Exhibit 10.49
U.S. $40,000,000
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of September 11, 1996
Among
WESTERN MASSACHUSETTS ELECTRIC COMPANY
as the Seller and Servicer
and
MONTE ROSA CAPITAL CORPORATION
as the Purchaser
and
UNION BANK OF SWITZERLAND, NEW YORK BRANCH
as the Agent
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms 1
1.02. Other Terms 21
1.03. Computation of Time Periods 21
ARTICLE II
THE RECEIVABLES FACILITY
2.01. Purchases and Maintenance of Percentage
Interests 22
2.02. Termination or Reduction of the Purchase
Limit 24
2.03. Percentage Interests 24
2.04. Selection of Purchase Periods 24
2.05. Non-Liquidation Settlement Procedures 25
2.06. Liquidity Shortfall Event; Partial
Liquidations 25
2.07. Liquidation Settlement Procedures 26
2.08. Deemed Collections of Receivables 27
2.09. Payments and Computations, Etc. 28
2.10. Fees 29
2.11. Breakage Fee and Indemnity 29
2.12. Sharing of Payments, Etc. 30
2.13. Eurodollar Rate Protection; Illegality 30
2.14. Increased Costs; Capital Adequacy 32
2.15. Taxes 33
2.16. Security Interest 35
ARTICLE III
CONDITIONS OF PURCHASES
3.01. Conditions Precedent to Initial Purchase 35
3.02. Conditions Precedent to All Purchases and
Reinvestments 35
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the
Seller 36
4.02. Representations and Warranties of the
Servicer 40
ARTICLE V
GENERAL COVENANTS OF THE SELLER AND THE SERVICER
5.01. General Seller Covenants 41
5.02 Servicer Covenants 45
ARTICLE VI
ADMINISTRATION, COLLECTION AND MONITORING OF RECEIVABLES
6.01. Appointment and Designation of the
Servicer 46
6.02. Collection of Receivables by the Servicer;
Extensions and Amendments of Receivables 47
6.03. Distribution and Application of
Collections 47
6.04. Segregation of Collections 48
6.05. Other Rights of the Agent 48
6.06. Records; Maintenance of General Trial
Balance; Audits 49
6.07. Receivables Reporting 50
6.08 Collections 50
6.09. UCC Matters; Protection and Perfection of
Percentage Interests 51
6.10. Obligations of the Seller With Respect to
Receivables 52
ARTICLE VII
EVENTS OF TERMINATION
7.01. Events of Termination 52
ARTICLE VIII
THE AGENT
8.01. Authorization and Action 55
8.02. UCC Filings 56
8.03. Agent's Reliance, Etc. 56
8.04. Agent and Affiliates 57
8.05. Purchase Decision 57
8.06. Indemnification 57
8.07. Successor Agent 58
ARTICLE IX
INDEMNIFICATION
9.01. Indemnities by the Seller 58
9.02 Indemnities by the Servicer 60
ARTICLE X
MISCELLANEOUS
10.01. Amendments and Waivers 61
10.02. Notices, Etc. 61
10.03. No Waiver; Remedies 62
10.04. Binding Effect; Assignability 62
10.05. Term of this Agreement 63
10.06. GOVERNING LAW; SUBMISSION TO
JURISDICTION 63
10.07. Costs, Expenses and Taxes 63
10.08. No Proceedings 64
10.09. Execution in Counterparts; Severability;
Integration 65
10.10. WAIVER OF TRIAL BY JURY 65
10.11. Section Headings 65
10.12. Confidentiality 65
10.13. Restructuring 67
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE I Condition Precedent Documents
SCHEDULE II Intentionally Omitted
SCHEDULE III Tradenames, Fictitious Names and "Doing Business
As" Names
SCHEDULE IV Location of the Seller's Chief Executive Office, Principal
Place of Business and Books and Records
EXHIBITS
EXHIBIT A Form of Assignment and Acceptance
EXHIBIT B Methodology re: Unbilled Receivables
EXHIBIT C-1 Form of Bank Notice for Lock-Box Bank
EXHIBIT C-2 Form of Bank Notice for bank at which the Collection Account
is maintained
EXHIBIT D Form of Investor Report
EXHIBIT E-1 Forms of Opinions of Internal Counsel for Seller
EXHIBIT E-2 Form of Opinion of Outside Counsel for Seller
EXHIBIT F Form of Officer's Certificate
THIS RECEIVABLES PURCHASE AND SALE AGREEMENT (the "Agreement") is
made as of September 11, 1996, among:
(1) WESTERN MASSACHUSETTS ELECTRIC COMPANY, a Massachusetts
corporation (the "Seller" or "WMECO");
(2) MONTE ROSA CAPITAL CORPORATION, a Delaware corporation (the
"Purchaser"); and
(3) UNION BANK OF SWITZERLAND, NEW YORK BRANCH ("UBS"), as agent (the
"Agent").
IT IS AGREED as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. (a) Certain capitalized
terms used throughout this Agreement are defined above or in this Section
1.01.
(b) As used in this Agreement and its Exhibits, the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).
"Active Receivable" means a Receivable which is not an Inactive
Receivable.
"Adverse Claim" means a lien, security interest, charge,
encumbrance or other right or claim of any Person.
"Affected Party" has the meaning assigned to that term in Section
2.14.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by or under common control with such Person;
provided, however, that neither the Agent, UBS, any of UBS's branches or
agencies, the Purchaser nor any subsidiary of the Purchaser, shall be deemed
to be an affiliate of the Seller.
"Agent's Account" means a special account (account number USDDAC1
282626) in the name of the Agent maintained at the Agent's main office at New
York, New York or such other account as may be designated from time to time
by the Agent upon at least five Business Days' prior written notice to the
Seller and the Servicer.
"Alternative Rate" means, with respect to any Percentage Interest
for any Purchase Period, an interest rate per annum equal to the Eurodollar
Rate; provided, however, that the "Alternative Rate" for such Percentage
Interest for such Purchase Period shall be the Base Rate in effect from time
to time during such Purchase Period if (i) such Purchase Period is a period
of 1 to 29 days or (ii) the Purchase Price allocated to such Percentage
Interest is less than $1,000,000; and provided, further, that at all times
following the occurrence of an Event of Termination, the "Alternative Rate"
shall be the sum of (a) the Base Rate in effect from time to time, plus (b)
2.0%.
"Assignment and Acceptance" means an assignment and acceptance
entered into by an Owner and an assignee pursuant to Section 10.04,
substantially in the form of Exhibit A.
"Bank Notice" means a notice (a) from the Seller to any Lock-Box
Bank, in substantially the form of Exhibit C-1, or (b) from the Purchaser to
the bank at which the Collection Account is maintained, in substantially the
form of Exhibit C-2, as applicable.
"Base Rate" means, on any date, a fluctuating rate of interest per
annum equal to the highest of:
(a) the Prime Rate;
(b) 0.50% above the latest three-week moving average of secondary
market morning offering rates in the United States for three-month
certificates of deposit of major United States money market banks, such
three-week moving average being determined weekly on each Monday (or, if
such day is not a Business Day, on the next succeeding Business Day) for
the three-week period ending on the previous Friday by the Agent on the
basis of such rates reported by certificate of deposit dealers to and
published by the Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the basis of quotations
for such rates received by the Agent from three New York certificate of
deposit dealers of recognized standing selected by the Agent, in either
case, adjusted to the nearest 1/4 of one percent or, if therein is no
nearest 1/4 of one percent, to the next higher 1/4 of one percent; and
(c) the Federal Funds Rate, plus 0.50%.
"Benefit Plan" means any employee benefit plan as defined in
Section 3(2) of ERISA in respect of which the Seller or any ERISA Affiliate
of the Seller is, or at any time during the immediately preceding six years
was, an "employer" as defined in Section 3(5) of ERISA.
"Breakage Fee" has the meaning assigned to that term in Section
2.11.
"Business Day" means a day of the year (other than a Saturday or a
Sunday) on which (i) banks are required to be open in New York City and (ii)
if the term "Business Day" is used in connection with the Eurodollar Rate,
dealings in Dollar deposits are carried on in the London interbank Eurodollar
market.
"Change in Late Stage Delinquencies" means the amount, computed as of
each Cut-Off Date as follows:
(i) determine the sum of (A) the Outstanding Balance of Active
Receivables which remain unpaid for more than 120 days past the original
billing date plus (B) the Outstanding Balance for Inactive Receivables
which remain unpaid for a period up to 30 days past the final billing
date (hereinafter referred to as "Late Stage Delinquencies");
(ii) determine the average Late Stage Delinquencies for the twelve
most recent months, as calculated in the twelve most recent Investor
Reports;
(iii) subtract the amount determined pursuant to clause (ii) from
the amount determined pursuant to clause (i), which amount shall be the
"Change in Late Stage Delinquencies" for such Cut-Off Date;
provided, that if the amount determined pursuant to clause (iii) is less than
zero, the Change in Late Stage Delinquencies for such Cut-Off Date shall
equal zero.
"Change of Control" means any Person, or two or more Persons acting
in concert, shall acquire beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission) of 20% or more of the
outstanding voting shares of the Seller.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning assigned to that term in Section 2.16.
"Collateral Trustee" means that Person acting as "Trustee" under
(and as defined in) the Security Agreement.
"Collection Account" means the account maintained in the name of
the Purchaser, which account shall be opened prior to the initial purchase
hereunder, or such other account as is designated as the Collection Account
pursuant to Section 4.01(l).
"Collection Date" means the date following the Termination Date on
which all Percentage Interests have been reduced to zero in accordance with
Section 2.03(a) and the Agent has received all amounts due to it in
connection with this Agreement.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable, any collection of such Receivable deemed to have been received
pursuant to Section 2.08 and all payments required to be made by the Seller
pursuant to Section 2.06 or the last sentence of Section 2.08.
"Commercial Paper Note" means any promissory note issued by the
Purchaser having an original maturity of 270 days or less (including the date
of issuance thereof).
"Concentration Limit" means, for any Reported Group on any Cut-Off
Date, 2.0% (or, if an Obligor identified in clause (i) of the definition of
"Reported Group" has a long term credit rating of at least AA- by Standard &
Poor's and Aa3 by Moody's, the Concentration Limit for such Obligor's
Reported Group shall mean 100%) of the Purchase Limit on such Cut-Off Date or
such other amount or percentage ("Special Concentration Limit") for any such
Reported Group designated by the Agent in a writing delivered to the Seller
from time to time.
"Coverage Ratio" means, on any date of determination, the ratio of
(x) the sum of (i) the Net Receivables Pool Balance plus (ii) the available
funds on deposit in the Collection Account to (y) the sum of the Utilized
Amounts for all Percentage Interests, in each case, as of such date.
"CP Disruption Event" means, at any time for any reason whatsoever,
the Purchaser shall be unable to raise, or shall be precluded or prohibited
from raising, funds through the issuance of Commercial Paper Notes in the
United States' commercial paper market at such time.
"CP Rate" means with respect to any Purchase Period for any
Percentage Interest, the rate equivalent to the sum of (i) the rate (or if
more than one rate, the weighted average of the rates) at which Commercial
Paper Notes having a term equal to such Purchase Period may be sold by any
placement agent or commercial paper dealer selected by the Purchaser, as
agreed between each such agent or dealer and the Purchaser; provided,
however, if the rate (or rates) as agreed between any such agent or dealer
and the Purchaser with regard to any Purchase Period for any Percentage
Interest is a discount rate (or rates), then such rate for such Purchase
Period shall be the rate (or if more than one rate, the weighted average of
the rates) resulting from converting such discount rate (or rates) to an
interest-bearing equivalent rate per annum plus (ii) the Dealer Fees for such
Purchase Period; provided, however, that at all times following the
occurrence of an Event of Termination, such rate for any Percentage Interest
shall be the Alternative Rate in effect from time to time.
"Credit and Collection Policy" means those credit and collection
policies and practices of the Seller relating to Receivables, as delivered to
the Agent prior to the date hereof, as modified in compliance with this
Agreement.
"Cut-Off Date" means the last day of a calendar month.
"Dealer Fees" means with respect to any Purchase Period for any
Percentage Interest, the rate set forth in a fee letter executed among the
Seller, the Agent and the Purchaser.
"Debt" of any Person means (i) indebtedness of such Person for
borrowed money, (ii) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations (other than
ordinary trade payables) of such Person to pay the deferred purchase price of
property or services, (iv) obligations of such Person as lessee under leases
which shall have been or should be, in accordance with GAAP, recorded as
capital leases, (v) obligations secured by an Adverse Claim upon property or
assets owned by such Person, even though such Person has not assumed or
become liable for the payment of such obligations and (vi) obligations of
such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iv)
above.
"Defaulted Receivable" means a Receivable: (i) as to which, with
respect to Active Receivables, any payment, or part thereof, remains unpaid
for more than 90 days from the billing date for such payment, (ii) as to
which, the Obligor thereon shall generally not be able to pay its debts as
such debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors, or any proceeding shall be instituted by or against such Obligor
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property, or (iii) which,
consistent with the Credit and Collection Policy, has been or should be
written off the Seller's books as uncollectible.
"Delinquency Ratio" means the ratio (expressed as a percentage)
computed as of each Cut-Off Date by dividing (i) the aggregate Outstanding
Balance of all Receivables that became Delinquent Receivables during the
month ending on such Cut-Off Date, by (ii) the aggregate Outstanding Balance
of all Receivables on such date.
"Delinquent Receivable" means an Active Receivable that is not a
Defaulted Receivable and as to which any payment or part thereof remains
unpaid for more than 60 days from the original billing date for such payment.
"Designated Obligor" means, at any time, each Obligor; provided,
however, that any Obligor shall cease to be a Designated Obligor upon three
Business Days' notice from the Agent to the Seller.
"Dilution Factors" means, with respect to the Receivables, any
credits, rebates, discounts, allowances, disputes, chargebacks, allowances
for early payments and other allowances or adjustments granted in accordance
with the Seller's usual practices.
"Dilution Ratio" means the ratio (expressed as a percentage)
computed as of each Cut-Off Date by dividing (i) the aggregate reduction as a
result of any of the Dilution Factors in the aggregate original principal
balance of the Receivables during such month, by (ii) the amount of
Collections (other than deemed Collections) received during such month.
"Dilution Reserve Percentage" means, on any day for any Percentage
Interest, the greater of (i) 1.00% and (ii) 2.0 times the average Dilution
Ratio for the three consecutive months ending on the most recent Cut-Off
Date.
"Dollars" or "$" means lawful money of the United States.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which is a Designated Obligor, is a United
States resident, and is not an Affiliate of any of the parties hereto;
(ii) which is not a Defaulted Receivable, a Delinquent
Receivable, an Inactive Receivable or a Hardship Receivable; and if such
Receivable is owed by an Obligor in a Reported Group, the Obligors in
such Reported Group are not the Obligors of any Defaulted Receivables or
of any Delinquent Receivables in the aggregate amount of 25% or more of
the aggregate Outstanding Balance of all Receivables of Obligors in such
Reported Group;
(iii) which (A) is required to be paid in full immediately
upon the Obligor's receipt of the original invoice therefor, (B)
constitutes the legal, valid and binding obligation of the Obligor of
such Receivable, enforceable against such Obligor in accordance with its
terms and (C) is not subject to any right of rescission, dispute,
offset, counterclaim or defense whatsoever;
(iv) (A) which is an "account" within the meaning of Section 9-106
of the UCC of all applicable jurisdictions, (B) which has been invoiced
by the Seller unless such Receivable is an Unbilled Receivable, (C) as
to which all action required to be taken in connection therewith by the
Seller for the Obligor has been taken, except that Unbilled Receivables
shall not have been invoiced, (D) is denominated and payable only in
Dollars in the United States and (E) no portion of which is payable on
account of sales, excise or similar taxes;
(v) which arises in the ordinary course of the Seller's
business in connection with the sale of electricity and/or related
services;
(vi) the sale, assignment or transfer of which (including,
without limitation, the sale of an undivided percentage interest
therein) does not contravene or conflict with any applicable laws, rules
or regulations or any contractual or other restriction, limitation or
encumbrance or require the consent of any Person;
(vii) which has not been compromised, adjusted or modified
(including by extension of time or payment or the granting of any
discounts, allowances or credits) for reasons related to the credit of
the Obligor of such Receivable;
(viii) which, together with any contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no party to any
contract related thereto, if applicable, is in violation of any such
law, rule or regulation in any material respect;
(ix) which (A) satisfies all applicable requirements of the
Credit and Collection Policy and (B) complies with such other criteria
and requirements as the Agent may from time to time specify to the
Seller following thirty days' notice;
(x) as to which the Agent has not notified the Seller that the
Agent has determined, in its sole discretion, that such Receivable (or
class of Receivables) is not acceptable for purchase hereunder;
(xi) which is neither evidenced by any promissory note,
draft, bond, debenture or other instrument nor payable pursuant to any
contract which creates a security interest in goods;
(xii) the Obligor of which is located outside of Indiana,
Minnesota or New Jersey unless the Seller has qualified to do business
in such state or has filed a Notice of Business Activities Report or
equivalent report with such state for the then current year; and
(xiii) which is free and clear from all liens (other than
liens expressly permitted by this Agreement) and (except as provided
herein) as to which the Seller has good and marketable title.
"ERISA" means, on any day, the U.S. Employee Retirement Income
Security Act of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate" means (i) any corporation which is a member of
the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Seller; (ii) a trade or business (whether
or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with the Seller or (iii) a member of the same
affiliated service group (within the meaning of Section 414(m) of the Code)
as the Seller, any corporation described in clause (i) above or any trade or
business described in clause (ii) above.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" means, with respect to any Percentage Interest
for any Purchase Period, the per annum rate of interest determined by the
Agent to be equal to the sum of (a) 0.85% and (b) the rate (rounded upward,
if necessary, to the nearest whole multiple of 1/16th of one percent per
annum) for deposits in Dollars for a period approximating such Purchase
Period which appears on the Reuters Screen LIBO Page as of 11:00 A.M. (London
time) on the second Business Day before (and for value on) the first day of
such Purchase Period, divided by the remainder of one minus the Eurodollar
Reserve Percentage (expressed as a decimal) applicable during such Purchase
Period.
"Eurodollar Reserve Percentage" means, with respect to any Purchase
Period for any Percentage Interest, the reserve percentage (rounded upwards,
if necessary, to the nearest 1/16th of one percent per annum) applicable
during such Purchase Period (or, if more than one such percentage shall be so
applicable during such Purchase Period, the daily average of such percentages
for those days in such Purchase Period during which any such percentages
shall be in effect) under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for banks or
other financial institutions subject to such regulations with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities
having a term equal to such Purchase Period.
"Event of Termination" has the meaning assigned to that term in
Section 7.01.
"Excess Government Exposure" means, at any time, the excess (if
any) of (x) the aggregate Outstanding Balance of Receivables owed by Obligors
that are governments or governmental subdivisions or agencies, over (y) 6.0%
of the aggregate Purchase Limit at such time.
"Excess Reported Group Exposure" means at any time the amount
computed as follows:
(i) for each Reported Group, determine the excess (if any) of
(x) the aggregate Outstanding Balance of Eligible Receivables owed by
Obligors in such Reported Group as of the most recent Cut-Off Date, over
(y) the Concentration Limit for such Reported Group, determined as of
such Cut-Off Date, and
(ii) determine the sum of the amounts determined pursuant to
clause (i) with respect to all Reported Groups, which sum shall be the
"Excess Reported Group Exposure".
"Excluded Representations" means (i) the last sentence of Section
4.01(e), and (ii) the last sentence of Section 4.01(f).
"Excluded Taxes" means, with respect to any Person, (i) net income
taxes imposed on such Person by the United States, (ii) net income and
franchise taxes imposed on such Person by the jurisdiction in which such
Person is organized or maintains its booking office for the transactions
contemplated hereby, or (iii) net income or franchise taxes imposed on such
Person by a political subdivision of the jurisdictions referred to in clause
(ii).
"Federal Funds Rate" means, for any period, a fluctuating per annum
interest rate for each day during such period equal to the weighted average
of the rates quoted on overnight Federal funds transactions with UBS for such
day by three Federal funds brokers of recognized standing selected by it.
"GAAP" means, at any particular time, generally accepted accounting
principles as in effect at such time in the United States of America,
consistently applied.
"General Trial Balance" means the accounts receivable trial balance
computer tape, containing (i) a list of Obligors and the invoiced Receivables
respectively owed by such Obligors, (ii) the aged Outstanding Balances of
each such Obligor's Receivables, determined as of the most recent Cut-Off
Date, and (iii) the aggregate balances of Unbilled Receivables owed by
Obligors, as allocated to the Seller's residential, commercial or industrial
classes and determined as of the most recent Cut-Off Date, in substantially
the form delivered to the Agent prior to the initial purchase of a Percentage
Interest hereunder.
"Gross Charge-Off Ratio" means, on any day, the ratio (expressed as
a percentage) determined by dividing (i) the Outstanding Balance of
Receivables which, consistent with the Credit and Collection Policy, were or
should have been written off the Seller's books as uncollectible during the
month ending on the most recent Cut-Off Date, by (ii) the amount of
Collections (other than deemed Collections) received during such month.
"Gross Loss Proxy" means, on any day, the sum of (i) the
Outstanding Balance of Receivables which, consistent with the Credit and
Collection Policy, were or should have been written off the Seller's books as
uncollectible during the month ending on the most recent Cut-Off Date plus
(ii) the Change in Late Stage Delinquencies as of such Cut-Off Date.
"Gross Loss Proxy Ratio" means, on any day, the ratio (expressed as
a percentage) determined by dividing (i) the Gross Loss Proxy calculated as
of the most recent Cut-Off Date, by (ii) the Outstanding Balance of
Receivables billed during the month ending five months prior to such Cut-Off
Date.
"Hardship Receivable" means a Receivable with respect to an account
which the Seller has classified as "hardship" in accordance with the Credit
and Collection Policy.
"Holder" has the meaning assigned thereto in Section 10.12(b).
"Inactive Receivable" means a Receivable owed by an Obligor whose
electrical service has been discontinued by the Seller and to which the
Seller has rendered a final bill.
"Investor Report" means a report, in substantially the form of
Exhibit D, furnished by the Servicer to the Agent for each Owner pursuant to
Section 6.07.
"Issuer" means any Person whose principal business consists of
issuing commercial paper notes, medium-term promissory notes or other
securities (including, without limitation, the Commercial Paper Notes) to
fund its acquisition and maintenance of receivables, accounts, instruments,
chattel paper, general intangibles and other similar assets.
"Liquidation Servicing Fee" means, for any Percentage Interest at
any time, an amount equal to the product of (i) the Purchase Price of such
Percentage Interest and (ii) the product of (A) the highest percentage per
annum of the Servicing Fee set forth in Section 2.10(b) and (B) a fraction,
the numerator of which equals 2.0 times the Weighted Average Maturity and the
denominator of which equals 360.
"Liquidation Yield" means, for any Percentage Interest on any date,
an amount equal to the product of (i) the Purchase Price of such Percentage
Interest and (ii) the product of (A) highest Yield Rate applicable to any
Percentage Interest (or, if higher, the Base Rate for such Percentage
Interest) on such date and (B) a fraction, the numerator of which equals 2.0
times the Weighted Average Maturity and the denominator of which equals 360
(or, if using the Base Rate as the applicable Yield Rate, 365 or (in the case
of a leap year) 366).
"Liquidity Agreement" means any credit agreement, loan agreement,
stand-by credit agreement or loan agreement, letter of credit facility or
other instrument, document or agreement providing for loans, advances or
other extensions of credit from certain Liquidity Lenders parties thereto to
the Purchaser to either provide liquidity support for the Commercial Paper
Notes issued by the Purchaser in connection with this Agreement or to fund
the acquisition and/or maintenance by the Purchaser of Percentage Interests.
"Liquidity Facility Termination Date" means any day upon which the
commitments of the Liquidity Lenders to make loans, advances or other
extensions of credit to the Purchaser under or pursuant to any Liquidity
Agreement to which such Liquidity Lenders are parties shall be terminated for
any reason (whether at the stated maturity or earlier) or shall otherwise
cease to be in full force and effect.
"Liquidity Lender" means any of the financial institutions from
time to time parties to, and extending credit commitments to the Purchaser
under, any Liquidity Agreement.
"Liquidity Shortfall Event" means the occurrence of any of the
following events: (i) any Liquidity Lender defaults on, or is unable for any
reason whatsoever to perform in respect of, its commitment under the
Liquidity Agreement to which it is a party; or (ii) any Liquidity Lender
shall cease to be rated at least A-1+ by Standard & Poor's and P-1 by
Moody's, and such downgraded Liquidity Lender has not been replaced or
substituted by a Replacement Bank within 30 days after such Liquidity Lender
was so downgraded.
"Lock-Box Account" means an account maintained at a Lock-Box Bank
for the purpose of receiving Collections in accordance with Section 6.08.
"Lock-Box Bank" means any of the banks or other financial
institutions designated by the Agent, following an Event of Termination, to
receive payments in respect of Receivables.
"Loss Horizon Ratio" means the ratio (expressed as a percentage)
computed as of each Cut-Off Date by dividing (i) the sum of (A) the
Outstanding Balance of Receivables billed during the three months ending on
such Cut-Off Date plus (B) the product of 0.50 times the Outstanding Balance
of Receivables billed during the month ending three months prior to such Cut-
Off Date, by (ii) the Outstanding Balance of Eligible Receivables as of such
Cut-Off Date.
"Loss Reserve" means, at any time for any Percentage Interest, an
amount equal to
LRP x (PP + YR)
1 - LRP
where:
LRP = the Loss Reserve Percentage for such Percentage Interest at
such time.
PP = the Purchase Price of such Percentage Interest at such time.
YR = the Yield Reserve for such Percentage Interest at such time.
"Loss Reserve Percentage" means, on any day for any Percentage
Interest, the greatest of (i) the product of (A) the Gross Loss Proxy Ratio
calculated as of the most recent Cut-Off Date, times (B) the Loss Horizon
Ratio as of the most recent Cut-Off Date, (C) times 2.00, (ii) five times the
percentage which the Concentration Limit (without giving effect to any
Special Concentration Limit) bears to the then aggregate Purchase Price of
all Percentage Interests and (iii) 10%.
"Loss-to-Liquidation Ratio" means the ratio (expressed as a
percentage) computed as of each Cut-Off Date by dividing (i) the aggregate
Outstanding Balance of all Receivables that became Defaulted Receivables
during the month ending on such Cut-Off Date, by (ii) the aggregate amount of
Collections actually received during such month.
"Material Adverse Effect" means a material adverse effect on (i)
the operations of the Seller or the Servicer, (ii) the ability of the Seller
or the Servicer to perform its obligations hereunder or (iii) the credit
quality, enforceability or collectibility of the Receivables.
"Material Parent Effect" means a material adverse effect on the
operations or financial condition of (i) Parent or (ii) Parent and its
subsidiaries.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding five years contributed to by the Seller or
any ERISA Affiliate on behalf of its employees.
"Net Receivables Pool Balance" means, at any time, (i) the
aggregate Outstanding Balance of all Eligible Receivables at such time, minus
(ii) the Excess Reported Group Exposure, minus (iii) the Excess Government
Exposure.
"Obligor" means a Person obligated to make payments to the Seller,
which obligation arises in connection with the Seller's sale of electricity
and/or related services.
"Original Balance" means, for any Receivable, the original
principal balance of such Receivable at its creation.
"Outstanding Balance" means for any Receivable at any time, the
then outstanding principal balance thereof; provided, that the Outstanding
Balance of any Unbilled Receivables shall be calculated in accordance with
Exhibit B.
"Owner" means, with respect to each Percentage Interest, upon its
purchase, the Purchaser; provided, however, that upon any assignment thereof
pursuant to Section 10.04, the assignee shall be the Owner of such Percentage
Interest (or portion thereof) so assigned, and the assignor shall cease to be
the Owner of such Percentage Interest (or portion thereof) so assigned.
"Parent" means Northeast Utilities, a Massachusetts business trust.
"Percentage Interest" means, at any time, an undivided percentage
ownership interest at such time in (i) each and every Receivable existing on
the date such Percentage Interest shall have been purchased and in each and
every Receivable existing or arising after such date but prior to the
Termination Date, (ii) all Related Security with respect to each such
Receivable, (iii) all Collections with respect to each such Receivable, and
(iv) all proceeds of any of the foregoing. Such undivided percentage
interest for such Percentage Interest shall be computed by dividing the
Utilized Amount of such Percentage Interest at such time by the Net
Receivables Pool Balance at such time. Each Percentage Interest shall be
determined from time to time pursuant to the provisions of Section 2.03(a).
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, bank, financial institution, trust,
unincorporated association, joint venture, government (or any agency or
political subdivision thereof) or other entity.
"Prime Rate" means the per annum rate of interest announced
publicly by UBS in New York, New York as its prime rate, such rate to change
as and when such announced rate changes. The Prime Rate is not intended to
be the lowest rate of interest charged by UBS in connection with extensions
of credit to debtors.
"Public Disclosure Documents" means (i) the Seller's Annual Report
on Form 10-K for the year ending December 31, 1995, (ii) the Seller's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and June
30, 1996, and (iii) the Parent's reports on Form 8-K dated January 31, 1996,
March 30, 1996, April 15, 1996, June 3, 1996, June 18, 1996, June 28, 1996
and July 22, 1996.
"Purchase Limit" means at any time $40,000,000, as such amount may
be reduced pursuant to Section 2.02 or Section 2.06(a); provided, however,
that at all times on and after the Termination Date, the "Purchase Limit"
shall mean the aggregate Purchase Price for all Percentage Interests.
"Purchase Period" means, with respect to any Percentage Interest, a
period selected by the Agent, after consultation with the Owner(s) of such
Percentage Interest; provided, however, that:
(a) with respect to any Percentage Interest the purchase or
maintenance of which is funded other than through the issuance of
Commercial Paper Notes, the Purchase Period shall be any number of days
up to (and including) 29 or one, two or three months; and
(b) with respect to any Percentage Interest the purchase or
maintenance of which is funded through the issuance of Commercial Paper
Notes, the Purchase Period shall be any number of days up to (and
including) 270;
Each Purchase Period in respect of any Percentage Interest shall commence,
initially, on the date of purchase by the Purchaser of such Percentage
Interest and thereafter on the last day of the immediately preceding Purchase
Period. Notwithstanding anything contained herein to the contrary (i) any
Purchase Period which would otherwise end on a day which is not a Business
Day shall be extended to the immediately succeeding Business Day; provided,
however, that if Yield in respect of such Percentage Interest allocated to
such Purchase Period is computed by reference to the Eurodollar Rate and such
succeeding Business Day is in the next calendar month, then such Purchase
Period shall end on the immediately preceding Business Day, (ii) any Purchase
Period which commences before the Termination Date and would otherwise end on
a date occurring after the Termination Date shall end on the Termination
Date, (iii) any Purchase Period as to which Yield accrues at the CP Rate may
be terminated at the election of, and upon notice thereof to the Seller and
each Owner of the Percentage Interests allocated thereto by, the Agent at any
time upon the occurrence and during the continuance of any CP Disruption
Event, and (iv) whenever any Purchase Period as to which Yield accrues at the
Eurodollar Rate commences on the last Business Day in a month or on a day for
which there is no numerical corresponding day in the month in which such
Purchase Period ends, such Purchase Period shall end on the last Business Day
of the month in which such Purchase Period ends.
"Purchase Price" of any Percentage Interest means the amount paid
to the Seller for such Percentage Interest at the time of its acquisition by
a Purchaser pursuant to Section 2.01, reduced from time to time by
Collections received and distributed to the Owners on account of such
Purchase Price pursuant to Sections 2.06 or 2.07 or the last sentence of
Section 2.08; provided, however, that such Purchase Price of such Percentage
Interest shall not be reduced by any distribution of any portion of
Collections if at any time such distribution is rescinded or must be returned
for any reason.
"Purchaser" means Monte Rosa Capital Corporation or, upon the
assignment of all of its rights, title, interests, obligations and
liabilities as the Purchaser hereunder in accordance with Section 10.04 (or,
in the case of any subsequent Purchaser, upon the assignment of all of such
subsequent Purchaser's rights, title, interests, obligations and liabilities
as the Purchaser hereunder in accordance with Section 10.04), such other
Issuer to which such assignment was so made; provided, however, that upon any
such assignment by any Issuer (including Monte Rosa Capital Corporation) of
all of its rights, title, interests, obligations and liabilities as the
Purchaser hereunder, such Issuer shall cease to be the Purchaser hereunder.
"Receivable" means the billed and unbilled indebtedness of any
Obligor owed (prior to giving effect to the transfer contemplated hereby) to
the Seller, whether constituting an account, chattel paper, instrument or
general intangible, as booked to Accounts 142.01 and 173 under the Federal
Energy Regulatory Commission Chart of Accounts as utilized by the Seller, but
excluding the right to payment of any interest or finance charges or taxes
with respect thereto.
"Records" means all documents, books, records and other information
(including without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) maintained by the
Seller or the Servicer with respect to the Receivables and the related
Obligors.
"Reinvested Collections" has the meaning assigned to that term in
Section 2.05.
"Reinvestment Termination Date" means that Business Day which the
Seller designates as the Reinvestment Termination Date by notice to the Agent
at least ten Business Days prior to such Business Day or, if any of the
conditions precedent in Section 3.02 are not satisfied, that Business Day
which the Agent designates as the Reinvestment Termination Date by notice to
the Seller at least one Business Day prior to such Business Day.
"Related Security" means with respect to any Receivable:
(i) all security interests or liens and the Seller's interest in
the property subject thereto from time to time purporting to secure
payment of such Receivable, whether pursuant to a contract related to
such Receivable or otherwise;
(ii) the assignment to the Agent, for the benefit of any Owner, of
all UCC financing statements covering any collateral securing payment of
such Receivable;
(iii) all guarantees, letters of credit, indemnities, warranties,
insurance policies and proceeds and premium refunds thereof and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable whether pursuant to a
contract related to such Receivable or otherwise;
(iv) all Records; and
(v) all proceeds of the foregoing.
"Replacement Bank" has the meaning assigned to that term in Section
2.06(a).
"Reported Group" means, on any Cut-Off Date, the Obligors
identified by the following process, as described in the most recent Investor
Report:
(i) in the Investor Reports delivered in each July and January of
each year, the Seller shall indicate each of the ten Obligors that, as
of the preceding April 30 or October 31, as the case may be, were billed
for the highest aggregate amounts of Receivables during the twelve month
period ending on such date;
(ii) for each Obligor described in clause (i), the Seller shall,
to the best of its knowledge and ability in accordance with its
practices and procedures in effect on the date hereof, identify those of
such Obligor's Affiliates that are also Obligors (determined as of such
Cut-Off Date); and
(iii) group each Obligor described in clause (i) with its
Affiliates described in clause (ii), each of which groups shall
collectively constitute a "Reported Group".
"Required Rating" means (i) at any time before February 1, 1997, BB
by Standard & Poor's and Ba2 by Moody's and (ii) at any time on or after
February 1, 1997, BB+ by Standard & Poor's and Ba1 by Moody's.
"Required Owners" means, at any time, those Owners owning
Percentage Interests, the aggregate outstanding Purchase Price of which
exceeds 50% of the aggregate outstanding Purchase Price of all Percentage
Interests outstanding hereunder.
"Restructuring" means a restructuring of the transactions
contemplated hereby, pursuant to which (i) the Seller shall transfer the
Receivables, the Related Security and the Collections to its newly
established bankruptcy remote, special purpose subsidiary, which transfer
shall be structured so as to constitute a "true sale" for purposes of
applicable state, Federal and bankruptcy law, (ii) such subsidiary shall
transfer undivided interests in the Receivables, the Related Security and the
Collections to the Owners, provided that the Agent shall be satisfied as to
form and substance (in its sole discretion) with all of the following: (i)
the capital structure of such subsidiary, (ii) the opinions (including
without limitation with respect to issues of the true sale, substantive
consolidation, tax, the creation and perfection of ownership and security
interests and satisfaction of regulatory requirements) required to be
delivered by the Agent, (iii) the Seller's ability to maintain the systems
required to comply with the reporting and operating requirements applicable
to the restructured transaction, (iv) the documentation for such
restructuring, (v) the terms and conditions of such restructuring and (vi)
the obtaining of all requisite regulatory approvals and "no-action" or
similar letters from regulatory authorities as to any matters which the Agent
believes may be necessary or appropriate.
"Reuters Screen LIBO Page" means the display page so designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as
may replace the LIBO page on such service for the purpose of displaying
London interbank offered rates of major banks).
"Scheduled Termination Date" means (i) if the Agent shall determine
that the Restructuring has been consummated, September 4, 2001; or (ii)
otherwise, February 1, 1997.
"Security Agreement" means that certain Collateral Trust and
Security Agreement of even date herewith among the Purchaser and the
Collateral Trustee, as the same may be amended, supplemented or otherwise
modified from time to time.
"Security Deposit" means a deposit of money by an Obligor with (or
for the account of) the Seller to secure the payment of the Receivables owed
by such Obligor.
"Seller Confidential Information" means information regarding the
operations or financial condition of Parent, the Seller or their respective
subsidiaries (including, without limitation, information regarding the
Obligors and the Receivables).
"Servicer" means at any time the Person then authorized pursuant to
Article VI to service, administer and collect Receivables.
"Servicer Default" means the Agent, in its reasonable discretion,
determines that an event has occurred that would reasonably materially and
adversely affect (i) the Servicer's operations, (ii) the Servicer's ability
to service the Receivables or (iii) the credit quality, collectibility or
enforceability of the Receivables.
"Servicing Fee" has the meaning assigned to that term in
Section 2.10.
"Servicing Fee Reserve" means, with respect to any Percentage
Interest at any time, the sum of (i) the Liquidation Servicing Fee for such
Percentage Interest at such time, plus (ii) the unpaid Servicing Fee relating
to such Percentage Interest accrued to such time.
"Servicing Fee Reserve Percentage" means, on any day for any
Percentage Interest, the ratio (expressed as a percentage) computed by
dividing (i) the Servicing Fee Reserve related to such Percentage Interest by
(ii) the Purchase Price for such Percentage Interest.
"Settlement Date" means, with respect to any Purchase Period for
any Percentage Interest, the last day of such Purchase Period.
"Special Concentration Limit" has the meaning assigned to that term
in the definition of "Concentration Limit".
"Standard & Poor's" means Standard & Poor's Rating Services, a
division of The McGraw-Hill Companies, Inc.
"Subject Party" has the meaning assigned thereto in Section
10.12(b).
"Termination Date" means the earliest of (i) the Reinvestment
Termination Date, (ii) the date of termination of the Purchase Limit pursuant
to Section 2.02, (iii) the date of the declaration or automatic occurrence of
the Termination Date pursuant to Section 7.01, (iv) the occurrence of a
Liquidity Facility Termination Date, and (v) the Scheduled Termination Date.
"Total Reserve Percentage" means, on any day for any Percentage
Interest, the sum of (i) the Loss Reserve Percentage for such Percentage
Interest at such time, (ii) the Dilution Reserve Percentage for such
Percentage Interest at such time, (iii) the Yield Reserve Percentage for such
Percentage Interest at such time and (iv) the Servicing Fee Reserve
Percentage for such Percentage Interest at such time.
"Total Reserves" means, at any time for any Percentage Interest, an
amount equal to
TRP x (PP + YR)
1 - LRP
where:
TRP = the Total Reserve Percentage for such Percentage Interest at
such time.
LRP = the Loss Reserve Percentage for such Percentage Interest at
such time.
PP = the Purchase Price of such Percentage Interest at such time.
YR = the Yield Reserve for such Percentage Interest at such time.
"Transition Event" means the occurrence of any of the following:
(i) an Event of Termination, (ii) the reduction of the Coverage Ratio to
below 102%, (iii) the Termination Date, and (iv) the Seller's senior secured
debt shall be rated BB+ or lower by Standard & Poor's or Ba1 or lower by
Moody's.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
"Unbilled Receivable" means a bona fide, enforceable obligation of
a customer for the customer's metered use of electricity that will be billed
by the Seller or the Servicer during the Seller's next monthly billing cycle.
"United States" means the United States of America.
"Utilized Amount" means, for any Percentage Interest at any time,
the sum of (i) the aggregate Purchase Price of such Percentage Interest at
such time and (ii) the Total Reserves for such Percentage Interest at such
time.
"Weighted Average Maturity" means on any day, the number of days
equal to (i) 30.0 times (ii) the average of the aggregate Outstanding
Balances of Receivables on the two most recent Cut-Off Dates, divided by
(iii) Newly Generated Receivables. For purposes of this definition, "Newly
Generated Receivables" means, on any day, the amount equal to the sum of (i)
the Outstanding Balance of Receivables billed during the month ending on the
most recent Cut-Off Date, plus (ii) the difference between (A) the
Outstanding Balance of Unbilled Receivables as of the most recent Cut-Off
Date minus (B) the Outstanding Balance of Unbilled Receivables as of the
second most recent Cut-Off Date.
"Yield" means for each Percentage Interest during any Purchase
Period, the product of
YRT x PP x ED
DIY
where:
PP = the Purchase Price of such Percentage Interest during such
Purchase Period,
ED = the actual number of days elapsed during such Purchase Period,
YRT = the Yield Rate for such Percentage Interest for such Purchase
Period, and
DIY = the number of days in the year for purposes of calculating
Yield, which number shall be 360 in all cases other than if
the applicable Yield Rate for such Percentage Interest shall
be the Base Rate, in which case, such number shall be 365 or,
in the case of a leap year, 366, and
provided, however, that (i) no provision of this Agreement shall require the
payment or permit the collection of Yield in excess of the maximum permitted
by applicable law and (ii) Yield for any Percentage Interest shall not be
considered paid by any distribution if at any time such distribution is
rescinded or must otherwise be returned for any reason.
"Yield Rate" for any Purchase Period for any Percentage Interest
means:
(i) to the extent the purchase or the maintenance of such
Percentage Interest is funded other than through the issuance of
Commercial Paper Notes, a rate equal to the applicable Alternative Rate
for such Purchase Period, and
(ii) to the extent the purchase or maintenance of such Percentage
Interest is funded through the issuance of Commercial Paper Notes, a
rate equal to the CP Rate, as applicable, for such Purchase Period;
provided, however, that notwithstanding anything contained herein to the
contrary, upon the assignment of any Percentage Interest (or any portion
thereof) by the Purchaser to any other Owner, the Yield Rate at which such
Percentage Interest shall thereafter accrue Yield shall be the Alternative
Rate.
"Yield Reserve" means, for any Percentage Interest at any time, the
sum of (i) the Liquidation Yield for such Percentage Interest, and (ii) the
aggregate amount of all Yield accrued and to accrue during any applicable
Purchase Period (as determined by the Agent in good faith) with respect to
such Percentage Interest.
"Yield Reserve Percentage" means, on any day for any percentage
Interest, the ratio (expressed as a percentage) computed by dividing (i) the
Yield Reserve related to such Percentage Interest by (ii) the Purchase Price
for such Percentage Interest.
SECTION 1.02. Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of New York, and not specifically defined
herein, are used herein as defined in such Article 9.
SECTION 1.03. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
ARTICLE II
THE RECEIVABLES FACILITY
SECTION 2.01. Purchases and Maintenance of Percentage Interests.
(a) On the terms and conditions hereinafter set forth, the Purchaser hereby
agrees to purchase Percentage Interests from the Seller from time to time
during the period from the date hereof until (but not including) the
Termination Date; provided, however, that nothing in this Agreement shall be
deemed or construed as a commitment by the Purchaser or any Owner to fund the
purchase or maintenance of Percentage Interests through the issuance of
Commercial Paper Notes, and it is hereby expressly acknowledged and agreed
that such funding is, and shall continue to be, wholly discretionary on the
part of the Purchaser and all applicable Owners. Under no circumstances
shall the Purchaser make any such purchase if, after giving effect to such
purchase, the aggregate Purchase Price of all Percentage Interests hereunder
would exceed the Purchase Limit.
(b) Each purchase of a Percentage Interest hereunder shall be made
on notice from the Seller to the Agent (who shall notify the Purchaser) given
not later than 11:00 A.M. (New York City time) on the second Business Day
before the date of such requested purchase. Each such notice of a proposed
purchase of a Percentage Interest shall be by telephone, telecopier, telex or
cable and shall specify the following with respect to each such Percentage
Interest: (A) the aggregate initial Purchase Price of the Percentage Interest
so requested to be purchased, which Purchase Price shall not be less than
$1,000,000 and shall be an integral multiple of $100,000; (B) the date of
such proposed purchase (which day must be a Business Day); and (C) whether
the Alternative Rate or the CP Rate is requested with respect to such
Percentage Interest. Any notice of a requested purchase as set forth above
shall become effective and shall be binding on the Seller when given by the
Seller.
Promptly upon its receipt of such notice from the Agent, the
Purchaser shall notify the Agent and the Seller as to whether, in the case of
any requested purchase to be funded through the issuance of Commercial Paper,
it is willing to make such a purchase.
(c) On the date of such purchase, the Purchaser shall, upon the
satisfaction of the applicable conditions set forth in Article III, make
available to the Seller in same day funds, at Fleet National Bank, Hartford,
Connecticut, ABA #011900445, Account #5025-2528, the aggregate Purchase Price
of such Percentage Interest. The Purchaser shall allocate such Purchase
Price to such Purchase Periods as it shall select in accordance with the
terms of this Agreement.
(d) At least two (2) Business Days prior to the last day of each
Purchase Period, the Seller shall notify the Agent (who shall then notify the
Purchaser) as to the following with respect to the succeeding allocation of
the Purchase Price allocated to such Purchase Period then ending, (A) whether
the Alternative Rate or the CP Rate is requested with respect to such
Purchase Price and (B) if more than one rate is requested, the requested
allocation of the Purchase Price as among such rates; provided that the
Purchase Price allocated to each rate must be in a minimum amount of
$1,000,000 and in integral multiples of $100,000, except for any such
Purchase Price allocated to the Base Rate, which Purchase Price may be
allocated thereto in any amount. Such notice shall be given by telephone,
telecopier, telex or cable. If and to the extent the Purchaser elects to
make such Yield Rate(s) available to the Seller (such election to be
submitted to the Agent and the Seller, then, upon the expiration of the then
current Purchase Period, the Purchaser shall reallocate the Purchase Price
previously allocated to such Purchase Period to such other Purchase Periods
as the Agent shall select in accordance with the terms hereof, each accruing
Yield at the applicable Yield Rate requested in accordance with this Section
2.01(d). Notwithstanding anything contained in this Section 2.01(d) to the
contrary, in the event that:
(i) the Seller shall fail to give such notice with respect to any
Purchase Period then ending; or
(ii) in any case where the requested Yield Rate is the CP Rate, the
Purchaser elects not to make the requested Yield Rate available with
respect to the Purchase Price allocated to such Purchase Period then
ending (such election to be promptly submitted to the Agent and the
Seller),
and, in any such case, the Purchaser and Seller shall fail to otherwise agree
before the last day of such Purchase Period, then the Yield Rate to be
applicable to the Purchase Price allocated to such Purchase Period then
ending shall be either the CP Rate or the Alternative Rate, as the relevant
Owner of such affected Percentage Interest may elect, and such Purchase Price
shall be allocated to such Purchase Periods as shall be selected by the Agent
in accordance with the terms hereof, but in any event not to exceed five
days.
(e) If at any time after the occurrence and during the continuance
of any CP Disruption Event, the Agent elects to terminate any Purchase Period
accruing Yield at the CP Rate, the Purchase Price allocated to such
terminated Purchase Period shall be allocated to a new Purchase Period to be
designated by the Agent (but in no event to exceed 5 days) and shall accrue
Yield at the Alternative Rate.
(f) The Purchaser shall notify the Agent and the Seller, promptly
after the commencement of any Purchase Period of the amount of the Purchase
Price allocated to such Purchase Period, the duration of such Purchase
Period, and the Yield Rate applicable to such Purchase Period.
SECTION 2.02. Termination or Reduction of the Purchase Limit. The
Seller may, upon at least five Business Days' notice to the Agent, terminate
in whole or reduce in part the unused portion of the Purchase Limit;
provided, however, that each partial reduction of the Purchase Limit shall be
in an aggregate amount equal to $1,000,000 or an integral multiple thereof.
SECTION 2.03. Percentage Interests. (a) Each Percentage Interest
shall be initially computed as of the opening of business of the Servicer on
the date of its purchase. Thereafter until the Termination Date, such
Percentage Interest shall be automatically recomputed as of (i) the opening
of business of the Servicer on any day on which the aggregate Purchase Price
of all Percentage Interests hereunder is increased and (ii) the close of
business of the Servicer on each day. A Percentage Interest shall become
zero only when the Purchase Price thereof, all Yield thereon, all fees and
other amounts owing to the Owner thereof in connection with this Agreement
and all Servicing Fees in respect thereof shall have been paid in full. Each
Percentage Interest shall remain constant from the time as of which any such
computation or recomputation is made until the time as of which the next such
recomputation, if any, shall be made. From and after the Termination Date,
each Percentage Interest shall remain constant until it becomes zero as set
forth in the third sentence of this Section 2.03(a).
(b) The Agent shall maintain books and records in which shall be
recorded (i) the date and amount of each purchase of a Percentage Interest
hereunder and the Owners thereof, (ii) the date and amount of and parties to
any assignment of rights and obligations hereunder pursuant to Section 10.04,
(iii) the amount of any Yield, fees or other amount due and payable or to
become due from the Seller to the Agent, any Owner or the Servicer hereunder
and (iv) the amount and date of any reduction in the Purchase Price of any
Percentage Interest. The entries made in the Agent's books and records as
described in this Section 2.03(b) shall be conclusive and binding for all
purposes absent manifest error.
SECTION 2.04. Selection of Purchase Periods. Except as expressly
provided otherwise in this Agreement, the Agent, after consultation with the
Purchaser or the applicable Owner(s), shall designate the duration of all
Purchase Periods (subject to the restrictions set forth in the definition of
"Purchase Period" set forth in Section 1.01) to which any Purchase Price is
to be allocated hereunder and shall allocate Purchase Price accruing Yield on
the same basis (i.e., at the Alternative Rate or the CP Rate) to such
Purchase Periods in such proportions as the Purchaser or the applicable
Owner(s), as the case may be, shall, in their sole discretion, direct.
Notwithstanding anything in this Agreement to the contrary, the outstanding
Purchase Price of all Percentage Interests shall at all times be allocated to
a Purchase Period.
SECTION 2.05. Non-Liquidation Settlement Procedures. On each day
prior to the Termination Date, the Servicer shall: (i) out of Collections in
respect of each Percentage Interest received on such day, set aside on its
books and hold in trust for the Owner of such Percentage Interest an amount
equal to the Yield and Servicing Fee accrued through such day for such
Percentage Interest and not so previously set aside and (ii) reinvest the
remainder of such Collections (such reinvested portion of Collections being
"Reinvested Collections"), for the benefit of such Owner, by recomputation of
such Percentage Interest pursuant to Section 2.03 as of the end of such day
and the payment of such remainder to the Seller; provided that if for any
reason any portion of such remaining Collections cannot be so reinvested
(including, without limitation, the inability to satisfy the conditions in
Section 3.02), the Servicer shall set aside such portion on its books and
hold such portion in trust for the Owner of such Percentage Interest. The
recomputed Percentage Interest shall constitute the percentage ownership
interest in the Receivables on such day held by such Owner. On each
Settlement Date in respect of each Purchase Period for each Percentage
Interest to occur prior to the Termination Date (and, if the Agent shall so
request following a Transition Event, on each Business Day during such
Purchase Period), the Servicer shall deposit to the Agent's Account the
amounts set aside as described in the first sentence of this Section 2.05.
Upon receipt of such funds by the Agent, the Agent shall distribute them
first, to the Owner of such Percentage Interest in full payment of the
accrued Yield for such Percentage Interest, second, to the Servicer in full
payment of the accrued Servicing Fee payable with respect to such Percentage
Interest, and third to the partial liquidation of the Owners' Percentage
Interests as contemplated by Section 2.06.
SECTION 2.06. Liquidity Shortfall Event; Partial Liquidations. (a)
Immediately upon the occurrence of a Liquidity Shortfall Event, the Purchase
Limit hereunder shall be automatically reduced by (1) in the case of a
Liquidity Shortfall Event of the type described in clause (i) of the
definition thereof, the aggregate amount of any such defaulting or downgraded
Liquidity Lender's unused commitment under the Liquidity Agreements to which
it is a party; provided, however, that with respect to any such Liquidity
Shortfall Event of the type described in clause (i) of the definition
thereof, if such defaulting Liquidity Lender is replaced by or is substituted
with another bank or other financial institution acceptable to the Purchaser
(a "Replacement Bank") under the applicable Liquidity Agreement(s) within 30
days after the occurrence of such a Liquidity Shortfall Event, then the
Purchase Limit may be reinstated to the extent of such Replacement Bank's
unused commitment under such Liquidity Agreement (but not to exceed the
original Purchase Limit hereunder); and provided, further, that
notwithstanding anything contained in this Agreement to the contrary, the
Purchaser shall have no obligation to replace or substitute any such
defaulting or downgraded Liquidity Lender with a Replacement Bank under any
Liquidity Agreement, or (2) in the case of a Liquidity Shortfall Event of the
type described in clause (ii) of the definition thereof, the amount of the
liquidity deficiency determined by the Agent to exist as of such date as a
result of such Liquidity Shortfall Event. In addition, within 30 days after
the occurrence of any such Liquidity Shortfall Event, the Seller, either
through the payment of such amount to the Agent for deposit in the Agent's
Account or through a partial liquidation in accordance with Section 2.06(b),
shall reduce the outstanding Purchase Price of all Percentage Interests (to
be determined after the occurrence of such Liquidity Shortfall Event) by such
an amount, if any, as may be necessary to reduce the aggregate outstanding
Purchase Price of all Percentage Interests to an amount which is equal to or
less than the Purchase Limit as so reduced.
(b) The Seller shall be entitled at any time during the term of
this Agreement to request a partial liquidation of the Percentage Interests
such that the aggregate outstanding Purchase Price of all Percentage
Interests shall be reduced to an amount designated by the Seller in such
request. Any such partial liquidation shall be conducted by remitting
Collections that are not Reinvested Collections to the Agent in accordance
with the terms and provisions to be mutually acceptable to the Servicer, the
Agent, the Required Owners and the Collateral Trustee.
(c) If on any day the Coverage Ratio is less than 102%, the Seller
(either through a payment to the Agent for deposit in the Agent's Account or
through a partial liquidation in accordance with Section 2.06(b)), shall make
the payment required to be made pursuant to the last sentence of Section
2.08.
SECTION 2.07. Liquidation Settlement Procedures. On the
Termination Date and on each day thereafter, the Servicer shall set aside and
hold in trust for each Owner of each Percentage Interest, the Collections in
respect of such Percentage Interest received on such day. On each Settlement
Date in respect of each Purchase Period for each Percentage Interest to occur
on or after the Termination Date (and, if both the Termination Date and a
Transition Event shall have occurred and the Agent shall so request, on each
other Business Day during such Purchase Period), the Servicer shall deposit
to the Agent's Account the amounts set aside pursuant to the preceding
sentence with respect to such Percentage Interest, together with any
remaining amounts set aside pursuant to Section 2.05 prior to the Termination
Date, but not to exceed the sum of (a) the accrued Yield for such Percentage
Interest, (b) the Purchase Price of such Percentage Interest, (c) the
aggregate of all other amounts owed by the Seller to the Owner of such
Percentage Interest in connection with this Agreement and (d) the accrued
Servicing Fee payable with respect to such Percentage Interest. The Agent
shall distribute the funds so received to the Owner of such Percentage
Interest first, in full payment of the accrued Yield for such Percentage
Interest (including, without limitation, the Breakage Fee, if any for such
Percentage Interest then due and payable pursuant to the terms hereof),
second, to the extent a Servicer other than the Seller or an Affiliate of the
Seller has been designated by the Agent, in payment of the accrued Servicing
Fee payable to such Servicer with respect to such Percentage Interest,
third, in reduction (to zero) of the Purchase Price of such Percentage
Interest, and fourth, in full payment of any other amounts owed by the Seller
to such Owner in connection with this Agreement. The Agent shall distribute
any remaining funds to the Servicer (if the Seller or an Affiliate of the
Seller) in payment of the accrued Servicing Fee payable to such Person with
respect to such Percentage Interest. If there shall be insufficient funds on
deposit for the Agent to distribute funds in payment in full of the
aforementioned amounts, the Agent shall distribute funds, first, in payment
of the accrued Yield for such Percentage Interest (but, in the case of the
Breakage Fee for such Percentage Interest, only to the extent the Agent shall
elect to pay such Breakage Fee from Collections attributable to such
Percentage Interest under this Section 2.07 rather than from other funds
pursuant to Section 2.11), second, to the extent a Servicer other than the
Seller or an Affiliate of the Seller has been designated by the Agent, in
payment of the accrued Servicing Fee payable to such Person with respect to
such Percentage Interest, third, in reduction of Purchase Price of such
Percentage Interest, fourth, in payment of other amounts payable to such
Owner, and fifth, to the Servicer (if the Seller or an Affiliate of the
Seller), in payment of the accrued Servicing Fee payable to such Person with
respect to such Percentage Interest. Following the Collection Date, the
Servicer shall pay to the Seller any remaining Collections set aside and held
by the Servicer pursuant to the first sentence of this Section 2.07.
SECTION 2.08. Deemed Collections of Receivables. If on any day
the Outstanding Balance of any Receivable is either (a) reduced or adjusted
as a result of any defective, rejected, returned, repossessed or foreclosed
merchandise, any defective, disputed, or rejected services, any discount or
any other adjustment made or performed by the Seller or any other Person
(including, without limitation, those described in the definition of
"Dilution Factors") or (b) reduced or cancelled as a result of a setoff in
respect of any claim by the Obligor thereof against the Seller or any other
Person (whether such claim arises out of the same or a related transaction or
an unrelated transaction), the Seller shall be deemed to have received on
such day a Collection of such Receivable in the amount of such reduction,
cancellation or adjustment. If on any day any of the representations or
warranties in Section 4.01(h) are no longer true with respect to a
Receivable, the Seller shall be deemed to have received on such day a
Collection of such Receivable in full. If on any day the representation and
warranty in Section 4.01(i) is no longer true the Seller shall immediately
pay to the Agent, for the benefit of the Owners, an amount sufficient to make
such representation true and accurate.
SECTION 2.09. Payments and Computations, Etc. (a) All amounts to
be paid or deposited by the Seller or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 11:00 A.M. (New
York City time) on the day when due in lawful money of the United States in
immediately available funds to the Agent's Account. Each of the Seller and
the Servicer shall, to the extent permitted by law, pay to the Agent interest
on all amounts not paid or deposited by it when due hereunder at 2.0% per
annum above the Base Rate as then in effect, payable on demand; provided,
however, that such interest rate shall not at any time exceed the maximum
rate permitted by applicable law. Such interest shall be retained by the
Agent except to the extent that such failure to make a timely payment or
deposit has continued beyond the date for distribution by the Agent of such
overdue amount to the Owner of a Percentage Interest, in which case such
interest accruing after such date shall be for the account of, and
distributed by the Agent to the Owners ratably in accordance with their
respective interests in such overdue amount.
All computations of interest and all computations of Yield,
Liquidation Yield, and fees hereunder shall be made on the basis of a year of
360 days (other than with respect to any of the foregoing computations made
with respect to the Base Rate, which computations shall be made on the basis
of a 365 or, in the case of a leap year, 366-day year) for the actual number
of days (including the first but excluding the last day) elapsed.
(b) Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of Yield, interest or any fee payable
hereunder, as the case may be; provided, however, that, if such extension
would cause payment of Yield on, or Purchase Price of, any Percentage
Interest on which Yield accrues at the Eurodollar Rate to be made in the next
following month, such payment shall be made on the next preceding Business
Day.
(c) If any purchase of a Percentage Interest requested by the
Seller and approved by the Purchaser and the Agent pursuant to Section
2.01(b) or any selection of a subsequent Purchase Period and applicable Yield
Rate for any Percentage Interest requested by the Seller and approved by the
Agent pursuant to Section 2.01(d) is, for any reason whatsoever, not made or
effectuated, as the case may be, on the date specified therefor, the Seller
shall indemnify the relevant Owner against any loss, cost or expense incurred
by such Owner, including, without limitation, any loss (including loss of
anticipated profits, net of anticipated profits in the reemployment of such
funds in the manner determined by such Owner), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Owner to fund or maintain such Percentage Interest during such
Purchase Period.
SECTION 2.10. Fees. (a) The Seller shall pay the Purchaser and
the Agent certain fees in the amounts and on the dates set forth in a fee
letter executed among the Seller, the Agent and the Purchaser.
(b) Each Owner shall pay to the Servicer a collection fee (the
"Servicing Fee") of (i) for so long as the Seller or an Affiliate of the
Seller shall be acting as the Servicer, one-quarter of 1% per annum of the
average daily amount of Purchase Price of each Percentage Interest, and (ii)
from and after the designation by the Agent of a Servicer other than the
Seller or an Affiliate of the Seller, one percent (1.0%) per annum of the
average daily amount of Purchase Price of each Percentage Interest, in each
case, from the date hereof until the later of the Termination Date or the
date on which all Percentage Interests are reduced to zero, payable on the
last day of each Purchase Period for such Percentage Interest; provided,
however, that, upon three Business Days' notice to the Agent, the Servicer
(if other than the Seller or an Affiliate of the Seller) may elect to be
paid, as such fee, another percentage per annum of the average daily amount
of Purchase Price of each such Percentage Interest, but in no event in excess
of 110% of the costs and expenses referred to in Section 6.03; and provided,
further, that such fee shall be payable only from Collections pursuant to,
and subject to the priority of payment set forth in, Sections 2.05 and 2.07.
SECTION 2.11. Breakage Fee and Indemnity. (a) In the event there
shall occur a reduction of the Purchase Price of any Percentage Interest or
the termination of the Purchase Period to which such Purchase Price was
allocated, in either case, prior to the date upon which the applicable
Purchase Period was originally scheduled to end, whether pursuant to Section
2.04, 2.06, 2.07, 2.08, 7.01 or otherwise, the Seller shall pay to the Agent,
for the benefit of the Owner of such Percentage Interest, upon such Owner's
demand therefor, a fee (the "Breakage Fee") equal to, in the case of any
reduction of the Purchase Price allocated to a Purchase Period or the early
termination of any such Purchase Period, the excess, if any, of (1) the Yield
that would have accrued during the remainder of such Purchase Period
subsequent to the date of such reduction or termination on that portion of
the Purchase Price allocated to such Purchase Period which is so reduced or
terminated early (such amount being the "Reduction Amount"), had not such
reduction or termination occurred, over (2) the sum of (a) to the extent the
Reduction Amount is allocated to another Purchase Period or Purchase Periods,
the Yield actually accrued on that portion of the Reduction Amount so
allocated during the remainder of such Purchase Period(s), and (b) to the
extent the Reduction Amount is not allocated to another Purchase Period, the
income, if any, actually received by such Owner from investing the portion of
the Reduction Amount not so allocated.
(b) In addition to paying the Breakage Fee as aforesaid, the
Seller shall indemnify and hold the Owners harmless for all losses, costs,
liabilities and expenses which such Owner may incur as a result of the early
reduction of the Purchase Price allocated to any Purchase Period or the early
termination of any such Purchase Period and in respect of which such Owner is
not compensated by the payment of the applicable Breakage Fee in respect
thereof.
SECTION 2.12. Sharing of Payments, Etc. If any Owner shall obtain
any payment (whether voluntary, involuntary, through the exercise of any
right of setoff, or otherwise) on account of Percentage Interests owned by it
(other than pursuant to Section 2.10(a), 2.14, 2.15 or 9.01 and other than as
a result of the differences in the timing of the applications of Collections
pursuant to Section 2.05, 2.06 or 2.07) in excess of its ratable share of
payments on account of Percentage Interests obtained by all of the Owners,
such Owner shall forthwith purchase from the other Owners such participations
in the Percentage Interests owned by them as shall be necessary to cause such
purchasing Owner to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Owner, such purchase from each
Owner shall be rescinded and each such Owner shall repay to the purchasing
Owner the purchase price paid by such purchasing Owner for such participation
to the extent of such recovery, together with an amount equal to such Owner's
ratable share (according to the proportion of (a) the amount of such Owner's
required payment to (b) the total amount so recovered from the purchasing
Owner) of any interest or other amount paid or payable by the purchasing
Owner in respect of the total amount so recovered.
SECTION 2.13. Eurodollar Rate Protection; Illegality.
(a) If the Agent is unable to obtain on a timely basis the
information necessary to determine the Eurodollar Rate for any Percentage
Interest for any Purchase Period in respect of which Yield is to accrue at
the Eurodollar Rate, then
(i) the Agent shall forthwith notify the Purchaser, the Owners and
the Seller that the interest rate cannot be determined for such
Percentage Interest for such Purchase Period, and
(ii) while such circumstances exist, the Agent shall not allocate
the Purchase Price of any additional Percentage Interest purchased
during such period or reallocate the Purchase Price allocated to any
Purchase Period ending during such period, to any Purchase Period in
respect of which Yield is to accrue at the Eurodollar Rate.
(b) If, with respect to any Percentage Interest which accrues
Yield at the Eurodollar Rate, the Purchaser or any of the applicable Owners
thereof, as the case may be, notifies the Agent that it is unable to obtain
matching deposits in the London interbank market to fund its purchase or
maintenance of such Percentage Interest or that the Eurodollar Rate
applicable to such Percentage Interest for any Purchase Period will not
adequately reflect the cost to the Purchaser or such Owner, as the case may
be, of funding or maintaining its respective Percentage Interest for such
Purchase Period, then the Agent shall forthwith so notify the Seller,
whereupon the Agent shall not, while such circumstances exist, allocate the
Purchase Price of any additional Percentage Interest purchased during such
period or reallocate the Purchase Price allocated to any Purchase Period
ending during such period, to any Purchase Period in respect of which Yield
is to accrue at the Eurodollar Rate.
(c) Notwithstanding any other provision of this Agreement, if the
Purchaser or any Owner shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that it
is unlawful, for the Purchaser or such Owner, as the case may be, to fund its
purchases or maintenance of Percentage Interests at the Eurodollar Rate, then
(i) as of the effective date of such notice from the Purchaser or such Owner,
as the case may be, to the Agent, the obligation or ability of the Purchaser
or such Owner, as the case may be, to fund its purchase or maintenance of
Percentage Interests at the Eurodollar Rate shall be suspended until the
Purchaser or such Owner, as the case may be, notifies the Agent that the
circumstances causing such suspension no longer exist and (ii) the Purchase
Price of each Percentage Interest of the Purchaser or such Owner allocated to
a Purchase Period which accrues interest at the Eurodollar Rate shall either
(a) if the Purchaser or such Owner, as the case may be, may lawfully continue
to maintain such Percentage Interest until the last day of the applicable
Purchase Period, be reallocated on the last day of such Purchase Period to
another Purchase Period in respect of which the Purchase Price allocated
thereto accrues Yield at a Yield Rate other than the Eurodollar Rate or (b)
if the Purchaser or such Owner, as the case may be, shall determine that it
may not lawfully continue to maintain such Percentage Interest until the end
of the applicable Purchase Period (at which time it may be reallocated to
another Purchase Period in accordance with Section 2.01(d) and this Section
2.13(c)), be deemed to accrue Yield at the Base Rate from the effective date
of such notice until the end of such Purchase Period.
SECTION 2.14. Increased Costs; Capital Adequacy. (a) If, due to
either (i) the introduction of or any change (other than any change by way of
imposition or increase of reserve requirements included in the Eurodollar
Reserve Percentage) in or in the interpretation of, any law or regulation or
(ii) the compliance with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law), there
shall be any increase in the cost to the Agent, any Owner or any Affiliate
thereof (each of which shall be an "Affected Party") of agreeing to make,
making or funding purchases of and/or reinvestments in Percentage Interests
hereunder or maintaining Percentage Interests hereunder, then the Seller
shall from time to time, upon demand by such Affected Party, pay to such
Affected Party additional amounts sufficient to compensate such Affected
Party for any such increased costs.
(b) If either (i) the introduction of, or any change in or in the
interpretation of, any law or regulation or (ii) the compliance by any
Affected Party with any guideline or request from any central bank or other
governmental authority issued after the date of this Agreement (whether or
not having the force of law), affects or would affect the amount of capital
required or expected to be maintained by such Affected Party, and such
Affected Party determines that the amount of such capital is increased by or
based upon its obligations hereunder or its purchasing and maintaining
Percentage Interests hereunder or, in each case, under similar financial
arrangements of this type, then, upon demand by such Affected Party (with a
copy of such demand to the Agent), the Seller shall pay to the Agent for the
account of such Affected Party, from time to time as specified by such
Affected Party, additional amounts sufficient to compensate such Affected
Party in the light of such circumstances, to the extent that such Affected
Party reasonably determines such increase in capital to be allocable to such
Affected Party's obligations hereunder or its purchasing, funding or
maintaining Percentage Interests hereunder.
(c) If as a result of any event or circumstance similar to those
described in Section 2.14(a) or 2.14(b), any Affected Party is required to
compensate a bank or other financial institution providing liquidity support,
credit enhancement or other similar support to such Affected Party in
connection with this Agreement or the funding or maintenance of purchases of
Percentage Interests hereunder, then upon demand by such Affected Party (with
a copy of such demand to the Agent), the Seller shall pay to such Affected
Party such additional amount or amounts as may be necessary to reimburse such
Affected Party for any amounts paid by it.
(d) In determining any amount provided for in this Section 2.14,
the Affected Party may use any reasonable averaging and attribution methods.
Any Affected Party making a claim under this Section 2.14 shall submit to the
Seller a certificate as to such additional or increased cost or reduction,
which certificate shall be conclusive absent demonstrable error.
SECTION 2.15. Taxes. (a) Any and all payments by the Seller or
the Servicer hereunder shall be made, in accordance with Section 2.09, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of the Purchaser, each Owner and
the Agent, Excluded Taxes for such Person (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes". If the Seller or the Servicer shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Owner or the Agent, (i) the Seller shall make an additional
payment to such Owner or the Agent, as the case may be, in an amount
sufficient so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.15),
such Owner or the Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Seller
or the Servicer, as the case may be, shall make such deductions and (iii) the
Seller or the Servicer, as the case may be, shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Seller agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement (hereinafter referred to as "Other Taxes").
(c) The Seller will indemnify each Owner and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.15) paid by such Owner or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto; provided that an Owner or the Agent, as appropriate,
making a demand for indemnity payment shall provide the Seller, at its
address referred to in Section 10.02, with a certificate from the relevant
taxing authority or from a responsible officer of such Owner or the Agent
stating or otherwise evidencing that such Owner or the Agent has made payment
of such Taxes or Other Taxes and will provide a copy of or extract from
documentation, if available, furnished by such taxing authority evidencing
assertion or payment of such Taxes or Other Taxes. This indemnification
shall be made within ten days from the date such Owner or the Agent (as the
case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes, the Seller or the Servicer, as the case may be, will furnish to the
Agent, at its address referred to in Section 10.02, appropriate evidence of
payment thereof.
(e) The Agent and each Owner that is not created or organized
under the laws of the United States or a political subdivision thereof shall,
to the extent that it may then do so under applicable laws and regulations,
deliver to the Seller (with, in the case of each Owner, a copy to the Agent)
(i) within 15 days after the date hereof, or, if later, the date on which
such Owner becomes an Owner pursuant to Section 10.04 hereof, two (or such
other number as may from time to time be prescribed by applicable laws or
regulations) duly completed copies of IRS Form 4224 or Form 1001 (or any
successor forms or other certificates or statements which may be required
from time to time by the relevant United States taxing authorities or
applicable laws or regulations), as appropriate, to permit the Seller to make
payments hereunder for the account of the Agent or such Owner, as the case
may be, without deduction or withholding of United States federal income or
similar taxes and (ii) upon the obsolescence of, or after the occurrence of
any event requiring a change in, any form or certificate previously delivered
pursuant to this Section 2.15(e), copies (in such numbers as may from time to
time be prescribed by applicable laws or regulations) of such additional,
amended or successor forms, certificates or statements as may be required
under applicable laws or regulations to permit the Seller to make payments
hereunder for the account of the Agent or such Owner, as the case may be,
without deduction or withholding of United States federal income or similar
taxes.
(f) For any period with respect to which an Owner or the Agent has
failed to provide the Seller with the appropriate form, certificate or
statement described in Section 2.15(e) (other than if such failure is due to
a change in law occurring after the date of this Agreement), the Agent or
such Owner, as the case may be, shall not be entitled to indemnification
under Section 2.15(a), 2.15(b) or 2.15(c) with respect to Taxes imposed by
the United States.
(g) Within 30 days of the written request of the Seller therefor,
the Agent and each Owner, as appropriate, shall execute and deliver to the
Seller such certificates, forms or other documents which can be furnished
consistent with the facts and which are reasonably necessary to assist the
Seller in applying for refunds of taxes remitted hereunder.
(h) If, in connection with an agreement or other document
providing liquidity support, credit enhancement or other similar support to
any Owner in connection with this Agreement or the funding or maintenance of
purchases of Percentage Interests hereunder, such Owner is required to
compensate a bank or other financial institution in respect of taxes under
circumstances similar to those described in this Section 2.15 then, within
ten days after demand by such Owner, the Seller shall pay to such Owner such
additional amount or amounts as may be necessary to reimburse such Owner for
any amounts paid by it.
(i) Without prejudice to the survival of any other agreement of
the Seller hereunder, the agreements and obligations of the Seller contained
in this Section 2.15 shall survive the termination of this Agreement.
SECTION 2.16. Security Interest. The Seller hereby grants to the
Purchaser, for its own benefit and for the ratable benefit of the Agent and
each of the Owners, a security interest in (i) all of the Seller's interests
in the Receivables, the Related Security, and the Collections, (ii) the
Collection Account and all funds therein and all investments and other items
therein or attributable thereto, and (iii) all proceeds of the foregoing (the
items described in items (i), (ii) and (iii) being the "Collateral"), to
secure payment of all fees and expenses, indemnity obligations and all other
obligations owed hereunder to the Agent and/or the Owners by the Seller or
the Servicer. It is understood and agreed that this Section 2.16 does not
secure or guaranty the obligations of an Obligor to pay any Receivable. The
immediately preceding sentence shall not limit the extent to which any other
provision of this Agreement creates a claim against the Seller or the
Servicer in respect of any Receivable (for reasons other than the Obligor's
credit problems), or limit the extent to which the Collateral secures such
claim.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The
initial purchase hereunder is subject to the condition precedent that the
Agent shall have received on or before the date of such purchase the items
listed in Schedule I, each (unless otherwise indicated) dated as of the date
of delivery (provided that such date is no later than the date of the initial
purchase), in form and substance satisfactory to the Agent and the
Purchasers.
SECTION 3.02. Conditions Precedent to All Purchases and
Reinvestments. Each purchase (including the initial purchase) from the
Seller by the Purchaser and the right of the Servicer to reinvest in Eligible
Receivables on behalf of the Purchaser those Collections allocable to a
Percentage Interest pursuant to Section 2.05 shall be subject to the further
conditions precedent that: (a) with respect to any such purchase (other than
the initial purchase), on or prior to the date of such purchase, the Servicer
shall have delivered to the Agent, in form and substance satisfactory to the
Agent, a completed Investor Report dated within ten days prior to the date of
such purchase and containing such additional information as may be reasonably
requested by the Agent; (b) on the date of such purchase or reinvestment the
following statements shall be true and the Seller by accepting the amount of
such purchase or by receiving the proceeds of such reinvestment shall be
deemed to have certified that:
(i) The representations and warranties contained in
Section 4.01 (other than Excluded Representations) and Section 4.02 are
correct on and as of such day as though made on and as of such date, and
(ii) No event or condition has occurred and is continuing, or
would result from such purchase or reinvestment, which would (a) cause
the Termination Date to occur or (b) constitute an Event of Termination
or would constitute an Event of Termination but for the requirement that
notice be given or time elapse or both, and
(iii) The Seller's senior secured debt shall be rated at least
the Required Rating, and
(iv) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or governmental
body, agency or instrumentality shall prohibit or enjoin, the making of
such purchase or reinvestment by the Purchaser or any applicable Owner
in accordance with the provisions hereof, and
(c) the Agent shall have received such other approvals, opinions or documents
as the Agent may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller. The
Seller represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of Massachusetts and is duly
qualified to do business, and is in good standing, in every other
jurisdiction in which the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the Seller of this
Agreement and all other documents to be delivered by it hereunder, including
the Seller's use of the proceeds of purchases and reinvestments, are within
the Seller's corporate powers, have been duly authorized by all necessary
corporate action, do not contravene (i) the Seller's charter or by-laws,
(ii) any law, rule or regulation applicable to the Seller, (iii) any
contractual restriction binding on or affecting the Seller or its property or
(iv) any order, writ, judgment, award, injunction or decree binding on or
affecting the Seller or its property, and do not result in or require the
creation of any lien, security interest or other charge or encumbrance upon
or with respect to any of its properties (other than in favor of the Agent
for the benefit of the Owners with respect to the Receivables and the Related
Security and Collections associated therewith); and no transaction
contemplated hereby requires compliance with any bulk sales act or similar
law. The Agreement 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 this
Agreement or any other document or instrument to be delivered hereunder,
except for the filing of the UCC financing statements described in Schedule
I.
(d) This Agreement and each other document or instrument delivered
by it hereunder constitutes the legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms.
(e) The consolidated balance sheets of each of the Parent and the
Seller as at December 31, 1995, and the related statements of income,
shareholders' equity and cash flows for the fiscal year then ended, copies of
which have been furnished to the Agent, fairly present the consolidated
financial condition of the Parent and Seller and their consolidated
subsidiaries as at such date and the consolidated results of the operations
of the Parent, the Seller and their consolidated subsidiaries for the period
ended on such date, all in accordance with GAAP, since December 31, 1995, and
except as disclosed in the Public Disclosure Documents, there has been no
change in any such condition or operations which has had, or could reasonably
be expected to have, a Material Adverse Effect. Since December 31, 1995, and
except as disclosed in the Public Disclosure Documents, there has been no
change in any such condition or operations that has had, or reasonably could
be expected to have, a material adverse effect on the operations or financial
condition of the Parent.
(f) Except as disclosed in the Public Disclosure Documents, (i)
there is no pending or threatened action or proceeding affecting the Parent,
the Seller or any of their subsidiaries before any court, governmental agency
or arbitrator that has had, or reasonably could be expected to have, a
Material Adverse Effect, (ii) none of the Parent, the Seller nor any of their
subsidiaries is in default with respect to any order of any court, arbitrator
or governmental body except for defaults with respect to orders of
governmental agencies which defaults are not material to the business or
operations of the Seller or any subsidiary and have not had (and cannot
reasonably be expected to have) a Material Adverse Effect, and (iii) no other
condition exists that has caused, or could reasonably be expected to cause, a
Material Adverse Effect. Except as disclosed in the Public Disclosure
Documents, (i) there is no pending or threatened action or proceeding
affecting the Parent or any of its subsidiaries before any court,
governmental agency or arbitrator that has had, or could reasonably be
expected to have, a Material Parent Effect, and (ii) neither the Parent nor
any of its subsidiaries is in default with respect to any order of any court,
arbitrator or governmental body except for defaults with respect to orders of
governmental agencies which defaults are not material to the business or
operations of the Parent or any subsidiary and has not had (and cannot
reasonably be expected to have) a Material Parent Effect.
(g) No proceeds of any purchase of Percentage Interests will be
used by the Seller to acquire any security in any transaction which is
subject to Section 13 or 14 of the Securities Exchange Act of 1934, as
amended.
(h) Each Receivable, together with any contract related thereto,
and the Collateral shall, at all times, be owned by the Seller free and clear
of any Adverse Claim except as created by this Agreement, and upon each
purchase and reinvestment, the Owner making such purchase or reinvestment, as
the case may be, shall acquire a valid and perfected first priority undivided
percentage ownership interest to the extent of the pertinent Percentage
Interest in each Receivable then existing or thereafter arising and in the
Related Security (other than Security Deposits) and Collections with respect
thereto, free and clear of any Adverse Claim except as provided hereunder.
No effective financing statement or other instrument similar in effect
covering any Receivable, the Related Security, the Collections or the
Collateral with respect thereto shall at any time be on file in any recording
office except such as may be filed in favor of the Purchaser relating to this
Agreement.
(i) At all times on or prior to the Termination Date, the Coverage
Ratio shall equal or exceed 102%.
(j) No Investor Report, information, exhibit, financial statement,
document, book, record or report furnished or to be furnished by the Seller
or the Servicer to the Agent or any Owner in connection with this Agreement
is or will be inaccurate in any material respect as of the date it is or
shall be dated or (except as otherwise disclosed to the Agent or such Owner,
as the case may be, at such time) as of the date so furnished, and no such
document contains or will contain any material misstatement of fact or omits
or shall omit to state a material fact or any fact necessary to make the
statements contained therein not misleading. Any Receivable described as an
Eligible Receivable in any Investor Report or such other information,
exhibit, financial statement, document, book, record or report satisfies the
requirements of the definition of "Eligible Receivable." The Seller and the
Servicer have management information systems that are adequate to generate
reliable statistical information with respect to the Receivables, including
such information as is required to be delivered pursuant to the terms of this
Agreement.
(k) The principal place of business and chief executive office of
the Seller and the offices where the Seller keeps all of the Records are
located at the addresses specified in Schedule IV (or at such other locations
as to which the notice and other requirements specified in Section 6.09 shall
have been satisfied). The Seller has places of business in more than one
town in Massachusetts.
(l) Obligors have been (or, in the case of Obligors on Unbilled
Receivables, will be) instructed to make all payments in respect of
Receivables to the Seller's post office box in Hartford, Connecticut, and
such payments are (i) processed by the Servicer in Wethersfield, Connecticut
and (ii) deposited to the Collection Account within one Business Day of the
Servicer's receipt thereof. No funds other than Collections are or will be
deposited to the Collection Account, provided that the location of such post
office box and/or such processing, and the identity of the Collection Account
may be changed with the consent of the Agent, upon 30 days' prior written
notice to the Agent, if (i) the requirements of Section 6.09 are satisfied,
(ii) the Collection Account continues to be a single-purpose account into
which Collections (and no other funds) are deposited, (iii) the Collection
Account continues to be in the name of the Purchaser, and under the exclusive
ownership and control of the Purchaser, and (iv) the bank at which the
Collection Account is maintained shall have received, executed and returned a
Bank Notice.
(m) All Obligors (other than Obligors in respect of Unbilled
Receivables) are listed on the General Trial Balance. The Seller's
methodology for determining the Outstanding Balance of Unbilled Receivables
is accurately described in Exhibit B, and such description does not omit any
fact necessary to make the statements contained therein not misleading. The
Outstanding Balance of Unbilled Receivables shall be calculated in accordance
with the methodology described in Exhibit B.
(n) Except as described in Schedule III, the Seller has no trade
names, fictitious names, assumed names or "doing business as" names other
than those names with respect to which it has satisfied its obligations under
Section 6.09.
(o) The Seller has assets which are greater than the amount of its
liabilities, and is able to pay its debts as they become due.
(p) The terms of the Receivables have not been extended or
modified, except as permitted under the Credit and Collection Policy.
(q) The Credit and Collection Policy has not been materially
changed in any way which might reasonably lead to a Material Adverse Effect.
SECTION 4.02. Representations and Warranties of the Servicer. The
Servicer represents and warrants as follows:
(a) The Servicer is a corporation duly incorporated, validly
existing and in good standing under the laws of Massachusetts and is duly
qualified to do business, and is in good standing, in every other
jurisdiction in which the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the Servicer of
this Agreement and all other documents to be delivered by it hereunder are
within the Servicer's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene (i) the Servicer's charter or
by-laws, (ii) any law, rule or regulation applicable to the Servicer,
(iii) any contractual restriction binding on or affecting the Servicer or its
property or (iv) any order, writ, judgment, award, injunction or decree
binding on or affecting the Servicer or its property, and do not result in or
require the creation of any lien, security interest or other charge or
encumbrance upon or with respect to any of its properties. The Agreement has
been duly executed and delivered by the Servicer.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by the Servicer of this
Agreement or any other document or instrument to be delivered hereunder.
(d) This Agreement and each other document or instrument delivered
by it hereunder constitutes the legal, valid and binding obligation of the
Servicer enforceable against the Servicer in accordance with its terms.
(e) No Investor Report (if prepared by the Servicer, or to the
extent that information contained therein is supplied by the Servicer),
information, exhibit, financial statement, document, book, record or report
furnished or to be furnished by the Servicer to the Agent or any Owner in
connection with this Agreement is or will be inaccurate in any material
respect as of the date it is or shall be dated or (except as otherwise
disclosed to the Agent or such Owner, as the case may be, at such time) as of
the date so furnished, and no such document contains or will contain any
material misstatement of fact or omits or shall omit to state a material fact
or any fact necessary to make the statements contained therein not
misleading.
(f) All Obligors (other than Obligors in respect of Unbilled
Receivables) are listed on the General Trial Balance. The Seller's
methodology for determining the Outstanding Balance of Unbilled Receivables
is accurately described in Exhibit B, and such description does not omit any
fact necessary to make the statements contained therein not misleading. The
Outstanding Balance of Unbilled Receivables shall be calculated in accordance
with the methodology described in Exhibit B.
(g) The terms of the Receivables have not been extended or
modified, except as permitted under the Credit and Collection Policy.
(h) The Credit and Collection Policy has not been materially
changed in any way which might reasonably lead to a Material Adverse Effect.
(i) The Servicer has management information systems that are
adequate to generate reliable statistical information with respect to the
Receivables, including such information as is required to be delivered
pursuant to the terms of this Agreement.
ARTICLE V
GENERAL COVENANTS OF THE SELLER AND THE SERVICER
SECTION 5.01. General Seller Covenants. The Seller covenants as
follows:
(a) Compliance with Laws; Preservation of Corporate Existence.
The Seller will comply in all material respects with all applicable laws, and
all governmental rules, regulations and orders and preserve and maintain its
corporate existence, rights, franchises, qualifications and privileges, in
each case to the extent that the failure to do so could reasonably be
expected to cause a Material Adverse Effect.
(b) Sales, Liens, Etc. Except as otherwise provided herein, the
Seller will not sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Adverse Claim upon or with
respect to, any Receivable, the related contract (if any), any Collections,
any Related Security or the Collateral, or upon or with respect to any other
account to which any Collections of any Receivable are sent, or assign any
right to receive income in respect thereof.
(c) General Reporting Requirements. The Seller will provide (or
cause the Servicer to provide) to the Agent (in sufficient copies for each
Owner) the following:
(i) as soon as available and in any event within 50 days
after the end of each of the first three quarters of each fiscal year of
the Seller, a copy of the Seller's Quarterly Report on Form 10-Q
submitted to the Securities and Exchange Commission with respect to such
quarter, containing financial statements in reasonable detail and duly
certified (subject to year-end audit adjustments) by the chief financial
officer, chief accounting officer, Treasurer or Assistant Treasurer of
the Seller as having been prepared in accordance with GAAP and on a
basis consistent with the financial statements referred to in Section
4.01(e); and
(ii) as soon as available and in any event within 105 days after
the end of each fiscal year of the Seller, a copy of the Seller's Annual
Report on Form 10-K submitted to the Securities and Exchange Commission
with respect to such year, containing financial statements certified by
a nationally-recognized independent public accountant acceptable to the
Agent;
(iii) promptly after the sending or filing thereof, copies of all
reports which the Seller sends to any of its public securityholders and
copies of all reports and registration statements which the Seller files
with the Securities and Exchange Commission or any national securities
exchange other than registration statements relating to employee benefit
plans and to registrations of securities for selling securityholders;
(iv) promptly after the filing or receiving thereof, copies of all
reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which the Seller or any subsidiary of the Seller
files under ERISA with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor or which
the Seller or any subsidiary of the Seller receives from such
Corporation;
(v) as soon as possible and in any event within two days
after the occurrence of each Event of Termination or each event which,
with the giving of notice or lapse of time or both, would constitute an
Event of Termination, a statement of the chief financial officer, chief
accounting officer, Treasurer or any Assistant Treasurer of the Seller
setting forth details of such Event of Termination or event and the
action which the Seller has taken and proposes to take with respect
thereto; provided, that in the case of an event described in Section
7.01(f), such statement shall be provided to the Agent immediately;
(vi) promptly following the Agent's request therefor, such other
information respecting the Receivables or the conditions or operations,
financial or otherwise, of the Parent, the Seller, the Servicer or any
of their subsidiaries as the Agent may from time to time reasonably
request in writing in order to protect the interests of the Agent or any
Owner in connection with this Agreement;
(vii) to the extent not otherwise provided pursuant to the
immediately foregoing clauses (i)-(vi), promptly after the sending or
receipt thereof, copies of all reports and notices (other than routine
borrowing requests and confirmations under established lines) which the
Seller sends to or receives from any creditor or group of creditors of
the Seller or any representative or agent for any creditor or group of
creditors of the Seller, in each case, in respect of which the Debt
owing to such creditor or group of creditors exceeds $10,000,000 in the
aggregate; and
(viii) together with the quarterly and annual financial
statements to be delivered by the Seller pursuant to the immediately
preceding clauses (i) and (ii) respectively, a certificate from the
Seller's chief financial officer, chief accounting officer, Treasurer or
any Assistant Treasurer, in the case of the quarterly financial
statements, and independent certified public accountants, in the case of
the annual financial statements, stating, in each case, (a) that such
Person is familiar with the terms of this Agreement and that in
examining such financial statements, such Person did not become aware of
any fact or condition which would constitute (or which with the giving
of notice or passage of time, or both, would constitute) an Event of
Termination, except for those, if any, described in reasonable detail in
such certificate and (b) that, as of the date of such financial
statements, the representation and warranty of the Seller set forth in
Section 4.01(i) is true and correct.
(d) Merger, Etc. The Seller will not merge or consolidate with,
or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions), all or substantially all of its
assets (whether now owned or hereafter acquired), or acquire all or
substantially all of the assets or capital stock or other ownership interest
of any Person (any such transaction, acquisition or other action hereinafter
referred to as a "Reorganization"), except that the Seller may enter into a
Reorganization if the following conditions are satisfied:
(i) the survivor (such term referring to the survivor of a merger
or consolidation as well as the acquirer of assets, capital stock or
other ownership interests) of such Reorganization is organized under the
laws of, and is resident in, the United States or one of the states
therein;
(ii) the senior secured debt of such survivor shall be rated at
least BBB- by Standard & Poor's and Baa2 by Moody's;
(iii) if the Seller is not the survivor of the Reorganization, such
survivor shall have assumed all of the obligations of the Seller under
or in connection with this Agreement pursuant to an agreement in form
and substance satisfactory to the Agent;
(iv) if the Seller is not the survivor of the Reorganization, the
Agent shall have received opinions of counsel satisfactory to the Agent
with respect to the matters described in the forms of opinion attached
hereto as Exhibits E-1 and E-2, and any modifications or additions to
Uniform Commercial Code filings or other security arrangements requested
by the Agent shall have been completed; and
(v) each of Standard & Poor's and Moody's shall have confirmed
that such merger or consolidation will not cause the ratings of the
Purchaser's commercial paper notes to be reduced or withdrawn.
(e) Accounting of Purchases. In its financial statements, the
Seller will account for the transactions contemplated hereby as sales of the
Percentage Interests by the Seller to the Owners.
(f) ERISA Matters. The Seller will not (i) engage or permit any
ERISA Affiliate to engage in any prohibited transaction (as defined in
Section 4975 of the Code and Section 406 of ERISA) for which an exemption is
not available or has not previously been obtained from the United States
Department of Labor; (ii) permit to exist any accumulated funding deficiency
(as defined in Section 302(a) of ERISA and Section 412(a) of the Code) or
funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (iii) fail to make any payments to any Multiemployer Plan
that the Seller or any ERISA Affiliate may be required to make under the
agreement relating to such Multiemployer Plan or any law pertaining thereto;
(iv) terminate any Benefit Plan so as to result in any liability; or
(v) permit to exist any occurrence of any reportable event described in Title
IV of ERISA which represents a material risk of a liability of the Seller or
any ERISA Affiliate under ERISA or the Code, if such prohibited transactions,
accumulated funding deficiencies, payments, terminations and reportable
events occurring within any fiscal year of the Seller, in the aggregate,
involve a payment of money or an incurrence of liability by the Seller or any
ERISA Affiliate in an amount in excess of $100,000,000.
(g) Marking of Records. At its expense, the Seller will mark (or
cause the Servicer to mark) its master data processing records relating to
the Receivables so that reports generated from such records include the
following legend:
UNDIVIDED FRACTIONAL OWNERSHIP INTERESTS IN THE RECEIVABLES
DESCRIBED HEREIN HAVE BEEN SOLD BY WESTERN MASSACHUSETTS ELECTRIC
COMPANY TO MONTE ROSA CAPITAL CORPORATION PURSUANT TO A RECEIVABLES
PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 11, 1996, AS THE SAME
MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AMONG WESTERN
MASSACHUSETTS ELECTRIC COMPANY, MONTE ROSA CAPITAL CORPORATION AND
UNION BANK OF SWITZERLAND, NEW YORK BRANCH, AS AGENT.
(h) The Seller will cause the representation in Section 4.01(l) to
be true at all times.
SECTION 5.02 Servicer Covenants. The Servicer covenants as
follows:
(a) Compliance with Laws; Preservation of Corporate Existence.
The Servicer will comply in all material respects with all applicable laws,
and all governmental rules, regulations and orders and preserve and maintain
its corporate existence, rights, franchises, qualifications and privileges,
in each case to the extent that the failure to do so could reasonably be
expected to cause a Material Adverse Effect.
(b) Merger, etc. The Servicer will not merge or consolidate with,
or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions), all or substantially all of its
assets (whether now owned or hereafter acquired), or acquire all or
substantially all of the assets or capital stock or other ownership interest
of any Person (any such transaction, acquisition or other action hereinafter
referred to as a "Reorganization"), except that the Servicer may enter into a
Reorganization if the following conditions are satisfied:
(i) the survivor (such term referring to the survivor of a merger
or consolidation as well as the acquirer of assets, capital stock or
other ownership interests) of such Reorganization is organized under the
laws of, and is resident in, the United States or one of the states
therein;
(ii) the senior secured debt of such survivor shall be rated at
least BBB- by Standard & Poor's and Baa2 by Moody's;
(iii) if the Servicer is not the survivor of the Reorganization,
such survivor shall have assumed all of the obligations of the Servicer
under or in connection with this Agreement pursuant to an agreement in
form and substance satisfactory to the Agent;
(iv) if the Servicer is not the survivor of the Reorganization, the
Agent shall have received opinions of counsel satisfactory to the Agent
with respect to the matters described in the forms of opinion attached
hereto as Exhibits E-1 and E-2, mutatis mutandis, and any modifications
or additions to Uniform Commercial Code filings or other security
arrangements requested by the Agent shall have been completed; and
(v) each of Standard & Poor's and Moody's shall have confirmed
that such merger or consolidation will not cause the ratings of the
Purchaser's commercial paper notes to be reduced or withdrawn.
(c) Marking of Records. At its expense, the Servicer will mark
its master data processing records relating to the Receivables so that
reports generated from such records include the legend described in Section
5.01(g).
ARTICLE VI
ADMINISTRATION, COLLECTION AND MONITORING OF RECEIVABLES
SECTION 6.01. Appointment and Designation of the Servicer. The
Seller, the Purchaser, the Owners and the Agent hereby appoint the Person
(the "Servicer") designated by the Agent from time to time pursuant to this
Section 6.01, as their agent to service, administer and collect the
Receivables and otherwise to enforce their respective rights and interests in
and under the Receivables, the Related Security and any contracts between the
Seller and an Obligor. The Servicer's authorization under this Agreement
shall terminate on the Collection Date. Until the Agent gives notice to the
Seller of a designation of a new Servicer, WMECO is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Servicer pursuant
to the terms hereof. The Agent may, upon the occurrence of a Servicer
Default or other Event of Termination, designate as Servicer any Person to
succeed WMECO any successor Servicer, on the condition in each case that any
such Person so designated shall agree to perform the duties and obligations
of the Servicer pursuant to the terms hereof. The Seller agrees that any
Servicer may take any and all steps in the Seller's name and on behalf of the
Seller necessary or desirable, in the determination of the Servicer, to
collect all amounts due under any and all Receivables, including, without
limitation, endorsing the Seller's name on checks and other instruments
representing Collections and enforcing such Receivables and any related
contracts. The Seller will, upon the request of the Agent, execute such
powers of attorney and other instruments as may be necessary to facilitate
the foregoing. The Servicer may, with the prior consent of the Agent (which
consent is hereby given with respect to Northeast Utilities Service Company),
subcontract with any other Person for servicing, administering or collecting
the Receivables, provided that the Servicer shall remain liable for the
performance of the duties and obligations of the Servicer pursuant to the
terms hereof. Notwithstanding anything to the contrary contained in this
Agreement, the Servicer, if not WMECO or an Affiliate of WMECO, shall have no
obligation to collect, enforce or take any other action described in this
Article VI with respect to any receivable or other indebtedness owing to the
Seller that is not a Receivable other than to deliver to the Seller the
collections and documents with respect to any such receivable or other
indebtedness as described in Sections 6.03 and 6.06(b).
SECTION 6.02. Collection of Receivables by the Servicer;
Extensions and Amendments of Receivables. The Servicer shall take or cause
to be taken all such actions as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules
and regulations, with reasonable care and diligence, and in accordance with
the Credit and Collection Policy; provided, however, that, notwithstanding
anything to the contrary contained herein, (a) the Agent shall have the
absolute and unlimited right (subject to applicable requirements of law) to
direct the Servicer (whether the Servicer is the Seller or otherwise) to
commence or settle any legal action, to enforce collection of any Receivable
or to foreclose upon or repossess any Related Security and (b) the Servicer
shall not make the Agent or any Owner a party to any litigation without the
express written consent of the Agent or such Owner, as the case may be.
Provided that the Termination Date shall not have occurred, the Servicer may,
in accordance with the Credit and Collection Policy, (a) extend the maturity
or adjust the Outstanding Balance of any Defaulted Receivable as the Servicer
may determine to be appropriate to maximize Collections thereof, provided,
that no such extension or adjustment shall affect the characterization of
such Receivable as being a Defaulted Receivable, and (b) adjust the
Outstanding Balance of any Receivable to reflect the reductions or
cancellations described in the first sentence of Section 2.08. Except as
otherwise permitted pursuant to the preceding sentence, the Servicer will not
extend, amend or otherwise modify the terms of any Receivable, or, if there
exists a contract related to any Receivable, amend, modify or waive any term
or condition of any such contract.
SECTION 6.03. Distribution and Application of Collections. The
Servicer shall set aside on its books for the account of the Seller and each
Owner their respective allocable shares of the Collections of Receivables in
accordance with Sections 2.05, 2.06, 2.07 and 2.08; provided, however, that
if required by Section 2.05, 2.06 or 2.07 or otherwise instructed by the
Agent following a Transition Event, the Servicer shall segregate such
Collections in accordance with Section 6.04. The Servicer shall as soon as
practicable following receipt turn over to the Seller the collections of any
receivable or other indebtedness owing to the Seller which is not a
Receivable, less, in the event the Seller is not the Servicer, all reasonable
and appropriate out-of-pocket costs and expenses of such Servicer of
servicing, collecting and administering any such receivable or other
indebtedness to the extent not covered by the Servicing Fee received by it.
Any payment by an Obligor in respect of any indebtedness owed by it to the
Seller shall, except as otherwise specified by such Obligor or otherwise
required by contract or law or by instruction of the Agent, be applied as a
Collection of any Receivable of such Obligor (in the order of the age of such
Receivables, starting with the oldest such Receivable) to the extent of any
amounts then due and payable thereunder before being applied to any other
receivable or other indebtedness (other than a Receivable) of such Obligor.
SECTION 6.04. Segregation of Collections. The Servicer shall not
be required (unless required by Section 2.05, 2.06 or 2.07 or otherwise
instructed by the Agent following a Transition Event) to segregate the funds
constituting the Owners' portion of daily Collections prior to the remittance
thereof in accordance with Sections 2.05, 2.06, 2.07 and 2.08. If so
instructed by the Agent following a Transition Event, the Servicer shall (a)
on the first Business Day following its receipt thereof, segregate and
deposit with a bank designated by the Agent (which may be the Agent) each
Owner's allocable share of Collections of Receivables received by the
Servicer; provided, that on any date before the Termination Date, such
segregation shall not apply to Reinvested Collections, and (b) if so
requested by the Agent, provide payment instructions to such bank as directed
by the Agent.
SECTION 6.05. Other Rights of the Agent. At any time following
the occurrence of an Event of Termination or the designation of a Servicer
other than the Seller pursuant to Section 6.01:
(a) The Agent may or, at the request of the Agent, the Seller
and the Servicer shall (in either case, at the Seller's expense) direct
the Obligors of Receivables, or any of them, to pay all amounts payable
under any Receivable directly to the Agent or its designee; and
(b) The Seller and the Servicer shall, at the Agent's request and
at the Seller's expense, (i) assemble all Records and make the same
available to the Agent or its designee at a place selected by the Agent
or its designee, and (ii) segregate all cash, checks and other
instruments received by it from time to time constituting Collections of
Receivables in a manner acceptable to the Agent and, promptly following
receipt, remit all such cash, checks and instruments, duly endorsed or
with duly executed instruments of transfer, to the Agent or its
designee.
SECTION 6.06. Records; Maintenance of General Trial Balance;
Audits. (a) The Seller and the Servicer will maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Receivables in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for
the collection of all Receivables (including, without limitation, records
adequate to permit the identification of each Receivable and all Collections
thereof and adjustments thereto). The Seller will (and will cause the
Servicer to) mark all master data processing records so that reports
generated from such records include the legend described in Section 5.01(g).
(b) The Servicer shall hold all Records in trust for the Seller
and each Owner in accordance with their respective interests. Subject to the
receipt of contrary instructions from the Agent, the Seller will, upon the
designation of a Servicer other than the Seller, deliver (or cause the
Servicer to deliver) all Records to such Servicer; provided, however, that
the Servicer shall as soon as practicable upon demand deliver to the Seller
all records and documents in its possession relating to receivables and other
indebtedness owing to the Seller other than Receivables, and copies of all
Records in its possession relating to Receivables.
(c) Neither the Servicer nor the Seller will make any change or
modification to the form of the General Trial Balance which is adverse to the
interests of the Purchaser or the Owners. The Servicer will apply all
Collections to the applicable Receivables as provided in Section 6.03 and
modify the General Trial Balance to reflect such Collections, in each case,
within one Business Day following the earliest date on which such Collections
are received by the Servicer or the Seller or (following the occurrence of an
Event of Termination and the establishment of Lock-Box Accounts pursuant to
Section 6.08) deposited in a Lock-Box Account. The Servicer will post each
new invoiced Receivable on the General Trial Balance on the day such
Receivable is billed. If at any time the Servicer fails or otherwise ceases
to generate the General Trial Balance, the Agent shall have the right to
reconstruct the General Trial Balance so that a determination of the
Percentage Interests can be made pursuant to Section 2.03. The Seller and
the Servicer each agree to cooperate with such reconstruction of the General
Trial Balance, including, without limitation, the delivery to the Agent, upon
the Agent's request, of copies of all Records. The Seller shall reimburse
the Agent for all costs and expenses incurred in connection with such
reconstruction of the General Trial Balance.
(d) The Seller and the Servicer each will, from time to time
during regular business hours as reasonably requested by the Agent, permit
the Agent, or its agents or representatives, (i) to examine and make copies
of and abstracts from all Records and (ii) to visit the offices and
properties of the Seller or the Servicer for the purpose of examining such
Records and to discuss matters relating to the Receivables or the Seller's or
the Servicer's performance hereunder with any of the officers or employees of
the Seller or the Servicer, as the case may be, having knowledge of such
matters.
SECTION 6.07. Receivables Reporting. Starting with the first
month commencing after the date hereof and continuing through (and including)
the month in which the Collection Date occurs, the Servicer shall on or
before the eighteenth calendar day of each month (or if such eighteenth day
is not a Business Day, on the Business Day immediately preceding such
eighteenth day), prepare and forward to the Agent for each Owner, an Investor
Report relating to all Percentage Interests, as of the close of business of
the Servicer on the last day of the immediately preceding month, which report
will include (without limitation) (i) the information required to compute
each element of the Coverage Ratio and (ii) the aggregate amount billed by
the Seller to each Obligor in a Reported Group.
SECTION 6.08 Collections. The Seller will instruct all Obligors
to cause all Collections to be paid to the Servicer and if the Seller
receives any Collections, the Seller will remit such Collections to the
Servicer (including, without limitation, any Collections deemed to have been
received pursuant to Section 2.08) within one Business Day following the
Seller's receipt thereof. The Seller will not make any change in its
instructions to Obligors regarding payments to be made to the Seller or the
Servicer, unless the Agent shall have received at least ten Business Days'
prior written notice of such change and all actions reasonably requested by
the Agent to protect and perfect the interest of the Agent and the Owners in
the Collections of the Receivables have been taken and completed. If
requested to do so following a Transition Event, the Seller shall instruct
the Obligors to cause all Collections to be paid to a Lock-Box Bank for
deposit into a Lock-Box Account and deliver a Bank Notice to such Lock-Box
Bank. Such notice shall transfer to the Agent exclusive ownership and
control of such Lock-Box Account. The Seller hereby agrees to take any
further action necessary that the Agent may reasonably request to effect such
transfer. Without limiting the foregoing, on or prior to the date of the
initial purchase of a Percentage Interest hereunder, (i) the Seller shall
cause to be established the Collection Account, in the name of the Purchaser,
(ii) the Purchaser shall give a Bank Notice to the bank at which the
Collection Account is maintained and (iii) the Seller shall cause such bank
to execute such notice and return it to the Purchaser. Such notice shall
give the bank standing instructions to remit funds on deposit in the
Collection Account to the Servicer, unless the Purchaser, or the Agent on
behalf of the Purchaser, instructs otherwise, which instruction may only be
delivered upon the occurrence of a Transition Event.
SECTION 6.09. UCC Matters; Protection and Perfection of Percentage
Interests. The Seller will keep its principal place of business and chief
executive office, and the office where it keeps the Records, at the addresses
of the Seller specified in Schedule IV or, upon 30 days' prior written notice
to the Agent, at such other locations within the United States where all
actions reasonably requested by the Agent to protect and perfect the interest
of the Agent and the Owners in the Receivables, the Related Security
(excluding Security Deposits) relating thereto, the Collections relating
thereto and the Collateral have been taken and completed. The Seller will
not make any change to its corporate name or use any tradenames, fictitious
names, assumed names or "doing business as" names other than those described
in Schedule III, unless prior to the effective date of any such name change
or use, the Seller delivers to the Agent such executed financing statements
as the Agent may request to reflect such name change or use, together with
such other documents and instruments as the Agent may reasonably request in
connection therewith. The Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all further instruments and
documents, and take all further action that the Agent may reasonably request
in order to perfect, protect or more fully evidence the interests of the
Owners in the Receivables, the Related Security (excluding Security Deposits)
relating thereto, Collections relating thereto and the Collateral, or to
enable any of them or the Agent to exercise or enforce any of their
respective rights hereunder. Without limiting the generality of the
foregoing, the Seller will upon the request of the Agent execute and file
such financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be
necessary or appropriate or as the Agent may request. The Seller hereby
authorizes the Purchaser to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to all
or any of the Receivables, the Related Security, the Collections and the
Collateral now existing or hereafter arising without the signature of the
Seller where permitted by law. A carbon, photographic or other reproduction
of this Agreement or any financing statement covering the Receivables, the
Related Security and Collections relating thereto and the Collateral (or, in
each case, any part thereof) shall be sufficient as a financing statement.
The Seller shall, upon the request of the Agent at any time after a
Transition Event and at the Seller's expense, notify the Obligors of
Receivables, or any of them, of the Owners' interests therein. If the Seller
fails to perform any of its agreements or obligations under this Section
6.09, the Agent may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of the Agent
incurred in connection therewith shall be payable by the Seller upon the
Agent's demand therefor. For purposes of enabling the Agent to exercise its
rights described in the preceding sentence and elsewhere in this Article VI,
the Seller and the Owners hereby authorize the Agent to take any and all
steps in the Seller's name and on behalf of the Seller and the Owners
necessary or desirable, in the determination of the Agent, to collect all
amounts due under any and all Receivables, including, without limitation,
endorsing the Seller's name on checks and other instruments representing
Collections and enforcing such Receivables and any related contracts. In
addition, to the extent that any Receivables Interest is intended to be or is
likely to be outstanding five years or more after the date of this Agreement,
the Seller shall provide, within six months (but not later than the 30th day)
prior to the expiration of such five year period (and, if applicable, each
subsequent five year period), or more frequently as the Agent reasonably
deems advisable, an opinion of counsel to the Seller as to the continuing
validity and perfection of the Agent's and the Owners' interests in the
Receivables and the Related Security (excluding Security Deposits) and
Collections relating thereto.
SECTION 6.10. Obligations of the Seller With Respect to
Receivables. The Seller will (a) at its expense, regardless of any exercise
by the Agent or any Owner of its rights hereunder, timely and fully perform
and comply with all material provisions, covenants and other promises
required to be observed by it under any contracts or other agreements related
to the Receivables to the same extent as if Percentage Interests had not been
sold hereunder and (b) pay when due any taxes (other than Excluded Taxes),
including without limitation, sales and excise taxes, payable in connection
with the Receivables. In no event shall the Agent or any Owner have any
obligation or liability with respect to any Receivables or related contracts,
if applicable, nor shall any of them be obligated to perform any of the
obligations of the Seller thereunder. The Seller will timely and fully
comply in all material respects with the Credit and Collection Policy in
regard to each Receivable and any related contract. The Seller will not make
any change in the character of its business or in the Credit and Collection
Policy, which change would, in either case, impair the credit quality,
enforceability or collectibility of any Receivable.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following
events ("Events of Termination") shall occur:
(a) (i) The Servicer (if other than the Agent) shall fail to
perform or observe any term, covenant or agreement hereunder (other than
as referred to in clause (ii) of this Section 7.01(a)) and such failure
shall remain unremedied for five Business Days after written notice
thereof shall have been given by the Agent to the Servicer or
(ii) either the Servicer (if other than the Agent) or the Seller shall
fail to make any payment or deposit to be made by it hereunder when due;
or
(b) Any representation or warranty made or deemed to be made by
either the Seller or the Servicer (or any of its respective officers)
under or in connection with this Agreement or any Investor Report or
other information or report delivered pursuant hereto shall prove to
have been false or incorrect in any material respect when made or deemed
to have been made and shall not have been remedied for a period of five
Business Days after written notice thereof shall have been given by the
Agent to the Seller; or
(c) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for
five Business Days after written notice thereof shall have been given by
the Agent to the Seller; or
(d) The Seller shall fail to pay any principal of or premium or
interest on any Debt in an aggregate amount exceeding $10,000,000, when
the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such failure
shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or any other default
under any agreement or instrument relating to any such Debt or any other
event, shall occur and shall continue after the applicable grace period,
if any, specified in such agreement or instrument if the effect of such
default or event is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable or required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof; or
(e) Any purchase of a Percentage Interest or reinvestment of
Collections shall for any reason, except to the extent permitted by the
terms hereof, cease to create a valid and perfected first priority
undivided percentage ownership interest to the extent of such Percentage
Interest in each Receivable and the Related Security (excluding Security
Deposits) and Collections with respect thereto, or any other Adverse
Claim shall attach to any Receivables, Related Security or Collections
and, provided that the attachment of any such Adverse Claim securing
payment of taxes, assessments or governmental charges shall not
constitute an Event of Termination unless it shall remain outstanding
for fifteen days; or
(f) (i) The Seller or the Servicer (if other than the Agent)
shall generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall make
a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Seller or the Servicer (if other
than the Agent) seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief
of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property; or (ii) the Seller or the
Servicer (if other than the Agent) shall take any corporate action to
authorize any of the actions set forth in clause (i) above in this
Section 7.01(f); or
(g) The Loss-to-Liquidation Ratio for any month shall exceed
6.75%, or the average Loss-to-Liquidation Ratio for any six consecutive
months shall exceed 5.25%, or the Delinquency Ratio for any month shall
exceed 6.25%, or the Gross Charge-Off Ratio for any month shall exceed
2.50%, or the average Dilution Ratio for any three consecutive months
shall exceed 1.00%, or the Weighted Average Maturity for any month shall
exceed 60.0 days; or
(h) The Seller's senior secured debt shall not be rated at least
the Required Rating, or there shall have occurred any event which has a
Material Adverse Effect; or
(i) (i) A regulatory, tax or accounting body has ordered that the
activities of the Purchaser or any Affiliate of the Purchaser
contemplated hereby be terminated or (ii) as a result of any other event
or circumstance, the activities of the Purchaser contemplated hereby may
reasonably be expected to cause the Purchaser, the financial institution
then acting as the administrator or the manager for the Purchaser, or
any of their respective Affiliates to suffer materially adverse
regulatory, accounting or tax consequences; or
(j) the Purchaser shall be unable to issue Commercial Paper Notes
for sixty consecutive days; or
(k) Any Event of Default under (and as defined in) either of the
Liquidity Agreements shall occur or a Liquidity Facility Termination
Date shall have occurred; or
(l) The Coverage Ratio shall be less than 102% for two Business
Days; or
(m) A Change of Control shall occur; or
(n) a Servicer Default shall have occurred; then, and in any such
event, the Agent may, or at the direction of the Required Owners shall,
by notice to the Seller declare the Termination Date to have occurred,
except that, in the case of any event described in clause (i) of Section
7.01(f), above, the Termination Date shall be deemed to have occurred
automatically upon the occurrence of such event. Upon any such
declaration or automatic occurrence, the Agent and the Owners shall
have, in addition to all other rights and remedies under this Agreement
or otherwise, all other rights and remedies provided under the UCC of
the applicable jurisdiction and other applicable laws, which rights
shall be cumulative.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Owner hereby accepts
the appointment of and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
In addition, each of the Owners and the Agent acknowledge that the Purchaser
has entered into the Security Agreement pursuant to which certain rights of
the Purchaser hereunder were pledged to the Collateral Trustee, and the Agent
hereby agrees to take, or refrain from taking, such actions under or in
connection with this Agreement as the Collateral Trustee shall from time to
time direct in accordance with the terms of the Security Agreement.
Notwithstanding anything contained herein to the contrary, the Agent shall
not be required to take any action which exposes it to personal liability or
which is contrary to this Agreement or to applicable law. The Agent agrees
to give (i) to each Owner, prompt notice of each notice given to it by the
Seller, or by it to the Seller, pursuant to the terms of this Agreement and
(ii) to the Collateral Trustee, prompt notice of the occurrence hereunder of
any Event of Termination or the Termination Date. The appointment and
authority of the Agent hereunder shall terminate on the Collection Date. The
Agent hereby further acknowledges that to the extent it receives or holds any
funds or other amounts or property to which the Purchaser would be entitled,
the Agent shall receive and/or hold such funds as agent for the Collateral
Trustee under and in accordance with the Security Agreement. Notwithstanding
anything to the contrary, the Collateral Trustee is an intended beneficiary
of the provisions of this Section 8.01, and no amendment, supplement or other
modification to this Section which would adversely affect the interest of the
Collateral Trustee under this Section shall be effective without the
Collateral Trustee's consent.
SECTION 8.02. UCC Filings. The Owners and the Seller expressly
recognize and agree that the Agent may be listed as the assignee or secured
party of record on the various UCC filings required to be made hereunder in
order to perfect the transfer of the Percentage Interests from the Purchaser
to the other Owners, that such listing shall be for administrative
convenience only in creating a record or nominee owner to take certain
actions hereunder on behalf of such Owners and that such listing will not
affect in any way the status of such Owners as the beneficial Owners of the
Percentage Interests. In addition, such listing shall impose no duties on
the Agent other than those expressly and specifically undertaken in
accordance with this Article VIII. In furtherance of the foregoing, each
Owner shall be entitled to enforce its rights created under this Agreement
without the need to conduct such enforcement through the Agent except as
provided herein.
SECTION 8.03. Agent's Reliance, Etc. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable to any Owner for
any action taken or omitted to be taken by it or them as Agent under or in
connection with this Agreement (including, without limitation, the Agent's
servicing, administering or collecting Receivables as Servicer pursuant to
Article VI), except for its or their own gross negligence or willful
misconduct. Without limiting the foregoing, the Agent: (i) may consult with
legal counsel (including counsel for the Seller), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (ii) makes no warranty or
representation to any Owner and shall not be responsible to any Owner for any
statements, warranties or representations made in or in connection with this
Agreement; (iii) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of
this Agreement on the part of the Seller or to inspect the property
(including the books and records) of the Seller; (iv) shall not be
responsible to any Owner for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement, or any
other instrument or document furnished pursuant hereto; and (v) shall incur
no liability under or in respect of this Agreement by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by telex) believed by it to be genuine and signed or
sent by the proper party or parties.
SECTION 8.04. Agent and Affiliates. To the extent that the Agent
or any of its Affiliates shall become an Owner hereunder, the Agent or such
Affiliate, in such capacity, shall have the same rights and powers under this
Agreement as would any Owner hereunder and may exercise the same as though it
were not the Agent. The Agent and its Affiliates may generally engage in any
kind of business with the Seller or any Obligor, any of their respective
Affiliates and any Person who may do business with or own securities of the
Seller or any Obligor or any of their respective Affiliates, all as if it
were not the Agent hereunder and without any duty to account therefor to the
Owners.
SECTION 8.05. Purchase Decision. The Purchaser acknowledges that
it has, independently and without reliance upon the Agent or any other Owner
and based on such documents and information as it has deemed appropriate,
made its own evaluation and decision to enter into this Agreement and, if it
so determines, to purchase Percentage Interests hereunder. Each Owner
acknowledges and agrees that it will, independently and without reliance upon
the Agent, the Purchaser or any other Owner, and based on such documents and
information as it shall deem appropriate at the time, make its own decisions
in taking or not taking action under or in connection with this Agreement.
SECTION 8.06. Indemnification. Each Owner agrees to indemnify the
Agent (to the extent not reimbursed by the Seller or the Servicer), ratably
according to its share of the aggregate outstanding Purchase Price of all
Percentage Interests from time to time, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against the Agent in any
way relating to or arising out of this Agreement or any action taken or
omitted by the Agent under this Agreement; provided, however, that an Owner
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from the Agent's gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, each
Owner agrees to reimburse the Agent, ratably according to its share of the
aggregate outstanding Purchase Price of all Percentage Interests from time to
time, promptly upon demand, for any out-of-pocket expenses (including
reasonable counsel fees) incurred by the Agent in connection with the
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement. The Agent hereby agrees
that any amount owing to it by the Purchaser pursuant to this Section 8.06
shall not be due and payable until the earliest date on which the Agent would
be entitled to initiate proceedings of the type described in Section 10.08
against the Purchaser, it being understood, however, that the Purchaser may
at any time prepay any amount owing to the Agent pursuant to this
Section 8.06. The indemnities contained in this Section 8.06 shall be
continuing and shall survive the termination of this Agreement.
SECTION 8.07. Successor Agent. The Agent may resign at any time
by giving thirty days' notice thereof to the Owners, the Seller and the
Servicer. Upon any such resignation, the Owners shall have the right to
appoint a successor Agent approved by the Seller (which approval will not be
unreasonably withheld or delayed). If no successor Agent shall have been so
appointed by the Owners and accepted such appointment within 30 days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Owners, appoint a successor Agent approved by the
Seller (which approval will not be unreasonably withheld or delayed), which
successor Agent shall be (a) either (i) a commercial bank having a combined
capital and surplus of at least $1,000,000,000 or (ii) an Affiliate of such
an institution and (b) experienced in the types of transactions contemplated
by this Agreement. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
or removal hereunder as Agent, the provisions of this Article VIII
(including, without limitation, the indemnities set forth in Section 8.06)
shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Indemnities by the Seller. Without limiting any
other rights which the Agent, any Owner or any of their respective Affiliates
may have hereunder or under applicable law, the Seller hereby agrees to
indemnify the Agent, each Owner, and each of their respective Affiliates from
and against any and all damages, losses, claims, liabilities and related
costs and expenses, including reasonable attorneys' fees and disbursements
(all of the foregoing being collectively referred to as "Indemnified
Amounts") awarded against or incurred by any of them arising out of or as a
result of this Agreement or the ownership of Percentage Interests or in
respect of any Receivable or any related contract, excluding, however,
(i) Indemnified Amounts to the extent resulting from gross negligence or
willful misconduct on the part of the Agent, such Owner or such Affiliate,
(ii) recourse (except as otherwise specifically provided in this Agreement)
for uncollectible Receivables or (iii) Excluded Taxes. Without limiting the
foregoing, the Seller shall indemnify the Agent, each Owner and each of their
respective Affiliates for Indemnified Amounts relating to or resulting from:
(i) the transfer of an ownership interest in any Receivable
other than an Eligible Receivable;
(ii) reliance on any representation or warranty made or
deemed made by the Servicer (so long as the Servicer is the Seller or an
Affiliate of the Seller) or the Seller (or any of their officers) under
or in connection with this Agreement, which shall have been false or
incorrect in any material respect when made or deemed made or delivered;
(iii) the failure by the Servicer (so long as the Servicer is
the Seller or an Affiliate of the Seller) or the Seller to comply with
any term, provision or covenant contained in this Agreement or any
agreement executed in connection with this Agreement, or with any
applicable law, rule or regulation with respect to any Receivable, the
related contract, if any, or the Related Security, or the nonconformity
of any Receivable, the related contract, if any, or the Related Security
with any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in each Owner or
to transfer to each Owner, legal and equitable title to and ownership
of, an undivided percentage ownership interest, to the extent of each
Percentage Interest owned by it hereunder, in the Receivables, together
with all Collections and Related Security relating thereto, free and
clear of any Adverse Claim whether existing at the time of the purchase
of such Percentage Interest or at any time thereafter;
(v) the failure of the Coverage Ratio to equal or exceed 102%
at all times on or prior to the Termination Date;
(vi) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any
Receivables, whether at the time of any purchase of a Percentage
Interest or at any subsequent time;
(vii) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment of
any Receivable (including, without limitation, a defense based on such
Receivable or the related contract, if any, not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the
merchandise or services related to such Receivable or the furnishing or
failure to furnish such merchandise or services;
(viii) any failure of the Seller or the Servicer (so long as
the Servicer is the Seller or an Affiliate of the Seller) to perform its
duties or obligations in accordance with the provisions of this
Agreement or to perform its duties under any contracts related to the
Receivables;
(ix) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with merchandise or
services which are the subject of any Receivable or related contract; or
(x) the failure to pay when due any taxes (other than
Excluded Taxes), including without limitation, sales, excise or personal
property taxes payable in connection with any of the Receivables; or
(xi) any repayment by the Agent or any Owner of any amount
previously distributed in reduction of Purchase Price which the Agent or
such Owner believes in good faith is required to be made; or
(xii) the commingling of Collections of Receivables at any
time with other funds; or
(xiii) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of purchases or reinvestments or
the ownership of Percentage Interests or in respect of any Receivable,
Related Security or related contract, if any.
Any amounts subject to the indemnification provisions of this Section 9.01
shall be paid by the Seller to the Agent within two Business Days following
the Agent's written demand therefor.
SECTION 9.02 Indemnities by the Servicer. Without limiting any
other rights which the Agent, any Owner or any of their respective Affiliates
may have hereunder or under applicable law, the Servicer hereby agrees to
indemnify the Agent, each Owner, and each of their respective Affiliates from
and against all Indemnified Amounts awarded against or incurred by any of
them arising out of or as a result of (i) any failure of the Servicer to
perform its duties or obligations in accordance with the provisions of this
Agreement, or (ii) reliance on any representation or warranty made or deemed
made by the Servicer (or any of its officers) under or in connection with
this Agreement, which shall have been false or incorrect in any material
respect when made or deemed made or delivered. Any amounts subject to the
indemnification provisions of this Section 9.02 shall be paid by the Servicer
to the Agent within two Business Days following the Agent's demand therefor.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Amendments and Waivers. (a) Except as provided in
Section 10.01(b), no amendment or modification of any provision of this
Agreement shall be effective without the written agreement of the Seller, the
Agent, the Required Owners and, to the extent expressly required pursuant to
Section 8.01, the Collateral Trustee, and no termination or waiver of any
provision of this Agreement or consent to any departure therefrom by the
Seller shall be effective without the written concurrence of the Agent and
the Required Owners. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(b) Notwithstanding the provisions of Section 10.01(a), (i) the
written consent of each Owner shall be required for any amendment,
modification or waiver (A) reducing the Purchase Price of, or the Yield on,
the Percentage Interests for any Purchase Period, (B) postponing any date for
any payment of the Purchase Price of, or the Yield on, the Percentage
Interests for any Purchase Period, (C) reducing the percentage specified in
the definition of "Required Owners" or (D) modifying the provisions of this
Section 10.01, (ii) the written consent of the Purchaser shall be required
for any amendment, modification or waiver increasing the Purchase Limit or
reducing any fees or other amounts payable to the Purchaser hereunder for its
own account, and (iii) the written consent of the Agent shall be required for
any amendment, modification or waiver of any provision of this Agreement
affecting the indemnities to, or the rights, duties and obligations of, the
Agent or reducing any fees or other amounts payable to the Agent hereunder
for its own account.
SECTION 10.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex communication and communication by facsimile copy) and
mailed, telexed, transmitted or delivered, as to each party hereto, at its
address set forth under its name on the signature pages hereof or specified
in such party's Assignment and Acceptance or at such other address as shall
be designated by such party in a written notice to the other parties hereto.
All such notices and communications shall be effective, upon receipt, or in
the case of (a) notice by mail, three days after being deposited in the
United States mails, first class postage prepaid, (b) notice by overnight
courier, one Business Day after being deposited with a national overnight
courier service, (c) notice by telex, when telexed against receipt of
answerback, or (d) notice by facsimile copy, when confirmation of receipt is
obtained, except that notices and communications pursuant to Article II shall
not be effective until received.
SECTION 10.03. No Waiver; Remedies. No failure on the part of the
Agent or any Owner to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 10.04. Binding Effect; Assignability. This Agreement
shall be binding upon and inure to the benefit of the Seller, the Servicer,
the Agent, the Owners and their respective successors and permitted assigns.
This Agreement and each Owner's rights and obligations hereunder and interest
herein shall be assignable in whole or in part (including by way of the sale
of participation interests therein) by such Owner and its successors and
assigns; provided, however, that the Purchaser may only assign its rights and
obligations as the "Purchaser" hereunder (as distinguished from its rights
and obligations as an "Owner" hereunder), in whole, to another Issuer
acceptable to the Purchaser, and, upon such assignment, such assigning
Purchaser shall cease to be the Purchaser hereunder. Neither the Seller nor
the Servicer may assign any of its rights and obligations hereunder or any
interest herein without the prior written consent of the Owners and the
Agent. The parties to each assignment or participation made pursuant to this
Section 10.04 shall execute and deliver to the Agent for its acceptance and
recording in its books and records, an Assignment and Acceptance or a
participation agreement or other transfer instrument reasonably satisfactory
in form and substance to the Agent and the Seller, and which shall provide
that the parties thereto agree to be bound by Section 10.12 of this
Agreement. Each such assignment or participation shall be effective as of
the date specified in the applicable Assignment and Acceptance or other
agreement or instrument only after the execution, delivery, acceptance and
recording as described in the preceding sentence. The Agent shall notify the
Seller of any assignment or participation thereof made pursuant to this
Section 10.04. The Purchaser or any Owner may, in connection with any
assignment or participation or any proposed assignment or participation
pursuant to this Section 10.04, disclose to the assignee or participant or
proposed assignee or participant who agrees to abide by the provisions of
Section 10.12 any information relating to the Seller and the Percentage
Interests furnished to such Owner by or on behalf of the Seller or the
Servicer. Notwithstanding the fact that the Purchaser or any Owner, as a
result of its having assigned all of its remaining rights, interests, duties
and obligations hereunder, shall cease to be the Purchaser or an Owner for
purposes hereof, such assigning Purchaser or Owner, as the case may be, shall
continue to be entitled to all rights of indemnity and reimbursement from the
Seller under this Agreement for any indemnifiable or reimbursable costs,
expenses or liabilities incurred or arising out or in connection with such
Person's acting as the Purchaser or an Owner under this Agreement.
SECTION 10.05. Term of this Agreement. This Agreement, including,
without limitation, each of the Seller's and the Servicer's obligation to
observe its respective covenants set forth in Articles V and VI, shall remain
in full force and effect until the Collection Date; provided, however, that
the rights and remedies with respect to any breach of any representation and
warranty made or deemed made by the Seller or the Servicer pursuant to
Articles III and IV and the indemnification and payment provisions of
Articles IX and Article X shall be continuing and shall survive any
termination of this Agreement.
SECTION 10.06. GOVERNING LAW; SUBMISSION TO JURISDICTION. (A)
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE INTERESTS OF THE OWNERS IN THE RECEIVABLES, THE RELATED
SECURITY AND THE COLLECTIONS, OR THE REMEDIES HEREUNDER IN RESPECT THEREOF,
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(B) EACH OF THE SELLER AND THE SERVICER HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK, NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OF THE OTHER INSTRUMENTS, DOCUMENTS OR
AGREEMENTS EXECUTED IN CONNECTION HEREWITH, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH OF THE SELLER AND THE SERVICER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING IN THIS SECTION 10.06 SHALL AFFECT THE RIGHT OF THE AGENT OR ANY OF
THE OWNERS TO BRING ANY ACTION OR PROCEEDING AGAINST THE SELLER, THE SERVICER
OR ANY OF ITS RESPECTIVE PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 10.07. Costs, Expenses and Taxes. (a) In addition to the
rights of indemnification granted to the Agent, the Owners and their
Affiliates under Article IX hereof, the Seller agrees to pay on demand all
costs and expenses of the Purchasers and the Agent incurred in connection
with the preparation, execution, delivery, administration (including periodic
auditing), amendment, modification or syndication of, or any waiver or
consent issued in connection with, this Agreement and the other documents to
be delivered hereunder or in connection herewith, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent and the Purchasers with respect thereto and with respect to advising
the Agent and the Purchasers as to their respective rights and remedies under
this Agreement and the other documents to be delivered hereunder or in
connection herewith, and all costs and expenses, if any (including reasonable
counsel fees and expenses), incurred by the Agent or the Owners in connection
with the enforcement of this Agreement and the other documents to be
delivered hereunder or in connection herewith.
(b) In addition, the Seller shall pay on demand any and all
commissions (other than Dealer Fees included in the definition of "CP Rate")
of placement agents and dealers in respect of Commercial Paper Notes issued
to fund the purchase or maintenance of any Percentage Interest and any and
all stamp, sales, excise and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of
this Agreement or the other documents to be delivered hereunder.
(c) In addition, the Seller shall pay on demand all other costs,
expenses and taxes (excluding income taxes) incurred by the Purchaser or any
general or limited partner or shareholder of the Purchaser ("Other Costs"),
including, without limitation, the cost of auditing the Purchaser's books by
certified public accountants, the cost of rating the Purchaser's Commercial
Paper Notes by independent financial rating agencies, the taxes (excluding
income taxes) resulting from the Purchaser's operations, and the reasonable
fees and out-of-pocket expenses of counsel for the Purchaser or any counsel
for any general or limited partner or shareholder of the Purchaser with
respect to (i) advising such Person as to its rights and remedies under this
Agreement and the other documents to be delivered hereunder or in connection
herewith, (ii) the enforcement of this Agreement and the other documents to
be delivered hereunder or in connection herewith or matters relating to the
Purchaser's operations, and (iii) advising such Person as to the issuance of
the Purchaser's Commercial Paper Notes and acting in connection with such
issuance.
SECTION 10.08. No Proceedings. Each of the Seller, the Servicer,
the Agent and the Owners hereby agrees that it will not institute against, or
join any other Person in instituting against, the Purchaser or any subsidiary
of the Purchaser any proceedings of the type referred to in clause (i) of
Section 7.01(f) so long as any Commercial Paper Notes or other debt
securities issued by the Purchaser or any of its subsidiaries shall be
outstanding or there shall not have elapsed one year and one day since the
last day on which any such Commercial Paper Notes shall have been
outstanding.
SECTION 10.09. Execution in Counterparts; Severability;
Integration. This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. In case any provision
in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby. This Agreement contains the final and complete integration
of all prior expressions by the parties hereto with respect to the subject
matter hereof and shall constitute the entire agreement among the parties
hereto with respect to the subject matter hereof, superseding all prior oral
or written understandings other than the fee letters described in Section
2.10(a). Each of the Seller and the Servicer acknowledges and agrees that it
is not intended to have, and shall not assert, any rights, benefits, causes
of action or remedies under or in connection with any instrument, document or
agreement to which it is not a party, or any of the transactions contemplated
thereby or in respect of any acts or omissions by any of the parties thereto,
in each case, whether relating specifically to the transactions contemplated
hereby or otherwise, including, without limitation, any Liquidity Agreements.
SECTION 10.10. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THE AGENT, THE OWNERS, THE SELLER AND THE SERVICER EACH
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED AND/OR DELIVERED IN CONNECTION
HEREWITH OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
SECTION 10.11. Section Headings. Section headings in this
Agreement are included herein for convenience of reference only and shall not
affect in any way the interpretation of any of the provisions hereof.
SECTION 10.12. Confidentiality. (a) Confidentiality of Agreement
Information. Each of the Seller and the Servicer agrees to maintain the
confidentiality of this Agreement (and all drafts thereof) and not to
disclose this Agreement or such drafts to third parties (other than to its
directors, officers, employees, accountants or counsel); provided, however,
that the Agreement may be disclosed to third parties to the extent such
disclosure is:
(i) (A) required in connection with a sale of securities of the
Seller, (B) made solely to persons who are legal counsel for the
purchaser or underwriter of such securities, and (C) limited in scope to
the provisions of Articles V, VII, X and, to the extent defined terms
are used in Articles V, VII and X, such terms defined in Article I of
this Agreement;
(ii) such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the
Agent;
(iii) with respect to information generally available to the
public through no fault of the Seller or Servicer;
(iv) to any federal or state regulatory authority having
jurisdiction over the Seller or the Servicer; or
(v) to any other Person to which such delivery or disclosure may
be necessary or appropriate (A) in compliance with any law, rule,
regulation or order applicable to the Seller or the Servicer, or (B) in
response to any subpoena or other legal process.
(b) Confidentiality of Seller Confidential Information. Each of the
Purchaser, the Agent and each Owner (each, a "Subject Party") agrees to
maintain the confidentiality of the Seller Confidential Information and not
to disclose the Seller Confidential Information to third parties (other than
to its directors, officers, employees, accountants or counsel); provided,
however, that the Seller Confidential Information may be disclosed to third
parties to the extent such disclosure is:
(i) to another Subject Party;
(ii) with respect to information generally available to the public
through no fault of such Subject Party;
(iii) to any holder of a Commercial Paper Note (a "Holder") and
any placement agent with respect to Commercial Paper Notes, or in the
case of general information regarding the nature, basic terms and status
of the Purchaser's commercial paper program (including, without
limitation, the amount and nature of the Purchase Limit, the Percentage
Interests, the nature of the Receivables, the nature and amount of the
required reserves and the performance of the Receivables pool), to any
prospective Holder;
(iv) to any party providing credit enhancement or liquidity
facilities or any other facilities to any of the Owners, any proposed
assignee or transferee of a Percentage Interest or any part thereof;
(v) to any federal or state regulatory authority having
jurisdiction over the Purchaser, any Owner or the Agent;
(vi) to any internationally recognized rating agency in connection
with the rating by such agency of an Owner; or
(vii) to any other Person to which such delivery or disclosure may
be necessary or appropriate (A) in compliance with any law, rule,
regulation or order applicable to the Purchaser, any Owner or the Agent,
(B) in response to any subpoena or other legal process, or (C) in order
to protect or enforce an Owner's investment in the Percentage Interests.
SECTION 10.13. Restructuring. Each of the parties hereto agrees
to negotiate in good faith with the other parties hereto during the period
prior to February 1, 1997 to consummate the Restructuring; provided, however,
that no party shall be obligated to agree to any term of such restructuring
which it believes, in its sole discretion, is contrary to its interests.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE SELLER:
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By: /s/David R. McHale
Title: Assistant Treasurer
174 Brush Hill Avenue
West Springfield, Massachusetts
Facsimile No.:
Confirmation No.:
Attention: David McHale, Assistant Treasurer
With a copy to:
107 Selden Street
Berlin, CT 06037
Facsimile No.: (860) 665-5457
Confirmation No.: (860) 665-3249
Attention: David McHale, Assistant Treasurer
THE SERVICER:
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By: /s/David R. McHale
Title: Assistant Treasure
174 Brush Hill Avenue
West Springfield, Massachusetts
Facsimile No.:
Confirmation No.:
Attention: David McHale, Assistant Treasurer
With a copy to:
107 Selden Street
Berlin, CT 06037
Facsimile No.: (860) 665-5457
Confirmation No.: (860) 665-3249
Attention: David McHale, Assistant Treasurer
THE AGENT:
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH, as Agent
By: /s/James F. Moore
Title:Vice President
By:/s/Dennis J. Knitowski
Title:Assistant Treasurer
299 Park Avenue
New York, New York 10171
Attention: Asset Securitization Group-
J. Fred Moore
Facsimile No.: (212) 821-3890
Confirmation No.: (212) 821-3294
THE PURCHASER:
MONTE ROSA CAPITAL CORPORATION
By: Union Bank of Switzerland, New York Branch, as its attorney-in-fact
By /s/Rick Persaud
Title:Assistant Vice President
By /s/Regina Watkins
Title:Assistant Treasurer
c/o Union Bank of Switzerland,
New York Branch
299 Park Avenue
New York, New York 10171
Attention: Asset Securitization Group-
J. Fred Moore
Facsimile No.: (212) 821-3890
Confirmation No.: (212) 821-3294
SCHEDULE I
CONDITION PRECEDENT DOCUMENTS
As required by Section 3.01 of the Agreement, each of the following
items must be delivered to the Agent prior to the date of the initial
purchase of a Percentage Interest:
(a) A copy of this Agreement duly executed by the Seller, the
Servicer, the Purchaser and the Agent;
(b) A certificate of the Secretary or Assistant Secretary of the
Seller, certifying (i) the names and true signatures of the incumbent
officers of the Seller authorized to sign this Agreement and the other
documents to be delivered by it hereunder (on which certificates the Agent
and the Owners may conclusively rely until such time as the Agent shall
receive from the Seller, a revised certificate meeting the requirements of
this paragraph (b)), (ii) that the copy of the certificate of incorporation
of the Seller attached thereto is a complete and correct copy and that such
certificate of incorporation has not been amended, modified or supplemented
and is in full force and effect, (iii) that the copy of the by-laws of the
Seller attached thereto is a complete and correct copy and that such by-laws
have not been amended, modified or supplemented and are in full force and
effect, (iv) the resolutions of the Seller's board of directors approving and
authorizing the execution, delivery and performance by the Seller of this
Agreement and the documents related thereto and (v) that the copy of its
servicing agreement with Northeast Utilities Service Company attached thereto
is a complete and correct copy and that such agreement has not been amended,
modified or supplemented and is valid, enforceable and in full force and
effect;
(c) Articles/Certificate of Incorporation of the Seller, certified
by the Secretary of State of Massachusetts no more than 20 days prior to the
effective date of this Agreement.
(d) Good standing certificates for the Seller issued by the
Secretary of State of Massachusetts, and dated no more than 20 days prior to
the effective date of this Agreement;
(e) Acknowledgment copies of proper financing statements (the
"Facility Financing Statements"), dated a date reasonably near to the date of
the initial purchase of Percentage Interests, describing the Receivables and
the Related Security and Collections relating thereto and naming the Seller
as debtor and the Purchaser as secured party, or other, similar instruments
or documents, as may be necessary or, in the opinion of the Agent or any
Owner, desirable under the UCC of all appropriate jurisdictions or any
comparable law to perfect the Owners' interests in all Receivables and
Related Security;
(f) Acknowledgment copies of proper financing statements, if any,
necessary to release all security interests and other rights of any Person in
the Receivables and Related Security previously granted by the Seller;
(g) Certified copies of requests for information or copies (or a
similar search report certified by a party acceptable to the Agent), dated a
date reasonably near to the date of the initial purchase of Percentage
Interests, listing all effective financing statements (including the Facility
Financing Statements) which name the Seller (under its present name and any
previous name) as debtor and which are filed in the jurisdictions in which
the Facility Financing Statements were filed, together with copies of such
financing statements (none of which, other than the Facility Financing
Statements, shall cover any Receivables, Related Security, Collections or
other Collateral);
(h) An officer's certificate, dated the date of such initial
purchase, in the form of Exhibit F, executed by an appropriate officer of
Seller;
(i) An opinion of internal counsel to the Seller, in substantially
the form of Exhibit E-1 and as to such other matters as the Agent may
reasonably request;
(j) An opinion of outside counsel to the Seller, in substantially
the form of Exhibit E-2 and as to such other matters as the Agent may
reasonably request;
(k) A copy of each of the Liquidity Agreements related to this
Agreement, executed by each of the Liquidity Lenders thereunder, the
Purchaser and UBS, as the Liquidity Agent, together with all other
instruments, documents and agreements required to be delivered thereunder;
(l) A letter from the Seller's independent accountants regarding
such matters as the Agent may reasonably request;
(m) The Public Disclosure Documents and such other financial
reports as may be requested by the Agent or the Purchaser;
(n) Letters from both Standard & Poor's and Moody's, confirming
that the execution and delivery of this Agreement will not cause the ratings
of the Purchaser's commercial paper notes to be reduced or withdrawn;
(o) A Bank Notice, executed by the Purchaser and the bank at which
the Collection Account is maintained, evidencing the Collection Account
opened in the name of the Purchaser and complying with all of the other
requirements of Section 6.08;
(p) An Investor Report, dated as of the Cut-Off date immediately
preceding such initial purchase; and
(q) A copy of the Credit and Collection Policy, certified by an
appropriate officer of the Company as correct and complete.
SCHEDULE III
TRADENAMES, FICTITIOUS NAMES AND "DOING BUSINESS AS" NAMES
NONE
SCHEDULE IV
LOCATIONS OF SELLER'S CHIEF EXECUTIVE OFFICE AND
PRINCIPAL PLACE OF BUSINESS AND
LOCATIONS OF BOOKS AND RECORDS
Executive Office Address:
174 Brush Hill Avenue
West Springfield, Massachusetts 01090-0010
Principal Administrative Office Address:
107 Selden Street
Berlin, Connecticut 06037
Processing Office Address:
176 Cumberland Avenue
Wethersfield, Connecticut 06109
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
Attached.
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
This ASSIGNMENT AND ACCEPTANCE, dated 19 , is by and between
, a ("Assignor"), and
("Assignee").
Reference is made to the Receivables Purchase and Sale Agreement, dated
as of September 11, 1996 (the "Receivables Purchase Agreement"), among
Western Massachusetts Electric Company, Monte Rosa Capital Corporation and
Union Bank of Switzerland, New York Branch (the "Agent"). Capitalized terms
used but not defined herein shall have the meanings assigned to them in the
Receivables Purchase Agreement.
The Assignor hereby sells, assigns, transfers and conveys to the
Assignee all of its right, title and interest in, to and under
(1) (the "Transferred Percentage Interests") in
accordance with Section 10.04 of the Receivables Purchase Agreement.
From and after the date hereof, the Assignee shall have all of the
rights, and be subject to all of the obligations, of the Assignor with
respect to the Transferred Percentage Interests. The Agent shall be informed
by both the Assignor and the Assignee of such assignment, and shall duly so
note on its records; provided, however, that the failure of the Agent duly to
so note shall not void or otherwise impair this Assignment and Acceptance or
limit the Assignee's obligations under the Receivables Purchase Agreement
with respect to the Transferred Percentage Interests.
Without limiting the foregoing, the Assignee shall be bound by the
provisions of Section 10.12 of the Receivables Purchase Agreement.
THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE RECEIVABLES PURCHASE AGREEMENT AND THE INTERNAL LAWS OF
THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties hereto have caused
this Assignment and Acceptance to be duly executed and delivered as of the
date first above written.
[ASSIGNOR]
By: /s/
Name:
Title:
[ASSIGNEE]
By: /s/
Name:
Title:
EXHIBIT B
METHODOLOGY RE: UNBILLED RECEIVABLES
Total monthly generation ("MWHR") less a loss factor of around 8% (currently
adjusted annually according to business practices) plus prior months unbilled
MWHRs minus the current months billings in MWHRs equals the current months
unbilled MWHRs. The unbilled MWHRs are allocated by class of customer
(Residential, Commercial, Industrial and Street lights) based on actual MWHRs
billed by class and then an average price per MWHR, which is calculated based
on actual revenues by class divided by actual sales in MWHRs by class, is
applied.
EXHIBIT C-1
FORM OF BANK NOTICE FOR LOCK-BOX BANK
[Letterhead of the Seller]
____________, 19__
[Name and Address of Bank]
Re: Western Massachusetts Electric Company
Lock-Box No.
Account No.
Gentlemen:
We hereby notify you that we have transferred exclusive ownership
and control of our lock-box number ____________________ (the "Lock-Box") and
the corresponding account number _____________________ (the "Account")
maintained with you to Union Bank of Switzerland, New York Branch, 299 Park
Avenue, New York, New York 10171 (the "Agent").
We hereby irrevocably instruct you to collect the monies, checks,
instruments and other items of payment mailed to the Lock-Box and deposit
into the Lock-Box Account all such monies, checks, instruments and other
items of payment (unless otherwise instructed by the Agent), and to make all
payments to be made by you out of or in connection with the Account directly
to Union Bank of Switzerland, New York Branch, 299 Park Avenue, New York, New
York 10171, account number ______________, for the account of the Agent,
unless you have received contrary instructions from the Agent. If you have
received such contrary instructions, you shall be required to make such
payments in accordance with such instructions.
We also hereby notify you that the Agent shall be irrevocably
entitled to exercise any and all rights in respect of or in connection with
the Lock-Box and the Account, including, without limitation, the right to
specify when payments are to be made out of or in connection with the Lock-
Box and the Account. The monies, checks, instruments and other items of
payment mailed to the Lock-Box and the funds deposited into the Account will
not be subject to deduction, set-off, banker's lien, or any other right in
favor of any person other than the Agent.
Please agree to the terms of, and acknowledge receipt of, this
notice by signing in the space provided below on two copies hereof sent
herewith and send one such signed copy to the Agent, at its address referred
to above, Attention: Asset Securitization Group, and send the other signed
copy to the undersigned at its address at _____________________, Attention:
_____________.
Very truly yours,
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By /s/
Title:
Agreed and acknowledged:
[NAME OF BANK]
By /s/
Title:
EXHIBIT C-2
FORM OF BANK NOTICE FOR BANK
AT WHICH THE COLLECTION ACCOUNT IS MAINTAINED
[Letterhead of the Purchaser]
____________, 19__
[Name and Address of Bank]
Re: Union Bank of Switzerland, as agent (the "Agent") under the
Receivables Purchase Agreement, dated as of September 11,
1996, among, Western Massachusetts Electric Company ("WMECO"),
Monte Rosa Capital Corporation (the "Purchaser") and the
Agent.
Gentlemen:
By your execution of this letter (where indicated below) you
confirm that the Purchaser has exclusive ownership and control of account
number _____________________ (the "Account") maintained with you.
We hereby instruct you to transfer all available funds in the
Account on each business day to WMECO's account number _________ at
_______________, unless you have received contrary instructions from the
Purchaser or the Agent, on behalf of the Purchaser. If you have received
such contrary instructions, you shall be required to transfer funds in the
Account only in accordance with such instructions.
You also hereby confirm that the Purchaser or the Agent, on behalf
of the Purchaser, shall be irrevocably entitled to exercise any and all
rights in respect of or in connection with the Account, including, without
limitation, the right to specify when payments are to be made out of or in
connection with the Account. The funds deposited into the Account will not
be subject to deduction, set-off, banker's lien, or any other right in favor
of any person other than the Purchaser.
Please agree to the terms of, and acknowledge receipt of, this
notice by signing in the space provided below on two copies hereof sent
herewith and send one such signed copy to WMECO, at its address at 107 Selden
Street, Berlin, Connecticut 06037, Attention: David McHale, and send the
other signed copy to the undersigned, care of the Agent at the Agent's
address at 299 Park Avenue, New York, New York 10171, Attention: Asset
Securitization Group.
Very truly yours,
MONTE ROSA CAPITAL CORPORATION
By: Union Bank of Switzerland, New York Branch, as its attorney-in-fact
By /s/
Title:
By /s/
Title:
Agreed and acknowledged:
[NAME OF BANK]
By /s/
Title:
EXHIBIT D
FORM OF INVESTOR REPORT
Attached.
EXHIBIT E-1
FORMS OF OPINIONS OF INTERNAL COUNSEL FOR THE SELLER
ATTACHED
EXHIBIT E-2
FORM OF OPINION OF OUTSIDE COUNSEL FOR THE SELLER
ATTACHED
EXHIBIT F
OFFICER'S CERTIFICATE
I, _________________, _________________ of Western Massachusetts
Electric Company, a Massachusetts corporation ("WMECO") hereby certify
pursuant to Section 3.01 and Schedule I(h) of the Receivables Purchase and
Sale Agreement, dated as of September 11, 1996, among WMECO, as Seller and
Servicer, Monte Rosa Capital Corporation, as Purchaser ("MRCC"), and Union
Bank of Switzerland, New York Branch, as Agent (the "Receivables Purchase
Agreement") (capitalized terms used but not defined herein have the meanings
set forth in the Receivables Purchase Agreement), that, on the date hereof:
(a) the representations and warranties contained in Section 4.01
and Section 4.02 of the Receivables Purchase Agreement are true and
correct in all material respects on the date hereof, except to the
extent that such representations relate solely to an earlier date (in
which case, such representations and warranties were true and correct in
all material respects and as of such date),
(b) the conditions precedent to the initial purchase under the
Receivables Purchase Agreement, as listed in Schedule I (per Section
3.01) of the Receivables Purchase Agreement, have been performed or
complied with on or before the date hereof,
(c) no event has occurred and is continuing, or would result from
the purchase from WMECO by MRCC of Percentage Interests under the
Receivables Purchase Agreement, that would: (i) cause the Termination
Date to occur or (ii) constitute an Event of Termination or would
constitute an Event of Termination but for the requirement that notice
be given or time elapse or both,
(d) except as disclosed in the Public Disclosure Documents, since
December 31, 1995, there has been no material adverse change in the
operations or consolidated financial condition of the Parent or WMECO
from that shown in the financial statements described in Section 4.01 of
the Receivables Purchase Agreement, and
(e) the Collection Account, which is maintained in the name of the
Purchaser, complies with the requirements of Section 6.08 of the
Receivables Purchase Agreement.
IN WITNESS WHEREOF, I have signed this certificate this _____ day of
_________________, 199____.
Name: /s/
Title:
(1)[Specify Percentage Interest, or portion thereof, being designed]
FIRST AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO RECEIVABLES PURCHASE AND SALE
AGREEMENT, dated
as of January 15, 1997 (this "Amendment"), is among WESTERN MASSACHUSETTS
ELECTRIC COMPANY, a Massachusetts corporation (the "Seller"), MONTE ROSA
CAPITAL CORPORATION, a Delaware corporation (the "Purchaser"), and UNION BANK
OF SWITZERLAND, NEW YORK BRANCH, as Agent (the "Agent").
BACKGROUND
1. The Seller, the Purchaser and the Agent entered into the
Receivables Purchase and Sale Agreement, dated as of September 11, 1996 (the
"Purchase and Sale Agreement").
2. The parties hereto desire to amend the Purchase and Sale Agreement
in certain respects as set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions. Capitalized terms used in this Amendment and
not otherwise defined herein shall have the meanings assigned thereto in the
Purchase and Sale Agreement.
SECTION 2. Scheduled Termination Date. The definition of "Scheduled
Termination Date" that is set forth in Section 1.01 of the Purchase and Sale
Agreement is hereby amended by deleting the date "February 1, 1997" where it
appears in such definition and inserting in lieu thereof the date "March 31,
1997".
SECTION 3. Accounting of Purchases. Section 5.01(e) of the Purchase
and Sale Agreement is hereby waived for the period following January 1, 1997.
SECTION 4. Collection Account. The Seller acknowledges and agrees that,
under Section 10.07 of the Purchase and Sale Agreement, it is obligated to
reimburse the Agent and the Purchaser for all payments made by them to the
bank at which the Collection Account is maintained or any Lock-Box Bank for
any reason (including without limitation in respect of disallowances, fees
and charges). If any such payments are not reimbursed upon demand, the Agent
shall be entitled to reimbursement of such payments from Collections, with
the same priority under Section 2.05 or 2.07 of the Purchase and Sale
Agreement as Yield.
SECTION 5. Representations and Warranties. Seller hereby represents
and warrants that all of the representations and warranties set forth in
Article IV of the Purchase and Sale Agreement are true and correct as of the
date hereof, after giving effect to this Amendment, and shall be deemed to
have been made as of the date hereof as if fully set forth herein. Seller
hereby further represents and warrants that no Event of Termination has
occurred and is continuing or would result from this Amendment.
SECTION 6. Effectiveness. This Amendment shall become effective upon
its execution and delivery by the Seller, the Purchaser and the Agent as of
the day and year first above written.
SECTION 7. Miscellaneous. The Purchase and Sale Agreement, as amended
hereby, remains in full force and effect. From and after the date hereof,
any reference to the Purchase and Sale Agreement shall be deemed to refer to
the Purchase and Sale Agreement as amended hereby, unless otherwise expressly
stated. This Amendment 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. This
Amendment shall be governed by, and construed in accordance with, the
internal laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the date and year
first above written.
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By: /s/David R. McHale
Title: Assistant Treasurer
MONTE ROSA CAPITAL CORPORATION
By: Union Bank of Switzerland, New York Branch, as its attorney-in-fact
By: /s/Rick Persaud
Title: Assistant Vice President
By: /s/Daniel Gringauz
Title: Assistant Treasurer
UNION BANK OF SWITZERLAND, NEW YORK BRANCH, as Agent
By: /s/Rick Persaud
Title: Vice President
By: /s/Daniel Gringauzi
Title: Assistant Treasurer