EXHIBIT 10.4
EXECUTION COPY
RECEIVABLES SALE AGREEMENT
Dated as of December 30, 0000
Xxxxxxx
XXXXXXXX XXXXXXX PUBLIC SERVICE COMPANY
as Seller
and
NIPSCO RECEIVABLES CORPORATION
as Purchaser
TABLE OF CONTENT
Page
----
ARTICLE I. DEFINITIONS............................................................. 1
SECTION 1.01. Certain Defined Terms............................................. 1
SECTION 1.02. Other Terms....................................................... 4
SECTION 1.03. Incorporation of Defined Terms.................................... 4
ARTICLE II. AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS........................ 4
SECTION 2.01. Facility.......................................................... 4
SECTION 2.02. Making Purchases.................................................. 4
SECTION 2.03. Collections....................................................... 5
SECTION 2.04. Settlement Procedures............................................. 6
SECTION 2.05. Payments and Computations, Etc.................................... 6
SECTION 2.06. Contributions..................................................... 7
SECTION 2.07. Grant of Security Interest........................................ 7
ARTICLE III. CONDITIONS OF PURCHASES................................................. 7
SECTION 3.01. Conditions Precedent to Initial Purchase from the Seller.......... 7
SECTION 3.02. Conditions Precedent to All Purchases............................. 7
ARTICLE IV. REPRESENTATIONS AND WARRANTIES.......................................... 8
SECTION 4.01. Representations and Warranties of the Seller...................... 8
ARTICLE V. COVENANTS............................................................... 11
SECTION 5.01. Covenants of the Seller........................................... 16
SECTION 5.02. Intent of the Seller and the Purchaser............................ 17
ARTICLE VI. ADMINISTRATION AND COLLECTION........................................... 17
SECTION 6.01. Designation of Servicer........................................... 17
SECTION 6.02. Certain Rights of the Purchaser................................... 18
SECTION 6.03. Rights and Remedies............................................... 18
SECTION 6.04. Transfer of Records to Purchaser.................................. 19
ARTICLE VII. EVENTS OF TERMINATION................................................... 19
SECTION 7.01. Events of Termination............................................. 19
ARTICLE VIII. INDEMNIFICATION......................................................... 21
SECTION 8.01. Indemnities by the Seller......................................... 21
i
ARTICLE IX. MISCELLANEOUS........................................................... 22
SECTION 9.01. Amendments, Etc................................................... 23
SECTION 9.02. Notices, Etc...................................................... 23
SECTION 9.03. Binding Effect; Assignability..................................... 23
SECTION 9.04. Costs, Expenses and Taxes......................................... 24
SECTION 9.05. No Proceedings.................................................... 24
SECTION 9.06. Confidentiality................................................... 24
SECTION 9.07. GOVERNING LAW..................................................... 24
SECTION 9.08. Third Party Beneficiary........................................... 24
SECTION 9.09. Subordination..................................................... 24
SECTION 9.10. Execution in Counterparts......................................... 25
SECTION 9.11. Integration; Survival of Termination.............................. 25
SECTION 9.12. Consent to Jurisdiction........................................... 25
SECTION 9.13. WAIVER OF JURY TRIAL.............................................. 26
EXHIBITS and ANNEXES
EXHIBIT A Blocked Account Banks
EXHIBIT B Form of Promissory Note for Deferred Purchase Price
EXHIBIT C Trade Names and Former Names
ANNEX A Additional Representations and Warranties of the Seller
ii
RECEIVABLES SALES AGREEMENT
Dated as of December 30, 2003
NORTHERN INDIANA PUBLIC SERVICE COMPANY, an Indiana
corporation (the "Seller"), and NIPSCO RECEIVABLES CORPORATION, an Indiana
corporation (the "Purchaser"), agree as follows:
PRELIMINARY STATEMENTS. (1) Certain terms which are
capitalized and used throughout this Agreement (in addition to those defined
above) are defined in Article I of this Agreement.
(2) The Seller has Receivables that it wishes to sell to
the Purchaser, and the Purchaser is prepared to purchase such Receivables on the
terms set forth herein.
(3) The Seller may also wish to contribute Receivables to
the capital of the Purchaser on the terms set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Certain Defined Terms. 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):
"Agreement" means this Receivables Sales Agreement, as the
same may be amended, restated, supplemented or otherwise modified from
time to time.
"Closing Date" means December 30, 2003 or, if later, the first
date on which the conditions precedent set forth in Section 3.01 are
satisfied.
"Contributed Receivable" has the meaning specified in Section
2.06.
"Deferred Purchase Price" means the portion of the Purchase
Price of Purchased Receivables purchased on any Purchase Date exceeding
the amount of the Purchase Price to be paid in cash, which portion when
added to the cumulative amount of all previous Deferred Purchase Prices
(after giving effect to any payments made on account thereof) shall not
exceed at any time (i) 85% of the aggregate Outstanding Balance of the
Transferred Receivables (other than Defaulted Receivables) minus (ii)
the aggregate outstanding Capital (as defined in the Purchase
Agreement). The obligations of the Purchaser in respect of the Deferred
Purchase Price shall be evidenced by the Deferred Purchase Price Note.
"Deferred Purchase Price Note" has the meaning specified in
Section 9.09.
"Discount" means, in respect of each Purchase, the Discount
Rate multiplied by the Outstanding Balance of the Receivables that are
the subject of such Purchase;
provided, however, the foregoing Discount may be revised prospectively
by request of either of the parties hereto to reflect changes in recent
experience with respect to write-offs, timing and cost of Collections
and cost of funds, provided further that such revision is consented to
by both of the parties (it being understood that each party agrees to
duly consider such request but shall have no obligation to give such
consent).
"Discount Rate" means a percentage calculated to provide the
Purchaser with a reasonable return on its investment in the Receivables
after taking account of (i) the time value of money based upon the
anticipated dates of collection of the Receivables and the cost to the
Purchaser of financing its investment in the Receivables during such
period and (ii) the risk of nonpayment by the Obligors. On the Closing
Date, the Discount Rate is .30%. The Seller and the Purchaser may agree
from time to time to change the Discount Rate based on changes in one
or more of the items affecting the calculation thereof, provided that
any change to the Discount Rate shall take effect as of the
commencement of a calendar month, shall apply only prospectively and
shall not affect the Purchase Price payment in respect of Purchase
which occurred during any calendar month ending prior to the calendar
month during which the Seller and the Purchaser agree to make such
change.
"Event of Termination" has the meaning specified in Section
7.01.
"Facility" means the willingness of the Purchaser to make
Purchases of Receivables from the Seller from time to time pursuant to
the terms of this Agreement.
"Indemnified Amounts" has the meaning specified in Section
8.01.
"Indemnified Parties" has the meaning specified in Section
8.01.
"Material Adverse Effect" means a material adverse effect on
(i) the ability of any Transaction Party to perform its obligations
under any Transaction Document, (ii) the legality, validity or
enforceability of this Agreement or any other Transaction Document,
(iii) the Purchaser's interest in the Receivables generally or in any
material portion of the Receivables, the Related Security or the
Collections with respect thereto, or (iv) the collectibility of the
Receivables generally or of any material portion of the Receivables.
"Purchase" means a purchase by the Purchaser of Receivables
from the Seller pursuant to Article II.
"Purchase Agreement" means that certain Receivables Purchase
Agreement, dated as of the date hereof, among the Purchaser, as seller,
CAFCO, LLC, as Conduit Purchaser, Citibank, N.A. and Danske Bank A/S,
Cayman Island Branch, as Bank Purchasers, Citicorp North America, Inc.,
as Agent and the Seller, as servicer, as amended, restated or otherwise
modified from time to time.
"Purchase Date" means each day on which a Purchase is made
pursuant to Article II.
2
"Purchase Price" means, for any Purchase, an amount equal to
the Outstanding Balance of the Receivables that are the subject of such
Purchase as set forth in the Seller's Receivables Trial Balance, minus
the Discount for such Purchase.
"Purchased Receivable" means any Receivable which is purchased
by the Purchaser pursuant to Section 2.02.
"Receivables Trial Balance" means, on any date, the Seller's
accounts receivable trial balance (whether in the form of a computer
printout, magnetic tape or diskette or other electronic or paper
record) on such date, listing Obligors and the Receivables respectively
owed by such Obligors on such date together with the aged Outstanding
Balances of such Receivables, in form and substance satisfactory to the
Purchaser.
"Related Security" means with respect to any Receivable:
(i) all of the Seller's interest in any
merchandise or goods (including returned merchandise or
goods), if any, relating to any sale giving rise to such
Receivable;
(ii) all security interests or liens and property
subject thereto from time to time purporting to secure payment
of such Receivable, whether pursuant to the Contract related
to such Receivable or otherwise, together with all financing
statements authorized by an Obligor describing any collateral
securing such Receivable;
(iii) all guaranties, 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;
(iv) all other books, records and other
information (including, without limitation, computer programs,
tapes, discs, punch cards, data processing software and
related property and rights) relating to such Receivable and
the related Obligor; and
(v) all of the Seller's right, title and
interest in and to all invoices or other agreements or
documents that evidence, secure or otherwise relate to such
Receivable.
"Transaction Party" means any of the Seller, the Purchaser or
the Servicer.
"Senior Obligations" means all "Seller Obligations" (as
defined in the Purchase Agreement).
"Settlement Date" means (i) the 18th day of each calendar
month (or, if such day is not a Business Day, the next succeeding
Business Day) and (ii) following the Termination Date, each other
"Settlement Date" under and as defined in the Purchase Agreement.
3
"Settlement Period" means each calendar month.
"Transferred Receivable" means a Purchased Receivable or a
Contributed Receivable.
SECTION 1.02.Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles. All terms used in Article 9 of the UCC in the
State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.
SECTION 1.03. Incorporation of Defined Terms. Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to
such terms in the Purchase Agreement.
ARTICLE II. AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS
SECTION 2.01. Facility. On the terms and conditions
hereinafter set forth and without recourse to the Seller (except to the extent
specifically provided herein), the Seller hereby agrees to sell to the Purchaser
all Receivables originated or acquired by it from time to time and the Purchaser
hereby agrees to purchase from the Seller all such Receivables from time to
time, in each case during the period from the date hereof to the Termination
Date; provided that on the Closing Date, the Seller may, at its option, elect to
contribute Receivables to the Purchaser pursuant to Section 2.06 in lieu of a
sale of such Receivables.
SECTION 2.02. Making Purchases.
(a) Initial Purchase. On the Closing Date, the Seller
shall (i) contribute to the Capital of the Purchaser Receivables having an
aggregate Outstanding Balance of $44,454,144 and (ii) sell to the Purchaser all
other Receivables outstanding as of the Closing Date. On the date of such
Purchase, the Purchaser shall, upon satisfaction of the applicable conditions
set forth in Article III, pay the Purchase Price for the Receivables sold to it
in the manner provided in Section 2.02(c).
(b) Subsequent Purchases. On each Business Day following
the Closing Date until the Termination Date, the Seller shall sell to the
Purchaser and the Purchaser shall purchase from the Seller, upon satisfaction of
the applicable conditions set forth in Article III, all Receivables originated
or otherwise acquired by the Seller which have not previously been sold or
contributed to the Purchaser.
(c) Payment of Purchase Price. With respect to any
Receivables coming into existence after the date hereof, the Purchaser shall pay
the Purchase Price therefor in the following manner:
(i) first, by delivery of immediately available
funds, to the extent of funds available to the Purchaser from (i) its
subsequent sale of an interest in the Receivables under the Purchase
Agreement, (ii) Collections arising from any Receivables previously
sold to the Purchaser in which the Purchaser has retained an interest,
or (iii) other cash on hand; and
4
(ii) second, by an increase in the Deferred
Purchase Price (subject at all times to the limitations contained in
the definition thereof).
The Seller is hereby authorized by the Purchaser to endorse on the schedule
attached to the Deferred Purchase Price Note an appropriate notation evidencing
the date and amount of each advance thereunder, as well as the date of each
payment with respect thereto, provided that the failure to make such notation
shall to affect any obligation of the Purchaser thereunder.
Although the Purchase Price for each Receivable coming into existence
after the date hereof shall be due and payable in full by the Purchaser to the
Seller on the date such Receivable came into existence, and payment of such
Purchase Price shall be made as provided in this Section 2.02(c), final
settlement of the Purchase Price between the Purchaser to the Seller shall be
effected on a monthly basis on each Settlement Date with respect to all
Receivables coming into existence during the calendar month preceding such
Settlement Date and based on the information contained in the Monthly Report
delivered by the Servicer pursuant to the Purchase Agreement for the calendar
month then most recently ended. On each Settlement Date, the Purchaser and the
Seller shall cause a reconciliation to made in respect of all purchases that
shall have been made during the calendar month then most recently ended.
Although settlement shall be effected on Settlement Dates, increases or
decreases in the amount owing under the Deferred Purchase Price Note made
pursuant to this Section 2.02(c) shall be deemed to have occurred and shall be
effective as of the last Business Day of the calendar month to which such
settlement relates.
(d) Ownership of Receivables and Related Security. On
each Purchase Date, after giving effect to the Purchase (and any contribution of
Receivables) on such date, the Purchaser shall own all Receivables originated or
otherwise acquired by the Seller on such date (including Receivables which have
been previously sold or contributed to the Purchaser hereunder). The Purchase or
contribution of any Receivable shall include all Related Security with respect
to such Receivable.
SECTION 2.03. Collections. (a) On each Deposit Date, the
Servicer shall apply all Collections released to the Purchaser pursuant to the
Purchase Agreement and all amounts paid by the Seller pursuant to Section
2.04(a) and 2.04(b) hereof (i) first, to pay the Purchase Price then owing by
the Purchaser hereunder on such date, (ii) second, if such date is a Settlement
Date, to pay the accrued and unpaid interest on the Deferred Purchase Price for
the most recently ended calendar month (as provided in Section 2.03(c)), and
(iii) third, to prepay in whole or in part the principal amount of the Deferred
Purchase Price. The Servicer shall, on or before each Settlement Date, deposit
into an account of the Purchaser or the Purchaser's assignee all remaining
Collections of Transferred Receivables (if any) then held by the Servicer (but
only to the extent such Collections have not been previously applied to purchase
new Receivables hereunder or to pay the Deferred Purchase Price).
(b) In the event that the Seller believes that
collections which are not Collections of Transferred Receivables have been
deposited into an account of the Purchaser or the Purchaser's assignee, the
Seller shall so advise the Purchaser and, on the Business Day following such
identification to the Purchaser's reasonable satisfaction, the Purchaser shall
instruct the Servicer to remit such collections to the Seller.
5
(c) On each Settlement Date, the Purchaser shall, to the
extent Collections are available for such purpose under the Purchase Agreement
and are not required to pay the Purchase Price for any Receivables purchased
hereunder, pay to the Seller accrued interest on the Deferred Purchase Price;
provided that each such payment shall be made solely from (i) Collections of
Transferred Receivables after all other amounts then due from the Purchaser
under the Purchase Agreement have been paid in full and all amounts then
required to be set aside by the Purchaser or the Servicer under the Purchase
Agreement have been so set aside or (ii) excess cash flow from operations of the
Purchaser which is not required to be applied to the payment of any Senior
Obligations; and provided, further that no such payment shall be made at any
time when an Event of Termination shall have occurred and be continuing. At such
time following the Termination Date when all Senior Obligations shall have been
paid in full, the Purchaser shall apply, on each Deposit Date, all Collections
of Transferred Receivables received by the Purchaser pursuant to Section 2.03(a)
(and not previously distributed) first to the payment of accrued interest on the
Deferred Purchase Price, and then to the reduction of the principal amount of
the Deferred Purchase Price.
SECTION 2.04. Settlement Procedures. (a) If on any day any
Transferred Receivable becomes (in whole or in part) a Diluted Receivable, the
Seller shall be deemed to have received on such day a Collection of such
Receivable in the amount of such Diluted Receivable. The Seller shall pay to the
Servicer on or prior to the next Settlement Date all amounts deemed to have been
received pursuant to this subsection.
(b) Upon discovery by the Seller or the Purchaser of a
breach of any of the representations and warranties made by the Seller in
Section 4.01(j) with respect to any Transferred Receivable, such party shall
give prompt written notice thereof to the other party, as soon as practicable
and in any event within three Business Days following such discovery. The Seller
shall, upon not less than two Business Days' notice from the Purchaser or its
assignee or designee, repurchase such Transferred Receivable on the next
succeeding Settlement Date for a repurchase price equal to the Outstanding
Balance of such Transferred Receivable. Each repurchase of a Transferred
Receivable shall include the Related Security with respect to such Transferred
Receivable. The proceeds of any such repurchase shall be deemed to be a
Collection in respect of such Transferred Receivable. The Seller shall pay to
the Servicer on or prior to the next Settlement Date the repurchase price
required to be paid pursuant to this subsection.
(c) Except as stated in subsection (a) or (b) of this
Section 2.04 or as otherwise required by law or the relevant Contract, or as
otherwise specified by such Obligor, all Collections from an Obligor of any
Transferred Receivable shall be applied to the Receivables of such Obligor in
the order of the age of such Receivables, starting with the oldest such
Receivable.
SECTION 2.05. Payments and Computations, Etc. (a) All amounts
to be paid or deposited by the Seller or the Servicer hereunder shall be paid or
deposited no later than 11:00 A.M. (New York City time) on the day when due in
same day funds to an account or accounts designated by the Purchaser from time
to time.
(b) The Seller shall, to the extent permitted by law, pay
to the Purchaser interest on any amount not paid or deposited by the Seller
(whether as Servicer or otherwise)
6
when due hereunder at an interest rate per annum equal to 2.00% per annum above
the Alternate Base Rate, payable on demand.
(c) All computations of interest and all computations of
fees hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first but excluding the last day) elapsed.
Whenever any payment or deposit to be made hereunder shall be due on a day other
than a Business Day, such payment or deposit shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of such payment or deposit.
SECTION 2.06. Contribution. The Seller shall on the Closing
Date identify Receivables which it proposes to transfer to the Purchaser as a
capital contribution. On the date of such contribution and after giving effect
thereto, the Purchaser shall own all right, title and interest in and to the
Receivables so identified and contributed (collectively, the "Contributed
Receivables") and all Related Security with respect thereto. The foregoing
notwithstanding, on the date of the initial Purchase hereunder the Seller agrees
to contribute to the Purchaser all Receivables which are not included in such
initial Purchase.
SECTION 2.07. Grant of Security Interest. As collateral
security for the performance by the Seller of all the terms, covenants and
agreements on the part of the Seller (whether as Seller, Servicer or otherwise)
to be performed under this Agreement or any other Transaction Document,
including the punctual payment when due of all amounts payable by it hereunder
and thereunder, the Seller hereby assigns to the Purchaser and grants to the
Purchaser a first priority security interest in, all of the Seller's right,
title and interest (if any) in and to (A) all Receivables, whether now owned and
existing or hereafter acquired or arising, all Related Security and Collections
with respect thereto and all Blocked Accounts, and (B) to the extent not
included in the foregoing, all proceeds of any and all of the foregoing.
ARTICLE III. CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase from
the Seller. The initial Purchase of Receivables from the Seller hereunder is
subject to the conditions precedent that the Purchaser shall have received on or
before the date of such Purchase all of the instruments, documents, agreements
and opinions specified in Section 3.01 of the Purchase Agreement, each (unless
otherwise indicated therein) dated such date, in form and substance satisfactory
to the Purchaser.
SECTION 3.02. Conditions Precedent to All Purchases. The
Purchaser's obligation to make any Purchase (including the initial Purchase)
hereunder shall be subject to the further conditions precedent that:
(a) the Seller shall have delivered to the Purchaser, if
requested by the Purchaser, (i) the Seller's Receivables Trial Balance
(which if in the form of an electronic record shall be compatible with
the Purchaser's computer software) as of a date not more than 31 days
prior to the date of such Purchase, and (ii) such additional
information concerning such Receivables as may reasonably be requested
by the Purchaser;
7
(b) with respect to any such Purchase, on or prior to the
date of such Purchase, the Servicer shall have delivered to the
Purchaser, all Monthly Reports required to be delivered hereunder and
under the Purchase Agreement, each duly completed and containing
information covering the most recently ended reporting period for which
information is required pursuant to Section 6.02(g) of the Purchase
Agreement and containing such additional information as may reasonably
be requested by the Purchaser;
(c) on the date of such Purchase the following statements
shall be true (and the Seller, by accepting the Purchase Price for such
Purchase, shall be deemed to have represented and warranted that):
(i) The representations and warranties contained
in Section 4.01 are correct on and as of the date of such
Purchase as though made on and as of such date;
(ii) No event has occurred and is continuing, or
would result from such Purchase, that constitutes an Event of
Termination or an Involuntary Bankruptcy Event; and
(iii) The "Termination Date" shall not have
occurred under (and as defined in) the Purchase Agreement; and
(d) the Purchaser shall have received such other
approvals, opinions or documents as the Purchaser may reasonably
request.
Notwithstanding the foregoing, unless otherwise specified by the
Purchaser (with the written consent of the Agent) in a written notice to the
Seller, each Purchase shall occur automatically on each day prior to the
Termination Date, with the result that the title to all Receivables shall vest
in the Purchaser automatically on the date each such Receivable arises and
without any further action of any kind by the Purchaser or the Seller, whether
or not the conditions precedent to such Purchase were in fact satisfied on such
date and notwithstanding any delay in making payment of the Purchase Price for
such Receivables (but without impairing the Purchaser's obligation to pay such
Purchase Price in accordance with the terms hereof).
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller.
The Seller (both individually and in its capacity as Servicer) represents and
warrants as follows as of the date hereof and as of the date of each Purchase
hereunder:
(a) The Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of Indiana, and is
duly qualified to do business, and is in good standing, in every
jurisdiction where the nature of its business requires it to be so
qualified.
(b) The execution, delivery and performance by the Seller
of the Transaction Documents to which it is a party, including the
Seller's sale and contribution of Receivables hereunder and the
Seller's use of the proceeds of Purchases, (i) are within
8
the Seller's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) do not contravene (1) the Seller's
charter or by-laws, (2) any law, rule or regulation applicable to the
Seller, (3) any contractual restriction binding on or affecting the
Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its
property, and (iv) do not result in or require the creation of any
Adverse Claim upon or with respect to any of its properties (except for
the transfer of the Seller's interest in the Transferred Receivables
pursuant to this Agreement). Each of the Transaction Documents to which
the Seller is named as a party has been duly executed and delivered by
the Seller.
(c) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by the
Seller of the Transaction Documents to which it is a party or any other
document to be delivered by it thereunder except for those that have
already been obtained or made and the filing of UCC financing
statements which are referred to therein.
(d) Each of the Transaction Documents to which the Seller
is a party constitutes the legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors'
rights generally and by principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(e) Sales and contributions made pursuant to this
Agreement will constitute a valid sale (or contribution), transfer, and
assignment of the Transferred Receivables to the Purchaser, enforceable
against creditors of, and purchasers from, the Seller. The Seller shall
have no remaining property interest in any Transferred Receivable.
(f) The consolidated balance sheets of the Seller and its
Subsidiaries as of December 31, 2002, and the related statements of
income and retained earnings of the Seller and its Subsidiaries as of
and for the fiscal year then ended, certified by Deloitte & Touche LLP,
independent public accountants, a copy of which has been furnished to
the Purchaser, fairly present the financial condition of the Seller and
its Subsidiaries as of such date and the results of the operations of
the Seller and its Subsidiaries for the fiscal year ended on such date,
all in accordance with generally accepted accounting principles
consistently applied. Since December 31, 2002, there has been no
material adverse change in the business, operations, property or
financial condition of the Seller.
(g) There is no pending or, to the best knowledge of the
Seller, threatened action or proceeding affecting the Seller or any of
its Subsidiaries before any court, governmental agency or arbitrator
which (if adversely determined) would have a Material Adverse Effect,
except as disclosed in the financial statements referred to in Section
4.01(f).
9
(h) No proceeds of any Purchase will be used 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.
(i) No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(j) Each Transferred Receivable, together with the
Related Security, is owned (immediately prior to its sale or
contribution hereunder) by the Seller free and clear of any Adverse
Claim (other than any Adverse Claim arising solely as the result of any
action taken by the Purchaser). When the Purchaser makes a Purchase it
shall acquire valid and perfected first priority ownership interest of
each Purchased Receivable and the Related Security and Collections with
respect thereto free and clear of any Adverse Claim (other than any
Adverse Claim arising solely as the result of any action taken by the
Purchaser), and no effective financing statement or other instrument
similar in effect is filed in any recording office listing the Seller
as debtor, covering any Receivable, any interest therein, the Related
Security or Collections except such as may be filed in favor of
Purchaser in accordance with this Agreement and assigned to the Agent
in accordance with the Purchase Agreement.
(k) Each Monthly Report, information, exhibit, financial
statement, document, book, record or report furnished or to be
furnished in writing at any time by any Transaction Party to the
Purchaser in connection with this Agreement is or will be accurate in
all material respects as of its date or (except as otherwise disclosed
to the Purchaser at such time) as of the date so furnished, and no such
Monthly Report, information, exhibit, financial statement, document,
book, record or report contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained therein, in the
light of the circumstances under which they were made, not materially
misleading.
(l) The principal place of business and chief executive
office of the Seller and the office where the Seller keeps its records
concerning the Transferred Receivables are located at the address or
addresses referred to in Section 5.01(b).
(m) The names and addresses of all the Blocked Account
Banks, together with the account numbers of the Blocked Accounts at
such Blocked Account Banks, are specified in Exhibit A, as such may be
updated from time to time pursuant to Section 5.01(g).
(n) In the past five (5) years, the Seller has not used
any company name, tradename or doing-business-as name other than the
name in which it has executed this Agreement and the other names listed
on Exhibit C. The Seller's organizational identification number is
192445-018.
(o) (i) The fair value of the property of the Seller is
greater than the total amount of liabilities, including contingent
liabilities, of the Seller, (ii) the present fair salable value of the
assets of the Seller is not less than the amount that will be required
to
10
pay all probable liabilities of the Seller on its debts as they become
absolute and matured, (iii) the Seller does not intend to, and does not
believe that it will, incur debts or liabilities beyond the Seller's
abilities to pay such debts and liabilities as they mature and (iv) the
Seller is not engaged in a business or a transaction, and is not about
to engage in a business or a transaction, for which the Seller's
property would constitute unreasonably small capital.
(p) The Seller shall have originated each Receivable in
the ordinary course of its business.
(q) Each Transferred Receivable included as an Eligible
Receivable in the calculation of the Net Receivables Pool Balance on
any Monthly Report satisfies the requirements of eligibility contained
in the definition of "Eligible Receivable" in the Purchase Agreement as
of the date of The information reported in such Monthly Report.
(r) The transfers of Transferred Receivables by the
Seller to the Purchaser pursuant to this Agreement, and all other
transactions between the Seller and the Purchaser, have been and will
be made in good faith and without intent to hinder, delay or defraud
creditors of the Seller.
(s) The Seller and its ERISA Affiliates are in
compliance, in all material respects, with ERISA, and no Adverse Claim
exists in favor of the Pension Benefit Guaranty Corporation on any of
the Receivables.
(t) The Seller believes that the Purchaser has adequate
capitalization and liquidity to meet its financial obligations under
the Transaction Documents without the need for capital contributions
other than the initial capital contribution described in Section
2.02(a).
(u) Each of the representations and warranties set forth
on Annex A are true and correct.
ARTICLE V. COVENANTS
SECTION 5.01. Covenants of the Seller. From the date hereof
until the first day following the Termination Date on which all of the
Transferred Receivables are either collected in full or are written off in
accordance with the applicable Credit and Collection Policy, the Seller (both
individually and in its capacity as Servicer) covenants and agrees as follows:
(a) Compliance with Laws, Etc. The Seller will comply in
all respects with all applicable laws, rules, regulations and orders
and preserve and maintain its corporate existence, rights, franchises,
qualifications and privileges except to the extent that the failure so
to comply with such laws, rules and regulations or the failure so to
preserve and maintain such rights, franchises, qualifications, and
privileges would not reasonably be expected to have a Material Adverse
Effect.
(b) Offices, Records and Books of Account. The Seller
will keep its principal place of business and chief executive office
and the office where it keep its records
11
concerning the Receivables at (i) the address of the Seller set forth
under its name on the signature page to this Agreement, or (ii) upon 30
days' prior written notice to the Purchaser at any other locations in
jurisdictions where all actions reasonably requested by the Purchaser
to protect and perfect the interest in the Transferred Receivables
shall have been taken and completed. The Seller will maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables and
related Contracts 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 daily identification of each new Transferred Receivable and all
Collections of and adjustments to each existing Transferred
Receivable).
(c) Performance and Compliance with Contracts and Credit
and Collection Policy. The Seller will, at its expense, (i) timely and
fully perform and comply in all material respects with all provisions,
covenants and other promises required to be observed by it under the
Contracts related to the Receivables, and (ii) timely and fully comply
in all material respects with the Credit and Collection Policy in
regard to each Receivable and the related Contracts.
(d) Sales, Liens, Etc. Except for the sales and
contributions of Receivables contemplated herein, the Seller will not
sell, assign (by operation of law or otherwise) or otherwise dispose
of, or create or suffer to exist any Adverse Claim upon or with respect
to, any Receivable, Related Security, related Contract or Collections,
or upon or with respect to any Blocked Account, or assign any right to
receive income in respect thereof.
(e) Extension or Amendment of Receivables and Contracts.
The Seller will not extend, amend or otherwise modify the terms of any
Receivable or amend, modify or waive any term or condition of any
Contract related thereto except, in its capacity as Servicer, to the
extent permitted under Section 6.02(c) of the Purchase Agreement.
(f) Change in Business or Credit and Collection Policy.
The Seller will not make any change in the character of its business or
in any Credit and Collection Policy, except, for any such change that
would not (i) impair the collectibility of any Receivables or (ii)
otherwise be reasonably likely to have a Material Adverse Effect.
(g) Addition or Termination of Blocked Accounts; Change
in Payment Instructions to Obligors. The Seller will not add or
terminate any bank or bank account as a Blocked Account Bank or Blocked
Account from those listed in Exhibit A to this Agreement, or make any
change in its instructions to Obligors regarding payments to be made in
respect of the Receivables or payments to be made to any Blocked
Account Bank, unless the Purchaser shall have received notice of such
addition, termination or change (including an updated Exhibit A) and a
fully executed Blocked Account Agreement with respect to each new
Blocked Account.
(h) Deposits to Blocked Accounts. The Seller will
instruct all Obligors to remit all their payments in respect of the
Receivables to the Seller or to a Blocked
12
Account. If the Seller shall receive any Collections directly, the
Seller shall promptly (and in any event within one Business Day)
deposit the same into a Blocked Account. The Seller will not permit any
funds to be deposited into any Blocked Account other than Collections.
(i) Marking of Records. At its expense, the Seller will
xxxx its master data processing records evidencing Receivables with a
legend evidencing that Transferred Receivables and the related
Contracts have been sold in accordance with this Agreement.
(j) Audits. The Seller will, from time to time during
regular business hours as requested by the Purchaser or its assigns
upon reasonable prior notice and at the Seller's expense, permit the
Purchaser, or its agents, representatives or assigns, (i) to examine
and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the
possession or under the control of the Seller relating to Receivables
and the Related Security, including, without limitation, the related
Contracts, and (ii) to visit the offices and properties of the Seller
for the purpose of examining such materials described in clause (i)
above, and to discuss matters relating to Receivables and the Related
Security or the Seller's performance under the Transaction Documents or
under the Contracts with any of the officers or employees of the Seller
having knowledge of such matters.
(k) Further Assurances; Change in Name or Jurisdiction of
Organization, Etc. (i) The Seller agrees from time to time, at its
expense, promptly to execute and deliver all further instruments and
documents, and to take all further actions, that may be necessary or
desirable, or that the Purchaser or its assignee may reasonably
request, to perfect, protect or more fully evidence the Purchaser's
ownership of the Transferred Receivables and/or the Purchaser's
security interest described in Section 2.07, or to enable the Purchaser
or its assignee to exercise and enforce its respective rights and
remedies under this Agreement. Without limiting the foregoing, the
Seller will, upon the request of the Purchaser or its assignee, execute
and file such financing or continuation statements, or amendments
thereto, and such other instruments and documents, that may be
necessary or desirable or that the Purchaser or its assignee may
reasonably request to perfect, protect, evidence or maintain the
priority of the Purchaser's ownership of such Receivables or such
security interest.
(ii) The Seller authorizes the Purchaser or its
assignee to file financing or continuation statements, and amendments
thereto and assignments thereof, relating to the Receivables and the
Related Security, the related Contracts and the Collections with
respect thereto and the collateral described in Section 2.07 without
the signature of the Seller. A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement where permitted
by law.
(iii) The Seller shall perform its obligations
under the Contracts related to the Transferred Receivables to the same
extent as if the Transferred Receivables had not been sold or
transferred.
13
(iv) The Seller shall not take any action to
change its jurisdiction of incorporation unless (i) the Purchaser shall
have received at least thirty (30) days advance written notice of such
change and all action by Seller necessary or appropriate to perfect or
maintain the perfection of the Purchaser's interest in the Receivables
and the collateral described in Section 2.07 (including, without
limitation, the filing of all financing statements and the taking of
such other action as the Purchaser may request in connection with such
change) shall have been duly taken and (ii) the new jurisdiction of
incorporation is a State within the United States of America.
(v) The Seller will not change its name,
identity or corporate structure unless the Purchaser shall have
received at least thirty (30) days advance written notice of such
change or relocation and all action by Seller necessary or appropriate
to perfect or maintain the perfection of the Purchaser's interest in
the Receivables and the collateral described in Section 2.07
(including, without limitation, the filing of all financing statements
and the taking of such other action as the Purchaser may request in
connection with such change) shall have been duly taken.
(l) Reporting Requirements. The Seller will provide or
cause to be provided to the Purchaser and the Agent the following:
(i) a Form 10-K for the Seller as soon as (and
if) available and in any event within 120 days after the end of each
fiscal year of the Seller, which will include an audited consolidated
balance sheet of the Seller and its Consolidated Subsidiaries as of the
end of such fiscal year and the related audited consolidated statements
of income, cash flows and changes in common stockholders' equity for
such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on in a manner
acceptable to the United States Securities and Exchange Commission
independent public accountants of nationally recognized standing;
provided, however; that such Form 10-K need not be provided if it is
available, within the above referenced time period, via the XXXXX
system of the United States Securities and Exchange Commission
("XXXXX") on the Internet;
(ii) a Form 10-Q for the Seller as soon as (and
if) available and in any event within 60 days after the end of each of
the first three quarters of each fiscal year of the Seller, which will
include a consolidated balance sheet of the Seller and its Consolidated
Subsidiaries, as of the end of such quarter and the related
consolidated statement of income for such quarter and for the portion
of the Seller's fiscal year ended at the end of such quarter, and the
related consolidated statement of cash flows for the portion of the
Seller's fiscal year ended at the end of such quarter, setting forth in
each case in comparative form (A) for the consolidated balance sheet,
the figures as of the end of the Seller's previous fiscal year, (B) for
the consolidated statement of income, the figures for the corresponding
quarter and the corresponding portion of the Seller's previous fiscal
year and (C) for the consolidated statement of cash flows, the figures
for the corresponding portion of the Seller's previous fiscal year; the
delivery of such financial statements shall constitute a certification
(subject to normal year-end adjustments) as to fairness of presentation
and conformity with generally accepted accounting principles
consistently applied; provided, however, that such Form 10-Q need
14
not be provided if it is available, within the above referenced time
periods, via XXXXX on the Internet;
(iii) as soon as practicable and in any event
within five Business Days after obtaining knowledge of the occurrence
of each Event of Termination or Incipient Event of Termination, a
statement of a Financial Officer of the Seller setting forth details of
such Event of Termination or Incipient Event of Termination and the
action that the Seller has taken and proposes to take with respect
thereto;
(iv) promptly after the same become publicly
available, all reports that the Seller or any of its Affiliates files
with the Securities and Exchange Commission or distributes to its
shareholders; provided, however, that such reports need not be provided
if they are available via XXXXX on the Internet;
(v) promptly after the filing or receiving
thereof, copies of all reports and notices that the Seller or any
Affiliate files under ERISA with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation or the U.S. Department of Labor or
that the Seller or any Affiliate receives from any of the foregoing or
from any multiemployer plan (within the meaning of Section 4001(a)(3)
of ERISA) to which the Seller or any Affiliate is or was, within the
preceding five years, a contributing employer, in each case in respect
of the assessment of withdrawal liability or an event or condition
which could, in the aggregate, result in the imposition of liability on
the Seller and/or any such Affiliate in excess of $50,000,000, other
than the liability for payment of amounts required to satisfy a minimum
funding requirement standard under Section 302 of ERISA, or an
alternative minimum funding standard under Section 305 of ERISA,
provided that such required funding amounts do not include any waived
funding deficiency within the meaning of Section 305 of ERISA;
(vi) at least thirty (30) days prior to any
change in the name or jurisdiction of organization of any Transaction
Party, a notice setting forth the new name or jurisdiction of
organization, as applicable, and the effective date thereof;
(vii) at the time of the delivery of the financial
statements provided for in clause (i) of this paragraph, a certificate
of a Financial Officer of the Seller to the effect that, to the best of
such officer's knowledge, no Event of Termination or Incipient Event of
Termination has occurred and is continuing or, if any Event of
Termination or Incipient Event of Termination has occurred and is
continuing, specifying the nature and extent thereof;
(viii) promptly upon learning thereof, notice of
any downgrade in the Debt Rating (or the withdrawal by either S&P or
Xxxxx'x of a Debt Rating) of any Transaction Party, setting forth the
Debt affected and the nature of such change (or withdrawal);
(ix) promptly after the occurrence thereof,
notice of any event or condition that has had, or could reasonably be
expected to have, a Material Adverse Effect; and
15
(x) such other information respecting the
Transferred Receivables or the condition or operations, financial or
otherwise, of the Seller as the Purchaser may from time to time
reasonably request.
(m) Separate Conduct of Business. The Seller will: (i)
maintain separate corporate records and books of account from those of
the Purchaser; (ii) conduct its business from an office separate from
that of the Purchaser; (iii) ensure that all oral and written
communications, including without limitation, letters, invoices,
purchase orders, contracts, statements and applications, will not be
made in the name of the Purchaser; (iv) have stationery and other
business forms separate from those of the Purchaser; (v) not hold
itself out as having agreed to pay, or as being liable for, the
obligations of the Purchaser; (vi) not engage in any transaction with
the Purchaser except as contemplated by this Agreement or as permitted
by the Purchase Agreement; and (vii) continuously maintain as official
records the resolutions, agreements and other instruments underlying
the transactions contemplated by this Agreement.
(n) Taxes. The 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 the Purchaser.
(o) Treatment as Sales. The Seller shall not account for
or treat (whether in financial statements or otherwise) the
transactions contemplated by this Agreement in any manner other than as
a sale, contribution and/or absolute conveyance of Receivables by the
Seller to the Purchaser except on the face of its financial statements
(but not the notes thereto) to the extent required by the principles of
consolidated financial reporting in accordance with generally accepted
accounting principles.
SECTION 5.02. Intent of the Seller and the Purchaser. The
Seller and the Purchaser have structured this Agreement with the intention that
each Purchase of Receivables hereunder be treated as a sale of such Receivables
by the Seller to the Purchaser for all purposes and the contribution of
Receivables hereunder shall be treated as an absolute transfer of such
Receivables by the Seller to the Purchaser for all purposes (except that, in
accordance with applicable tax principles, each purchase and contribution may be
ignored for tax reporting purposes). The Seller and the Purchaser shall record
each Purchase and contribution as a sale or purchase or capital contribution, as
the case may be, on its books and records, and reflect each Purchase and
contribution in its financial statements as a sale or purchase or capital
contribution, as the case may be. In the event that, contrary to the mutual
intent of the Seller and the Purchaser, any Purchase or contribution of
Receivables hereunder is not characterized as a sale or absolute transfer, the
Seller shall, effective as of the date hereof, be deemed to have granted (and
the Seller hereby does grant) to the Purchaser a first priority security
interest in and to any and all Receivables, the Related Security, the
Collections in respect thereof and the proceeds thereof to secure the repayment
of all amounts advanced to the Seller hereunder with accrued interest thereon,
and this Agreement shall be deemed to be a security agreement.
16
ARTICLE VI. ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Servicer. Consistent with the
Purchaser's ownership interest in the Transferred Receivables, the Seller
acknowledges and agrees that the servicing, administration and collection of the
Transferred Receivables shall be the responsibility and right of the Purchaser.
The Purchaser has advised the Seller that the servicing, administration and
collection of the Transferred Receivables shall be conducted by the Person
designated as the Servicer pursuant to the Purchase Agreement from time to time.
The Purchaser has requested the Seller to, and the Seller has agreed that it
will, act as the initial Servicer. All references to the Seller hereunder shall
include the Seller in its capacity as Servicer under the Purchase Agreement
until a successor Servicer is appointed thereunder.
SECTION 6.02. Certain Rights of the Purchaser. (a) The
Purchaser may, at any time, direct the Obligors of Transferred Receivables and
any Person obligated on any Related Security, or any of them, that payment of
all amounts payable under any Transferred Receivable shall be made directly to
the Purchaser or its designee. The Seller hereby transfers to the Purchaser (and
its assigns and designees) the exclusive ownership and control of the Blocked
Accounts maintained by the Seller for the purpose of receiving Collections and
the Seller shall take any further action that the Purchaser may reasonably
request to effect or further evidence such transfer.
(b) At any time following the designation of a Servicer
other than the Seller:
(i) At the Purchaser's request and at the
Seller's expense, the Seller shall give notice of the Purchaser's
ownership to each Obligor of Transferred Receivables and direct that
payments of all amounts payable under the Transferred Receivables be
made directly to the Purchaser or its designee.
(ii) At the Purchaser's request and at the
Seller's expense, the Seller shall (A) assemble all of the documents,
instruments and other records (including, without limitation, computer
tapes and disks) that evidence or relate to the Receivables, and the
related Contracts and Related Security, or that are otherwise necessary
or desirable to collect the Receivables, and shall make the same
available to the Purchaser at a place selected by the Purchaser or its
designee, and (B) segregate all cash, checks and other instruments
received by it from time to time constituting Collections of
Receivables in a manner acceptable to the Purchaser and, promptly upon
receipt, remit all such cash, checks and instruments, duly indorsed or
with duly executed instruments of transfer, to the Purchaser or its
designee.
(c) The Seller authorizes each of the Purchaser and the
Agent, and hereby irrevocably appoints each of the Purchaser and the Agent as
its attorney-in-fact coupled with an interest, with full power of substitution
and with full authority in place of the Seller, following the occurrence and
during the continuation of a Servicer Default, to take any and all steps in the
Seller's name and on behalf of the Seller, that are necessary or desirable, in
the determination of the Purchaser or the Agent, to collect amounts due under
the Receivables, including, without limitation, endorsing the Seller's name on
checks and other instruments representing Collections of Receivables and
enforcing the Receivables and the Related Security and related Contracts.
17
(d) Following the occurrence of an Event of Termination,
the Seller shall, upon the request of the Purchaser or the Agent (and if the
Seller fails to do so, the Purchaser or the Agent may itself) deliver a notice
to all applicable Obligors, in form and substance satisfactory to the Purchaser
and the Agent, stating that (i) the Transferred Receivables have been sold to
the Purchaser and (ii) effective immediately all payments on the Transferred
Receivables must be made without any setoff. Such notice shall be delivered by
the Seller as soon as practicable and in any event within three Business Days
after such written request by the Purchaser or the Agent. From and after the
date the Purchaser or the Agent requests the Seller to deliver such notice, (i)
the Seller shall require all payments by Obligors to be made without any setoff,
and shall make available to the Agent and the Purchaser such information as may
be required to determine whether such payments are being so made and (ii) the
Seller and the Purchaser shall, and shall cause each other Transaction Party to,
pay, or cause to be paid, when due all amounts owing by any Transaction Party to
any Obligor without any set off of such amounts against Receivables due from
such Obligor.
SECTION 6.03. Rights and Remedies. (a) If the Seller (as
Servicer or otherwise) fails to perform any of its obligations under this
Agreement, the Purchaser may (but shall not be required to) cause performance
of, such obligation, and the costs and expenses of the Purchaser reasonably
incurred in connection therewith shall be payable by the Seller.
(b) The Seller (as Servicer or otherwise) shall perform
all of its obligations under the Contracts related to the Transferred
Receivables to the same extent as if the Seller had not sold or contributed
Receivables hereunder and the exercise by the Purchaser of its rights hereunder
shall not relieve the Seller (as Servicer or otherwise) from such obligations or
its obligations with respect to the Transferred Receivables or the related
Contracts. The Purchaser shall not have any obligation or liability with respect
to any Transferred Receivables or related Contracts, nor shall the Purchaser be
obligated to perform any of the obligations of the Seller (as Servicer or
otherwise) thereunder.
(c) The Seller shall cooperate with the Servicer in
collecting amounts due from Obligors in respect of the Transferred Receivables.
(d) The Seller hereby grants to Servicer an irrevocable
power of attorney, with full power of substitution, coupled with an interest, to
take or cause to be taken in the name of the Seller all steps necessary or
advisable to endorse, negotiate or otherwise realize on any Collections and any
checks, instruments or other proceeds of the Transferred Receivables held or
transmitted by the Seller or transmitted or received by the Purchaser (whether
or not from the Seller) in connection with any Transferred Receivable.
SECTION 6.04. Transfer of Records to Purchaser. Each Purchase
and contribution of Receivables hereunder shall include the transfer to the
Purchaser of all of the Seller's right and title to and interest in the records
relating to such Receivables and shall include an irrevocable non-exclusive
license to the use of the Seller's computer software system to access and create
such records. Such license shall be without royalty or payment of any kind, is
coupled with an interest, and shall be irrevocable until all of the Transferred
Receivables are either collected in full or become Defaulted Receivables. In
recognition of the Seller's need to have access to the records transferred to
the Purchaser hereunder, the Purchaser hereby grants to
18
the Seller an irrevocable license to access such records in connection with any
activity arising in the ordinary course of the Seller's business or in
performance of its duties as Servicer, provided that (i) the Seller shall not
disrupt or otherwise interfere with the Purchaser's use of and access to such
records during such license period, and (ii) the Seller consents to the
assignment and delivery of the records (including any information contained
therein relating to the Seller or its operations) to any assignees or
transferees of the Purchaser.
ARTICLE VII. EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following
events (each an "Event of Termination") shall occur and be continuing:
(a) (i) The Servicer shall fail to perform or observe any
term, covenant or agreement under this Agreement (other than as referred to in
clause (ii) of this subsection (a)) and such failure shall remain unremedied for
three Business Days or (ii) any Transaction Party shall fail to make when due
any payment or deposit to be made by it under this Agreement or any other
Transaction Document; or
(b) Any representation or warranty made or deemed made by
any Transaction Party (or any of their respective officers) under or in
connection with this Agreement or any other Transaction Document or any
certificate, report or other statement delivered by any Transaction Party
pursuant to this Agreement or any other Transaction Document shall prove to have
been incorrect or untrue in any material respect when made or deemed made or
delivered (unless such representation or warranty relates solely to one or more
specific Transferred Receivables and the Seller makes a deemed Collection
payment or repurchases such Receivable no later than the third Business Day
following the discovery of such breach of representation); or
(c) Any Transaction Party shall fail to perform or
observe (i) any term, covenant or agreement contained in Section 5.01(a) of this
Agreement or (ii) any other term, covenant or agreement contained in this
Agreement or any other Transaction Document on its part to be performed or
observed and, solely in the case of this clause (ii), such failure shall remain
unremedied for 10 days after the first date on which such Transaction Party
receives written notice thereof from the Purchaser; or
(d) (i) Any Transaction Party or any Consolidated
Subsidiary shall default beyond any applicable period of grace in any payment of
principal or interest on any indebtedness for any borrowed money for which such
Transaction Party or any Consolidated Subsidiary is liable in a principal amount
then outstanding of $25,000,000 or more or (ii) any other event of default
(other than a failure to pay principal or interest) shall occur under any
mortgage, indenture, agreement or instrument under which there may be issued, or
by which there may be secured or evidenced, any indebtedness for any borrowed
money for which any Transaction Party or any Consolidated Subsidiary is liable
in a principal amount then outstanding of $25,000,000 and either (A) the
occurrence of such event shall result in such indebtedness becoming or being
declared due and payable prior to the date on which it could otherwise become
due and payable or (B) the occurrence of such event shall permit the holders of
such indebtedness to declare such indebtedness to be due and payable prior to
the date on which it would otherwise become due and payable; or
19
(e) Any Purchase or contribution of Receivables
hereunder, the Related Security and the Collections with respect thereto shall
for any reason cease to vest in the Purchaser valid and perfected ownership of
such Receivables, Related Security and Collections free and clear of any Adverse
Claim or the security interest created pursuant to Section 2.07 shall for any
reason cease to be a valid and perfected first priority security interest in the
collateral referred to in that Section; or
(f) Any Transaction Party shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any Transaction
Party seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 45 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 any Transaction Party or any Material Subsidiary shall
take any corporate action to authorize any of the actions set forth above in
this subsection (f); or
(g) There shall have occurred or shall exist any event or
condition which has had or will have a Material Adverse Effect; or
(h) The Seller shall cease to own, directly or
indirectly, all of the outstanding membership interests of the Purchaser, free
and clear of any Adverse Claim; or
(i) The Internal Revenue Service shall file notice of a
lien pursuant to Section 6323 of the IRC with regard to any of the assets of the
Purchaser or the Seller and such lien shall not have been released within five
Business Days, or the Pension Benefit Guaranty Corporation shall, or shall
indicate its intention to, file notice of a lien pursuant to Section 4068 of
ERISA with regard to any of the assets of the Purchaser, the Seller or any
Subsidiaries of the Seller; or
(j) One or more judgments or decrees shall be entered
against any Transaction Party or any Consolidated Subsidiary involving in the
aggregate a liability (not paid or fully covered by insurance) of $5,000,000 or
more and all such judgments or decrees shall not have been vacated, dismissed,
discharged, bonded or stayed within 30 days from the entry thereof; or
then, and in any such event, the Purchaser may, by notice to the Seller, declare
the Termination Date to have occurred (in which case the Termination Date shall
be deemed to have occurred); provided that, automatically upon the occurrence of
any event (without any requirement for the giving of notice) described in
subsection (f) of this Section 7.01, the Termination Date shall occur, the
Seller (if it is then serving as the Servicer) shall cease to be the Servicer,
and the Agent or its designee shall become the Servicer. Upon any such
declaration or designation or upon such automatic termination, the Purchaser
shall have, in addition to the rights and remedies
20
under this Agreement, all other rights and remedies with respect to the
Receivables provided after default under the UCC and under other applicable law,
which rights and remedies shall be cumulative.
ARTICLE VIII. INDEMNIFICATION
SECTION 8.01. Indemnities by the Seller. Without limiting any
other rights that the Purchaser and its assigns (including without limitation,
the Agent, the "Purchasers" under the Purchase Agreement and their respective
Affiliates) (each, an "Indemnified Party") may have hereunder or under
applicable law, the Seller hereby agrees to indemnify each Indemnified Party
from and against any and all claims, losses and liabilities (including
reasonable attorneys' fees) (all of the foregoing being collectively referred to
as "Indemnified Amounts") arising out of or resulting from this Agreement or any
other Transaction Document or the acquisition by the Purchaser of any Receivable
excluding, however, 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. Without limiting
the generality of the foregoing indemnification, the Seller shall indemnify each
Indemnified Party for all Indemnified Amounts resulting from any of the
following:
(i) the failure of any Transferred Receivable
included as an Eligible Receivable in the calculation of the Net
Receivables Pool Balance on any Monthly Report to satisfy the
requirements of eligibility contained in the definition of "Eligible
Receivable" as of the date of The information reported in such Monthly
Report;
(ii) any representation or warranty or statement
made or deemed made by any Transaction Party (or any of their
respective officers) under or in connection with this Agreement or any
of the other Transaction Documents which shall have been incorrect in
any respect when made;
(iii) the failure by any Transaction Party to
comply with any applicable law, rule or regulation with respect to any
Receivable or the related Contract; or the failure of any Receivable or
the related Contract to conform to any such applicable law, rule or
regulation;
(iv) the failure to vest in the Purchaser (a)
absolute ownership of each Transferred Receivable and the Related
Security and Collections in respect thereof, and (b) a first priority
perfected security interest in all of the property described in Section
2.07, in each case free and clear of any Adverse Claim;
(v) 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 Receivables and the Related Security and
Collections in respect thereof, whether at the time of any Purchase or
contribution or at any subsequent time;
(vi) any dispute, claim or defense (other than
discharge in bankruptcy) of an 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
21
obligation of such Obligor enforceable against it in accordance with
its terms), or any other claim resulting from the sale of the
merchandise, goods or services related to such Receivable or the
furnishing or failure to furnish such merchandise, goods or services or
relating to collection activities with respect to such Receivable;
(vii) any failure of any Transaction Party to
perform its duties or obligations in accordance with the provisions
hereof and each other Transaction Document or to perform its duties or
obligations under the Contracts or to timely and fully comply in all
respects with the Seller's Credit and Collection Policy in regard to
each Receivable and the related Contract;
(viii) any products liability, environmental or
other claim arising out of or in connection with merchandise, goods or
services which are the subject of any Contract issued by the Seller or
any Contract related thereto;
(ix) the commingling of Collections of
Transferred Receivables at any time with other funds;
(x) any investigation, litigation or proceeding
(actual or threatened) related to this Agreement or any other
Transaction Document or the use of proceeds of purchases or the
ownership of Transferred Receivables or in respect of any Receivable or
Related Security or Contract;
(xi) any failure of any Transaction Party to
comply with its covenants contained in this Agreement or any other
Transaction Document;
(xii) any setoff with respect to any Receivable;
(xiii) any claim brought by any Person other than
an Indemnified Party arising from any activity by the Seller or any
Affiliate of the Seller in servicing, administering or collecting any
Receivable; or
(xiv) the failure by any Transaction Party to pay
when due any taxes, including, without limitation, sales, excise or
personal property taxes.
Notwithstanding anything to the contrary in this Agreement,
solely for purposes of the Seller's indemnification obligations in this Article
VIII, any representation, warranty or covenant qualified by the occurrence or
non-occurrence of a Material Adverse Effect or similar concepts of materiality
shall be deemed to be not so qualified.
ARTICLE IX. MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or consent to any departure by the Seller therefrom
shall be effective unless in a writing signed by the Purchaser and (so long as
the Purchase Agreement is in effect) the Agent (and, in the case of any
amendment, also signed by the Seller), and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No failure on the part of the Purchaser to exercise,
and no delay in
22
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 9.02. Notices, Etc. All notices and other
communications hereunder shall, unless otherwise stated herein, be in writing
(which shall include facsimile communication) and be faxed or delivered, to each
party hereto, at its address set forth under its name on the signature pages
hereof or at such other address as shall be designated by such party in a
written notice to the other parties hereto. Notices and communications by
facsimile shall be effective when sent (and shall be followed by hard copy sent
by regular mail), and notices and communications sent by other means shall be
effective when received.
SECTION 9.03. Binding Effect; Assignability. (a) This
Agreement shall be binding upon and inure to the benefit of the Seller, the
Purchaser and their respective successors and assigns; provided, however, that
the Seller may not assign its rights or obligations hereunder or any interest
herein without the prior written consent of the Purchaser. The Purchaser may
assign all or any part of its rights and obligations hereunder without the
consent of the Seller. In connection with any sale or assignment by the
Purchaser of all or a portion of the Transferred Receivables, the buyer or
assignee, as the case may be, shall, to the extent of its purchase or
assignment, have all rights of the Purchaser under this Agreement (as if such
buyer or assignee, as the case may be, were the Purchaser hereunder) subject to
the terms of the agreement between the Purchaser and such buyer or assignee, as
the case may be.
(b) This Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with its terms, and
shall remain in full force and effect until such time, after the Termination
Date, when all of the Transferred Receivables are either collected in full or
become Defaulted Receivables; provided, however, that rights and remedies with
respect to any breach of any representation and warranty made by the Seller
pursuant to Article IV and the provisions of Article VIII and Sections 9.04,
9.05 and 9.06 shall be continuing and shall survive any termination of this
Agreement.
SECTION 9.04. Costs, Expenses and Taxes. (a) In addition to
the rights of indemnification granted to the Purchaser pursuant to Article VIII
hereof, the Seller agrees to pay on demand all reasonable costs and expenses in
connection with the preparation, execution and delivery of this Agreement and
the other documents and agreements to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Purchaser with respect thereto and with respect to advising the Purchaser as to
its rights and remedies under this Agreement, and the Seller agrees to pay all
costs and expenses, if any (including reasonable counsel fees and expenses), in
connection with the enforcement of this Agreement and the other documents to be
delivered hereunder.
(b) In addition, the Seller agrees to pay any and all
stamp and other taxes and fees payable in connection with the execution,
delivery, filing and recording of this Agreement or the other documents or
agreements to be delivered hereunder, and the Seller agrees to save each
Indemnified Party harmless from and against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.
23
SECTION 9.05. No Proceedings. The Seller hereby agrees that it
will not institute against the Purchaser any proceeding of the type referred to
in Section 7.01(f) so long as there shall not have elapsed one year plus one day
since the later of (i) the Termination Date and (ii) the date on which all of
the Transferred Receivables are either collected in full or are written off in
accordance with the applicable Credit and Collection Policy.
SECTION 9.06. Confidentiality. Each party hereto agrees to
maintain the confidentiality of this Agreement in communications with third
parties and otherwise; provided that this Agreement may be disclosed to (i) any
Person party to the Purchase Agreement, (ii) such party's legal counsel and
auditors and the Purchaser's assignees, if they agree in each case to hold it
confidential and (iii) to the extent required by applicable law or regulation or
by any court, regulatory body or agency having jurisdiction over such party; and
provided, further, that if the Purchaser requests the Bank Purchasers to extend
the "Scheduled Commitment Termination Date" under the Purchase Agreement and
part or all of the Bank Purchasers decline to grant such extension, then the
Purchaser may disclose this Agreement to other financial institutions for
purposes of securing a replacement bank or receivables purchase facility.
Notwithstanding any other provision herein, each party hereto (and each of their
employees, representatives or other agents) may disclose to any and all persons,
without limitation of any kind, the U.S. tax treatment and U.S. tax structure of
the Transaction Documents and all materials of any kind (including opinions or
other tax analyses) that are provided to such party relating to such U.S. tax
treatment and U.S. tax structure, other than any information for which
nondisclosure is reasonably necessary in order to comply with applicable
securities laws.
SECTION 9.07. GOVERNING LAW. THIS AGREEMENT SHALL, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES THEREOF THAT
WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO
THE EXTENT THAT, PURSUANT TO THE UCC OF THE STATE OF NEW YORK, THE PERFECTION
AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE PURCHASER'S OWNERSHIP OF
OR SECURITY INTEREST IN THE RECEIVABLES OR OTHER ASSETS ARE GOVERNED BY THE LAWS
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 9.08. Third Party Beneficiary. Each of the parties
hereto hereby acknowledges that the Purchaser may assign all or any portion of
its rights under this Agreement and that such assignees may (except as otherwise
agreed to by such assignees) further assign their rights under this Agreement,
and the Seller hereby consents to any such assignments. All such assignees,
including parties to the Purchase Agreement in the case of assignment to such
parties, shall be third party beneficiaries of, and shall be entitled to enforce
the Purchaser's rights and remedies under, this Agreement to the same extent as
if they were parties thereto, subject to the terms of their agreement with the
Purchaser.
SECTION 9.09. Subordination. (a) The Seller agrees that any
indebtedness, obligation or claim it may from time to time hold or otherwise
have (including, without limitation, any obligation or claim in respect of the
Deferred Purchase Price) against the
24
Purchaser or any assets or properties of the Purchaser, whether arising
hereunder or otherwise existing, shall be subordinate in right of payment to the
prior payment in full of all Senior Obligations; provided, however, that so long
as no Event of Termination has occurred and is continuing, Seller may accept
payments of any such obligations. In addition, the Seller acknowledges the
subordination provisions set forth in the promissory note evidencing the
Deferred Purchase Price (the "Deferred Purchase Price Note"), the form of which
is attached hereto as Exhibit B, and agrees to be bound thereby. The
subordination provisions contained herein and in such promissory note are for
the direct benefit of, and may be enforced by, each of the Persons to whom
Senior Obligations are owed.
(b) Except as otherwise provided herein, the obligations
and liabilities of the Seller under this Agreement and the other Transaction
Documents (collectively, the "Seller Obligations") shall not be subject to
deduction of any kind or type, except by payment in full of the amount thereof
in accordance with the terms thereof. The Seller hereby waives any right it may
now or at any time hereafter have to set-off against any Seller Obligation any
obligation or liability from time to time owing by the Purchaser to the Seller
except as expressly set forth herein.
SECTION 9.10. Execution in Counterparts. This Agreement may be
executed in any number of 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.
SECTION 9.11. Integration; Survival of Termination. This
Agreement and the other Transaction Documents executed by the parties hereto on
the date hereof 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 superceding all prior oral or written understandings.
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.
SECTION 9.12. Consent to Jurisdiction. (a) Each party hereto
hereby irrevocably submits to the non-exclusive jurisdiction of any New York
State or Federal court sitting in New York City in any action or proceeding
arising out of or relating to this Agreement, and each party hereto hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State court or, to the extent permitted
by law, in such Federal court. The parties hereto hereby irrevocably waive, to
the fullest extent they may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. The parties hereto agree
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
(b) Each of the Seller and the Purchaser consents to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to it at its address specified in Section 9.02.
Nothing in this Section 9.12 shall affect the right of any other Transaction
Party to serve legal process in any manner permitted by law.
25
SECTION 9.13. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, 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 OR ANY OTHER TRANSACTION DOCUMENT.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
26
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SELLER AND SERVICER: NORTHERN INDIANA PUBLIC SERVICE
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Vice President and Treasurer
000 X. 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Treasurer
Telecopier: (000) 000-0000
PURCHASER: NIPSCO RECEIVABLES CORPORATION
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Vice President and Treasurer
000 X. 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Treasurer
Telecopier: (000) 000-0000
27
ANNEX A
Additional Representations and Warranties of the Seller
1. This Agreement creates a valid and continuing security interest (as
defined in the applicable UCC) in the Receivables, the Related Security
and Collections with respect thereto and the Blocked Accounts in favor
of the Purchaser (and its assigns), which security interest is prior to
all other Adverse Claims, and is enforceable as such against the
creditors of and purchasers from the Seller.
2. The Receivables constitute "accounts" within the meaning of the
applicable UCC.
3. The Seller owns and has good title to the Receivables, the Related
Security and Collections with respect thereto and the Blocked Accounts,
free and clear of any Adverse Claim, claim or encumbrance of any
Person.
4. The Seller has caused or will have caused, within ten days, the filing
of all appropriate financing statements in the proper filing office in
the appropriate jurisdictions under applicable law in order to perfect
the security interest in the Receivables, the Related Security and
Collections with respect thereto and the Blocked Accounts granted to
the Purchaser (and its assigns), hereunder.
5. Other than the security interest granted to the Purchaser (and its
assigns) pursuant to this Agreement, the Seller has not pledged,
assigned, sold, granted a security interest in, or otherwise conveyed
any of the Receivables, the Related Security and Collections with
respect thereto or the Blocked Accounts. The Seller has not authorized
the filing of and is not aware of any financing statements against the
Seller that include a description of collateral covering the
Receivables, the Related Security and Collections with respect thereto
or the Blocked Accounts other than any financing statement relating to
the security interest granted to the Purchaser (and its assigns)
hereunder or that has been terminated. The Seller is not aware of any
judgment or tax lien filings against the Seller.
