TRADE RECEIVABLES PURCHASE AND SALE AGREEMENT

Exhibit 10.1

TRADE RECEIVABLES

PURCHASE AND SALE AGREEMENT

Dated as of December 20, 1988,

as Amended and Restated as of November 14, 1995, as of January 1, 1999,

as of November 14, 2000, as of November 14, 2005 and as

Further Amended and Restated as of September 19, 2008

Among

PECO ENERGY COMPANY,

VICTORY RECEIVABLES CORPORATION,

And

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH

TABLE OF CONTENTS

 

 

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TRADE RECEIVABLES

PURCHASE AND SALE AGREEMENT

Dated as of December 20, 1988,

as Amended and Restated as of November 14, 1995, as of January 1, 1999,

as of November 14, 2000, as of November 14, 2005

and as Further Amended and Restated as of September 19, 2008

PECO ENERGY COMPANY (formerly known as Philadelphia Electric Company), a Pennsylvania corporation (the “ Seller ”), VICTORY RECEIVABLES CORPORATION, a Delaware corporation (the “ Investor ”), and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH (“ BTMUNY ”), as agent (the “ Agent ”) for the Investor and the Owner (as defined below), agree as follows:

PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized and used throughout this Agreement (in addition to those defined above) are defined in Article I of this Agreement.

(2)      The Seller, CIESCO, LLC (“ CIESCO ”) and Citicorp North America, Inc. (“ CNAI ”) entered into that certain Trade Receivables Purchase and Sale Agreement dated as of December 20, 1988, as amended and restated as of November 14, 1995, as of January 1, 1999, as of November 14, 2000 and as of November 14, 2005, and further amended as of December 28, 2007 and as of April 30, 2008 (the “ Existing Agreement ”).

(3)      CIESCO and CNAI have assigned all of their right, title and interest in and to the Existing Agreement to the Investor and BTMUNY, respectively, and the parties hereto now desire to amend and restate the Existing Agreement, all in accordance with the conditions set forth below.

(4)      The Seller has, and expects to have, Pool Receivables in which the Seller has sold or intends to sell interests, referred to herein as Eligible Assets.

(5)      BTMUNY has agreed to act as Agent in accordance with the terms and provisions set forth below.

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree to amend and restate the Existing Agreement in its entirety to read as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01         Certain Defined Terms . As used in this Agreement, each of the following terms shall have the following meaning (such meaning to be equally applicable to both the singular and plural forms of the term defined):

“ Adjustment Request ” has the meaning assigned to the term in the Servicing Agreement and relates to and sets forth the recalculation and adjustment of the Intangible Transition Charges.

“ Adverse Claim ” means a lien, security interest, charge or encumbrance, or other right or claim of any Person.

“ Affiliate ” when used with respect to a Person means any other Person controlling, controlled by or under common control with such Person.

“ Affiliated Obligor ” means any Obligor which is an Affiliate of another Obligor.

“ Agent ” has the meaning assigned to that term in the introductory paragraph hereto.

“ Agent’s Account ” means the special account (account number 01419647) of the Agent maintained at the office of Deutsche Bank Trust Company Americas at 60 Wall Street, New York, New York 10005, ABA No. 021-001-033, Account Name: Corporate Trust & Agency Services, Reference: Victory Receivables Corporation/PECO Energy Co.

“ Alternate Base Rate ” means, on any date, a fluctuating rate of interest per annum equal to the higher of:

(a)      the rate of interest most recently announced by BTMU in New York, New York as its Prime Rate; or

(b)      the Federal Funds Rate most recently determined by the Agent, plus 1.00%.

The Alternate Base Rate is not necessarily intended to be the lowest rate of interest determined by the Agent in connection with extensions of credit.

“ Assignee Rate ” for any day falling in a particular Fixed Period with respect to any Eligible Asset means an interest rate per annum equal to the BTMU LIBO Rate for such Fixed Period plus (i) 1.5% per annum or (ii) in the event that all of the Seller’s long-term public First and Refunding Mortgage Bonds are not rated at least BBB- by S&P and Baa3 by Moody’s, 2.5% per annum; provided , however , that (i) for any Fixed Period on or prior to the first day of which the Owner shall have notified the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for the Owner to fund such Eligible Asset at

 

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the Assignee Rate set forth above (and the Owner shall not have subsequently notified the Agent that such circumstances no longer exist), (ii) in the case of any Fixed Period of one to (and including) 29 days, (iii) in the case of any Fixed Period as to which the Agent does not receive notice, by no later than 12:00 noon (New York City time) on the third Business Day preceding the first day of such Fixed Period, that the related Eligible Asset will not be funded by issuance of commercial paper, and (iv) in the case of any Fixed Period for an Eligible Asset the Capital of which allocated to the Owner is less than $500,000, the “ Assignee Rate ” for such Fixed Period shall be an interest rate per annum equal to 1.5% per annum above the Alternate Base Rate in effect on the first day of such Fixed Period; provided further that the Agent and the Seller may agree in writing from time to time upon a different “ Assignee Rate .”

“ BTMU ” means The Bank of Tokyo-Mitsubishi UFJ, Ltd.

“ BTMU LIBO Rate ” means for any Fixed Period the rate per annum at which deposits in U.S. Dollars are offered by the principal office of BTMU in London, England to prime banks in the London interbank market at 11:00 a.m. London time two (2) Business Days before the commencement of such Fixed Period or, if no such rate is available, BTMU shall determine such rate based on the rates it is offered on deposits of such duration in the London interbank market.

“ BTMU LIBO Rate Reserve Percentage ” of any Owner for any Fixed Period in respect of which Yield is computed by reference to the BTMU LIBO Rate means the reserve percentage applicable two Business Days before the first day of such Fixed Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) (or if more than one such percentage shall be applicable, the daily average of such percentages for those days in such Fixed Period during which any such percentage shall be so applicable) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Owner with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurocurrency Liabilities is determined) having a term equal to such Fixed Period.

“ BTMUNY ” has the meaning assigned to that term in the Preliminary Statements.

“ Business Day ” means any day on which (i) banks are not authorized or required to close in New York City, Philadelphia, Pennsylvania and Chicago, Illinois and (ii) if this definition of “Business Day” is utilized in connection with the BTMU LIBO Rate, dealings are carried out in the London interbank market.

“ Capital ” of an Eligible Asset means the original amount paid to the Seller for such Eligible Asset by the Investor or, in the case of an Eligible Asset created by the division or combination of an Existing Eligible Asset (as defined in Section 2.11), the amount as determined in Section 2.11, in each case reduced from time to time by Collections received and distributed on account of such Capital pursuant to Section 2.07; provided , however , that such Capital of such Eligible Asset shall be deemed not to have been 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.

 

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“ CAP Rate Program Receivables ” means Tariff Receivables of Obligors whose annual household gross income is below 150% of the federal poverty level. Obligors in this program receive a rate discount for usage up to a fixed maximum each month. Usage exceeding this maximum is billed at the regular Tariff rate. These Obligors may also have any pre-application arrears on their account forgiven if they remain current on post-application billings for six consecutive months. This requirement may be replaced by an arrangement that forgives 1/12 ^th of the arrearage for each on-time payment of the current account.

“ CIESCO ” means CIESCO, LLC, a Delaware limited liability company.

“ Collection Agent ” means at any time the Person (including the Agent) then authorized pursuant to Article VI to service, administer and collect Pool Receivables.

“ Collection Agent Fee ” has the meaning assigned to that term in Section 2.03(c).

“ Collection Agent Fee Reserve ” means, on any day, the product of (i) the percentage per annum used in the calculation of the Collection Agent Fee in effect on such day multiplied by (ii) the Days’ Sales Outstanding plus the Collection Delay Period, multiplied by (iii) the aggregate Outstanding Balance of all Receivables in the Receivables Pool multiplied by (iv) 1/360.

“ Collection Delay Period ” means 10 days or such other number of days as the Agent may select upon three Business Days’ notice to the Seller.

“ Collections ” means, with respect to any Pool Receivable, all cash collections and other cash proceeds of such Pool Receivable, including, without limitation, all cash proceeds of Related Security with respect to such Pool Receivable, and any Collection of such Pool Receivable deemed to have been received pursuant to Section 2.08 or Section 2.09.

“ Commercial Paper Note ” means a promissory note having a term not exceeding 270 days.

“ Competition Act ” means the Pennsylvania Electricity Generation Customer Choice and Competition Act of 1996 and shall also include all amendments, rules, regulations and orders promulgated thereunder or related thereto issued from time to time.

“ Competitive Transition Charges ” means those charges so designated on Obligors’ bills and imposed on such Obligors pursuant to the QRO’s.

“ Concentration Limit ” for any Obligor means at any time 3% for any Obligor or such higher percentage (“ Special Concentration Limit ”) for such Obligor as the Agent may approve from time to time in writing upon three Business Days’ notice to the Seller; provided , that the Special Concentration Limit shall be 6% for Obligors whose (i) long-term public senior non-credit enhanced unsecured debt securities are rated at least BBB- by S&P and at least Baa3 by Moody’s and/or (ii) unsecured commercial paper and short-term debt obligation ratings are at least A-3 by S&P and at least P-3 by Moody’s (it being understood that if any such rating is downgraded, the Concentration Limit shall automatically, and without the requirement of notice, revert to 3%); provided , however , that, in the case of an Obligor with any Affiliate Obligor, the

 

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Concentration Limit, the Receivables related thereto and the Outstanding Balance thereof shall be calculated as if such Obligor and such Affiliated Obligor are one Obligor; provided , further , that for all governmental Obligors in the aggregate, the Concentration Limit shall be 6%; provided , further , that the Agent may cancel any Special Concentration Limit upon three Business Days’ notice to the Seller; and provided , further , that the operation of the Concentration Limit under this Agreement shall be without prejudice to the rights of the Agent pursuant to clause (xiii) of the definition of “Eligible Receivable”.

“ Contract ” means (a) each of the Tariffs, (b) the provisions of the Competition Act and the QRO’s which relate to the creation and payment of EGS Receivables with respect to Competitive Transition Charges and (c) the provisions of the Competition Act and the QRO’s which relate to the creation and payment of Third Party Biller Receivables with respect to the Competitive Transition Charges.

“ CP Fixed Period Date ” means, for any Eligible Asset, the date of Purchase of such Eligible Asset and thereafter the last day of each calendar month or any other day as shall have been agreed to in writing by the Agent and the Seller prior to the first day of the preceding Fixed Period for such Eligible Asset or, if there is no preceding Fixed Period, prior to the first day of such Fixed Period.

“ CP Rate ” means, for each day in any Fixed Period with respect to any Eligible Asset funded by Commercial Paper Notes, the sum of (a) discount or yield accrued (including, without limitation, any associated with financing the discount or interest component on the roll-over of any Pooled Commercial Paper) on the Investor’s Pooled Commercial Paper on such day issued to fund or maintain such Eligible Asset, as determined by the Agent, plus (b) any and all accrued commissions in respect of the Investor’s placement agents and commercial paper dealers, and issuing and paying agent fees incurred, in respect of such Pooled Commercial Paper for such day, plus (c) other costs (including without limitation those associated with funding small or odd-lot amounts) with respect to all receivable purchase, credit and other investment facilities which are funded by the applicable Pooled Commercial Paper for such day (it being understood that the amounts described herein shall be determined by the Agent, whose determination shall be conclusive).

“ Credit and Collection Policy ” means those credit and collection policies and practices of the Seller in effect on the date hereof relating to Tariff Receivables described in Schedule I hereto, as modified in compliance with Section 7.01(j).

“ Credit Draw ” means a loan, advance, purchase or other funding made by the Enhancement Provider pursuant to the Enhancement Agreement as credit enhancement for the Investor’s commercial paper facility.

“ Days’ Sales Outstanding ” means, as of any date, an amount equal to the Outstanding Balance of Receivables at the end of the most recently ended calendar month, divided by the amount of sales in such month, multiplied by the number of days in such month.

“ Debt ” means (i) indebtedness for borrowed money or for the deferred purchase price of property or services, (ii) obligations as lessee under leases which, in accordance with

 

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generally accepted accounting principles, are recorded as capital leases and (iii) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) or (ii) above. Debt shall not include indebtedness under the Transition Bonds or any successor series bonds thereto relating to Intangible Transition Charges and Nonrecourse Debt.

“ Default Ratio ” means the ratio (expressed as a percentage) computed as of the last day of each calendar month by dividing (i) the aggregate Outstanding Balance of all Pool Receivables (other than Unbilled Tariff Receivables) that were Defaulted Receivables on such date or would have been Defaulted Receivables on such date had they not been written off the books of the Seller during such month, by (ii) the aggregate Outstanding Balance of all Pool Receivables (other than Unbilled Tariff Receivables) on such date.

“ Defaulted Receivable ” means a Receivable (i) as to which any payment, or part thereof, remains unpaid for 61 days from the original, or, in the case of Special Agreement Receivables, the most recent due date for such payment, (ii) as to which the Obligor thereof has taken any action, or suffered any event to occur, of the type described in Section 7.01(f) or (iii) which, consistent with the Credit and Collection Policy, would be written off the Seller’s books as uncollectible if they were on such books.

“ Delinquency Ratio ” means the ratio (expressed as a percentage) computed as of the last day of each calendar month by dividing (i) the aggregate Outstanding Balance of all Pool Receivables (other than Unbilled Tariff Receivables) that were Delinquent Receivables at the end of such month by (ii) the aggregate Outstanding Balance of all Pool Receivables (other than Unbilled Tariff Receivables) on such date.

“ Delinquent Receivable ” means a Receivable that is not a Defaulted Receivable and

(i)      as to which any payment, or part thereof, remains unpaid for 31 days but not more than 60 days from the original, or, in the case of Special Agreement Receivables, the most recent, due date for such payment; or

(ii)      which, consistent with the Credit and Collection Policy, would be classified as delinquent by the Seller.

“ Designated Account ” means an account designated by the Agent pursuant to Section 6.03, in a writing delivered to the Seller, for the purpose of receiving Collections of Pool Receivables.

“ Designated Obligor ” means, at any time, each Obligor; provided , however , that for credit reasons related to an Obligor determined by the Agent, any Obligor shall cease to be a Designated Obligor upon three Business Days’ notice by the Agent to the Seller.

“ Diluted Receivable ” means a Pool Receivable (other than a Defaulted Receivable or a Delinquent Receivable) to the extent the balance thereof is reduced due to returns, cash discounts, rebates, adjustments, disputes, offsets or any other similar reason, or due to a breach of title or the eligibility of such Pool Receivable.

 

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“ Dilution Horizon Ratio ” means, for each day of determination, the ratio (expressed as a percentage) computed for the most recently ended calendar month of (a) the aggregate initial balance of all Receivables originated by the Seller during the immediately preceding two calendar months to (b) the Net Receivables Pool Balance as of the last day of the most recently ended calendar month.

“ Dilution Ratio ” means, as of any day, the ratio (expressed as a percentage) of (a) the aggregate Outstanding Balance of Diluted Receivables that became Diluted Receivables in the most recently ended calendar month, to (b) the aggregate initial balance of Receivables originated by the Seller in the prior calendar month.

“ Dilution Reserve ” means, on any day, the product of (a) the Dilution Reserve Factor on such date, multiplied by (b) the Net Receivables Pool Balance on such day.

“ Dilution Reserve Factor ” means, with respect to any date of determination, an amount equal to:

((2.0 x DR) + DVR) x DHR

 

“ Dilution Spike ” has the meaning assigned to that term in the definition of Dilution Volatility Ratio.

“ Dilution Volatility Ratio ” means the product of (a) the difference between (i) the highest three-month average Dilution Ratio observed over the preceding twelve (12) months (the “ Dilution Spike ”), minus (ii) the preceding twelve month average Dilution Ratio, multiplied by (b) the quotient of (i) the Dilution Spike, divided by (ii) the preceding twelve (12) month average Dilution Ratio.

“ Disclosure Document ” means each of (i) the Seller’s Annual Report on Form 10-K for the year ended December 31, 2007, (ii) the Seller’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008, respectively and (iii) the Seller’s Current Reports on Form 8-K filed January 23, 2008, March 5, 2008, March 6, 2008, March 24, 2008, April 3, 2008, April 24, 2008, May 28, 2008, July 17, 2008, July 23, 2008, August 5, 2008, August 21, 2008, September 4, 2008, September 10, 2008 and September 15, 2008, respectively.

“ Effective Date ” means September 19, 2008.

 

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“ EGS ” means electric generation suppliers licensed by the Pennsylvania Public Utility Commission pursuant to the Competition Act to provide generation and related services, including billing of Receivables of the Seller and metering.

“ EGS Receivable ” means the indebtedness of an EGS to the Seller with respect to Competitive Transition Charges (but not Intangible Transition Charges) plus distribution and transmission charges that an EGS bills on behalf of the Seller pursuant to the Competition Act.

“ Eligible Asset ” means, at any time, an undivided percentage interest at such time in (i) all Pool Receivables, (a) in the case of Tariff Receivables, arising prior to the time of the most recent computation or recomputation of such undivided percentage interest pursuant to Section 2.05 or to the extent resulting from the billing of the Unbilled Tariff Receivables referred to below and, (b) in the case of Unbilled Tariff Receivables, which have been included in the Receivables Pool prior to the time of such computation or recomputation, (ii) all Related Security with respect to all Pool Receivables and (iii) all Collections with respect to, and other proceeds of, all Pool Receivables. Such undivided percentage interest for an Eligible Asset shall be computed as

C + RA +YR + CAFR

NRPB

where:

 

Each Eligible Asset shall be determined from time to time pursuant to the provisions of Section 2.05.

“ Eligible Receivable ” means, at any time and with respect to any Eligible Asset, a Receivable

(i)      the Obligor of which (A) is a United States resident and (B) is not an Affiliate of the Seller;

(ii)      the Obligor of which at the time of the recomputation of such Eligible Asset first made after the Receivable arises is a Designated Obligor;

 

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(iii)      the Obligor of which at the time of the recomputation of such Eligible Asset first made after the Receivable arises is not the Obligor of any Defaulted Receivables in the aggregate amount of 5% or more of the aggregate Outstanding Balance of all Pool Receivables of such Obligor;

(iv)      which at the time of the recomputation of such Eligible Asset first made after the Receivable arises is not a Defaulted Receivable; provided , that if such Receivable thereafter becomes a Defaulted Receivable, such Receivable shall continue to be an Eligible Receivable until the time of such next recomputation of such Eligible Asset.

(v)      which, according to the Contract related thereto, is required to be paid in full within 30 (60, if the Receivable is a governmental Receivable) days of the original billing date therefor;

(vi)      which is an account receivable or other obligation representing all or part of the sales price of merchandise, insurance or services within the meaning of Section 3(c)(5) of the Investment Company Act of 1940, as amended;

(vii)      the nature of which is such that its purchase with the proceeds of notes would constitute a “current transaction” within the meaning of Section 3(a)(3) of the Securities Act of 1933, as amended;

(viii)      which is an “account” or a “general intangible” within the meaning of Article 9 of the UCC of the Commonwealth of Pennsylvania;

(ix)      which is denominated and payable only in United States dollars in the United States;

(x)      which arises under a Contract which, together with such Receivable (or together with such Receivable when billed), is in full force and effect and constitutes the legal, valid and binding obligation of the obligor of such Receivable enforceable against such obligor in accordance with its terms, except as the enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors’ rights generally, and which is not subject to any Adverse Claim other than the Mortgage or any other dispute, offset, counterclaim or defense whatsoever except as specifically contemplated by this Agreement;

(xi)      which, together with the Contract related thereto, does not contravene in any material respect any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which the Seller is not in violation of any such law, rule or regulation in any material respect;

(xii)      which at the time of the recomputation of such Eligible Asset first made after the Receivable arises, satisfies all applicable requirements of the Credit and Collection Policy and complies with such other reasonable requirements as the Agent may from time to time specify; and

 

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(xiii)      as to which, at or prior to the time of the recomputation of such Eligible Asset first made after the Receivable arises, the Agent has not given the Seller three Business Days’ notice that the Agent has determined that, for credit reasons related to such Receivable or the obligor thereof, such Receivable (or class of Receivables) is not acceptable;

provided , however , that until Unbilled Tariff Receivables are billed and become Tariff Receivables, they shall be included as Eligible Receivables even if they do not meet the criteria set forth in clauses (i), (ii) and (iii) above; and provided , further , that current and future Special Agreement Receivables shall under no circumstances be considered to be Eligible Receivables.

“ Enhancement Agreement ”’ means any agreement between Investor and any other Persons(s) entered into to provide credit enhancement to the Investor’s commercial paper facility.

“ Enhancement Provider ” means any Person providing credit support to the Investor under an Enhancement Agreement.

“ ERISA ” means the U.S. Employee Retirement Income Security Act of 1974, as amended from time to time.

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Existing Agreement ” has the meaning assigned to that term in the Preliminary Statements to this Agreement.

“ Facility Termination Date ” means the earliest of (a) September 18, 2009 (or September 17, 2010 or September 16, 2011, as the case may be, provided that the parties hereto shall in each such instance mutually consent thereto in writing) or (b) the date declared as (or deemed to be) the Facility Termination Date pursuant to Section 7.01.

“ Federal Funds Rate ” means, for any period, a fluctuating interest rate per annum equal (for each day during such period) to:

(a)      the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York; or

(b)      if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Liquidity Provider from three federal funds brokers of recognized standing selected by it.

“ Fee Letter ” has the meaning assigned to that term in Section 2.03(a).

 

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“ Fees ” has the meaning assigned to that term in Section 2.03(a).

“ Fixed Period ” means, with respect to any Eligible Asset,

(a)      in the case of any Fixed Period in respect of which Yield is computed by reference to the CP Rate, each successive period commencing on each CP Fixed Period Date for such Eligible Asset and ending on the next succeeding CP Fixed Period Date for such Eligible Asset;

(b)      in the case of any Fixed Period in respect of which the funding is made by a Liquidity Advance or a Credit Draw, each successive period commencing on the date of the making of such Liquidity Advance or a Credit Draw, and ending such number of days thereafter as the Agent shall select; and

(c)      in the case of any Fixed Period in respect of which Yield is computed by reference to the Assignee Rate (but not under the circumstances referred to in clause (b) above), each successive period of from one to and including 14 days, or a period of 21, 30 or 60 days, as the Seller shall select and the Agent may approve on notice by the Seller received by the Agent (including notice by telephone, confirmed in writing) not later than 11:00 A.M. (New York City time) on the day which occurs three Business Days before the first day of such Fixed Period, each such Fixed Period for such Eligible Asset to commence on the last day of the immediately preceding Fixed Period for such Eligible Asset (or, if there is no such Fixed Period, on the date of Purchase of such Eligible Asset), except that if the Agent shall not have received such notice, or the Agent and the Seller shall not have so mutually agreed, before 11:00 A.M. (New York City time) on such day, the Fixed Period shall be one day;

provided , however , that: (i) any such Fixed Period (other than of one day) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day, except that, in the case of any Fixed Period for which a BTMU LIBO Rate applies, if such extension would cause the last day of such Fixed Period to occur in the next following calendar month, the last day of such Fixed Period shall occur on the next preceding Business Day; (ii) in the case of Fixed Periods of one day for any Eligible Asset, (A) if such Fixed Period is such Eligible Asset’s initial Fixed Period, such Fixed Period shall be the day of the Purchase; (B) any subsequently occurring Fixed Period which is one day shall, if the immediately preceding Fixed Period is more than one day, be the last day of such immediately preceding Fixed Period, and, if the immediately preceding Fixed Period is one day, be the day next following such immediately preceding Fixed Period; and (C) if such Fixed Period occurs on a day immediately preceding a day which is not a Business Day, such Fixed Period shall be extended to the next succeeding Business Day; and (iii) in the case of any Fixed Period for such Eligible Asset which commences before the Termination Date for such Eligible Asset and would otherwise end on a date occurring after such Termination Date, such Fixed Period shall end on such Termination Date and the duration of each Fixed Period which commences on or after the Termination Date for such Eligible Asset shall be of such duration as shall be selected by the Agent.

 

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“ Intangible Transition Charges ” means the charges so designated and imposed upon Obligors in the Seller’s historical geographic area pursuant to the QRO’s.

“ Intercreditor Agreement ” means that certain Intercreditor Agreement dated March 25, 1999, as amended as of May 2, 2000, among the Bond Trustee (as defined in the Servicing Agreement), the Seller (in its capacities as the Seller under this Agreement and as the Servicer under the Servicing Agreement), the Trust and the Agent, as amended from time to time.

“ Investor ” shall include Victory Receivables Corporation, and any successor or assign of the Investor that is a receivables investment company which in the ordinary course of its business issues commercial paper or other securities to fund its acquisition and maintenance of receivables.

“ Investor Rate ” for any Fixed Period for any Eligible Asset means the CP Rate for such Fixed Period; provided , however , that if the Owner shall not, at any time and for any reason, fund its Purchase or maintenance of such Eligible Asset for such Fixed Period by its issuing Commercial Paper Notes, the “ Investor Rate ” for such Fixed Period shall then be the Assignee Rate for such Fixed Period or such other rate as the Agent and the Seller shall agree to in writing; and provided , further , however , that if the Owner so requests and the Seller consents thereto, the “Investor Rate” for any Fixed Period of one day shall be the Assignee Rate for such Fixed Period.

“ Investor Report ” means a report in substantially the form of Exhibit C hereto, furnished by the Collection Agent to the Agent for each Owner pursuant to Section 2.09.

“ Liquidation Day ” for any Eligible Asset means either (i) each day which occurs on or after the Termination Date for such Eligible Asset or (ii) any day designated by the Seller as a Liquidation Day or (iii) any day on which all of the Seller’s long-term public First and Refunding Mortgage Bonds are rated less than BBB- by S&P or less than Baa3 by Moody’s.

“ Liquidation Fee ” means, for each Eligible Asset for any Fixed Period (computed without regard to clause (iii) of the definition of “ Fixed Period ”) during which any Liquidation Day or Termination Date for such Eligible Asset occurs, the amount, if any, by which (i) the additional Yield (calculated without taking into account any Liquidation Fee) which would have accrued on the reductions of Capital of such Eligible Asset during such Fixed Period (as so computed) if such reductions had remained as Capital, exceeds (ii) the income, if any, received by the Owner of such Eligible Asset from such Owner's investing the proceeds of such reductions of Capital.

“ Liquidity Advance ” means a loan, advance, purchase or other similar action made by a Liquidity Provider pursuant to a Liquidity Agreement.

“ Liquidity Agent ” means BTMUNY in its capacity as liquidity agent under the Liquidity Agreement.

 

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“ Liquidity Agreement ” means any agreement entered into in connection with this Agreement pursuant to which any Person agrees to make loans or advances to, or purchases from the Investor in order to provide liquidity for the Investor’s Commercial Paper Notes.

“ Liquidity Provider ” means BTMUNY or any other commercial lending institution that is at any time a lender or purchaser under a Liquidity Agreement.

“ Loss Horizon Ratio ” means, as of any day, the ratio (expressed as a percentage) of (a) the aggregate initial balance of Receivables originated by the Seller during the preceding three calendar months, to (b) the Net Receivables Pool Balance at the end of the most recently ended calendar month.

“ Loss Ratio ” means, as of any day, the ratio (expressed as a percentage) of (a) the aggregate Outstanding Balance of all Delinquent Receivables as of the last day of the most recently ended calendar month, plus the aggregate Outstanding Balance of all Receivables that were written off the Seller’s books as uncollectible in such calendar month to (b) the aggregate initial balance of all Receivables originated in the third month preceding such calendar month.

“ Loss Reserve ” means on any day the product of (a) the Loss Reserve Factor on such day, multiplied by (b) the Net Receivables Pool Balance on such day.

“ Loss Reserve Factor ” means, as of any day, the product of (a) 2.00, multiplied by (b) the Peak Loss Ratio, multiplied by (c) the Loss Horizon Ratio, in each case, at such time.

“ Loss-to-Liquidation Ratio ” means, as of any date, the ratio (expressed as a percentage) computed as of the last day of the immediately preceding calendar month by dividing (a) the aggregate Outstanding Balance of all Pool Receivables written off, or which should have been written off, by the Seller in accordance with the Credit and Collection Policy during such calendar month, by (b) the aggregate amount of Collections of Pool Receivables actually received by the Seller during such calendar month.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Mortgage ” means the First and Refunding Mortgage, dated May 1, 1923, between The Counties Gas and Electric Company (to which the Seller is a successor) and Fidelity Trust Company, Trustee (to which U.S. Bank, National Association is a successor), as amended to the date hereof, providing for the issuance of the Seller’s First and Refunding Mortgage Bonds.

“ Net Receivables Pool Balance ” means at any time the amount derived by applying (a) the NRPB Discount Percentage, to (b) the Outstanding Balance of the Eligible Receivables in the Receivables Pool at such time reduced by (i), in the case of Pool Receivables other than governmental Receivables, the sum of the amounts by which the Outstanding Balance of all Pool Receivables of each Obligor exceeds the product of (A) the Concentration Limit for such Obligor at such time multiplied by (B) the aggregate Capital of all Eligible Assets outstanding at such time and (ii) in the case of governmental Receivables, the sum of the amounts by which the Outstanding Balance of all Pool Receivables that are governmental Receivables, exceeds the product of (A) the aggregate Concentration Limit for all governmental Obligors, multiplied by (B) the aggregate Capital of all Eligible Assets outstanding at such time.

 

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“ Nonrecourse Debt ” means any indebtedness that finances the acquisition, development, ownership or operation of an asset in respect of which the Person to which such indebtedness is owed has no recourse whatsoever to the Seller other than:

(i)      recourse to the named obligor with respect to such indebtedness (the “ Debtor ”) for amounts limited to the cash flow or net cash flow (other than historic cash flow) from the asset;

(ii)      recourse to the Debtor for the purpose only of enabling amounts to be claimed in respect of such indebtedness in an enforcement of any security interest or lien given by the Debtor over the asset or the income, cash flow or other proceeds deriving from the asset (or given by any shareholder or the like in the Debtor) over its shares or like interest in the capital of the Debtor is limited solely to the amount of any recoveries made on any such enforcement; and

(iii)      recourse to the Debtor generally or indirectly or any Affiliate of the Debtor, under any form of assurance, undertaking or support, which recourse is limited to a claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for a breach of an obligation (other than a payment obligation or an obligation to comply or to procure compliance by another with any financial ratios or other tests of financial condition) by the Person against which such recourse is available.

“ NRPB Discount Percentage ” means the percentage equal to (i) 100%, minus (ii) the product of (A) 5, and (B) the excess of the latest 12-month rolling average of the Loss-to-Liquidation Ratio over 2%.

“ Obligor ” means a Person obligated to make payments pursuant to a Contract.

“ Outstanding Balance ” of any Receivable at any time means in the case of a Tariff Receivable, Unbilled Tariff Receivable, EGS Receivable or Third Party Biller Receivable, the then outstanding principal balance thereof determined as of the close of business on the day before the date of determination.

“ Owner ” shall include the Investor and all other owners by assignment or otherwise of an Eligible Asset and, to the extent of the undivided interests so purchased, shall include any participants.

“ Peak Loss Ratio ” means the highest three-month rolling average Loss Ratio over the preceding twelve (12) calendar months.

“ Person ” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity.

“ Pool Receivable ” means a Receivable in the Receivables Pool.

 

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“ Pooled Commercial Paper ” means Commercial Paper Notes issued by the Investor which are subject to any particular pooling arrangement, as determined by the Agent (it being recognized that there may be more than one distinct group of Pooled Commercial Paper at any time).

“ Prime Rate ” means a fluctuating interest rate per annum equal to the higher of the rate of interest most recently announced by BTMU or its Affiliate Bank of Tokyo-Mitsubishi UFJ Trust Company, in New York, New York, as its prime rate.

“ Program Administration Agreement ” means that certain administration agreement between the Investor and the Program Administrator governing certain aspects of the administration of the Investor’s commercial paper facility.

“ Program Administrator ” means the program administrator designated as such (and its successors) under the Program Administration Agreement

“ Provisional Liquidation Day ” means each day on which the conditions set forth in clauses (b)(i) (other than with respect to a bring down of the representations and warranties contained in Section 4.01(e) and (f)) and (b)(ii) of Section 3.02 (assuming a Purchase were made on such day, whether or not a Purchase in fact is made) are not satisfied (and such failure of conditions is not waived by the Agent).

“ Purchase ” means the purchase by the Investor of an Eligible Asset from the Seller pursuant to this Agreement.

“ QRO’s ” means all Qualified Rate Orders issued by the Pennsylvania Public Utility Commission in accordance with the Competition Act, including, without limitation, those certain Qualified Rate Orders issued on May 14, 1998 and March 16, 2000, in each case relating, among other things, to Competitive Transition Charges and Intangible Transition Charges.

“ Receivable ” means a Tariff Receivable, an Unbilled Tariff Receivable, an EGS Receivable or a Third Party Biller Receivable.

“ Receivables Pool ” means at any time the aggregation of all then outstanding Receivables in respect of which the Obligor is a Designated Obligor or was a Designated Obligor on the date of Purchase, subject to the provisions of Section 2.05(b) but shall not include any Receivables arising after the Termination Date.

“ Related Security ” means with respect to any Receivable all cash accounts, irrevocable letters of credit, surety bonds and third party guarantees with respect to such Receivable and all collections therefrom existing on the date of the sale thereof and thereafter arising.

“ Report Date ” means, with respect to each calendar month, the later of the 25th day of such month and the date on which the Agent receives an Investor Report for the preceding calendar month in accordance with Section 2.09.

 

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“ Reserve Amount ” means, on any day, the product of (i) greater of (a) the sum of the Loss Reserve Factor plus the Dilution Reserve Factor or (b) an amount equal to the sum of (1) four times the Concentration Limit plus (2) the Dilution Spike, multiplied by the Dilution Horizon Ratio, multiplied by (ii) the Net Receivables Pool Balance.

“ S&P ” means Standard & Poor’s Ratings Services, a division of McGraw-Hill Companies, Inc.

“ Sale Agreement ” means the Intangible Transition Property Sale Agreement dated March 25, 1999, as amended and restated as of May 2, 2000, between the Seller, as the seller and the Trust as the issuer, as amended from time to time.

“ Seller ” has the meaning assigned to that term in the introductory paragraph hereto.

“ Servicing Agreement ” means the Master Servicing Agreement dated March 25, 1999, as amended and restated as of May 2, 2000, among the Trust, Seller, as servicer, and any other issuers of Transition Bonds, as amended from time to time.

“ Settlement Date ” means the second Business Day of each month.

“ Settlement Period ” for any Eligible Asset means each period commencing on the first day of each Fixed Period for such Eligible Asset and ending on the last day of such Fixed Period, and, on and after the Termination Date for such Eligible Asset, such period (including, without limitation, a period of one day) as shall be selected from time to time by the Agent or, in the absence of any such selection, each period of thirty days from the last day of the Immediately preceding Settlement Period.

“ Special Agreement Receivable ” means a Tariff Receivable that is (i) an agreement (other than with respect to the Seller’s “budget customers”) between the Seller and any Obligor whereby a ratepayer is permitted to amortize or pay the unpaid balance of an account in more than one payment over a period of time greater than the normal billing period, (ii) subject to a settlement agreement within the meaning of Chapter 52, Section 56.2 of the Pennsylvania Code or (iii) a Receivable representing indebtedness that was the subject of a previously existing Defaulted Receivable.

“ Tariff ” means each of the tariffs (as in effect from time to time) and each other arrangement authorized by law or regulation pursuant to which the Seller shall provide and bill transmission and distribution services as well as electricity or gas or generation or other services to certain Obligors from time to time in the ordinary course of business of the Seller and pursuant to which such Obligors shall be obligated to pay for such transmission and distribution services, electricity or gas and Competitive Transition Charges from time to time (but not Intangible Transition Charges), in the form delivered to the Agent as attached to the certificate referred to in Section 3.01(a) and as delivered to the Agent from time to time pursuant to Section 5.01(j).

“ Tariff Receivable ” means the indebtedness of any Obligor under a Tariff arising from a sale of gas or electricity, or for gas transportation services rendered, or for the provision

 

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of transmission or distribution services, in each case by the Seller to such Obligor, and includes the right to payment of any interest or finance charges and other obligations of any Obligor or for Competitive Transition Charges with respect thereto or for CAP Rate Program Receivables, but shall not include Intangible Transition Charges or Receivables billed by the Seller on behalf of an EGS.

“ Termination Date ” for any Eligible Asset means the earlier of (i) the Facility Termination Date or (ii) such Business Day which the Seller designates as the Termination Date for such Eligible Asset by notice to the Agent at least one Business Day prior to such Business Day.

“ Third Party Biller ” means any Person other than the Seller or an EGS that provides billing services with respect to Receivables of the Seller.

“ Third Party Biller Receivable ” means the indebtedness of a Third Party Biller with respect to Competitive Transition Charges (but not Intangible Transition Charges) plus distribution and transmission charges that a Third Party Biller bills on behalf of the Seller pursuant to the Competition Act.

“ Transaction Document ” means any of this Agreement, the Fee Letter, the Intercreditor Agreement, all amendments and waivers to any of the foregoing and all other agreements and documents delivered and/or related hereto or thereto.

“ Transition Bonds ” means those certain bond series issued from time to time pursuant to that certain Indenture dated as of March 1, 1999 between the Trust and The Bank of New York, as bond trustee.

“ Trigger Event ” has the meaning assigned to that term in Section 7.01.

“ Trust ” means PECO Energy Transition Trust, a Delaware statutory business trust.

“ Unbilled Tariff Receivable ” means a Tariff Receivable which has not yet been billed to the Obligor; once billed, an Unbilled Tariff Receivable shall become a Tariff Receivable.

“ UCC ” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.

“ Yield ” means for each Eligible Asset for any Fixed Period,

(i)      for each day during such Fixed Period to the extent such Eligible Asset will be funded on such day by the Investor through the issuance of Commercial Paper Notes,

 

 

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(ii)      for each day during such Fixed Period to the extent such Eligible Asset will be funded by a Liquidity Advance or by a Credit Draw, or otherwise not through the issuance of Commercial Paper Notes,

AR x C x ED + LF

360

where:

 

provided , however , that no provision of this Agreement shall require the payment or permit the collection of Yield in excess of the maximum permitted by applicable law; and provided , further , that Yield for any Eligible Asset shall not be considered paid by any distribution if at any time such distribution is rescinded or must otherwise be returned for any reason.

“ Yield Reserve ” for any Eligible Asset means, at any time of calculation hereunder, an amount equal to the sum of (a) the Yield which is accrued and unpaid as of such date, plus (b) the product of (i) the sum of the Alternate Base Rate multiplied by (ii) 1.5 multiplied by (iii) the Net Receivables Pool Balance at such time, multiplied by (iv) the sum of the Days’ Sales Outstanding plus the Collection Delay Period multiplied by (v) 1/360.

SECTION 1.02         Other Terms . All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.

SECTION 1.03         Computation of Time Periods . Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.”

ARTICLE II

AMOUNT AND TERMS OF PURCHASE

SECTION 2.01         Facility . The Seller has, pursuant to the Existing Agreement, sold and CIESCO has purchased Eligible Assets having Capital of $225,000,000. The Investor has acquired such Eligible Assets by assignment from CIESCO.

 

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SECTION 2.02        [Omitted]

SECTION 2.03         Fees and Payments . (a) The Seller shall pay certain ongoing fees (“ Fees ”) to the Agent individually and as agent for the Owner, as more fully set forth in a letter agreement of even date herewith, as amended or restated from time to time (the “ Fee Letter ”).

(b)      If the Collection Agent is not the Seller or any of its Affiliates or any Person acting under a subcontract (other than this Agreement) with the Seller or any of its Affiliates, the Seller shall pay to the Agent an additional increment of Yield equal to 1.0% per annum on the average daily amount of Capital of each Eligible Asset, from the date hereof until the later of (x) the Facility Termination Date or (y) the earlier of the date on which all Capital of all Eligible Assets is reduced to zero or 90 days after all uncollected Pool Receivables have been written off by the Seller which, in the case of Tariff Receivables, shall be in accordance with the Credit and Collection Policy, payable on the last day of each Settlement Period for such Eligible Asset.

(c)      If the Collection Agent is not the Seller or any of its Affiliates or any Person acting under a subcontract (other than this Agreement) with the Seller or any of its Affiliates, each Owner shall pay to the Collection Agent a collection fee (the “ Collection Agent Fee ”) of 1.0% per annum on the average daily amount of Capital of each Eligible Asset owned by such Owner, for the same period as in Section 2.03(b).

SECTION 2.04         Determination of Investor Rate . The Investor Rate for each Fixed Period for each Eligible Asset shall be the CP Rate; provided that if the provisions of the definition of “Investor Rate” contained in Section 1.01 shall specify that the Investor Rate for any Fixed Period shall be the Assignee Rate (or such other rate as the Agent and the Seller may agree to in writing), the Investor Rate for such Fixed Period shall be the Assignee Rate (or such other rate) for such Fixed Period.

SECTION 2.05         Eligible Asset . (a) An Eligible Asset shall be initially computed as of the Effective Date. Thereafter until the Termination Date for each Eligible Asset, such Eligible Asset shall be automatically recomputed as of the close of business of the Collection Agent on each day (other than a Liquidation Day). Such Eligible Asset shall remain constant from the time as of which any such computation or recomputation is made until the time as of which the next such recomputation, if any, shall be made. Any Eligible Asset, as computed as of the day immediately preceding the Termination Date for such Eligible Asset, shall be fixed on the Termination Date and shall remain constant at all times thereafter, and the undivided percentage interest created by such Eligible Asset shall apply only to Pool Receivables (or the day immediately preceding the Termination Date upon the occurrence of a Trigger Event described in Section 7.01(f)) (which shall include any Unbilled Tariff Receivables included in the Receivables Pool on such date and any Tariff Receivables in existence on such date or to the extent resulting from the billing of Unbilled Tariff Receivables). Such Eligible Asset shall become zero at such time as the Owner of such Eligible Asset shall have received the accrued Yield and Fees for such Eligible Asset and shall have recovered the Capital of such Eligible Asset, and the Seller shall have been paid all other amounts owed by the Seller hereunder.

 

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(b)      If any Eligible Asset would otherwise be reduced on any day on account of Receivables newly arising as or becoming Pool Receivables, the Owner of such Eligible Asset may prevent such reduction by giving notice to the Collection Agent, before the close of business of the Collection Agent on such day, that such Eligible Asset’s interest in such Receivables is to be limited so as to prevent such reduction. If such notice is given for any day for any Eligible Asset, the Receivables Pool and the Net Receivables Pool Balance, will include, with respect to Receivables arising as or becoming Pool Receivables on such day, only such number of such Receivables or such portion of such Receivables as shall cause such Eligible Asset to remain constant, such Receivables or portion thereof being included in the Receivables Pool in the order of the Seller’s account numbers for such Receivables up to an aggregate amount so as to cause such Eligible Asset to remain constant, and the remainder of such Receivables or portion thereof shall be treated as Receivables arising on the next succeeding Business Day.

SECTION 2.06         Non-Liquidation Settlement Procedures . On each day (oth