EXHIBIT B-4
RECEIVABLES PURCHASE AGREEMENT
dated as of January [__], 2004
Among
[NEWCO], as Seller,
Metropolitan Edison Company,
as Servicer,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTIES HERETO,
JUPITER SECURITIZATION CORPORATION,
and
BANK ONE, NA (MAIN OFFICE CHICAGO)
as Agent
TABLE OF CONTENTS
ARTICLE I
PURCHASE ARRANGEMENTS.....................................................1
Section 1.1 Purchase Facility.............................................1
Section 1.2 Increases.....................................................2
Section 1.3 Decreases.....................................................2
Section 1.4 Payment Requirements..........................................2
ARTICLE II
PAYMENTS AND COLLECTIONS..................................................3
Section 2.1 Payments......................................................3
Section 2.2 Collections Prior to Amortization.............................3
Section 2.3 Terminating Financial Institutions............................5
Section 2.4 Collections Following Amortization............................5
Section 2.5 Application of Collections....................................5
Section 2.6 Payment Rescission............................................6
Section 2.7 Maximum Purchaser Interests...................................6
Section 2.8 Clean Up Call.................................................6
ARTICLE III
COMPANY FUNDING...........................................................7
Section 3.1 Yield.........................................................7
Section 3.2 Payments......................................................7
Section 3.3 Calculation of Yield..........................................7
ARTICLE IV
FINANCIAL INSTITUTION FUNDING.............................................7
Section 4.1 Financial Institution Funding.................................7
Section 4.2 Yield Payments................................................7
Section 4.3 Selection and Continuation of Tranche Periods.................7
Section 4.4 Financial Institution Bank Rates..............................8
Section 4.5 Suspension of the LIBO Rate...................................8
Section 4.6 Liquidity Agreement Fundings..................................9
ARTICLE V
REPRESENTATIONS AND WARRANTIES............................................9
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Section 5.1 Representations and Warranties of The Seller Parties..........9
Section 5.2 Financial Institution Representations and Warranties.........13
ARTICLE VI
CONDITIONS OF PURCHASES..................................................14
Section 6.1 Conditions Precedent to Initial Incremental Purchase.........14
Section 6.2 Conditions Precedent to All Purchases and Reinvestments......14
ARTICLE VII
COVENANTS................................................................15
Section 7.1 Affirmative Covenants of the Seller Parties..................15
Section 7.2 Negative Covenants of the Seller Parties.....................22
ARTICLE VIII
ADMINISTRATION AND COLLECTION............................................24
Section 8.1 Designation of Servicer......................................24
Section 8.2 Duties of Servicer...........................................24
Section 8.3 Collection Notices...........................................26
Section 8.4 Responsibilities of Seller...................................26
Section 8.5 Reports......................................................26
Section 8.6 Servicing Fees...............................................26
ARTICLE IX
AMORTIZATION EVENTS......................................................27
Section 9.1 Amortization Events..........................................27
Section 9.2 Remedies.....................................................29
ARTICLE X
INDEMNIFICATION..........................................................29
Section 10.1 Indemnities by The Seller Parties............................29
Section 10.2 Increased Cost and Reduced Return............................32
Section 10.3 Other Costs and Expenses.....................................33
ARTICLE XI
THE AGENT................................................................33
Section 11.1 Authorization and Action.....................................33
Section 11.2 Delegation of Duties.........................................33
Section 11.3 Exculpatory Provisions.......................................34
Section 11.4 Reliance by Agent............................................34
Section 11.5 Non-Reliance on Agent and Other Purchasers...................34
Section 11.6 Reimbursement and Indemnification............................35
Section 11.7 Agent in its Individual Capacity.............................35
Section 11.8 Successor Agent..............................................35
ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS..............................................35
Section 12.1 Assignments..................................................35
Section 12.2 Participations...............................................36
Section 12.3 Extension of Commitment Termination Date.....................37
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Section 12.4 Terminating Financial Institutions...........................37
ARTICLE XIII
MISCELLANEOUS............................................................38
Section 13.1 Waivers and Amendments.......................................38
Section 13.2 Notices......................................................39
Section 13.3 Ratable Payments.............................................39
Section 13.4 Protection of Ownership Interests of the Purchasers..........39
Section 13.5 Confidentiality..............................................40
Section 13.6 Bankruptcy Petition..........................................40
Section 13.7 CHOICE OF LAW................................................41
Section 13.8 CONSENT TO JURISDICTION......................................41
Section 13.9 WAIVER OF JURY TRIAL.........................................41
Section 13.10 Integration; Binding Effect; Survival of Terms...............41
Section 13.11 Counterparts; Severability; Section References...............42
Section 13.12 Bank One Roles...............................................42
Section 13.13 Characterization.............................................42
Exhibits and Schedules
Exhibit I Definitions
Exhibit II Form of Purchase Notice
Exhibit III Places of Business of the Seller Parties; Locations of Records;
Federal Employer Identification Number(s)
Exhibit IV Names of Collection Banks; Collection Accounts
Exhibit V Form of Compliance Certificate
Exhibit VI Form of Collection Account Agreement
Exhibit VII Form of Assignment Agreement
Exhibit VIII Credit and Collection Policy
Exhibit IX Form of Contract(s)
Exhibit X Form of Monthly Report
Exhibit XI Form of P.O. Box Transfer Notice
Exhibit XII Form of Reduction Notice
Exhibit XIII Defined Terms for Section 9.1(k)
Schedule A Commitments
Schedule B Closing Documents
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[NEWCO]
RECEIVABLES PURCHASE AGREEMENT
This Receivables Purchase Agreement dated as of January [__], 2004 is
among [Newco], a Delaware limited liability company ("Seller"), Metropolitan
Edison Company, a Pennsylvania corporation ("MetEd"), as initial Servicer (the
Servicer together with Seller, the "Seller Parties" and each a "Seller Party"),
the entities listed on Schedule A to this Agreement (together with any of their
respective successors and assigns hereunder, the "Financial Institutions"),
Jupiter Securitization Corporation ("Conduit") and Bank One, NA (Main Office
Chicago), as agent for the Purchasers hereunder (together with its successors
and assigns hereunder, the "Agent"). Unless defined elsewhere herein,
capitalized terms used in this Agreement shall have the meanings assigned to
such terms in Exhibit I.
PRELIMINARY STATEMENTS
Seller desires to transfer and assign Purchaser Interests to the
Purchasers from time to time.
Conduit may, in its absolute and sole discretion, purchase Purchaser
Interests from Seller from time to time.
In the event that Conduit declines to make any purchase, the Financial
Institutions shall, at the request of Seller, purchase Purchaser Interests from
time to time. In addition, the Financial Institutions have agreed to provide a
liquidity facility to Conduit in accordance with the terms of the Liquidity
Agreement entered into by Conduit with such Financial Institutions.
Bank One, NA (Main Office Chicago) has been requested and is willing
to act as Agent on behalf of Conduit and the Financial Institutions in
accordance with the terms hereof.
ARTICLE I
PURCHASE ARRANGEMENTS
Section 1.1 Purchase Facility.
(a) Upon the terms and subject to the conditions hereof, Seller may,
at its option, sell and assign Purchaser Interests to the Agent for the benefit
of one or more of the Purchasers. In accordance with the terms and conditions
set forth herein, Conduit may, at its option, instruct the Agent to purchase on
behalf of Conduit, or if Conduit shall decline to purchase, the Agent shall
purchase, on behalf of the Financial Institutions, Purchaser Interests from time
to time in an aggregate amount not to exceed at such time the lesser of (i) the
Purchase Limit and (ii) the aggregate amount of the Commitments during the
period from the date hereof to but not including the Amortization Date.
(b) Seller may, upon at least 5 Business Days' notice to the Agent,
terminate in whole or reduce in part, ratably among the Financial Institutions,
the unused portion of the Purchase Limit; provided that each partial reduction
of the Purchase Limit shall be in an amount equal to $5,000,000 or an integral
multiple thereof.
Section 1.2 Increases.
Seller shall provide the Agent with at least two Business Days' prior
notice in a form set forth as Exhibit II hereto of each Incremental Purchase (a
"Purchase Notice"). Each Purchase Notice shall be subject to Section 6.2 hereof
and, except as set forth below, shall be irrevocable and shall specify the
requested Purchase Price (which shall not be less than $1,000,000) and date of
purchase and, if the Seller has been notified that such Incremental Purchase
shall be funded by the Financial Institutions, the requested Tranche Period.
Following receipt of a Purchase Notice, the Agent will determine whether Conduit
agrees to make the purchase. If Conduit declines to make a proposed purchase,
Agent shall notify Seller and Seller may cancel the Purchase Notice or, in the
absence of such a cancellation, the Incremental Purchase of the Purchaser
Interest will be made by the Financial Institutions. On the date of each
Incremental Purchase, upon satisfaction of the applicable conditions precedent
set forth in Article VI, Conduit or the Financial Institutions, as applicable,
shall deposit to the account designated by the Seller in the applicable Purchase
Notice, in immediately available funds, no later than 12:00 noon (Chicago time),
an amount equal to (i) in the case of Conduit, the aggregate Purchase Price of
the Purchaser Interests Conduit is then purchasing or (ii) in the case of a
Financial Institution, such Financial Institution's Pro Rata Share of the
aggregate Purchase Price of the Purchaser Interests the Financial Institutions
are purchasing.
Section 1.3 Decreases. Seller shall provide the Agent with prior
written notice in the form set forth as Exhibit XII hereto (a "Reduction
Notice") two (2) Business Days prior to any proposed reduction of Aggregate
Capital from Collections. Such Reduction Notice shall designate (i) the date
(the "Proposed Reduction Date") upon which any such reduction of Aggregate
Capital shall occur and (ii) the amount of Aggregate Capital to be reduced which
shall be applied ratably to the Purchaser Interests of Conduit and the Financial
Institutions in accordance with the amount of Capital (if any) owing to Conduit,
on the one hand, and the amount of Capital (if any) owing to the Financial
Institutions (ratably, based on their respective Pro Rata Shares), on the other
hand (the "Aggregate Reduction"). Only one (1) Reduction Notice shall be
outstanding at any time. No Aggregate Reduction will be made following the
occurrence of the Amortization Date without the consent of the Agent.
Section 1.4 Payment Requirements. All amounts to be paid or deposited
by any Seller Party pursuant to any provision of this Agreement shall be paid or
deposited in accordance with the terms hereof no later than 11:00 a.m. (Chicago
time) on the day when due in immediately available funds, and if not received
before 11:00 a.m. (Chicago time) shall be deemed to be received on the next
succeeding Business Day. If such amounts are payable to a Purchaser they shall
be paid to the Agent, for the account of such Purchaser, at 000 Xxxxx Xxxxxxxx,
Xxxxxxx, Xxxxxxxx 00000 until otherwise notified by the Agent. All computations
of Yield (other than Yield calculated using the Prime Rate), per annum fees
hereunder and under the Fee Letter shall be made on the basis of a year of 360
days for the actual number of days elapsed. All computations of Yield using the
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Prime Rate shall be made on the basis of a year of 365 or 366 days, as
applicable, for the actual number of days elapsed. If any amount hereunder shall
be payable on a day which is not a Business Day, such amount shall be payable on
the next succeeding Business Day.
ARTICLE II
PAYMENTS AND COLLECTIONS
Section 2.1 Payments. Notwithstanding any limitation on recourse
contained in this Agreement, Seller shall immediately pay to the Agent when due,
for the account of the relevant Purchaser or Purchasers on a full recourse
basis, (i) such fees as set forth in the Fee Letter (which fees are all of the
fees owing to the Financial Institutions), (ii) all amounts payable as Yield,
(iii) all amounts payable as Deemed Collections (which shall be immediately due
and payable by Seller and applied in accordance with Sections 2.2 and 2.4
hereof), (iv) all amounts payable to reduce the Purchaser Interest, if required,
pursuant to Section 2.7, (v) all amounts payable pursuant to Article X, if any,
(vi) all Servicer costs and expenses, including the Servicing Fee, in connection
with servicing, administering and collecting the Receivables, (vii) all Broken
Funding Costs and (viii) all Default Fees (collectively, the "Obligations"). If
any Person fails to pay any of the Obligations when due, or if Servicer fails to
make any deposit required to be made by it hereunder when due, such Person
agrees to pay, on demand, the Default Fee in respect thereof until paid.
Notwithstanding the foregoing, no provision of this Agreement or the Fee Letter
shall require the payment or permit the collection of any amounts hereunder in
excess of the maximum permitted by applicable law. If at any xxxx Xxxxxx
receives any Collections or is deemed to receive any Collections, Seller shall
immediately pay such Collections or Deemed Collections to the Servicer for
application in accordance with the terms and conditions hereof and, at all times
prior to such payment, such Collections or Deemed Collections shall be held in
trust by Seller for the exclusive benefit of the Purchasers and the Agent.
Section 2.2 Collections Prior to Amortization.
(a) Subject to the following Section 2.2(b) below, prior to the
Amortization Date, the Purchaser Interests of any Collections and/or Deemed
Collections received by the Servicer shall be set aside and held in trust by the
Servicer for the payment of any accrued and unpaid Aggregate Unpaids or for a
Reinvestment as provided in this Section 2.2.
(b) At any time any Collections or Deemed Collections are received by
the Servicer prior to the Amortization Date:
(i) the Servicer shall set aside and hold in trust for the benefit of
the Purchasers:
(A) the Termination Percentage of Collections and Deemed
Collections evidenced by the Purchaser Interests of each Terminating
Financial Institution,
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(B) an amount equal to the accrued and unpaid Obligations, and
(C) an amount equal to the Aggregate Reduction, if any, to be
effected pursuant to Section 1.3, and
(ii) Seller hereby requests and the Purchasers (other than any
Terminating Financial Institutions) hereby agree to make (subject to the
conditions precedent set forth in Section 6.2 and the requirements of
Section 2.7), simultaneously with such receipt, a reinvestment (each a
"Reinvestment") with that portion of the balance of each and every
Collection received or Deemed Collection deemed received by the Servicer
that is part of any Purchaser Interest, such that after giving effect to
such Reinvestment, the amount of Aggregate Capital immediately after such
receipt and corresponding Reinvestment shall be equal to the amount of
Aggregate Capital immediately prior to such receipt.
(c) On each Settlement Date prior to the occurrence of the
Amortization Date, the Servicer shall remit to the Agent's account the amounts
set aside since the prior Settlement Date that have not been subject to a
Reinvestment and apply such amounts (if not previously paid in accordance with
Section 2.1):
(i) first, to the payment of the Servicer's reasonable out-of-pocket
costs and expenses in connection with servicing, administering and
collecting the Receivables, including the Servicing Fee, if the Seller or
one of its Affiliates is not then acting as the Servicer,
(ii) second, ratably to the payment of all accrued and unpaid Yield,
(iii) third, ratably to the payment of all accrued and unpaid fees
under the Fee Letter,
(iv) fourth, to reduce the Capital of all Purchaser Interests of
Terminating Financial Institutions to zero, applied ratably to each
Terminating Financial Institution according to its respective Termination
Percentage,
(v) fifth, to reduce Capital of outstanding Purchaser Interests in an
amount, if any, necessary so that the aggregate of the Purchaser Interests
does not exceed 100%, applied ratably in accordance with the Capital Pro
Rata Share of the Purchasers,
(vi) sixth, for the ratable payment of all other unpaid Obligations,
provided that to the extent such Obligations relate to the payment of
Servicer costs and expenses, including the Servicing Fee, when Seller or
one of its Affiliates is acting as the Servicer, such costs and expenses
will not be paid until after the payment in full of all other Obligations,
(vii) seventh, to fund any Aggregate Reduction on such Settlement Date
applied ratably in accordance with the Capital Pro Rata Share of the
Purchasers, and
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(viii) eighth, any balance remaining thereafter shall be remitted from
the Servicer to Seller on such Settlement Date.
In the event that, pursuant to Section 1.3, an Aggregate Reduction is to take
place on a date other than a Settlement Date, on the date of such Aggregate
Reduction, the Servicer shall remit to the Agent's account, out of the amounts
set aside pursuant to this Section 2.2, an amount equal to such Aggregate
Reduction to be applied in accordance with Section 1.3.
Section 2.3 Terminating Financial Institutions. Each Terminating
Financial Institution shall be allocated a ratable portion of Collections from
the date of its becoming a Terminating Financial Institution (the "Termination
Date") until such Terminating Financing Institution's Capital shall be paid in
full. This ratable portion shall be calculated on the Termination Date of each
Terminating Financial Institution as a percentage equal to (i) Capital of such
Terminating Financial Institution outstanding on its Termination Date, divided
by (ii) the Aggregate Capital outstanding on such Termination Date (the
"Termination Percentage"). Each Terminating Financial Institution's Termination
Percentage shall remain constant prior to the Amortization Date. On and after
the Amortization Date, each Termination Percentage shall be disregarded, and
each Terminating Financial Institution's Capital shall be reduced ratably with
all Financial Institutions in accordance with Section 2.4.
Section 2.4 Collections Following Amortization. On the Amortization
Date and on each day thereafter, the Servicer shall set aside and hold in trust,
for the holder of each Purchaser Interest, all Collections and Deemed
Collections received on such day (provided, that if the Amortization Date has
occurred pursuant to clause (iii) or (iv) of the definition thereof, the
Servicer shall set aside and hold in trust only the Purchaser Interests of all
Collections and Deemed Collections received on such day) and an additional
amount of funds for the payment of any accrued and unpaid Obligations owed by
Seller and not previously paid by Seller in accordance with Section 2.1. On the
Amortization Date and on each day thereafter, the Servicer shall (a) remit to
the Agent's account the amounts set aside pursuant to the preceding sentence,
and (b) apply amounts, in each case, to reduce the Capital associated with each
such Purchaser Interest and any other Aggregate Unpaids.
Section 2.5 Application of Collections. If there shall be insufficient
funds on deposit for the Servicer to distribute funds in payment in full of the
aforementioned amounts pursuant to Section 2.4, the Servicer shall distribute
funds:
first, to the payment of the Servicer's reasonable out-of-pocket costs
and expenses in connection with servicing, administering and collecting the
Receivables, including the Servicing Fee, if Seller or one of its
Affiliates is not then acting as the Servicer,
second, to the reimbursement of the Agent's costs of collection and
enforcement of the Tranche Documents,
third, ratably to the payment of all accrued and unpaid fees under the
Fee Letter and all Yield due and payable,
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fourth, (to the extent applicable) to the ratable reduction of the
Aggregate Capital (without regard to any Termination Percentage),
fifth, for the ratable payment of all other unpaid Obligations,
provided that to the extent such Obligations relate to the payment of
Servicer costs and expenses, including the Servicing Fee, when Seller or
one of its Affiliates is acting as the Servicer, such costs and expenses
will not be paid until after the payment in full of all other Obligations,
and
sixth, after the Aggregate Unpaids have been indefeasibly reduced to
zero, to Seller.
Collections applied to the payment of Aggregate Unpaids shall be
distributed in accordance with the aforementioned provisions, and, giving effect
to each of the priorities set forth in this Section 2.5, shall be shared ratably
(within each priority) among the Agent and the Purchasers in accordance with the
amount of such Aggregate Unpaids owing to each of them in respect of each such
priority.
Section 2.6 Payment Rescission. No payment of any of the Aggregate
Unpaids shall be considered paid or applied hereunder to the extent that, at any
time, all or any portion of such payment or application is rescinded by
application of law or judicial authority, or must otherwise be returned or
refunded for any reason. Seller shall remain obligated for the amount of any
payment or application so rescinded, returned or refunded, and shall promptly
pay to the Agent (for application to the Person or Persons who suffered such
recission, return or refund) the full amount thereof, plus the Default Fee from
the date of any such recission, return or refunding.
Section 2.7 Maximum Purchaser Interests. Seller shall ensure that the
Purchaser Interests of the Purchasers shall at no time exceed, in the aggregate,
the Applicable Maximum Purchaser Interest. If the aggregate of the Purchaser
Interests of the Purchasers exceeds the Applicable Maximum Purchaser Interest,
Seller shall pay to the Agent within (i) at any time a Monthly Reporting Period
is in effect, two (2) Business Days and (ii) at any time a Daily or Weekly
Reporting Period is in effect, one (1) Business Day, an amount to be applied to
reduce the Aggregate Capital (as allocated by the Agent), such that after giving
effect to such payment, the aggregate of the Purchaser Interests equals or is
less than the Applicable Maximum Purchaser Interest.
Section 2.8 Clean Up Call. In addition to Seller's rights pursuant to
Section 1.3, Seller shall have the right (after providing two (2) Business Days'
prior written notice to the Agent), at any time following the reduction of the
Aggregate Capital to a level that is less than 25.0% of the original Purchase
Limit, to purchase from the Purchasers all, but not less than all, of the then
outstanding Purchaser Interests. The purchase price in respect thereof shall be
an amount equal to the Aggregate Unpaids through the date of such purchase,
payable in immediately available funds. Such purchase shall be without
representation, warranty or recourse of any kind by, on the part of, or against
any Purchaser or the Agent; provided that the Agent and each Purchaser shall
represent and warrant on the date of such purchase that such Purchaser Interests
shall be free of any Adverse Claim created by such Person.
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ARTICLE III
CONDUIT FUNDING
Section 3.1 Yield. Seller shall pay Yield with respect to the Capital
associated with each Purchaser Interest of Conduit for each day that any Capital
in respect of such Purchaser Interest is outstanding; provided, that any
Purchaser Interest, portion thereof or undivided interest in which is being
funded by the Financial Institutions pursuant to the Liquidity Agreement shall
accrue Yield pursuant to Article IV. Each Purchaser Interest funded
substantially with Pooled Commercial Paper will accrue Yield each day on a pro
rata basis, based upon the percentage share the Capital in respect of such
Purchaser Interest represents in relation to all assets held by Conduit and
funded substantially with Pooled Commercial Paper.
Section 3.2 Payments. On each Yield Payment Date, Seller shall pay to
the Agent (for the benefit of Conduit) an aggregate amount equal to all accrued
and unpaid Yield in respect of the Capital associated with all Purchaser
Interests of Conduit for the immediately preceding Accrual Period in accordance
with Article II.
Section 3.3 Calculation of Yield. On the second Business Day
immediately preceding each Yield Payment Date, Conduit shall calculate the
aggregate amount of Yield for the immediately preceding Accrual Period and shall
notify Seller of such aggregate amount.
ARTICLE IV
FINANCIAL INSTITUTION FUNDING
Section 4.1 Financial Institution Funding. Each Purchaser Interest of
the Financial Institutions shall accrue Yield for each day during its Tranche
Period at either the LIBO Rate or the Prime Rate in accordance with the terms
and conditions hereof. Until Seller gives notice to the Agent of another Bank
Rate in accordance with Section 4.3, the initial Bank Rate for any Purchaser
Interest funded by the Financial Institutions pursuant to the terms and
conditions hereof shall be the Base Rate. If any Financial Institution acquires
by assignment from the Conduit all or any portion of a Purchaser Interest (or an
undivided interest therein) pursuant to the Liquidity Agreement, such Purchaser
Interest so assigned shall be deemed to have a new Tranche Period commencing on
the date of such assignment.
Section 4.2 Yield Payments. On the Yield Payment Date, Seller shall
pay to the Agent (for the benefit of the Financial Institutions) an aggregate
amount equal to the accrued and unpaid Yield in respect of all Purchaser
Interests of the Financial Institutions for the Tranche Period of each such
Purchaser Interest then ended in accordance with Article II.
Section 4.3 Selection and Continuation of Tranche Periods.
(a) With consultation from (and, in the case of any requested Tranche
Period corresponding to the LIBO Rate which is not one, two, three or six
months, with the approval by) the Agent, Seller shall from time to time request
Tranche Periods for the Purchaser Interests of the Financial Institutions,
provided that, if at any time the Financial Institutions shall have a Purchaser
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Interest, Seller shall always request Tranche Periods such that at least one
Tranche Period shall end on the date specified in clause (A) of the definition
of Yield Payment Date.
(b) Seller or the Agent, upon notice to and consent by the other
received at least three (3) Business Days prior to the end of a Tranche Period
(such Tranche Period, the "Terminating Tranche") for any Purchaser Interest,
may, effective on the last day of the Terminating Tranche: (i) divide any such
Purchaser Interest into multiple Purchaser Interests, (ii) combine any such
Purchaser Interest with one or more other Purchaser Interests that have a
Terminating Tranche ending on the same day as such Terminating Tranche or (iii)
combine any such Purchaser Interest with a new Purchaser Interests to be
purchased on the day such Terminating Tranche ends, provided, that in no event
may a Purchaser Interest of Conduit be combined with a Purchaser Interest of the
Financial Institutions.
Section 4.4 Financial Institution Bank Rates. Seller may, subject to
the terms of this Agreement, select the LIBO Rate or the Prime Rate for each
Purchaser Interest of the Financial Institutions. Seller shall by 11:00 a.m.
(Chicago time): (i) at least three (3) Business Days prior to the expiration of
any Terminating Tranche with respect to which the LIBO Rate is being requested
as a new Bank Rate and (ii) at least one (1) Business Day prior to the
expiration of any Terminating Tranche with respect to which the Prime Rate is
being requested as a new Bank Rate, give the Agent irrevocable notice of the
requested new Bank Rate for the Purchaser Interest associated with such
Terminating Tranche. Until Seller gives notice to the Agent of another Bank
Rate, the initial Bank Rate for any Purchaser Interest transferred to the
Financial Institutions pursuant to the terms and conditions hereof or under the
Liquidity Agreement shall be the Prime Rate.
Section 4.5 Suspension of the LIBO Rate. (a) If any Financial
Institution notifies the Agent that it has determined that funding its Pro Rata
Share of the Purchaser Interests of the Financial Institutions at a LIBO Rate
would violate any applicable law, rule, regulation, or directive of any
governmental or regulatory authority, whether or not having the force of law, or
that (i) deposits of a type and maturity appropriate to match fund its Purchaser
Interests at such LIBO Rate are not available or (ii) such LIBO Rate does not
accurately reflect the cost of acquiring or maintaining a Purchaser Interest at
such LIBO Rate, then the Agent shall suspend the availability of such LIBO Rate
and require Seller to select the Prime Rate for any Purchaser Interest accruing
Yield at such LIBO Rate.
(b) If less than all of the Financial Institutions give a notice to
the Agent pursuant to Section 4.5(a), each Financial Institution which gave such
a notice shall be obliged, at the request of Seller, Conduit or the Agent, to
assign all of its rights and obligations hereunder to (i) another Financial
Institution or (ii) another funding entity nominated by Seller or the Agent that
is acceptable to Conduit and willing to participate in this Agreement and the
related Liquidity Agreement through the Commitment Termination Date in the place
of such notifying Financial Institution; provided that (i) the notifying
Financial Institution receives payment in full, pursuant to an Assignment
Agreement, of an amount equal to such notifying Financial Institution's Pro Rata
Share of the Capital and Yield owing to all of the Financial Institutions and
all accrued but unpaid fees and other costs and expenses payable in respect of
its Pro Rata Share of the Purchaser Interests of the Financial Institutions, and
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(ii) the replacement Financial Institution otherwise satisfies the requirements
of Section 12.1(b).
Section 4.6 Liquidity Agreement Fundings. The parties hereto
acknowledge that Conduit may put all or any portion of its Purchaser Interests
to the Financial Institutions at any time pursuant to the Liquidity Agreement to
finance or refinance the necessary portion of its Purchaser Interests through a
funding under the Liquidity Agreement to the extent available. The fundings
under the Liquidity Agreement will accrue interest at the Bank Rate in
accordance with this Article IV. Regardless of whether a funding of Purchaser
Interests by the Financial Institutions constitutes the direct purchase of a
Purchaser Interest hereunder, an assignment under the Liquidity Agreement of a
Purchaser Interest originally funded by Conduit or the sale of one or more
participations under the Liquidity Agreement in a Purchaser Interest originally
funded by Conduit, each Financial Institution participating in a funding of a
Purchaser Interest shall have the rights and obligations of a "Purchaser"
hereunder with the same force and effect as if it had directly purchased such
Purchaser Interest from Seller hereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of The Seller Parties. Each
Seller Party hereby represents and warrants to the Agent and the Purchasers, as
to itself, as of the date hereof and as of the date of each Incremental Purchase
and the date of each Reinvestment that:
(a) Corporate Existence and Power. Such Seller Party is a corporation,
in the case of the Servicer, or limited liability company, in the case of the
Seller, duly organized, validly existing and in good standing under the laws of
its state of formation. Such Seller Party is (i) duly qualified to do business
and is in good standing as a foreign organization in each jurisdiction in which
the failure to be so qualified and in good standing could reasonably be expected
to have a Material Adverse Effect and (ii) has and holds all power and all
governmental licenses, authorizations, consents and approvals required to carry
on its business in each jurisdiction in which its business is conducted, other
than any licenses, authorizations, consents and approvals which, if not
obtained, could not reasonably be expected to have a Material Adverse Effect.
(b) Power and Authority; Due Authorization, Execution and Delivery.
The execution and delivery by such Seller Party of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, in the case of Seller, Seller's use of
the proceeds of purchases made hereunder, are within its powers and authority
and have been duly authorized by all necessary action on its part. This
Agreement and each other Transaction Document to which such Seller Party is a
party has been duly executed and delivered by such Seller Party.
(c) No Conflict. The execution and delivery by such Seller Party of
this Agreement and each other Transaction Document to which it is a party, and
the performance of its obligations hereunder and thereunder (x) do not
contravene or violate (i) its articles of incorporation or by-laws, in the case
9
of the Servicer, or its certificate of formation or limited liability company
agreement, in the case of the Seller, (ii) any law, rule or regulation
applicable to it, including, without limitation, the Public Utility Holding
Company Act of 1935, as amended, (iii) any restrictions under any agreement,
contract or instrument to which it or FirstEnergy is a party or by which it or
FirstEnergy or any of its or FirstEnergy's property is bound, or (iv) any order,
writ, judgment, award, injunction or decree binding on or affecting it or
FirstEnergy, or its or FirstEnergy's property, unless, in each case, such
contravention or violation could not reasonably be expected to have a Material
Adverse Effect and (y) do not result in the creation or imposition of any
Adverse Claim on assets of such Seller Party or its Subsidiaries (except as
created hereunder); and no transaction contemplated hereby requires compliance
with any bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of the financing
statements required hereunder and the obtaining of authorization by MetEd from
the Pennsylvania Public Utility Commission, 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 and delivery by such Seller
Party of this Agreement and each other Transaction Document to which it is a
party and the performance of its obligations hereunder and thereunder.
(e) Actions, Suits. Other than as disclosed in MetEd's December 31,
2002 10-K and September 30, 2003 10-Q filed with the Securities and Exchange
Commission/1/, there are no actions, suits or proceedings pending, or to the
best of such Seller Party's knowledge, threatened, against or affecting such
Seller Party, or any of its properties, in or before any court, arbitrator or
other body, that could reasonably be expected to have a Material Adverse Effect.
Seller is not in default with respect to any order of any court, arbitrator or
governmental body. Servicer is not in default with respect to any order of any
court, arbitrator or governmental body, which default could reasonably be
expected to have a Material Adverse Effect.
(f) Binding Effect. This Agreement and each other Transaction Document
to which such Seller Party is a party constitute the legal, valid and binding
obligations of such Seller Party enforceable against such Seller Party in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by
such Seller Party or any of its Affiliates to the Agent or the Purchasers for
purposes of or in connection with this Agreement, any Periodic Report, any of
the other Transaction Documents or any transaction contemplated hereby or
thereby is, and all such information hereafter furnished by such Seller Party or
any of its Affiliates to the Agent or the Purchasers will be, true and accurate
in every material respect on the date such information is stated or certified
and does not and will not contain any material misstatement of fact or omit to
state a material fact or any fact necessary to make the statements contained
therein not misleading in any material respect.
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1 MetEd to advise if any 8-Ks filed since September 30, 2003
10
(h) Use of Proceeds. No proceeds of any purchase hereunder will be
used (i) for a purpose that violates, or would be inconsistent with, Regulation
T, U or X promulgated by the Board of Governors of the Federal Reserve System
from time to time or (ii) to acquire any security in any transaction which is
subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as
amended.
(i) Good Title. Immediately prior to each purchase hereunder, Seller
shall be the legal and beneficial owner of the Receivables and Related Security
with respect thereto, free and clear of any Adverse Claim, except as created by
the Transaction Documents. Each purchase of Receivables by the Seller from the
Originator under the Receivables Sale Agreement was made in good faith and
without notice of any Adverse Claim against the Receivables purchased, except as
created by the Transaction Documents. There have been duly filed all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect Seller's
ownership interest in each Receivable, its Collections and the Related Security.
(j) Perfection. This Agreement, together with the filing of the
financing statements contemplated hereby, is effective to, and shall, upon each
purchase hereunder, transfer to the Agent for the benefit of the relevant
Purchaser or Purchasers (and the Agent for the benefit of such Purchaser or
Purchasers shall acquire from Seller) a valid and perfected first priority
undivided percentage ownership or security interest in each Receivable existing
or hereafter arising and in the Related Security and Collections with respect
thereto, free and clear of any Adverse Claim, except as created by the
Transactions Documents. There have been duly filed all financing statements or
other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect the Agent's (on
behalf of the Purchasers) ownership or security interest in the Receivables, the
Related Security and the Collections.
(k) Places of Business; Locations of Records; Organizational
Information. The principal places of business and chief executive office of such
Seller Party for the past six (6) years and the offices where it keeps and has
kept all of its Records for the past six (6) years are located at the
address(es) listed on Exhibit III or such other locations of which the Agent has
been notified in accordance with Section 7.2(a) in jurisdictions where all
action required by Section 13.4(a) has been taken and completed. Seller is
organized as a limited liability company under the laws of the state of
Delaware. Seller's Delaware organizational identification number and Federal
Employer Identification Number are correctly set forth on Exhibit III.
(l) Collections. The conditions and requirements set forth in Section
7.1(j) and Section 8.2 have at all times been satisfied and duly performed. The
names and addresses of all Collection Banks, together with the account numbers
of the Collection Accounts at each Collection Bank and the post office box
number of each Post Office Box, are listed on Exhibit IV. The Collection Agent
has delivered to the Agent P.O. Box Transfer Notices with respect to each Post
Office Box and Collection Account Agreements and Intercreditor Agreements/2/
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2 Parties need to discuss collection mechanics and intercreditor issues to
determine how agreements will be handled.
11
with respect to each Collection Account. Seller has not granted, nor allowed the
Collection Agent to grant, to any Person, other than the Agent as contemplated
by this Agreement, the P.O. Box Transfer Notices, the Collection Account
Agreements and Intercreditor Agreements, or to any other Person party to the
Intercreditor Agreement as a [Creditor], dominion and control of any Post Office
Box or Collection Account, or the right to take dominion and control of any such
Post Office Box or Collection Account at a future time or upon the occurrence of
a future event.
(m) Material Adverse Effect. (i) The initial Servicer represents and
warrants that since December 31, 2002, no event has occurred that would have a
material adverse effect on the financial condition or operations of the initial
Servicer and its Subsidiaries or the ability of the initial Servicer to perform
its obligations under this Agreement, and (ii) Seller represents and warrants
that since the date of this Agreement, no event has occurred that would have a
material adverse effect on (A) the financial condition or operations of Seller,
(B) the ability of Seller to perform its obligations under the Transaction
Documents, or (C) the collectibility of the Receivables generally or any
material portion of the Receivables (other than on account of the insolvency,
bankruptcy or lack of creditworthiness of the related Obligor thereof).
(n) Names. Seller has not used any names, trade names or assumed names
other than the name in which it has executed this Agreement.
(o) Ownership of Seller. Originator owns, directly or indirectly, 100%
of the issued and outstanding limited liability company interests of Seller,
free and clear of any Adverse Claim. Such limited liability company interests
are validly issued, fully paid and nonassessable, and there are no options,
warrants or other rights to acquire securities of Seller.
(p) Not a Holding Company or an Investment Company. Such Seller Party
is exempt from the registration requirements of the Public Utility Holding
Company Act of 1935, as amended, or any successor statute. Such Seller Party is
not an "investment company" within the meaning of the Investment Company Act of
1940, as amended, or any successor statute.
(q) Compliance with Law. Such Seller Party has complied in all
respects with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where a
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. Each Receivable, together with the Contract related thereto, does not
contravene 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), unless such contravention could not
reasonably be expected to have a Material Adverse Effect. No part of any
Contract related to any Receivable is in violation of any such law, rule or
regulation, except where such violation could not reasonably be expected to have
a Material Adverse Effect.
(r) Compliance with Credit and Collection Policy. Such Seller Party
has complied in all material respects with the Credit and Collection Policy with
regard to each Receivable and the related Contract, and has not made any change
to such Credit and Collection Policy, other than as permitted under Section
7.2(c) and in compliance with the notification requirements in Section
7.1(a)(vii).
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(s) Payments to Originator. With respect to each Receivable
transferred to Seller under the Receivables Sale Agreement, Seller has given
reasonably equivalent value to Originator in consideration therefor and such
transfer was not made for or on account of an antecedent debt. No transfer by
Originator of any Receivable under the Receivables Sale Agreement is or may be
voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C.
Sections 101 et seq.), as amended.
(t) Enforceability of Contracts. Each Contract with respect to each
Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net
Receivables Balance as an Eligible Receivable on the date of its purchase under
the Receivables Sale Agreement was an Eligible Receivable on such purchase date.
(v) Aggregate Purchaser Interests. Seller has determined that,
immediately after giving effect to each purchase hereunder, the aggregate
Purchaser Interests does not exceed the Applicable Maximum Purchaser Interest.
(w) Accounting. The manner in which such Seller Party accounts for the
transactions contemplated by this Agreement and the Receivables Sale Agreement
does not jeopardize the true sale analysis.
(x) Purpose. Seller has determined that, from a business viewpoint,
the purchases of the Receivables and related interests thereto from the
Originator under the Receivables Sale Agreement, and the sales of Receivable
Interests to the Purchasers and the other transactions contemplated herein, are
in the best interests of Seller.
(y) Collection of Third Party Amounts. Other than Tax Amounts, no
portion of the Collections in respect of any Receivable represents amounts such
Seller Party is collecting on behalf of third parties.
Section 5.2 Financial Institution Representations and Warranties. Each
Financial Institution hereby represents and warrants to the Agent, each Seller
Party and Conduit that:
(a) Existence and Power. Such Financial Institution is a corporation
or a banking association duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, and has all
corporate power to perform its obligations hereunder.
(b) No Conflict. The execution and delivery by such Financial
Institution of this Agreement and the performance of its obligations hereunder
are within its corporate powers, have been duly authorized by all necessary
13
corporate action, do not contravene or violate (i) its certificate or articles
of incorporation or association or by-laws, (ii) any law, rule or regulation
applicable to it, (iii) any restrictions under any agreement, contract or
instrument to which it is a party or any of its property is bound, or (iv) any
order, writ, judgment, award, injunction or decree binding on or affecting it or
its property, and do not result in the creation or imposition of any Adverse
Claim on its assets. This Agreement has been duly authorized, executed and
delivered by such Financial Institution.
(c) Governmental Authorization. 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 and delivery by such Financial
Institution of this Agreement and the performance of its obligations hereunder.
(d) Binding Effect. This Agreement constitutes the legal, valid and
binding obligation of such Financial Institution enforceable against such
Financial Institution in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
ARTICLE VI
CONDITIONS OF PURCHASES
Section 6.1 Conditions Precedent to Initial Incremental Purchase. The
initial Incremental Purchase of a Purchaser Interest under this Agreement is
subject to the conditions precedent that (a) the Agent shall have received on or
before the date of such purchase: (i) those documents listed on Schedule B, (ii)
a pro forma Monthly Report covering the immediately preceding Accrual Period and
(iii) all fees and expenses required to be paid on such date pursuant to the
terms of this Agreement and the Fee Letter and (b) the Servicer shall have
complied (and have caused the Originator to comply) with the requirements of
Section 7.1(e) .
Section 6.2 Conditions Precedent to All Purchases and Reinvestments.
Each purchase of a Purchaser Interest (other than pursuant to Section 12.1) and
each Reinvestment shall be subject to the further conditions precedent that in
the case of each such purchase or Reinvestment: (a) the Servicer shall have
delivered to the Agent on or prior to the date of such purchase, in form and
substance satisfactory to the Agent, all Periodic Reports as and when due under
Section 8.5; (b) the Commitment Termination Date shall not have occurred and (c)
on the date of each such Incremental Purchase or Reinvestment, the following
statements shall be true (and acceptance of the proceeds of such Incremental
Purchase or Reinvestment shall be deemed a representation and warranty by Seller
that such statements are then true):
(i) the representations and warranties set forth in Section 5.1 are
true and correct on and as of the date of such Incremental Purchase or
Reinvestment as though made on and as of such date;
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(ii) no event has occurred and is continuing, or would result from
such Incremental Purchase or Reinvestment, that constitutes an Amortization
Event or a Potential Amortization Event; and
(iii) the Aggregate Capital does not exceed the Purchase Limit and the
aggregate Purchaser Interests do not exceed the Applicable Maximum
Purchaser Interest.
It is expressly understood that each Reinvestment shall, unless otherwise
directed by the Agent or any Purchaser, occur automatically on each day that the
Servicer shall receive any Collections without the requirement that any further
action be taken on the part of any Person and notwithstanding the failure of
Seller to satisfy any of the foregoing conditions precedent in respect of such
Reinvestment. The failure of Seller to satisfy any of the foregoing conditions
precedent in respect of any Reinvestment shall give rise to a right of the
Agent, which right may be exercised at any time on demand of the Agent, to
rescind the related purchase and direct Seller to pay to the Agent for the
benefit of the Purchasers an amount equal to the Collections prior to the
Amortization Date that shall have been applied to the affected Reinvestment.
ARTICLE VII
Section 7.1 Affirmative Covenants of the Seller Parties. Until the
date on which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, as set forth below:
(a) Financial Reporting. Such Seller Party will maintain, for itself
and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish or cause to be furnished to
the Agent:
(i) Annual Reporting. Within 105 days after the close of each of its
respective fiscal years, audited, unqualified financial statements or, in
the case of the Seller, unaudited financial statements, (which shall
include balance sheets, statements of income and retained earnings and a
statement of cash flows) for the Seller and MetEd and its consolidated
Subsidiaries for such fiscal year certified in a manner acceptable to the
Agent by independent public accountants acceptable to the Agent.
(ii) Quarterly Reporting. Within 50 days after the close of the first
three (3) quarterly periods of each of its respective fiscal years, balance
sheets of MetEd and its consolidated Subsidiaries, and the Seller as at the
close of each such period and statements of income and retained earnings
and a statement of cash flows for each such Person for the period from the
beginning of such fiscal year to the end of such quarter, all certified by
its respective chief financial officer.
(iii) Compliance Certificate. Together with the financial statements
required hereunder, a compliance certificate in substantially the form of
Exhibit V signed by such Seller Party's Authorized Officer and dated the
date of such annual financial statement or such quarterly financial
statement, as the case may be.
15
(iv) S.E.C. Filings. Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly or other regular
reports which Originator or any of its Subsidiaries files with the
Securities and Exchange Commission.
(v) Copies of Notices. Promptly upon its receipt of any notice,
request for consent, financial statements, certification, report or other
communication under or in connection with any Transaction Document from any
Person other than the Agent or Conduit, copies of the same.
(vi) Change in Credit and Collection Policy. At least thirty (30) days
prior to the effectiveness of any material change in or material amendment
to the Credit and Collection Policy, a copy of the Credit and Collection
Policy then in effect and a notice (A) indicating such change or amendment,
and (B) if such proposed change or amendment would be reasonably likely to
adversely affect the collectibility of the Receivables or decrease the
credit quality of any newly created Receivables, requesting the Agent's
consent thereto.
(vii) Other Information. Promptly, from time to time, such other
information, documents, records, approvals, opinions or reports relating to
the Receivables, the Purchasers or the Agent's rights in the Receivables,
the Related Security and Collections or hereunder, or the condition or
operations, financial or otherwise, of such Seller Party as the Agent may
from time to time reasonably request in order to protect the interests of
the Agent and the Purchasers under or as contemplated by this Agreement.
Any report, statement or other material required to be delivered pursuant to
this clause (a) shall be deemed to have been furnished to the Agent on the date
that such report, statement or other material is posted on the Securities and
Exchange Commission's website at xxx.xxx.xxx; provided that each Seller Party
shall furnish paper copies of such reports, statements or other materials upon
the reasonable request therefor by the Agent until such Seller Party receives
notice from the Agent to cease delivering such paper copies.
(b) Notices. Such Seller Party will notify the Agent in writing of any
of the following promptly upon learning of the occurrence thereof, describing
the same and, if applicable, the steps being taken with respect thereto:
(i) Amortization Events or Potential Amortization Events. The
occurrence of each Amortization Event and each Potential Amortization
Event, by a statement of an Authorized Officer of such Seller Party.
(ii) Judgment and Proceedings. (1) The entry of any judgment or decree
against the Servicer or any of its respective Subsidiaries if the aggregate
amount of all judgments and decrees then outstanding against the Servicer
and its Subsidiaries exceeds $10,000,000 and (2) the institution of any
litigation, arbitration proceeding or governmental proceeding against the
Servicer; and (B) the entry of any judgment or decree or the institution of
any litigation, arbitration proceeding or governmental proceeding against
Seller.
16
(iii) Material Adverse Effect. The occurrence of any event or
condition that has had, or could reasonably be expected to have, a Material
Adverse Effect.
(iv) Defaults Under Other Agreements. The occurrence of a default or
an event of default under any other financing arrangement pursuant to which
such Seller Party is a debtor or an obligor.
(v) Downgrade of Originator. Any downgrade in the rating of any
Indebtedness of Originator by S&P or by Xxxxx'x, setting forth the
Indebtedness affected and the nature of such change.
(c) Compliance with Laws and Preservation of Existence. (i) Such
Seller Party will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. (ii) Such Seller Party will preserve
and maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its organization, and qualify and remain qualified in good
standing as a foreign entity in each jurisdiction where its business is
conducted, except where the failure to so preserve and maintain or qualify could
not reasonably be expected to have a Material Adverse Effect.
(d) Audits. Such Seller Party will furnish to the Agent from time to
time such information with respect to it and the Receivables as the Agent may
reasonably request. Such Seller Party will, from time to time during regular
business hours as reasonably requested by the Agent upon reasonable notice, and
at the sole cost of such Seller Party, permit the Agent, or its agents or
representatives (and shall cause Originator to permit the Agent or its agents or
representatives), (i) to examine and make copies of and abstracts from all
Records in the possession or under the control of such Person relating to the
Receivables and the Related Security, including, without limitation, the related
Contracts, and (ii) to visit the offices and properties of such Person for the
purpose of examining such materials described in clause (i) above, and to
discuss matters relating to such Person's financial condition or the Receivables
and the Related Security or any Person's performance under any of the
Transaction Documents or any Person's performance under the Contracts and, in
each case, with any of the officers or employees of Seller or the Servicer
having knowledge of such matters; provided, however that during any Monthly
Reporting Period and so long as no Amortization Event has occurred, such Seller
Party shall be responsible for the costs and expenses of only one such audit
during any one-year period.
(e) Keeping and Marking of Records and Books.
(i) The Servicer will (and will cause Originator to) maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing 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 immediate identification of each
new Receivable and all Collections of and adjustments to each existing
Receivable). The Servicer will (and will cause Originator to) give the
17
Agent notice of any material change in the administrative and operating
procedures referred to in the previous sentence.
(ii) Such Seller Party will (and will cause Originator to) (A) on or
prior to the date hereof, xxxx its master data processing records and other
books and records relating to the Purchaser Interests with a legend,
acceptable to the Agent, describing the Purchaser Interests and (B) upon
the reasonable request of the Agent following the occurrence of an
Amortization Event, (x) xxxx each Contract with a legend describing the
Purchaser Interests and (y) deliver to the Agent all Contracts (including,
without limitation, all multiple originals of any such Contract) relating
to the Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. Such
Seller Party will (and will cause Originator to) timely and fully (i) perform
and comply with all material provisions, covenants and other promises required
to be observed by it under the Contracts related to the Receivables, and (ii)
comply in all material respects with the Credit and Collection Policy in regard
to each Receivable and the related Contract.
(g) Performance and Enforcement of Receivables Sale Agreement. Seller
will, and will require Originator to, perform each of their respective
obligations and undertakings under and pursuant to the Receivables Sale
Agreement, will purchase Receivables thereunder in strict compliance with the
terms thereof and will vigorously enforce the rights and remedies accorded to
Seller under the Receivables Sale Agreement. Seller will take all actions to
perfect and enforce its rights and interests (and the rights and interests of
the Agent and the Purchasers as assignees of Seller) under the Receivables Sale
Agreement as the Agent may from time to time reasonably request, including,
without limitation, making claims to which Seller may be entitled under any
indemnity, reimbursement or similar provision contained in the Receivables Sale
Agreement.
(h) Ownership. Seller will (or will cause Originator to) take all
necessary action to (i) vest legal and equitable title to the Receivables, the
Related Security and the Collections purchased under the Receivables Sale
Agreement irrevocably in Seller, free and clear of any Adverse Claims other than
Adverse Claims in favor of the Agent and the Purchasers (including, without
limitation, the filing of all financing statements or other similar instruments
or documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect Seller's interest in such Receivables, Related Security
and Collections and such other action to perfect, protect or more fully evidence
the interest of Seller therein as the Agent may reasonably request), and (ii)
establish and maintain, in favor of the Agent, for the benefit of the
Purchasers, a valid and perfected first priority undivided percentage ownership
interest (and/or a valid and perfected first priority security interest) in all
Receivables, Related Security and Collections to the full extent contemplated
herein, free and clear of any Adverse Claims other than Adverse Claims in favor
of the Agent for the benefit of the Purchasers (including, without limitation,
the filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect the Agent's (for the benefit of the Purchasers) interest in such
Receivables, Related Security and Collections and such other action to perfect,
protect or more fully evidence the interest of the Agent for the benefit of the
Purchasers as the Agent may reasonably request).
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(i) Purchasers' Reliance. Seller acknowledges that the Purchasers are
entering into the transactions contemplated by this Agreement in reliance upon
Seller's identity as a legal entity that is separate from MetEd or any Affiliate
thereof (each a "MetEd Entity"). Therefore, from and after the date of execution
and delivery of this Agreement, Seller shall take all reasonable steps,
including, without limitation, all steps that the Agent or any Purchaser may
from time to time reasonably request, to maintain Seller's identity as a
separate legal entity and to make it manifest to third parties that Seller is an
entity with assets and liabilities distinct from those of each MetEd Entity and
not just a division of a MetEd Entity. Without limiting the generality of the
foregoing and in addition to the other covenants set forth herein, Seller will:
(A) conduct its own business in its own name and require that all
full-time employees of Seller, if any, identify themselves as such and
not as employees of any MetEd Entity (including, without limitation,
by means of providing appropriate employees with business or
identification cards identifying such employees as Seller's
employees);
(B) compensate all employees, consultants and agents directly,
from Seller's own funds, for services provided to Seller by such
employees, consultants and agents and, to the extent any employee,
consultant or agent of Seller is also an employee, consultant or agent
of any MetEd Entity, allocate the compensation of such employee,
consultant or agent between Seller and such MetEd Entity, on a basis
that reflects the services rendered to Seller and such MetEd Entity;
(C) clearly identify its offices (by signage or otherwise) as its
offices and, if such office is located in the offices of any MetEd
Entity, Seller shall lease such office at a fair market rent;
(D) have a separate telephone number, which will be answered only
in its name and separate stationery, invoices and checks, if any, in
its own name;
(E) conduct all transactions with each MetEd Entity strictly on
an arm's-length basis, allocate all overhead expenses (including,
without limitation, telephone and other utility charges) for items
shared between Seller and any MetEd Entity on the basis of actual use
to the extent practicable and, to the extent such allocation is not
practicable, on a basis reasonably related to actual use;
(F) at all times have a Board of Directors consisting of at least
three members, at least one member of which is an Independent
Director;
(G) observe all limited liability company formalities as a
distinct entity, and ensure that all limited liability company actions
relating to (1) the selection, maintenance or replacement of the
Independent Director, (2) the dissolution or liquidation of Seller or
(3) the initiation of, participation in, acquiescence in or consent to
19
any bankruptcy, insolvency, reorganization or similar proceeding
involving Seller, are duly authorized by unanimous vote of its Board
of Directors (including the Independent Director);
(H) maintain Seller's books and records separate from those of
any MetEd Entity and otherwise readily identifiable as its own assets
rather than assets of such MetEd Entity;
(I) prepare its financial statements separately from those of any
MetEd Entity and insure that any consolidated financial statements of
any MetEd Entity that include Seller and that are filed with the
Securities and Exchange Commission or any other governmental agency
have notes clearly stating that Seller is a separate corporate entity
and that its assets will be available first and foremost to satisfy
the claims of the creditors of Seller;
(J) maintain the funds or other assets of Seller in such a manner
that it will not be costly or difficult to segregate, ascertain or
identify its own assets from those of any other Person;
(K) pay all of Seller's operating expenses from Seller's own
assets (except for certain payments by any MetEd Entity or other
Persons pursuant to allocation arrangements that comply with the
requirements of this Section 7.1(i));
(L) operate its business and activities such that: it does not
engage in any business or activity of any kind, or enter into any
transaction or indenture, mortgage, instrument, agreement, contract,
lease or other undertaking, other than the transactions contemplated
and permitted under this Agreement and the Receivables Sale Agreement;
and does not create, incur, guarantee, assume or suffer to exist any
indebtedness or other liabilities, whether direct or contingent, other
than (1) as a result of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course
of business, (2) the incurrence of obligations under this Agreement,
(3) the incurrence of obligations, as expressly contemplated in the
Receivables Sale Agreement, to make payment to Originator thereunder
for the purchase of Receivables from Originator under the Receivables
Sale Agreement, and (4) the incurrence of operating expenses in the
ordinary course of business of the type otherwise contemplated by this
Agreement;
(M) maintain its organizational documents in conformity with this
Agreement, such that it does not amend, restate, supplement or
otherwise modify its Certificate of Formation or Limited Liability
Company Agreement in any respect that would impair its ability to
20
comply with the terms or provisions of any of the Transaction
Documents, including, without limitation, this Section 7.1(i);
(N) maintain the effectiveness of, and continue to perform under
the Receivables Sale Agreement, such that it does not amend, restate,
supplement, cancel, terminate or otherwise modify the Receivables Sale
Agreement, or give any consent, waiver, directive or approval
thereunder or waive any default, action, omission or breach under the
Receivables Sale Agreement or otherwise grant any indulgence
thereunder, without (in each case) the prior written consent of the
Agent;
(O) maintain its limited liability company separateness such that
it does not merge or consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a
series of transactions, and except as otherwise contemplated herein)
all or substantially all of its assets (whether now owned or hereafter
acquired) to, or acquire all or substantially all of the assets of,
any Person, nor at any time create, have, acquire, maintain or hold
any interest in any Subsidiary;
(P) maintain at all times the Required Capital Amount (as defined
in the Receivables Sale Agreement) and refrain from making any
dividend, distribution, or redemption of membership interests which
would cause the Required Capital Amount to cease to be so maintained,
and refrain from making any payment of any subordinated indebtedness
which would cause the Required Capital Amount to cease to be so
maintained; and
(Q) take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the opinion issued
by Pillsbury Winthrop LLP, as counsel for Seller, in connection with
the closing or initial Incremental Purchase under this Agreement and
relating to true sale and substantive consolidation issues, and in the
certificates accompanying such opinion, remain true and correct in all
material respects at all times.
(j) Collections. Such Seller Party will cause (i) all Collections to
be remitted to either a Post Office Box or a Collection Account, (ii) all
proceeds from all Post Office Boxes to be directly deposited by the Collection
Agent into a Collection Account and (iii) each Post Office Box and Collection
Account to be subject at all times to a P.O. Box Transfer Notice and a
Collection Account Agreement and an Intercreditor Agreement, respectively, this
is in full force and effect. In the event any payments relating to Receivables
are remitted directly to Seller or any Affiliate of Seller, Seller will remit
(or will cause all such payments to be remitted) directly to a Collection Bank
and deposited into a Collection Account within two (2) Business Days following
receipt thereof, and, at all times prior to such remittance, Seller will itself
hold or, if applicable, will cause such payments to be held in trust for the
exclusive benefit of the Agent and the Purchasers. Seller will cause the
Collection Agent to maintain exclusive ownership, dominion and control (subject
to the terms of this Agreement) of each Post Office Box and Collection Account
21
and shall not grant, nor allow the Collection Agent to grant, the right to take
dominion and control of any Post Office Box or Collection Account at a future
time or upon the occurrence of a future event to any Person, except to the Agent
as contemplated by this Agreement.
(k) Taxes. Such Seller Party will file all tax returns and reports
required by law to be filed by it and will promptly pay all taxes and
governmental charges at any time owing. Seller will pay when due any taxes
payable in connection with the Receivables, exclusive of taxes on or measured by
income or gross receipts of Conduit, the Agent or any Financial Institution,
except any such taxes which are not yet delinquent or are being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books.
(l) Insurance. Seller will maintain in effect, or cause to be
maintained in effect, at Seller's own expense, such casualty and liability
insurance as Seller shall deem appropriate in its good faith business judgment.
The foregoing requirements shall not be construed to negate, reduce or modify,
and are in addition to, Seller's obligations hereunder.
(m) Payment to Originator. With respect to any Receivable purchased by
Seller from Originator, such sale shall be effected under, and in strict
compliance with the terms of, the Receivables Sale Agreement, including, without
limitation, the terms relating to the amount and timing of payments to be made
to Originator in respect of the purchase price for such Receivable.
Section 7.2 Negative Covenants of the Seller Parties. Until the date
on which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, that:
(a) Name Change; Change of Jurisdiction. Such Seller Party will not
(and will not permit the Originator to) change its name (within the meaning of
Section 9-507(c) of any applicable enactment of the UCC) or its identity,
corporate structure, jurisdiction of organization, or relocate its chief
executive office or any office where records are kept unless it shall have: (i)
given the Agent at least forty-five (45) days' prior written notice thereof,
(ii) delivered to the Agent all financing statements, instruments and other
documents requested by the Agent in connection with such change so that the
Agent, for the benefit of itself and the Purchasers, continues to have a first
priority, perfected ownership or security interest in the Receivables, the
Related Security and any Collections thereon, and (iii) in the case of a change
of the jurisdiction of organization, delivered to the Agent an opinion of
counsel in form and substance satisfactory to the Agent, as to such organization
and the applicable Seller Party's valid existence and good standing and the
perfection and priority of the Agent's ownership or security interest in the
Receivables, the Related Security and any Collections thereon.
(b) Change in Payment Instructions to Obligors. Except as may be
required by the Agent pursuant to Section 8.2(b), such Seller Party will not,
and will not allow the Collection Agent to, add or terminate any bank as a
Collection Bank, or make any change in the instructions to Obligors regarding
payments to be made to any Post Office Box or Collection Account, unless the
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Agent shall have received, at least ten (10) days before the proposed effective
date therefor, (i) written notice of such addition, termination or change and
(ii) with respect to the addition of a Collection Bank or a Collection Account
or Post Office Box, an executed Collection Account Agreement, Intercreditor
Agreement and Post Office Box Transfer Notice, respectively, with respect to the
new Collection Account or Post Office Box; provided, however, that the Servicer
may make changes in instructions to Obligors regarding payments if such new
instructions require such Obligor to make payments to another existing
Collection Account or Post Office Box.
(c) Modifications to Contracts and Credit and Collection Policy. Such
Seller Party will not, and will not permit Originator to, make any change to the
Credit and Collection Policy that could adversely affect the collectibility of
the Receivables or decrease the credit quality of any newly created Receivables
without the Agent's consent. Except as provided in Section 8.2(d), the Servicer
will not, and will not permit Originator to, extend, amend or otherwise modify
the material terms of any Receivable or any Contract related thereto other than
in accordance with the Credit and Collection Policy without the Agent's consent.
(d) Sales, Liens. Seller will not, and will not allow the Collection
Agent to, sell, assign (by operation of law or otherwise) or otherwise dispose
of, or grant any option with respect to, or create or suffer to exist any
Adverse Claim upon (including, without limitation, the filing of any financing
statement) or with respect to, any Receivable, Related Security or Collections,
or upon or with respect to any Contract under which any Receivable arises, or
any Post Office Box or Collection Account, or assign any right to receive income
with respect thereto (other than, in each case, the creation of the interests
therein in favor of the Agent and the Purchasers provided for herein), and
Seller will defend the right, title and interest of the Agent and the Purchasers
in, to and under any of the foregoing property, against all claims of third
parties claiming through or under Seller or Originator. Seller will not create
or suffer to exist any mortgage, pledge, security interest, encumbrance, lien,
charge or other similar arrangement on any of its inventory.
(e) Aggregate Purchaser Interests. At no time prior to the
Amortization Date shall Seller permit the aggregate Purchaser Interests to
exceed the Applicable Maximum Purchaser Interest.
(f) Termination Date Determination. Seller will not designate the
Termination Date (as defined in the Receivables Sale Agreement), or send any
written notice to Originator in respect thereof, without the prior written
consent of the Agent, except with respect to the occurrence of such Termination
Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.
(g) Restricted Junior Payments. From and after the occurrence of any
Amortization Event, Seller will not make any Restricted Junior Payment if, after
giving effect thereto, Seller would fail to meet its obligations set forth in
Section 7.2(e).
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ARTICLE VIII
ADMINISTRATION AND COLLECTION
Section 8.1 Designation of Servicer.
(a) The servicing, administration and collection of the Receivables
shall be conducted by such Person (the "Servicer") so designated from time to
time in accordance with this Section 8.1. MetEd is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Servicer pursuant to
the terms of this Agreement. The Agent may, upon the occurrence and during the
continuance of an Amortization Event or during a Daily Reporting Period,
designate as Servicer any Person to succeed MetEd or any successor Servicer.
(b) Without the prior written consent of the Agent and the Required
Financial Institutions, MetEd shall not be permitted to delegate any of its
duties or responsibilities as Servicer to any Person other than (i) Seller and
(ii) with respect to Charged-Off Receivables, outside collection agencies in
accordance with its customary practices. Seller shall not be permitted to
further delegate to any other Person any of the duties or responsibilities of
the Servicer delegated to it by MetEd. If at any time the Agent shall designate
as Servicer any Person other than MetEd, all duties and responsibilities
theretofore delegated by MetEd to Seller may, at the reasonable discretion of
the Agent, be terminated forthwith on prior written notice given by the Agent to
MetEd and to Seller.
(c) Until such time as a Person other than MetEd has been designated
as Servicer hereunder, (i) MetEd shall be and remain primarily liable to the
Agent and the Purchasers for the full and prompt performance of all duties and
responsibilities of the Servicer hereunder and (ii) the Agent and the Purchasers
shall be entitled to deal exclusively with MetEd in matters relating to the
discharge by the Servicer of its duties and responsibilities hereunder. The
Agent and the Purchasers shall not be required to give notice, demand or other
communication to any Person other than MetEd in order for communication to the
Servicer and its sub-servicer or other delegate with respect thereto to be
accomplished. MetEd, at all times that it is the Servicer, shall be responsible
for providing any sub-servicer or other delegate of the Servicer with any notice
given to the Servicer under this Agreement.
Section 8.2 Duties of Servicer.
(a) 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.
(b) The Servicer will instruct all Obligors to pay all Collections
directly to a Post Office Box or Collection Account. The Servicer shall cause
the Collection Agent to effect a Collection Account Agreement and an
Intercreditor Agreement substantially in the form of Exhibit VI with each
Collection Bank and a P.O. Box Transfer Notice substantially in the form of
Exhibit XI with respect to each Post Office Box. In the case of any remittances
received in any Post Office Box or Collection Account that shall have been
identified, to the sole satisfaction of the Servicer, to not constitute
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Collections or other proceeds of the Receivables or the Related Security, the
Servicer shall cause the Collection Agent to promptly return such items to the
Person reasonably identified to it as being the owner of such remittances. From
and after the date the Agent delivers to any Collection Bank a Collection Notice
pursuant to Section 8.3, the Agent may request that the Servicer, and the
Servicer thereupon promptly shall instruct all Obligors with respect to the
Receivables, to remit all payments thereon to a new depositary account specified
by the Agent and, at all times thereafter, Seller and the Servicer shall not
deposit or otherwise credit, and shall not instruct any other Person to deposit
or otherwise credit to such new depositary account any cash or payment item
other than Collections.
(c) The Servicer shall administer the Collections in accordance with
the procedures described herein and in Article II. The Servicer shall set aside
and hold in trust for the account of Seller and the Purchasers their respective
shares of the Collections in accordance with Article II. Upon the occurrence and
during the continuance of an Amortization Event or during a Daily Reporting
Period, the Agent may request the Servicer to segregate, and upon such request
the Servicer shall segregate, in a manner acceptable to the Agent, all cash,
checks and other instruments received by it from time to time constituting
Collections from the general funds of the Servicer or Seller prior to the
remittance thereof in accordance with Article II. If the Servicer shall be
required to segregate Collections pursuant to the preceding sentence, the
Servicer shall segregate and deposit with Bank One (so long as Bank One is
acting as the Agent hereunder, otherwise, a bank acceptable to the Seller
Parties) such allocable share of Collections of Receivables set aside for the
Purchasers on the first Business Day following receipt by the Servicer of such
Collections, duly endorsed or with duly executed instruments of transfer.
(d) The Servicer may, in accordance with the Credit and Collection
Policy, extend the maturity of any Receivable or adjust the Outstanding Balance
of any Receivable as the Servicer determines in its sole judgment to be
appropriate to maximize Collections thereof; provided, however, that such
extension or adjustment shall not alter the status of such Receivable as a
Delinquent Receivable, Defaulted Receivable or Charged-Off Receivable or limit
the rights of the Agent or the Purchasers under this Agreement. Notwithstanding
anything to the contrary contained herein, upon the occurrence and during the
continuance of an Amortization Event, the Agent shall have the absolute and
unlimited right to direct the Servicer to commence or settle any legal action
with respect to any Receivable or to foreclose upon or repossess any Related
Security.
(e) The Servicer shall hold in trust for Seller and the Purchasers all
Records that (i) evidence or relate to the Receivables, the related Contracts
and Related Security or (ii) are otherwise necessary or desirable to collect the
Receivables and shall, as soon as practicable upon demand of the Agent, deliver
or make available to the Agent all such Records, at a place selected by the
Agent. The Servicer shall, as soon as practicable following receipt thereof turn
over to Seller any cash collections or other cash proceeds received with respect
to Indebtedness not constituting Receivables. The Servicer shall, from time to
time at the reasonable request of any Purchaser, furnish to the Purchasers (as
promptly as practicable after any such request) a calculation of the amounts set
aside for the Purchasers pursuant to Article II.
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(f) Any payment by an Obligor in respect of any indebtedness owed by
it to Originator or Seller shall, except as otherwise specified by such Obligor
or otherwise required by contract or law and unless otherwise instructed by the
Agent, be applied as a Collection of any Receivable of such Obligor (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
obligation of such Obligor.
Section 8.3 Collection Notices. The Agent is authorized (i) when an
Amortization Event exists or (ii) during a Daily Reporting Period, to date and
to deliver to the Collection Banks the Collection Notices and to date and
deliver to the U.S. Postmaster, the P.O. Box Transfer Notices. Pursuant to the
terms of the Collection Account Agreements and P.O. Box Transfer Notices, the
Collection Agent has agreed to transfer to the Agent for the benefit of the
Purchasers, effective when the Agent delivers such notice, the exclusive
ownership and control of each Post Office Box and the Collection Accounts. In
case any authorized signatory of the Collection Agent whose signature appears on
a Collection Account Agreement or P.O. Box Transfer Notice shall cease to have
such authority before the delivery of such notice, such Collection Notice shall
nevertheless be valid as if such authority had remained in force. Seller hereby
authorizes the Agent, and agrees that the Agent shall be entitled when an
Amortization Event exists to (A) endorse Seller's name on checks and other
instruments representing Collections, (B) enforce the Receivables, the related
Contracts and the Related Security and (C) take such action as shall be
necessary or desirable to cause all cash, checks and other instruments
constituting Collections of Receivables to come into the possession of the Agent
rather than Seller.
Section 8.4 Responsibilities of Seller. Anything herein to the
contrary notwithstanding, the exercise by the Agent and the Purchasers of their
rights hereunder shall not release the Servicer, Originator or Seller from any
of their duties or obligations with respect to any Receivables or under the
related Contracts. The Purchasers shall have no obligation or liability with
respect to any Receivables or related Contracts, nor shall any of them be
obligated to perform the obligations of Seller.
Section 8.5 Reports. The Servicer shall prepare and forward to the
Agent (i)(A) on the 15th day of each month (or if such day is not a Business
Day, on the next succeeding Business Day), a Monthly Report, (B) upon the
Agent's reasonable request, an interim Monthly Report showing the amount of
Eligible Receivables, (C) during a Weekly Reporting Period, a Weekly Report
covering the period from and including Monday of the preceding week to but
excluding Monday of such week and (D) during a Daily Reporting Period, a Daily
Report and (ii) upon the Agent's reasonable request, such other information
related to the Receivables. Each Periodic Report required to be delivered
pursuant this Section 8.5 on or after the Report Completion Date shall contain
the Additional Reporting Information.
Section 8.6 Servicing Fees. In consideration of MetEd's agreement to
act as Servicer hereunder, the Purchasers hereby agree that, so long as MetEd
shall continue to perform as Servicer hereunder, Seller shall pay over to MetEd
a fee (the "Servicing Fee") on the first calendar day of each month, in arrears
for the immediately preceding month, equal to 0.25% per annum of the aggregate
26
Outstanding Balance of all Receivables during such period, as compensation for
its servicing activities.
ARTICLE IX
AMORTIZATION EVENTS
Section 9.1 Amortization Events. The occurrence of any one or more of
the following events shall constitute an Amortization Event:
(a) Any Seller Party shall fail:
(i) to make any payment or deposit required hereunder or under any
other Transaction Document in respect of Capital when due and such failure
continues for one (1) Business Day;
(ii) to make any payment or deposit required hereunder or under any
other Transaction Document other than in respect of Capital and such
failure continues for five (5) Business Days; or
(iii) to perform or observe any term, covenant or agreement hereunder
(other than as referred to in clauses (i) and (ii) of this paragraph (a)
and paragraph 9.1(e)) and such failure shall continue for (A) in the case
of any covenant set forth in paragraphs (a)(viii), (b)(v), (e) or (k) of
Section 7.1, thirty (30) days after the earlier of (1) the date upon which
any Authorized Officer of such Seller Party obtains actual knowledge of
such failure and (2) the date upon which such Seller Party receives written
notice of such failure from the Agent or any Purchaser, (B) in the case of
the covenant set forth in clause (i) of Section 7.1(c), ten (10) days after
the earlier of (1) the date upon which any Authorized Officer of such
Seller Party obtains actual knowledge of such failure and (2) the date upon
which such Seller Party receives written notice of such failure from the
Agent or any Purchaser and (C) except as provided in the preceding clauses
(A) and (B), five (5) Business Days after the earlier of (1) the date upon
which any Authorized Officer of such Seller Party obtains actual knowledge
of such failure and (2) the date upon which such Seller Party receives
written notice of such failure from the Agent or any Purchaser.
(b) Any representation, warranty, certification or statement made by
any Seller Party in this Agreement, any other Transaction Document or in any
other document delivered pursuant hereto or thereto shall prove to have been
materially incorrect when made or deemed made (except that the materiality
standard in this subsection (b) shall not apply to any such representation or
warranty which is qualified by a materiality standard by its terms).
(c) Failure of Seller to pay any Indebtedness when due or the failure
of the Servicer or the Originator to pay Indebtedness when due in excess of
$[20,000,000] in the aggregate; or the default by such Person in the performance
of any term, provision or condition contained in any agreement under which any
such Indebtedness was created or is governed, the effect of which is to cause,
or to permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due prior to its stated maturity; or any such
Indebtedness of such Person shall be declared to be due and payable or required
27
to be prepaid (other than by a regularly scheduled payment) prior to the date of
maturity thereof.
(d) (i) Any Seller Party, the Collection Agent, Originator or any of
such Person's Subsidiaries 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 (ii) any
proceeding shall be instituted by or against any such Person or any of such
Person's Subsidiaries seeking to adjudicate it 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 any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by it), such
proceeding shall remain undismissed or unstayed for a period of 60 days, or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or (iii) any such Person or any of such Person's
Subsidiaries shall take any corporate action to authorize any of the actions set
forth in clauses (i) or (ii) above in this subsection (d).
(e) Seller shall fail to comply with the terms of Section 2.7 hereof
(subject to the grace periods set forth therein).
(f) As of the end of any calendar month:
(i) the average of the Dilution Ratios as of the end of such calendar
month and the two preceding calendar months shall exceed [o]%;
(ii) the average of the Delinquency Ratios as of the end of such
calendar month and the two preceding calendar months shall exceed [o]%;
(iii) the average of the Default Ratios as of the end of such calendar
month and the two preceding calendar months shall exceed [o]%; or
(iv) the average of the Days Sales Outstanding Ratios as of the end of
such calendar month and the two preceding calendar months shall exceed
[o]%.
(g) A Change of Control shall occur.
(h) (i) One or more final judgments for the payment of money shall be
entered against Seller or (ii) one or more final judgments for the payment of
money in an amount in excess of $10,000,000, individually or in the aggregate,
shall be entered against the Servicer or the Originator on claims not covered by
insurance or as to which the insurance carrier has denied its responsibility,
and such judgment shall continue unsatisfied and in effect for fifteen (15)
consecutive days without a stay of execution.
(i) The "Termination Date" under and as defined in the Receivables
Sale Agreement shall occur under the Receivables Sale Agreement or Originator
shall for any reason cease to transfer, or cease to have the legal capacity to
28
transfer, or otherwise be incapable of transferring Receivables to Seller under
the Receivables Sale Agreement.
(j) This Agreement shall terminate in whole or in part (except in
accordance with its terms), or shall cease to be effective or to be the legally
valid, binding and enforceable obligation of Seller, or any Obligor shall
directly or indirectly contest in any manner such effectiveness, validity,
binding nature or enforceability, or the Agent for the benefit of the Purchasers
shall cease to have a valid and perfected first priority security interest in
the Receivables, the Related Security and the Collections with respect thereto
and the Collection Accounts.
(k) MetEd shall (i) fail to maintain a Fixed Charge Ratio (determined
as of the last day of each fiscal quarter) of at least 2.00 to 1.00 or (ii)
permit the ratio (determined as of the last day of each fiscal quarter) of
Consolidated Debt on such day to Total Capitalization on such day to exceed 0.65
to 1.00. Capitalized terms used in this paragraph (k) shall have the meanings
set forth in Exhibit XIII.
(l) Any Periodic Report delivered on or after [___], 2004 shall fail
to contain all Additional Reporting Information.
Section 9.2 Remedies. Upon the occurrence and during the continuation
of an Amortization Event, the Agent may, or upon the direction of the Required
Financial Institutions shall, take any of the following actions: (i) replace the
Person then acting as Servicer, (ii) declare the Amortization Date to have
occurred, whereupon the Amortization Date shall forthwith occur, without demand,
protest or further notice of any kind, all of which are hereby expressly waived
by each Seller Party; provided, however, that upon the occurrence of an
Amortization Event described in Section 9.1(d)(ii), or of an actual or deemed
entry of an order for relief with respect to any Seller Party under the Federal
Bankruptcy Code, the Amortization Date shall automatically occur, without
demand, protest or any notice of any kind, all of which are hereby expressly
waived by each Seller Party, (iii) to the fullest extent permitted by applicable
law, declare that the Default Fee shall accrue with respect to any of the
Aggregate Unpaids outstanding at such time, (iv) deliver the Collection Notices
to the Collection Banks, (v) notify Obligors of the Purchasers' interest in the
Receivables and (vi) upon the occurrence of an Amortization Event described in
Section 9.1(a) or 9.1(g) with respect to the Collection Agent, replace the
Collection Agent. The aforementioned rights and remedies shall be without
limitation, and shall be in addition to all other rights and remedies of the
Agent and the Purchasers otherwise available under any other provision of this
Agreement, by operation of law, at equity or otherwise, all of which are hereby
expressly preserved, including, without limitation, all rights and remedies
provided under the UCC, all of which rights shall be cumulative.
ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnities by The Seller Parties. Without limiting any
other rights that the Agent or any Purchaser may have hereunder or under
applicable law, (A) Seller hereby agrees to indemnify (and pay within 5 Business
29
Days after demand therefor) the Agent and each Purchaser and their respective
assigns, officers, directors, agents and employees (each an "Indemnified Party")
from and against any and all damages, losses, claims, taxes, liabilities, costs,
expenses and for all other amounts payable, including reasonable attorneys' fees
and documented 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 acquisition, either directly or
indirectly, by a Purchaser of an interest in the Receivables, and (B) the
Servicer hereby agrees to indemnify (and pay within 5 Business Days after demand
therefor) each Indemnified Party for Indemnified Amounts awarded against or
incurred by any of them arising out of the Servicer's activities as Servicer
hereunder and under the other Transaction Documents to which it is a party,
excluding, however, in all of the foregoing instances under the preceding
clauses (A) and (B):
(i) Indemnified Amounts to the extent a final judgment of a court of
competent jurisdiction holds that such Indemnified Amounts resulted from
gross negligence or willful misconduct on the part of any Indemnified
Party;
(ii) Indemnified Amounts to the extent the same includes losses in
respect of Receivables that are uncollectible on account of the insolvency,
bankruptcy or lack of creditworthiness of the related Obligor; or
(iii) taxes imposed by the jurisdiction in which such Indemnified
Party's principal executive office is located, on or measured by the
overall net income of such Indemnified Party to the extent that the
computation of such taxes is consistent with the characterization for
income tax purposes of the acquisition by the Purchasers of Purchaser
Interests as a loan or loans by the Purchasers to Seller secured by the
Receivables, the Related Security, the Collection Accounts and the
Collections;
provided, however, that nothing contained in this sentence shall limit the
liability of any Seller Party or limit the recourse of the Purchasers to any
Seller Party for amounts otherwise specifically provided to be paid by such
Seller Party under the terms of this Agreement. Without limiting the generality
of the foregoing indemnification but subject to the same limitations above, each
Seller Party shall indemnify the Agent and the Purchasers for Indemnified
Amounts (including, without limitation, losses in respect of uncollectible
receivables, regardless of whether reimbursement therefor would constitute
recourse to Seller or the Servicer) relating to or resulting from:
(i) any representation or warranty made by any Seller Party or
Originator (or any officers of any such Person) under or in connection with
this Agreement, any other Transaction Document or any other information or
report delivered by any such Person pursuant hereto or thereto, which shall
have been false or incorrect when made or deemed made;
(ii) the failure by Seller, the Servicer or Originator to comply with
any applicable law, rule or regulation with respect to any Receivable or
Contract related thereto, or the nonconformity of any Receivable or
Contract included therein with any such applicable law, rule or regulation
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or any failure of Originator to keep or perform any of its obligations,
express or implied, with respect to any Contract;
(iii) any failure of Seller, the Servicer or Originator to perform its
duties, covenants or other obligations in accordance with the provisions of
this Agreement or any other Transaction Document;
(iv) any products liability, personal injury or damage suit, or other
similar claim arising out of or in connection with merchandise, insurance
or services that are the subject of any Contract or any Receivable;
(v) any dispute, claim, offset or defense (other than discharge in
bankruptcy or insolvency of the Obligor or the Obligor's financial
inability to pay) of the Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract 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 service related to such
Receivable or the furnishing or failure to furnish such merchandise or
services;
(vi) the commingling of Collections of Receivables at any time with
other funds;
(vii) any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby, the use of the proceeds of an Incremental
Purchase or a Reinvestment, the ownership of the Purchaser Interests or any
other investigation, litigation or proceeding relating to Seller, the
Servicer or Originator in which any Indemnified Party becomes involved as a
result of any of the transactions contemplated hereby;
(viii) any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being immune from
civil and commercial law and suit on the grounds of sovereignty or
otherwise from any legal action, suit or proceeding;
(ix) any Amortization Event described in Section 9.1(d);
(x) any failure of Seller to acquire and maintain legal and equitable
title to, and ownership of any Receivable and the Related Security and
Collections with respect thereto from Originator, free and clear of any
Adverse Claim (other than as created hereunder); or any failure of Seller
to give reasonably equivalent value to Originator under the Receivables
Sale Agreement in consideration of the transfer by Originator of any
Receivable, or any attempt by any Person to void such transfer under
statutory provisions or common law or equitable action;
(xi) any failure to vest and maintain vested in the Agent for the
benefit of the Purchasers, or to transfer to the Agent for the benefit of
the Purchasers, legal and equitable title to, and ownership of, a first
priority perfected undivided percentage ownership interest (to the extent
of the Purchaser Interests contemplated hereunder) or security interest in
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the Receivables, the Related Security and the Collections, free and clear
of any Adverse Claim (except as created by the Transaction Documents);
(xii) the failure to have filed, 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
Receivable, the Related Security and Collections with respect thereto, and
the proceeds of any thereof, whether at the time of any Incremental
Purchase or Reinvestment or at any subsequent time;
(xiii) any action or omission by any Seller Party which reduces or
impairs the rights of the Agent or the Purchasers with respect to any
Receivable or the value of any such Receivable;
(xiv) any attempt by any Person to void any Incremental Purchase or
Reinvestment hereunder under statutory provisions or common law or
equitable action; and
(xv) the failure of any Receivable included in the calculation of the
Net Receivables Balance as an Eligible Receivable to be an Eligible
Receivable at the time so included.
Section 10.2 Increased Cost and Reduced Return. If after the date
hereof, any Funding Source shall be charged any fee, expense or increased cost
on account of the adoption of any applicable law, rule or regulation (including
any applicable law, rule or regulation regarding capital adequacy) or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency: (i) that subjects any Funding Source to any
charge or withholding on or with respect to any Funding Agreement or a Funding
Source's obligations under a Funding Agreement, or on or with respect to the
Receivables, or changes the basis of taxation of payments to any Funding Source
of any amounts payable under any Funding Agreement (except for changes in the
rate of tax on the overall net income of a Funding Source or taxes excluded by
Section 10.1) or (ii) that imposes, modifies or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of a Funding Source, or credit
extended by a Funding Source pursuant to a Funding Agreement or (iii) that
imposes any other condition the result of which is to increase the cost to a
Funding Source of performing its obligations under a Funding Agreement, or to
reduce the rate of return on a Funding Source's capital as a consequence of its
obligations under a Funding Agreement, or to reduce the amount of any sum
received or receivable by a Funding Source under a Funding Agreement or to
require any payment calculated by reference to the amount of interests or loans
held or interest received by it, then, upon demand by the Agent, Seller shall
pay to the Agent, for the benefit of the relevant Funding Source, such amounts
charged to such Funding Source or such amounts to otherwise compensate such
Funding Source for such increased cost or such reduction.
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Section 10.3 Other Costs and Expenses. Seller shall pay to the Agent
and Conduit on demand all actual and documented costs and reasonable
out-of-pocket expenses in connection with the preparation, negotiation,
execution, delivery and administration of this Agreement, the transactions
contemplated hereby and the other documents to be delivered hereunder, including
without limitation, the cost of Conduit's auditors auditing the books, records
and procedures of Seller, reasonable fees and out-of-pocket expenses of legal
counsel for Conduit and the Agent (which such counsel may be employees of
Conduit or the Agent) with respect thereto and with respect to advising Conduit
and the Agent as to their respective rights and remedies under this Agreement.
Seller shall pay to the Agent on demand any and all costs and expenses of the
Agent and the Purchasers, if any, including reasonable counsel fees and expenses
in connection with the enforcement of this Agreement and the other Transaction
Documents delivered hereunder and any documents delivered in connection with any
restructuring or workout of this Agreement or the Transaction Documents, or the
administration of this Agreement following an Amortization Event.
ARTICLE XI
THE AGENT
Section 11.1 Authorization and Action. Each Purchaser hereby
designates and appoints Bank One to act as its agent hereunder and under each
other Transaction Document, and authorizes the Agent to take such actions as
agent on its behalf and to exercise such powers as are delegated to the Agent by
the terms of this Agreement and the other Transaction Documents together with
such powers as are reasonably incidental thereto. The Agent shall not have any
duties or responsibilities, except those expressly set forth herein or in any
other Transaction Document, or any fiduciary relationship with any Purchaser,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Agent shall be read into this Agreement or any
other Transaction Document or otherwise exist for the Agent. In performing its
functions and duties hereunder and under the other Transaction Documents, the
Agent shall act solely as agent for the Purchasers and does not assume nor shall
be deemed to have assumed any obligation or relationship of trust or agency with
or for any Seller Party or any of such Seller Party's successors or assigns. The
Agent shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to this Agreement, any other Transaction
Document or applicable law. The appointment and authority of the Agent hereunder
shall terminate upon the indefeasible payment in full of all Aggregate Unpaids.
Each Purchaser hereby authorizes the Agent to execute such Transaction Documents
as may require the Agent's signature on behalf of such Purchaser, including the
Collection Account Agreements and P.O. Box Transfer Notices (the terms of which
shall be binding on such Purchaser).
Section 11.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement and each other Transaction Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
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Section 11.3 Exculpatory Provisions. Neither the Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Purchasers for any recitals, statements, representations or
warranties made by any Seller Party contained in this Agreement, any other
Transaction Document or any certificate, report, statement or other document
referred to or provided for in, or received under or in connection with, this
Agreement, or any other Transaction Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, or
any other Transaction Document or any other document furnished in connection
herewith or therewith, or for any failure of any Seller Party to perform its
obligations hereunder or thereunder, or for the satisfaction of any condition
specified in Article VI, or for the perfection, priority, condition, value or
sufficiency of any collateral pledged in connection herewith. The Agent shall
not be under any obligation to any Purchaser to ascertain or to inquire as to
the observance or performance of any of the agreements or covenants contained
in, or conditions of, this Agreement or any other Transaction Document, or to
inspect the properties, books or records of the Seller Parties. The Agent shall
not be deemed to have knowledge of any Amortization Event or Potential
Amortization Event unless the Agent has received notice from Seller or a
Purchaser.
Section 11.4 Reliance by Agent. The Agent shall in all cases be
entitled to rely, and shall be fully protected in relying, upon any document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to Seller), independent
accountants and other experts selected by the Agent. The Agent shall in all
cases be fully justified in failing or refusing to take any action under this
Agreement or any other Transaction Document unless it shall first receive such
advice or concurrence of Conduit or the Required Financial Institutions or all
of the Purchasers, as applicable, as it deems appropriate and it shall first be
indemnified to its satisfaction by the Purchasers, provided that unless and
until the Agent shall have received such advice, the Agent may take or refrain
from taking any action, as the Agent shall deem advisable and in the best
interests of the Purchasers. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of Conduit or
the Required Financial Institutions or all of the Purchasers, as applicable, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Purchasers.
Section 11.5 Non-Reliance on Agent and Other Purchasers. Each
Purchaser expressly acknowledges that neither the Agent, nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates has made
any representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of any Seller
Party, shall be deemed to constitute any representation or warranty by the
Agent. Each Purchaser represents and warrants to the Agent that it has and will,
independently and without reliance upon the Agent or any other Purchaser and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of Seller and
34
made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
Section 11.6 Reimbursement and Indemnification. The Financial
Institutions agree to reimburse and indemnify the Agent and its officers,
directors, employees, representatives and agents ratably according to their Pro
Rata Shares, to the extent not paid or reimbursed by the Seller Parties (i) for
any amounts for which the Agent, acting in its capacity as Agent, is entitled to
reimbursement by the Seller Parties hereunder and (ii) for any other expenses
incurred by the Agent, in its capacity as Agent and acting on behalf of the
Purchasers, in connection with the administration and enforcement of this
Agreement and the other Transaction Documents.
Section 11.7 Agent in its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with Seller or any Affiliate of Seller as though the Agent were
not the Agent hereunder. With respect to the acquisition of Purchaser Interests
pursuant to this Agreement, the Agent shall have the same rights and powers
under this Agreement in its individual capacity as any Purchaser and may
exercise the same as though it were not the Agent, and the terms "Financial
Institution," "Purchaser," "Financial Institutions" and "Purchasers" shall
include the Agent in its individual capacity.
Section 11.8 Successor Agent. The Agent may, upon five days' notice to
Seller and the Purchasers, and the Agent will, upon the direction of all of the
Purchasers (other than the Agent, in its individual capacity) resign as Agent.
If the Agent shall resign, then the Required Financial Institutions during such
five-day period shall appoint from among the Purchasers a successor agent with
the consent of the Seller; provided that the Seller's consent shall not be
required (i) if such appointed Purchaser is an Affiliate of Bank One or (ii) if
an Amoritization Event or Potential Amoritization Event has occurred. If for any
reason no successor Agent is appointed by the Required Financial Institutions
during such five-day period, then effective upon the termination of such five
day period, the Purchasers shall perform all of the duties of the Agent
hereunder and under the other Transaction Documents and Seller and the Servicer
(as applicable) shall make all payments in respect of the Aggregate Unpaids
directly to the applicable Purchasers and for all purposes shall deal directly
with the Purchasers. After the effectiveness of any retiring Agent's resignation
hereunder as Agent, the retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Transaction Documents and the
provisions of this Article XI and Article X shall continue in effect for its
benefit with respect to any actions taken or omitted to be taken by it while it
was Agent under this Agreement and under the other Transaction Documents.
ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS
Section 12.1 Assignments. (a) Each Seller Party and each Financial
Institution hereby agree and consent to the complete or partial assignment by
Conduit of all or any portion of its rights under, interest in, title to and
obligations under this Agreement to the Financial Institutions pursuant to the
35
Liquidity Agreement or to any other Person, and upon such assignment, Conduit
shall be released from its obligations so assigned. Further, each Seller Party
and each Financial Institution hereby agree that any assignee of Conduit of this
Agreement or all or any of the Purchaser Interests of Conduit shall have all of
the rights and benefits under this Agreement as if the term "Conduit" explicitly
referred to such party, and no such assignment shall in any way impair the
rights and benefits of Conduit hereunder. Neither Seller nor the Servicer shall
have the right to assign its rights or obligations under this Agreement without
the Agent's prior written consent.
(b) Any Financial Institution may at any time and from time to time
assign to (i) any other Financial Institution party hereto or the date
immediately preceding such assignment, (ii) any Affiliate of Bank One, or (iii)
with the consent of the Seller, one or more other Persons; provided that, after
the occurrence of an Amortization Event or Potential Amortization Event, the
Seller's consent shall not be required for any such assignment, (each such
assignee, a "Purchasing Financial Institutions") all or any part of its rights
and obligations under this Agreement pursuant to an assignment agreement,
substantially in the form set forth in Exhibit VII hereto (the "Assignment
Agreement") executed by such Purchasing Financial Institution and such selling
Financial Institution. The consent of Conduit shall be required prior to the
effectiveness of any such assignment. Each assignee of a Financial Institution
must (i) have a short-term debt rating of A-1 or better by S&P and P-1 by
Xxxxx'x and (ii) agree to deliver to the Agent, promptly following any request
therefor by the Agent or Conduit, an enforceability opinion in form and
substance satisfactory to the Agent and Conduit. Upon delivery of the executed
Assignment Agreement to the Agent, such selling Financial Institution shall be
released from its obligations hereunder to the extent of such assignment.
Thereafter the Purchasing Financial Institution shall for all purposes be a
Financial Institution party to this Agreement and shall have all the rights and
obligations of a Financial Institution under this Agreement to the same extent
as if it were an original party hereto and no further consent or action by
Seller, the Purchasers or the Agent shall be required.
(c) Each of the Financial Institutions agrees that in the event that
it shall cease to have a short-term debt rating of A-1 or better by S&P and P-1
by Moody's (an "Affected Financial Institution"), such Affected Financial
Institution shall be obliged, at the request of Conduit or the Agent, to assign
all of its rights and obligations hereunder to (x) another Financial Institution
or (y) another funding entity nominated by the Agent and acceptable to Conduit,
and willing to participate in this Agreement through the Commitment Termination
Date in the place of such Affected Financial Institution; provided that the
Affected Financial Institution receives payment in full, pursuant to an
Assignment Agreement, of an amount equal to such Financial Institution's Pro
Rata Share of the Aggregate Capital and Yield owing to the Financial
Institutions and all accrued but unpaid fees and other costs and expenses
payable in respect of its Pro Rata Share of the Purchaser Interests of the
Financial Institutions.
Section 12.2 Participations. Any Financial Institution may, in the
ordinary course of its business at any time sell to one or more Persons (each a
"Participant") participating interests in its Pro Rata Share of the Purchaser
Interests of the Financial Institutions, its obligation to pay Conduit its
Acquisition Amounts or any other interest of such Financial Institution
hereunder. Notwithstanding any such sale by a Financial Institution of a
36
participating interest to a Participant, such Financial Institution's rights and
obligations under this Agreement shall remain unchanged, such Financial
Institution shall remain solely responsible for the performance of its
obligations hereunder, and Seller, Conduit and the Agent shall continue to deal
solely and directly with such Financial Institution in connection with such
Financial Institution's rights and obligations under this Agreement. Each
Financial Institution agrees that any agreement between such Financial
Institution and any such Participant in respect of such participating interest
shall not restrict such Financial Institution's right to agree to any amendment,
supplement, waiver or modification to this Agreement, except for any amendment,
supplement, waiver or modification described in Section 13.1(b)(i).
Section 12.3 Extension of Commitment Termination Date. The Seller may
advise the Agent in writing of its desire to extend the Commitment Termination
Date for an additional period not exceeding 364 days, provided such request is
made not more than 90 days prior to, and not less than 60 days prior to, the
then current Commitment Termination Date. The Agent so advised by the Seller
shall promptly notify each Financial Institution of any such request and each
such Financial Institution shall notify the Agent and the Seller of its decision
to accept or decline the request for such extension no later than 30 days prior
to the then current Commitment Termination Date (it being understood that each
Financial Institution may accept or decline such request in its sole discretion
and on such terms as it may elect, and the failure to so notify the Agent and
the Seller shall be deemed an election not to extend by such Financial
Institution). In the event that at least one Financial Institution agrees to
extend the Commitment Termination Date, the Seller Parties, the Agent, the
extending Financial Institution(s) and the Agent shall enter into such documents
as such extending Financial Institution(s) may deem necessary or appropriate to
reflect such extension, and all reasonable costs and expenses incurred by such
Financial Institution(s) and the Agent (including reasonable attorneys' fees)
shall be paid by the Seller. In the event that any Financial Institution
declines the requests to extend the Commitment Termination Date (each such
Financial Institution being referred to herein as a "Non-Renewing Financial
Institution"), and the Commitment of such Non-Renewing Financial Institution is
not assigned to another Person in accordance with the terms of this Article XII
prior to the then current Commitment Termination Date, the Purchase Limit shall
be reduced by an amount equal to each such Non-Renewing Financial Institution's
Commitment on the then current Commitment Termination Date.
Section 12.4 Terminating Financial Institutions.
(a) Any Affected Financial Institution or Non-Renewing Financial
Institution which has not assigned its rights and obligations hereunder if
requested pursuant to this Article XII shall be a "Terminating Financial
Institution" for purposes of this Agreement as of the then current Commitment
Termination Date.
(b) The Commitment of any Financial Institution shall terminate on the
date it becomes a Terminating Financial Institution. Upon reduction to zero of
the Capital of all of the Purchaser Interests of a Terminating Financial
Institution (after application of Collections thereto pursuant to Sections 2.4)
all rights and obligations of such terminating Financial Institution hereunder
shall be terminated and such terminating Financial Institution shall no longer
be a "Financial Institution" hereunder; provided, however, that the provisions
of Article X shall continue in effect for its benefit with respect to Purchaser
37
Interests or the Commitment held by such Terminating Financial Institution prior
to its termination as a Financial Institution.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Waivers and Amendments. No failure or delay on the part
of the Agent or any Purchaser in exercising any power, right or remedy under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other further
exercise thereof or the exercise of any other power, right or remedy. The rights
and remedies herein provided shall be cumulative and nonexclusive of any rights
or remedies provided by law. Any waiver of this Agreement shall be effective
only in the specific instance and for the specific purpose for which given.
(a) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing in accordance with the provisions of this
Section 13.1(b). Conduit, Seller and the Agent, at the direction of the Required
Financial Institutions, may enter into written modifications or waivers of any
provisions of this Agreement, provided, however, that no such modification or
waiver shall:
(i) without the consent of each affected Purchaser, (A) extend the
Commitment Termination Date or the date of any payment or deposit of
Collections by Seller or the Servicer, (B) reduce the rate or extend the
time of payment of Yield (or any component thereof), (C) reduce any fee
payable to the Agent for the benefit of the Purchasers, (D) except pursuant
to Article XII hereof, change the amount of the Capital of any Purchaser,
any Financial Institution's Pro Rata Share (except as may be required
pursuant to the Liquidity Agreement) or any Financial Institution's
Commitment, (E) amend, modify or waive any provision of the definition of
Required Financial Institutions or this Section 13.1(b), (F) consent to or
permit the assignment or transfer by Seller of any of its rights and
obligations under this Agreement, (G) change the definition of "Applicable
Maximum Purchaser Interest," "Applicable Stress Factor," "Dilution Ratio,"
"Dilution Reserve," "Eligible Receivable," "Loss Ratio," "Loss Reserve,"
"Loss Percentage," "Net Receivables Balance" or "Yield and Servicer Fee
Reserve" or (H) amend or modify any defined term (or any defined term used
directly or indirectly in such defined term) used in clauses (A) through
(G) above in a manner that would circumvent the intention of the
restrictions set forth in such clauses; or
(ii) without the written consent of the then Agent, amend, modify or
waive any provision of this Agreement if the effect thereof is to affect
the rights or duties of such Agent.
Notwithstanding the foregoing, (i) without the consent of the Financial
Institutions, but with the consent of Seller, the Agent may amend this Agreement
solely to add additional Persons as Financial Institutions hereunder and (ii)
the Agent, the Required Financial Institutions and Conduit may enter into
amendments to modify any of the terms or provisions of Article XI, Article XII,
38
Section 13.12 or any other provision of this Agreement without the consent of
Seller, provided that such amendment has no negative impact upon Seller. Any
modification or waiver made in accordance with this Section 13.1 shall apply to
each of the Purchasers equally and shall be binding upon Seller, the Purchasers
and the Agent.
Section 13.2 Notices. Except as provided in this Section 13.2, all
communications and notices provided for hereunder shall be in writing (including
bank wire, facsimile or electronic facsimile transmission or similar writing)
and shall be given to the other parties hereto at their respective addresses or
facsimile numbers set forth on the signature pages hereof or at such other
address or facsimile number as such Person may hereafter specify for the purpose
of notice to each of the other parties hereto. Each such notice or other
communication shall be effective if given by facsimile, upon the receipt
thereof, if given by mail, three (3) Business Days after the time such
communication is deposited in the mail with first class postage prepaid or if
given by any other means, when received at the address specified in this Section
13.2. Seller hereby authorizes the Agent to effect purchases and Tranche Period
and Bank Rate selections based on telephonic notices made by any Person whom the
Agent in good faith believes to be acting on behalf of Seller. Seller agrees to
deliver promptly to the Agent a written confirmation of each telephonic notice
signed by an authorized officer of Seller; provided, however, the absence of
such confirmation shall not affect the validity of such notice. If the written
confirmation differs from the action taken by the Agent, the records of the
Agent shall govern absent manifest error.
Section 13.3 Ratable Payments. If any Purchaser, whether by setoff or
otherwise, has payment made to it with respect to any portion of the Aggregate
Unpaids owing to such Purchaser (other than payments received pursuant to
Section 10.2 or 10.3) in a greater proportion than that received by any other
Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of such Aggregate Unpaids held by the other Purchasers so
that after such purchase each Purchaser will hold its ratable proportion of such
Aggregate Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
Section 13.4 Protection of Ownership Interests of the Purchasers. (a)
Seller agrees that from time to time, at its expense, it will promptly execute
and deliver all instruments and documents, and take all actions, that may be
necessary or desirable, or that the Agent may reasonably request, to perfect,
protect or more fully evidence the Purchaser Interests, or to enable the Agent
or the Purchasers to exercise and enforce their rights and remedies hereunder.
After the occurrence of an Amortization Event, the Agent may, or the Agent may
direct Seller or the Servicer to, notify the Obligors of Receivables, at
Seller's expense, of the ownership or security interests of the Purchasers under
this Agreement and may also direct that payments of all amounts due or that
become due under any or all Receivables be made directly to the Agent or its
designee. Seller or the Servicer (as applicable) shall, at any Purchaser's
request, withhold the identity of such Purchaser in any such notification.
39
(b) If any Seller Party fails to perform any of its obligations
hereunder, the Agent or any Purchaser may (but shall not be required to)
perform, or cause performance of, such obligations, and the Agent's or such
Purchaser's costs and expenses incurred in connection therewith shall be payable
by Seller as provided in Section 10.3. Each Seller Party irrevocably authorizes
the Agent at any time and from time to time in the sole discretion of the Agent,
and appoints the Agent as its attorney-in-fact, to act on behalf of such Seller
Party (i) to execute on behalf of Seller as debtor and to file financing
statements necessary or desirable in the Agent's sole discretion to perfect and
to maintain the perfection and priority of the interest of the Purchasers in the
Receivables and (ii) to file a carbon, photographic or other reproduction of
this Agreement or any financing statement with respect to the Receivables as a
financing statement in such offices as the Agent in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and priority of
the interests of the Purchasers in the Receivables. This appointment is coupled
with an interest and is irrevocable.
Section 13.5 Confidentiality. (a) Each party hereto shall maintain and
shall cause each of its employees and officers to maintain the confidentiality
of this Agreement and the other confidential or proprietary information with
respect to each other party and their respective businesses in connection with
the structuring, negotiating and execution of the transactions contemplated
herein, except that such party and its officers and employees may disclose such
information to such party's external accountants and attorneys and as required
by any applicable law or order of any judicial or administrative proceeding.
(b) Anything herein to the contrary notwithstanding, each Seller
Party, each Purchaser, the Agent, each Indemnified Party and any successor or
assign of any of the foregoing (and each employee, representative or other agent
of any of the foregoing) may disclose to any and all Persons, without limitation
of any kind, the "tax treatment" and "tax structure" (in each case, within the
meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated herein and all materials of any kind (including opinions or other
tax analyses) that are or have been provided to any of the foregoing relating to
such tax treatment or tax structure, and it is hereby confirmed that each of the
foregoing have been so authorized since the commencement of discussions
regarding the transactions.
(c) Anything herein to the contrary notwithstanding, each Seller Party
hereby consents to the disclosure of any nonpublic information with respect to
it (i) to the Agent, the Financial Institutions or Conduit by each other, (ii)
by the Agent or the Purchasers to any prospective or actual assignee or
participant of any of them and (iii) by the Agent to any rating agency,
Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity
enhancement to Conduit and to any officers, directors, employees, outside
accountants and attorneys of any of the foregoing. In addition, the Purchasers
and the Agent may disclose any such nonpublic information pursuant to any law,
rule, regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law).
Section 13.6 Bankruptcy Petition. Seller, the Servicer, the Agent and
each Financial Institution hereby covenants and agrees that, prior to the date
that is one year and one day after the payment in full of all outstanding senior
indebtedness of Conduit, it will not institute against, or join any other Person
40
in instituting against, Conduit or any such entity any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
Section 13.7 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF
THE STATE OF ILLINOIS.
Section 13.8 CONSENT TO JURISDICTION. EACH SELLER PARTY HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED
BY SUCH PERSON PURSUANT TO THIS AGREEMENT AND EACH SELLER PARTY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY PURCHASER TO BRING
PROCEEDINGS AGAINST ANY SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
ANY JUDICIAL PROCEEDING BY ANY SELLER PARTY AGAINST THE AGENT OR ANY PURCHASER
OR ANY AFFILIATE OF THE AGENT OR ANY PURCHASER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS
AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
Section 13.9 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY
SELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER OR THEREUNDER.
Section 13.10 Integration; Binding Effect; Survival of Terms.
(a) This Agreement and each other Transaction Document contain 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.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
41
its terms and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and remedies with
respect to (i) any breach of any representation and warranty made by any Seller
Party pursuant to Article V, (ii) the indemnification and payment provisions of
Article X, and Sections 13.5 and 13.6 shall be continuing and shall survive any
termination of this Agreement.
Section 13.11 Counterparts; Severability; Section References. 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. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and
sections of, and schedules and exhibits to, this Agreement.
Section 13.12 Bank One Roles. Each of the Financial Institutions
acknowledges that Bank One acts, or may in the future act, (i) as administrative
agent for Conduit or any Financial Institution, (ii) as issuing and paying agent
for the Commercial Paper, (iii) to provide credit or liquidity enhancement for
the timely payment for the Commercial Paper and (iv) to provide other services
from time to time for Conduit or any Financial Institution (collectively, the
"Bank One Roles"). Without limiting the generality of this Section 13.12, each
Financial Institution hereby acknowledges and consents to any and all Bank One
Roles and agrees that in connection with any Bank One Role, Bank One may take,
or refrain from taking, any action that it, in its discretion, deems
appropriate, including, without limitation, in its role as administrative agent
for Conduit, and the giving of notice to the Agent of a mandatory purchase
pursuant to the Liquidity Agreement.
Section 13.13 Characterization. (a) It is the intention of the parties
hereto that each purchase hereunder shall constitute and be treated as an
absolute and irrevocable sale, which purchase shall provide the applicable
Purchaser with the full benefits of ownership of the applicable Purchaser
Interest. Except as specifically provided in this Agreement, each sale of a
Purchaser Interest hereunder is made without recourse to Seller; provided,
however, that (i) Seller shall be liable to each Purchaser and the Agent for all
representations, warranties, covenants and indemnities made by Seller pursuant
to the terms of this Agreement, and (ii) such sale does not constitute and is
not intended to result in an assumption by any Purchaser or the Agent or any
assignee thereof of any obligation of Seller or Originator or any other person
arising in connection with the Receivables, the Related Security, or the related
Contracts, or any other obligations of Seller or Originator.
(b) In addition to any ownership interest which the Agent may from
time to time acquire pursuant hereto, Seller hereby grants to the Agent for the
ratable benefit of the Purchasers a valid and perfected security interest in all
of Seller's right, title and interest in, to and under all Receivables now
existing or hereafter arising, the Collections, each Post Office Box, each
Collection Account, all Related Security, all other rights and payments relating
to such Receivables, all of Seller's rights under the Receivables Sale Agreement
42
(including, without limitation, (a) all rights to indemnification arising
thereunder, and (b) all UCC financing statements filed pursuant thereto and all
proceeds of any thereof and all other assets in which the Agent on behalf of the
Purchasers has acquired, may hereafter acquire and/or purports to have acquired
under this Agreement prior to all other liens on and security interests therein
to secure the prompt and complete payment of the Aggregate Unpaids. The Agent
and the Purchasers shall have, in addition to the rights and remedies that they
may have under this Agreement, all other rights and remedies provided to a
secured creditor under the UCC and other applicable law, which rights and
remedies shall be cumulative. The Seller hereby authorizes the Agent, within the
meaning of Section 9-509 of any applicable enactment of the UCC, as secured
party for the benefit of itself and the Purchasers, to file, without the
signature of the Seller or the Originator as debtors, the UCC financing
statements contemplated herein and under the Receivables Sale Agreement.
(c) In connection with Seller's transfer of its right, title and
interest in, to and under the Receivables Sale Agreement, the Seller agrees that
the Agent shall have the right to enforce the Seller's rights and remedies under
the Receivables Sale Agreement, to receive all amounts payable thereunder or in
connection therewith, to consent to amendments, modifications or waivers
thereof, and to direct, instruct or request any action thereunder, but in each
case without any obligation on the part of the Agent or any Purchaser or any of
its or their respective Affiliates to perform any of the obligations of the
Seller under the Receivables Sale Agreement. To the extent that the Seller
enforces the Seller's rights and remedies under the Receivables Sale Agreement,
from and after the occurrence of an Amortization Event, and during the
continuance thereof, the Agent shall have the exclusive right to direct such
enforcement by the Seller.
[SIGNATURE PAGES FOLLOW]
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
[SELLER]
By:
-----------------------------------
Name:
Title:
Address:
METROPOLITAN EDISON COMPANY
By:
-----------------------------------
Name:
Title:
Address:
44
JUPITER SECURITIZATION CORPORATION
By:
-----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Authorized Signatory
Address: c/o Bank One, NA (Main Office Chicago),
as Agent
Asset Backed Finance
Suite IL1-0079, 7th Floor
000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
FAX: (000) 000-0000
BANK ONE, NA (MAIN OFFICE CHICAGO), as a
Financial Institution and as Agent
By:
-----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Managing Director, Capital Markets
Address: Bank One, NA (Main Office Chicago)
Asset Backed Finance
Suite XX0-0000, 0xx Xxxxx
000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
45
EXHIBIT I
DEFINITIONS
As used in this Agreement, 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):
"Accrual Period" means each calendar month occurring before or after
the Closing Date.
"Additional Reporting Information" means [_____]. [The additional
information to be included in each Periodic Report after April 2004 will be
described here].
"Adverse Claim" means a lien, security interest, financing statement,
charge or encumbrance, or other right or claim in, of or on any Person's assets
or properties in favor of any other Person.
"Affected Financial Institution" has the meaning specified in Section
12.1(c).
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person or any Subsidiary of such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
stock, by contract or otherwise.
"Agent" has the meaning set forth in the preamble to this Agreement.
"Aggregate Capital" means, on any date of determination, the aggregate
amount of Capital of all Purchaser Interests outstanding on such date.
"Aggregate Reduction" has the meaning specified in Section 1.3.
"Aggregate Reserves" means, on any date of determination, the sum of
the Loss Reserve, the Yield and Servicer Fee Reserve and the Dilution Reserve.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of
all Aggregate Capital and all other unpaid Obligations (whether due or accrued)
at such time.
"Agreement" means this Receivables Purchase Agreement, as it may be
amended or modified and in effect from time to time.
"Amortization Date" means the earliest to occur of (i) the Business
Day immediately prior to the occurrence of an Amortization Event set forth in
Section 9.1(d), (ii) the Business Day specified in a written notice from the
Exh. I-1
Agent following the occurrence of any other Amortization Event, (iii) the date
which is 15 Business Days after the Agent's receipt of written notice from
Seller that it wishes to terminate the facility evidenced by this Agreement and
(iv) the Commitment Termination Date, as such date may from time to time be
extended with the consent of the parties hereto in accordance with Section 12.3
hereof.
"Amortization Event" has the meaning specified in Article IX.
"Applicable Margin" has the meaning set forth in Schedule I to the Fee
Letter.
"Applicable Maximum Purchaser Interest" means, at any time during (i)
a Monthly Reporting Period, [95]%, (ii) a Weekly Reporting Period, [97]%, and
(iii) a Daily Reporting Period, [100]%.
"Applicable Stress Factor" means, at any time, the amount set forth
below based upon the Debt Rating of the Originator then in effect as rated by
each of S&P and Moody's, respectively; provided, however, that (a) if the
ratings established or deemed to have been established by S&P and Moody's,
respectively, fall within different levels, the Applicable Stress Factor will be
based on the lower of the two ratings, (b) if S&P or Moody's (but not both) is
then rating the Originator, the Applicable Stress Factor will be based on the
single rating then in effect and (c) if neither S&P nor Xxxxx'x is then rating
the Originator, the Applicable Stress Factor will be the highest amount set
forth in the table below:
-------------------------------------------------------------------------------------
Rating by S&P/Moody's Applicable Stress Factor
-------------------------------------------------------------------------------------
Greater than or equal to BBB/Baa2 2.0
-------------------------------------------------------------------------------------
Less than BBB/Baa2, but greater than or equal to BB+/Ba1 2.25
-------------------------------------------------------------------------------------
Less than BB+/Ba1 or unrated 2.5
-------------------------------------------------------------------------------------
"Applicable Unbilled Receivables Limit" means, (i) during any Monthly
Reporting Period, [__%], (ii) during any Weekly Reporting Period, [__%] and
(iii) during any Daily Reporting Period, [___%].
"Assignment Agreement" has the meaning set forth in Section 12.1(b).
"Authorized Officer" means, with respect to any Person, its president,
corporate controller, treasurer or chief financial officer.
"Bank One" means Bank One, NA (Main Office Chicago) in its individual
capacity and its successors.
"Bank Rate" means, the LIBO Rate or the Prime Rate, as applicable,
with respect to each Purchaser Interest of the Financial Institutions and any
Purchaser Interest of the Conduit, an undivided interest in which has been
Exh. I-2
assigned by the Conduit to a Financial Institution pursuant to the Liquidity
Agreement; provided, that if an Amortization Event shall have occurred and the
Agent has exercised its rights pursuant to Section 9.2(iii), the Bank Rate shall
mean a rate per annum equal to 2% above the otherwise applicable Bank Rate.
"BBP Receivable" means a Receivable arising under an Obligor's account
which is subject to a balanced or levelized payment plan of the applicable
Originator.
"Billed Receivable" means a Receivable for which, as of the time of
determination, an invoice addressed to the Obligor thereof has been sent.
"Broken Funding Costs" means for any Purchaser Interest which: (i) has
its Capital reduced without compliance by Seller with the notice requirements
hereunder or (ii) does not become subject to an Aggregate Reduction following
the delivery of any Reduction Notice or (iii) is assigned under the Liquidity
Agreement or terminated prior to the date on which it was originally scheduled
to end; an amount equal to the excess, if any, of (A) the Yield that would have
accrued during the remainder of the Tranche Periods or the tranche periods for
Commercial Paper determined by the Agent to relate to such Purchaser Interest
(as applicable) subsequent to the date of such reduction, assignment or
termination (or in respect of clause (ii) above, the date such Aggregate
Reduction was designated to occur pursuant to the Reduction Notice) of the
Capital of such Purchaser Interest if such reduction, assignment or termination
had not occurred or such Reduction Notice had not been delivered, over (B) the
sum of (x) to the extent all or a portion of such Capital is allocated to
another Purchaser Interest, the amount of Yield actually accrued during the
remainder of such period on such Capital for the new Purchaser Interest, and (y)
to the extent such Capital is not allocated to another Purchaser Interest, the
income, if any, actually received during the remainder of such period by the
holder of such Purchaser Interest from investing the portion of such Capital not
so allocated. In the event that the amount referred to in clause (B) exceeds the
amount referred to in clause (A), the relevant Purchaser or Purchasers agree to
pay to Seller the amount of such excess. All Broken Funding Costs shall be due
and payable hereunder upon demand.
"Business Day" means any day on which MetEd is open for business and
on which banks are not authorized or required to close in New York, New York or
Chicago, Illinois and The Depository Trust Company of New York is open for
business, and, if the applicable Business Day relates to any computation or
payment to be made with respect to the LIBO Rate, any day on which dealings in
dollar deposits are carried on in the London interbank market.
"Capital" of any Purchaser Interest means, at any time, (A) the
Purchase Price of such Purchaser Interest, minus (B) the sum of the aggregate
amount of Collections and other payments received by the Agent which in each
case are applied to reduce such Capital in accordance with the terms and
conditions of this Agreement; provided that such Capital shall be restored (in
accordance with Section 2.6) in the amount of any Collections or other payments
so received and applied if at any time the distribution of such Collections or
payments are rescinded, returned or refunded for any reason.
Exh. I-3
"Capital Pro Rata Share" means, for any Purchaser at any time, the
amount of Capital allocated to the Purchaser Interests of such Purchaser at such
time divided by the Aggregate Capital at such time.
"Change of Control" means with respect to any Seller Party or the
Collection Agent, the acquisition by any Person, or two or more Persons acting
in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934) of
20% or more of the outstanding shares of voting stock of such Seller Party or
the Collection Agent, as applicable.
"Charged-Off Receivable" means a Receivable: (i) as to which the
Obligor thereof has taken any action, or suffered any event to occur, of the
type described in Section 9.1(d) (as if references to Seller Party therein refer
to such Obligor), (ii) as to which the Obligor thereof, if a natural person, is
deceased, (iii) which, consistent with the Credit and Collection Policy, should
be written off Seller's books as uncollectible or (iv) which has been identified
by the Seller as uncollectible.
"Collection Account" means each depositary account maintained in the
name of the Collection Agent in which any Collections are deposited and which is
listed on Exhibit IV.
"Collection Account Agreement" means an agreement substantially in the
form of Exhibit VI, or such other agreement in form and substance reasonably
acceptable to the Agent, among the Seller, the Collection Agent, the Agent and a
Collection Bank.
"Collection Agent" means FirstEnergy Service Company, an Ohio
corporation or, following the occurrence of an Amortization Event described in
Section 9.1(d) or Section 9.1(g) with respect to the Collection Agent, any other
Person approved by the Agent in its sole discretion.
"Collection Bank" means, at any time, any of the banks holding one or
more Collection Accounts and which is listed on Exhibit IV.
"Collection Notice" means a notice, in substantially the form of Annex
A to Exhibit VI, from the Agent to a Collection Bank.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds in respect of such Receivable, including,
without limitation, all yield, Finance Charges or other related amounts accruing
in respect thereof and all cash proceeds of Related Security with respect to
such Receivable.
"Commercial Paper" means promissory notes of Conduit issued by Conduit
in the commercial paper market.
"Commitment" means, for each Financial Institution, the commitment of
such Financial Institution to purchase Purchaser Interests from Seller in an
amount not to exceed (i) in the aggregate, the amount set forth opposite such
Financial Institution's name on Schedule A to this Agreement, as such amount may
be modified in accordance with the terms hereof and (ii) with respect to any
Exh. I-4
individual purchase hereunder, its Pro Rata Share of the Purchase Price
therefor.
"Commitment Termination Date" means January [___], 2005.
"Concentration Limit" means, at any time, for any Obligor, [__]% of
the Outstanding Balance of all Eligible Receivables at such time, or such other
amount (a "Special Concentration Limit") for such Obligor designated by the
Agent; provided, that in the case of an Obligor and any Affiliate of such
Obligor, the Concentration Limit shall be calculated as if such Obligor and such
Affiliate are one Obligor; and provided, further, that Conduit or the Required
Financial Institutions may, upon not less than three Business Days' notice to
Seller, cancel any Special Concentration Limit.
"Conduit" has the meaning set forth in the preamble to this Agreement.
"Contingent Obligation" of a Person means any agreement, undertaking
or arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.
"Contract" means, with respect to any Receivable, any and all
instruments, agreements, invoices or other writings pursuant to which such
Receivable arises or which evidences such Receivable.
"CP Costs" means, for each day, the sum of (i) discount or yield
accrued on Pooled Commercial Paper on such day, plus (ii) any and all accrued
commissions in respect of placement agents and Commercial Paper dealers, and
issuing and paying agent fees incurred, in respect of such Pooled Commercial
Paper for such day, plus (iii) other costs associated with funding small or
odd-lot amounts with respect to all receivable purchase facilities which are
funded by Pooled Commercial Paper for such day, minus (iv) any accrual of income
net of expenses received on such day from investment of collections received
under all receivable purchase facilities funded substantially with Pooled
Commercial Paper, minus (v) any payment received on such day net of expenses in
respect of Broken Funding Costs related to the prepayment of any Purchaser
Interest of Conduit pursuant to the terms of any receivable purchase facilities
funded substantially with Pooled Commercial Paper. In addition to the foregoing
costs, if Seller shall request any Incremental Purchase during any period of
time determined by the Agent in its sole discretion to result in incrementally
higher Yield applicable to such Incremental Purchase, the Capital associated
with any such Incremental Purchase shall, during such period, be deemed to be
funded by Conduit in a special pool (which may include capital associated with
other receivable purchase facilities) for purposes of determining such
additional Yield applicable only to such special pool and charged each day
during such period against such Capital.
Exh. I-5
"CP Rate" means with respect to any Accrual Period and any Purchaser
Interest funded by Conduit if and to the extent Conduit funds the Purchase or
maintenance of its Purchaser Interest by the issuance of Commercial Paper during
such Accrual Period, a per annum rate equal to a fraction, expressed as a
percentage, the numerator of which shall be equal to the sum of the CP Costs,
determined on a pro rata basis, based upon the percentage share that the dollar
amount of such Purchaser Interest represents in relation to all assets or
investments associated with any assets held by Conduit and funded substantially
with Pooled Commercial Paper, for each day during such Accrual Period (or
portion thereof), and the denominator of which is the weighted daily average
Capital of such Purchaser Interest during such Accrual Period; provided that if
an Amortization Event shall have occurred and the Agent has exercised its rights
pursuant to Section 9.2(iii), the CP Rate with respect to each Purchaser
Interest shall mean a rate per annum equal to 2% above the Prime Rate.
"Credit and Collection Policy" means Originator's customary credit and
collection policies and practices relating to Contracts and Receivables existing
on the date hereof and summarized in Exhibit VIII hereto, as modified from time
to time in accordance with this Agreement.
"Customer Deposits" means, at any time, the aggregate amount of cash
deposits held by the Originator against Obligors' accounts.
"Daily Report" means a report in the form agreed upon by the Agent and
the Servicer, furnished by the Servicer to the Agent pursuant to Section 8.5.
"Daily Reporting Period" means any period during which the Debt Rating
shall be [BB] or lower by S&P or [Ba2] or lower by Xxxxx'x or shall not be rated
by S&P or by Xxxxx'x.
"Days Sales Outstanding Ratio" means, for any Accrual Period, (i) the
aggregate Outstanding Balance of all Receivables as of the last day of the
Accrual Period ending one Accrual Period prior to such Accrual Period, divided
by (ii) the aggregate amount of Collections received during such Accrual Period,
multiplied by (iii) 30.
"Debt Rating" means, at any time, the rating then assigned by S&P or
Xxxxx'x to the Originator's senior secured long-term non-credit enhanced debt.
"Deemed Collections" means the aggregate of all amounts Seller shall
have been deemed to have received as a Collection of a Receivable. Seller shall
be deemed to have received a Collection with respect to a Receivable to the
extent (i) the Outstanding Balance of any such Receivable is either (x) reduced
as a result of any defective or rejected goods or services, any discount or any
adjustment or otherwise by Seller (other than cash Collections on account of the
Receivables) or (y) reduced or canceled as a result of a setoff in respect of
any claim by any Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction) or (ii) any of the representations or
warranties in Article V are no longer true with respect to such Receivable.
Exh. I-6
"Defaulted Receivable" means a Billed Receivable as to which any
payment, or part thereof, remains unpaid for [__] days or more from the original
due date for such payment.
"Default Fee" means with respect to any amount due and payable by
Seller in respect of any Aggregate Unpaids, an amount equal to interest on any
such unpaid Aggregate Unpaids at a rate per annum equal to 2% above the Prime
Rate.
"Default Ratio" means, at any time, a percentage equal to (i) the
aggregate Outstanding Balance of all Receivables that are Defaulted Receivables
or Charged-Off Receivables at such time divided by (ii) the aggregate
Outstanding Balance of all Receivables at such time.
"Delinquency Ratio" means, at any time, a percentage equal to (i) the
aggregate Outstanding Balance of all Receivables that are Delinquent Receivables
at such time divided by (ii) the aggregate Outstanding Balance of all
Receivables at such time.
"Delinquent Receivable" means a Receivable as to which any payment, or
part thereof, remains unpaid for [30] days or more from the original due date
for such payment.
"Dilution Horizon Factor" means, at any time, a fraction, the
numerator of which equals the sum of (a) the aggregate Original Balance of all
Billed Receivables originated during the [three] Accrual Periods ending
immediately prior to the last day of the most recently ended Accrual Period and
(b) the aggregate Original Balance of all Unbilled Receivables as of the end of
the most recently ended Accrual Period, and the denominator of which equals the
Net Receivables Balance as of the end of the most recently ended Accrual Period.
"Dilution Percentage" means, at any time, the greater of (i) the
Dilution Percentage Floor at such time and (ii) a percentage calculated in
accordance with the following formula:
DP = [(ASF x ADR) + [(HDR - ADR) x (HDR/ADR)]] x DHF
where:
DP = the Dilution Percentage;
ADR = the average of the monthly Dilution Ratios occurring during the
12 most recent Accrual Periods;
ASF = Applicable Stress Factor;
HDR = the highest [three]-month average of the Dilution Ratios occurring
during the 12 most recent Accrual Periods; and
DHF = the Dilution Horizon Factor at such time.
"Dilution Percentage Floor" means (i) on and after the Report
Completion Date and so long as all Periodic Reports delivered from the Report
Completion Date until the date of determination of the Dilution Percentage Floor
Exh. I-7
have contained all Additional Reporting Information, [5.0]% and (ii) at all
other times, 7.5%.
"Dilution Ratio" means, for any Accrual Period, a percentage equal to
(i) the aggregate amount of Dilutions which occurred during such Accrual Period
divided by (ii) the aggregate Original Balance of all Receivables generated by
the Originator during the Accrual Period [two months] prior to such Accrual
Period.
"Dilution Reserve" means, at any time, an amount equal to the product
of (a) the Net Receivable Balance at such time, and (b) the Dilution Percentage
at such time.
"Dilutions" means, at any time, the aggregate amount of reductions or
cancellations described in clause (i) of the definition of "Deemed Collections".
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which (a) if a natural person, maintains a service
address in the United States or, if a corporation or other business
organization, maintains a principal place of business in the United States
or any political subdivision thereof and (b) is not an Affiliate of any of
the parties hereto or the Originator,
(ii) the Obligor of which is not the Obligor of any Charged-Off
Receivable, unless such Obligor becomes current and is deemed to be an
acceptable customer in accordance with the Credit and Collection Policy,/3/
(iii) the Obligor of which is not the Obligor of Receivables more than
90 days past due, the Outstanding Balance of which, in the aggregate,
constitutes more than 35% of the aggregate Outstanding Balance of all
Receivables with respect to such Obligor,
(iv) which is not a Charged-Off Receivable or a Delinquent Receivable,
(v) which by its terms is due and payable within 30 days of the
original billing date therefor and has not had its payment terms extended,
(vi) which is an "account" within the meaning of Section 9-102 of the
UCC of all applicable jurisdictions,
(vii) which is denominated and payable only in United States dollars
in the United States or for which payment is guaranteed in United States
dollars,
(viii) which does not arise under a contract created pursuant to a
public assistance program, nor require payments based on a percentage of
the applicable Obligor's income,
----------
3 Pillsbury/MetEd to advise re: procedures for Charged-Off Receivables.
Exh. I-8
(ix) which arises under a Contract [in substantially the form of one
of the form Contracts set forth on Exhibit IX hereto or otherwise approved
by the Agent in writing,]/4/ which, together with such Receivable, is in
full force and effect and constitutes the legal, valid and binding
obligation of the related Obligor enforceable against such Obligor in
accordance with its terms subject to no offset, counterclaim or other
defense, except as such enforcement may be limited by applicable
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally,
(x) which arises under a Contract which (A) does not require the
Obligor under such Contract to consent to the transfer, sale or assignment
of the rights and duties of Originator or any of its assignees under such
Contract and (B) does not contain a confidentiality provision that purports
to restrict the ability of any Purchaser to exercise its rights under this
Agreement, including, without limitation, its right to review the Contract,
(xi) which arises under a Contract that contains an obligation to pay
a specified sum of money, contingent only upon the sale of goods or power
or the provision of services by Originator and not by any other Person (in
whole or in part),/5/
(xii) which, together with the Contract related thereto, does not
contravene any law, rule or regulation applicable thereto (including,
without limitation, any law, rule and regulation 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 part of the Contract related thereto is in violation of any
such law, rule or regulation,
(xiii) which satisfies in all material respects all applicable
requirements of the Credit and Collection Policy,
(xiv) which was generated in the ordinary course of Originator's
business,
(xv) which is not subject to any right of rescission, set-off,
counterclaim, any other defense (including defenses arising out of
violations of usury laws) of the applicable Obligor against Originator (it
being understood that only a portion of a Receivable equal to the amount of
such partial rescission, set-off, counterclaim or defense, if the amount of
such partial rescission, set-off, counterclaim or defense can be
quantified, shall be deemed not to be an Eligible Receivable) or any other
Adverse Claim, and the Obligor thereon holds no right as against
Originator,
(xvi) as to which Originator has satisfied and fully performed all
obligations on its part with respect to such Receivable required to be
fulfilled by it, and no further action is required to be performed by any
----------
4 Please provide forms so that determination can be made regarding what
should or should not be attached.
5 Pillsbury to propose revised language to reflect billing on behalf of third
parties.
Exh. I-9
Person with respect thereto other than payment thereon by the applicable
Obligor, and
(xvii) all right, title and interest to and in which has been validly
transferred by Originator directly to Seller under and in accordance with
the Receivables Sale Agreement, and Seller has good and marketable title
thereto free and clear of any Adverse Claim.
(xviii) [others to be determined upon completion of due diligence.]
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Excess Government Receivables Amount" means at any time, an amount
equal to the positive difference, if any, of (i) the aggregate Outstanding
Balance of the Eligible Receivables consisting of Government Receivables at such
time minus (ii) the product of (a) the aggregate Outstanding Balance of all
Eligible Receivables at such time multiplied by (b) [__]%.
"Excess Unbilled Receivables Amount" means at any time, an amount
equal to the sum of (x) the positive difference, if any, between (i) the
aggregate Outstanding Balance of the Eligible Receivables consisting of Unbilled
Receivables as of the last day of the most recently ended Accrual Period and
(ii) the product of (a) the Applicable Unbilled Receivables Limit, multiplied by
(b) the aggregate amount of all Eligible Receivables and (y) the aggregate
Outstanding Balance of all Unbilled Receivables, the Outstanding Balance of
which has been included on a Monthly Report for more than one consecutive
calendar month.
"Federal Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy," as amended and any successor statute thereto.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum for each day during such period equal to (a) the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the preceding
Business Day) by the Federal Reserve Bank of New York in the Composite Closing
Quotations for U.S. Government Securities; or (b) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 10:30 a.m. (Chicago time) for such day on such transactions
received by the Agent from three federal funds brokers of recognized standing
selected by it.
"Fee Letter" means that certain letter agreement dated as of the date
hereof among Seller, Conduit and the Agent, as it may be amended or modified and
in effect from time to time.
"Finance Charges" means, with respect to a Contract, any finance,
interest, late payment charges or similar charges owing by an Obligor pursuant
to such Contract.
"Financial Institutions" has the meaning set forth in the preamble in
this Agreement.
Exh. I-10
"FirstEnergy" means FirstEnergy Corp., an Ohio corporation.
"Funding Agreement" means this Agreement and any agreement or
instrument executed by any Funding Source with or for the benefit of Conduit,
including the Liquidity Agreement.
"Funding Source" means (i) any Financial Institution or (ii) any
insurance company, bank or other funding entity providing liquidity, credit
enhancement or back-up purchase support or facilities to Conduit.
"GAAP" means generally accepted accounting principles in effect in the
United States of America as of the date of this Agreement.
"Government Receivable" means a Receivable the Obligor of which is the
United States government, state government or municipal government, or a
subdivision or agency thereof.
"Incremental Purchase" means a purchase of one or more Purchaser
Interests which increases the total outstanding Aggregate Capital hereunder.
"Indebtedness" of a Person means such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by liens or payable out of the
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) capitalized lease obligations, (vi) net liabilities under
interest rate swap, exchange or cap agreements, (vii) Contingent Obligations and
(viii) liabilities in respect of unfunded vested benefits under plans covered by
Title IV of ERISA.
"Independent Director" means a member of the Board of Directors of
Seller who is not at such time, and has not been at any time during the
preceding five (5) years, (A) a director, officer, employee or affiliate of
Seller, Originator, or any of their respective Subsidiaries or Affiliates, or
(B) the beneficial owner (at the time of such individual's appointment as an
Independent Director or at any time thereafter while serving as an Independent
Director) of any of the outstanding common shares of Seller, Originator, or any
of their respective Subsidiaries or Affiliates, having general voting rights.
"Intercreditor Agreement" means, with respect to each Collection
Account, an agreement among [------------------].
"LIBO Rate" means the rate per annum equal to the sum of (i) (a) the
applicable British Bankers' Association Interest Settlement Rate for deposits in
U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two
Business Days prior to the first day of the relevant Tranche Period, and having
a maturity equal to such Tranche Period, provided that, (i) if Reuters Screen
FRBD is not available to the Agent for any reason, the applicable LIBO Rate for
the relevant Tranche Period shall instead be the applicable British Bankers'
Exh. I-11
Association Interest Settlement Rate for deposits in U.S. dollars as reported by
any other generally recognized financial information service as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Tranche Period,
and having a maturity equal to such Tranche Period, and (ii) if no such British
Bankers' Association Interest Settlement Rate is available to the Agent, the
applicable LIBO Rate for the relevant Tranche Period shall instead be the rate
determined by the Agent to be the rate at which Bank One offers to place
deposits in U.S. dollars with first-class banks in the London interbank market
at approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Tranche Period, in the approximate amount to be funded at the LIBO
Rate and having a maturity equal to such Tranche Period, divided by (b) one
minus the maximum aggregate reserve requirement (including all basic,
supplemental, marginal or other reserves) which is imposed against the Agent in
respect of Eurocurrency liabilities, as defined in Regulation D of the Board of
Governors of the Federal Reserve System as in effect from time to time
(expressed as a decimal), applicable to such Tranche Period plus (ii) the
Applicable Margin. The LIBO Rate shall be rounded, if necessary, to the next
higher 1/16 of 1%.
"Liquidity Agreement" means the agreement entered into by the Conduit
and the Financial Institutions in connection herewith for the purpose of
providing liquidity with respect to the Capital funded by the Conduit hereunder.
"Loss Horizon Factor" means, at any time, a fraction, the numerator of
which equals the sum of (a) the aggregate Original Balance of all Billed
Receivables originated during the two Accrual Periods ending immediately prior
to the last day of the most recently ended Accrual Period and (b) the aggregate
Original Balance of Unbilled Receivables as of the last day of the most recently
ended Accrual Period, and the denominator of which equals the Net Receivables
Balance as of the end of the most recently ended Accrual Period.
"Loss Percentage" means, at any time, the greater of (i) the Loss
Percentage Floor at such time and (ii) a percentage calculated in accordance
with the following formula:
LP = ASF x LHF x LR
where:
ASF = Applicable Stress Factor;
LP = the Loss Percentage;
LHF = the Loss Horizon Factor; and
LR = the highest three-month rolling average of
the Loss Ratios occurring during the 12 most
recent Accrual Periods.
"Loss Percentage Floor" means (i) on and after the Report Completion
Date, so long as all Periodic Reports delivered from the Report Completion Date
until the date of determination of the Loss Percentage Floor have contained all
Additional Reporting Information, [10.0%] and (ii) at all other times, 15.0%.
Exh. I-12
"Loss Ratio" means, at any time, a ratio (expressed as a percentage)
equal to (i) the aggregate outstanding balance of all Billed Receivables which
are more than [___] and less than [___] days past due as of the last day of the
most recently ended Accrual Period plus all Charged-Off Receivables written off
during such Accrual Period divided by (ii) the aggregate Original Balance of all
Receivables originated during the Accrual Period which ended [___] Accrual
Periods prior to such Accrual Period.
"Loss Reserve" means, on any date, an amount equal to the Loss
Percentage on such date multiplied by the Net Receivables Balance as of the
close of business of the Servicer on such date.
"Material Adverse Effect" means a material adverse effect on (i) the
financial condition or operations of any Seller Party and its Subsidiaries, (ii)
the ability of any Seller Party to perform its obligations under this Agreement,
(iii) the legality, validity or enforceability of this Agreement or any other
Transaction Document, (iv) any Purchaser's interest in the Receivables generally
or in any significant portion of the Receivables, the Related Security or the
Collections with respect thereto, or (v) the collectibility of the Receivables
generally or of any material portion of the Receivables.
"Monthly Report" means a report, in substantially the form of Exhibit
X hereto (appropriately completed), furnished by the Servicer to the Agent
pursuant to Section 8.5.
"Monthly Reporting Period" means any period during which the
Originator's Debt Rating shall be [BBB] or higher by S&P and [Baa2] or higher by
Moody's.
"Moody's" means Xxxxx'x Investors Service and its successors.
"Net Receivables Balance" means, at any time, (a) the aggregate
Outstanding Balance of all Eligible Receivables at such time, minus (b) the sum
of (without duplication) (i) the aggregate amount by which the Outstanding
Balance of all Eligible Receivables of each Obligor and its Affiliates exceeds
the Concentration Limit for such Obligor at such time, (ii) the Excess Unbilled
Receivables Amount at such time, (iii) the aggregate amount of Unapplied Cash
and Credits at such time, (iv) the aggregate amount of Customer Deposits at such
time, (v) the credit balance portion of all BBP Receivables at such time, (vi)
the Excess Government Receivables Amount at such time, (vii) the aggregate
amount of Finance Charges due and owing at such time with respect to all
Eligible Receivables, and (viii) [other items to be determined upon due
diligence].
"Non-Renewing Financial Institution" has the meaning set forth in
Section 12.3.
"Obligations" shall have the meaning set forth in Section 2.1.
"Obligor" means a Person obligated to make payments pursuant to a
Contract.
"Original Balance" means, with respect to any Receivable, the
Outstanding Balance of such Receivable on the date it was originated.
Exh. I-13
"Originator" means Metropolitan Edison Company, in its capacity as
seller under the Receivables Sale Agreement.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Participant" has the meaning set forth in Section 12.2.
"MetEd" has the meaning set forth in the preamble to this Agreement.
"Periodic Reports" means, at any time, the reports required to be
delivered by the Servicer under Section 8.5.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"P.O. Box Transfer Notice" means, with respect to each Post Office
Box, an agreement substantially in the form of Exhibit XI, or such other
agreement in form and substance satisfactory to the Agent.
"Pooled Commercial Paper" means Commercial Paper notes of Conduit
subject to any particular pooling arrangement by Conduit, but excluding
Commercial Paper issued by Conduit for a tenor and in an amount specifically
requested by any Person in connection with any agreement effected by Conduit.
"Post Office Box" means each post office box maintained in the name of
the Collection Agent/6/ which is listed on Exhibit IV.
"Potential Amortization Event" means an event which, with the passage
of time or the giving of notice, or both, would constitute an Amortization
Event.
"Prime Rate" means, for any day, a per annum rate equal to the higher
of (i) the rate of interest per annum determined by the Agent from time to time
in its sole discretion as its prime commercial lending rate for such day for
United States Dollar loans made in the United States and (ii) the Federal Funds
Effective Rate for such day plus .50%. The Prime Rate is not necessarily the
lowest rate that the Agent is charging any corporate customer.
"Proposed Reduction Date" has the meaning set forth in Section 1.3.
"Pro Rata Share" means, for each Financial Institution, a percentage
equal to (i) the Commitment of such Financial Institution, divided by (ii) the
aggregate amount of all Commitments of all Financial Institutions hereunder.
----------
6 FirstEnergy to confirm that Collection Agent is owner of Post Office Boxes.
Exh. I-14
"Purchase Limit" means $[80,000,000].
"Purchase Notice" has the meaning set forth in Section 1.2.
"Purchase Price" means, with respect to any Incremental Purchase of a
Purchaser Interest, the amount paid to Seller for such Purchaser Interest which
shall not exceed the least of (i) the amount requested by Seller in the
applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the
applicable purchase date and (iii) the excess, if any, of the Net Receivables
Balance (less the Aggregate Reserves) on the applicable purchase date over the
aggregate outstanding amount of Aggregate Capital determined as of the date of
the most recent Periodic Report, taking into account such proposed Incremental
Purchase.
"Purchasers" means Conduit and each Financial Institution.
"Purchaser Interest" means, at any time, an undivided percentage
ownership interest (computed as set forth below) associated with a designated
amount of Capital, selected pursuant to the terms and conditions hereof in (i)
each Receivable arising prior to the time of the most recent computation or
recomputation of such undivided interest, (ii) all Related Security with respect
to each such Receivable, and (iii) all Collections with respect to, and other
proceeds of, each such Receivable. Each such undivided percentage interest shall
equal:
C
--------
NRB - AR
where:
C = the Capital of such Purchaser Interest.
AR = the Aggregate Reserves.
NRB = the Net Receivables Balance.
Such undivided percentage ownership interest shall be initially computed on its
date of purchase. Thereafter, until the Amortization Date, each Purchaser
Interest shall be automatically recomputed (or deemed to be recomputed) on each
day prior to the Amortization Date. The variable percentage represented by any
Purchaser Interest as computed (or deemed recomputed) as of the close of the
business day immediately preceding the Amortization Date shall remain constant
at all times thereafter.
"Purchasing Financial Institution" has the meaning set forth in
Section 12.1(b).
"Receivable" means all indebtedness and other obligations owed to
Seller or Originator (at the time it arises, and before giving effect to any
transfer or conveyance under the Receivables Sale Agreement or hereunder) or in
which Seller or Originator has a security interest or other interest, whether or
not the Seller or Originator has billed any Obligor therefor and whether or not
the Seller of Originator has received payment therefor if such payment (in cash
or credit) has not been applied to the respective Obligor's account, including,
without limitation, any indebtedness, obligation or interest constituting an
Exh. I-15
account, chattel paper, instrument or general intangible, arising in connection
with the sale of goods or power or the rendering of services by Originator and
further includes, without limitation, the obligation to pay any Finance Charges
with respect thereto. Indebtedness and other rights and obligations arising from
any one transaction, including, without limitation, indebtedness and other
rights and obligations represented by an individual invoice, shall constitute a
Receivable separate from a Receivable consisting of the indebtedness and other
rights and obligations arising from any other transaction; provided further,
that any indebtedness, rights or obligations referred to in the immediately
preceding sentence shall be a Receivable regardless of whether the account
debtor or Seller treats such indebtedness, rights or obligations as a separate
payment obligation.
"Receivables Sale Agreement" means that certain Receivables Sale
Agreement, dated as of the date hereof between Originator and Seller, as the
same may be amended, restated or otherwise modified from time to time.
"Records" means, with respect to any Receivable, all Contracts and
other documents, books, records and other information (including, without
limitation, computer programs, tapes, disks, punch cards, data processing
software and related property and rights) relating to such Receivable, any
Related Security therefor and the related Obligor.
"Reduction Notice" has the meaning set forth in Section 1.3.
"Reinvestment" has the meaning set forth in Section 2.2.
"Related Security" means, with respect to any Receivable:
(i) all security interests or liens and property subject thereto from
time to time, if any, purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise,
together with all financing statements and security agreements describing
any collateral securing such Receivable,
(ii) all guaranties, letters of credit, letter of credit rights,
supporting obligations, insurance and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise,
(iii) all service contracts and other contracts and agreements
associated with such Receivable,
(iv) all of Seller's right, title and interest in, to and under any
contracts or agreements providing for the servicing of such Receivable,
(v) all Records related to such Receivable,
(vi) all of Seller's right, title and interest in, to and under the
Receivables Sale Agreement in respect of such Receivable, and
Exh. I-16
(vii) all proceeds of any of the foregoing.
"Required Financial Institutions" means, at any time, Financial
Institutions with Commitments in excess of 66-2/3% of the Purchase Limit.
"Report Completion Date" means the date on which the first Periodic
Report containing the Additional Reporting Information is delivered by the
Servicer to the Agent.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
capital stock of Seller now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock or in any junior class of stock of
Seller, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of capital stock of Seller now or hereafter outstanding, (iii) any
payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, and any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission with
respect to the Subordinated Loans (as defined in the Receivables Sale
Agreement), (iv) any payment made to redeem, purchase, repurchase or retire, or
to obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of capital stock of Seller now or hereafter
outstanding, and (v) any payment of management fees by Seller (except for
reasonable management fees to the Originator or its Affiliates in reimbursement
of actual management services performed).
"S&P" means Standard & Poor's Ratings Service, a division of The
XxXxxx-Xxxx Companies, Inc., and its successors.
"Seller" has the meaning set forth in the preamble to this Agreement.
"Seller Parties" has the meaning set forth in the preamble to this
Agreement.
"Servicer" means at any time the Person (which may be the Agent) then
authorized pursuant to Article VIII to service, administer and collect
Receivables.
"Servicing Fee" has the meaning set forth in Section 8.6.
"Settlement Date" means (A) if during a Monthly Reporting Period, the
date which is two (2) Business Days after a Monthly Report is due, (B) if during
a Weekly Reporting Period, the date which is one (1) Business Day after a Weekly
Report is due, (C) if during a Daily Reporting Period, the date which is one (1)
Business Day after a Daily Report is due.
"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, limited liability company, joint venture
or similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Exh. I-17
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of Seller.
"Termination Date" has the meaning set forth in Section 2.3.
"Termination Percentage" has the meaning set forth in Section 2.3.
"Terminating Financial Institution" has the meaning set forth in
Section 12.4.
"Terminating Tranche" has the meaning set forth in Section 4.3(b).
"Tranche Period" means, with respect to any Purchaser Interest held by
a Financial Institution, including any Purchaser Interest or undivided interest
in a Purchaser Interest assigned to a Financial Institution pursuant to the
Liquidity Agreement:
(a) if Yield for such Purchaser Interest is calculated on the basis of
the LIBO Rate, a period of one, two, three or six months, or such other period
as may be mutually agreeable to the Agent and Seller, commencing on a Business
Day selected by Seller or the Agent pursuant to this Agreement. Such Tranche
Period, the case of one-, two-, three- or six-month periods, shall end on the
day in the applicable succeeding calendar month which corresponds numerically to
the beginning day of such Tranche Period, provided, however, that if there is no
such numerically corresponding day in such succeeding month, such Tranche Period
shall end on the last Business Day of such succeeding month; or
(b) if Yield for such Purchaser Interest is calculated on the basis of
the Prime Rate, a period commencing on a Business Day selected by Seller and
agreed to by the Agent, provided no such period shall exceed one month.
If any Tranche Period would end on a day which is not a Business Day, such
Tranche Period shall end on the next succeeding Business Day, provided, however,
that in the case of Tranche Periods corresponding to the LIBO Rate, if such next
succeeding Business Day falls in a new month, such Tranche Period shall end on
the immediately preceding Business Day. In the case of any Tranche Period for
any Purchaser Interest which commences before the Amortization Date and would
otherwise end on a date occurring after the Amortization Date, such Tranche
Period shall end on the Amortization Date. The duration of each Tranche Period
which commences after the Amortization Date shall be of such duration as
selected by the Agent.
"Transaction Documents" means, collectively, this Agreement, each
Purchase Notice, the Receivables Sale Agreement, each Collection Account
Agreement, each P.O. Box Transfer Notice, each Intercreditor Agreement, the Fee
Letter, the Subordinated Note (as defined in the Receivables Sale Agreement) and
all other instruments, documents and agreements executed and delivered in
connection herewith.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the specified jurisdiction.
Exh. I-18
"Unapplied Cash and Credits" means, at any time, the aggregate amount
of Collections or other cash or credits then held by or for the account of the
Servicer, any Originator or the Seller in respect of the payment of Billed
Receivables, but not yet applied to the payment of such Receivables.
"Unbilled Receivables" means Receivables in respect of which an
invoice addressed to the Obligor thereof has not been sent.
"Weekly Report" means a report in the form agreed upon by the Agent
and the Servicer, furnished by the Servicer to the Agent pursuant to Section
8.5.
"Weekly Reporting Period" means any period during which the Debt
Rating shall be [BBB- or BB+] by S&P, and [Baa3 or Ba1] by Moody's.
"Yield" means (a) for each respective Tranche Period relating to
Purchaser Interests of the Financial Institutions, including any Purchaser
Interest or undivided interest in a Purchaser Interest assigned to a Financial
Institution pursuant to the Liquidity Agreement, an amount equal to the product
of the applicable Bank Rate for each Purchaser Interest multiplied by the
Capital of such Purchaser Interest for each day elapsed during such Tranche
Period, annualized on a 360 day basis (or a 365 or 366 day basis, as applicable,
in the case of the Prime Rate) and (b) for each respective Accrual Period
relating to Purchaser Interests of the Conduit, other than a Purchaser Interest
which, or an undivided interest in which, has been assigned by the Conduit to a
Financial Institution pursuant to the Liquidity Agreement, an amount equal to
the product of the CP Rate multiplied by the Capital of such Purchaser Interest
for each day elapsed during such Accrual Period, amortized on a 360-day basis.
"Yield and Servicer Fee Percentage" means, at any time, an amount
equal to the greater of (i) 1.5% and (ii) the ratio (expressed as a percentage)
equal to (a) the product of (x) 1.5, multiplied by (y) the Prime Rate plus 2.0%,
multiplied by (z) the highest three-month average Days Sales Outstanding Ratio
over the prior twelve (12) months, divided by (b) 360.
"Yield and Servicer Fee Reserve" means, on any date, an amount equal
to the product of (a) the Yield and Servicer Fee Percentage and (b) the Net
Receivables Balance as of the close of business of the Servicer on such date.
"Yield Payment Date means (A) with respect to the Purchaser Interest
of the Conduit, the date of each month which is two (2) Business Days after the
Monthly Report is due and (B) with respect to the Purchaser Interests of the
Financial Institutions, the last day of the relevant Tranche Period.
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 Illinois, and not specifically defined herein, are used herein as
defined in such Article 9.
Exh. I-19
EXHIBIT II
FORM OF PURCHASE NOTICE
[Date]
Bank One, NA (Main Office Chicago), as Agent
Suite XX0-0000, 0xx Xxxxx
000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: _______________________
Re: PURCHASE NOTICE
Ladies and Gentlemen:
Reference is hereby made to the Receivables Purchase Agreement, dated
as of January [__], 2004, by and among [Newco], a Delaware limited liability
company (the "Seller"), Metropolitan Edison Company, as Servicer, the Financial
Institutions, [_________________________] Corporation ("Conduit"), and Bank One,
NA (Main Office Chicago), as Agent (the "Receivables Purchase Agreement").
Capitalized terms used herein shall have the meanings assigned to such terms in
the Receivables Purchase Agreement.
The Agent is hereby notified of the following Incremental Purchase:
--------------------------------------------------------------------------------
Purchase Price: $
------------------------
--------------------------------------------------------------------------------
Date of Purchase:
--------------------------------------------------------------------------------
Requested Bank Rate: [LIBO Rate] [Prime Rate] [CP Rate]
--------------------------------------------------------------------------------
Tranche Period:
--------------------------------------------------------------------------------
Please wire-transfer the Purchase Price in immediately available funds on
the above-specified date of purchase to:
[Account Name]
[Account No.]
[Bank Name & Address]
[ABA #]
Exh. II-1
Reference:
Telephone advice to: [Name] @ tel. No. ( )
Please advise [Name] at telephone no ( ) _________________ if Conduit
will not be making this purchase.
In connection with the Incremental Purchase to be made on the above
listed "Date of Purchase" (the "Purchase Date"), the Seller hereby certifies
that the following statements are true on the date hereof, and will be true on
the Purchase Date (before and after giving effect to the proposed Incremental
Purchase):
(i) the representations and warranties of the Seller set forth in
Section 5.1 of the Receivables Purchase Agreement are true and correct on and as
of the Purchase Date as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result from the
proposed Incremental Purchase, that will constitute an Amortization Event or a
Potential Amortization Event;
(iii) the Amortization Date has not occurred, the Aggregate Capital
does not exceed the Purchase Limit and the aggregate Purchaser Interests do not
exceed the Applicable Maximum Purchaser Interest; and
(iv) the amount of Aggregate Capital is $_________ after giving effect
to the Incremental Purchase to be made on the Purchase Date.
Very truly yours,
[SELLER]
By:
-----------------------------
Name:
Title:
Exh. II-2
EXHIBIT III
PLACES OF BUSINESS OF THE SELLER PARTIES;
LOCATIONS OF RECORDS;
ORGANIZATIONAL IDENTIFICATION NUMBERS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER(S)
Principal Place of Business/Chief Executive Office:
Seller: ___________________________________
___________________________________
___________________________________
Servicer: 0000 Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Location of Records:
Seller:
Servicer: 00 Xxxxx Xxxx Xxxxxx
Xxxxx, XX 00000
Organizational ID#:
Seller: ___________________________________
Servicer: N/A
FEIN#:
Seller: ______________________________
Servicer: 00-0000000
Exh. III-1
EXHIBIT IV
NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS
--------------------------------------------------------------------------------
Post Office Box Related Collection Account Collection Account Bank
--------------------------------------------------------------------------------
P.O. Box # ______________ Account #_____________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Exh. IV-1
EXHIBIT V
FORM OF COMPLIANCE CERTIFICATE
To: Bank One, NA (Main Office Chicago), as Agent
This Compliance Certificate is furnished pursuant to that certain
Receivables Purchase Agreement dated as of January [__], 2004 among [Newco] (the
"Seller"), Metropolitan Edison Company (the "Servicer"), the Purchasers party
thereto and Bank One, NA (Main Office Chicago), as agent for such Purchasers
(the "Agreement").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected [_____________] of Seller.
2. I, or persons under my supervision, have reviewed the terms of the
Agreement and I have made, or have caused to be made under my supervision, a
detailed review of the transactions and conditions of Seller and its
Subsidiaries during the accounting period covered by the attached financial
statements.
3. The examinations described in paragraph 2 did not disclose, and I
have no actual knowledge of, the existence of any condition or event which
constitutes an Amortization Event or Potential Amortization Event, as each such
term is defined under the Agreement, during or at the end of the accounting
period covered by the attached financial statements or as of the date of this
Certificate, except as set forth in paragraph 5 below.
4. Schedule I attached hereto sets forth financial data and
computations evidencing the compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct in all
material respects.
5. Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which Seller has taken, is taking, or
proposes to take with respect to each such condition or event:
-------------
-------------
-------------
This certificate is being delivered solely in satisfaction of
Section 7.1(a)(iii) of the Agreement, and no personal liability will attach to
the undersigned officer for statements and certifications made in good faith.
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this
day of , .
Exh. V-1
SCHEDULE I TO COMPLIANCE CERTIFICATE
A. Schedule of Compliance as of __________, ____ with Section ___ of the
Agreement. Unless otherwise defined herein, the terms used in this
Compliance Certificate have the meanings ascribed thereto in the Agreement.
This schedule relates to the month ended:
--------------------
Exh. V-2
EXHIBIT VI
FORM OF COLLECTION ACCOUNT AGREEMENT
Exh. VI-1
EXHIBIT VII
FORM OF ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "Assignment Agreement") is entered
into as of the ___ day of ____________, ____, by and between
_____________________ ("Assignor") and __________________ ("Assignee").
PRELIMINARY STATEMENTS
A. This Assignment Agreement is being executed and delivered in
accordance with Section 12.1(b) of that certain Receivables Purchase Agreement
dated as of January [___], 2004 by and among [Newco], as Seller, Metropolitan
Edison Company, as Servicer, [_________________________ Corporation], Bank One,
NA (Main Office Chicago), as Agent, and the Financial Institutions party thereto
(as amended, modified or restated from time to time, the "Purchase Agreement").
Capitalized terms used and not otherwise defined herein are used with the
meanings set forth or incorporated by reference in the Purchase Agreement.
B. Assignor is a Financial Institution party to the Purchase
Agreement, and Assignee wishes to become a Financial Institution thereunder; and
C. Assignor is selling and assigning to Assignee an undivided
____________% (the "Transferred Percentage") interest in all of Assignor's
rights and obligations under the Purchase Agreement and the Transaction
Documents, including, without limitation, Assignor's Commitment and (if
applicable) the Capital of Assignor's Purchaser Interests as set forth herein.
AGREEMENT
The parties hereto hereby agree as follows:
1. The sale, transfer and assignment effected by this Assignment
Agreement shall become effective (the "Effective Date") two (2) Business Days
(or such other date selected by the Agent in its sole discretion) following the
date on which a notice substantially in the form of Schedule II to this
Assignment Agreement ("Effective Notice") is delivered by the Agent to Conduit,
Assignor and Assignee. From and after the Effective Date, Assignee shall be a
Financial Institution party to the Purchase Agreement for all purposes thereof
as if Assignee were an original party thereto and Assignee agrees to be bound by
all of the terms and provisions contained therein.
2. If Assignor has no outstanding Capital under the Purchase
Agreement, on the Effective Date, Assignor shall be deemed to have hereby
transferred and assigned to Assignee, without recourse, representation or
warranty (except as provided in paragraph 6 below), and the Assignee shall be
deemed to have hereby irrevocably taken, received and assumed from Assignor, the
Transferred Percentage of Assignor's Commitment and all rights and obligations
Exh. VII-1
associated therewith under the terms of the Purchase Agreement, including,
without limitation, the Transferred Percentage of Assignor's future funding
obligations under Section 4.1 of the Purchase Agreement.
3. If Assignor has any outstanding Capital under the Purchase
Agreement, at or before 12:00 noon, local time of Assignor, on the Effective
Date Assignee shall pay to Assignor, in immediately available funds, an amount
equal to the sum of (i) the Transferred Percentage of the outstanding Capital of
Assignor's Purchaser Interests (such amount, being hereinafter referred to as
the "Assignee's Capital"); (ii) all accrued but unpaid (whether or not then due)
Yield attributable to Assignee's Capital; and (iii) accruing but unpaid fees and
other costs and expenses payable in respect of Assignee's Capital for the period
commencing upon each date such unpaid amounts commence accruing, to and
including the Effective Date (the "Assignee's Acquisition Cost"); whereupon,
Assignor shall be deemed to have sold, transferred and assigned to Assignee,
without recourse, representation or warranty (except as provided in paragraph 6
below), and Assignee shall be deemed to have hereby irrevocably taken, received
and assumed from Assignor, the Transferred Percentage of Assignor's Commitment
and the Capital of Assignor's Purchaser Interests (if applicable) and all
related rights and obligations under the Purchase Agreement and the Transaction
Documents, including, without limitation, the Transferred Percentage of
Assignor's future funding obligations under Section 4.1 of the Purchase
Agreement.
4. Concurrently with the execution and delivery hereof, Assignor will
provide to Assignee copies of all documents requested by Assignee which were
delivered to Assignor pursuant to the Purchase Agreement.
5. Each of the parties to this Assignment Agreement agrees that at
any time and from time to time upon the written request of any other party, it
will execute and deliver such further documents and do such further acts and
things as such other party may reasonably request in order to effect the
purposes of this Assignment Agreement.
6. By executing and delivering this Assignment Agreement, Assignor
and Assignee confirm to and agree with each other, the Agent and the Financial
Institutions as follows: (a) other than the representation and warranty that it
has not created any Adverse Claim upon any interest being transferred hereunder,
Assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made by any other
Person in or in connection with the Purchase Agreement or the Transaction
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of Assignee, the Purchase Agreement or any other instrument
or document furnished pursuant thereto or the perfection, priority, condition,
value or sufficiency of any collateral; (b) Assignor makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Seller, any Obligor, any Seller Affiliate or the performance or
observance by the Seller, any Obligor, any Seller Affiliate of any of their
respective obligations under the Transaction Documents or any other instrument
or document furnished pursuant thereto or in connection therewith; (c) Assignee
confirms that it has received a copy of the Purchase Agreement and copies of
such other Transaction Documents, and other documents and information as it has
requested and deemed appropriate to make its own credit analysis and decision to
Exh. VII-2
enter into this Assignment Agreement; (d) Assignee will, independently and
without reliance upon the Agent, Conduit, the Seller or any other Financial
Institution or Purchaser and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Purchase Agreement and the Transaction
Documents; (e) Assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Transaction Documents
as are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; and (f) Assignee agrees that it will perform
in accordance with their terms all of the obligations which, by the terms of the
Purchase Agreement and the other Transaction Documents, are required to be
performed by it as a Financial Institution or, when applicable, as a Purchaser.
7. Each party hereto represents and warrants to and agrees with the
Agent that it is aware of and will comply with the provisions of the Purchase
Agreement, including, without limitation, Sections 4.1 and 13.6 thereof.
8. Schedule I hereto sets forth the revised Commitment of Assignor
and the Commitment of Assignee, as well as administrative information with
respect to Assignee.
9. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS.
10. Assignee hereby covenants and agrees that, prior to the date
which is one year and one day after the payment in full of all senior
indebtedness for borrowed money of Conduit, it will not institute against, or
join any other Person in instituting against, Conduit any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
Exh. VII-3
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers of the
date hereof.
[ASSIGNOR]
By:
-----------------------------------
Title:
[ASSIGNEE]
By:
-----------------------------------
Title:
The Seller hereby consents to such sale, transfer and assignment to Assignee
pursuant to Article XII of the Purchase Agreement.
[SELLER]
By: ________________________________
Title:
Exh. VII-4
SCHEDULE I TO ASSIGNMENT AGREEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
DATE: _______________, ____
TRANSFERRED PERCENTAGE: ________%
----------------- ---------------------- -------------------- -------------------- -------------------
X-0 X-0 X-0 X-0
----------------- ---------------------- -------------------- -------------------- -------------------
ASSIGNOR COMMITMENT (PRIOR TO COMMITMENT (AFTER OUTSTANDING RATABLE SHARE OF
GIVING EFFECT TO THE GIVING EFFECT TO CAPITAL OUTSTANDING
ASSIGNMENT AGREEMENT) THE ASSIGNMENT (IF ANY) CAPITAL
AGREEMENT)
----------------- ---------------------- -------------------- -------------------- -------------------
------------------------------------------------------------------------------------------------------
----------------- ---------------------- -------------------- -------------------- -------------------
X-0 X-0 X-0
----------------- ---------------------- -------------------- -------------------- -------------------
ASSIGNEE COMMITMENT (AFTER OUTSTANDING RATABLE SHARE OF
GIVING EFFECT TO CAPITAL OUTSTANDING
THE ASSIGNMENT (IF ANY) CAPITAL
AGREEMENT)
----------------- ---------------------- -------------------- -------------------- -------------------
----------------- ---------------------- -------------------- -------------------- -------------------
ADDRESS FOR NOTICES
-------------------
Attention:
Phone:
Fax:
Exh. VII-5
SCHEDULE II TO ASSIGNMENT AGREEMENT
EFFECTIVE NOTICE
TO: ________________________, Assignor
________________________
________________________
________________________
TO: ________________________, Assignee
________________________
________________________
________________________
The undersigned, as Agent under the Receivables Purchase Agreement
dated as of [______], 2004 by and among [Newco], a Delaware Limited Liability
Company, Metropolitan Edison Company, a Pennsylvania corporation, as Servicer,
[_________________________ Corporation], Bank One, NA (Main Office Chicago), as
Agent, and the Financial Institutions party thereto, hereby acknowledges receipt
of executed counterparts of a completed Assignment Agreement dated as of
____________, ____ between __________________, as Assignor, and
__________________, as Assignee. Terms defined in such Assignment Agreement are
used herein as therein defined.
1. Pursuant to such Assignment Agreement, you are advised that the
Effective Date will be ____________, ____.
2. Conduit hereby consents to the Assignment Agreement as required by
Section 12.1(b) of the Receivables Purchase Agreement.
Exh. VII-6
[3. Pursuant to such Assignment Agreement, the Assignee is required to
pay $____________ to Assignor at or before 12:00 noon (local time of Assignor)
on the Effective Date in immediately available FUNDS.]
Very truly yours,
BANK ONE, NA (MAIN OFFICE CHICAGO),
individually and as Agent
By:
-----------------------------------
Title:
--------------------------------
[
-------------------------
CORPORATION]
By: ____________________________
Authorized Signatory
Exh. VII-7
EXHIBIT VIII
CREDIT AND COLLECTION POLICY
See Exhibit V to Receivables Sale Agreement
Exh. VIII-1
EXHIBIT IX
FORM OF CONTRACT(S)
See Attached
Exh. IX-1
EXHIBIT X
FORM OF PERIODIC REPORTS
[ATTACHED]
Exh. X-1
EXHIBIT XI
FORM OF P.O. BOX TRANSFER NOTICE
United States Postal Service
[Address of Post Office]
Re: Zip Code: [____________]
[DATE]
Dear Sir or Madam:
Please be informed that [FirstEnergy Service Company], the customer for Zip
Code: [___________] hereby requests that effective immediately the customer for
Zip Code: [___________] be changed to Bank One, NA (Main Office Chicago), as
Agent for the benefit of the Purchasers under that certain Receivables Purchase
Agreement dated January [__], 2004.
Thank you.
[FIRSTENERGY SERVICE COMPANY]
By:____________________
Name:
Title:
Bank One, NA (Main Office Chicago), as customer for Zip Code:
[____________] hereby gives notice that effective immediately, only authorized
representatives (as determined by the branch managers or officers of such
organization) of the organizations listed are authorized to accept mail
addressed to this post office box, to change the keys for this post office box,
or otherwise instruct you with respect to this post office box:
[List follows on next page]
Exh. XI-1
Name of Individual or Organization Contact Number
----------------------------- ---------------------------
----------------------------- ---------------------------
----------------------------- ---------------------------
Thank you.
BANK ONE, NA (MAIN OFFICE
CHICAGO)
By:____________________
Name:
Title:
Exh. XI-2
EXHIBIT XII
FORM OF REDUCTION NOTICE
Exh. XII-1
EXHIBIT XIII
Defined Terms for Section 9.1(k)
Terms used in Section 9.1(k) of this Agreement or this Exhibit XIII
which are not defined herein are used as defined elsewhere in this Agreement.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person.
"Code" means the United States Internal Revenue Code of 1986, as
amended from time to time, and the applicable regulations thereunder.
"Consolidated Debt" means, with respect to MetEd, at any date of
determination the aggregate Indebtedness of MetEd and its Consolidated
Subsidiaries determined on a consolidated basis in accordance with GAAP, but
shall not include (i) Nonrecourse Indebtedness of MetEd and any of its
Subsidiaries, (ii) the aggregate principal amount of Trust Preferred Securities
of MetEd and its Consolidated Subsidiaries, (iii) obligations under leases that
shall have been or should be, in accordance with GAAP recorded as operating
leases in respect of which the Borrower or any of its Consolidated Subsidiaries
is liable as a lessee, and (iv) the aggregate principal amount of Stranded Cost
Securitization Bonds of MetEd and its Consolidated Subsidiaries.
"Consolidated Subsidiary" means, as to any Person, any Subsidiary of
such Person the accounts of which are or are required to be consolidated with
the accounts of such Person in accordance with GAAP.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control that, together with MetEd and its Subsidiaries, are treated as a
single employer under Section 414(b) or 414(c) of the Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the regulations promulgated and rulings issued thereunder, each as amended,
modified and in effect from time to time.
"Fixed Charge Ratio" means, with respect to any fiscal quarter, the
ratio of (i) the sum of (A) consolidated net income before extraordinary items
of MetEd and its Consolidated Subsidiaries for the twelve-month period ended on
the last day of such fiscal quarter, plus (B) depreciation, amortization,
dividends paid on preferred stock of subsidiaries, interest expense, amounts
paid on Trust Preferred Securities, taxes and federal income taxes deducted in
determining such net income, plus (C) the interest element of rental payments
deducted in determining such net income under operating lease obligations of
MetEd and its Consolidated Subsidiaries during such twelve-month period, plus
Exh. XIII-1
(D) all other non-cash charges constituting operating expenses deducted in
determining such net income to (ii) the sum of (A) all interest expense
(excluding the amount of any allowance for funds used during construction and
amounts paid on Trust Preferred Securities) in respect of Indebtedness of MetEd
and its Consolidated Subsidiaries during such twelve-month period, plus (B) the
interest element of rental payments deducted in determining net income under
operating lease obligations of the Borrower and its Consolidated Subsidiaries
during such twelve-month period.
"GAAP" means generally accepted accounting principals in the United
States in effect from time to time.
"Indebtedness" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, or with respect to
deposits or advances of any kind, or for the deferred purchase price of property
or services, (ii) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, (iii) all obligations of such Person upon which
interest charges are customarily paid, (iv) all obligations under leases that
shall have been or should be, in accordance with GAAP, recorded at as capital
leases in respect of which such Person is liable as lessee, (v) liabilities in
respect of unfunded vested benefits under Plans, (vi) withdrawal liability
incurred under ERISA by such Person or any of its affiliates to any
Multiemployer Plan, (vii) reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers acceptances,
surety or other bonds and similar instruments, (viii) all Indebtedness of others
secured by a Lien on any asset of such Person, whether or not such Indebtedness
is assumed by such Person and (ix) 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
above.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"Nonrecourse Indebtedness" means any Indebtedness that finances the
acquisition, development, ownership or operation of an asset in respect of which
the Person to which such Indebtedness is owed has no recourse whatsoever to the
Borrower or any of its Affiliates other than:
(i) recourse to the named obligor with respect to such Indebtedness
(the "Debtor") for amounts limited to the cash flow or net cash
flow (other than historic cash flow) from the asset; and
(ii) recourse to the Debtor for the purpose only of enabling amounts
to be claimed in respect of such Indebtedness in an enforcement
of any security interest or lien given by the Debtor over the
asset or the income, cash flow or other proceeds deriving from
Exh. XIII-2
the asset (or given by any shareholder or the like in the Debtor
over its shares or like interest in the capital of the Debtor) to
secure the Indebtedness, but only if the extent of the recourse
to the Debtor is limited solely to the amount of any recoveries
made on any such enforcement; and
(iii) recourse to the Debtor generally or indirectly to any Affiliate
of the Debtor, under any form of assurance, undertaking or
support, which recourse is limited to a claim for damages (other
than liquidated damages and damages required to be calculated in
a specified way) for a breach of an obligation (other than a
payment obligation or an obligation to comply or to procure
compliance by another with any financial ratios or other tests of
financial condition) by the Person against which such recourse is
available.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plan" means, at any time, an employee pension benefit plan that is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of a member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
"Stranded Cost Securitization Bonds" means any instruments,
pass-through certificates, notes, debentures, certificates of participation,
bonds, certificates of beneficial interest or other evidences of indebtedness or
instruments evidencing a beneficial interest which are secured by or otherwise
payable from non-bypassable cent per kilowatt hour charges authorized pursuant
to an order of a state commission regulating public utilities to be applied and
invoiced to customers of such utility. The charges so applied and invoiced must
be deducted and stated separately from the other charges invoiced by such
utility against its customers.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such a Person, or one or more Subsidiaries, or by such Person and one or more of
its Subsidiaries.
"Total Capitalization" means, with respect to MetEd at any date of
determination the sum of (i) Consolidated Debt of MetEd, (ii) consolidated
equity of the common stockholders of MetEd and its Consolidated Subsidiaries,
Exh. XIII-3
(iii) consolidated equity of the preference stockholders of MetEd and its
Consolidated Subsidiaries, and (iv) the aggregate principal amount of Trust
Preferred Securities.
"Trust Preferred Securities" means any securities, however
denominated, (i) issued by MetEd or any Consolidated Subsidiary of MetEd,
(ii) that are not subject to mandatory redemption or the underlying securities,
if any, of which are not subject to mandatory redemption, (iii) that are
perpetual or mature no less than 30 years from the date of issuance, (iv) the
indebtedness issued in connection with which, including any guaranty, is
subordinate in right of payment to the unsecured and unsubordinated indebtedness
of the issuer of such indebtedness or guaranty, and (v) the terms of which
permit the deferral of the payment of interest or distributions thereon to a
date occurring after the Commitment Termination Date.
Exh. XIII-4
SCHEDULE A
COMMITMENTS OF FINANCIAL INSTITUTIONS
------------------------------------------------- ------------------------------
Financial Institution Commitment
--------------------- ----------
------------------------------------------------- ------------------------------
Bank One NA (Main Office Chicago) $[________________]
------------------------------------------------- ------------------------------
SCHEDULE B
LIST OF CLOSING DOCUMENTS
[ATTACHED]
