance of Percentage Interests. (a) On the
terms and conditions hereinafter set forth, the Purchaser hereby agrees to
purchase Percentage Interests from the Seller from time to time during the
period from the date hereof until (but not including) the Termination Date;
provided, however, that nothing in this Agreement shall be deemed or
construed as a commitment by the Purchaser or any Owner to fund the purchase
or maintenance of Percentage Interests through the issuance of Commercial
Paper Notes, and it is hereby expressly acknowledged and agreed that such
funding is, and shall continue to be, wholly discretionary on the part of the
Purchaser and all applicable Owners. Under no circumstances shall the
Purchaser make any such purchase if, after giving effect to such purchase,
the aggregate Purchase Price of all Percentage Interests hereunder would
exceed the Purchase Limit.
(b) Each purchase of a Percentage Interest hereunder shall be made on notice
from the Seller to the Agent (who shall notify the Purchaser) given not later
than 11:00 A.M. (New York City time) on the second Business Day before the
date of such requested purchase. Each such notice of a proposed purchase of
a Percentage Interest shall be by telephone, telecopier, telex or cable and
shall specify the following with respect to each such Percentage Interest:
(A) the aggregate initial Purchase Price of the Percentage Interest so
requested to be purchased, which Purchase Price shall not be less than
$1,000,000 and shall be an integral multiple of $100,000; (B) the date of
such proposed purchase (which day must be a Business Day); and (C) whether
the Alternative Rate or the CP Rate is requested with respect to such
Percentage Interest. Any notice of a requested purchase as set forth above
shall become effective and shall be binding on the Seller when given by the
Seller.
Promptly upon its receipt of such notice from the Agent, the Purchaser shall
notify the Agent and the Seller as to whether, in the case of any requested
purchase to be funded through the issuance of Commercial Paper, it is willing
to make such a purchase.
(c) On the date of such purchase, the Purchaser shall, upon the satisfaction
of the applicable conditions set forth in Article III, make available to the
Seller in same day funds, at Fleet National Bank, Hartford, Connecticut, ABA
000000000, Account 9370211519, the aggregate Purchase Price of such
Percentage Interest. The Purchaser shall allocate such Purchase Price to
such Purchase Periods as it shall select in accordance with the terms of this
Agreement.
(d) At least two (2) Business Days prior to the last day of each Purchase
Period, the Seller shall notify the Agent (who shall then notify the
Purchaser) as to the following with respect to the succeeding allocation of
the Purchase Price allocated to such Purchase Period then ending, (A) whether
the Alternative Rate or the CP Rate is requested with respect to such
Purchase Price and (B) if more than one rate is requested, the requested
allocation of the Purchase Price as among such rates; provided that the
Purchase Price allocated to each rate must be in a minimum amount of
$1,000,000 and in integral multiples of $100,000, except for any such
Purchase Price allocated to the Base Rate, which Purchase Price may be
allocated thereto in any amount. Such notice shall be given by telephone,
telecopier, telex or cable. If and to the extent the Purchaser elects to
make such Yield Rate(s) available to the Seller (such election to be
submitted to the Agent and the Seller, then, upon the expiration of the then
current Purchase Period, the Purchaser shall reallocate the Purchase Price
previously allocated to such Purchase Period to such other Purchase Periods
as the Agent shall select in accordance with the terms hereof, each accruing
Yield at the applicable Yield Rate requested in accordance with this Section
2.01(d). Notwithstanding anything contained in this Section 2.01(d) to the
contrary, in the event that:
(i) the Seller shall fail to give such notice with respect to any Purchase
Period then ending; or
(ii) in any case where the requested Yield Rate is the CP Rate, the Purchaser
elects not to make the requested Yield Rate available with respect to the
Purchase Price allocated to such Purchase Period then ending (such election
to be promptly submitted to the Agent and the Seller),
and, in any such case, the Purchaser and Seller shall fail to otherwise agree
before the last day of such Purchase Period, then the Yield Rate to be
applicable to the Purchase Price allocated to such Purchase Period then
ending shall be either the CP Rate or the Alternative Rate, as the relevant
Owner of such affected Percentage Interest may elect, and such Purchase Price
shall be allocated to such Purchase Periods as shall be selected by the Agent
in accordance with the terms hereof, but in any event not to exceed five
days.
(e) If at any time after the occurrence and during the continuance of any CP
Disruption Event, the Agent elects to terminate any Purchase Period accruing
Yield at the CP Rate, the Purchase Price allocated to such terminated
Purchase Period shall be allocated to a new Purchase Period to be designated
by the Agent (but in no event to exceed 5 days) and shall accrue Yield at the
Alternative Rate.
(f) The Purchaser shall notify the Agent and the Seller, promptly after the
commencement of any Purchase Period of the amount of the Purchase Price
allocated to such Purchase Period, the duration of such Purchase Period, and
the Yield Rate applicable to such Purchase Period.
SECTION 2.02. Termination or Reduction of the Purchase Limit. The Seller
may, upon at least five Business Days' notice to the Agent, terminate in
whole or reduce in part the unused portion of the Purchase Limit; provided,
however, that each partial reduction of the Purchase Limit shall be in an
aggregate amount equal to $1,000,000 or an integral multiple thereof.
SECTION 2.03. Percentage Interests. (a) Each Percentage Interest shall be
initially computed as of the opening of business of the Servicer on the date
of its purchase. Thereafter until the Termination Date, such Percentage
Interest shall be automatically recomputed as of (i) the opening of business
of the Servicer on any day on which the aggregate Purchase Price of all
Percentage Interests hereunder is increased and (ii) the close of business of
the Servicer on each day. A Percentage Interest shall become zero only when
the Purchase Price thereof, all Yield thereon, all fees and other amounts
owing to the Owner thereof in connection with this Agreement and all
Servicing Fees in respect thereof shall have been paid in full. Each
Percentage Interest shall remain constant from the time as of which any such
computation or recomputation is made until the time as of which the next such
recomputation, if any, shall be made. From and after the Termination Date,
each Percentage Interest shall remain constant until it becomes zero as set
forth in the third sentence of this Section 2.03(a).
(b) The Agent shall maintain books and records in which shall be recorded
(i) the date and amount of each purchase of a Percentage Interest hereunder
and the Owners thereof, (ii) the date and amount of and parties to any
assignment of rights and obligations hereunder pursuant to Section 10.04,
(iii) the amount of any Yield, fees or other amount due and payable or to
become due from the Seller or WMECO to the Agent, any Owner or the Servicer
hereunder and (iv) the amount and date of any reduction in the Purchase Price
of any Percentage Interest. The entries made in the Agent's books and
records as described in this Section 2.03(b) shall be conclusive and binding
for all purposes absent manifest error.
SECTION 2.04. Selection of Purchase Periods. Except as expressly provided
otherwise in this Agreement, the Agent, after consultation with the Purchaser
or the applicable Owner(s), shall designate the duration of all Purchase
Periods (subject to the restrictions set forth in the definition of "Purchase
Period" set forth in Section 1.01) to which any Purchase Price is to be
allocated hereunder and shall allocate Purchase Price accruing Yield on the
same basis (i.e., at the Alternative Rate or the CP Rate) to such Purchase
Periods in such proportions as the Purchaser or the applicable Owner(s), as
the case may be, shall, in their sole discretion, direct. Notwithstanding
anything in this Agreement to the contrary, the outstanding Purchase Price of
all Percentage Interests shall at all times be allocated to a Purchase
Period.
SECTION 2.05. Non-Liquidation Settlement Procedures. On each day prior to
the Termination Date, the Servicer shall: out of Collections in respect of
each Percentage Interest received on such day, (i) set aside on its books and
hold in trust for the Owner of such Percentage Interest an amount equal to
the Yield and Servicing Fee accrued through such day for such Percentage
Interest and not so previously set aside, (ii) set aside on its books and pay
to the Agent and the Owners amounts then due to them hereunder including
without limitation Section 10.07 that have not been paid and (iii) subject to
Section 3.02, reinvest the remainder of such Collections (such reinvested
portion of Collections being "Reinvested Collections"), for the benefit of
such Owner, by recomputation of such Percentage Interest pursuant to Section
2.03 as of the end of such day and the payment of such remainder to the
Seller or such other Person as the Seller shall direct; provided that if for
any reason any portion of such remaining Collections cannot be so reinvested
(including, without limitation, the inability to satisfy the conditions in
Section 3.02) or are not to be reinvested pursuant to Section 2.06(b), the
Servicer shall set aside such portion on its books and hold such portion in
trust for the Owner of such Percentage Interest. The recomputed Percentage
Interest shall constitute the percentage ownership interest in the
Receivables on such day held by such Owner. On each Settlement Date in
respect of each Purchase Period for each Percentage Interest to occur prior
to the Termination Date (and, if the Agent shall so request following a
Transition Event, on each Business Day during such Purchase Period), the
Servicer shall deposit to the Agent's Account the amounts set aside as
described in the first sentence of this Section 2.05 other than (unless the
Agent shall specify otherwise) amounts set aside for Servicing Fee (which
amounts the Servicer shall retain for its own account). It is understood
that funds reinvested as provided in clause (iii) of such sentence shall not
be so deposited. Upon receipt of such funds by the Agent, the Agent shall
distribute them first, to the Owner of such Percentage Interest in full
payment of the accrued Yield for such Percentage Interest and any other
amounts then due to such Owner hereunder, second, to the Servicer in full
payment of the accrued Servicing Fee payable with respect to such Percentage
Interest, and third to the partial liquidation of the Owners' Percentage
Interests as contemplated by Section 2.06.
SECTION 2.06. Liquidity Shortfall Event; Partial Liquidations. (a)
Immediately upon the occurrence of a Liquidity Shortfall Event, the Purchase
Limit hereunder shall be automatically reduced by (1) in the case of a
Liquidity Shortfall Event of the type described in clause (i) of the
definition thereof, the aggregate amount of any such defaulting or downgraded
Liquidity Lender's unused commitment under the Liquidity Agreements to which
it is a party; provided, however, that with respect to any such Liquidity
Shortfall Event of the type described in clause (i) of the definition
thereof, if such defaulting Liquidity Lender is replaced by or is substituted
with another bank or other financial institution acceptable to the Purchaser
(a "Replacement Bank") under the applicable Liquidity Agreement(s) within 30
days after the occurrence of such a Liquidity Shortfall Event, then the
Purchase Limit may be reinstated to the extent of such Replacement Bank's
unused commitment under such Liquidity Agreement (but not to exceed the
original Purchase Limit hereunder); and provided, further, that
notwithstanding anything contained in this Agreement to the contrary, the
Purchaser shall have no obligation to replace or substitute any such
defaulting or downgraded Liquidity Lender with a Replacement Bank under any
Liquidity Agreement, or (2) in the case of a Liquidity Shortfall Event of the
type described in clause (ii) of the definition thereof, the amount of the
liquidity deficiency determined by the Agent to exist as of such date as a
result of such Liquidity Shortfall Event. In addition, within 30 days after
the occurrence of any such Liquidity Shortfall Event, the Seller, either
through the payment of such amount to the Agent for deposit in the Agent's
Account or through a partial liquidation in accordance with Section 2.06(b),
shall reduce the outstanding Purchase Price of all Percentage Interests (to
be determined after the occurrence of such Liquidity Shortfall Event) by such
an amount, if any, as may be necessary to reduce the aggregate outstanding
Purchase Price of all Percentage Interests to an amount which is equal to or
less than the Purchase Limit as so reduced.
(b) The Seller shall be entitled at any time during the term of this
Agreement to request a partial liquidation of the Percentage Interests such
that the aggregate outstanding Purchase Price of all Percentage Interests
shall be reduced to an amount designated by the Seller in such request. Any
such partial liquidation shall be conducted by remitting Collections that are
not Reinvested Collections to the Agent in accordance with the terms and
provisions to be mutually acceptable to the Servicer, the Agent, the Required
Owners and the Collateral Trustee.
(c) If on any day the Coverage Ratio is less than 102%, the Seller (either
through a payment to the Agent for deposit in the Agent's Account or through
a partial liquidation in accordance with Section 2.06(b)), shall make the
payment required to be made pursuant to the last sentence of Section 2.08.
SECTION 2.07. Liquidation Settlement Procedures. On the Termination Date
and on each day thereafter, the Servicer shall set aside and hold in trust
for each Owner of each Percentage Interest, the Collections in respect of
such Percentage Interest received on such day. On each Settlement Date in
respect of each Purchase Period for each Percentage Interest to occur on or
after the Termination Date (and, if both the Termination Date and a
Transition Event shall have occurred and the Agent shall so request, on each
other Business Day during such Purchase Period), the Servicer shall deposit
to the Agent's Account the amounts set aside pursuant to the preceding
sentence with respect to such Percentage Interest, together with any
remaining amounts set aside pursuant to Section 2.05 prior to the Termination
Date, but not to exceed the sum of (a) the accrued Yield for such Percentage
Interest, (b) the Purchase Price of such Percentage Interest, (c) the
aggregate of all other amounts owed by the Seller to the Owner of such
Percentage Interest in connection with this Agreement and (d) the accrued
Servicing Fee payable with respect to such Percentage Interest. The Agent
shall distribute the funds so received to the Owner of such Percentage
Interest first, in full payment of the accrued Yield for such Percentage
Interest (including, without limitation, the Breakage Fee, if any for such
Percentage Interest then due and payable pursuant to the terms hereof),
second, to the extent a Servicer other than WMECO or an Affiliate of WMECO
has been designated by the Agent, in payment of the accrued Servicing Fee
payable to such Servicer with respect to such Percentage Interest, third, in
reduction (to zero) of the Purchase Price of such Percentage Interest, and
fourth, in full payment of any other amounts owed by the Seller or the
Servicer to such Owner in connection with this Agreement. The Agent shall
distribute any remaining funds to the Servicer (if WMECO or an Affiliate of
WMECO) in payment of the accrued Servicing Fee payable to such Person with
respect to such Percentage Interest. If there shall be insufficient funds on
deposit for the Agent to distribute funds in payment in full of the
aforementioned amounts, the Agent shall distribute funds, first, in payment
of the accrued Yield for such Percentage Interest (but, in the case of the
Breakage Fee for such Percentage Interest, only to the extent the Agent shall
elect to pay such Breakage Fee from Collections attributable to such
Percentage Interest under this Section 2.07 rather than from other funds
pursuant to Section 2.11), second, to the extent a Servicer other than WMECO
or an Affiliate of WMECO has been designated by the Agent, in payment of the
accrued Servicing Fee payable to such Person with respect to such Percentage
Interest, third, in reduction of Purchase Price of such Percentage Interest,
fourth, in payment of other amounts payable to such Owner, and fifth, to the
Servicer (if WMECO or an Affiliate of WMECO), in payment of the accrued
Servicing Fee payable to such Person with respect to such Percentage
Interest. Following the Collection Date, the Servicer shall pay to the
Seller any remaining Collections set aside and held by the Servicer pursuant
to the first sentence of this Section 2.07.
SECTION 2.08. Deemed Collections of Receivables. If on any day the
Outstanding Balance of any Receivable is either (a) reduced or adjusted as a
result of any defective, rejected, returned, repossessed or foreclosed
merchandise, any defective, disputed, or rejected services, any discount or
any other adjustment made or performed by the Seller or any other Person
(including, without limitation, those described in the definition of
"Dilution Factors") or (b) reduced or cancelled as a result of a setoff in
respect of any claim by the Obligor thereof against the Seller or any other
Person (whether such claim arises out of the same or a related transaction or
an unrelated transaction), the Seller shall be deemed to have received on
such day a Collection of such Receivable in the amount of such reduction,
cancellation or adjustment. If on any day any of the representations or
warranties in Section 4.01(f) are no longer true with respect to a
Receivable, the Seller shall be deemed to have received on such day a
Collection of such Receivable in full. If on any day the representation and
warranty in Section 4.01(g) is no longer true the Seller shall immediately
pay to the Agent, for the benefit of the Owners, an amount sufficient to make
such representation true and accurate.
SECTION 2.09. Payments and Computations, Etc. (a) All amounts to be paid or
deposited by the Seller, WMECO or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 11:00 A.M. (New
York City time) on the day when due in lawful money of the United States in
immediately available funds to the Agent's Account. Each of the Seller,
WMECO and the Servicer shall, to the extent permitted by law, pay to the
Agent interest on all amounts not paid or deposited by it when due hereunder
at 2.0% per annum above the Base Rate as then in effect, payable on demand;
provided, however, that such interest rate shall not at any time exceed the
maximum rate permitted by applicable law. Such interest shall be retained by
the Agent except to the extent that such failure to make a timely payment or
deposit has continued beyond the date for distribution by the Agent of such
overdue amount to the Owner of a Percentage Interest, in which case such
interest accruing after such date shall be for the account of, and
distributed by the Agent to the Owners ratably in accordance with their
respective interests in such overdue amount.
All computations of interest and all computations of Yield, Liquidation
Yield, and fees hereunder shall be made on the basis of a year of 360 days
(other than with respect to any of the foregoing computations made with
respect to the Base Rate, which computations shall be made on the basis of a
365 or, in the case of a leap year, 366-day year) for the actual number of
days (including the first but excluding the last day) elapsed.
(b) Whenever any payment hereunder shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in
the computation of payment of Yield, interest or any fee payable hereunder,
as the case may be; provided, however, that, if such extension would cause
payment of Yield on, or Purchase Price of, any Percentage Interest on which
Yield accrues at the Eurodollar Rate to be made in the next following month,
such payment shall be made on the next preceding Business Day.
(c) If any purchase of a Percentage Interest requested by the Seller and
approved by the Purchaser and the Agent pursuant to Section 2.01(b) or any
selection of a subsequent Purchase Period and applicable Yield Rate for any
Percentage Interest requested by the Seller and approved by the Agent
pursuant to Section 2.01(d) is, for any reason whatsoever, not made or
effectuated, as the case may be, on the date specified therefor, the Seller
shall indemnify the relevant Owner against any loss, cost or expense incurred
by such Owner, including, without limitation, any loss (including loss of
anticipated profits, net of anticipated profits in the reemployment of such
funds in the manner determined by such Owner), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Owner to fund or maintain such Percentage Interest during such
Purchase Period.
SECTION 2.10. Fees. (a) The Seller shall pay, or cause WMECO to pay, the
Purchaser and the Agent certain fees in the amounts and on the dates set
forth in a fee letter executed among the Seller, the Agent and the Purchaser.
(b) In consideration of the purchase by the Owners of Percentage Interests
as herein provided, the Seller agrees to pay the Servicing Fee and certain
other amounts, including without limitation certain indemnities provided in
Article IX, relating to the cost of servicing the Receivables; provided that
such fee shall be payable only from Collections pursuant to, and subject to
the priority of payment set forth in, Sections 2.05 and 2.07.
SECTION 2.11. Breakage Fee and Indemnity. (a) In the event there shall
occur a reduction of the Purchase Price of any Percentage Interest or the
termination of the Purchase Period to which such Purchase Price was
allocated, in either case, prior to the date upon which the applicable
Purchase Period was originally scheduled to end, whether pursuant to Section
2.04, 2.06, 2.07, 2.08, 7.01 or otherwise, the Seller shall pay to the Agent,
for the benefit of the Owner of such Percentage Interest, upon such Owner's
demand therefor, a fee (the "Breakage Fee") equal to, in the case of any
reduction of the Purchase Price allocated to a Purchase Period or the early
termination of any such Purchase Period, the excess, if any, of (1) the Yield
that would have accrued during the remainder of such Purchase Period
subsequent to the date of such reduction or termination on that portion of
the Purchase Price allocated to such Purchase Period which is so reduced or
terminated early (such amount being the "Reduction Amount"), had not such
reduction or termination occurred, over (2) the sum of (a) to the extent the
Reduction Amount is allocated to another Purchase Period or Purchase Periods,
the Yield actually accrued on that portion of the Reduction Amount so
allocated during the remainder of such Purchase Period(s), and (b) to the
extent the Reduction Amount is not allocated to another Purchase Period, the
income, if any, actually received by such Owner from investing the portion of
the Reduction Amount not so allocated.
(b) In addition to paying the Breakage Fee as aforesaid, the Seller shall
indemnify and hold the Owners harmless for all losses, costs, liabilities and
expenses which such Owner may incur as a result of the early reduction of the
Purchase Price allocated to any Purchase Period or the early termination of
any such Purchase Period and in respect of which such Owner is not
compensated by the payment of the applicable Breakage Fee in respect thereof.
SECTION 2.12. Sharing of Payments, Etc. If any Owner shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) on account of Percentage Interests owned by it (other
than pursuant to Section 2.10(a), 2.14, 2.15 or 9.01 and other than as a
result of the differences in the timing of the applications of Collections
pursuant to Section 2.05, 2.06 or 2.07) in excess of its ratable share of
payments on account of Percentage Interests obtained by all of the Owners,
such Owner shall forthwith purchase from the other Owners such participations
in the Percentage Interests owned by them as shall be necessary to cause such
purchasing Owner to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Owner, such purchase from each
Owner shall be rescinded and each such Owner shall repay to the purchasing
Owner the purchase price paid by such purchasing Owner for such participation
to the extent of such recovery, together with an amount equal to such Owner's
ratable share (according to the proportion of (a) the amount of such Owner's
required payment to (b) the total amount so recovered from the purchasing
Owner) of any interest or other amount paid or payable by the purchasing
Owner in respect of the total amount so recovered.
SECTION 2.13. Eurodollar Rate Protection; Illegality.
(a) If the Agent is unable to obtain on a timely basis the information
necessary to determine the Eurodollar Rate for any Percentage Interest for
any Purchase Period in respect of which Yield is to accrue at the Eurodollar
Rate, then
(i) the Agent shall forthwith notify the Purchaser, the Owners and the
Seller that the interest rate cannot be determined for such Percentage
Interest for such Purchase Period, and
(ii) while such circumstances exist, the Agent shall not allocate the
Purchase Price of any additional Percentage Interest purchased during such
period or reallocate the Purchase Price allocated to any Purchase Period
ending during such period, to any Purchase Period in respect of which Yield
is to accrue at the Eurodollar Rate.
(b) If, with respect to any Percentage Interest which accrues Yield at the
Eurodollar Rate, the Purchaser or any of the applicable Owners thereof, as
the case may be, notifies the Agent that it is unable to obtain matching
deposits in the London interbank market to fund its purchase or maintenance
of such Percentage Interest or that the Eurodollar Rate applicable to such
Percentage Interest for any Purchase Period will not adequately reflect the
cost to the Purchaser or such Owner, as the case may be, of funding or
maintaining its respective Percentage Interest for such Purchase Period, then
the Agent shall forthwith so notify the Seller, whereupon the Agent shall
not, while such circumstances exist, allocate the Purchase Price of any
additional Percentage Interest purchased during such period or reallocate the
Purchase Price allocated to any Purchase Period ending during such period, to
any Purchase Period in respect of which Yield is to accrue at the Eurodollar
Rate.
(c) Notwithstanding any other provision of this Agreement, if the Purchaser
or any Owner shall notify the Agent that the introduction of or any change in
or in the interpretation of any law or regulation makes it unlawful, or any
central bank or other governmental authority asserts that it is unlawful, for
the Purchaser or such Owner, as the case may be, to fund its purchases or
maintenance of Percentage Interests at the Eurodollar Rate, then (i) as of
the effective date of such notice from the Purchaser or such Owner, as the
case may be, to the Agent, the obligation or ability of the Purchaser or such
Owner, as the case may be, to fund its purchase or maintenance of Percentage
Interests at the Eurodollar Rate shall be suspended until the Purchaser or
such Owner, as the case may be, notifies the Agent that the circumstances
causing such suspension no longer exist and (ii) the Purchase Price of each
Percentage Interest of the Purchaser or such Owner allocated to a Purchase
Period which accrues interest at the Eurodollar Rate shall either (a) if the
Purchaser or such Owner, as the case may be, may lawfully continue to
maintain such Percentage Interest until the last day of the applicable
Purchase Period, be reallocated on the last day of such Purchase Period to
another Purchase Period in respect of which the Purchase Price allocated
thereto accrues Yield at a Yield Rate other than the Eurodollar Rate or (b)
if the Purchaser or such Owner, as the case may be, shall determine that it
may not lawfully continue to maintain such Percentage Interest until the end
of the applicable Purchase Period (at which time it may be reallocated to
another Purchase Period in accordance with Section 2.01(d) and this Section
2.13(c)), be deemed to accrue Yield at the Base Rate from the effective date
of such notice until the end of such Purchase Period.
SECTION 2.14. Increased Costs; Capital Adequacy. (a) If, due to either (i)
the introduction of or any change (other than any change by way of imposition
or increase of reserve requirements included in the Eurodollar Reserve
Percentage) in or in the interpretation of, any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall
be any increase in the cost to the Agent, any Owner or any Affiliate thereof
(each of which shall be an "Affected Party") of agreeing to make, making or
funding purchases of and/or reinvestments in Percentage Interests hereunder
or maintaining Percentage Interests hereunder, then the Seller shall from
time to time, upon demand by such Affected Party, pay to such Affected Party
additional amounts sufficient to compensate such Affected Party for any such
increased costs.
(b) If either (i) the introduction of, or any change in or in the
interpretation of, any law or regulation or (ii) the compliance by any
Affected Party with any guideline or request from any central bank or other
governmental authority issued after the date of this Agreement (whether or
not having the force of law), affects or would affect the amount of capital
required or expected to be maintained by such Affected Party, and such
Affected Party determines that the amount of such capital is increased by or
based upon its obligations hereunder or its purchasing and maintaining
Percentage Interests hereunder or, in each case, under similar financial
arrangements of this type, then, upon demand by such Affected Party (with a
copy of such demand to the Agent), the Seller shall pay to the Agent for the
account of such Affected Party, from time to time as specified by such
Affected Party, additional amounts sufficient to compensate such Affected
Party in the light of such circumstances, to the extent that such Affected
Party reasonably determines such increase in capital to be allocable to such
Affected Party's obligations hereunder or its purchasing, funding or
maintaining Percentage Interests hereunder.
(c) If as a result of any event or circumstance similar to those described
in Section 2.14(a) or 2.14(b), any Affected Party is required to compensate a
bank or other financial institution providing liquidity support, credit
enhancement or other similar support to such Affected Party in connection
with this Agreement or the funding or maintenance of purchases of Percentage
Interests hereunder, then upon demand by such Affected Party (with a copy of
such demand to the Agent), the Seller shall pay to such Affected Party such
additional amount or amounts as may be necessary to reimburse such Affected
Party for any amounts paid by it.
(d) In determining any amount provided for in this Section 2.14, the
Affected Party may use any reasonable averaging and attribution methods. Any
Affected Party making a claim under this Section 2.14 shall submit to the
Seller a certificate as to such additional or increased cost or reduction,
which certificate shall be conclusive absent demonstrable error.
SECTION 2.15. Taxes. (a) Any and all payments by the Seller or the
Servicer hereunder shall be made, in accordance with Section 2.09, free and
clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of the Purchaser, each Owner and
the Agent, Excluded Taxes for such Person (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes". If the Seller or the Servicer shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Owner or the Agent, (i) the Seller shall make an additional
payment to such Owner or the Agent, as the case may be, in an amount
sufficient so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.15),
such Owner or the Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Seller
or the Servicer, as the case may be, shall make such deductions and (iii) the
Seller or the Servicer, as the case may be, shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Seller agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Other Taxes").
(c) The Seller will indemnify each Owner and the Agent for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section 2.15)
paid by such Owner or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto; provided that an Owner or the Agent, as appropriate, making
a demand for indemnity payment shall provide the Seller, at its address
referred to in Section 10.02, with a certificate from the relevant taxing
authority or from a responsible officer of such Owner or the Agent stating or
otherwise evidencing that such Owner or the Agent has made payment of such
Taxes or Other Taxes and will provide a copy of or extract from
documentation, if available, furnished by such taxing authority evidencing
assertion or payment of such Taxes or Other Taxes. This indemnification
shall be made within ten days from the date such Owner or the Agent (as the
case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes or Other Taxes,
the Seller or the Servicer, as the case may be, will furnish to the Agent, at
its address referred to in Section 10.02, appropriate evidence of payment
thereof.
(e) The Agent and each Owner that is not created or organized under the laws
of the United States or a political subdivision thereof shall, to the extent
that it may then do so under applicable laws and regulations, deliver to the
Seller (with, in the case of each Owner, a copy to the Agent) (i) within 15
days after the date hereof, or, if later, the date on which such Owner
becomes an Owner pursuant to Section 10.04 hereof, two (or such other number
as may from time to time be prescribed by applicable laws or regulations)
duly completed copies of IRS Form 4224 or Form 1001 (or any successor forms
or other certificates or statements which may be required from time to time
by the relevant United States taxing authorities or applicable laws or
regulations), as appropriate, to permit the Seller to make payments hereunder
for the account of the Agent or such Owner, as the case may be, without
deduction or withholding of United States federal income or similar taxes and
(ii) upon the obsolescence of, or after the occurrence of any event requiring
a change in, any form or certificate previously delivered pursuant to this
Section 2.15(e), copies (in such numbers as may from time to time be
prescribed by applicable laws or regulations) of such additional, amended or
successor forms, certificates or statements as may be required under
applicable laws or regulations to permit the Seller to make payments
hereunder for the account of the Agent or such Owner, as the case may be,
without deduction or withholding of United States federal income or similar
taxes.
(f) For any period with respect to which an Owner or the Agent has failed to
provide the Seller with the appropriate form, certificate or statement
described in Section 2.15(e) (other than if such failure is due to a change
in law occurring after the date of this Agreement), the Agent or such Owner,
as the case may be, shall not be entitled to indemnification under Section
2.15(a), 2.15(b) or 2.15(c) with respect to Taxes imposed by the United
States.
(g) Within 30 days of the written request of the Seller therefor, the Agent
and each Owner, as appropriate, shall execute and deliver to the Seller such
certificates, forms or other documents which can be furnished consistent with
the facts and which are reasonably necessary to assist the Seller in applying
for refunds of taxes remitted hereunder.
(h) If, in connection with an agreement or other document providing
liquidity support, credit enhancement or other similar support to any Owner
in connection with this Agreement or the funding or maintenance of purchases
of Percentage Interests hereunder, such Owner is required to compensate a
bank or other financial institution in respect of taxes under circumstances
similar to those described in this Section 2.15 then, within ten days after
demand by such Owner, the Seller shall pay to such Owner such additional
amount or amounts as may be necessary to reimburse such Owner for any amounts
paid by it.
(i) Without prejudice to the survival of any other agreement of the Seller
hereunder, the agreements and obligations of the Seller contained in this
Section 2.15 shall survive the termination of this Agreement.
SECTION 2.16. Security Interest. The Seller hereby grants to the Purchaser,
for its own benefit and for the ratable benefit of the Agent and each of the
Owners, a security interest in (i) all of the Seller's interests in the
Purchase and Sale Agreement and each other Transaction Document, the
Receivables, the Related Security, and the Collections, (ii) the Collection
Account and all funds therein and all investments and other items therein or
attributable thereto, and (iii) all proceeds of the foregoing (the items
described in items (i), (ii) and (iii) being the "Collateral"), to secure
payment of all fees and expenses, indemnity obligations and all other
obligations owed hereunder to the Agent and/or the Owners by the Seller or
the Servicer (whether such obligations are now existing or hereafter
arising). It is understood and agreed that this Section 2.16 does not secure
or guaranty the obligations of an Obligor to pay any Receivable. The
immediately preceding sentence shall not limit the extent to which any other
provision of this Agreement creates a claim against the Seller, WMECO or the
Servicer in respect of any Receivable (for reasons other than the Obligor's
credit problems), or limit the extent to which the Collateral secures such
claim.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The initial
purchase hereunder is subject to the condition precedent that the Agent shall
have received on or before the date of such purchase the items listed in
Schedule I, each (unless otherwise indicated) dated as of the date of
delivery (provided that such date is no later than the date of the initial
purchase), in form and substance satisfactory to the Agent and the
Purchasers.
SECTION 3.02. Conditions Precedent to All Purchases and Reinvestments. Each
purchase (including the initial purchase) from the Seller by the Purchaser
and the right of the Servicer to reinvest in Eligible Receivables on behalf
of the Purchaser those Collections allocable to a Percentage Interest
pursuant to Section 2.05 shall be subject to the further conditions precedent
that: (a) with respect to any such purchase (other than the initial
purchase), on or prior to the date of such purchase, the Servicer shall have
delivered to the Agent, in form and substance satisfactory to the Agent, a
completed Investor Report dated within ten days prior to the date of such
purchase and containing such additional information as may be reasonably
requested by the Agent; (b) on the date of such purchase or reinvestment the
following statements shall be true and the Seller by accepting the amount of
such purchase or by receiving the proceeds of such reinvestment shall be
deemed to have certified that:
(i) The representations and warranties contained in Section 4.01 and Section
4.02 are correct on and as of such day as though made on and as of such date,
and
(ii) The representations and warranties of WMECO under Section 5.1 of
the Purchase and Sale Agreement (other than Excluded Representations) are
correct on and as of such date as though made on and as of such date; and
(iii) No event or condition has occurred and is continuing, or would
result from such purchase or reinvestment, which would (a) cause the
Termination Date to occur or (b) constitute an Event of Termination or would
constitute an Event of Termination but for the requirement that notice be
given or time elapse or both, and
(iv) WMECO's senior secured debt shall be rated at least the Required
Rating, and
(v) No law or regulation shall prohibit, and no order, judgment or
decree of any federal, state or local court or governmental body, agency or
instrumentality shall prohibit or enjoin, the making of such purchase or
reinvestment by the Purchaser or any applicable Owner in accordance with the
provisions hereof, and
(c) the Agent shall have received such other approvals, opinions or documents
as the Agent may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller. The Seller
represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of Connecticut and is duly qualified to do
business, and is in good standing, in every other jurisdiction in which the
failure to be so qualified could reasonably be expected to have a Material
Adverse Effect.
(b) The execution, delivery and performance by the Seller of this Agreement
and all other Transaction Documents to be delivered by it, including the
Seller's use of the proceeds of purchases and reinvestments, are within the
Seller's corporate powers, have been duly authorized by all necessary
corporate action, do not contravene (i) the Seller's charter or by-laws, (ii)
any law, rule or regulation applicable to the Seller, (iii) any contractual
restriction binding on or affecting the Seller or its property or (iv) any
order, writ, judgment, award, injunction or decree binding on or affecting
the Seller or its property, and do not result in or require the creation of
any lien, security interest or other charge or encumbrance upon or with
respect to any of its properties (other than in favor of the Agent for the
benefit of the Owners with respect to the Receivables and the Related
Security and Collections associated therewith); and no transaction
contemplated hereby requires compliance with any bulk sales act or similar
law. This Agreement and each of the other Transaction Documents to which it
is a party have been duly executed and delivered by the Seller.
(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Seller of this Agreement,
any Transaction Document or any other document or instrument to be delivered
hereunder, except for (i) such items that have been obtained and are in full
force and effect and (ii) the filing of the UCC financing statements
described in Schedule I.
(d) This Agreement and each other Transaction Document or instrument
delivered by it hereunder constitute the legal, valid and binding obligation
of the Seller enforceable against the Seller in accordance with its terms.
(e) No proceeds of any sale of Percentage Interests will be used by it to
acquire any security in any transaction which is subject to Section 13 or 14
of the Securities Exchange Act of 1934, as amended.
(f) Each Receivable, together with any contract related thereto, and the
Collateral shall, at all times, be owned by the Seller free and clear of any
Adverse Claim except as created by this Agreement, and upon each purchase and
reinvestment, the Owner making such purchase or reinvestment, as the case may
be, shall acquire a valid and perfected first priority undivided percentage
ownership interest to the extent of the pertinent Percentage Interest in each
Receivable then existing or thereafter arising and in the Related Security
(other than Security Deposits) and Collections with respect thereto, free and
clear of any Adverse Claim except as provided hereunder. No effective
financing statement or other instrument similar in effect covering any
Receivable, the Related Security, the Collections or the Collateral with
respect thereto shall at any time be on file in any recording office except
such as may be filed in favor of the Purchaser relating to this Agreement or
the Purchase and Sale Agreement.
(g) At all times on or prior to the Termination Date, the Coverage Ratio
shall equal or exceed 102%.
(h) No Investor Report, information, exhibit, financial statement, document,
book, record or report furnished or to be furnished by the Seller or the
Servicer to the Agent or any Owner in connection with this Agreement is or
will be inaccurate in any material respect as of the date it is or shall be
dated or (except as otherwise disclosed to the Agent or such Owner, as the
case may be, at such time) as of the date so furnished, and no such document
contains or will contain any material misstatement of fact or omits or shall
omit to state a material fact or any fact necessary to make the statements
contained therein not misleading. Any Receivable described as an Eligible
Receivable in any Investor Report or such other information, exhibit,
financial statement, document, book, record or report satisfies the
requirements of the definition of "Eligible Receivable." WMECO and the
Servicer have management information systems that are adequate to generate
reliable statistical information with respect to the Receivables, including
such information as is required to be delivered pursuant to the terms of this
Agreement.
(i) The principal place of business and chief executive office of the Seller
and WMECO and the offices where the Seller and WMECO keeps all of the Records
are located at the addresses specified in Schedule IV (or at such other
locations as to which the notice and other requirements specified in Section
6.09 shall have been satisfied). WMECO has places of business in more than
one town in Massachusetts.
(j) All Obligors have been (or, in the case of Obligors with respect to
Unbilled Receivables, will be) instructed to make all payments in respect of
Receivables to WMECO's post office box in Hartford, Connecticut or to a
Payment Center, and such payments are (i) processed by the Servicer in
Wethersfield, Connecticut and (ii) deposited to the Collection Account within
one Business Day of the Servicer's receipt thereof. The Seller will make
commercially reasonable efforts to prevent funds other than Collections from
being deposited to the Collection Account.
(k) All Obligors (other than Obligors in respect of Unbilled Receivables)
are listed on the General Trial Balance. The methodology for determining the
Outstanding Balance of Unbilled Receivables is accurately described in
Exhibit B, and such description does not omit any fact necessary to make the
statements contained therein not misleading. The Outstanding Balance of
Unbilled Receivables shall be calculated in accordance with the methodology
described in Exhibit B.
(l) Except as described in Schedule III, neither the Seller nor WMECO has
any trade names, fictitious names, assumed names or "doing business as" names
other than (with respect to WMECO only) those names with respect to which it
has satisfied its obligations under Section 6.09.
(m) The Seller's pro forma balance sheet as of the date of this Agreement,
certified by its chief financial officer, chief accounting officer, Treasurer
or Assistant Treasurer, copies of which have been furnished to the Purchaser
and the Agent, fairly presents the Seller's assets and liabilities at such
date.
(n) The terms of the Receivables have not been extended or modified, except
as permitted under the Credit and Collection Policy.
(o) The Credit and Collection Policy has not been materially changed in any
way which might reasonably lead to a Material Adverse Effect.
(p) No use of any proceeds of any sale of Percentage Interests by the Seller
will conflict with or contravene any of Regulations G, T, U and X promulgated
by the Board of Governors of the Federal Reserve System.
(q) The Seller has (i) obtained legal and equitable title to the Receivables
and Related Security and has the legal right to sell such Receivables and
such Related Security free and clear of any Adverse Claims (other than in
favor of the Agent either directly or as the assignee of the Seller) and (ii)
given reasonably equivalent value to WMECO for such transfer, and no such
transfer shall have been made on account of an antecedent debt owed by WMECO
to the Seller or shall be voidable under any Section of the Bankruptcy Reform
Act of 1978 (11 U.S.C. Section 101 et seq.), as amended (the "Bankruptcy Code").
(r) On the date of the first purchase hereunder (both before and after
giving effect to the purchase on such date), each of the Seller and WMECO
have assets which are greater than its liabilities, and is able to pay its
debts as they become due.
(s) The authorized capital stock of the Seller consists of twenty thousand
(20,000) shares of common stock, without par value ("Seller Common Stock"),
one hundred shares of which are currently issued and outstanding. All of
such outstanding shares of Seller Common Stock are validly issued, fully paid
and nonassessable and are owned (beneficially and of record) by WMECO.
SECTION 4.02. Representations and Warranties of the Servicer. The Servicer
represents and warrants as follows:
(a) The Servicer is a corporation duly incorporated, validly existing and in
good standing under the laws of Massachusetts and is duly qualified to do
business, and is in good standing, in every other jurisdiction in which the
failure to be so qualified could reasonably be expected to have a Material
Adverse Effect.
(b) The execution, delivery and performance by the Servicer of this
Agreement and all other documents to be delivered by it hereunder are within
the Servicer's corporate powers, have been duly authorized by all necessary
corporate action, do not contravene (i) the Servicer's charter or by-laws,
(ii) any law, rule or regulation applicable to the Servicer, (iii) any
contractual restriction binding on or affecting the Servicer or its property
or (iv) any order, writ, judgment, award, injunction or decree binding on or
affecting the Servicer or its property, and do not result in or require the
creation of any lien, security interest or other charge or encumbrance upon
or with respect to any of its properties. The Agreement has been duly
executed and delivered by the Servicer.
(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Servicer of this Agreement
or any other document or instrument to be delivered hereunder.
(d) This Agreement and each other document or instrument delivered by it
hereunder constitutes the legal, valid and binding obligation of the Servicer
enforceable against the Servicer in accordance with its terms.
(e) No Investor Report (if prepared by the Servicer, or to the extent that
information contained therein is supplied by the Servicer), information,
exhibit, financial statement, document, book, record or report furnished or
to be furnished by the Servicer to the Agent or any Owner in connection with
this Agreement is or will be inaccurate in any material respect as of the
date it is or shall be dated or (except as otherwise disclosed to the Agent
or such Owner, as the case may be, at such time) as of the date so furnished,
and no such document contains or will contain any material misstatement of
fact or omits or shall omit to state a material fact or any fact necessary to
make the statements contained therein not misleading.
(f) All Obligors (other than Obligors in respect of Unbilled Receivables)
are listed on the General Trial Balance. The methodology for determining the
Outstanding Balance of Unbilled Receivables is accurately described in
Exhibit B, and such description does not omit any fact necessary to make the
statements contained therein not misleading. The Outstanding Balance of
Unbilled Receivables shall be calculated in accordance with the methodology
described in Exhibit B.
(g) The terms of the Receivables have not been extended or modified, except
as permitted under the Credit and Collection Policy.
(h) The Credit and Collection Policy has not been materially changed in any
way which might reasonably lead to a Material Adverse Effect.
(i) The Servicer has management information systems that are adequate to
generate reliable statistical information with respect to the Receivables,
including such information as is required to be delivered pursuant to the
terms of this Agreement.
(j) Each Receivable, together with any contract related thereto, and the
Collateral shall, at all times, be owned by the Seller free and clear of any
Adverse Claim except as created by this Agreement, and upon each purchase and
reinvestment, the Owner making such purchase or reinvestment, as the case may
be, shall acquire a valid and perfected first priority undivided percentage
interest to the extent of the pertinent Percentage Interest in each
Receivable then existing or thereafter arising and in the Related Security
(other than Security Deposits) and Collections with respect thereto, free and
clear of any Adverse Claim except as provided hereunder. No effective
financing statement or other instrument similar in effect covering any
Receivable, the Related Security, the Collections or the Collateral with
respect thereto shall at any time be on file in any recording office except
such as may be filed in favor of the Seller or the Purchaser relating to this
Agreement or the Purchase and Sale Agreement.
ARTICLE V
GENERAL COVENANTS OF THE SELLER, WMECO AND THE SERVICER
SECTION 5.01. General Seller Covenants. The Seller covenants as follows:
(a) Compliance with Laws; Preservation of Corporate Existence. The Seller
will comply in all material respects with all applicable laws, and all
governmental rules, regulations and orders and preserve and maintain its
corporate existence, rights, franchises, qualifications and privileges, in
each case to the extent that the failure to do so could reasonably be
expected to cause a Material Adverse Effect.
(b) Sales, Liens, Etc. Except as otherwise provided herein or in any other
Transaction Document, the Seller will not sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any Receivable, the related contract
(if any), any Collections, any Related Security or the Collateral, or upon or
with respect to any other account to which any Collections of any Receivable
are sent, or assign any right to receive income in respect thereof.
(c) General Reporting Requirements. The Seller will provide (or cause the
Servicer to provide) to the Agent (in sufficient copies for each Owner) the
following:
(i) as soon as available and in any event within 50 days after the end of
each of the first three quarters of each fiscal year of the Seller, the
balance sheet and income statement of the Seller in reasonable detail and
duly certified (subject to year-end adjustments) by the chief financial
officer, chief accounting officer, Treasurer or Assistant Treasurer of the
Seller as having been prepared in accordance with GAAP and on a basis
consistent with the financial statements referred to in Section 6.1(d) of the
Purchase and Sale Agreement;
(ii) as soon as available and in any event within 105 days after the end
of each fiscal year of the Seller, the balance sheet and income statement of
the Seller, in reasonable detail and duly certified by the chief financial
officer, chief accounting officer, Treasurer or Assistant Treasurer of WMECO
and the Seller as having been prepared in accordance with GAAP and on a basis
consistent with the financial statements referred to in Section 6.1(d) of the
Purchase and Sale Agreement;
(iii) promptly after the filing or receiving thereof, copies of all
reports and notices with respect to any Reportable Event defined in Article
IV of ERISA which the Seller files under ERISA with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation or the U.S. Department of
Labor or which the Seller receives from such Corporation;
(iv) as soon as possible and in any event within two days after the
occurrence of each Event of Termination or Unmatured Termination Event, a
statement of the chief financial officer, chief accounting officer, Treasurer
or any Assistant Treasurer of the Seller setting forth details of such Event
of Termination or Unmatured Termination Event, and the action which the
Seller has taken and proposes to take with respect thereto; provided, that in
the case of an event described in Section 7.01(g), such statement shall be
provided to the Agent immediately;
(v) promptly following the Agent's request therefor, such other information
respecting the Receivables or the conditions or operations, financial or
otherwise, of the Parent, the Seller, WMECO, the Servicer or any of their
subsidiaries as the Agent may from time to time reasonably request in writing
in order to protect the interests of the Agent or any Owner in connection
with this Agreement; and
(vi) together with the quarterly and annual financial statements of the
Seller to be delivered pursuant to the immediately preceding clauses (i) and
(ii) respectively, a certificate from the Seller's chief financial officer,
chief accounting officer, Treasurer or any Assistant Treasurer, in the case
of the quarterly financial statements, and independent certified public
accountants, in the case of the annual financial statements, stating, in each
case, (a) that such Person is familiar with the terms of the Transaction
Documents and that in examining such financial statements, such Person did
not become aware of any fact or condition which would constitute an Event of
Termination, except for those, if any, described in reasonable detail or
Unmatured Termination Event in such certificate and (b) that, as of the date
of such financial statements, the representations and warranties of the
Seller set forth in Section 4.01(g) are true and correct.
(d) Merger, Etc. (i) The Seller will not merge or consolidate with, or
convey, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions), all or substantially all of its assets
(whether now owned or hereafter acquired), or acquire all or substantially
all of the assets or capital stock or other ownership interest of any Person.
(ii) The Seller will not make, incur or suffer to exist an investment in,
equity contribution to, loan, credit or advance to, or payment obligation in
respect of the deferred purchase price of property from, any other Person,
except for advances to WMECO permitted by Section 5.01(j).
(iii) The Seller will not create any direct or indirect subsidiary or
otherwise acquire direct or indirect ownership of any equity interests in any
other Person.
(e) ERISA Matters. The Seller will not (i) engage in any prohibited
transaction (as defined in Section 4975 of the Code and Section 406 of ERISA)
for which an exemption is not available or has not previously been obtained
from the United States Department of Labor; (ii) permit to exist any
accumulated funding deficiency (as defined in Section 302(a) of ERISA and
Section 412(a) of the Code) or funding deficiency with respect to any Benefit
Plan other than a Multiemployer Plan; (iii) fail to make any payments to any
Multiemployer Plan that the Seller may be required to make under the
agreement relating to such Multiemployer Plan or any law pertaining thereto;
(iv) terminate any Benefit Plan so as to result in any liability; or (v)
permit to exist any occurrence of any reportable event described in Title IV
of ERISA which represents a material risk of a liability of the Seller under
ERISA or the Code, if such prohibited transactions, accumulated funding
deficiencies, payments, terminations and reportable events occurring within
any fiscal year of the Seller, in the aggregate, involve a payment of money
or an incurrence of liability by the Seller under Title IV of ERISA in an
amount in excess of $5,000,000.
(f) Marking of Records. At its expense, the Seller will xxxx (or cause the
Servicer to xxxx) its master data processing records relating to the
Receivables so that reports generated from such records include the following
legend:
THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO WMECO RECEIVABLES
CORPORATION PURSUANT TO A PURCHASE AND SALE AGREEMENT, DATED AS OF MAY 22,
1997, AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME, BETWEEN WESTERN
MASSACHUSETTS ELECTRIC COMPANY AND WMECO RECEIVABLES CORPORATION; AND
UNDIVIDED, FRACTIONAL OWNERSHIP INTERESTS IN THE RECEIVABLES DESCRIBED HEREIN
HAVE BEEN SOLD BY WMECO RECEIVABLES CORPORATION TO MONTE ROSA CAPITAL
CORPORATION PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT, DATED AS OF MAY 22,
1997, AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AMONG WMECO RECEIVABLES
CORPORATION, WESTERN MASSACHUSETTS ELECTRIC COMPANY, MONTE ROSA CAPITAL
CORPORATION AND UNION BANK OF SWITZERLAND, NEW YORK BRANCH, AS THE AGENT.
(g) The Seller will cause the representation in Section 4.01(j) to be true
at all times.
(h) Change in Transaction Documents. The Seller shall not amend, modify,
waive or terminate, or suffer to exist any matured or unmatured default
under, any terms or conditions of any of the Transaction Documents to which
it is a party without the consent of the Agent.
(i) Performance and Enforcement of Transaction Documents. The Seller shall
timely perform the obligations required to be performed by it under each of
the Transaction Documents. The Seller shall not (i) exercise any of its
rights under the Purchase and Sale Agreement in a manner that could prejudice
the rights or interests of the Agent or the Owners in any way, (ii) exercise
any of its rights or remedies under the Purchase and Sale Agreement during
the continuance of an Event of Termination or Unmatured Termination Event, or
(iii) initiate any action against WMECO in connection with the Purchase and
Sale Agreement, unless in each case the Agent shall have given its prior
written consent. If instructed by the Agent, the Seller shall exercise any
right or remedy available to it, or initiate any action thereunder, pursuant
to the Purchase and Sale Agreement or under applicable law.
(j) Restricted Payments. (i) Except in accordance with this Section
5.01(k), the Seller shall not (A) purchase or redeem any shares of its
capital stock, (B) declare or pay any Dividend or set aside any funds for any
such purpose, (C) prepay, purchase or redeem any subordinated indebtedness of
the Seller, (D) lend or advance any funds or (E) pay the deferred WRC
Purchase Price or repay any other loans or advances to, for or from WMECO or
any of its Affiliates (other than the Seller). Actions of the type described
in this clause (i) are herein collectively called "Restricted Payments".
(ii) Subject to the limitations set forth in clause (iii) below, the Seller
may make Restricted Payments so long as such Restricted Payments are made
only to WMECO and only in one or more of the following ways:
(A) the Seller may make cash payments or deemed payments (including
prepayments) on the WRC Purchase Price in accordance with the terms of the
Purchase and Sale Agreement; and
(B) if no amounts are then outstanding with respect to the WRC Purchase
Price or in regards to any fees, including Servicing Fees, the Seller may (1)
declare and pay Dividends and (2) permit to be outstanding WMECO's
obligations to return funds under Section 3.1 of the Purchase and Sale
Agreement.
(iii) the Seller shall not pay, make or declare any Restricted Payment
(including any Dividend) if, after giving effect thereto, (x) any Event of
Termination or Unmatured Termination Event shall have occurred and be
continuing, (y) the Termination Date has occurred, or (z) the Coverage Ratio
shall be less than 102%.
(k) Priority of Payments. The Seller shall apply Collections in respect of
the Receivables which are payable to the Seller pursuant to Section 2.05 and
2.07 to make payments in the following order of priority: first, the payment
of its expenses (including, without limitation, amounts payable to the Owners
and the Agent hereunder), second, to the extent permitted pursuant to
subsection (k) above, the payment of the outstanding WRC Purchase Price, and
fourth, other legal and valid corporate purposes.
(l) Restrictions on Transaction Documents. The Seller shall not enter into,
execute and deliver, or otherwise become bound by, any agreement, instrument,
document or other arrangement that restricts the right of the Seller to
amend, supplement, amend and restate or otherwise modify, or to extend or
renew, or to waive any right under, this Agreement or any other Transaction
Document.
(m) Debt. The Seller shall not (i) create, incur or permit to exist, any
Debt of the Seller or (ii) cause or permit to be issued for its account any
letters of credit or bankers' acceptances, except in each case for Debt and
other liabilities incurred pursuant to the Transaction Documents.
(n) Segregation. The Seller shall use commercially reasonable efforts to
prevent the deposit into the Collection Account of any funds other than
Collections.
SECTION 5.02. Servicer Covenants. The Servicer covenants as follows:
(a) Compliance with Laws; Preservation of Corporate Existence. The Servicer
will comply in all material respects with all applicable laws, and all
governmental rules, regulations and orders and preserve and maintain its
corporate existence, rights, franchises, qualifications and privileges, in
each case to the extent that the failure to do so could reasonably be
expected to cause a Material Adverse Effect.
(b) Merger, etc. The Servicer will not merge or consolidate with, or
convey, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions), all or substantially all of its assets
(whether now owned or hereafter acquired), or acquire all or substantially
all of the assets or capital stock or other ownership interest of any Person
(any such transaction, acquisition or other action hereinafter referred to as
a "Reorganization"), except that the Servicer may enter into a Reorganization
if the following conditions are satisfied:
(i) the survivor (such term referring to the survivor of a merger or
consolidation as well as the acquirer of assets, capital stock or other
ownership interests) of such Reorganization is organized under the laws of,
and is resident in, the United States or one of the states therein;
(ii) the senior secured debt of such survivor shall be rated at least BBB-
by Standard & Poor's and Baa3 by Xxxxx'x;
(iii) if the Servicer is not the survivor of the Reorganization, such
survivor shall have assumed all of the obligations of the Servicer under or
in connection with this Agreement pursuant to an agreement in form and
substance satisfactory to the Agent;
(iv) if the Servicer is not the survivor of the Reorganization, the Agent
shall have received opinions of counsel satisfactory to the Agent with
respect to the matters described in the forms of opinion attached hereto as
Exhibits E-1 and E-2, mutatis mutandis, and any modifications or additions to
Uniform Commercial Code filings or other security arrangements requested by
the Agent shall have been completed; and
(v) each of Standard & Poor's and Xxxxx'x shall have confirmed that such
merger or consolidation will not cause the ratings of the Purchaser's
commercial paper notes to be reduced or withdrawn.
(c) Marking of Records. At its expense, the Servicer will xxxx its master
data processing records relating to the Receivables so that reports generated
from such records include the legend described in Section 5.01(f).
(d) Restrictions on Transaction Documents. The Servicer shall not enter
into, execute and deliver, or otherwise become bound by, any agreement,
instrument, document or other arrangement that restricts the right of the
Servicer to amend, supplement, amend and restate or otherwise modify, or to
extend or renew, or to waive any right under, this Agreement or any other
Transaction Document.
(e) Segregation. The Servicer shall use commercially reasonable efforts to
prevent the deposit into the Collection Account of any funds other than
Collections. If the Servicer receives notice that funds other than
Collections have been deposited in the Collection Account at a time when a
WMECO Obligation is in default, as provided in Section 7.2(b) of the Purchase
and Sale Agreement the Servicer shall deliver such amount to the Agent to pay
such WMECO Obligation and to otherwise secure payment of the WMECO
Obligations. The Agent shall hold such amount until all WMECO Obligations
(whether fixed or contingent) are paid in full. If the Servicer receives
such notice at a time when no WMECO Obligation is in default, the Servicer
shall promptly remit such amount to WMECO.
(f) Payment Instructions. The Servicer will cause the representation in
Section 4.01(j) to be correct at all times, except that the location of the
post office box and/or processing described in such Section, and the identity
of the Collection Account, may be changed with the consent of the Agent, upon
30 days' prior written notice to the Agent, if (i) the requirements of
Section 6.09 are satisfied, (ii) the Collection Account continues to be a
single-purpose account for the deposit of Collections, (iii) the Collection
Account continues to be in the name of the Purchaser, and under the exclusive
ownership and control of the Purchaser, and (iv) the bank at which the
Collection Account is maintained shall have received, executed and returned a
Bank Notice.
SECTION 5.03. Separate Corporate Existence of the Seller. WMECO and the
Seller hereby acknowledge that the Owners and the Agent are entering into the
transactions contemplated by this Agreement in reliance upon the Seller's
identity as a legal entity separate from WMECO. Therefore, from and after
the date hereof, the Seller and WMECO shall take all reasonable steps to
continue the Seller's identity as a separate legal entity and to make it
apparent to third Persons that the Seller is an entity with assets and
liabilities distinct from those of WMECO and any other Person, and is not a
division of WMECO or any other Person. Without limiting the generality of
the foregoing and in addition to and consistent with the covenant set forth
in Section 5.01(a), the Seller and WMECO shall take such actions and WMECO
shall cause the Seller to take such actions, as shall be required in order
that:
(a) The Seller will be a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation to acquiring
Receivables from WMECO, entering into agreements for the servicing of such
Receivables, selling undivided percentage interests in Receivables hereunder,
and conducting such other activities as it deems necessary or appropriate to
carry out its primary activities;
(b) Not less than two members of the Seller's Board of Directors shall be
Independent Directors. The Seller's Board of Directors shall not approve, or
take any other action to cause, the commencement of a voluntary case or other
proceeding with respect to the Seller under any applicable bankruptcy,
insolvency, reorganization, debt arrangement, dissolution or other similar
law, or the appointment of or taking possession by, a receiver, liquidator,
assignee, trustee, custodian, or other similar official for the Seller
unless, in each case, all of the Independent Directors shall approve the
taking of such action in writing prior to the taking of such action. The
Independent Directors' fiduciary duty shall be to the Seller (and its
creditors) and, to the extent permitted by applicable law, not to the
Seller's shareholders in respect of any decision of the type described in the
preceding sentence. In the event an Independent Director resigns or
otherwise ceases to be a director of the Seller, there shall be selected a
replacement Independent Director, and no act of the Seller requiring the
unanimous consent of its Board of Directors shall be taken until a
replacement Independent Director shall have been so selected and elected.
The Seller's certificate of incorporation shall reflect the requirements of
this Section 5.03(b);
(c) No Independent Director shall at any time serve as a trustee in
bankruptcy for WMECO or any of its Affiliates (other than the Seller);
(d) All employees, consultants and agents of the Seller will be compensated
from the Seller's own bank accounts for services provided to the Seller
except as provided herein in respect of fees payable to the Servicer. The
Seller will engage no agents other than a Servicer for the Receivables, which
Servicer will be fully compensated for its services to the Seller by payment
of the fees payable to the Servicer hereunder;
(e) The Seller will contract with the Servicer to perform for the Seller all
operations required on a daily basis to service its Receivables. The Seller
will pay the Servicer the Servicing Fee provided for herein. The Seller will
not incur any material indirect or overhead expenses for items shared between
the Seller and WMECO or any of its Affiliates (other than the Seller) which
are not reflected in the fees payable to the Servicer hereunder. To the
extent, if any, that the Seller and WMECO or any of its Affiliates (other
than the Seller) share items of expenses not reflected in the fees payable to
the Servicer hereunder, such as legal, auditing and other professional
services, such expenses will be allocated to the extent practical on the
basis of actual use or the value of services rendered, and otherwise on a
basis reasonably related to the actual use or the value of services rendered,
it being understood that WMECO shall pay all expenses relating to the
preparation, negotiation, execution and delivery of this Agreement and each
other Transaction Document, including, without limitation, legal, commitment,
agency and other fees;
(f) The Seller's operating expenses will be paid by the Seller from its own
assets and not by WMECO or any of its Affiliates (other than the Seller);
(g) The Seller will have its own stationery and telephone number;
(h) The Seller's books and records will be maintained separately from those
of WMECO and each of its Affiliates (other than the Seller);
(i) The Seller will have its own financial statements prepared and any
financial statement of WMECO or any of its Affiliates (other than the Seller)
which is consolidated to include the Seller will contain detailed notes
clearly indicating that (A) the Seller has acquired the Receivables from
WMECO, and (B) the Seller is a separate corporate entity with creditors who
have purchased and otherwise received ownership and security interests in the
Seller's assets;
(j) The Seller's assets and liabilities will be maintained in a manner that
facilitates their identification and segregation from those of WMECO or any
of its Affiliates (other than the Seller);
(k) The Seller will strictly observe corporate formalities in its dealings
with WMECO and each of its Affiliates, and funds or other assets of the
Seller will not be commingled with those of WMECO or any of its Affiliates
(other than the Seller). The Seller shall not maintain joint bank accounts
or other depository accounts to which WMECO or any of its Affiliates (other
than the Seller) has independent access (other than WMECO in its capacity as
Servicer). None of the Seller's funds will at any time be pooled with any
funds of WMECO or any of its Affiliates (other than the Seller);
(l) The Seller will maintain arm's length relationships with WMECO and each
of its Affiliates (other than the Seller). If WMECO or any of its Affiliates
(other than the Seller) renders or otherwise furnishes services to the
Seller, such Person will be compensated by the Seller at market rates for
such services. Neither the Seller, on the one hand, nor WMECO or any of its
Affiliates (other than the Seller), on the other hand, will be or will hold
itself out to be responsible for the debts of the other or the decisions or
actions respecting the daily business and affairs of the other; and
(m) The Seller and WMECO will each hold themselves out to the public as
separate entities and conduct business solely in its own name.
ARTICLE VI
ADMINISTRATION, COLLECTION AND MONITORING OF RECEIVABLES
SECTION 6.01. Appointment and Designation of the Servicer. The Seller, the
Purchaser, the Owners and the Agent hereby appoint the Person (the
"Servicer") designated by the Agent from time to time pursuant to this
Section 6.01, as their agent to service, administer and collect the
Receivables and otherwise to enforce their respective rights and interests in
and under the Receivables, the Related Security and any contracts between the
Seller and an Obligor. The Servicer's authorization under this Agreement
shall terminate on the Collection Date. Until the Agent gives notice to the
Seller of a designation of a new Servicer, WMECO is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Servicer pursuant
to the terms hereof. The Agent may, upon the occurrence of a Servicer
Default or other Event of Termination, designate as Servicer any Person to
succeed WMECO any successor Servicer, on the condition in each case that any
such Person so designated shall agree to perform the duties and obligations
of the Servicer pursuant to the terms hereof. The Seller agrees that any
Servicer may take any and all steps in the Seller's name and on behalf of the
Seller necessary or desirable, in the determination of the Servicer, to
collect all amounts due under any and all Receivables, including, without
limitation, endorsing the Seller's name on checks and other instruments
representing Collections and enforcing such Receivables and any related
contracts. The Seller will, upon the request of the Agent, execute such
powers of attorney and other instruments as may be necessary to facilitate
the foregoing. The Servicer may, with the prior consent of the Agent (which
consent is hereby given with respect to Northeast Utilities Service Company),
subcontract with any other Person for servicing, administering or collecting
the Receivables, provided that the Servicer shall remain liable for the
performance of the duties and obligations of the Servicer pursuant to the
terms hereof. Notwithstanding anything to the contrary contained in this
Agreement, the Servicer, if not WMECO or an Affiliate of WMECO, shall have no
obligation to collect, enforce or take any other action described in this
Article VI with respect to any receivable or other indebtedness owing to the
Seller that is not a Receivable other than to deliver to the Seller the
collections and documents with respect to any such receivable or other
indebtedness as described in Sections 6.03 and 6.06(b).
SECTION 6.02. Collection of Receivables by the Servicer; Extensions and
Amendments of Receivables. The Servicer shall take or cause to be taken all
such actions as may be necessary or advisable to collect each Receivable from
time to time, all in accordance with applicable laws, rules and regulations,
with reasonable care and diligence, and in accordance with the Credit and
Collection Policy; provided, however, that, notwithstanding anything to the
contrary contained herein, (a) the Agent shall have the absolute and
unlimited right (subject to applicable requirements of law) to direct the
Servicer (whether the Servicer is WMECO or otherwise) to commence or settle
any legal action, to enforce collection of any Receivable or to foreclose
upon or repossess any Related Security and (b) the Servicer shall not make
the Agent or any Owner a party to any litigation without the express written
consent of the Agent or such Owner, as the case may be. Provided that the
Termination Date shall not have occurred, the Servicer may, in accordance
with the Credit and Collection Policy, (a) extend the maturity or adjust the
Outstanding Balance of any Defaulted Receivable as the Servicer may determine
to be appropriate to maximize Collections thereof, provided, that no such
extension or adjustment shall affect the characterization of such Receivable
as being a Defaulted Receivable, and (b) adjust the Outstanding Balance of
any Receivable to reflect the reductions or cancellations described in the
first sentence of Section 2.08. Except as otherwise permitted pursuant to
the preceding sentence, the Servicer will not extend, amend or otherwise
modify the terms of any Receivable, or, if there exists a contract related to
any Receivable, amend, modify or waive any term or condition of any such
contract.
SECTION 6.03. Distribution and Application of Collections. The Servicer
shall set aside on its books for the account of the Seller and each Owner
their respective allocable shares of the Collections of Receivables in
accordance with Sections 2.05, 2.06, 2.07 and 2.08; provided, however, that
if required by Section 2.05, 2.06 or 2.07 or otherwise instructed by the
Agent following a Transition Event, the Servicer shall segregate such
Collections in accordance with Section 6.04. The Servicer shall as soon as
practicable following receipt turn over to the Seller the collections of any
receivable or other indebtedness owing to the Seller which is not a
Receivable, less, in the event the Seller is not the Servicer, all reasonable
and appropriate out-of-pocket costs and expenses of such Servicer of
servicing, collecting and administering any such receivable or other
indebtedness to the extent not covered by the Servicing Fee received by it.
Any payment by an Obligor in respect of any indebtedness owed by it to the
Seller shall, except as otherwise specified by such Obligor or otherwise
required by contract or law or by instruction of the Agent, be applied as a
Collection of any Receivable of such Obligor (in the order of the age of such
Receivables, starting with the oldest such Receivable) to the extent of any
amounts then due and payable thereunder before being applied to any other
receivable or other indebtedness (other than a Receivable) of such Obligor.
SECTION 6.04. Segregation of Collections. The Servicer shall not be
required (unless required by Section 2.05, 2.06 or 2.07 or otherwise
instructed by the Agent following a Transition Event) to segregate the funds
constituting the Owners' portion of daily Collections prior to the remittance
thereof in accordance with Sections 2.05, 2.06, 2.07 and 2.08. If so
instructed by the Agent following a Transition Event, the Servicer shall (a)
on the first Business Day following its receipt thereof, segregate and
deposit with a bank designated by the Agent (which may be the Agent) each
Owner's allocable share of Collections of Receivables received by the
Servicer; provided, that on any date before the Termination Date, such
segregation shall not apply to Reinvested Collections, and (b) if so
requested by the Agent, provide payment instructions to such bank as directed
by the Agent.
SECTION 6.05. Other Rights of the Agent. At any time following the
occurrence of an Event of Termination or the designation of a Servicer other
than WMECO pursuant to Section 6.01:
(a) The Agent may or, at the request of the Agent, the Seller and the
Servicer shall (in either case, at the Seller's expense) direct the Obligors
of Receivables, or any of them, to pay all amounts payable under any
Receivable directly to the Agent or its designee; and
(b) The Seller and the Servicer shall, at the Agent's request and at the
Seller's expense, (i) assemble all Records and make the same available to the
Agent or its designee at a place selected by the Agent or its designee, and
(ii) segregate all cash, checks and other instruments received by it from
time to time constituting Collections of Receivables in a manner acceptable
to the Agent and, promptly following receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer, to
the Agent or its designee.
SECTION 6.06. Records; Maintenance of General Trial Balance; Audits. (a)
The Seller and the Servicer will maintain and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing the Receivables in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit the
identification of each Receivable and all Collections thereof and adjustments
thereto). The Seller will (and will cause the Servicer to) xxxx all master
data processing records so that reports generated from such records include
the legend described in Section 5.01(f).
(b) The Servicer shall hold all Records in trust for the Seller and each
Owner in accordance with their respective interests. Subject to the receipt
of contrary instructions from the Agent, WMECO will, upon the designation of
a Servicer other than WMECO, deliver (or cause the Servicer to deliver) all
Records to such Servicer; provided, however, that the Servicer shall as soon
as practicable upon demand deliver to WMECO all records and documents in its
possession relating to receivables and other indebtedness owing to the Seller
other than Receivables, and copies of all Records in its possession relating
to Receivables.
(c) Neither the Servicer nor the Seller will make any change or modification
to the form of the General Trial Balance which is adverse to the interests of
the Purchaser or the Owners. The Servicer will apply all Collections to the
applicable Receivables as provided in Section 6.03 and modify the General
Trial Balance to reflect such Collections, in each case, within one Business
Day following the earliest date on which such Collections are received by the
Servicer or the Seller or (following the occurrence of an Event of
Termination and the establishment of Lock-Box Accounts pursuant to Section
6.08) deposited in a Lock-Box Account. The Servicer will post each new
invoiced Receivable on the General Trial Balance on the day such Receivable
is billed. If at any time the Servicer fails or otherwise ceases to generate
the General Trial Balance, the Agent shall have the right to reconstruct the
General Trial Balance so that a determination of the Percentage Interests can
be made pursuant to Section 2.03. The Seller and the Servicer each agree to
cooperate with such reconstruction of the General Trial Balance, including,
without limitation, the delivery to the Agent, upon the Agent's request, of
copies of all Records. The Seller shall reimburse the Agent for all costs
and expenses incurred in connection with such reconstruction of the General
Trial Balance.
(d) The Seller, WMECO and the Servicer each will, from time to time during
regular business hours as reasonably requested by the Agent, permit the
Agent, or its agents or representatives, (i) to examine and make copies of
and abstracts from all Records and (ii) to visit the offices and properties
of the Seller, WMECO or the Servicer for the purpose of examining such
Records and to discuss matters relating to the Receivables or the Seller's,
WMECO's or the Servicer's performance hereunder with any of the officers or
employees of the Seller, WMECO or the Servicer, as the case may be, having
knowledge of such matters.
SECTION 6.07. Receivables Reporting. Starting with the first month
commencing after the date hereof and continuing through (and including) the
month in which the Collection Date occurs, the Servicer shall on or before
the eighteenth calendar day of each month (or if such eighteenth day is not a
Business Day, on the Business Day immediately preceding such eighteenth day),
prepare and forward to the Agent for each Owner, an Investor Report relating
to all Percentage Interests, as of the close of business of the Servicer on
the last day of the immediately preceding month, which report will include
(without limitation) (i) the information required to compute each element of
the Coverage Ratio and (ii) the aggregate amount billed by WMECO to each
Obligor in a Reported Group.
SECTION 6.08 Collections. The Seller will instruct all Obligors to cause
all Collections to be paid to the Servicer and if the Seller receives any
Collections, the Seller will remit such Collections to the Servicer
(including, without limitation, any Collections deemed to have been received
pursuant to Section 2.08) within one Business Day following the Seller's
receipt thereof. The Seller will not make any change in its instructions to
Obligors regarding payments to be made to the Seller or the Servicer, unless
the Agent shall have received at least ten Business Days' prior written
notice of such change and all actions reasonably requested by the Agent to
protect and perfect the interest of the Agent and the Owners in the
Collections of the Receivables have been taken and completed. If requested
to do so following a Transition Event, the Seller shall instruct the Obligors
to cause all Collections to be paid to a Lock-Box Bank for deposit into a
Lock-Box Account and deliver a Bank Notice to such Lock-Box Bank. Such
notice shall transfer to the Agent exclusive ownership and control of such
Lock-Box Account. The Seller hereby agrees to take any further action
necessary that the Agent may reasonably request to effect such transfer.
Without limiting the foregoing, on or prior to the date of the initial
purchase of a Percentage Interest hereunder, (i) the Seller shall cause to be
established the Collection Account, in the name of the Purchaser, (ii) the
Purchaser shall give a Bank Notice to the bank at which the Collection
Account is maintained and (iii) the Seller shall cause such bank to execute
such notice and return it to the Purchaser. Such notice shall give the bank
standing instructions to remit funds on deposit in the Collection Account to
the Servicer, unless the Purchaser, or the Agent on behalf of the Purchaser,
instructs otherwise, which instruction may only be delivered upon the
occurrence of a Transition Event.
SECTION 6.09. UCC Matters; Protection and Perfection of Percentage
Interests. (a) With respect to each Receivable and the Related Security
therefor (excluding Security Deposits), the Seller shall (i) acquire such
Receivable and Related Security pursuant to and in accordance with the terms
of the Purchase and Sale Agreement, (ii) take all action necessary to
perfect, protect and more fully evidence the Seller's ownership interest in
such Receivables and Related Security, including, without limitation, (A)
filing and maintaining effective financing statements (Form UCC-1) or similar
forms against WMECO in all necessary or appropriate filing offices, and
filing continuation statements, amendments or assignments with respect
thereto in such filing offices, and (B) executing or causing to be executed
such other instruments or notices as may be necessary or appropriate and
(iii) take all additional action that the Agent reasonably may request in
order to perfect, protect and more fully evidence the interest of the parties
to this Agreement in such Receivables and Related Security.
(b) The Seller will keep its principal place of business and chief executive
office, and the office where it keeps the Records, at the addresses of the
Seller specified in Schedule V or, upon 30 days' prior written notice to the
Agent, at such other locations within the United States where all actions
reasonably requested by the Agent, to protect and perfect the interest of the
Agent and the Owners in the Receivables, the Related Security (excluding
Security Deposits) relating thereto, the Collections relating thereto and the
Collateral, have been taken and completed. The Seller will not make any
change to its corporate name or use any tradenames, fictitious names, assumed
names or "doing business as" names other than those described in Schedule
III, unless prior to the effective date of any such name change or use, the
Seller delivers to the Agent such executed financing statements as the Agent
may request to reflect such name change or use, together with such other
documents and instruments as the Agent may reasonably request in connection
therewith. The Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents, and take
all further action that the Agent may reasonably request in order to perfect,
protect or more fully evidence the interests of the Owners in the
Receivables, the Related Security (excluding Security Deposits) relating
thereto, Collections relating thereto and the Collateral, or to enable any of
them or the Agent to exercise or enforce any of their respective rights
hereunder. Without limiting the generality of the foregoing, the Seller will
upon the request of the Agent execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate or as the Agent
may request. The Seller hereby authorizes the Purchaser to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Receivables, the Related Security, the
Collections and the Collateral now existing or hereafter arising without the
signature of the Seller where permitted by law. A carbon, photographic or
other reproduction of this Agreement or any financing statement covering the
Receivables, the Related Security and Collections relating thereto and the
Collateral (or, in each case, any part thereof) shall be sufficient as a
financing statement. The Seller shall, upon the request of the Agent at any
time after a Transition Event and at the Seller's expense, notify the
Obligors of Receivables, or any of them, of the Owners' interests therein.
If the Seller fails to perform any of its agreements or obligations under
this Section 6.09, the Agent may (but shall not be required to) itself
perform, or cause performance of, such agreement or obligation, and the
expenses of the Agent incurred in connection therewith shall be payable by
the Seller upon the Agent's demand therefor. For purposes of enabling the
Agent to exercise its rights described in the preceding sentence and
elsewhere in this Article VI, the Seller and the Owners hereby authorize the
Agent to take any and all steps in the Seller's name and on behalf of the
Seller and the Owners necessary or desirable, in the determination of the
Agent, to collect all amounts due under any and all Receivables, including,
without limitation, endorsing the Seller's name on checks and other
instruments representing Collections and enforcing rights with respect to
such Receivables and any related contracts. In addition, to the extent that
any Receivables Interest is intended to be or is likely to be outstanding
five years or more after the date of this Agreement, the Seller shall
provide, within six months (but not later than the 30th day) prior to the
expiration of such five year period (and, if applicable, each subsequent five
year period), or more frequently as the Agent reasonably deems advisable, an
opinion of counsel to the Seller as to the continuing validity and perfection
of the Agent's and the Owners' interests in the Receivables and the Related
Security (excluding Security Deposits) and Collections relating thereto.
SECTION 6.10. Obligations of the Seller with Respect to Receivables. The
Seller will cause WMECO to (a) at its expense, regardless of any exercise by
the Agent or any Owner of its rights hereunder, timely and fully perform and
comply with all material provisions, covenants and other promises required to
be observed by it under any contracts or other agreements related to the
Receivables to the same extent as if the Receivables had not been sold under
the Purchase and Sale Agreement and the Percentage Interests had not been
sold hereunder and (b) pay when due any taxes (other than Excluded Taxes),
including without limitation, sales and excise taxes, payable in connection
with the Receivables. In no event shall the Agent or any Owner have any
obligation or liability with respect to any Receivables or related contracts,
if applicable, nor shall any of them be obligated to perform any of the
obligations of the Seller or WMECO thereunder. The Seller and the Servicer
will timely and fully comply in all material respects with the Credit and
Collection Policy in regard to each Receivable and any related contract.
Neither the Seller nor the Servicer will make any change in the character of
its business or in the Credit and Collection Policy, which change would, in
either case, impair the credit quality, enforceability or collectibility of
any Receivable.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following events
("Events of Termination") shall occur:
(a) (i) The Servicer (if other than the Agent) shall fail to perform or
observe any term, covenant or agreement hereunder (other than as referred to
in clause (ii) of this Section 7.01(a)) and such failure shall remain
unremedied for five Business Days after written notice thereof shall have
been given by the Agent to the Servicer or (ii) the Servicer (if other than
the Agent), WMECO or the Seller shall fail to make any payment or deposit to
be made by it hereunder when due; or
(b) Any representation or warranty made or deemed to be made by either the
Seller, WMECO or the Servicer (or any of its respective officers) under or in
connection with this Agreement or any other Transaction Document or any
Investor Report or other information or report delivered pursuant hereto
shall prove to have been false or incorrect in any material respect when made
or deemed to have been made and shall not have been remedied for a period of
five Business Days after written notice thereof shall have been given by the
Agent to the Seller; or
(c) WMECO shall fail to perform or observe any term, covenant or agreement
contained in the Transaction Documents on its part to be performed or
observed and such failure shall continue unremedied for five Business Days
after written notice thereof shall have been given by the Agent to WMECO; or
(d) The Seller or the Servicer shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for five
Business Days after written notice thereof shall have been given by the Agent
to the Seller or the Servicer; or
(e) The Seller or WMECO shall fail to pay any principal of or premium or
interest on any Debt (which, in the case of WMECO, is in an aggregate amount
exceeding $10,000,000), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise)
and such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or any other
default under any agreement or instrument relating to any such Debt or any
other event, shall occur and shall continue after the applicable grace
period, if any, specified in such agreement or instrument if the effect of
such default or event is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable or required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof; or
(f) Any purchase of a Percentage Interest or reinvestment of Collections
shall for any reason, except to the extent permitted by the terms hereof,
cease to create a valid and perfected first priority undivided percentage
ownership interest to the extent of such Percentage Interest in each
Receivable and the Related Security (excluding Security Deposits) and
Collections with respect thereto, or any other Adverse Claim shall attach to
any Receivables, Related Security or Collections and, provided that the
attachment of any such Adverse Claim securing payment of taxes, assessments
or governmental charges shall not constitute an Event of Termination unless
it shall remain outstanding for fifteen days; or
(g) (i) The Seller, WMECO or the Servicer (if other than the Agent) shall
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Seller, WMECO or the Servicer (if other than the
Agent) seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its property; or
(ii) the Seller, WMECO or the Servicer (if other than the Agent) shall take
any corporate action to authorize any of the actions set forth in clause (i)
above in this Section 7.01(g); or
(h) The Loss-to-Liquidation Ratio for any month shall exceed 6.75%, or the
average Loss-to-Liquidation Ratio for any six consecutive months shall exceed
5.25%, or the Delinquency Ratio for any month shall exceed 6.25%, or the
Gross Charge-Off Ratio for any month shall exceed 2.50%, or the average
Dilution Ratio for any three consecutive months shall exceed 1.00%, or the
Weighted Average Maturity for any month shall exceed 60.0 days; or
(i) WMECO's senior secured debt shall not be rated at least the Required
Rating, or there shall have occurred any event which has a Material Adverse
Effect; or
(j) (i) A regulatory, tax or accounting body has ordered that the activities
of the Purchaser or any Affiliate of the Purchaser contemplated hereby be
terminated or (ii) as a result of any other event or circumstance, the
activities of the Purchaser contemplated hereby may reasonably be expected to
cause the Purchaser, the financial institution then acting as the
administrator or the manager for the Purchaser, or any of their respective
Affiliates to suffer materially adverse regulatory, accounting or tax
consequences; or
(k) the Purchaser shall be unable to issue Commercial Paper Notes for sixty
consecutive days; or
(l) Any Event of Default under (and as defined in) either of the Liquidity
Agreements shall occur or a Liquidity Facility Termination Date shall have
occurred; or
(m) The Coverage Ratio shall be less than 102% for two Business Days; or
(n) A Change of Control shall occur; or
(o) a Servicer Default shall have occurred; or
(p) WMECO or the Seller shall have given notice that it desires to terminate
the Purchase and Sale Agreement pursuant to Section 8.1 thereof, or the
Purchase and Sale Termination Date shall otherwise occur; or
(q) Any litigation (including, without limitation, derivative actions),
arbitration proceedings or governmental proceedings is pending against the
Seller, the Receivables or the Related Security, which has a reasonable
likelihood of having an adverse determination that would have a Material
Adverse Effect;
then, and in any such event, the Agent may, or at the direction of the
Required Owners shall, by notice to the Seller declare the Termination Date
to have occurred, except that, in the case of any event described in clause
(i) of Section 7.01(g), above, the Termination Date shall be deemed to have
occurred automatically upon the occurrence of such event. Upon any such
declaration or automatic occurrence, the Agent and the Owners shall have, in
addition to all other rights and remedies under this Agreement or otherwise,
all other rights and remedies provided under the UCC of the applicable
jurisdiction and other applicable laws, which rights shall be cumulative.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Owner hereby accepts the
appointment of and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. In
addition, each of the Owners and the Agent acknowledge that the Purchaser has
entered into the Security Agreement pursuant to which certain rights of the
Purchaser hereunder were pledged to the Collateral Trustee, and the Agent
hereby agrees to take, or refrain from taking, such actions under or in
connection with this Agreement as the Collateral Trustee shall from time to
time direct in accordance with the terms of the Security Agreement.
Notwithstanding anything contained herein to the contrary, the Agent shall
not be required to take any action which exposes it to personal liability or
which is contrary to this Agreement or to applicable law. The Agent agrees
to give (i) to each Owner, prompt notice of each notice given to it by the
Seller, or by it to the Seller, pursuant to the terms of this Agreement and
(ii) to the Collateral Trustee, prompt notice of the occurrence hereunder of
any Event of Termination or the Termination Date. The appointment and
authority of the Agent hereunder shall terminate on the Collection Date. The
Agent hereby further acknowledges that to the extent it receives or holds any
funds or other amounts or property to which the Purchaser would be entitled,
the Agent shall receive and/or hold such funds as agent for the Collateral
Trustee under and in accordance with the Security Agreement. Notwithstanding
anything to the contrary, the Collateral Trustee is an intended beneficiary
of the provisions of this Section 8.01, and no amendment, supplement or other
modification to this Section which would adversely affect the interest of the
Collateral Trustee under this Section shall be effective without the
Collateral Trustee's consent.
SECTION 8.02. UCC Filings. The Owners, WMECO and the Seller expressly
recognize and agree that the Agent may be listed as the assignee or secured
party of record on the various UCC filings required to be made hereunder in
order to perfect the transfer of the Percentage Interests from the Purchaser
to the other Owners, that such listing shall be for administrative
convenience only in creating a record or nominee owner to take certain
actions hereunder on behalf of such Owners and that such listing will not
affect in any way the status of such Owners as the beneficial Owners of the
Percentage Interests. In addition, such listing shall impose no duties on
the Agent other than those expressly and specifically undertaken in
accordance with this Article VIII. In furtherance of the foregoing, each
Owner shall be entitled to enforce its rights created under this Agreement
without the need to conduct such enforcement through the Agent except as
provided herein.
SECTION 8.03. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to any Owner for any
action taken or omitted to be taken by it or them as Agent under or in
connection with this Agreement (including, without limitation, the Agent's
servicing, administering or collecting Receivables as Servicer pursuant to
Article VI), except for its or their own gross negligence or willful
misconduct. Without limiting the foregoing, the Agent: (i) may consult with
legal counsel (including counsel for the Seller), 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 Owner and shall not be responsible to any Owner for any
statements, warranties or representations made in or in connection with this
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 on the part of the Seller or to inspect the property
(including the books and records) of the Seller; (iv) shall not be
responsible to any Owner for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement, or any
other instrument or document furnished pursuant hereto; and (v) shall incur
no liability under or in respect of this Agreement by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by telex) believed by it to be genuine and signed or
sent by the proper party or parties.
SECTION 8.04. Agent and Affiliates. To the extent that the Agent or any of
its Affiliates shall become an Owner hereunder, the Agent or such Affiliate,
in such capacity, shall have the same rights and powers under this Agreement
as would any Owner hereunder and may exercise the same as though it were not
the Agent. The Agent and its Affiliates may generally engage in any kind of
business with the Seller or any Obligor, any of their respective Affiliates
and any Person who may do business with or own securities of the Seller or
any Obligor or any of their respective Affiliates, all as if it were not the
Agent hereunder and without any duty to account therefor to the Owners.
SECTION 8.05. Purchase Decision. The Purchaser acknowledges that it has,
independently and without reliance upon the Agent or any other Owner and
based on such documents and information as it has deemed appropriate, made
its own evaluation and decision to enter into this Agreement and, if it so
determines, to purchase Percentage Interests hereunder. Each Owner
acknowledges and agrees that it will, independently and without reliance upon
the Agent, the Purchaser or any other Owner, and based on such documents and
information as it shall deem appropriate at the time, make its own decisions
in taking or not taking action under or in connection with this Agreement.
SECTION 8.06. Indemnification. Each Owner agrees to indemnify the Agent (to
the extent not reimbursed by the Seller or the Servicer), ratably according
to its share of the aggregate outstanding Purchase Price of all Percentage
Interests from time to time, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Agent in any way relating to
or arising out of this Agreement or any action taken or omitted by the Agent
under this Agreement; provided, however, that an Owner shall not be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements resulting from
the Agent's gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, each Owner agrees to reimburse the Agent,
ratably according to its share of the aggregate outstanding Purchase Price of
all Percentage Interests from time to time, promptly upon demand, for any
out-of-pocket expenses (including reasonable counsel fees) incurred by the
Agent in connection with the administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement. The Agent hereby agrees that any amount owing to it by the
Purchaser pursuant to this Section 8.06 shall not be due and payable until
the earliest date on which the Agent would be entitled to initiate
proceedings of the type described in Section 10.08 against the Purchaser, it
being understood, however, that the Purchaser may at any time prepay any
amount owing to the Agent pursuant to this Section 8.06. The indemnities
contained in this Section 8.06 shall be continuing and shall survive the
termination of this Agreement.
SECTION 8.07. Successor Agent. The Agent may resign at any time by giving
thirty days' notice thereof to the Owners, the Seller and the Servicer. Upon
any such resignation, the Owners shall have the right to appoint a successor
Agent approved by the Seller (which approval will not be unreasonably
withheld or delayed). If no successor Agent shall have been so appointed by
the Owners and accepted such appointment within 30 days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on
behalf of the Owners, appoint a successor Agent approved by the Seller (which
approval will not be unreasonably withheld or delayed), which successor Agent
shall be (a) either (i) a commercial bank having a combined capital and
surplus of at least $1,000,000,000 or (ii) an Affiliate of such an
institution and (b) experienced in the types of transactions contemplated by
this Agreement. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VIII (including,
without limitation, the indemnities set forth in Section 8.06) shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Indemnities by the Seller. Without limiting any other rights
which the Agent, any Owner or any of their respective Affiliates may have
hereunder or under applicable law, the Seller hereby agrees to indemnify the
Agent, each Owner, and each of their respective Affiliates from and against
any and all damages, losses, claims, liabilities and related costs and
expenses, including reasonable attorneys' fees and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts") awarded
against or incurred by any of them arising out of or as a result of this
Agreement or the ownership of Percentage Interests or in respect of any
Receivable or any related contract, excluding, however, (i) Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct
on the part of the Agent, such Owner or such Affiliate, (ii) recourse (except
as otherwise specifically provided in this Agreement) for uncollectible
Receivables or (iii) Excluded Taxes. Without limiting the foregoing, the
Seller shall indemnify the Agent, each Owner and each of their respective
Affiliates for Indemnified Amounts relating to or resulting from:
(i) the transfer of an ownership interest in any Receivable to any Person
other than the Purchaser;
(ii) reliance on any representation or warranty made or deemed made by the
Servicer (so long as the Servicer is WMECO or an Affiliate of WMECO), WMECO
or the Seller (or any of their officers) under or in connection with this
Agreement or any other Transaction Document, which shall have been false or
incorrect in any material respect when made or deemed made or delivered;
(iii) the failure by the Servicer (so long as the Servicer is WMECO or an
Affiliate of WMECO), WMECO or the Seller to comply with any term, provision
or covenant contained in this Agreement or any agreement executed in
connection with this Agreement, or with any applicable law, rule or
regulation with respect to any Receivable, the related contract, if any, or
the Related Security, or the nonconformity of any Receivable, the related
contract, if any, or the Related Security with any such applicable law, rule
or regulation;
(iv) the failure to vest and maintain vested in each Owner or to transfer to
each Owner, legal and equitable title to and ownership of, an undivided
percentage ownership interest, to the extent of each Percentage Interest
owned by it hereunder, in the Receivables, together with all Collections and
Related Security relating thereto, free and clear of any Adverse Claim
whether existing at the time of the purchase of such Percentage Interest or
at any time thereafter;
(v) the failure of the Coverage Ratio to equal or exceed 102% at all times
on or prior to the Termination Date;
(vi) the failure of WMECO or the Seller to file, or any delay in filing,
financing statements or other similar instruments or documents under the UCC
of any applicable jurisdiction or other applicable laws with respect to any
Receivables or Related Security, whether at the time of any purchase of a
Percentage Interest or at any subsequent time;
(vii) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related contract, if any, not being a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms), or any
other claim resulting from the sale of the merchandise or services related to
such Receivable or the furnishing or failure to furnish such merchandise or
services;
(viii) any failure of the Seller, WMECO or the Servicer (so long as the
Servicer is WMECO or an Affiliate of WMECO) to perform its duties or
obligations in accordance with the provisions of this Agreement or any other
Transaction Document or to perform its duties under any contracts related to
the Receivables;
(ix) any products liability claim or personal injury or property damage suit
or other similar or related claim or action of whatever sort arising out of
or in connection with merchandise or services which are the subject of any
Receivable, related contract or Related Security; or
(x) the failure to pay when due any taxes (other than Excluded Taxes),
including without limitation, sales, excise or personal property taxes
payable in connection with any of the Receivables; or
(xi) any repayment by the Agent or any Owner of any amount previously
distributed in reduction of Purchase Price which the Agent or such Owner
believes in good faith is required to be made; or
(xii) the commingling of Collections of Receivables at any time with other
funds (including without limitation any commingling in the Collection Account
that occurs notwithstanding the Seller's commercially reasonable efforts to
prevent it); or
(xiii) any investigation, litigation or proceeding related to this Agreement
or the use of proceeds of purchases or reinvestments or the ownership of
Percentage Interests or in respect of any Receivable, Related Security or
related contract, if any; or
(xiv) any inability to obtain any judgment in, or utilize the court or other
adjudication system of, any state in which an Obligor may be located as a
result of the failure of the Seller, WMECO or the Servicer to qualify to do
business or file any notice of business activity report or any similar
report; or
(xv) any failure of the Seller to give reasonably equivalent value to WMECO
in consideration of the purchase by the Seller from WMECO of any Receivable,
or any attempt by any Person to void any such transfer under statutory
provisions or common law or equitable action, including, without limitation,
any provision of the Bankruptcy Code; or
(xvi) any claim involving environmental liability that relates to any
property that has been, is now or hereafter will be owned, leased, operated
or otherwise used by Seller, WMECO or the Servicer.
Any amounts subject to the indemnification provisions of this Section 9.01
shall be paid by the Seller to the Agent within two Business Days following
the Agent's written demand therefor.
SECTION 9.02 Indemnities by WMECO. Without limiting any other rights which
the Agent, any Owner or any of their respective Affiliates may have hereunder
or under applicable law, WMECO (in its capacity as the parent of Seller and
as Servicer) hereby agrees to indemnify the Agent, each Owner, and each of
their respective Affiliates from and against all Indemnified Amounts awarded
against or incurred by any of them arising out of or as a result of any of
the following:
(i) reliance on any representation or warranty made or deemed made by the
Servicer (or any of their officers) under or in connection with this
Agreement or any other Transaction Document, which shall have been false or
incorrect in any material respect when made or deemed made or delivered;
(ii) the failure by the Servicer to comply with the term, provision or
covenant contained in this Agreement, any other Transaction Document or any
other agreement executed in connection with this Agreement, or with any
applicable law, rule or regulation with respect to any Receivable, the
related contract, if any, or the Related Security, or the nonconformity of
any Receivable, the related contract, if any, or the Related Security with
any such applicable law, rule or regulation;
(iii) the failure to vest and maintain vested in each Owner or to transfer
to each Owner, legal and equitable title to and ownership of, an undivided
percentage ownership interest, to the extent of each Percentage Interest
owned by it hereunder, in the Receivables, together with all Collections and
Related Security relating thereto, free and clear of any Adverse Claim
whether existing at the time of the purchase of such Percentage Interest or
at any time thereafter;
(iv) the failure of the Coverage Ratio to equal or exceed 102% at all times
on or prior to the Termination Date;
(v) the failure to file, or any delay in filing, financing statements or
other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Receivables or
Related Security, whether at the time of any purchase of a Percentage
Interest or at any subsequent time;
(vi) any failure of the Servicer to perform its duties or obligations under
any contracts related to the Receivables;
(vii) the commingling of Collections of Receivables at any time with other
funds (including without limitation any such commingling that occurs in the
Collection Account that occurs notwithstanding the Servicer's commercially
reasonable efforts to prevent it); or
(viii) the failure of a Lock-Box Bank or the bank at which the Collection
Account is maintained (if other than Union Bank of Switzerland) to remit any
amounts held in the Lock-Box Account or Collection Account, as the case may
be, pursuant to the instructions of the Servicer, the Seller or the Agent,
whether by reason of the exercise of set-off rights or otherwise.
Any amounts subject to the indemnification provisions of this Section 9.02
shall be paid by the Servicer to the Agent within two Business Days following
the Agent's demand therefor.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Amendments and Waivers. (a) Except as provided in Section
10.01(b), no amendment or modification of any provision of this Agreement
shall be effective without the written agreement of WMECO, the Seller, the
Agent, the Required Owners and, to the extent expressly required pursuant to
Section 8.01, the Collateral Trustee, and no termination or waiver of any
provision of this Agreement or consent to any departure therefrom by the
Seller shall be effective without the written concurrence of the Agent and
the Required Owners. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(b) Notwithstanding the provisions of Section 10.01(a), (i) the written
consent of each Owner shall be required for any amendment, modification or
waiver (A) reducing the Purchase Price of, or the Yield on, the Percentage
Interests for any Purchase Period, (B) postponing any date for any payment of
the Purchase Price of, or the Yield on, the Percentage Interests for any
Purchase Period, (C) reducing the percentage specified in the definition of
"Required Owners" or (D) modifying the provisions of this Section 10.01, (ii)
the written consent of the Purchaser shall be required for any amendment,
modification or waiver increasing the Purchase Limit or reducing any fees or
other amounts payable to the Purchaser hereunder for its own account, and
(iii) the written consent of the Agent shall be required for any amendment,
modification or waiver of any provision of this Agreement affecting the
indemnities to, or the rights, duties and obligations of, the Agent or
reducing any fees or other amounts payable to the Agent hereunder for its own
account.
SECTION 10.02. Notices, Etc. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
telex communication and communication by facsimile copy) and mailed, telexed,
transmitted or delivered, as to each party hereto, at its address set forth
under its name on the signature pages hereof or specified in such party's
Assignment and Acceptance or at such other address as shall be designated by
such party in a written notice to the other parties hereto. All such notices
and communications shall be effective, upon receipt, or in the case of (a)
notice by mail, three days after being deposited in the United States mails,
first class postage prepaid, (b) notice by overnight courier, one Business
Day after being deposited with a national overnight courier service, (c)
notice by telex, when telexed against receipt of answerback, or (d) notice by
facsimile copy, when confirmation of receipt is obtained, except that notices
and communications pursuant to Article II shall not be effective until
received.
SECTION 10.03. No Waiver; Remedies. No failure on the part of the Agent or
any Owner to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
SECTION 10.04. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of WMECO, the Seller, the Servicer, the
Agent, the Owners and their respective successors and permitted assigns.
This Agreement and each Owner's rights and obligations hereunder and interest
herein shall be assignable in whole or in part (including by way of the sale
of participation interests therein) by such Owner and its successors and
assigns; provided, however, that the Purchaser may only assign its rights and
obligations as the "Purchaser" hereunder (as distinguished from its rights
and obligations as an "Owner" hereunder), in whole, to another Issuer
acceptable to the Purchaser, and, upon such assignment, such assigning
Purchaser shall cease to be the Purchaser hereunder. Neither WMECO, the
Seller nor the Servicer may assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of the
Owners and the Agent. The parties to each assignment or participation made
pursuant to this Section 10.04 shall execute and deliver to the Agent for its
acceptance and recording in its books and records, an Assignment and
Acceptance or a participation agreement or other transfer instrument
reasonably satisfactory in form and substance to the Agent and the Seller,
and which shall provide that the parties thereto agree to be bound by Section
10.12 of this Agreement. Each such assignment or participation shall be
effective as of the date specified in the applicable Assignment and
Acceptance or other agreement or instrument only after the execution,
delivery, acceptance and recording as described in the preceding sentence.
The Agent shall notify the Seller of any assignment or participation thereof
made pursuant to this Section 10.04. The Purchaser or any Owner may, in
connection with any assignment or participation or any proposed assignment or
participation pursuant to this Section 10.04, disclose to the assignee or
participant or proposed assignee or participant who agrees to abide by the
provisions of Section 10.12 any information relating to the Seller and the
Percentage Interests furnished to such Owner by or on behalf of the Seller or
the Servicer. Notwithstanding the fact that the Purchaser or any Owner, as a
result of its having assigned all of its remaining rights, interests, duties
and obligations hereunder, shall cease to be the Purchaser or an Owner for
purposes hereof, such assigning Purchaser or Owner, as the case may be, shall
continue to be entitled to all rights of indemnity and reimbursement from the
Seller under this Agreement for any indemnifiable or reimbursable costs,
expenses or liabilities incurred or arising out or in connection with such
Person's acting as the Purchaser or an Owner under this Agreement.
SECTION 10.05. Term of this Agreement. This Agreement, including, without
limitation, each of the Seller's and the Servicer's obligation to observe its
respective covenants set forth in Articles V and VI, shall remain in full
force and effect until the Collection Date; provided, however, that the
rights and remedies with respect to any breach of any representation and
warranty made or deemed made by the Seller or the Servicer pursuant to
Articles III and IV and the indemnification and payment provisions of
Articles IX and Article X shall be continuing and shall survive any
termination of this Agreement.
SECTION 10.06. GOVERNING LAW; SUBMISSION TO JURISDICTION. (A) THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION
OF THE INTERESTS OF THE OWNERS IN THE RECEIVABLES, THE RELATED SECURITY AND
THE COLLECTIONS, OR THE REMEDIES HEREUNDER IN RESPECT THEREOF, ARE GOVERNED
BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(B) EACH OF WMECO, THE SELLER AND THE SERVICER HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK, NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OF THE OTHER INSTRUMENTS, DOCUMENTS OR
AGREEMENTS EXECUTED IN CONNECTION HEREWITH, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH OF WMECO, THE SELLER AND THE SERVICER
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING IN THIS SECTION 10.06 SHALL AFFECT THE RIGHT OF THE AGENT OR ANY OF
THE OWNERS TO BRING ANY ACTION OR PROCEEDING AGAINST WMECO, THE SELLER, THE
SERVICER OR ANY OF ITS RESPECTIVE PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
SECTION 10.07. Costs, Expenses and Taxes. (a) In addition to the rights of
indemnification granted to the Agent, the Owners and their Affiliates under
Article IX hereof, the Seller agrees to pay on demand all out-of-pocket costs
and expenses of the Purchasers and the Agent incurred in connection with the
preparation, execution, delivery, administration (including periodic auditing
and amounts paid to any Lock-Box Bank or the bank at which the Collection
Account is maintained in respect of disallowed items, fees and charges or for
any other reason), amendment, modification or syndication of, or any waiver
or consent issued in connection with, this Agreement and the other
Transaction Documents, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent and the Purchasers with
respect thereto and with respect to advising the Agent and the Purchasers as
to their respective rights and remedies under this Agreement and the other
documents to be delivered hereunder or in connection herewith, and all costs
and expenses, if any (including reasonable counsel fees and expenses),
incurred by the Agent or the Owners in connection with the enforcement of
this Agreement and the other documents to be delivered hereunder or in
connection herewith.
(b) In addition, the Seller shall pay on demand any and all commissions
(other than Dealer Fees included in the definition of "CP Rate") of placement
agents and dealers in respect of Commercial Paper Notes issued to fund the
purchase or maintenance of any Percentage Interest and any and all stamp,
sales, excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this
Agreement or the other documents to be delivered hereunder.
(c) In addition, the Seller shall pay on demand all other costs, expenses
and taxes (excluding income taxes) incurred by the Purchaser or any general
or limited partner or shareholder of the Purchaser ("Other Costs"),
including, without limitation, the cost of auditing the Purchaser's books by
certified public accountants, the cost of rating the Purchaser's Commercial
Paper Notes by independent financial rating agencies, the taxes (excluding
income taxes) resulting from the Purchaser's operations, and the reasonable
fees and out-of-pocket expenses of counsel for the Purchaser or any counsel
for any general or limited partner or shareholder of the Purchaser with
respect to (i) advising such Person as to its rights and remedies under this
Agreement and the other documents to be delivered hereunder or in connection
herewith, (ii) the enforcement of this Agreement and the other documents to
be delivered hereunder or in connection herewith or matters relating to the
Purchaser's operations, and (iii) advising such Person as to the issuance of
the Purchaser's Commercial Paper Notes and acting in connection with such
issuance.
SECTION 10.08. No Proceedings. Each of WMECO, the Seller, the Servicer, the
Agent and the Owners hereby agrees that it will not institute against, or
join any other Person in instituting against, the Purchaser or any subsidiary
of the Purchaser any proceedings of the type referred to in clause (i) of
Section 7.01(g) so long as any Commercial Paper Notes or other debt
securities issued by the Purchaser or any of its subsidiaries shall be
outstanding or there shall not have elapsed one year and one day since the
last day on which any such Commercial Paper Notes shall have been
outstanding.
SECTION 10.09. Execution in Counterparts; Severability; Integration. This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together shall
constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof
and shall constitute the entire agreement among the parties hereto with
respect to the subject matter hereof, superseding all prior oral or written
understandings other than the fee letters described in Section 2.10(a). Each
of WMECO, the Seller and the Servicer acknowledges and agrees that it is not
intended to have, and shall not assert, any rights, benefits, causes of
action or remedies under or in connection with any instrument, document or
agreement to which it is not a party, or any of the transactions contemplated
thereby or in respect of any acts or omissions by any of the parties thereto,
in each case, whether relating specifically to the transactions contemplated
hereby or otherwise, including, without limitation, any Liquidity Agreements.
SECTION 10.10. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE AGENT, THE OWNERS, WMECO, THE SELLER AND THE SERVICER
EACH IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED AND/OR DELIVERED IN
CONNECTION HEREWITH OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
SECTION 10.11. Section Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not affect in any
way the interpretation of any of the provisions hereof.
SECTION 10.12. Confidentiality. (a) Confidentiality of Agreement
Information. Each of WMECO, the Seller and the Servicer agrees to maintain
the confidentiality of this Agreement (and all drafts thereof) and not to
disclose this Agreement or such drafts to third parties (other than to its
directors, officers, employees, accountants or counsel); provided, however,
that the Agreement may be disclosed to third parties to the extent such
disclosure is:
(i) (A) required in connection with a sale of securities of the Seller, (B)
made solely to persons who are legal counsel for the purchaser or underwriter
of such securities, and (C) limited in scope to the provisions of Articles V,
VII, X and, to the extent defined terms are used in Articles V, VII and X,
such terms defined in Article I of this Agreement;
(ii) such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the Agent;
(iii) with respect to information generally available to the public through
no fault of WMECO, the Seller or Servicer;
(iv) to any federal or state regulatory authority having jurisdiction over
WMECO, the Seller or the Servicer; or
(v) to any other Person to which such delivery or disclosure may be
necessary or appropriate (A) in compliance with any law, rule, regulation or
order applicable to the Seller or the Servicer, or (B) in response to any
subpoena or other legal process.
(b) Confidentiality of Seller Confidential Information. Each of the
Purchaser, the Agent and each Owner (each, a "Subject Party") agrees to
maintain the confidentiality of the Seller Confidential Information and not
to disclose the Seller Confidential Information to third parties (other than
to its directors, officers, employees, accountants or counsel); provided,
however, that the Seller Confidential Information may be disclosed to third
parties to the extent such disclosure is:
(i) to another Subject Party;
(ii) with respect to information generally available to the public through
no fault of such Subject Party;
(iii) to any holder of a Commercial Paper Note (a "Holder") and any
placement agent with respect to Commercial Paper Notes, or in the case of
general information regarding the nature, basic terms and status of the
Purchaser's commercial paper program (including, without limitation, the
amount and nature of the Purchase Limit, the Percentage Interests, the nature
of the Receivables, the nature and amount of the required reserves and the
performance of the Receivables pool), to any prospective Holder;
(iv) to any party providing credit enhancement or liquidity facilities or
any other facilities to any of the Owners, any proposed assignee or
transferee of a Percentage Interest or any part thereof;
(v) to any federal or state regulatory authority having jurisdiction over
the Purchaser, any Owner or the Agent;
(vi) to any internationally recognized rating agency in connection with the
rating by such agency of an Owner; or
(vii) to any other Person to which such delivery or disclosure may be
necessary or appropriate (A) in compliance with any law, rule, regulation or
order applicable to the Purchaser, any Owner or the Agent, (B) in response to
any subpoena or other legal process, or (C) in order to protect or enforce an
Owner's investment in the Percentage Interests.
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.
WMECO RECEIVABLES CORPORATION,
as the Seller
By: /s/ Xxxxxx X. Xxxxxxx
Title: Assistant Treasurer
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Confirmation No.: (000) 000-0000
Attention: Xxxxx XxXxxx
Assistant Treasurer
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By: /s/ Xxxxx X. XxXxxx
Title: Assistant Treasurer
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxxxxxxxxx, Xxxxxxxxxxxxx
Facsimile No.: (000) 000-0000
Confirmation No.: (000) 000-0000
Attention: Xxxxx XxXxxx
Assistant Treasurer
With a copy to:
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Confirmation No.: (000) 000-0000
Attention: Xxxxx XxXxxx
Assistant Treasurer
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH, as Agent
By: /s/ Xxxx Xxxxxxx
Title: Assistant Vice President
By: /s/ Marino Zenlos
Title: Vice President Corporate and Institutional Banking
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Securitization Group-
J. Xxxx Xxxxx
Facsimile No.: (000) 000-0000
Confirmation No.: (000) 000-0000
MONTE ROSA CAPITAL CORPORATION,
as the Purchaser
By: Union Bank of Switzerland, New York
Branch, as its attorney-in-fact
By /s/ Xxxxx X. Xxxxx
Title: Vice President
By /s/ Xxxxxxx Xxxx
Title: Assistant Treasurer
x/x Xxxxx Xxxx xx Xxxxxxxxxxx,
Xxx Xxxx Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Securitization Group-
J. Xxxx Xxxxx
Facsimile No.: (000) 000-0000
Confirmation No.: (000) 000-0000
SCHEDULE I
CONDITION PRECEDENT DOCUMENTS
As required by Section 3.01 of the Agreement, each of the following items
must be delivered to the Agent prior to the date of the initial purchase of a
Percentage Interest:
(a) A copy of this Agreement duly executed by the Seller, WMECO, the
Servicer, the Purchaser and the Agent;
(b) a copy of each other Transaction Document executed by the parties
hereto;
(c) Separate certificates of the Secretary or Assistant Secretary of the
Seller and the Clerk or Assistant Clerk of WMECO, certifying (i) the names
and true signatures of the incumbent officers of the Seller or WMECO, as the
case may be, authorized to sign this Agreement and the other documents to be
delivered by it hereunder (on which certificates the Agent and the Owners may
conclusively rely until such time as the Agent shall receive from the Seller
or WMECO, as the case may be, a revised certificate meeting the requirements
of this paragraph (b)), (ii) that the copy of the certificate of
incorporation of the Seller or WMECO, as the case may be, attached thereto is
a complete and correct copy and that such certificate of incorporation has
not been amended, modified or supplemented and is in full force and effect,
(iii) that the copy of the by-laws of the Seller or WMECO, as the case may
be, attached thereto is a complete and correct copy and that such by-laws
have not been amended, modified or supplemented and are in full force and
effect, (iv) the resolutions of the Seller's or WMECO's, as the case may be,
board of directors approving and authorizing the execution, delivery and
performance by the Seller or WMECO, as the case may be, of this Agreement and
the documents related thereto and (v) in the case of such certificate of the
Clerk or Assistant Clerk of WMECO, that the copy of its servicing agreement
with Northeast Utilities Service Company attached thereto is a complete and
correct copy and that such agreement has not been amended, modified or
supplemented and is valid, enforceable and in full force and effect;
(d) Articles/Certificate of Incorporation of each of the Seller and WMECO,
certified by the Secretary of State of the state of its incorporation no more
than 20 days prior to the effective date of this Agreement.
(e) Good standing certificates for each of the Seller and WMECO issued by
the Secretary of State of the state of its incorporation, and dated no more
than 20 days prior to the effective date of this Agreement;
(f) Acknowledgment copies of proper financing statements (the "Facility
Financing Statements"), dated a date reasonably near to the date of the
initial purchase of Percentage Interests, (i) describing the Receivables, the
Related Security and Collections relating thereto and the assets described in
Section 1.7 of the Purchase and Sale Agreement and naming WMECO as the
seller/debtor, the Seller as buyer/secured party and the Purchaser as
assignee, and (ii) describing the assets included in the definition of
Percentage Interest or Section 2.16 and naming the Seller as debtor and the
Purchaser as secured party, or other, similar instruments or documents, as
may be necessary or, in the opinion of the Agent or any Owner, desirable
under the UCC of all appropriate jurisdictions or any comparable law to
perfect the Owners' interests in all Receivables and Related Security;
(g) A pay out letter and related releases (excluding proper financing
statements) with respect to the September, 1996 securitization transaction
between WMECO, the Purchaser and the Agent; and acknowledgment copies of
proper financing statements, if any, necessary to release all other security
interests and other rights of any Person in the Receivables and Related
Security previously granted by the Seller or WMECO;
(h) Certified copies of requests for information or copies (or a similar
search report certified by a party acceptable to the Agent), dated a date
reasonably near to the date of the initial purchase of Percentage Interests,
listing all effective financing statements (including the Facility Financing
Statements) which name the Seller or WMECO (under its present name and any
previous name) as debtor and which are filed in the jurisdictions in which
the Facility Financing Statements were filed, together with copies of such
financing statements (none of which, other than the Facility Financing
Statements, shall cover any Receivables, Related Security, Collections or
other Collateral);
(i) An officer's certificate, dated the date of such initial purchase, in
the form of Exhibit F, executed by an appropriate officer of WMECO;
(j) An opinion of internal counsel to WMECO, in substantially the form of
Exhibit E-1 and as to such other matters as the Agent may reasonably request;
(k) Opinions of outside counsel to WMECO, in substantially the form of
Exhibit E-2 and as to such other matters as the Agent may reasonably request;
(l) An opinion of counsel to the Seller, in substantially the form of
Exhibit E-3 and as to such other matters as the Agent may reasonably request;
(m) A copy of each of the Liquidity Agreements related to this Agreement,
executed by each of the Liquidity Lenders thereunder, the Purchaser and UBS,
as the Liquidity Agent, together with all other instruments, documents and
agreements required to be delivered thereunder;
(n) [Intentionally Deleted]
(o) The Public Disclosure Documents and such other financial reports as may
be requested by the Agent or the Purchaser;
(p) Letters from both Standard & Poor's and Moody's, confirming that the
execution and delivery of this Agreement will not cause the ratings of the
Purchaser's commercial paper notes to be reduced or withdrawn;
(q) A Bank Notice, executed by the Purchaser and the bank at which the
Collection Account is maintained, evidencing the Collection Account opened in
the name of the Purchaser and complying with all of the other requirements of
Section 6.08; and a written agreement of each payment intermediary, executed
for the benefit of the Owners, pursuant to which such payment intermediary
agrees to transfer Collections received in the Payment Centers to the
Collection Account each day;
(r) An Investor Report, dated as of the Cut-Off date immediately preceding
such initial purchase;
(s) A copy of the Credit and Collection Policy, certified by an appropriate
officer of the Company as correct and complete;
(t) A certification from an appropriate officer of WMECO (which may be
combined with the certificate described in clause (i) above) (i) as to the
execution and delivery by each of the parties thereto of the Purchase and
Sale Agreement and all documents, agreements and instruments contemplated
thereby (which evidence shall include copies, either original or facsimile,
of each of such documents, instruments and agreements), (ii) that each of the
conditions precedent to the execution and delivery of the Purchase and Sale
Agreement has been satisfied to the Agent's satisfaction, (iii) that WMECO
shall have contributed not less than $5,000,000 to the capital of Seller,
including a pro forma balance sheet of Seller as of the date of the proposed
initial purchase hereunder, certified to be true and correct by an executive
officer of Seller, and (iv) that the initial purchases under the Purchase and
Sale Agreement have been consummated;
(u) A certificate from an officer of the Seller (in form satisfactory to the
Agent) to the effect that the Trigger Conditions (as defined on the Purchase
and Sale Agreement) do not exist after giving effect to the occurrences
described in clause (t) above; and
(v) A copy, certified as true and complete by an appropriate officer of
WMECO, of the authorizations granted the Securities and Exchange Commission
and the Massachusetts Department of Public Utilities with respect to the
transactions contemplated by the Transaction Documents.
SCHEDULE III
TRADENAMES, FICTITIOUS NAMES AND "DOING BUSINESS AS" NAMES
NONE
SCHEDULE IV
LOCATIONS OF SELLER'S AND WMECO'S CHIEF EXECUTIVE OFFICE AND
PRINCIPAL PLACE OF BUSINESS AND
LOCATIONS OF BOOKS AND RECORDS
I. Seller
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxx 00000
II. WMECO
Executive Office Address:
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Principal Administrative Office Address:
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Processing Office Address:
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxx 00000
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
This ASSIGNMENT AND ACCEPTANCE, dated , 19 , is by and between
, a ("Assignor"), and ("Assignee").
Reference is made to the Receivables Purchase Agreement, dated as of May 22,
1997 (the "Receivables Purchase Agreement"), among Western Massachusetts
Electric Company, WMECO Receivables Corporation, Monte Rosa Capital
Corporation and Union Bank of Switzerland, New York Branch (the "Agent").
Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Receivables Purchase Agreement.
The Assignor hereby sells, assigns, transfers and conveys to the Assignee all
of its right, title and interest in, to and under 1 (the
"Transferred Percentage Interests") in accordance with Section 10.04 of the
Receivables Purchase Agreement.
From and after the date hereof, the Assignee shall have all of the rights,
and be subject to all of the obligations, of the Assignor with respect to the
Transferred Percentage Interests. The Agent shall be informed by both the
Assignor and the Assignee of such assignment, and shall duly so note on its
records; provided, however, that the failure of the Agent duly to so note
shall not void or otherwise impair this Assignment and Acceptance or limit
the Assignee's obligations under the Receivables Purchase Agreement with
respect to the Transferred Percentage Interests.
Without limiting the foregoing, the Assignee shall be bound by the provisions
of Section 10.12 of the Receivables Purchase Agreement.
THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE RECEIVABLES PURCHASE AGREEMENT AND THE INTERNAL LAWS OF
THE STATE OF NEW YORK.
1[Specify Percentage Interest, or portion thereof, being assigned]
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be duly executed and delivered as of the date first above
written.
[ASSIGNOR]
By: /s/
Name:
Title:
[ASSIGNEE]
By: /s/
Name:
Title:
EXHIBIT B
METHODOLOGY RE: UNBILLED RECEIVABLES
Total monthly generation ("MWHR") less a loss factor of around 8% (currently
adjusted annually according to business practices) plus prior months unbilled
MWHRs minus the current months xxxxxxxx in MWHRs equals the current months
unbilled MWHRs. The unbilled MWHRs are allocated by class of customer
(Residential, Commercial, Industrial and Street lights) based on actual MWHRs
billed by class and then an average price per MWHR, which is calculated based
on actual revenues by class divided by actual sales in MWHRs by class, is
applied.
EXHIBIT C-1
FORM OF BANK NOTICE FOR LOCK-BOX BANK
[Letterhead of the WMECO]
, 19
[Name and Address of Bank]
Re: Western Massachusetts Electric Company
Lock-Box No.
Account No.
Gentlemen:
We hereby notify you that we have transferred exclusive ownership and control
of our lock-box number (the "Lock-Box") and the corresponding
account number (the "Account") maintained with you to Union Bank
of Switzerland, New York Branch, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(the "Agent").
We hereby irrevocably instruct you to collect the monies, checks, instruments
and other items of payment mailed to the Lock-Box and deposit into the
Lock-Box Account all such monies, checks, instruments and other items of
payment (unless otherwise instructed by the Agent), and to make all payments
to be made by you out of or in connection with the Account directly to Union
Bank of Switzerland, New York Branch, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, account number , for the account of the Agent, unless you
have received contrary instructions from the Agent. If you have received
such contrary instructions, you shall be required to make such payments in
accordance with such instructions.
We also hereby notify you that the Agent shall be irrevocably entitled to
exercise any and all rights in respect of or in connection with the Lock-Box
and the Account, including, without limitation, the right to specify when
payments are to be made out of or in connection with the Lock-Box and the
Account. The monies, checks, instruments and other items of payment mailed
to the Lock-Box and the funds deposited into the Account will not be subject
to deduction, set-off, banker's lien, or any other right in favor of any
person other than the Agent.
Please agree to the terms of, and acknowledge receipt of, this notice by
signing in the space provided below on two copies hereof sent herewith and
send one such signed copy to the Agent, at its address referred to above,
Attention: Asset Securitization Group, and send the other signed copy to the
undersigned at its address at , Attention: .
Very truly yours,
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By
Title:
Agreed and acknowledged:
[NAME OF BANK]
By
Title:
EXHIBIT C-2
FORM OF BANK NOTICE FOR BANK
AT WHICH THE COLLECTION ACCOUNT IS MAINTAINED
[Letterhead of the Purchaser]
, 19
[Name and Address of Bank]
Re: Union Bank of Switzerland, as agent (the "Agent") under the Receivables
Purchase Agreement, dated as of May 22, 1997, among WMECO Receivables
Corporation, Western Massachusetts Electric Company ("WMECO"), Monte Rosa
Capital Corporation (the "Purchaser") and the Agent.
Gentlemen:
By your execution of this letter (where indicated below) you confirm that the
Purchaser has exclusive ownership and control of account number
(the "Account") maintained with you.
We hereby instruct you to transfer all available funds in the Account on each
business day to WMECO's account number at , unless you have
received contrary instructions from the Purchaser or the Agent, on behalf of
the Purchaser. If you have received such contrary instructions, you shall be
required to transfer funds in the Account only in accordance with such
instructions.
You also hereby confirm that the Purchaser or the Agent, on behalf of the
Purchaser, shall be irrevocably entitled to exercise any and all rights in
respect of or in connection with the Account, including, without limitation,
the right to specify when payments are to be made out of or in connection
with the Account. The funds deposited into the Account will not be subject
to deduction, set-off, banker's lien, or any other right in favor of any
person other than the Purchaser.
Please agree to the terms of, and acknowledge receipt of, this notice by
signing in the space provided below on two copies hereof sent herewith and
send one such signed copy to WMECO, at its address at 000 Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxx 00000, Attention: Xxxxx XxXxxx, and send the other signed
copy to the undersigned, care of the Agent at the Agent's address at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Securitization Group.
Very truly yours,
MONTE ROSA CAPITAL CORPORATION
By: Union Bank of Switzerland, New York Branch, as its attorney-in-fact
By
Title:
By
Title:
Agreed and acknowledged:
[NAME OF BANK]
By
Title:
EXHIBIT D
FORM OF INVESTOR REPORT
Attached.
EXHIBIT E-1
FORMS OF OPINIONS OF INTERNAL COUNSEL FOR WMECO
ATTACHED
EXHIBIT E-2
FORM OF OPINION OF OUTSIDE COUNSEL FOR WMECO
ATTACHED
EXHIBIT E-3
FORM OF OPINION OF OUTSIDE COUNSEL FOR THE SELLER
ATTACHED
OFFICER'S CERTIFICATE
I, , of Western Massachusetts Electric Company, a
Massachusetts corporation ("WMECO") hereby certify pursuant to Section 3.01
and Schedule I(i) of the Receivables Purchase and Sale Agreement, dated as of
May 22, 1997, among WMECO, as initial Servicer, WMECO Receivables Corporation
("WRC"), as Seller, Monte Rosa Capital Corporation, as Purchaser ("MRCC"),
and Union Bank of Switzerland, New York Branch, as Agent (the "Receivables
Purchase Agreement") (capitalized terms used but not defined herein have the
meanings set forth in the Receivables Purchase Agreement), that, on the date
hereof:
(a) the representations and warranties contained in Section 4.01 and Section
4.02 of the Receivables Purchase Agreement are true and correct in all
material respects on the date hereof, except to the extent that such
representations relate solely to an earlier date (in which case, such
representations and warranties were true and correct in all material respects
and as of such date),
(b) the conditions precedent to the initial purchase under the Receivables
Purchase Agreement, as listed in Schedule I (per Section 3.01) of the
Receivables Purchase Agreement, have been performed or complied with on or
before the date hereof,
(c) no event has occurred and is continuing, or would result from the
purchase from WMECO by MRCC of Percentage Interests under the Receivables
Purchase Agreement, that would: (i) cause the Termination Date to occur or
(ii) constitute an Event of Termination or would constitute an Event of
Termination but for the requirement that notice be given or time elapse or
both,
(d) except as disclosed in the Public Disclosure Documents, since December
31, 1996, there has been no material adverse change in the operations or
consolidated financial condition of the Parent or WMECO from that shown in
the financial statements described in Section 4.01 of the Receivables
Purchase Agreement,
(e) the Collection Account, which is maintained in the name of the
Purchaser, complies with the requirements of Section 6.08 of the Receivables
Purchase Agreement,
(f) WMECO holds all of the issued and outstanding shares of WRC and has
contributed at least $5,000,000 (in the form of Receivables) to WRC as
capital. Attached hereto is a pro forma balance sheet of the Seller after
giving effect to the initial funding under the Receivables Purchase
Agreement,
(g) attached hereto is a correct and complete copy of the Credit and
Collection Policy,
(h) the Trigger Conditions do not exist and will not result from WMECO's
sale and contribution of Receivables to WRC on the Initial Closing Date (as
defined in the Purchase and Sale Agreement), and
(i) attached hereto are true and complete copies of the authorizations
granted by the Securities and Exchange Commission and the Massachusetts
Department of Public Utilities with respect to the transactions contemplated
by the Transaction Documents.
IN WITNESS WHEREOF, I have signed this certificate as of this 22nd day of
May, 1997.
Name:
Title:
