EXHIBIT 4(e)
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RECEIVABLES PURCHASE AGREEMENT
Dated as of May 29, 2002
Among
AVISTA RECEIVABLES CORP.
as Seller
and
AVISTA CORPORATION
as initial Servicer
and
EAGLEFUNDING CAPITAL CORPORATION
as Conduit Purchaser
and
FLEET NATIONAL BANK
as Committed Purchaser
and
FLEET SECURITIES, INC.
as Administrator
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RECEIVABLES PURCHASE AGREEMENT
Dated as of May 29, 2002
THIS IS A RECEIVABLES PURCHASE AGREEMENT, among AVISTA RECEIVABLES
CORP., a Washington corporation ("Seller"), AVISTA CORPORATION, a Washington
corporation ("Parent"), as initial Servicer, EAGLEFUNDING CAPITAL CORPORATION, a
Delaware corporation (the "Conduit Purchaser"), FLEET NATIONAL BANK, a national
banking association (together with any other financial institution hereafter
party hereto, each a "Committed Purchaser", and collectively with the Conduit
Purchaser, the "Purchasers") and FLEET SECURITIES, INC., a New York corporation
("Fleet Securities"), as administrator for Purchasers (in such capacity, the
"Administrator"). Unless otherwise indicated, capitalized terms used in this
Agreement are defined in Appendix A.
Background
1. The Originator is engaged in the business of generating,
transmitting and distributing energy, as well as other energy-related
businesses.
2. Seller is a single purpose corporation formed for the purpose of
purchasing, and accepting contributions of, Receivables generated by the
Originator.
3. Seller has, and expects to have, Pool Receivables in which Seller,
subject to the terms and conditions of this Agreement, intends to sell an
undivided interest. Seller has requested Purchasers, and Conduit Purchaser may
(and if Conduit Purchaser does not, Committed Purchasers shall), subject to the
terms and conditions contained in this Agreement, fund the purchase of such
undivided interest, referred to herein as the Asset Interest, from Seller from
time to time during the term of this Agreement.
4. Seller and Purchasers also desire that, subject to the terms and
conditions of this Agreement, certain of the daily Collections in respect of the
Asset Interest be reinvested in Pool Receivables, which reinvestment shall
constitute part of the Asset Interest.
5. Parent has been requested, and is willing, to act as initial
Servicer.
6. Fleet Securities has been requested, and is willing, to act as the
Administrator.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01. Commitment to Purchase; Limits on Purchasers'
Obligations. Upon the terms and subject to the conditions of this Agreement,
from time to time prior to the Termination Date, Seller may request that
Administrator, for the benefit of Purchasers, purchase from Seller an undivided
ownership interest in the Pool Assets (each being a "Purchase") and Conduit
Purchaser may, in its sole discretion, fund each Purchase. If Conduit Purchaser
elects not to fund such Purchase, each Committed Purchaser shall fund its
Percentage of such Purchase, and the Administrator, for the benefit of
Purchasers, shall make such Purchase with the proceeds of such funding by the
Committed Purchasers; provided that no Purchase shall be funded by any Purchaser
if, after giving effect thereto, either (a) the Capital after giving effect to
such Purchase would exceed $100,000,000 (the "Purchase Limit"), as such Purchase
Limit may be decreased from time to time as provided in Section 1.05, or (b) the
Asset Interest would exceed 100% (the "Allocation Limit"); and provided further
that each Purchase made pursuant to this Section 1.01 shall have a purchase
price of at least $1,000,000.
SECTION 1.02. Purchase Procedures; Assignment of Purchaser's Interests.
(a) Notice of Purchase. Each Purchase from Seller shall be made on
notice from Seller to the Administrator received by the Administrator not later
than 11:00 a.m. (Boston, Massachusetts time) on the third Business Day next
preceding the date of such proposed Purchase. Each such notice of a proposed
Purchase shall be substantially in the form of Exhibit 1.02(a) (each a "Purchase
Notice"), and shall specify the desired amount and date of such Purchase, which
shall be a Business Day, provided that there shall be no more than one Purchase
in any calendar week and if the Purchase occurs in the same calendar week as a
Settlement Date, such Purchase shall be funded on such Settlement Date.
(b) Funding of Purchase. On the date of each Purchase, Conduit
Purchaser (or, if Conduit Purchaser has elected not to fund such Purchase, each
Committed Purchaser) shall, upon satisfaction of the applicable conditions set
forth in Article V, make available to the Administrator at the Administrator's
Office the amount of its Purchase in immediately available funds, and after
receipt by the Administrator of such funds, the Administrator shall
wire-transfer immediately available funds to an account designated by Seller in
the related Purchase Notice.
(c) Assignment of Asset Interest. Seller hereby sells, assigns, grants
and transfers to Administrator, for the benefit of Purchasers, the Asset
Interest.
SECTION 1.03. Reinvestments of Certain Collections; Payment of
Remaining Collections. (a) As of the close of business on each day during the
period from the date hereof to the Termination Date, Servicer shall, out of all
Collections received on such day:
(i) determine the portion of Collections attributable on any
day to the Asset Interest by multiplying (x) the amount of all
Collections received on such day times (y) the Asset Interest;
(ii) out of the portion of Collections allocated to the Asset
Interest pursuant to clause (i), set aside and hold in trust for
Purchasers an amount equal to the sum of the estimated amount of Earned
Discount accrued in respect of the Capital (based on rate information
provided by the Administrator pursuant to Section 2.04), the accrued
Fees,
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all other amounts due to Purchasers, the Administrator, the Affected
Parties or the Indemnified Parties hereunder (other than the Capital)
and the Purchasers' Share of Servicer's Fee (in each case, accrued
through such day) and not so previously set aside;
(iii) apply the Collections allocated to the Asset Interest
pursuant to clause (i) and not set aside pursuant to clause (ii) to the
purchase from Seller of ownership interests in Pool Assets (each such
purchase being a "Reinvestment"); provided that (A) if there is an
Excess Amount after giving effect to other Collections previously set
aside pursuant to this clause (iii) and then so held, then Servicer
shall not make a Reinvestment to such extent, but shall set aside and
hold for the benefit of Purchasers, a portion of such Collections
which, together with other Collections previously set aside and then so
held, shall equal the Excess Amount; and (B) if the conditions
precedent to Reinvestment in Section 5.02 are not satisfied, then
Servicer shall not reinvest any of such Collections;
(iv) pay to Seller (A) the portion of Collections not
allocated to the Asset Interest pursuant to clause (i), less Seller's
Share of Servicer's Fee accrued through such day, and (B) the
Collections applied to Reinvestment pursuant to clause (iii); and
(v) out of the portion of Collections not allocated to the
Asset Interest pursuant to clause (i), pay to Servicer Seller's Share
of Servicer's Fee accrued through such day.
(b) Unreinvested Collections. Servicer shall set aside and hold in
trust for the benefit of Purchasers all Collections which pursuant to clause
(ii) or (iii) of Section 1.03(a) may not be reinvested in Pool Assets; provided
that unless the Administrator shall request it to do so in writing, Servicer
shall not be required to hold Collections that have been set aside in a separate
deposit account containing only such Collections. If, prior to the date when
such Collections are required to be paid to the Administrator pursuant to
Section 3.01, the amount of Collections set aside pursuant to clause (iii) of
Section 1.03(a) exceeds the Excess Amount, if any, and the conditions precedent
to Reinvestment set forth in Section 5.02 are satisfied, then Servicer shall
apply such Collections (or, if less, a portion of such Collections equal to the
amount of such excess) to the making of a Reinvestment.
SECTION 1.04. Asset Interest. (a) Components of Asset Interest. On any
date the Asset Interest will represent Administrator's (for the benefit of
Purchasers) combined undivided percentage ownership interest in (i) all Pool
Receivables, (ii) all Related Security with respect to such Pool Receivables,
(iii) all of Seller's right and claims under the Purchase Agreement, (iv) all
Lock-Boxes and Lock-Box Accounts, all funds and investments therein and all
related agreements between the Seller or the Originator and the Lock-Box Banks,
(v) all Collections with respect to, and other proceeds of, the foregoing and
(vi) all books and records (including computer disks, tapes and software)
evidencing or relating to any of the foregoing, in each case, whether now owned
by Seller or hereafter acquired or arising, and wherever located (all of the
foregoing, collectively referred to as "Pool Assets").
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(b) Computation of Asset Interest. On any date of computation, the
Asset Interest will be equal to a percentage, expressed as the following
fraction:
C
NPB x (1 - RRP)
where:
C = the Capital on such date.
RRP = the Required Reserve Percentage on such date.
NPB = the Net Pool Balance on such date;
provided, however, that from and after the Termination Date, the Asset Interest
will be 100%.
(c) Frequency of Computation. The Asset Interest shall be computed as
of the Cut-Off Date for each Settlement Period. In addition, the Administrator
may require Servicer to provide a Servicer Report for purposes of computing the
Asset Interest as of any other date, and Servicer agrees to do so within five
Business Days of its receipt of the Administrator's request in writing.
SECTION 1.05. Voluntary Termination of Purchase and Reinvestment
Obligations or Reduction of Purchase Limit. Seller may, upon at least 60 days'
prior written notice to the Administrator, either (a) terminate Conduit
Purchaser's option to fund, and each Committed Purchaser's commitment to fund,
Purchases and Reinvestments hereunder, or (b) reduce the Purchase Limit to an
amount not less than $25,000,000; provided, however, that (i) each partial
reduction of the Purchase Limit shall be in an amount equal to $1,000,000 or an
integral multiple thereof, and (ii) after giving effect to such reduction, the
Capital will not exceed the Purchase Limit as so reduced. Any such reduction of
the Purchase Limit shall reduce each Committed Purchaser's Commitment on a pro
rata basis. The Purchase Limit may be increased upon the request of Seller and
the written consent of the Administrator and each Purchaser thereto, which
consent may be granted or withheld in their sole discretion and may be subject
to such conditions as they may require.
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. Computation of Capital. In making any determination of
Capital, the following rules shall apply:
(a) Capital shall not be considered reduced by any allocation, setting
aside or distribution of any portion of Collections unless such Collections
shall have been actually delivered to the Administrator pursuant hereto for
application to the Capital; and
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(b) Capital shall not be considered reduced by any distribution of any
portion of Collections if at any time such distribution is rescinded or must
otherwise be returned for any reason.
SECTION 2.02. Computation of Concentration Limit. In the case of any
Obligor that is (a) a Subsidiary of any other Obligor, (b) a parent of any other
Obligor, or (c) a Subsidiary of the same parent as any other Obligor, the
Concentration Limit and the aggregate Unpaid Balance of Pool Receivables of such
Obligors shall be calculated as if such Obligors were one Obligor.
SECTION 2.03. Computation of Earned Discount. In making any
determination of Earned Discount, the following rules shall apply:
(a) no provision of this Agreement shall require the payment or permit
the collection of Earned Discount in excess of the maximum permitted by
Applicable Law; and
(b) Earned Discount for any period shall not be considered paid by any
distribution if at any time such distribution is rescinded or must otherwise be
returned for any reason.
SECTION 2.04. Estimates of Earned Discount Rate, Fees, Etc. For
purposes of determining the amounts required to be set aside by Servicer
pursuant to Section 1.03, the Administrator shall notify Servicer from time to
time of the Earned Discount Rate applicable to the Capital and the rates at
which fees and other amounts are accruing hereunder. It is understood and agreed
that (i) the Earned Discount Rate may change from time to time, (ii) certain
rate information provided by the Administrator to Servicer shall be based upon
the Administrator's good faith estimate, (iii) the amount of Earned Discount
actually accrued with respect to the Capital during any Settlement Period may
exceed, or be less than, the amount set aside with respect thereto by Servicer,
and (iv) the amount of fees or other payables accrued hereunder with respect to
any Settlement Period may exceed, or be less than, the amount set aside with
respect thereto by Servicer. Failure to set aside any amount so accrued shall
not relieve Servicer of its obligation to remit Collections to the Administrator
with respect to such accrued amount, as and to the extent provided in Section
3.01.
ARTICLE III
SETTLEMENTS
SECTION 3.01. Settlement Procedures.
The parties hereto will take the following actions with respect to each
Settlement Period:
(a) Servicer Report. On or before the tenth (10th) Business Day of each
month prior to the Final Payout Date (each, a "Reporting Date"), Servicer shall
deliver to the Administrator a report containing the information described in
Exhibit 3.01(a) (each, a "Servicer Report"). On or before the second Business
Day to occur after the tenth (10th) Business Day of each month prior to the
Final Payout Date, Servicer shall deliver to the Administrator a report
containing the
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information described in Exhibit 3.01(a)-M for the period from the first day of
the related month to, and including, the tenth (10th) Business Day of such month
(each, a "Mid-Month Report").
(b) Earned Discount; Other Amounts Due. Two Business Days prior to each
Reporting Date, the Administrator shall notify Servicer of (i) the amount of
Earned Discount that will have accrued in respect of the Capital as of the next
Settlement Date and (ii) all Fees and other amounts that will have accrued and
be payable by Seller under this Agreement on the next Settlement Date (other
than Capital).
(c) Settlement Date Procedure - Reinvestment Period. On the second
Business Day after each Reporting Date (each, a "Settlement Date") prior to the
Termination Date, Servicer shall distribute from Collections set aside pursuant
to Sections 1.03(a)(ii) and (iii) during the immediately preceding Settlement
Period the following amounts in the following order:
(1) to the Administrator, an amount equal to the Earned
Discount accrued during such Settlement Period, plus any previously
accrued Earned Discount not paid on a prior Settlement Date, which
amount shall be distributed by the Administrator to each Purchaser for
application to the accrued Earned Discount with respect to such
Purchaser's Capital;
(2) to the Administrator, an amount equal to the Program Fee
and Commitment Fee accrued during such Settlement Period, plus any
previously accrued Program Fee and Commitment Fee not paid on a prior
Settlement Date;
(3) to Servicer, if Servicer is not Parent, an amount equal to
the Purchasers' Share of Servicer's Fee accrued during such Settlement
Period, plus any previously accrued Purchasers' Share of Servicer's Fee
not paid on a prior Settlement Date (it being understood that so long
as Servicer is Parent, no amount shall be distributed pursuant to this
clause (3));
(4) to the Administrator, an amount equal to the Excess
Amount, if any, which amount shall be distributed by the Administrator
to each Purchaser, based upon such Purchaser's Funded Percentage, for
application to such Purchaser's outstanding Capital;
(5) to the Administrator, all other amounts (other than
Capital) then due under this Agreement to the Administrator, the
Purchasers, the Affected Parties or the Indemnified Parties;
(6) to Servicer, if Servicer is Parent, an amount equal to the
Purchasers' Share of Servicer's Fee accrued during such Settlement
Period, plus any previously accrued Purchasers' Share of Servicer's Fee
not paid on a prior Settlement Day (it being understood that so long as
Servicer is not the Parent, no amount shall be distributed pursuant to
clause (6)); and
(7) to Seller, any remaining amounts.
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(d) Settlement Date Procedure - Liquidation Period. On each Settlement
Date occurring after the Termination Date, Servicer shall distribute from
Purchasers' Share of Collections received, or deemed received pursuant to
Section 3.02, during the immediately preceding Settlement Period the following
amounts in the following order:
(1) to the Administrator, an amount equal to the Earned
Discount accrued during such Settlement Period, plus any previously
accrued Earned Discount not paid on a prior Settlement Date, which
amount shall be distributed by the Administrator to each Purchaser for
application to the accrued Earned Discount with respect to such
Purchaser's Capital;
(2) to the Administrator, an amount equal to the Program Fee
and Commitment Fee accrued during such Settlement Period, plus any
previously accrued Program Fee and Commitment Fee not paid on a prior
Settlement Date;
(3) to Servicer, if Servicer is not Parent, an amount equal to
the Purchasers' Share of Servicer's Fee accrued during such Settlement
Period, plus any previously accrued Purchasers' Share of Servicer's Fee
not paid on a prior Settlement Date (it being understood that so long
as Servicer is Parent, no amount shall be distributed pursuant to this
clause (3));
(4) to the Administrator, an amount equal to the remaining
Purchasers' Share of Collections until the Capital is reduced to zero,
which amount shall be distributed by the Administrator to each
Purchaser, based upon such Purchaser's Funded Percentage, for
application to such Purchaser's outstanding Capital;
(5) to the Administrator, all other amounts (other than
Capital) then due under this Agreement to the Administrator, the
Purchasers, the Affected Parties or the Indemnified Parties;
(6) to Servicer, if Servicer is Parent, an amount equal to the
Purchasers' Share of Servicer's Fee accrued during such Settlement
Period, plus any previously accrued Purchasers' Share of Servicer's Fee
not paid on a prior Settlement Date (it being understood that so long
as Servicer is not the Parent, no amount shall be distributed pursuant
to clause (6)); and
(7) to Seller, any remaining amounts.
(e) Delayed Payment. If on any day described in this Section 3.01,
because Collections during the relevant Settlement Period were less than the
aggregate amounts payable, Servicer does not make any payment described in
clauses (1) through (6) of Section 3.01(c) or (d), as applicable, the next
available Collections in respect of the Asset Interest shall be applied to such
payment, and no Reinvestment shall be permitted hereunder until such amount
payable has been paid in full.
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SECTION 3.02. Deemed Collections; Reduction of Capital, Etc.
(a) Deemed Collections. If
(i) a Dilution occurs or the Unpaid Balance of any Pool
Receivable is less than the amount included in calculating the Net Pool
Balance for purposes of any Servicer Report for any other reason, or
(ii) any of the representations or warranties of Seller set
forth in Section 6.01(k) or (o) with respect to any Pool Receivable
were not true when made with respect to any Pool Receivable, or any of
the representations or warranties of Seller set forth in Section
6.01(k) are no longer true with respect to any Pool Receivable, or
(iii) without duplication, Seller receives a Deemed Collection
pursuant to the Purchase Agreement,
then, on the next succeeding Settlement Date (or, if earlier, on the date the
Originator pays a Deemed Collection pursuant to the Purchase Agreement), Seller
shall be deemed to have received a Collection of such Pool Receivable
(I) in the case of clause (i) above, in the amount of such
Dilution or the difference between the actual Unpaid Balance and the
amount included in calculating such Net Pool Balance, as applicable;
and
(II) in the case of clause (ii) above, in the amount of the
Unpaid Balance of such Pool Receivable; and
(III) in the case of clause (iii) above, in the amount of such
Deemed Collection.
(b) Seller's Optional Reduction of Capital. Seller may at any time
elect to reduce the Capital as follows:
(i) Seller shall give the Administrator at least five (5)
Business Days' prior written notice of such reduction (including the
amount of such proposed reduction and the proposed date on which such
reduction will commence),
(ii) on the proposed date of commencement of such reduction
and on each day thereafter, Servicer shall refrain from reinvesting
Collections pursuant to Section 1.03 until the amount thereof not so
reinvested shall equal the desired amount of reduction, and
(iii) Servicer shall hold such Collections in trust for
Purchasers, pending payment to the Administrator on the next Settlement
Date, as provided in Section 1.03;
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provided that,
(A) the amount of any such reduction shall be not less than
$1,000,000, and the Capital after giving effect to such reduction shall
be not less than $25,000,000 (unless Capital shall thereby be reduced
to zero), and
(B) Seller shall use reasonable efforts to attempt to choose a
reduction amount, and the date of commencement thereof, so that such
reduction shall commence and conclude in the same Settlement Period.
SECTION 3.03. Payments and Computations, Etc.
(a) Payments. All amounts to be paid or deposited by Seller or Servicer
to the Administrator hereunder shall be paid or deposited in accordance with the
terms hereof no later than 10:00 a.m. (Boston, Massachusetts time) on the day
when due in lawful money of the United States of America in immediately
available funds to Bankers Trust Company at ABA# ▇▇▇▇-▇▇▇▇-▇, account # 014196;
reference: Eaglefunding-Avista, attention: CP Group.
(b) Late Payments. Seller or Servicer, as applicable, shall, to the
extent permitted by law, pay to the Administrator, interest on all amounts not
paid or deposited when such amount is due hereunder at 2% per annum above the
Alternate Base Rate, payable on demand, provided, however, that such interest
rate shall not at any time exceed the maximum rate permitted by Applicable Law.
(c) Method of Computation. All computations of interest, Earned
Discount and any fees payable hereunder shall be made on the basis of a year of
360 days for the actual number of days (including the first day but excluding
the last day) elapsed.
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees. Seller shall pay to the Administrator and
Purchasers the fees in the amounts and at the times set forth in the fee letter,
dated as of the date hereof, among the Administrator, Parent and Seller (as
amended or supplemented from time to time, the "Fee Letter").
SECTION 4.02. Yield Protection.
(a) If (i) Regulation D or (ii) any Regulatory Change occurring after
the date hereof
(A) shall subject an Affected Party to any tax, duty or other
charge with respect to any Asset Interest owned by or funded by it, or
any obligations or right to make Purchases or Reinvestments or to
provide funding therefor, or shall change the basis of taxation of
payments to the Affected Party of any Capital or Earned Discount owned
by, owed to or funded in whole or in part by it or any other amounts
due under this
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Agreement in respect of the Asset Interest owned by or funded by it or
its obligations or rights, if any, to make Purchases or Reinvestments
or to provide funding therefor (except for franchise taxes or changes
in the rate of tax on the net income of such Affected Party imposed by
any jurisdiction); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Federal
Reserve Board), special deposit, compulsory loan or similar requirement
against assets of any Affected Party, deposits or obligations with or
for the account of any Affected Party or with or for the account of any
affiliate (or entity deemed by the Federal Reserve Board to be an
affiliate) of any Affected Party, or credit extended by any Affected
Party, but excluding any reserve, special deposit or similar
requirement included in the determination of Earned Discount; or
(C) shall change the amount of capital maintained or required
or requested or directed to be maintained by any Affected Party; or
(D) shall impose any other condition affecting any Asset
Interest owned or funded in whole or in part by any Affected Party, or
its obligations or rights, if any, to make Purchases or Reinvestments
or to provide funding therefor; or
(E) shall change the rate for, or the manner in which the
Federal Deposit Insurance Corporation (or a successor thereto)
assesses, deposit insurance premiums or similar charges;
and the result of any of the foregoing is
(x) to increase the cost to or to impose a cost on an Affected
Party funding or making or maintaining any Purchases or Reinvestments,
any purchases, reinvestments, or loans or other extensions of credit
under any Program Agreement, or any commitment of such Affected Party
with respect to any of the foregoing,
(y) to reduce the amount of any sum received or receivable by
an Affected Party under this Agreement, or under any Program Agreement
with respect thereto, or
(z) to reduce the rate of return on the capital of an Affected
Party as a consequence of its obligations hereunder or under any
Program Agreement or arising in connection herewith to a level below
that which such Affected Party could otherwise have achieved,
then within thirty days after demand by such Affected Party (which demand shall
be accompanied by a statement setting forth the basis for, calculation of, and
amount of such additional costs or reduced amount receivable; provided, however,
that no Affected Party shall be required to disclose any confidential or tax
planning information in any such statement), Seller shall pay directly to such
Affected Party such additional amount or amounts as will compensate such
Affected Party for such additional or increased cost or such reduction, but
without duplication of any other similar additional amounts due under any other
Program Agreement.
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(b) In determining any amount provided for or referred to in this
Section 4.02, an Affected Party may use any reasonable averaging and attribution
methods that it shall deem applicable. Any Affected Party when making a claim
under this Section 4.02 shall submit to Seller a statement as to such increased
cost or reduced return (including reasonable calculations and an explanation in
connection therewith), which statement shall, in the absence of manifest error,
be conclusive and binding upon Seller.
SECTION 4.03. Funding Losses. In the event that any Affected Party
shall incur any loss or expense (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Affected Party to make or maintain any funding with respect to the Asset
Interest) as a result of (i) any settlement with respect to any portion of
Capital funded by such Affected Party being made on any day other than the
scheduled last day of an applicable Settlement Period with respect thereto, or
(ii) any Purchase not being made in accordance with a request therefor under
Section 1.02, or, then, upon demand by the Administrator to Seller, Seller shall
pay to the Administrator for the account of such Affected Party, the amount of
such loss or expense. Such written notice (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding upon Seller.
ARTICLE V
CONDITIONS TO PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase. The initial
Purchase hereunder is subject to the condition precedent that the Administrator
shall have received, on or before the date of such Purchase, the following, each
(unless otherwise indicated) dated such date and in form and substance
reasonably satisfactory to the Administrator:
(a) Good standing certificates for each of Parent and Seller issued by
the Secretaries of State of the jurisdiction of its incorporation and its
principal place of business;
(b) A certificate of the Secretary or Assistant Secretary of each of
Seller and Parent certifying (i) a copy of the resolutions of its Board of
Directors approving the Transaction Documents to be delivered by it hereunder
and the transactions contemplated hereby; (ii) the names and true signatures of
the officers authorized on its behalf to sign the Transaction Documents to be
delivered by it hereunder (on which certificate the Administrator and each
Purchaser may conclusively rely until such time as the Administrator shall
receive from Seller or Parent, as the case may be, a revised certificate meeting
the requirements of this subsection (b)); (iii) a copy of its by-laws; and (iv)
all documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the Transaction Documents to which such
Person is a party;
(c) The Certificate of Incorporation or Articles of Incorporation, as
applicable, of each of Seller and Parent, duly certified by the Secretary of
State of the jurisdiction of its incorporation, as of a recent date;
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(d) Acknowledgment copies, or time stamped receipt copies, of proper
financing statements (Form UCC-1), filed on or prior to the date of the initial
Purchase, naming (i) the Originator as the debtor and seller of Receivables,
Seller as the secured party and purchaser and Administrator, for the benefit of
Purchasers, as the assignee and (ii) Seller as the debtor and seller of
Receivables or an undivided interest therein and Administrator, for the benefit
of Purchasers, as the secured party and purchaser, or other, similar instruments
or documents, as may be necessary or, in the opinion of the Administrator,
desirable under the UCC or any comparable law of all appropriate jurisdictions
to perfect Seller's and Purchasers' interests in the Pool Assets;
(e) A search report provided in writing to and approved by the
Administrator listing all effective financing statements that name the
Originator or Seller as debtor or assignor and that are filed in the
jurisdictions in which filings were made pursuant to subsection (d) above and in
such other jurisdictions that Administrator shall reasonably request, together
with copies of such financing statements (none of which shall cover any Pool
Assets, unless executed termination statements and/or partial releases with
respect thereto have been delivered to the Administrator), and tax and judgment
lien search reports from a Person satisfactory to Servicer and the Administrator
showing no evidence of such liens filed against the Originator or Seller;
(f) Duly executed copies of a Lock-Box Agreement with U.S. Bank,
National Association, duly executed copies of an undated notice with respect to
the Lock-Box Account at Bank of America, National Association and duly executed
notices in substantially the form of Exhibit 5.01(f)-2 (a "Postmaster Notice")
to the appropriate postmasters with respect to all Lock-Boxes;
(g) Opinions of Heller, Ehrman, White & ▇▇▇▇▇▇▇▇▇, counsel to Parent
and Seller covering such matters as the Administrator may request;
(h) Such powers of attorney as the Administrator shall reasonably
request to enable the Administrator to collect all amounts due under any and all
Pool Assets;
(i) A pro forma Servicer Report, prepared in respect of the proposed
initial Purchase, assuming a Cut-Off Date of April 30, 2002;
(j) Satisfactory results of a review and audit, conducted by Fleet
Securities, of Parent's collection, operating and reporting systems, Credit and
Collection Policy, historical receivables data and accounts, including
satisfactory results of a review of the Parent's operating location(s) and
satisfactory review and approval of the Eligible Receivables in existence on the
date of the initial Purchase;
(k) Evidence of payment of Seller by all accrued and unpaid fees
(including those contemplated by the Fee Letter), costs and expenses to the
extent then due and payable on the date thereof, together with attorneys' fees
of the Administrator to the extent invoiced prior to such date, including any
such costs, fees and expenses arising under or referenced in Section 14.05;
(l) The Liquidity Agreement, duly executed by Purchaser, the Liquidity
Agent and each Liquidity Bank;
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(m) The Purchase Agreement, duly executed by the Originator and Seller,
and a copy of all documents required to be delivered thereunder;
(n) Duly executed copies of the Fee Letter;
(o) A reassignment and termination agreement in form and substance
satisfactory to the Administrator, with respect to the existing receivables
purchase facility; and
(p) Copies of the notices to the state Public Utility Commissions to
which Parent is subject of the transactions contemplated hereby.
SECTION 5.02. Conditions Precedent to All Purchases and Reinvestments.
Each Purchase (including the initial Purchase) and each Reinvestment hereunder,
shall be subject to the further conditions precedent that:
(a) in the case of each Purchase, Servicer shall have delivered to the
Administrator on or prior to such Purchase, in form and substance reasonably
satisfactory to the Administrator, a completed Servicer Report with respect to
the immediately preceding calendar month, dated within two (2) Business Days
prior to the date of such Purchase, together with such additional information as
may be reasonably requested by the Administrator; and
(b) on the date of such Purchase or Reinvestment the following
statements shall be true (and 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 Article VI
are correct on and as of such day in all material respects as though
made on and as of such day and shall be deemed to have been made on
such day (except that any such representation or warranty that is
expressly stated as being made only as of a specified earlier date
shall be true and correct in all material respects as of such earlier
date),
(ii) no event has occurred and is continuing, or would result
from such Purchase or Reinvestment, that constitutes a Liquidation
Event or Unmatured Liquidation Event,
(iii) after giving effect to each proposed Purchase or
Reinvestment, Capital will not exceed the Purchase Limit and the Asset
Interest will not exceed the Allocation Limit, and
(iv) the Termination Date shall not have occurred;
provided, however, the absence of the occurrence and continuance of an Unmatured
Liquidation Event shall not be a condition precedent to any Reinvestment.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Seller. Seller
represents and warrants as follows:
(a) Organization and Good Standing. Seller has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Washington, with power and authority to own its properties as such
properties are presently owned and to conduct its business as such business is
presently conducted, and had at all relevant times, and now has, all necessary
power, authority, and legal right to acquire and own the Pool Assets.
(b) Due Qualification. Seller is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all other jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualification, licenses or
approvals, except where the failure to so qualify or have such licenses or
approvals has not had, and could not reasonably be expected to have, a Material
Adverse Effect.
(c) Power and Authority; Due Authorization. Seller (i) has all
necessary corporate power, authority and legal right to (A) execute and deliver
this Agreement and the other Transaction Documents to which it is a party, (B)
carry out the terms of the Transaction Documents to which it is a party, and (C)
sell and assign the Asset Interest on the terms and conditions herein provided
and (ii) has duly authorized by all necessary corporate action the execution,
delivery and performance of this Agreement and the other Transaction Documents
to which it is a party and the sale and assignment of the Asset Interest on the
terms and conditions herein provided.
(d) Valid Transfer; Binding Obligations. This Agreement constitutes a
valid transfer and assignment of the Asset Interest to the Administrator, for
the benefit of Purchasers; and this Agreement constitutes, and each other
Transaction Document to be signed by Seller when duly executed and delivered
will constitute, a legal, valid and binding obligation of Seller enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the other Transaction Documents to which Seller is a party
and the fulfillment of the terms hereof and thereof will not (i) conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, Seller's
certificate of incorporation or by-laws, (ii) conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under any Contractual Obligation of
Seller that has had, or could reasonably be expected to have, a Material Adverse
Effect, (iii) result in the creation or imposition of any Lien upon any of
Seller's properties pursuant to the terms of any such Contractual Obligation,
other than any
14
Lien created pursuant to this Agreement or any other Transaction Document, or
(iv) violate any Applicable Law, the violation of which has had, or could
reasonably be expected to have, a Material Adverse Effect.
(f) No Proceedings. There is no litigation, proceeding or investigation
pending, or to the best of Seller's knowledge, threatened, before any
Governmental Authority or arbitrator (i) asserting the invalidity of this
Agreement or any other Transaction Document to which Seller is a party, (ii)
seeking to prevent the sale and assignment of the Asset Interest or the
consummation of any of the other transactions contemplated by this Agreement or
any other Transaction Document, or (iii) seeking any determination or ruling
that could reasonably be expected to have a Material Adverse Effect.
(g) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(h) Government Approvals. No Governmental Action is required for the
due execution, delivery and performance by Seller of this Agreement or any other
Transaction Document to which Seller is a party, except for the filing of the
UCC financing statements referred to in Article V, all of which, at the time
required in Article V, shall have been duly made and shall be in full force and
effect.
(i) Financial Condition. Since the date of Seller's formation, there
has been no material adverse change in Seller's results of operations, financial
condition or assets.
(j) Margin Regulations. The use of all funds obtained by Seller under
this Agreement will not conflict with or contravene any of Regulations T, U and
X promulgated by the Board of Governors of the Federal Reserve System from time
to time.
(k) Quality of Title. Each Pool Asset is legally and beneficially owned
by Seller free and clear of any Lien (other than any Lien created hereby or
arising solely as the result of any action taken by a Purchaser or the
Administrator); when the Administrator, for the benefit of Purchasers, makes a
Purchase or Reinvestment, it shall acquire a valid and enforceable perfected
first priority undivided percentage interest to the extent of the Asset Interest
in each Pool Asset, free and clear of any Lien (other than any Lien created
hereby or arising solely as the result of any action taken by a Purchaser or the
Administrator), enforceable against any creditor of, or purchaser from, Seller
or the Originator; and no financing statement or other instrument similar in
effect covering any Pool Asset is on file in any recording office except such as
may be filed (i) in favor of Seller in accordance with the Purchase Agreement,
or (ii) in favor of a Purchaser or the Administrator in accordance with this
Agreement or in connection with any Lien arising solely as the result of any
action taken by a Purchaser or the Administrator.
(l) Accurate Reports. No information included in any Servicer Report or
Mid-Month Report to the extent supplied by Seller, or other information,
exhibit, financial statement, document, book, record or report furnished by or
on behalf of Seller to the Administrator or any Purchaser in connection with
this Agreement was inaccurate in any material respect as of the date it was
dated or (except as otherwise disclosed in writing to the Administrator at such
time) as of the date so furnished, or contained any untrue statement of a
material fact or omitted to
15
state a material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
(m) Offices. The principal place of business and chief executive office
of Seller are located at the address of Seller referred to in Section 14.02, and
the offices where Seller keeps all its books, records and documents evidencing
or relating to Pool Receivables are located at the addresses specified in
Schedule 6.01(m) (or at such other locations, notified to the Administrator in
accordance with Section 7.01(f), in jurisdictions where all action required by
Section 8.05 has been taken and completed).
(n) Lock-Box Accounts. The names and addresses of all the Lock-Box
Banks, together with the account numbers of the lock-box accounts of Seller at
such Lock-Box Banks, are specified in Schedule 6.01(n) (or have been notified to
the Administrator in accordance with Section 7.03(d)).
(o) Eligible Receivables. Each Receivable included in the Net Pool
Balance as an Eligible Receivable on the date of any Purchase, Reinvestment or
other calculation of Net Pool Balance was an Eligible Receivable on such date.
(p) Accounting Sale. Seller has accounted for each sale of undivided
percentage ownership interests in Receivables in its books and financial
statements as sales, consistent with GAAP.
(q) Credit and Collection Policy. Seller has complied in all material
respects with the Credit and Collection Policy with regard to each Receivable.
(r) Corporate Name. Seller's complete corporate name is set forth in
the preamble to this Agreement, and Seller does not use and has not during the
last six years used any other corporate name, trade name, doing business name or
fictitious name, other than WWP Receivables Corp.
SECTION 6.02. Representations and Warranties of Parent. Parent
represents and warrants as follows:
(a) Organization and Good Standing. Parent has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Washington, with power and authority to own its properties as such
properties are presently owned and to conduct its business as such business is
presently conducted.
(b) Due Qualification. Parent is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property
or the conduct of its business requires such qualification, licenses or
approvals, except where the failure to so qualify or have such licenses or
approvals has not had, and could not reasonably be expected to have, a Material
Adverse Effect.
(c) Power and Authority; Due Authorization. Parent (i) has all
necessary corporate power, authority and legal right to (A) execute and deliver
this Agreement and the other
16
Transaction Documents to which it is a party and (B) carry out the terms of the
Transaction Documents to which it is a party and (ii) has duly authorized by all
necessary corporate action the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes, and each other
Transaction Document to be signed by Parent when duly executed and delivered
will constitute, a legal, valid and binding obligation of Parent enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the other Transaction Documents to which Parent is a party
and the fulfillment of the terms hereof and thereof will not (i) conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under the Parent's
articles of incorporation or by-laws, (ii) conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under any Contractual Obligation of Parent that
has had, or could reasonably be expected to have, a Material Adverse Effect,
(iii) result in the creation or imposition of any Lien upon any of Parent's
properties pursuant to the terms of any such Contractual Obligation (other than
any Lien created pursuant to the Transaction Documents), or (iv) violate any
Applicable Law, the violation of which has had, or could reasonably be expected
to have, a Material Adverse Effect.
(f) No Proceedings. Except as set forth in the Annual Report of Parent
on Form 10-K for the year ended December 31, 2001, or in any document filed
prior to the date of this Agreement pursuant to Section 13(a), 14 or 15(d) of
the Securities Exchange Act of 1934, there is no litigation, proceeding or
investigation pending or, to the best of Parent's knowledge, threatened, before
any Governmental Authority or arbitrator (i) asserting the invalidity of this
Agreement or any other Transaction Document to which Parent is a party, (ii)
seeking to prevent the sale and assignment of the Asset Interest or the
consummation of any of the other transactions contemplated by this Agreement or
any other Transaction Document, or (iii) seeking any determination or ruling
that could reasonably be expected to have a Material Adverse Effect.
(g) Government Approvals. No Governmental Action is required for the
due execution, delivery and performance by Parent of this Agreement or any other
Transaction Document to which it is a party, other than the filing of the UCC
financing statements and the notice to the relevant state Public Utility
Commissions referred to in Article V, all of which, at the time required in
Article V, shall have been duly made and shall be in full force and effect.
(h) Financial Condition. The audited consolidated balance sheets of
Parent as at December 31, 1999, December 31, 2000 and December 31, 2001, and the
related consolidated statements of income and cash flows for the fiscal years
ended on such dates reported on by and accompanied by an unqualified report from
Deloitte & Touche, present fairly the consolidated financial position of Parent
as at such dates and the consolidated results of its operations and its
consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of Parent as at March 31, 2001, and the
related unaudited consolidated statements
17
of income and cash flows for the three-month period ended on such date, present
fairly the consolidated financial position of Parent as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
three-month period then ended (subject to normal year-end audit adjustments).
All such financial statements, including the related schedules and any notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein). Since December 31, 2001 there has been no
material adverse change in any such business, results of operations, assets or
financial position.
(i) Accurate Reports. No information included in any Servicer Report or
Mid-Month Report to the extent supplied by Parent, or other information,
exhibit, financial statement, document, book, record or report furnished by or
on behalf of Parent to the Administrator or any Purchaser, in connection with
this Agreement was inaccurate in any material respect as of the date it was
dated or (except as otherwise disclosed in writing to the Administrator at such
time) as of the date so furnished, or contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
(j) Lock-Box Accounts. Less than 3% of the monthly Collections are sent
to, or deposited in, the Lock-Box Accounts located at ▇▇▇▇▇ Fargo Bank and
Washington Mutual Bank.
ARTICLE VII
GENERAL COVENANTS
SECTION 7.01. Affirmative Covenants. From the date hereof until the
Final Payout Date:
(a) Compliance with Laws, Etc. Each of Seller and Parent will comply in
all material respects with all Applicable Laws, including those with respect to
the Pool Receivables and the related Contracts, except where noncompliance could
not reasonably be expected to have a Material Adverse Effect.
(b) Preservation of Corporate Existence. Each of Seller and Parent will
preserve and maintain its corporate existence in the jurisdiction of its
formation, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to preserve and maintain such
existence and qualification could reasonably be expected to have a Material
Adverse Effect.
(c) Audits. (i) Each of Parent and Seller will from time to time during
regular business hours and, unless a Liquidation Event has occurred and is
continuing, on reasonable prior written notice, permit the Administrator or any
of its agents or representatives, (A) to examine and make copies of and
abstracts from all books, records and documents (including, without limitation,
computer tapes and disks) in its possession or under its control relating to
Pool Assets, (B) to visit its offices and properties for the purpose of
examining such materials
18
described in clause (i)(A) above, and to discuss matters relating to Pool Assets
or its performance hereunder with any of its officers or employees having
knowledge of such matters, and (C) to verify the existence and amount of the
Receivables; and (ii) without limiting the provisions of clause (i) above, from
time to time on the written request of Administrator during regular business
hours, permit certified public accountants or other auditors acceptable to the
Administrator, at Seller's or Parent's, as the case may be, expense, a review of
its books and records with respect to the Pool Receivables; provided, however
that unless a Liquidation Event has occurred and is continuing, Seller and
Parent shall not be obligated to pay for more than one such review in each
calendar year.
(d) Keeping of Records and Books of Account. Each of Seller and Parent
will maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Pool 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 Pool Assets (including, without limitation,
records adequate to permit the daily identification of each new Pool Receivable
and all Collections of and adjustments to each existing Pool Receivable).
(e) Performance and Compliance with Receivables and Contracts. Seller
will timely and fully perform and comply (or cause the Originator to perform and
comply pursuant to the Purchase Agreement) with all provisions, covenants and
other promises required to be observed by it under the Contracts related to the
Pool Receivables and all other agreements related to such Pool Receivables,
except where failure to do so would not materially adversely affect the
validity, enforceability or collectibility of the related Pool Receivable.
(f) Location of Records. Each of Seller and Parent will keep its
principal place of business and chief executive office, and the offices where it
keeps its records concerning the Pool Receivables and all related Contracts and
all other agreements related to such Pool Receivables (and all original
documents relating thereto), at its address(es) referred to in Section 14.02 or,
upon 30 days' prior written notice to the Administrator, at such other locations
in jurisdictions where all action required by Section 8.05 shall have been taken
and completed.
(g) Credit and Collection Policies. Each of Seller and Parent, at its
own expense, will timely and fully perform and comply in all material respects
with the Credit and Collection Policy in regard to each Pool Receivable and the
related Contracts.
(h) Collections. Each of Seller and Parent will (i) instruct all
Obligors to cause all Collections to be sent to a Lock-Box that is the subject
of a Postmaster Notice and (ii) deposit, and instruct each Lock-Box Bank to
deposit, all such Collections directly into a Lock-Box Account that is the
subject of a Lock-Box Agreement, provided that the Lock-Box Accounts at ▇▇▇▇▇
Fargo Bank, Bank of America and Washington Mutual Bank shall not be subject to a
Lock-Box Agreement as of the date hereof. Seller and Servicer hereby agree to
(i) deliver to the Administrator Lock-Box Agreement executed by ▇▇▇▇▇ Fargo Bank
and Washington Mutual Bank on or before June 21, 2002, (ii) from and after June
10, 2002, deposit all checks and other payments received in the Lock-Boxes into
a Lock-Box Account that is subject to a Lock-Box Agreement and (iii) close the
Lock-Box Account located at Bank of America on or before August 30, 2002. In the
event that Parent or Seller receives Collections directly from any
19
Obligor, Parent or Seller, as the case may be, shall deposit such Collections
into a Lock-Box Account within two Business Days of receipt thereof.
(i) Net Worth. Seller will maintain a Tangible Net Worth of at least
$1,000,000.
(j) Quality of Title. Each of Seller and Parent will take all action
reasonably necessary or advisable to establish and maintain a valid and
enforceable perfected first priority undivided percentage interest in favor of
the Administrator, for the benefit of the Purchasers, to the extent of the Asset
Interest in each Pool Asset, free and clear of any Lien (other than any Lien
created by this Agreement or any other Transaction Document or arising solely as
a result of any action taken by a Purchaser or the Administrator), enforceable
against any creditor of, or purchaser from, Seller or Parent.
(k) Financial Covenants. Parent will not permit (i) Consolidated Total
Debt to Consolidated Total Capitalization to be, at any time, greater than 0.65
to 1.00, or (ii) the ratio of the Avista Utilities EBITDA to Avista Utilities
Interest Expense to be less than 1.6 to 1 for (a) the two-quarter fiscal quarter
period ending ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) the three-fiscal quarter period ending June
30, 2002, or (c) any four-fiscal quarter period ending thereafter.
SECTION 7.02. Reporting Requirements. From the date hereof until the
Final Payout Date:
(a) Quarterly Financial Statements. As soon as available and in any
event within 50 days after the end of each of the first three quarterly periods
of each fiscal year (i) Seller will furnish to the Administrator copies of its
unaudited financial statements, consisting of at least a balance sheet of Seller
as at the close of such quarter and the related unaudited statements of income
and of cash flows for such quarter and for the portion of the fiscal year
through the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by the chief financial officer or
treasurer of Seller as being fairly stated in all material respects (subject to
normal year-end audit adjustments) and (ii) Parent will furnish to the
Administrator copies of the unaudited consolidated financial statements of
Parent, consisting of at least an unaudited consolidated balance sheet of Parent
and its Subsidiaries as at the end of such quarter and the related unaudited
statements of income and cash flows for such quarter and for the portion of the
fiscal year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by the principal
financial officer of Parent as being fairly stated in all material respects
(subject to normal year-end audit adjustments); all of the foregoing financial
statements shall be complete and correct in all material respects and shall be
prepared in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods (except as
approved by such officer and disclosed therein, provided that such financial
statements need not contain footnotes);
(b) Annual Financial Statements. As soon as available and in any event
within 105 days after the end of each fiscal year (i) Seller will furnish to the
Administrator copies of its unaudited financial statements, consisting of at
least a balance sheet of Seller as at the end of such year and the related
unaudited consolidated statements of income and cash flows for such year,
setting forth in each case in comparative form the figures for the previous year
certified by
20
the chief financial officer or treasurer of Seller as being fairly stated in all
material respects; and (ii) Parent will furnish to the Administrator copies of
its audited financial statements, consisting of at least the audited
consolidated balance sheet of Parent and its Subsidiaries as at the end of such
year and a related audited consolidated statements of income and of cash flow
for such year, setting forth in each case in comparative form the figures for
the previous year, reported on without a "going-concern" or like qualification
or exception, or qualification arising out of the scope of the audit, by
Deloitte & Touche or other independent certified public accountants of national
recognized standing; all of the foregoing financial statements shall be complete
and correct in all material respects and shall be prepared in reasonable detail
and in accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such accountants
and disclosed therein);
(c) Compliance Certificate. Together with each quarterly and annual
financial statement delivered in accordance with the preceding paragraphs,
Parent will furnish to the Administrator a compliance certificate showing a
calculation of the financial covenants set forth in Section 7.01(k) certified by
the chief financial officer or treasurer of Parent;
(d) Liquidation Events. Each of Seller and Parent will furnish to the
Administrator, as soon as possible and in any event within three Business Days
after an officer of Seller or Parent obtains actual knowledge of the occurrence
of each Liquidation Event and each Unmatured Liquidation Event, a written
statement of the chief financial officer or chief accounting officer of Seller
or Parent, as the case may be, setting forth details of such event and the
action that Seller or Parent, as the case may be, proposes to take with respect
thereto;
(e) Litigation. Each of Seller and Parent will furnish to the
Administrator, as soon as possible and in any event within five Business Days of
Seller's or Parent's actual knowledge thereof, notice of (i) any litigation,
investigation or proceeding which may exist at any time which is not fully
covered by insurance and which could be reasonably expected to have a Material
Adverse Effect and (ii) any material adverse development in previously disclosed
litigation;
(f) Change in Credit and Collection Policy. Each of Seller and Parent
will furnish to the Administrator, prior to its effective date, notice of any
material change in the Credit and Collection Policy;
(g) Change in Name. Seller will furnish to the Administrator, at least
thirty days prior to any change in Seller's name, jurisdiction of organization
or any other change requiring the amendment of UCC financing statements, a
notice setting forth such changes and the effective date thereof; and
(h) Other Information. Each of Seller and Parent will furnish to the
Administrator such other information respecting the Receivables or the condition
or operations, financial or otherwise, of the Parent or Seller or any of
Parent's Subsidiaries as the Administrator may from time to time reasonably
request.
21
SECTION 7.03. Negative Covenants. From the date hereof until the Final
Payout Date:
(a) Sales, Liens, Etc. Seller will not, except as otherwise provided
herein or in the other Transaction Documents, sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist any Lien
upon or with respect to, any Pool Asset or any interest therein.
(b) Extension or Amendment of Receivables. Neither Parent nor Seller
will, except as otherwise permitted in Section 8.02, extend, amend or otherwise
modify, or permit Servicer to extend, amend or otherwise modify, the terms of
any Pool Receivable; or amend, modify or waive, or permit Servicer to amend,
modify or waive, any term or condition of any Contract related to a Pool
Receivable.
(c) Change in Business or Credit and Collection Policy. Neither
Servicer nor Seller will make any change in the character of its business or in
the Credit and Collection Policy (with the understanding that Servicer may
adjust, modify or otherwise affect Receivables as permitted in Section 8.02(c)),
which change, in either case, could materially impair the collectibility of a
significant portion of the Pool Receivables or otherwise materially adversely
affect the interests or remedies of the Administrator or any Purchaser under
this Agreement or any other Transaction Document.
(d) Change in Payment Instructions to Obligors. Neither Parent nor
Seller will add or terminate any Lock-Box, or any bank as a Lock-Box Bank or any
Lock-Box Account from those listed in Schedule 6.01(n) or make any change, or
permit Servicer to make any change, in its instructions to Obligors regarding
payments to be made to Seller or Servicer or payments to be made to any Lock-Box
or Lock-Box Bank, unless the Administrator shall have received prior notice of
such addition, termination or change and duly executed copies of Postmaster
Notices to the applicable postmaster, or Lock-Box Agreements with each new
Lock-Box Bank or with respect to each new Lock-Box Account, as the case may be.
(e) Mergers, Acquisitions, Sales, etc.
(i) Parent will not merge into or consolidate with any other
Person or permit any other Person (without the prior written consent of
the Administrator, not to be unreasonably withheld) to merge with or
into or consolidate with it, or purchase, lease or otherwise acquire
(in one transaction or a series of transactions) all or substantially
all of the assets of any other Person (whether directly by purchase,
lease or other acquisition of all or substantially all of the assets of
such Person or indirectly by purchase or other acquisition of all or
substantially all of the capital stock of such other Person) other than
acquisitions in the ordinary course of Parent's business, except that,
if at the time of such merger, consolidation, or acquisition, and
immediately after giving effect to such merger, consolidation, or
acquisition, no Liquidation Event or Unmatured Liquidation Event shall
have occurred and be continuing, then (A) Parent may merge with or into
or consolidate with any Subsidiary (other than Seller) in a transaction
in which Parent is the surviving corporation, (B) Parent may purchase,
lease or otherwise acquire from any Subsidiary (other than Seller) all
or substantially all of its assets and may purchase or otherwise
22
acquire all or substantially all of the capital stock of any Person who
immediately thereafter is a Subsidiary, (C) Parent may merge with or
into, or consolidate with, any other Person or an Affiliate of such
other Person so long as (i) in the case where the business of such
other Person or an Affiliate of such other Person, entirely or
primarily consists of an electric or gas utility business, (a) if
Parent is the surviving entity, the senior secured long-term debt
rating of Parent shall be at least BBB- or higher by S&P and Baa3 or
higher by ▇▇▇▇▇'▇ immediately after such merger or consolidation, or
(b) in the case of a merger or consolidation in which Parent is not the
surviving entity, (1) the surviving entity shall assume in writing the
obligation of Parent under this Agreement and each other Transaction
Document and (2) the senior secured long-term debt rating of the
surviving entity or an Affiliate thereof shall be at least BBB or
higher by S&P and Baa2 or higher by ▇▇▇▇▇'▇ immediately after such
merger or consolidation, or (ii) in the case where such other Person's
business does not entirely or primarily consist of an electric or gas
utility business, the assets of such Person at the time of such
consolidation or merger do not exceed 10% of the total assets of Parent
and its Subsidiaries after giving effect to such merger or
consolidation, computed and consolidated in accordance with GAAP
consistently applied, or (D) Parent may purchase, lease or otherwise
acquire any or all of the assets of any other Person (and may purchase
or otherwise acquire the capital stock of any other Person) so long as
(i) the assets being purchased, leased or acquired (or the assets of
the Person whose capital stock is being acquired) entirely or primarily
consist of electric or gas utility assets or (ii) in the case where the
assets being purchased, leased or acquired (or the assets of the Person
whose capital stock is being acquired) do not entirely or primarily
consist of electric or gas utility assets, the assets being acquired
(or Parent's proportionate share of the assets of the Person whose
capital stock is being acquired) do not exceed 10% of the total assets
of Parent and its Subsidiaries, after giving effect to such
acquisition, computed and consolidated in accordance with GAAP
consistently applied.
(ii) Seller will not merge or consolidate with any other
Person, or permit any other Person to merge or consolidate with it, or
purchase, lease or otherwise acquire (in one transaction or a series of
transactions) all or substantially all of the assets of any other
Person (whether directly or by purchase, lease or other acquisition of
all or substantially all of the assets of such Person or indirectly by
Purchase or other acquisition of all or substantially all of the
capital stock of such other Person) other than the acquisition of the
Receivables and Related Assets pursuant to the Purchase Agreement and
the sale of an interest in the Pool Receivables and Related Assets
hereunder.
(f) Deposits to Special Accounts. Neither Parent nor Seller will
deposit or otherwise credit, or cause or permit to be so deposited or credited,
to any Lock-Box Account cash or cash proceeds other than Collections of Pool
Receivables.
(g) Other Business. Seller will not (i) engage in any business other
than the transactions contemplated by the Transaction Documents; (ii) incur any
indebtedness, obligation, liability or contingent obligation of any kind other
than pursuant to this Agreement or the Purchase Agreement; or (iii) form any
Subsidiary or make any investments in any other Person.
23
(h) Certificate of Incorporation; Purchase Agreement. Seller will not
amend, modify, terminate, revoke or waive any provision of its certificate of
incorporation, the Initial Purchaser Note or the Purchase Agreement.
(i) Restricted Payments. Seller will not declare or make any dividend
or other distributions to any of its shareholders, redeem or purchase any of its
capital stock or make any loan or other payments to any of its shareholders
(other than (1) payments of the purchase price of Receivables as set forth in
the Purchase Agreement, (2) the turn-over of Collections of Reconveyed
Receivables to the Originator as set forth in the Purchase Agreement, (3)
payment of Servicer's Fee so long as Parent is Servicer and (4) payment of
reasonable management fees and reimbursement of reasonable expenses of Parent
incurred in connection with managing Seller) unless, in each case, no
Liquidation Event or Unmatured Liquidation Event has occurred and is continuing
or would result therefrom.
(j) Change of Name or Location. Seller will not change its name or the
location of its principal place of business or chief executive office or its
corporate structure or its jurisdiction or organization, unless Seller has given
the Administrator at least thirty (30) days prior notice thereof, and has taken
all steps necessary or advisable under the UCC to continue the perfection and
priority of the Administrator's and each Purchaser's interest in the Pool
Assets.
SECTION 7.04. Separate Existence. Each of Seller and Parent hereby
acknowledges that each Purchaser, the Program Support Providers and the
Administrator are entering into the transactions contemplated by this Agreement
and the other Transaction Documents in reliance upon Seller's identity as a
legal entity separate from Parent. Therefore, from and after the date hereof,
each of Seller and Parent shall take all steps specifically required by this
Agreement or by any Purchaser or the Administrator to continue Seller's identity
as a separate legal entity and to make it apparent to third Persons that Seller
is an entity with assets and liabilities distinct from those of Parent and any
other Person, and is not a division of Parent or any other Person. Without
limiting the generality of the foregoing and in addition to and consistent with
the other covenants set forth herein, each of Seller and Parent shall take such
actions as shall be required in order that:
(a) Seller will be a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation to purchasing or
otherwise acquiring from the Originator, owning, holding, granting security
interests, or selling interests, in Pool Assets, entering into agreements for
the selling and servicing of the Receivables Pool, and conducting such other
activities as it deems necessary or appropriate to carry out its primary
activities;
(b) Seller shall not engage in any business or activity, or incur any
indebtedness or liability other than as expressly permitted by the Transaction
Documents;
(c) Not less than one member of Seller's Board of Directors shall be an
Independent Director. The certificate of incorporation of Seller shall provide
that (i) Seller's Board of Directors shall not approve, or take any other action
to cause the filing of, a voluntary bankruptcy or insolvency petition or similar
proceeding or a merger or dissolution with respect to Seller unless the
Independent Director shall approve the taking of such action in writing prior to
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the taking of such action and (ii) such provision cannot be amended without the
prior written consent of the Independent Director;
(d) The Independent Director shall not at any time serve as a trustee
in bankruptcy for Seller, Parent or any Affiliate thereof;
(e) Any employee, consultant or agent of Seller will be compensated
from Seller's funds for services provided to Seller. Seller will not engage any
agents other than its attorneys, auditors and other professionals, and a
Servicer as contemplated by the Transaction Documents for the Receivables Pool,
which Servicer will be fully compensated for its services by payment of
Servicer's Fee and a manager, which manager will be fully compensated from
Seller's funds;
(f) Seller will not incur any material indirect or overhead expenses
for items shared with Parent (or any other Affiliate thereof) which are not
reflected in Servicer's Fee or the fee to Parent in its role as manager for
Seller. To the extent, if any, that Seller (or any other Affiliate thereof)
share items of expenses not reflected in Servicer's Fee or the manager's fee,
such as legal, auditing and other professional services, such expenses will be
allocated to the extent practical on the basis of actual use or the value of
services rendered, and otherwise on a basis reasonably related to the actual use
or the value of services rendered, it being understood that Parent shall pay all
expenses relating to the preparation, negotiation, execution and delivery of the
Transaction Documents, including, without limitation, legal and other fees;
(g) Seller's operating expenses will not be paid by Parent or any other
Affiliate thereof;
(h) Seller will have its own stationery;
(i) Seller's books and records will be maintained separately from those
of Parent and any other Affiliate thereof;
(j) All financial statements of Parent or any Affiliate thereof that
are consolidated to include Seller will contain detailed notes clearly stating
that (A) all of Seller's assets are owned by Seller, and (B) Seller is a
separate entity with creditors who have received security interests in Seller's
assets;
(k) Seller's assets will be maintained in a manner that facilitates
their identification and segregation from those of Parent or any Affiliate
thereof;
(l) Seller will strictly observe corporate formalities in its dealings
with Parent or any Affiliate thereof, and funds or other assets of Seller will
not be commingled with those of Parent or any Affiliate thereof except as
permitted by this Agreement in connection with servicing the Pool Receivables.
Seller shall not maintain joint bank accounts or other depository accounts to
which Parent or any Affiliate thereof (other than Parent in its capacity as
Servicer) has independent access;
(m) Seller will maintain arms'-length relationships with Parent (and
any Affiliate thereof). Any Person that renders or otherwise furnishes services
to Seller will be compensated by Seller at market rates for such services it
renders or otherwise furnishes to Seller. Neither
25
Seller nor Parent will be or will hold itself out to be responsible for the
debts of the other or the decisions or actions respecting the daily business and
affairs of the other. Seller and Parent will immediately correct any known
misrepresentation with respect to the foregoing, and they will not operate or
purport to operate as an integrated single economic unit with respect to each
other or in their dealing with any other entity; and
(n) Seller and Parent will take such other actions as may be necessary
to ensure that the facts and assumptions set forth in the opinion issued by
Heller, Ehrman, White & ▇▇▇▇▇▇▇▇▇ in connection with the initial Purchase and in
the certificate accompanying such opinion remain true and correct.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer.
(a) Parent as Initial Servicer. The servicing, administering and
collection of the Pool Receivables shall be conducted by the Person designated
as servicer hereunder ("Servicer") from time to time in accordance with this
Section 8.01. Until the Administrator gives to Parent a Successor Notice, Parent
is hereby designated as, and hereby agrees to perform the duties and obligations
of, Servicer pursuant to the terms hereof.
(b) Successor Notice; Servicer Transfer Events. Upon Parent's receipt
of notice from the Administrator of the Administrator's designation of a new
Servicer (a "Successor Notice"), Parent agrees that it will terminate its
activities as Servicer hereunder in a manner that the Administrator reasonably
believes will facilitate the transition of the performance of such activities to
the new Servicer, and the new Servicer shall assume each and all of Parent's
obligations to service and administer such Pool Receivables, on the terms and
subject to the conditions herein set forth, and Parent shall use its
commercially reasonable efforts to assist the new Servicer in assuming such
obligations. The Administrator agrees not to give Parent a Successor Notice
until after the occurrence of a Liquidation Event (any such Liquidation Event
being herein called a "Servicer Transfer Event"), in which case such Successor
Notice may be given at any time in the Administrator's discretion.
(c) Resignation. The Parent acknowledges that the Administrator and
each Purchaser have relied on the Parent's agreement to act as Servicer
hereunder in making their decision to execute and deliver this Agreement.
Accordingly, the Parent agrees that it will not voluntarily resign as Servicer.
(d) Subcontracts. Servicer may, with the prior consent of the
Administrator, subcontract with any other Person for servicing, administering or
collecting the Pool Receivables, provided that (i) such sub-servicer shall agree
in writing to perform its duties and obligations in a manner not inconsistent
with the duties and obligations of Servicer pursuant to the terms hereof; (ii)
Servicer shall remain primarily liable for the performance of the duties and
obligations of Servicer pursuant to the terms hereof, (iii) Seller, the
Administrator and each
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Purchaser shall have the right to look solely to Servicer for performance, and
(iv) any such subcontract may be terminated at the option of the Administrator
upon the occurrence of a Servicer Transfer Event.
(e) Servicing Programs. In the event that Servicer uses any software
program in servicing the Pool Receivables that it licenses from a third party,
upon the occurrence of a Servicer Transfer Event, Servicer shall use its
commercially reasonable efforts to obtain whatever licenses or approvals are
necessary to allow the Administrator or the new Servicer to use such program.
SECTION 8.02. Duties of Servicer.
(a) Appointment; Duties in General. Each of Seller, each Purchaser and
the Administrator hereby appoints Servicer as its agent, as from time to time
designated pursuant to Section 8.01, to enforce its rights and interests in and
under the Pool Assets. Servicer shall take or cause to be taken all such actions
as may be necessary or advisable to collect each Pool Receivable from time to
time, all in accordance with Applicable Law and the Credit and Collection
Policy.
(b) Allocation of Collections; Segregation. Servicer shall set aside
for the account of Seller and Purchasers their respective allocable shares of
the Collections of Pool Receivables in accordance with Section 1.03 but shall
not be required (unless otherwise instructed by the Administrator) to segregate
the funds constituting such portions of such Collections prior to the remittance
thereof in accordance with Section 3.01. If instructed by the Administrator,
Servicer shall segregate and deposit with a bank designated by the
Administrator, Purchasers' Share of Collections, on the second Business Day
following receipt by Servicer of such Collections in immediately available
funds.
(c) Modification of Receivables. So long as no Liquidation Event or
Unmatured Liquidation Event shall have occurred and be continuing, Servicer (i)
may in accordance with the Credit and Collection Policy, adjust the Unpaid
Balance of any Defaulted Receivable or extend the time for payment of any
Defaulted Receivable (but in no event to a date later than 45 days from the date
of the original invoice), provided that (A) such extension or adjustment shall
not alter the status of such Pool Receivable as an Overdue Receivable or a
Defaulted Receivable or limit the rights of any Purchaser or the Administrator
under this Agreement, and (B) the aggregate amount of all such adjustments made
in any Settlement Period, plus the aggregate Unpaid Balance of all Pool
Receivables that have been extended during such Settlement Period, shall not
exceed 2% of the aggregate Unpaid Balance of all Pool Receivables as at the
Cut-Off Date for such Settlement Period and (ii) shall adjust the Unpaid Balance
of any Receivable to reflect the reductions or cancellations described in the
first sentence of Section 3.02(a).
(d) Documents and Records. Seller shall deliver to Servicer, and
Servicer shall hold in trust for Seller and Purchasers in accordance with their
respective interests, all documents, instruments and records (including, without
limitation, computer tapes or disks) that evidence Pool Receivables.
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(e) Certain Duties to Seller. Servicer shall, as soon as practicable
following receipt, turn over to Seller that portion of Collections of Pool
Receivables representing Seller's undivided interest therein, less Seller's
Share of Servicer's Fee. Seller hereby directs Servicer to pay any Collections
of any Reconveyed Receivable directly to the Originator to be applied pursuant
to the Purchase Agreement. Servicer shall, as soon as practicable upon demand,
deliver to Seller copies of documents, instruments and records in its possession
that evidence Pool Receivables.
(f) Termination. Servicer's authorization under this Agreement shall
terminate upon the Final Payout Date.
(g) Power of Attorney. Seller hereby grants to Servicer an irrevocable
power of attorney, with full power of substitution, coupled with an interest, to
take in the name of Seller all steps which are necessary or advisable to
endorse, negotiate or otherwise realize on any writing or other right of any
kind held or transmitted by Seller or transmitted or received by a Purchaser
(whether or not from Seller) in connection with any Receivable. Notwithstanding
anything to the contrary contained herein, the Administrator may direct Servicer
to commence or settle any legal action to enforce collection of any Pool
Receivable or to foreclose upon or repossess any Related Security; provided,
however, that no such direction may be given unless either (i) a Liquidation
Event has occurred or (ii) the Administrator believes in good faith that failure
to commence, settle, or effect such legal action, foreclosure or repossession,
could adversely affect Receivables constituting a material portion of the Pool
Receivables, provided that the Administrator has given Servicer at least two
Business Days' notice of its intention to give such direction.
SECTION 8.03. Rights of the Administrator.
(a) Notice to Obligors. At any time after the occurrence of a
Liquidation Event, the Administrator may notify the Obligors of Pool
Receivables, or any of them, of the ownership of the Asset Interest by the
Administrator, for the benefit of Purchasers.
(b) Notice to Lock-Box Banks. At any time following the earlier to
occur of (i) the occurrence of a Liquidation Event, and (ii) the commencement of
the Liquidation Period, the Administrator is hereby authorized to give notice to
the related postmaster(s) and/or Lock-Box Banks, as provided in the Lock-Box
Agreements, of the transfer to the Administrator of dominion and control over
the lock-boxes and Lock-Box Accounts. Each of Servicer and Seller hereby
transfers to the Administrator, effective when the Administrator shall give
notice to the related postmaster(s) and/or Lock-Box Banks as provided in the
Lock-Box Agreements, the exclusive dominion and control over such lock-boxes and
accounts, and shall take any further action that the Administrator may
reasonably request to effect such transfer. Any proceeds of Pool Receivables
received by Seller or Parent, as Servicer or otherwise, thereafter shall be sent
immediately to the Administrator.
(c) Rights on Servicer Transfer Event. At any time following the
designation of a Servicer other than Parent pursuant to Section 8.01:
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(i) The Administrator may direct the Obligors of Pool
Receivables, or any of them, to pay all amounts payable under any Pool
Receivable directly to the Administrator or its designee.
(ii) Parent shall, at the Administrator's request and at
Parent's expense, give notice of such ownership to each said Obligor
and direct that payments be made directly to the Administrator or its
designee.
(iii) Parent and Seller shall, at the Administrator's request,
(A) assemble all of the documents, instruments and other records
(including, without limitation, computer programs, tapes and disks)
which evidence the Pool Receivables and the related Contracts and
Related Security, or which are otherwise necessary or desirable to
collect such Pool Receivables and make the same available to the
Administrator at a place selected by the Administrator, and (B)
segregate all cash, checks and other instruments received by it from
time to time constituting Collections in a manner acceptable to the
Administrator and promptly upon receipt, remit all such cash, checks
and instruments, duly endorsed or with duly executed instruments of
transfer, to the Administrator.
(iv) Each of Seller and each Purchaser hereby authorizes the
Administrator, and grants to the Administrator an irrevocable power of
attorney, to take any and all steps in Seller's name and on behalf of
Seller and any Purchaser which are necessary or desirable, in the
reasonable determination of the Administrator, to collect all amounts
due under any and all Pool Receivables including, without limitation,
endorsing Seller's name on checks and other instruments representing
Collections and enforcing such Pool Receivables and the related
Contracts.
SECTION 8.04. Responsibilities of Seller. Anything herein to the
contrary notwithstanding:
(a) Contracts. Seller shall perform, or cause the Originator to perform
under the Purchase Agreement, all of its material obligations under the
Contracts related to the Pool Receivables and under the other agreements related
thereto to the same extent as if the Asset Interest had not been sold hereunder,
and the exercise by the Administrator or its designee of its rights hereunder
shall not relieve Seller from any obligations under such Contracts and other
agreements.
(b) Limitation of Liability. Neither the Administrator nor any
Purchaser shall have any obligation or liability with respect to any Pool
Receivables, the related Contracts or any other related agreements, nor shall
any of them be obligated to perform any of the obligations of Seller or the
Originator thereunder.
SECTION 8.05. Further Action Evidencing Purchases and Reinvestments.
(a) Further Assurances. Seller shall, at its expense, take all action
necessary or advisable to establish and maintain a valid and enforceable first
priority perfected undivided ownership interest, to the extent of the Asset
Interest, in the Pool Assets, free and clear of any Lien, in favor of the
Administrator, for the benefit of Purchasers. Without limiting the generality of
the foregoing, Seller will upon the request of the Administrator or its designee
execute and file
29
such financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate to evidence or perfect the interest described in the previous
sentence.
(b) Data Processing Records. Each of Parent and Seller will ▇▇▇▇ its
master data processing records evidencing the Pool Receivables with the legend
set forth below evidencing that the Asset Interest has been sold in accordance
with this Agreement.
AN OWNERSHIP AND SECURITY INTEREST IN THE RECEIVABLES
DESCRIBED HEREIN HAS BEEN GRANTED AND ASSIGNED TO FLEET
SECURITIES, INC., AS ADMINISTRATOR, PURSUANT TO A RECEIVABLES
PURCHASE AGREEMENT, DATED AS OF MAY 29, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ RECEIVABLES CORP., EAGLEFUNDING CAPITAL
CORPORATION, FLEET NATIONAL BANK AND FLEET SECURITIES, INC.,
AS THE ADMINISTRATOR.
(c) Additional Financing Statements; Performance by Administrator.
Seller hereby authorizes the Administrator or its designee to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any portion of the Asset Interest now existing or
hereafter arising in the name of Seller without the signature of Seller to the
extent permitted by Applicable Law. If Seller or Parent fails to perform any of
its agreements or obligations under this Agreement, the Administrator or its
designee may (but shall not be required to), after notice to Seller or Parent
(unless immediate action is reasonably required to protect the interests of the
Administrator or Purchasers), itself perform, or cause performance of, such
agreement or obligation, and the expenses of the Administrator or its designee
incurred in connection therewith shall be payable by Seller or Parent, as the
case may be.
(d) Continuation Statements; Opinion. Without limiting the generality
of subsection (a), Seller will, not earlier than six (6) months and not later
than three (3) months prior to the fifth anniversary of the date of filing of
the financing statement referred to in Section 5.01(d) or any other financing
statement filed pursuant to this Agreement or in connection with any Purchase
hereunder, unless the Final Payout Date shall have occurred, (i) execute, if
required, and deliver and file or cause to be filed an appropriate continuation
statement with respect to such financing statement and (ii) deliver an opinion
of counsel, from counsel reasonably satisfactory to the Administrator, to the
effect that the Administrator has a perfected interest in the Pool Assets, free
and clear of all other Liens (subject to customary assumptions and exclusions).
SECTION 8.06. Application of Collections. Any payment by an Obligor in
respect of any indebtedness owed by it to Seller shall, (i) except as otherwise
specified by such Obligor, (ii) except as otherwise required by the underlying
Contract or law or (iii) unless the Administrator instructs otherwise, be
applied, first, as a Collection of any Pool Receivable or Receivables then
outstanding of such Obligor in the order of the age of such Pool Receivables,
30
starting with the oldest of such Pool Receivable and, second, to any other
indebtedness of such Obligor.
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Interest. To secure all obligations of
Seller arising in connection with this Agreement and each other Transaction
Document, whether now or hereafter existing, due or to become due, direct or
indirect, or absolute or contingent, including, without limitation, all
Indemnified Amounts, payments on account of Collections of Pool Receivables
received or deemed to be received and fees, Seller hereby assigns and grants to
Administrator, for the benefit of the Secured Parties, a security interest in
all of Seller's right, title and interest (including specifically any undivided
interest retained by Seller hereunder) now or hereafter existing in, to and
under all of the Pool Assets.
SECTION 9.02. Further Assurances. The provisions of Section 8.05 shall
apply to the security interest granted under Section 9.01 as well as to the
Purchases, Reinvestments and the Asset Interest hereunder.
SECTION 9.03. Remedies. Upon the occurrence of a Liquidation Event, the
Administrator and Purchasers shall have, with respect to the collateral granted
pursuant to Section 9.01, and in addition to all other rights and remedies
available to Purchaser or the Administrator under this Agreement or other
applicable law, all the rights and remedies of a secured party upon default
under the UCC.
ARTICLE X
LIQUIDATION EVENTS
SECTION 10.01. Liquidation Events. The following events shall be
"Liquidation Events" hereunder:
(a) (i) Servicer (if Parent or an Affiliate of Parent is Servicer)
shall fail to perform or observe any obligation of Servicer to provide any
Servicer Report or Mid-Month Report when due hereunder, (ii) Servicer (if Parent
or an Affiliate of Parent is Servicer) shall fail to perform any obligation of
Servicer pursuant to Section 8.02(a) or (c) and such failure shall remain
unremedied for more than three Business Days after written notice thereof shall
have been given by the Administrator to Servicer or (iii) Seller or Servicer (if
Parent or its Affiliate is Servicer) shall fail to make any payment or deposit
to be made by it hereunder within two (2) Business Days of the date when due; or
(b) Any representation or warranty made or deemed to be made by Seller,
Parent or the Originator under or in connection with this Agreement, any other
Transaction Document, any
31
Mid-Month Report or any Servicer Report or other information or report delivered
pursuant hereto shall prove to have been inaccurate in any material respect when
made; or
(c) Seller, Parent or the Originator shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement or any of the
other Transaction Documents on its part to be performed or observed and any such
failure shall continue unremedied for thirty (30) days after written notice
thereof shall have been given by the Administrator to Seller or Parent, as the
case may be; or
(d) A default shall have occurred and be continuing under any
instrument or agreement evidencing, securing or relating to Indebtedness in
excess of $25,000,000 of, or guaranteed by, Parent or any Subsidiary thereof,
which default is a payment default or if unremedied, uncured, or unwaived (with
or without the passage of time or the giving of notice or both) would permit
acceleration of the maturity of such indebtedness and such default shall have
continued unremedied, uncured or unwaived for a period long enough to permit
such acceleration; or
(e) This Agreement or any Purchase or any Reinvestment pursuant to this
Agreement shall for any reason (other than pursuant to the terms hereof) (i)
cease to create, or the Asset Interest shall for any reason cease to be, a valid
and enforceable perfected undivided percentage interest to the extent of the
Asset Interest in each Pool Asset, free and clear of any other Lien (other than
a Lien arising solely as the result of any action taken by a Purchaser or the
Administrator) or (ii) cease to create with respect to the items described in
Section 9.01, or the interest of the Administrator (for the benefit of
Purchasers) with respect to such items shall cease to be, a valid and
enforceable first priority perfected security interest, free and clear of any
other Lien (other than a Lien arising solely as the result of any action taken
by a Purchaser or the Administrator); or
(f) An Event of Bankruptcy shall have occurred and remain continuing
with respect to Seller, Parent or the Originator; or
(g) The average of the Sales-Based Dilution Ratios for any three
successive Cut-Off Dates exceeds 2.50%; or
(h) The average of the Default Ratios for any three successive Cut-Off
Dates exceeds 1.25%; or
(i) On any Settlement Date, after giving effect to the payments made
under Section 3.01(c), the Asset Interest exceeds the Allocation Limit; or
(j) The average of the Delinquency Ratios for any three successive
Cut-Off Dates is greater than 3.60%; or
(k) The average of the Collection Ratios for any two consecutive
Cut-Off Dates is less than 84%; or
(l) There shall exist any event or occurrence that has caused a
Material Adverse Effect; or
32
(m) Seller or Parent is subject to a Change-in-Control; or
(n) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Internal Revenue Code with regard to any of the assets of
Seller or Parent and such lien shall not have been released within seven (7)
days, or the Pension Benefit Guaranty Corporation shall file notice of a lien
pursuant to Section 4068 of the Employee Retirement Income Security Act of 1974
with regard to any of the assets of Seller or Parent and such lien shall not
have been released within seven (7) days.
SECTION 10.02. Remedies.
(a) Optional Liquidation. Upon the occurrence of a Liquidation Event
(other than a Liquidation Event described in subsection (f) of Section 10.01),
the Administrator shall, at the request, or may with the consent, of Purchasers,
by notice to Seller declare the Purchase Termination Date to have occurred and
the Liquidation Period to have commenced.
(b) Automatic Liquidation. Upon the occurrence of a Liquidation Event
described in (i) subsection (f) of Section 10.01 with respect to Parent or
Seller or (ii) subsection (i) of Section 10.01 and the continuance thereof for
more than two (2) Business Days, the Purchase Termination Date shall occur and
the Liquidation Period shall commence automatically.
(c) Additional Remedies. Upon any Purchase Termination Date occurring
pursuant to this Section 10.02, no Purchases or Reinvestments thereafter will be
made, and the Administrator and each Purchaser 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 each applicable jurisdiction and other
Applicable Law, which rights shall be cumulative, including the right to
foreclose upon and sell all, or any portion, of the Pool Assets in a public or
private sale (and Seller hereby agrees that ten (10) days prior notice of any
such sale shall be commercially reasonable notice thereof).
ARTICLE XI
THE ADMINISTRATOR
SECTION 11.01. Authorization and Action. Pursuant to the Program
Agreements, each Purchaser has appointed and authorized the Administrator (or
its designees) to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Administrator by the terms
hereof, together with such powers as are reasonably incidental thereto.
SECTION 11.02. Administrator's Reliance, Etc. The Administrator and its
directors, officers, agents or employees shall not be liable for any action
taken or omitted to be taken by it or them under or in connection with the
Transaction Documents (including, without limitation, the servicing,
administering or collecting of Pool Receivables as Servicer pursuant to Section
8.01), except for its or their own gross negligence, bad faith or willful
misconduct. Without limiting the generality of the foregoing, the Administrator:
(a) may consult with legal counsel,
33
independent certified 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; (b)
makes no warranty or representation to any Purchaser or any other holder of any
interest in Pool Receivables and shall not be responsible to any Purchaser or
any such other holder for any statements, warranties or representations made in
or in connection with any Transaction Document; (c) 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 any Transaction Document on the part of Seller or
Parent or to inspect the property (including the books and records) of Seller,
the Originator or Parent; (d) shall not be responsible to Purchaser or any other
holder of any interest in Pool Receivables for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Transaction
Document or any Receivable; and (e) 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 facsimile)
believed by it in good faith to be genuine and signed or sent by the proper
party or parties.
SECTION 11.03. Fleet and Affiliates. Fleet and any of its Affiliates
may generally engage in any kind of business with Seller, Parent, the Originator
or any Obligor, any of their respective Affiliates and any Person who may do
business with or own securities of Seller, Parent, the Originator or any Obligor
or any of their respective Affiliates, all as if Fleet were not the
Administrator, and without any duty to account therefor to any Purchaser or any
other holder of an interest in Pool Receivables.
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. Restrictions on Assignments.
(a) Neither Seller nor Parent may assign its rights, or delegate its
duties, hereunder or any interest herein without the prior written consent of
the Administrator. No Purchaser may assign its rights hereunder (although it may
delegate its duties hereunder as expressly indicated herein) or the Asset
Interest (or any portion thereof) to any Person without the prior written
consent of Seller, which consent shall not be unreasonably withheld; provided,
however, that, without such consent, Conduit Purchaser may assign all of its
rights and interests in the Transaction Documents, together with all its
interest in the Asset Interest, to (i) Fleet or any Subsidiary thereof, or (ii)
to any "bankruptcy remote" special purpose entity the business of which is
administered by Fleet or any Subsidiary thereof, so long as such entity has the
ability to issue commercial paper notes, or to cause the issuance of commercial
paper notes, to fund the Asset Interest or (iii) to any Liquidity Bank (or agent
on behalf of the Liquidity Banks). If Conduit Purchaser notifies Seller and
Parent that it has decided to assign its rights and delegate its duties
hereunder to the Liquidity Banks (or an agent therefor) and the Liquidity Banks
agree to assume the obligations of the Conduit Purchaser hereunder, Seller and
Parent agree to enter into such amendments hereto and to the other Transaction
Documents as the Administrator may reasonably request to reflect such assignment
and delegation.
34
(b) Seller agrees to advise the Administrator within five (5) Business
Days after notice to Seller of any proposed assignment by a Purchaser of the
Asset Interest (or any portion thereof), not otherwise permitted under
subsection (a), of Seller's consent or non-consent to such assignment. All of
the aforementioned assignments shall be upon such terms and conditions as the
assigning Purchaser and the assignee may mutually agree.
SECTION 12.02. Rights of Assignee. Upon the assignment by a Purchaser
in accordance with this Article XII, the assignee receiving such assignment
shall have all of the rights and shall assume in writing all of the obligations
of the assigning Purchaser with respect to the Transaction Documents and the
Asset Interest (or such portion thereof as has been assigned), and the assigning
Purchaser shall be released from such obligations.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities.
(a) General Indemnity by Seller. Without limiting any other rights
which any such Person may have hereunder or under Applicable Law, Seller hereby
agrees to indemnify each of the Administrator, each Purchaser, each Program
Support Provider, each of their respective Affiliates, and all successors,
permitted transferees, participants and permitted assigns and all officers,
directors, shareholders, members, controlling persons, employees and agents of
any of the foregoing (each an "Indemnified Party"), within five (5) Business
Days of demand, 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 relating to the Transaction Documents or the ownership or funding of the
Asset Interest or in respect of any Receivable or any Contract, excluding,
however, (a) Indemnified Amounts to the extent determined by a court of
competent jurisdiction to have resulted from gross negligence, bad faith or
willful misconduct on the part of such Indemnified Party or (b) Indemnified
Amounts which have the effect of recourse for non-payment of the Pool
Receivables due to credit problems of the Obligors (except as otherwise
specifically provided in this Agreement). Without limiting the foregoing, Seller
shall indemnify each Indemnified Party for Indemnified Amounts arising out of or
relating to:
(i) the transfer by Seller of any interest in any Pool
Receivable other than the transfer of an Asset Interest to the
Administrator, for the benefit of Purchasers, pursuant to this
Agreement and the grant of a security interest to the Administrator
pursuant to Section 9.01;
(ii) any representation or warranty made by Seller under or in
connection with any Transaction Document, any Servicer Report, any
Mid-Month Report or any other information or report delivered by or on
behalf of Seller pursuant hereto, which shall have been false,
incorrect or misleading in any respect when made;
35
(iii) the failure by Seller to comply with any Applicable Law,
or the nonconformity of any Pool Receivable or the related Contract
with any Applicable Law;
(iv) the failure to vest and maintain vested in the
Administrator, for the benefit of Purchasers, an undivided percentage
ownership interest, to the extent of the Asset Interest, in the Pool
Assets, free and clear of any Lien, other than a Lien created pursuant
to this Agreement or any other Transaction Document or arising solely
as a result of an act of a Purchaser or the Administrator, whether
existing at the time of any Purchase or Reinvestment of such Asset
Interest or at any time thereafter;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to
any Pool Assets, whether at the time of any Purchase or Reinvestment or
at any time thereafter;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy or payment) of any Obligor to the payment of
any Receivable in, or purporting to be in, the Receivables Pool
(including, without limitation, a defense based on such Receivable or
the related Contract not being a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms), or
any other claim resulting from the sale of the merchandise or services
related to such Receivable or the furnishing or failure to furnish such
merchandise or services;
(vii) any breach by Seller of any of its covenants or
agreements under this Agreement or any other Transaction Document;
(viii) any products liability claim arising out of or in
connection with merchandise or services that are the subject of any
Pool Receivable;
(ix) any litigation, proceeding or investigation against
Seller; or
(x) any tax or governmental fee or charge (but not including
taxes upon or measured by net income or representing a franchise or
unincorporated business tax of such Person), all interest and penalties
thereon or with respect thereto, and all out-of-pocket costs and
expenses, including the reasonable fees and expenses of counsel in
defending against the same, which may arise by reason of the purchase
or ownership of any Asset Interest, or any other interest in the Pool
Receivables or in any goods which secure any such Pool Receivables.
(b) Indemnity by Servicer. Without limiting any other rights which any
such Person may have hereunder or under applicable law, Servicer hereby agrees
to indemnify each Indemnified Party, within five (5) Business Days of demand,
from and against any and all Indemnified Amounts awarded against or incurred by
any of them arising out of or relating to (i) any representation or warranty
made by Servicer under or in connection with any Transaction Document, any
Servicer Report, any Mid-Month Report or any other information or report
delivered by or on behalf of Servicer pursuant hereto, which shall have been
false, incorrect or misleading when made, (ii) the failure by Servicer to comply
with any Applicable Law, (iii) any breach by Servicer of any of its covenants or
agreements under this Agreement or any other
36
Transaction Document or (iv) the commingling of any Collections with other
funds. Notwithstanding the foregoing, in no event shall any Indemnified Party be
awarded any Indemnified Amounts pursuant to this Section 13.01(b) (a) to the
extent determined by a court of competent jurisdiction to have resulted from
gross negligence or willful misconduct on the part of such Indemnified Party or
(b) for recourse for Defaulted Receivables.
(c) After-Tax Basis. Indemnification hereunder shall be in an amount
necessary to make the Indemnified Party whole after taking into account any tax
consequences to the Indemnified Party of the receipt of the indemnity provided
hereunder, including the effect of such tax or refund on the amount of tax
measured by net income or profits which is or was payable by the Indemnified
Party.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by any party therefrom shall in
any event be effective unless the same shall be in writing and signed by (a)
Seller, the Administrator, Parent and each Purchaser (with respect to an
amendment) or (b) the Administrator and each Purchaser (with respect to a waiver
or consent by them) or Seller or Parent (with respect to a waiver or consent by
it), as the case may be, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. The
parties acknowledge that, before entering into such an amendment or granting
such a waiver or consent, Conduit Purchaser may also be required to obtain the
approval of some or all of the Program Support Providers or to obtain
confirmation from certain rating agencies that such amendment, waiver or consent
will not result in a withdrawal or reduction of the ratings of the Commercial
Paper Notes.
SECTION 14.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
express mail or courier or by certified mail, postage prepaid, or by facsimile,
to the intended party at the address or facsimile number of such party set forth
under its name on Schedule 14.02 or at such other address or facsimile number as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, (a) if
personally delivered or sent by express mail or courier or if sent by certified
mail, when received, and (b) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means, if sent during business hours on a
Business Day or on the next Business Day in all other cases.
SECTION 14.03. No Waiver; Remedies. No failure on the part of the
Administrator, any Affected Party, any Indemnified Party, any Purchaser or any
other holder of the Asset Interest (or any portion thereof) 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.
37
SECTION 14.04. Binding Effect; Survival. This Agreement shall be
binding upon and inure to the benefit of Seller, Parent, the Administrator, each
Purchaser and their respective successors and assigns, and the provisions of
Section 4.02 and Article XIII shall inure to the benefit of the Affected Parties
and the Indemnified Parties, respectively, and their respective successors and
assigns; provided, however, nothing in the foregoing shall be deemed to
authorize any assignment not permitted by Section 12.01. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
Final Payout Date. The rights and remedies with respect to any breach of any
representation and warranty made by Seller or Parent pursuant to Article VI and
the provisions of Article XIII and Sections 4.02, 14.05, 14.06, 14.07, 14.08 and
14.15 shall be continuing and shall survive any termination of this Agreement.
SECTION 14.05. Costs, Expenses and Taxes. In addition to its
obligations under Article XIII, Seller or Parent, as the case may be, agrees to
pay within five Business Days of demand;
(a) all costs and expenses incurred by the Administrator, any Program
Support Provider and any Purchaser and their respective Affiliates, in
connection with the enforcement after the occurrence of a Liquidation Event
against Seller or Parent, as the case may be, of, or any breach by Seller or
Parent, as the case may be, of, this Agreement and the other Transaction
Documents, including, without limitation (A) the reasonable fees and expenses of
counsel to any of such Persons incurred in connection with any of the foregoing
or in advising such Persons as to their respective rights and remedies under any
of the Transaction Documents, and (B) all reasonable out-of-pocket expenses
(including reasonable fees and expenses of independent accountants incurred in
connection with any review of Seller's or Parent's, as the case may be, books
and records either prior to the execution and delivery hereof or pursuant to
Section 7.01(c) or otherwise); and
(b) all stamp 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 Transaction Documents, and agrees to indemnify each
Indemnified Party against any liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
SECTION 14.06. No Proceedings; Limitations on Recourse. Seller, Parent,
Servicer, each Purchaser (other than Conduit Purchaser) and Fleet Securities
(individually and as Administrator) each hereby agrees that it will not
institute against Conduit Purchaser, or join any other Person in instituting
against Conduit Purchaser, any insolvency proceeding (namely, any proceeding of
the type referred to in the definition of Event of Bankruptcy) so long as any
Commercial Paper Notes shall be outstanding or there shall not have elapsed one
year plus one day since the last day on which any such Commercial Paper Notes
shall have been outstanding. The parties hereto agree that Conduit Purchaser
shall have no obligations to make any payments hereunder (collectively,
"Purchaser Payments"), and that such Purchaser Payments shall not constitute a
claim against Conduit Purchaser as defined in Section 101 of the Bankruptcy
Code, unless and until Conduit Purchaser has amounts sufficient to pay such
Purchaser Payments from the Asset Interest or pursuant to the Liquidity
Agreement and such amounts are not required to repay Commercial Paper Notes of
Conduit Purchaser or loans to Conduit Purchaser funded by
38
Commercial Paper Notes. Conduit Purchaser shall not have any obligation to pay
any amounts owing hereunder unless and until Conduit Purchaser has received such
amounts.
SECTION 14.07. Confidentiality of Program Information.
(a) Confidential Information. Each party hereto acknowledges that Fleet
Securities regards the structure of the transactions contemplated by this
Agreement to be proprietary, and each such party severally agrees that:
(i) it will not disclose without the prior consent of Fleet
Securities or as is required or authorized by the Transaction Documents
(other than to the directors, employees, agents, auditors, counsel or
affiliates (collectively, "representatives") of such party, each of
whom shall be informed by such party of the confidential nature of the
Program Information (as defined below) and of the terms of this Section
14.07), (A) any information regarding the pricing in, or copies of,
this Agreement or any transaction contemplated hereby, (B) any
information regarding the organization, business or operations of
Conduit Purchaser generally or the services performed by the
Administrator for Conduit Purchaser, or (C) any information which is
furnished by Fleet Securities to such party and which is designated by
Fleet Securities to such party in writing as confidential or not
otherwise available to the general public (the information referred to
in clauses (A), (B) and (C) is collectively referred to as the "Program
Information"); provided, however, that such party may disclose any such
Program Information (I) to any other party to this Agreement for the
purposes contemplated hereby, (II) as may be required by any
Governmental Authority having or claiming to have jurisdiction over
such party, (III) in order to comply with Applicable Law, including,
without limitation, by filing the Transaction Documents with the
Securities and Exchange Commission (provided that neither Seller nor
Parent shall file the Fee Letter, or, if required by Applicable Law to
file the Fee Letter, Parent or Seller, as the case may be, shall
request confidential treatment therefor) or (IV) subject to subsection
(c), in the event such party is legally compelled (by interrogatories,
requests for information or copies, subpoena, civil investigative
demand or similar process) to disclose any such Program Information,
unless legally compelled not to do so;
(ii) it will use the Program Information solely for the
purposes of evaluating, administering and enforcing the transactions
contemplated by this Agreement and making any necessary business
judgments with respect thereto; and
(iii) it will, upon demand, return (and cause each of its
representatives to return) to Fleet Securities, all documents or other
written material (other than documents executed by such party) received
from Fleet Securities, as the case may be, in connection with (a)(i)(B)
or (C) above and all copies thereof made by such party which contain
the Program Information.
(b) Availability of Confidential Information. This Section 14.07 shall
be inoperative as to such portions of the Program Information which are or
become generally available to the public or such party on a nonconfidential
basis from a source other than Fleet Securities or were known to such party on a
nonconfidential basis prior to its disclosure by Fleet Securities.
39
(c) Legal Compulsion to Disclose. In the event that any party or anyone
to whom such party or its representatives transmits the Program Information is
requested or becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any of the Program Information, such party will, to the
extent that it may legally do so,
(i) provide Fleet Securities with prompt written notice so
that Fleet Securities may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Section
14.07; and
(ii) unless Fleet Securities waives compliance by such party
with the provisions of this Section 14.07, make a timely objection to
the request or confirmation to provide such Program Information on the
basis that such Program Information is confidential and subject to the
agreements contained in this Section 14.07.
In the event that such protective order or other remedy is not obtained, or
Fleet Securities waives compliance with the provisions of this Section 14.07,
such party will furnish only that portion of the Program Information which (in
such party's good faith judgment) is legally required to be furnished and will
exercise reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded the Program Information.
(d) Survival. This Section 14.07 shall survive termination of this
Agreement.
SECTION 14.08. Confidentiality of Parent Information.
(a) Confidential Information. Each party hereto acknowledges that each
of Seller and Parent regards certain information to be proprietary, and each
such party severally agrees that:
(i) it will not disclose without the prior consent of Parent
or as is required or authorized by the Transaction Documents (other
than to the directors, employees, agents, auditors, counsel or
affiliates (collectively, "representatives") of such party, each of
whom shall be informed by such party of the confidential nature of the
Parent Information (as defined below) and of the terms of this Section
14.08), any information which is furnished by Parent to such party and
which is designated by Parent or Seller to such party in writing as
confidential or not otherwise available to the general public ("Parent
Information"); provided, however, that such party may disclose any such
Parent Information (I) to any other party to this Agreement for the
purposes contemplated hereby, (II) as may be required by any
Governmental Authority having or claiming to have jurisdiction over
such party, (III) in order to comply with any Applicable Law, (IV)
subject to subsection (c), in the event such party is legally compelled
(by interrogatories, requests for information or copies, subpoena,
civil investigative demand or similar process) to disclose any such
Parent Information, (V) to any Affected Party or any Program Support
Provider, (VI) to the Rating Agencies, or (VII) to any potential
Liquidity Bank or any potential assignee or participant of any
Liquidity Bank (provided such Person has agreed to be bound by the
terms of this Section 14.08), and any placement agent for, or investor
or potential investor in, the Commercial Paper Notes; and
40
(ii) it will use the Parent Information solely for the
purposes of evaluating, administering and enforcing the transactions
contemplated by this Agreement and making any necessary business
judgments with respect thereto.
(b) Availability of Confidential Information. This Section 14.08 shall
be inoperative as to such portions of the Parent Information which are or become
generally available to the public or such party on a nonconfidential basis from
a source other than Parent or were known to such party on a nonconfidential
basis prior to its disclosure by Parent.
(c) Legal Compulsion to Disclose. In the event that any party or anyone
to whom such party or its representatives transmits the Parent Information is
requested or becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any of the Parent Information, such party will, to the
extent that it may legally do so,
(i) provide Parent with prompt written notice so that Parent
may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Section 14.08; and
(ii) unless Parent waives compliance by such party with the
provisions of this Section 14.08, make a timely objection to the
request or confirmation to provide such Parent Information on the basis
that such Parent Information is confidential and subject to the
agreements contained in this Section 14.08.
In the event that such protective order or other remedy is not obtained, or
Parent waives compliance with the provisions of this Section 14.08, such party
will furnish only that portion of the Parent Information which (in such party's
good faith judgment) is legally required to be furnished and will exercise
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded the Parent Information.
(d) Survival. This Section 14.08 shall survive termination of this
Agreement.
SECTION 14.09. Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
SECTION 14.10. Integration. This Agreement and the other Transaction
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
SECTION 14.11. GOVERNING LAW. THIS AGREEMENT, INCLUDING THE RIGHTS AND
DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW
41
YORK, EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE INTERESTS OF THE
ADMINISTRATOR IN THE POOL ASSETS IS GOVERNED BY THE LAWS OF THE JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
SECTION 14.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY
BE IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT A JURY TRIAL.
SECTION 14.13. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. EACH
PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT HEREBY IRREVOCABLY (i) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN, STATE OF NEW YORK, OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY TRANSACTION DOCUMENT; (ii) AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR UNITED
STATES FEDERAL COURT; (iii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO
SO UNDER APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OR PROCEEDING; (iv) CONSENTS TO THE SERVICE OF ANY AND ALL
PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH
PROCESS TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN SECTION 14.02; AND (v) TO THE
EXTENT ALLOWED BY LAW, AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
SECTION 14.13 SHALL AFFECT THE ADMINISTRATOR'S OR ANY PURCHASER'S RIGHT TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY OF SELLER OR PARENT OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTIONS.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION,
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN
CONNECTION WITH THIS AGREEMENT.
42
SECTION 14.14. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by the 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.
SECTION 14.15. No Recourse Against Other Parties. No recourse under any
obligation, covenant or agreement of Conduit Purchaser contained in this
Agreement shall be had against any stockholder (solely in its capacity as
stockholder), employee, officer, director, member or incorporator of Conduit
Purchaser.
43
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.
AVISTA RECEIVABLES CORP.,
as Seller
By:
-------------------------------------
Name Printed: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman of the Board and
President
AVISTA CORPORATION, as initial Servicer
By:
-------------------------------------
Name Printed: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer
S-1
EAGLEFUNDING CAPITAL CORPORATION,
as Conduit Purchaser
By: Fleet Securities, Inc., its
attorney-in-fact
By:
--------------------------------------
Name Printed:
----------------------------
Title:
-----------------------------------
S-2
FLEET NATIONAL BANK,
as Committed Purchaser
Commitment: $100,000,000
By:
--------------------------------------
Name Printed:
----------------------------
Title:
-----------------------------------
S-3
FLEET SECURITIES, INC., as Administrator
By:
--------------------------------------
Name Printed:
----------------------------
Title:
-----------------------------------
S-4
TABLE OF CONTENTS
Page
ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01. Commitment to Purchase; Limits on Purchasers' Obligations.............................1
SECTION 1.02. Purchase Procedures; Assignment of Purchaser's Interests..............................2
SECTION 1.03. Reinvestments of Certain Collections; Payment of Remaining Collections................2
SECTION 1.04. Asset Interest........................................................................3
SECTION 1.05. Voluntary Termination of Purchase and Reinvestment Obligations or Reduction of
Purchase Limit........................................................................4
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. Computation of Capital................................................................4
SECTION 2.02. Computation of Concentration Limit....................................................5
SECTION 2.03. Computation of Earned Discount........................................................5
SECTION 2.04. Estimates of Earned Discount Rate, Fees, Etc..........................................5
ARTICLE III
SETTLEMENTS
SECTION 3.01. Settlement Procedures.................................................................5
SECTION 3.02. Deemed Collections; Reduction of Capital, Etc.........................................8
SECTION 3.03. Payments and Computations, Etc........................................................9
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees..................................................................................9
SECTION 4.02. Yield Protection......................................................................9
SECTION 4.03. Funding Losses.......................................................................11
ARTICLE V
CONDITIONS TO PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase.............................................11
SECTION 5.02. Conditions Precedent to All Purchases and Reinvestments..............................13
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(continued)
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Seller.............................................14
SECTION 6.02. Representations and Warranties of Parent.............................................16
ARTICLE VII
GENERAL COVENANTS
SECTION 7.01. Affirmative Covenants................................................................18
SECTION 7.02. Reporting Requirements...............................................................20
SECTION 7.03. Negative Covenants...................................................................22
SECTION 7.04. Separate Existence...................................................................24
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer..............................................................26
SECTION 8.02. Duties of Servicer...................................................................27
SECTION 8.03. Rights of the Administrator..........................................................28
SECTION 8.04. Responsibilities of Seller...........................................................29
SECTION 8.05. Further Action Evidencing Purchases and Reinvestments................................29
SECTION 8.06. Application of Collections...........................................................30
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Interest...........................................................31
SECTION 9.02. Further Assurances...................................................................31
SECTION 9.03. Remedies.............................................................................31
ARTICLE X
LIQUIDATION EVENTS
SECTION 10.01. Liquidation Events...................................................................31
SECTION 10.02. Remedies.............................................................................33
ARTICLE XI
THE ADMINISTRATOR
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SECTION 11.01. Authorization and Action.............................................................33
SECTION 11.02. Administrator's Reliance, Etc........................................................33
SECTION 11.03. Fleet and Affiliates.................................................................34
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. Restrictions on Assignments..........................................................34
SECTION 12.02. Rights of Assignee...................................................................35
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities..........................................................................35
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc......................................................................37
SECTION 14.02. Notices, Etc.........................................................................37
SECTION 14.03. No Waiver; Remedies..................................................................37
SECTION 14.04. Binding Effect; Survival.............................................................37
SECTION 14.05. Costs, Expenses and Taxes............................................................38
SECTION 14.06. No Proceedings; Limitations on Recourse..............................................38
SECTION 14.07. Confidentiality of Program Information...............................................39
SECTION 14.08. Confidentiality of Parent Information................................................40
SECTION 14.09. Captions and Cross References........................................................41
SECTION 14.10. Integration..........................................................................41
SECTION 14.11. Governing Law........................................................................41
SECTION 14.12. Waiver Of Jury Trial.................................................................42
SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities........................................42
SECTION 14.14. Execution in Counterparts............................................................43
SECTION 14.15. No Recourse Against Other Parties....................................................43
APPENDICES
APPENDIX A Definitions
SCHEDULES
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SCHEDULE 6.01(m) List of Offices of Seller where Records Are Kept
SCHEDULE 6.01(n) List of Lock-Box Banks and Lock-Box Accounts
SCHEDULE 7.01(g) Description of Credit and Collection Policy
SCHEDULE 14.02 Notice Addresses
EXHIBITS
EXHIBIT 1.02(a) Form of Purchase Notice
EXHIBIT 3.01(a) Form of Servicer Report
EXHIBIT 3.01(a)-M Form of Mid-Month Report
EXHIBIT 5.01(f) Form of Lock-Box Agreement
EXHIBIT 5.01(f)-2 Form of Notice to Postmaster
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