RECEIVABLES PURCHASE AGREEMENT DATED AS OF October 3, 2007 BY AND AMONG STRATEGIC RECEIVABLES, LLC as Seller AND STRATEGIC ENERGY, L.L.C. as initial Servicer AND THE CONDUIT PURCHASERS PARTY HERETO AND THE PURCHASER AGENTS PARTY HERETO AND THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO, as LC Participants AND PNC BANK, NATIONAL ASSOCIATION, as Administrator and as LC Bank TABLE OF CONTENTS

Exhibit 10.1.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                            i                        STRATEGIC ENERGY - RPA

 

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whole or in part, by any Conduit Purchaser and its successors and assigns with the prior written consent of the Administrator and the Seller; provided, however, that such consent by the Seller and the Administrator shall not be unreasonably withheld; and provided further, that no such consent by the Seller shall be required if the assignment is made during the continuance of a Termination Event or to PNC, any Affiliate of PNC (other than a director or officer of PNC), any Purchaser or other Program Support Provider or any Person that is:  (i) in the business of issuing Notes and (ii) associated with or administered by PNC or any Affiliate of PNC.  Each assignor may, in connection with the assignment, disclose to the applicable assignee (that shall have agreed to be bound by Section 5.6) any information relating to the Servicer, the Seller or the Pool Receivables furnished to such assignor by or on behalf of the Servicer, the Seller, any Conduit Purchaser or the Administrator.  Any Conduit Purchaser shall give prior written notice of any assignment of such Conduit Purchaser’s rights and obligations (including ownership of the Purchased Interest to any Person other than a Program Support Provider).

 

(d)           Any Conduit Purchaser may at any time grant to one or more Liquidity Providers party to the Liquidity Agreement, or to any other Program Support Provider, participating interests in the Purchased Interest.  In the event of any such grant by a Conduit Purchaser of a participating interest to a Liquidity Provider or other Program Support Provider, such Conduit Purchaser shall remain responsible for the performance of its obligations hereunder.  Subject to the limitations set forth in Section 6.3(i), the Seller agrees that each Liquidity Provider or other Program Support Provider shall be entitled to the benefits of Sections 1.7 and 1.8.

 

(e)           This Agreement and the rights and obligations of the Administrator, the LC Bank, each LC Participant and the Purchaser Agents hereunder shall be assignable, in whole or in part, by the Administrator, the LC Bank, each LC Participant and the Purchaser Agents, as the case may be, and their respective successors and assigns, with the consent of the Seller; provided, however, that the Seller’s consent shall not be required if a Termination Event has occurred and is continuing at the time of such assignment.

 

(f)           Except as provided in Section 4.1(d), none of the Seller, Strategic Energy or the Servicer may assign its rights or delegate its obligations hereunder or any interest herein without the prior written consent of the Administrator.

 

(g)           Without limiting any other rights that may be available under applicable law, rule or regulation, the rights of any Purchaser and each Program Support Provider may be enforced through it or by its Purchaser Agent or, in the case of a Program Support Provider, the Purchaser Agent of the related Purchaser.

 

(h)           If required by the Administrator or any Purchaser Agent or to maintain the ratings of any Conduit Purchaser, each Assumption Agreement or other assignment and acceptance agreement must be accompanied by an opinion of counsel of the assignee as to such matters as the Administrator or such Purchaser Agent may reasonably request.

 

(i)           Notwithstanding anything herein to the contrary, no Affected Person may assign, transfer or otherwise dispose of any or all of its rights or obligations to any person that is not a U.S. person within the meaning of Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended, without the consent of Seller (such consent not to be unreasonably withheld).  In the

 

33        STRATEGIC ENERGY - RPA 

event that any such assignment, transfer or other disposition is made without the Seller’s consent, such assignee, transferee or successor shall not be entitled to any additional amounts for any taxes, as set forth in Section 1.8, from Seller.

 

Section 6.4       Costs, Expenses and Taxes.

 

(a)           In addition to the rights of indemnification granted under Sections 1.19 and 3.1, the Seller agrees to pay on demand all reasonable costs and expenses in connection with the preparation, execution, delivery and administration (including periodic internal audits of Pool Receivables by the Administrator, or by third parties at the direction of the Administrator, provided that the Seller shall not pay for more than one audit per year unless a Termination Event has occurred and is continuing) of this Agreement, the other Transaction Documents and the other documents and agreements to be delivered hereunder (and all reasonable costs and expenses in connection with any amendment, waiver or modification of any thereof), including:  (i) Attorney Costs for the Administrator, the Purchasers and their respective Affiliates and agents with respect thereto and with respect to advising the Administrator, the Purchasers and their respective Affiliates and agents as to their rights and remedies under this Agreement and the other Transaction Documents, and (ii) all reasonable costs and expenses (including Attorney Costs), if any, of the Administrator, the Purchasers and their respective Affiliates and agents in connection with the enforcement of this Agreement and the other Transaction Documents; provided, however, that Attorney Costs incurred other than with respect to clauses (i) or (ii) above shall be limited to such Attorney Costs of only one outside counsel to the Administrator and the Purchaser Groups.

 

(b)           In addition, the Seller shall pay on demand any and all stamp, franchise and other taxes and fees payable in connection with the execution, delivery, filing and recording of this Agreement or the other documents or agreements to be delivered hereunder, and agrees to save each Indemnified Party harmless from and against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees (it being understood and agreed that this Section 6.4(b) shall exclude taxes imposed on the overall or branch pre-tax net income of each such Person, and franchise taxes imposed on each such Person, by the jurisdiction under the laws of which such Person is organized or otherwise is considered doing, or having done, business (unless such Person would not be considered doing, or having done, business in such jurisdiction, but for having entered into, or engaged in the transactions in connection with, this Agreement or any other Transaction Document) or a political subdivision thereof).

 

Section 6.5       No Proceedings; Limitation on Payments.

 

(a)           Each of the Seller, Strategic Energy, the Servicer, the Administrator, the LC Bank, each LC Participant, each other Purchaser, each Purchaser Agent and each assignee of any Purchased Interest or any interest therein, and each Person that enters into a commitment to purchase the Purchased Interest or interests therein, hereby covenants and agrees that it will not institute against, or join any other Person in instituting against, any Conduit Purchaser or Purchaser Agent any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and one day after the latest maturing Note issued by all Conduit Purchasers is paid in full.  Each party hereto agrees that it will not institute against, or join any other Person in instituting

 

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against, the Seller any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and one day after which all other indebtedness and other obligations of the Seller hereunder and under each other Transaction Document shall have been paid in full; provided, however, that the Administrator may take any such action with the prior written consent of the Majority Purchaser Agents and the LC Bank.

 

(b)           Notwithstanding any provisions contained in this Agreement to the contrary, no Conduit Purchaser shall pay or be obligated to pay any amount payable by it pursuant to this Agreement or any other Transaction Document unless (i) such Conduit Purchaser has received funds which may be used to make such payment and which are not required to repay the Notes when due and (ii) after giving effect to such payment, either (x) such Conduit Purchaser could issue Notes to refinance all of its outstanding Notes (assuming such outstanding Notes matured at such time) in accordance with the program documents governing such Conduit Purchaser’s securitization program or (y) all of its Notes are paid in full.  Any amount which such Conduit Purchaser does not pay pursuant to the operation of the preceding sentence shall not constitute a claim (as defined in §101 of the Bankruptcy Code) against or company obligation of such Conduit Purchaser for any such insufficiency unless and until such Conduit Purchaser satisfies the provisions of clauses (i) and (ii) above.

 

The provisions of this Section 6.5 shall survive any termination of this Agreement.

 

Section 6.6       Confidentiality.

 

Each of the Seller and the Servicer agrees to maintain the confidentiality of this Agreement and the other Transaction Documents (and all drafts thereof) and that certain Summary of Terms and Conditions, dated July 30, 2007 in communications with third parties and otherwise; provided, that this Agreement may be disclosed to:  (a) any Affiliate of the Seller or the Servicer or any officers, directors, members, managers, employees or outside accountants, auditors or attorneys of such Person if they agree to hold it confidential, (b) any potential financing providers of or investors in the Servicer or any Originator if they agree to hold it confidential pursuant to a written agreement of confidentiality in form and substance reasonably satisfactory to the Administrator, (c) each of Strategic Energy’s, the Seller’s and the Servicer’s legal counsel and auditors if such legal counsel and auditors agree to hold it confidential, and (d) as otherwise required by applicable law, rules or regulations, provided prior notice is given to the Seller.  Unless otherwise required by applicable law, rules or regulations, each of the Administrator, the Purchaser Agents and the Purchasers agrees to maintain the confidentiality of non-public financial information regarding Strategic Energy and its Subsidiaries and Affiliates; provided, that such information may be disclosed to:  (i) any Affiliate of the Administrator, any Purchaser Agent or any Purchaser or any officers, directors, members, managers, employees or outside accountants, auditors or attorneys of such Person if they agree to hold it confidential, (ii) any potential assignees and participants if they agree to hold it confidential, (iii) legal counsel and auditors of any Purchaser Agent, any Purchaser or the Administrator if they agree to hold it confidential, (iv) the rating agencies rating the Notes, (v) any Program Support Provider or potential Program Support Provider if they agree to hold it confidential, (vi) any placement agent placing the Notes and (vii) any regulatory authorities having jurisdiction over PNC, any Purchaser Agent, any Purchaser, any Program Support Provider or any Purchaser.

 

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Section 6.7       GOVERNING LAW AND JURISDICTION.

 

(a)           THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO ANY OTHERWISE APPLICABLE CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF A SECURITY INTEREST OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

 

(b)           ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF NEW YORK COUNTY, NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.  EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.

 

Section 6.8       Execution in Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same agreement.

 

Section 6.9       Survival of Termination; Non-Waiver.

 

The provisions of Sections 1.7, 1.8, 1.18, 1.19, 3.1, 3.2, 6.3(i), 6.4, 6.5, 6.6, 6.7, 6.10 and 6.13 shall survive any termination of this Agreement.  Neither the Servicer nor any other Person may waive a breach of Exhibit III, Section 1(g) or 1(j) or Exhibit IV, Section 1(d) or 2(i) of this Agreement for so long as the Notes are outstanding.

 

Section 6.10     WAIVER OF JURY TRIAL.

 

EACH OF THE PARTIES HERETO WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE.  EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM OR

 

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CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION 6.10 AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

 

Section 6.11      Entire Agreement.

 

This Agreement and the other Transaction Documents embody the entire agreement and understanding between the parties hereto, and supersede all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof.

 

Section 6.12      Headings.

 

The captions and headings of this Agreement and any Exhibit, Schedule or Annex hereto are for convenience of reference only and shall not affect the interpretation hereof or thereof.

 

Section 6.13      Purchasers’ and Purchaser Agents’ Liabilities.

 

The obligations of each Purchaser and Purchaser Agent under the Transaction Documents are solely the obligations of such Purchaser or Purchaser Agent.  No recourse shall be had for any obligation or claim arising out of or based upon any Transaction Document against any stockholder, employee, officer, director, organizer or incorporator of any Purchaser or Purchaser Agent; provided, however, that this Section shall not relieve any such Person of any liability it might otherwise have for its own gross negligence or willful misconduct.

 

Section 6.14      Sharing of Recoveries.

 

Each Purchaser agrees that if it receives any recovery, through set-off, judicial action or otherwise, on any amount payable or recoverable hereunder in a greater proportion than should have been received hereunder or otherwise inconsistent with the provisions hereof, then the recipient of such recovery shall purchase for cash an interest in amounts owing to the other Purchasers (as return of Capital or otherwise), without representation or warranty except for the representation and warranty that such interest is being sold by each such other Purchaser free and clear of any Adverse Claim created or granted by such other Purchaser, in the amount necessary to create proportional participation by the Purchaser in such recovery.  If all or any portion of such amount is thereafter recovered from the recipient, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

 

      Section 6.15      Intercreditor Agreement.

 

Each of the Purchasers and the Purchaser Agents hereby authorizes the Administrator to enter into the Intercreditor Agreement and agrees to be bound by the provisions thereof.  The Administrator shall be authorized to make any amendment, waiver, permit, consent or approval

 

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with respect to the Intercreditor Agreement in its sole discretion, subject to the consent of the Purchaser Agents, and any such amendment, waiver, permit, consent or approval shall be binding upon each of the Purchasers and the Purchaser Agents.

 

Section 6.16      Payments to Non-Lock-Box Accounts.

 

Notwithstanding anything to the contrary herein or in the Sale Agreement or the Lock-Box Agreement, solely to the extent that any payments with respect to Receivables (including any Collections or other proceeds of such Receivables) are credited to or deposited into any account set forth on Schedule VII hereto (the “Non-Lock-Box Accounts”) within ninety (90) days following the Closing Date, so long as the Seller or the Servicer redirects all such amounts to a Lock-Box Account within one (1) Business Day after the crediting or depositing of such amount into such Non-Lock-Box Account, the Administrator, each Purchaser Agent and each Purchaser hereby consents to the departure from all representations, warranties and covenants by the Seller and the Servicer solely in respect of the credit to or deposit into a Non-Lock-Box Account of any such amounts.  The temporary consent to departure from such representations, warranties and covenants by the Seller and the Servicer provided for in this Section 6.16 shall automatically terminate on the 91^st day following the Closing Date.

 

 

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

SELLER:	STRATEGIC RECEIVABLES, LLC     By: /s/ Andrew J. Washburn Name: Andrew J. Washburn Title:   President
	Address:	Two Gateway Center Pittsburgh, PA ###-###-####
	Attention:	Andrew J. Washburn
	Telephone:	(412) 258-2188
	Facsimile:	(412) 258-2199
INITIAL SERVICER:	STRATEGIC ENERGY, L.L.C.     By: /s/ Brian M. Begg Name: Brian M. Begg Title:    VP, Corporate Development & Finance
	Address:	Two Gateway Center Pittsburgh, PA ###-###-####
	Attention:	Brian M. Begg
	Telephone:	(412) 394-6267
	Facsimile:	(412) 394-6664

 

 

 

 

 

 

 

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CONDUIT PURCHASERS:	MARKET STREET    FUNDING LLC     By: /s/ Doris J. Hearn Name: Doris J. Hearn Title:  Vice President
	Address:			Market Street Funding LLC c/o AMACAR Group, LLC 6525 Morrison Boulevard, Suite 318 Charlotte, North Carolina 28211
	Attention:			Doug Johnson
	Telephone:			704 ###-###-####
	Facsimile:			704 ###-###-####
	With a copy to:
	PNC Bank, National Association One PNC Plaza, 26th floor 249 Fifth Avenue Pittsburgh, PA 15222
	Attention:			Bill Falcon
	Telephone:			412 ###-###-####
	Facsimile:			412 ###-###-####
	Commitment:			$112,500,000

 

 

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	FIFTH THIRD BANK     By: /s/ Andrew D. Jones Name: Andrew D. Jones Title: Assistant Vice President
	Address:	Fifth Third Bank 38 Fountain Square Plaza, MD 109047 Cincinnati, Ohio 45263 Attention: Andrew D. Jones Telephone No.:(513) 534-0836 Facsimile No.: (513) 534-0319
	With a copy to its Purchaser Agent
	Commitment:	$62,500,000

 

 

 

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ADMINISTRATOR AND PURCHASER AGENT FOR MARKET STREET:	PNC BANK, NATIONAL ASSOCIATION     By: /s/ William P. Falcon Name: William P. Falcon Title:  Vice President
	Address:	PNC Bank, National Association One PNC Plaza, 26th floor 249 Fifth Avenue Pittsburgh, PA 15222
	Attention:	Bill Falcon
	Telephone:	412 ###-###-####
	Facsimile:	412 ###-###-####

PURCHASER AGENT FOR FIFTH THIRD BANK:	FIFTH THIRD BANK     By: /s/ Andrew D. Jones Name: Andrew D. Jones Title:  Assistant Vice President
	Address:	Fifth Third Bank 38 Fountain Square Plaza, MD109047 Cincinnati, Ohio 45263
	Attention:	Tausha Bush
	Telephone:	(513) 534-6235
	Facsimile:	(513) 534-0875

 

 

 

 

 

 S-4        STRATEGIC ENERGY - RPA

                 as the LC Bank and as an LC Participant

                By: /s/ Thomas A. Majeski

                Name:  Thomas A. Majeski

                Title:    Vice President

	Address:	One PNC Plaza, 26th floor
		249 Fifth Avenue
		Pittsburgh, PA 15222
	Attention:	Thomas Majeski
	Telephone:	412 ###-###-####
	Facsimile:	412 ###-###-####
	Commitment:	$112,500,000
	Pro-Rata Share:	64.29%

 

                

                                                FIFTH THIRD BANK,
                                    as the LC Bank and as an LC Participant

                By: /s/ Andrew D. Jones

                Name:  Andrew D. Jones

               Title:    Vice President

 

 

 

 

 

 

 

 

 

 

 

S-5        STRATEGIC ENERGY - RPA

 

 

As used in the Agreement (including its Exhibits, Schedules and Annexes), the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).  Unless otherwise indicated, all Section, Annex, Exhibit and Schedule references in this Exhibit are to Sections of and Annexes, Exhibits and Schedules to the Agreement.

 

“Administrator” has the meaning set forth in the preamble to the Agreement.

 

“Adverse Claim” means (i) a lien, security interest or other charge or encumbrance, or any other type of preferential arrangement; it being understood that any thereof in favor of, or assigned to, any Purchaser Agent, Purchaser or the Administrator (for the benefit of such Purchaser Agent or Purchaser) or PNC shall not constitute an Adverse Claim, or, (ii) when used in connection with a Receivable or Collections or Related Rights with respect to a Receivable, a claim or contention by or on behalf of a representative of the estate of any Originator which may be created under § 541 of the Bankruptcy Code that a Receivable generated by such Originator (or Collections or Related Rights with respect to such Receivable) which has been purchased or accepted as a contribution by the Seller from such Originator pursuant to the Sale Agreement constitutes property of such estate or that the transfer of such Receivable (or Collections or Related Rights with respect to such Receivable) should be avoided under § 544 or 548 of the Bankruptcy Code.

 

“Affected Person” has the meaning set forth in Section 1.7 of the Agreement.

 

“Affiliate” means, as to any Person:  (a) any Person that, directly or indirectly, is in control of, is controlled by or is under common control with such Person, or (b) who is a director or officer:  (i) of such Person or (ii) of any Person described in clause (a), except that, with respect to any Purchaser, Affiliate shall mean the holder(s) of its capital stock or membership interests, as the case may be; provided, however, that Kansas City Power & Light shall be deemed not to be an Affiliate.  For purposes of this definition, control of a Person shall mean the power, direct or indirect:  (x) to vote 25% or more of the securities having ordinary voting power for the election of directors or managers of such Person, or (y) to direct or cause the direction of the management and policies of such Person, in either case whether by ownership of securities, contract, proxy or otherwise.

 

“Agreement” has the meaning set forth in the preamble to the Agreement.

 

“Assumption Agreement” means an agreement substantially in the form acceptable to the Administrator.

 

“Alternate Rate” for any Settlement Period for any Portion of Capital of the Purchased Interest means an interest rate per annum equal to:  (a) 2.25% per annum above the Euro-Rate for such Settlement Period; provided, however, that if (x) it shall become unlawful for any Purchaser or Program Support Provider to obtain funds in the London interbank eurodollar market in order to make, fund or maintain any Purchased Interest, or if such funds shall not be reasonably available to any Purchaser or Program Support Provider, or (y) there shall not be at least two

 

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Business Days prior to the commencement of an applicable Settlement Period to determine a Euro-Rate in accordance with its terms, then the “Alternate Rate” shall be equal to the Base Rate in effect for each day during the remainder of such Settlement Period or (b) if requested by the Seller the Base Rate for such Settlement Period; provided, however, that the “Alternate Rate” for any day while a Termination Event exists shall be an interest rate equal to 2.00% per annum above the Base Rate in effect on such day.

 

“Attorney Costs” means and includes all reasonable fees and disbursements of any law firm or other external counsel.

 

“Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C.  § 101, et seq.), as amended from time to time.

 

“Base Rate” means, for any day, (i) in the case of Market Street, the Market Street Base Rate, and (ii) in the case of each other Conduit Purchaser, the rate set forth as the Base Rate for such Conduit Purchaser in the related Fee Letter.

 

“Base Rate Portion of Capital” shall mean a Portion of Capital, the Discount with respect to which is calculated at a per annum rate based on the interest rate determined by reference to the Base Rate.

 

“BBA” means the British Bankers’ Association.

 

“Benefit Plan” means any employee benefit pension plan as defined in Section 3(2) of ERISA in respect of which the Seller, any Originator, Strategic Energy or any ERISA Affiliate is, or at any time during the immediately preceding six years was, an “employer” as defined in Section 3(5) of ERISA.

 

“Business Day” means any day (other than a Saturday or Sunday) on which:  (a) banks are not authorized or required to close in New York City, New York or Pittsburgh, Pennsylvania and (b) if this definition of “Business Day” is utilized in connection with the Euro-Rate, dealings are carried out in the London interbank market.

 

“Capital” means, with respect to any Purchaser, the aggregate amounts paid to the Seller pursuant to Section 1.1(a) or Section 1.1(b) and the aggregate amount of all unreimbursed draws deemed to be Funded Purchases pursuant to the Agreement (including Section 1.2(e)), or such amount divided or combined in order to determine the Discount applicable to any Portion of Capital, in each case reduced from time to time by Collections distributed and applied on account of such Capital pursuant to Section 1.4(d) of the Agreement; provided, that if such Capital shall have been reduced by any distribution, and thereafter all or a portion of such distribution is rescinded or must otherwise be returned for any reason, such Capital shall be increased by the amount of such rescinded or returned distribution as though it had not been made.

 

“Change in Control” means that (a) Strategic Energy, ceases to own, directly or indirectly, 100% of the membership interests of the Seller free and clear of all Adverse Claims, or (b) Strategic Energy ceases to own, directly or indirectly, 100% of the membership interests or capital stock, as the case may be, of the Originators, free and clear of all Adverse Claims.

 

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“Closing Date” means October 3, 2007.

 

“Collections” means, with respect to any Pool Receivable:  (a) all funds that are received by any Originator, the Seller or the Servicer in payment of any amounts owed in respect of such Receivable (including purchase price, finance charges, interest and all other charges), or applied to amounts owed in respect of such Receivable (including insurance payments and net proceeds of the sale or other disposition of repossessed goods or other collateral or property of the related Obligor or any other Person directly or indirectly liable for the payment of such Pool Receivable and available to be applied thereon), (b) all amounts deemed to have been received pursuant to Section 1.4(e) of the Agreement and (c) all other proceeds of such Pool Receivable.

 

“Commitment” shall mean, (i) as to a Conduit Purchaser, that dollar amount set forth as the “Commitment” under its name on the signature pages to the Agreement, (ii) as to any LC Participant, its commitment to make participation advances and/or share in draws, in each case, under Letters of Credit up to that dollar amount set forth as the “Commitment” under its name on the signature pages to the Agreement or in the Assumption Agreement pursuant to which it became a Purchaser, as such amount may be modified in connection with any subsequent assignment and (iii) as to the LC Bank, its commitment to issue or cause the issuance of Letters of Credit up to that dollar amount set forth as the “Commitment” under its name on the signature pages to the Agreement (or, as applicable, set forth in any amendment thereto or set forth in any assignment agreement entered into pursuant to Section 6.3 as such dollar amount may be reduced pursuant to Section 1.1(c) of the Agreement); provided, however, that if any Person is a Conduit Purchaser and an LC Participant, such Person’s Commitment shall not exceed the greater of (x) the Commitment set forth under its name on the signature pages to the Agreement in such Person’s capacity as Conduit Purchaser and (y) the Commitment set forth under its name on the signature pages to the Agreement in such Person’s capacity as LC Participant; provided, further, that the aggregate Commitments of all Purchasers in a Purchaser Group shall not exceed the Commitment set forth under such Purchaser Group’s Conduit Purchaser’s name on the signature pages to the Agreement; and “Commitments” shall mean the aggregate commitments of the LC Participants to make participating advances in the Letters of Credit up to the Purchase Limit (or, if less, the amount permitted under Section 1.1(b)).

 

“Company Note” has the meaning set forth in Section 3.1 of the Sale Agreement.

 

“Concentration Percentage” means:  (a) for any Group A Obligor, 10.0%, (b) for any Group B Obligor, 10.0%, (c) for any Group C Obligor 5.0% and (d) for any Group D Obligor, 2.5%.

 

“Concentration Reserve” means, at any time, the product of:  (a) the Capital plus the LC Participation Amount, at such time multiplied by (b)(i) the Concentration Reserve Percentage, divided by (ii) 1 minus the Concentration Reserve Percentage.

 

“Concentration Reserve Percentage” means, at any time the following expressed as a percentage (as opposed to a fraction), (a) the largest of the following:  (i) the sum of four largest Group D Obligor Receivables balances (up to the Concentration Percentage for each Obligor), (ii) the sum of the two largest Group C Obligor Receivables balances (up to the Concentration Percentage for each Obligor) and (iii) the largest Group B Obligor Receivables balances (up to

 

I-3        STRATEGIC ENERGY - RPA 

the Concentration Percentage for each Obligor) or Group A Obligor Receivables balances (up to the Concentration Percentage for each Obligor), divided by (b) Eligible Receivables.

 

“Conduit Purchaser” has the meaning set forth in the preamble to the Agreement.

 

“Contract” means, with respect to any Receivable, any and all contracts, instruments, agreements, leases, invoices, notes or other writings pursuant to which such Receivable arises or that evidence such Receivable or under which an Obligor becomes or is obligated to make payment in respect of such Receivable.

 

“CP Rate” for any Settlement Period for any Portion of Capital means (i) in the case of Market Street, a rate calculated by the Administrator equal to:  (a) the rate (or if more than one rate, the weighted average of the rates) at which Notes of Market Street on each day during such period have been outstanding; provided, that if such rate(s) is a discount rate(s), then the CP Rate shall be the rate (or if more than one rate, the weighted average of the rates) resulting from converting such discount rate(s) to an interest-bearing equivalent rate plus (b) the commissions and charges charged by such placement agent or commercial paper dealer with respect to such Notes, expressed as a percentage of the face amount of such Notes and converted to an interest-bearing equivalent rate per annum, and (ii) in the case of each other Conduit Purchaser, the rate set forth as the CP Rate for such Conduit Purchaser in the related Fee Letter.  Notwithstanding the foregoing, the “CP Rate” for any day while a Termination Event exists shall be an interest rate equal to 2.00% above the Base Rate in effect on such day.

 

“Credit Agreement” means that certain Credit Agreement, dated on or about October 3, 2007, among Strategic Energy, the lenders and guarantors party thereto and PNC, as administrative agent thereunder, as amended, restated, supplemented or otherwise modified from time to time.

 

“Credit and Collection Policy” means, as the context may require, those receivables credit and collection policies and practices of the Originators in effect on the date of the Agreement and described in Schedule I to the Agreement, as modified in compliance with the Agreement.

 

“Cut-off Date” has the meaning set forth in Section 1.1(a) of the Sale Agreement.

 

“Days’ Sales Outstanding” means, at any time, an amount computed as of the last day of each calendar month equal to:  (a) the average of the Outstanding Balance of all Pool Receivables as of the last day of each of the three most recent calendar months ended on the last day of such calendar month divided by (b)(i) the aggregate credit sales made by the Originators during the three calendar months ended on or before the last day of such calendar month divided by (ii) 90.

 

“Debt” means (a) indebtedness for borrowed money, (b) obligations evidenced by bonds, debentures, notes or other similar instruments, (c) obligations to pay the deferred purchase price of property or services (it being understood that, with respect to the Servicer or any Originator, any such obligation which is less than ninety-one (91) days deferred shall not constitute “Debt”), (d) obligations as lessee under leases that shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, and (e) obligations under

 

I-4        STRATEGIC ENERGY - RPA 

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 (a) through (d).

 

“Default Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each calendar month by dividing:  (a) the aggregate Outstanding Balance of all Pool Receivables that became Defaulted Receivables during such month, by (b) the aggregate credit sales made by the Originators during the month that is seven calendar months before such month.

 

“Defaulted Receivable” means a Receivable:

 

(a)           as to which any payment, or part thereof, remains unpaid for more than 120 days from the original due date for such payment (which shall be determined without regard to any credit memos or credit balances available to the Obligor), or

 

(b)           without duplication (i) as to which an Insolvency Proceeding shall have occurred with respect to the Obligor thereof or any other Person obligated thereon or owning any Related Security with respect thereto, or (ii) that has been written off the Seller’s books as uncollectible.

 

“Delinquency Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each calendar month by dividing:  (a) the aggregate Outstanding Balance of all Pool Receivables that were Delinquent Receivables on such day by (b) the aggregate Outstanding Balance of all Pool Receivables on such day.

 

“Delinquent Receivable” means a Receivable as to which any payment, or part thereof, remains unpaid for more than 60 days from the original due date for such payment.

 

“Dilution Horizon” means, for any calendar month, the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of such calendar month of:  (a) the aggregate credit sales made by the Originators during the two most recent calendar months to (b) the Net Receivables Pool Balance at the last day of the most recent calendar month.

 

“Dilution Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward), computed as of the last day of each calendar month by dividing:  (a) the aggregate amount of payments required to be made by the Seller pursuant to Section 1.4(e)(i) of the Agreement during such calendar month by (b) the aggregate credit sales made by the Originators during the month that is one month prior to the current calendar month.

 

“Dilution Reserve” means, on any date, an amount equal to:  (a) the sum of the Capital plus the LC Participation Amount at the close of business of the Seller on such date multiplied by (b) (i) the Dilution Reserve Percentage on such date, divided by (ii) 100% minus the Dilution Reserve Percentage on such date.

 

I-5        STRATEGIC ENERGY - RPA 

“Dilution Reserve Percentage” means on any date, the following expressed as a percentage (as opposed to a fraction):  the product of (i) the Dilution Horizon multiplied by (ii) the sum of (x) 2.00 times the average of the Dilution Ratio for the twelve most recent calendar months and (y) the Spike Factor.

 

“Discount” means with respect to any Purchaser:

 

(a)           for the Portion of Capital for any Settlement Period to the extent such Conduit Purchaser will be funding such Portion of Capital during such Settlement Period through the issuance of Notes:

 

CPR x C x ED/360

 

(b)           for the Portion of Capital for any Settlement Period to the extent such Purchaser will not be funding such Portion of Capital during such Settlement Period through the issuance of Notes or, if the LC Bank and/or any LC Participant has made or has been deemed to have made a Funded Purchase, in connection with any drawing under a Letter of Credit that has not been reimbursed, which accrues Discount pursuant to Section 1.2(e) of the Agreement:

 

AR x C x ED/Year + TF

 

where:

 

AR  =

the Alternate Rate for the Portion of Capital for such Settlement Period with respect to such Purchaser,

 

C  =

the Portion of Capital during such Settlement Period with respect to such Purchaser,

 

CPR =

the CP Rate for the Portion of Capital for such Settlement Period with respect to such Purchaser,

 

ED  =

the actual number of days during such Settlement Period,

 

Year =

if such Portion of Capital is funded based upon:  (i) the Euro-Rate, 360 days, and (ii) the Base Rate, 365 or 366 days, as applicable, and

 

TF  =

the Termination Fee, if any, for the Portion of Capital for such Settlement Period with respect to such Purchaser;

 

provided, that no provision of the Agreement shall require the payment or permit the collection of Discount in excess of the maximum permitted by applicable law; and provided further, that Discount for the Portion of Capital shall not be considered paid by any distribution to the extent that at any time all or a portion of such distribution is rescinded or must otherwise be returned for any reason.

 

“Drawing Date” has the meaning set forth in Section 1.14 of the Agreement.

 

I-6        STRATEGIC ENERGY - RPA 

“Eligible Assignee” means any bank or financial institution whose lending office is in the United States or is doing business in the United States and that is acceptable to the LC Bank and the Administrator.

 

“Eligible Receivable” means, at any time, a Pool Receivable:

 

(a)           the Obligor of which is (i) a United States resident, (ii) not a government or a governmental subdivision or department, affiliate or agency other than the United States or a governmental subdivision or department, affiliate or agency of the United States, (iii) not subject to any action of the type described in paragraph (f) of Exhibit V to the Agreement and (iv) not an Affiliate of Strategic Energy or any other Originator;

 

(b)           that is denominated and payable only in U. S. dollars in the United States to a Lockbox Account;

 

(c)           that does not have a stated maturity which is more than 45 days after the original invoice date of such Receivable;

 

(d)           that arises under a duly authorized Contract for the sale and delivery of goods or services in the ordinary course of the related Originator’s business;

 

(e)           that arises under a duly authorized Contract that is in full force and effect and that is a legal, valid and binding obligation of the related Obligor, enforceable against such Obligor in accordance with its terms;

 

(f)           that conforms in all material respects with all applicable laws, rulings and regulations in effect, and the transfer of which does not violate any applicable law, rule or regulation in effect;

 

(g)           that is not the subject of any default, dispute, offset, hold back defense, Adverse Claim, litigation or other claim;

 

(h)           that satisfies all applicable requirements of the applicable Credit and Collection Policy, (including, without limitation, the origination thereof);

 

(i)           that has not been modified, waived or restructured since its creation, except as permitted pursuant to Section 4.2 of the Agreement;

 

(j)           in which the Seller owns good and marketable title, free and clear of any Adverse Claims (other than Permitted Liens), and that is freely assignable by the Seller (including without any consent of the related Obligor) and the representations and warranties with respect to such Receivable set forth in Section 2.1 and clause (1)(g) of Exhibit III are true;

 

(k)           for which the Administrator, for the benefit of the Purchasers, shall have a valid and enforceable undivided variable percentage ownership or security interest, to the extent of the Purchased Interest, and a valid and enforceable first priority perfected

 

 I-7        STRATEGIC ENERGY - RPA

security interest therein and in the Related Security and Collections with respect thereto, in each case free and clear of any Adverse Claim;

 

(l)           that constitutes an “account” as defined in the UCC, and that is not evidenced by instruments or chattel paper;

 

(m)           that is neither a Defaulted Receivable nor a Delinquent Receivable;

 

(n)           for which neither any Originator thereof, the Seller nor the Servicer has established any offset arrangements with the related Obligor;

 

(o)           that represents amounts earned and payable by the Obligor that are not subject to the performance of any additional services (other than, solely with respect to a Receivable described in clause (p) below, billing for such Receivable) the Originator thereof;

 

(p)           (i) the goods with respect to which have been shipped, (ii) the services with respect to which have been rendered or (iii) the electricity with respect to which has been used by the end-user, but in any case such Receivable has not yet been billed to the related Obligor within 60 days from the date of the such goods shipment or service rendering, as applicable; and

 

(q)           for which the sum of the Outstanding Balances of all Receivables of the related Obligor with respect to which any payment, or part thereof, remains unpaid for more than 60 days from the original due date for such payment do not exceed 50% of the Outstanding Balance of all such Obligor’s Receivables,

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute of similar import, together with the rulings and regulations thereunder, in each case as in effect from time to time.  References to sections of ERISA also refer to any successor statutes.

 

“ERISA Affiliate” means:  (a) any corporation that is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as the Seller, any Originator or Strategic Energy, (b) a trade or business (whether or not incorporated) under common control (within the meaning of Section 414(c) of the Internal Revenue Code) with the Seller, any Originator or Strategic Energy, or (c) a member of the same affiliated service group (within the meaning of Section 414(m) of the Internal Revenue Code) as the Seller, any Originator, any corporation described in clause (a) or any trade or business described in clause (b).

 

“Euro-Rate” means with respect to any Settlement Period the interest rate per annum determined by the Administrator by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest determined by the Administrator in accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the average of the London interbank market offered rates for U.S. dollars quoted by the BBA as set forth on Dow Jones Markets Service (formerly known as Telerate) (or appropriate successor or, if the BBA or its successor ceases to provide display page

 

 I-8        STRATEGIC ENERGY - RPA

3750 (or such other display page on the Dow Jones Markets Service system as may replace display page 3750) at or about 11:00 a.m.  (London time) on the Business Day which is two (2) Business Days prior to the first day of such Settlement Period for an amount comparable to the Portion of Capital to be funded at the Alternate Rate and based upon the Euro-Rate during such Settlement Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage.  The Euro-Rate may also be expressed by the following formula:

 

Euro-Rate =

Average of London interbank offered rates quoted

by BBA as shown on Dow Jones Markets Service

display page 3750 or appropriate successor

 

1.00 - Euro-Rate Reserve Percentage

 

where “Euro-Rate Reserve Percentage” means, the maximum effective percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including without limitation, supplemental, marginal, and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).  The Euro-Rate shall be adjusted with respect to any Portion of Capital funded at the Alternate Rate and based upon the Euro-Rate that is outstanding on the effective date of any change in the Euro-Rate Reserve Percentage as of such effective date.  The Administrator shall give prompt notice to the Seller of the Euro-Rate as determined or adjusted in accordance herewith (which determination shall be conclusive absent manifest error).

 

“Excess Concentration” means the sum of the following amounts:

 

(i) the sum of the following with respect to each such obligation: the amount by which the Outstanding Balance of Eligible Receivables of each Obligor then in the Receivables Pool exceeds an amount equal to:  (a) the Concentration Percentage for such Obligor multiplied by (b) the Outstanding Balance of all Eligible Receivables then in the Receivables Pool that have been allocated by the Administrator, in its sole discretion, to a specific Obligor;

 

(ii) the amount by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, the Obligor of which is a United States governmental entity, exceeds 2.0% of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; and

 

(iii) the amount by which the sum of all Eligible Receivables classified as “unbilled” for more than 30 days but less than or equal to 60 days exceeds 25.0% of all Eligible Receivables.

 

“Excluded Receivable” means any indebtedness and other obligations owed to the Seller (as the assignee of the related Originator) or any Originator by, or any right of any Originator to payment from or on behalf of, an Obligor which is a wholesale provider of electricity or an independent system operator, in either case which is listed on Schedule VI hereto, arising from a wholesale Contract between the related Originator and such Obligor, whether constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale of goods, the rendering of services or the sale of electricity by any Originator, and includes the obligation to pay any finance charges, fees and other charges with respect thereto.

 

 I-9        STRATEGIC ENERGY - RPA

“Exiting Notice” has the meaning set forth in Section 1.4(b)(ii) of the Agreement.

 

“Exiting Purchaser” has the meaning set forth in Section 1.4(b)(ii) of the Agreement.

 

“Facility Termination Date” means the earliest to occur of:  (a) October 1, 2010, (b) the date determined pursuant to Section 2.2 of the Agreement, (c) the date the Purchase Limit reduces to zero pursuant to Section 1.1(c) of the Agreement, (d) the date that the commitments of the Liquidity Providers terminate under the Liquidity Agreements (it being understood that the date set forth in Liquidity Agreement related to Market Street, as Conduit Purchaser, as the scheduled “purchase termination date” shall initially be October 1, 2008), (e) any Conduit Purchaser or any Purchaser Agent shall fail to cause the amendment or modification of any Transaction Document or related opinion as required by Moody’s or Standard and Poor’s, and such failure shall continue for 30 days after such amendment is initially requested and (f) with respect to the LC Bank, the Scheduled Commitment Termination Date.

 

“Federal Funds Rate” means, for any day, the per annum rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, “H.15(519)”) for such day opposite the caption “Federal Funds (Effective).” If on any relevant day such rate is not yet published in H.  15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m.  Quotations for U.S.  Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the “Composite 3:30 p.m.  Quotations”) for such day under the caption “Federal Funds Effective Rate.” If on any relevant day the appropriate rate is not yet published in either H.15(519) or the Composite 3:30 p.m.  Quotations, the rate for such day will be the arithmetic mean as determined by the Administrator of the rates for the last transaction in overnight Federal funds arranged before 9:00 a.m.  (New York time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Administrator.

 

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions.

 

“Fee Letters” has the meaning set forth in Section 1.5 of the Agreement.

 

“Funded Purchase” shall mean a purchase or deemed purchase of undivided interests in the Purchased Interest  under the Agreement which (i) is paid for in cash (other than through reinvestment of Collections pursuant to Section 1.4(b) of the Agreement) or (ii) treated as a Funded Purchase pursuant to Section 1.2(e) of the Agreement.

 

“Governmental Acts” has the meaning set forth in Section 1.19 of the Agreement.

 

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any body or entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court, and any Person owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

 

I-10        STRATEGIC ENERGY - RPA 

“Group A Obligor” means any Obligor with a short-term rating of at least:  (a) “A-l” by Standard & Poor’s, or if such Obligor does not have a short-term rating from Standard & Poor’s, a rating of “A+” or better by Standard & Poor’s on its long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-1” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Al” or better by Moody’s on its long-term senior unsecured and uncredit-enhanced debt securities.

 

“Group B Obligor” means an Obligor, not a Group A Obligor, with a short-term rating of at least:  (a) “A-2” by Standard & Poor’s, or if such Obligor does not have a short-term rating from Standard & Poor’s, a rating of “BBB+” to “A” by Standard & Poor’s on its long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-2” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baal” to “A2” by Moody’s on its long-term senior unsecured and uncredit-enhanced debt securities.

 

“Group C Obligor” means an Obligor, not a Group A Obligor or a Group B Obligor, with a short-term rating of at least:  (a) “A-3” by Standard & Poor’s, or if such Obligor does not have a short-term rating from Standard & Poor’s, a rating of “BBB-” to “BBB” by Standard & Poor’s on its long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-3” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baa3” to “Baa2” by Moody’s on its long-term senior unsecured and uncreditenhanced debt securities.

 

“Group Commitment” means with respect to any Purchaser Group the aggregate of the Commitments of each Purchaser within such Purchaser Group.

 

“Group D Obligor” means any Obligor that is not a Group A Obligor, a Group B Obligor or a Group C Obligor.

 

“Indemnified Amounts” has the meaning set forth in Section 3.1 of the Agreement.

 

“Indemnified Party” has the meaning set forth in Section 3.1 of the Agreement.

 

“Independent Director” has the meaning set forth in paragraph 3(c) of Exhibit IV to the Agreement.

 

“Information Package” means a report, in substantially the form of Annex A to the Agreement, furnished to the Administrator pursuant to the Agreement.

 

“Insolvency Proceeding” means:  (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors of a Person, or any composition, marshalling of assets for creditors of a Person, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in each of cases (a) and (b) undertaken under U.  S.  Federal, state or foreign law, including the Bankruptcy Code.

 

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated on or about October 3, 2007, among Strategic Energy, the Administrator and PNC, as administrative agent

 

I-11        STRATEGIC ENERGY - RPA 

under the Credit Agreement, as amended, restated, supplemented or otherwise modified from time to time.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time.  References to sections of the Internal Revenue Code also refer to any successor sections.

 

“LC Bank” has the meaning set forth in the preamble to the Agreement.

 

“LC Collateral Account” means the account designated as the LC Collateral Account established and maintained by the Administrator (for the benefit of the LC Bank and the LC Participants), or such other account as may be so designated as such by the Administrator.

 

“LC Commitment” means, the “Commitment” of each LC Participant party hereto as set forth under its name on the signature pages to the Agreement or as set forth in any assignment agreement pursuant to which it became a party hereto.

 

“LC Participant” has the meaning set forth in the preamble to the Agreement.

 

“LC Participation Amount” shall mean, at any time, the then aggregate undrawn face amount of all outstanding Letters of Credit.

 

“Letter of Credit” shall mean any stand-by letter of credit issued by the LC Bank for the account of the Seller pursuant to the Agreement.

 

“Letter of Credit Application” has the meaning set forth in Section 1.12 of the Agreement.

 

“Liquidity Agent” means each of the banks acting as agent for the various Liquidity Banks under each Liquidity Agreement.

 

“Liquidity Agreement” means any agreement entered into in connection with this Agreement pursuant to which a Liquidity Provider agrees to make purchases or advances to, or purchase assets from, any Conduit Purchaser in order to provide liquidity for such Conduit Purchaser’s Purchases.

 

“Liquidity Provider” means each bank or other financial institution that provides liquidity support to any Conduit Purchaser pursuant to the terms of a Liquidity Agreement.

 

“Lock-Box Account” means an account listed on Schedule II to the Agreement, in each case in the name of the Seller and maintained by the Seller at a bank or other financial institution for the purpose of receiving Collections, either by check deposit or wire or ACH transfer.

 

“Lock-Box Agreement” means an agreement, in form and substance satisfactory to the Administrator, among the Seller, the Servicer, the Administrator, and a Lock-Box Bank, as such agreement may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

 

I-12        STRATEGIC ENERGY - RPA 

“Lock-Box Bank” means any of the banks or other financial institutions holding one or more Lock-Box Accounts.

 

“Loss Reserve” means, on any date, an amount equal to:  (a) the sum of Capital plus the LC Participation Amount at the close of business of the Seller on such date multiplied by (b)(i) the Loss Reserve Percentage on such date divided by (ii) 100% minus the Loss Reserve Percentage on such date.

 

“Loss Reserve Percentage” means, on any date, the following expressed as a percentage (as opposed to a fraction):

 

Net Receivables Pool Balance

 

As used herein:

 

“ADR” means the highest average of the Default Ratios for any three consecutive calendar months during the twelve most recent calendar months.

 

“ACS” means the aggregate credit sales made by the Originators (or Receivables of such Originators otherwise created) during the five most recent calendar months and 25% of the aggregate credit sales made by the Originators (or Receivables of such Originators otherwise created) during the calendar month that is five months prior to the most recent calendar month.

 

“Majority LC Participants” shall mean LC Participants whose Pro Rata Shares aggregate 51% or more.

 

“Majority Purchaser Agents” means, at any time, the Purchaser Agents whose Group Commitments aggregate 2/3rds or more of the aggregate of the Group Commitments of all Purchaser Groups; provided, however, that so long as any Purchaser Group’s Group Commitment is greater than 50% of the aggregate Group Commitments, then “Majority Purchaser Agents” shall mean a minimum of two Purchaser Agents whose Group Commitments aggregate more than 50% of the aggregate Group Commitments.

 

“Market Street” means Market Street Funding LLC, a Delaware limited liability company.

 

“Market Street Base Rate” means, for any day, a fluctuating interest rate per annum as shall be in effect from time to time, which rate shall be at all times equal to the higher of:

 

(a)           the rate of interest in effect for such day as publicly announced from time to time by PNC in Pittsburgh, Pennsylvania as its “prime rate.” Such “prime rate” is set by PNC based upon various factors, including PNC’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate, and

 

(b)           0.50% per annum above the latest Federal Funds Rate.

 

 I-13        STRATEGIC ENERGY - RPA

“Material Adverse Effect” means, relative to any Person, with respect to any event or circumstance, a material adverse effect on:

 

(a)           the assets, operations, business or financial condition of (i) the Seller or (ii) Strategic Energy or its Subsidiaries,

 

(b)           the ability of any of the Originators, the Servicer or the Seller to perform its obligations under the Agreement or any other Transaction Document to which it is a party,

 

(c)           the validity or enforceability of the Agreement or any other Transaction Document, or the validity, enforceability or collectibility of a material portion of the Pool Receivables, or

 

(d)           the status, perfection, enforceability or priority of the Administrator’s or any Purchaser’s or the Seller’s interest in the Pool Assets.

 

“Member” shall have the meaning set forth in Schedule A to the Seller’s limited liability company agreement.

 

“Minimum Dilution Reserve” means, on any date, an amount equal to the product of (a) the sum of the Capital plus the LC Participation Amount at the close of business of the Seller on such date multiplied by (b) (i) the Minimum Dilution Reserve Percentage on such date, divided by (ii) 100% minus the Minimum Dilution Reserve Percentage on such date.

 

“Minimum Dilution Reserve Percentage” means on any date, the following expressed as a percentage (as opposed to a fraction): the product of (x) the Dilution Horizon multiplied by (y) the average of the Dilution Ratios for the twelve most recent calendar months.

 

“Monthly Settlement Date” means the 23^rd day of each calendar month (or the next succeeding Business Day if such day is not a Business Day), beginning October 23, 2007.

 

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

 

“Net Receivables Pool Balance” means, at any time:  (a) the Outstanding Balance of Eligible Receivables then in the Receivables Pool minus (b) Excess Concentration.

 

“Notes” means short-term promissory notes issued, or to be issued, by each Conduit Purchaser (or by its related commercial paper issuer if such Conduit Purchaser does not itself issue commercial paper notes) to fund its investments in accounts receivable or other financial assets.

 

“Obligor” means, with respect to any Receivable, the Person obligated to make payments pursuant to the Contract relating to such Receivable.

 

“Order” has the meaning set forth in Section 1.20 of the Agreement.

 

 I-14        STRATEGIC ENERGY - RPA

“Originator” and “Originators” have the meaning set forth in the Sale Agreement, as the same may be modified from time to time by adding new Originators or removing Originators, in each case with the prior written consent of the Administrator.

 

“Originator Assignment Certificate” means the assignment by each Originator to the Seller, in substantially the form of Exhibit C to the Sale Agreement, evidencing Seller’s ownership of the Receivables generated by the Originators, as the same may be amended, restated, supplemented, amended and restated, or otherwise modified from time to time in accordance with the Sale Agreement.

 

“Outstanding Balance” of any Receivable at any time means the then outstanding principal balance thereof.

 

“Paydown Notice” has the meaning set forth in Section 1.4(f)(i) of the Agreement.

 

“Payment Date” has the meaning set forth in Section 2.1 of the Sale Agreement.

 

“Permitted Liens” shall mean the following encumbrances: (a) liens for taxes or assessments or other governmental charges or levies not yet due and payable, (b)  inchoate and unperfected workers’, mechanics’ or suppliers’ liens arising in the ordinary course of business; and (c) any judgment lien against any Originator or the Servicer in the aggregate for all such liens not to exceed $1,000,000 to the extent not unstayed, unbonded, unvacated or undischarged for more than 30 days.

 

“Person” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.

 

“PNC” has the meaning set forth in the preamble to the Agreement.

 

“Pool Assets” has the meaning set forth in Section 1.2(d) of the Agreement.

 

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

 

“Portion of Capital” means with respect to any Purchaser and its related Capital, the portion of such Capital being funded or maintained by such Purchaser(or its successors or permitted assigns) by reference to a particular interest rate basis.  In addition, at any time when the Capital of the Purchased Interest is not divided into two or more such portions, “Portion of Capital” means 100% of the Capital.

 

“Pro Rata Share” shall mean, as to any LC Participant or the LC Bank, a fraction, the numerator of which equals the Commitment of such LC Participant or the LC Bank at such time and the denominator of which equals the aggregate of the Commitments of all LC Participants and the LC Bank at such time.

 

“Program Support Agreement” means and includes any Liquidity Agreement and any other agreement entered into by any Program Support Provider providing for:  (a) the issuance of one or more letters of credit for the account of any Conduit Purchaser in connection with such

 

I-15        STRATEGIC ENERGY - RPA 

Conduit Purchaser’s Receivables securitization program, (b) the issuance of one or more surety bonds in connection with such Conduit Purchaser’s Receivables securitization program for which any Conduit Purchaser is obligated to reimburse the applicable Program Support Provider for any drawings thereunder, (c) the sale by any Conduit Purchaser to any Program Support Provider of the Purchased Interest (or portions thereof) and/or (d) the making of loans and/or other extensions of credit to any Conduit Purchaser in connection with such Conduit Purchaser’s receivables-securitization program contemplated in the Agreement, together with any letter of credit, surety bond or other instrument issued thereunder (but excluding any discretionary advance facility provided by the Administrator).

 

“Program Support Provider” means and includes any Purchaser, any Liquidity Provider and any other Person (other than any customer of the related Conduit Purchaser) now or hereafter extending credit or having a commitment to extend credit to or for the account of, or to make purchases from, any Conduit Purchaser pursuant to any Program Support Agreement.

 

“Purchase and Sale Indemnified Amounts” has the meaning set forth in Section 9.1 of the Sale Agreement.

 

“Purchase and Sale Indemnified Party” has the meaning set forth in Section 9.1 of the Sale Agreement.

 

“Purchase and Sale Termination Date” has the meaning set forth in Section 1.4 of the Sale Agreement.

 

“Purchase and Sale Termination Event” has the meaning set forth in Section 8.1 of the Sale Agreement.

 

“Purchase Facility” has the meaning set forth in Section 1.1 of the Sale Agreement.

 

“Purchase Limit” means $175,000,000, as such amount may be reduced pursuant to Section 1.1(c) of the Agreement.  References to the unused portion of the Purchase Limit shall mean, at any time, the Purchase Limit minus the sum of the then aggregate outstanding Capital plus the LC Participation Amount.

 

“Purchase Notice” has the meaning set forth in Section 1.2(a) of the Agreement.

 

“Purchase Price” has the meaning set forth in Section 2.1 of the Sale Agreement.

 

“Purchase Report” has the meaning set forth in Section 2.1 of the Sale Agreement.

 

“Purchased Interest” means, at any time, the undivided variable percentage ownership interest of all Purchasers, collectively, in:  (a) each and every Pool Receivable now existing or hereafter arising, (b) all Related Security with respect to such Pool Receivables and (c) all Collections with respect to, and other proceeds of, such Pool Receivables and Related Security.  Such undivided variable percentage interest shall be computed as:

 

Net Receivables Pool Balance

 

I-16        STRATEGIC ENERGY - RPA 

The Purchased Interest shall be determined from time to time pursuant to Section 1.3 of the Agreement.

 

“Purchaser Agent” has the meaning set forth in the preamble to the Agreement.

 

“Purchaser Group” means, for each Conduit Purchaser, such Conduit Purchaser, its related Purchaser Agent and, in the case of Market Street as a Conduit Purchaser, the LC Bank, and in the case of each other Conduit Purchaser, the related LC Participant in addition to itself and Purchaser Agent.

 

“Purchasers” means each Conduit Purchaser, the LC Bank and each LC Participant.

 

“Purchasers’ Share” of any amount means such amount multiplied by the Purchased Interest at the time of determination.

 

“Ratable Share” means, for each Purchaser Group, such Purchaser Group’s Group Commitment divided by the aggregate Group Commitments of all Purchaser Groups.

 

“Receivable” means any indebtedness and other obligations owed to the Seller (as the assignee of the related Originator) or any Originator by, or any right of the Seller or any Originator to payment from or on behalf of, an Obligor, whether constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale of goods, the rendering of services or the sale of electricity by any Originator, and includes the obligation to pay any finance charges, fees and other charges with respect thereto. Excluded Receivables shall not constitute Receivables.  Indebtedness and other obligations arising from any one transaction, including indebtedness and other obligations represented by an individual invoice or agreement, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other obligations arising from any other transaction.

 

“Receivables Pool” means, at any time, all of the then outstanding Receivables purchased by the Seller pursuant to the Sale Agreement prior to the Facility Termination Date.

 

“Reimbursement Obligation” has the meaning set forth in Section 1.14 of the Agreement.

 

“Related Rights” has the meaning set forth in Section 1.1 of the Sale Agreement.

 

“Related Security” means, with respect to any Receivable:

 

(a)           all of the Seller’s and each Originator’s interest in any goods (including returned goods), and documentation of title evidencing the shipment or storage of any goods (including returned goods), relating to any sale giving rise to such Receivable,

 

(b)           all instruments and chattel paper that may evidence such Receivable,

 

(c)           all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all UCC financing statements or similar filings relating thereto,

 

I-17        STRATEGIC ENERGY - RPA 

(d)           all of the Seller’s and each Originator’s rights, interests and claims under the Contracts and all guaranties, warranties, indemnities, insurance (and proceeds and premium refunds with respect thereto) and other agreements (including the related Contract) or arrangements of whatever character from time to time supporting or securing payment of such Receivable or otherwise relating to such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, and

 

(e)           all of the Seller’s rights, interests and claims under the Sale Agreement and the other Transaction Documents.

 

“Required LC Participants” shall mean the LC Participants whose Pro Rata Shares aggregate 66⅔% or more.

 

“Responsible Officer” means, with respect to each Originator, the Servicer and the Seller, any president, vice president, treasurer, assistant treasurer, secretary, assistant secretary, chief financial officer, controller or any other officer of any such Person charged with the responsibility for administration of any Transaction Document.

 

“Restricted Payments” has the meaning set forth in Section 1(n) of Exhibit IV of the Agreement.

 

“Sale Agreement” means the Purchase and Sale Agreement, dated as of even date herewith, between the Seller and the Originators, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

 

“Scheduled Commitment Termination Date” means with respect to the LC Bank, initially October 1, 2010, as such date may be extended from time to time in the sole discretion of the LC Bank.

 

“Seller” has the meaning set forth in the preamble to the Agreement.

 

“Seller’s Share” of any amount means the greater of:  (a) $0 and (b) such amount minus the Purchasers’ Share.

 

“Servicer” has the meaning set forth in the preamble to the Agreement.

 

“Servicing Fee” shall mean the fee referred to in Section 4.6 of the Agreement.

 

“Servicing Fee Rate” shall mean the rate referred to in Section 4.6 of the Agreement.

 

“Servicer Termination Event” shall mean a Termination Event set forth in any of paragraphs (a), (b), (c), (d), (k) or (m) of Exhibit V to the Agreement with respect to the Servicer.

 

“Settlement Date” means with respect to any Portion of Capital for any Settlement Period, (i) prior to the Facility Termination Date, the Monthly Settlement Date and (ii) on and after the Facility Termination Date, each day selected from time to time by the Administrator (it

 

I-18        STRATEGIC ENERGY - RPA 

being understood that the Administrator may select such Settlement Date to occur as frequently as daily), or, in the absence of such selection, the Monthly Settlement Date.

 

“Settlement Period” means:  (a) before the Facility Termination Date:  (i) initially the period commencing on the date of the initial purchase pursuant to Section 1.2 of the Agreement (or in the case of any fees payable hereunder, commencing on the Closing Date) and ending on (but not including) the next Monthly Settlement Date, and (ii) thereafter, each period commencing on such Monthly Settlement Date and ending on (but not including) the next Monthly Settlement Date, and (b) on and after the Facility Termination Date:  such period (including a period of one day) as shall be selected from time to time by the Administrator or, in the absence of any such selection, each period of 30 days from the last day of the preceding Settlement Period.

 

“Solvent” means, with respect to any Person at any time, a condition under which:

 

(i)           the fair value and present fair saleable value of such Person’s total assets is, on the date of determination, greater than such Person’s total liabilities (including contingent and unliquidated liabilities) at such time;

 

(ii)           the fair value and present fair saleable value of such Person’s assets is greater than the amount that will be required to pay such Person’s probable liability on its existing debts as they become absolute and matured (“debts,” for this purpose, includes all legal liabilities, whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent);

 

(iii)           such Person is and shall continue to be able to pay all of its liabilities as such liabilities mature; and

 

(iv)           such Person does not have unreasonably small capital with which to engage in its current and in its anticipated business.

 

For purposes of this definition:

 

(A)           the amount of a Person’s contingent or unliquidated liabilities at any time shall be that amount which, in light of all the facts and circumstances then existing, represents the amount which can reasonably be expected to become an actual or matured liability;

 

(B)           the “fair value” of an asset shall be the amount which may be realized within a reasonable time either through collection or sale of such asset at its regular market value;

 

(C)           the “regular market value” of an asset shall be the amount which a capable and diligent business person could obtain for such asset from an interested buyer who is willing to purchase such asset under ordinary selling conditions; and

 

(D)           the “present fair saleable value” of an asset means the amount which can be obtained if such asset is sold with reasonable promptness in an arm’s-length transaction in an existing and not theoretical market.

 

I-19        STRATEGIC ENERGY - RPA 

“Special Member” shall have the meaning set forth in Schedule A to the Seller’s limited liability company agreement.

 

“Spike Factor” means, for any calendar month, (a) the positive difference, if any, between:  (i) the highest Dilution Ratio for any one calendar month during the twelve most recent calendar months and (ii) the arithmetic average of the Dilution Ratios for such twelve months times (b) (i) the highest Dilution Ratio for any one calendar month during the twelve most recent calendar months divided by (ii) the arithmetic average of the Dilution Ratios for such twelve months.

 

“Standard & Poor’s” means Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc.

 

“Strategic Energy” has the meaning set forth in the preamble to the Agreement.

 

“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock of each class or other interests having ordinary voting power (other than stock or other interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors or other managers of such entity are at the time owned, or management of which is otherwise controlled:  (a) by such Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and one or more Subsidiaries of such Person.

 

“Termination Day” means:  (a) each day on which the conditions set forth in Section 2 of Exhibit II to the Agreement are not satisfied or (b) each day that occurs on or after the Facility Termination Date.

 

“Termination Event” has the meaning specified in Exhibit V to the Agreement.

 

“Termination Fee” means, for any Settlement Period during which a Termination Day occurs, with respect to any Purchaser, the amount, if any, by which:  (a) the additional Discount (calculated without taking into account any Termination Fee or any shortened duration of such Settlement Period pursuant to the definition thereof) that would have accrued during such Settlement Period on the reductions of Capital relating to such Settlement Period had such reductions not been made, exceeds (b) the income, if any, received by the Purchasers from investing the proceeds of such reductions of Capital, as determined by the Administrator, which determination shall be binding and conclusive for all purposes, absent manifest error.

 

“Total Reserves” means, at any time the sum of:  (a) the Yield Reserve, plus (b) the greater of (i) the sum of the Loss Reserve plus the Dilution Reserve or (ii) the Minimum Dilution Reserve plus the Concentration Reserve.

 

“Transaction Documents” means the Agreement, the Lock-Box Agreements, the Fee Letters, the Sale Agreement, the Intercreditor Agreement and all other certificates, instruments, UCC financing statements, reports, notices and agreements executed or delivered under or in connection with the Agreement, in each case as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the Agreement.

 

 I-20        STRATEGIC ENERGY - RPA

“Transfer” has the meaning set forth in Section 1.1(a) of the Agreement.

 

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

 

“United States” means the United States of America.

 

“Unmatured Termination Event” means an event that, with the giving of notice or lapse of time, or both, would constitute a Termination Event.

 

“Yield Reserve” means, on any date, an amount equal to:  (a) the sum of the Capital plus the LC Participation Amount at the close of business of the Seller on such date multiplied by (b)(i) the Yield Reserve Percentage on such date divided by (ii) 100% minus the Yield Reserve Percentage on such date.

 

“Yield Reserve Percentage” means at any time:

 

(BR+SFR) x l.5 x DSO

360

 

where:

 

BR  =

the Base Rate computed for the most recent Settlement Period,

 

DSO  =

Days’ Sales Outstanding, and

 

SFR  =

the Servicing Fee Rate

 

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.  Unless the context otherwise requires, “or” means “and/or,” and “including” (and with correlative meaning “include” and “includes”) means including without limiting the generality of any description preceding such term.

 

I-21        STRATEGIC ENERGY - RPA 

 

 

1.           Conditions Precedent to Effectiveness of the Agreement.  The effectiveness of this Agreement is subject to the following conditions precedent that the Administrator shall have received on or before the Closing Date, each in form and substance (including the date thereof) satisfactory to the Administrator:

 

(a)           Each of the counterparts of the Agreement and each other Transaction Document, duly executed by the parties thereto.

 

(b)           Certified copies of:  (i) the resolutions of the Board of Directors or members or managers, as applicable, of each of the Seller, Strategic Energy and each Originator authorizing the execution, delivery and performance by the Seller, Strategic Energy and each Originator, as the case may be, of the Agreement and the other Transaction Documents to which it is a party; (ii) all documents evidencing other necessary corporate or organizational action and governmental approvals, if any, with respect to the Agreement and the other Transaction Documents and (iii) the certificate of incorporation or articles of organization and by-laws or limited liability company agreement, as applicable, of the Seller, Strategic Energy and each Originator.

 

(c)           A certificate of the Secretary or Assistant Secretary of the Seller, each Originator and Strategic Energy certifying the names and true signatures of its officers who are authorized to sign the Agreement and the other Transaction Documents to which it is a party.  Until the Administrator receives a subsequent incumbency certificate from the Seller, any Originator, or Strategic Energy, as the case may be, the Administrator shall be entitled to rely on the last such certificate delivered to it by the Seller, such Originator, or Strategic Energy, as the case may be.

 

(d)           Proper financing statements (Forms UCC 1 and UCC 3), duly authorized on or before the Closing Date of such initial purchase suitable for filing under the UCC of all jurisdictions that the Administrator may deem necessary in order to perfect the interests of the Seller and the Administrator (for the benefit of the Purchasers) contemplated by the Agreement and the Sale Agreement.

 

(e)           Proper financing statements (Form UCC 3), duly authorized and suitable for filing under the UCC of all jurisdictions that the Administrator may deem necessary to release all security interests and other rights of any Person in the Receivables, Contracts or Related Security previously granted by the Originators, Strategic Energy or the Seller.

 

(f)           Completed search reports from all applicable jurisdictions, dated on or shortly before the Closing Date, listing (i) the financing statements, if any, filed in all applicable jurisdictions that name any of the Originators or the Seller as debtor, and (ii) all judgment, tax, ERISA and other liens against any of the Originators or the Seller, as the Administrator may request, showing no Adverse Claims on any Pool Assets.

 

(e)           Favorable opinions, in form and substance reasonably satisfactory to the Administrator, of Sidley Austin LLP and Babst, Calland, Clements, Zomnir PC, counsel for the Seller, Strategic Energy, the Originators, and the Servicer.

 

 

II-1        STRATEGIC ENERGY - RPA

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(f)           Satisfactory results of a review, field examination and audit (performed by representatives of the Administrator or by third parties at the direction of the Administrator) of the Servicer’s collection, operating and reporting systems, the Credit and Collection Policy of the Originators, historical receivables data and accounts, including satisfactory results of a review of the Servicer’s operating location(s) and satisfactory review and approval of the Eligible Receivables in existence on the date of the initial purchase under the Agreement.

 

(g)           Evidence of payment by the Seller of all accrued and unpaid fees (including those contemplated by the Fee Letters), costs and expenses to the extent then due and payable on the date thereof, including any such costs, fees and expenses arising under or referenced in Section  6.4 of the Agreement and the Fee Letters.

 

(h)           A pro forma Information Package representing the performance of the Receivables Pool for the calendar month before closing..

 

(i)           Subject to Section 1(s) of Exhibit IV to the Agreement, good standing certificates with respect to each of the Seller, Strategic Energy, each Originator, and the Servicer issued by the Secretary of State (or similar official) of the state of each such Person’s organization or formation and principal place of business.

 

2.           Conditions Precedent to All Funded Purchases, Issuances of Letters of Credit.  Each Funded Purchase, including the initial Funded Purchase but excluding any deemed Funded Purchases made pursuant to Section 1.2(e) of the Agreement, and the issuance of any Letters of Credit shall be subject to the further conditions precedent that:

 

(a)           in the case of each Funded Purchase and the issuance of any Letters of Credit, the Servicer shall have delivered to the Administrator and each Purchaser Agent on or before such purchase or issuance, as the case may be, in form and substance satisfactory to the Administrator, a completed pro forma Information Package to reflect the level of Capital, the LC Participation Amount and related reserves and the calculation of the Purchased Interest after such subsequent purchase or issuance, as the case may be, and a completed Purchase Notice in the form of Annex B; and

 

(b)           on the date of such Funded Purchase or issuance, as the case may be, the following statements shall be true (and acceptance of the proceeds of such Funded Purchase or issuance shall be deemed a representation and warranty by the Seller that such statements are then true):

 

(i)           the representations and warranties contained in Exhibit III to the Agreement are true and correct in all material respects on and as of the date of such Funded Purchase or issuance as though made on and as of such date except for representations and warranties which apply as to an earlier date (in which case such representations and warranties shall be true and correct as of such earlier date);

 

(ii)           no event has occurred and is continuing, or would result from such Funded Purchase or issuance, that constitutes a Termination Event or an Unmatured Termination Event;

 

 II-2        STRATEGIC ENERGY - RPA

(iii)           the sum of the Capital plus the LC Participation Amount, after giving effect to any such Funded Purchase, issuance or reinvestment, as the case may be, shall not exceed the Purchase Limit and the Purchased Interest shall not exceed 100%; and

 

(iv)           the Facility Termination Date has not occurred.

 

 

 

 

II-3        STRATEGIC ENERGY - RPA 

 

1.           Representations and Warranties of the Seller.  The Seller represents and warrants as follows:

 

(a)           The Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to do business and is in good standing as a foreign limited liability company in every jurisdiction where the nature of its business requires it to be so qualified, except where the failure to be so qualified would not have a Material Adverse Effect.

 

(b)           The execution, delivery and performance by the Seller of the Agreement and the other Transaction Documents to which it is a party, including its use of the proceeds of purchases and reinvestments:  (i) are within its organizational powers; (ii) have been duly authorized by all necessary organizational action; (iii) do not contravene or result in a default under or conflict with:  (A) its certificate of formation, limited liability company agreement or any other organizational document of the Seller, (B) any law, rule or regulation applicable to it, (C) any indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument to which it is a party or by which it is bound, or (D) any order, writ, judgment, award, injunction or decree binding on or affecting it or any of its property; and (iv) do not result in or require the creation of any Adverse Claim upon or with respect to any of its properties.  The Agreement and the other Transaction Documents to which it is a party have been duly executed and delivered by the Seller.

 

(c)           No authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or other Person is required for its due execution, delivery and performance by the Seller of the Agreement or any other Transaction Document to which it is a party, other than the Uniform Commercial Code filings referred to in Exhibit II to the Agreement, all of which shall have been filed on or before the date of the first purchase hereunder.

 

(d)           Each of the Agreement and the other Transaction Documents to which the Seller is a party constitutes its legal, valid and binding obligation enforceable against the Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws from time to time in effect 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)           There is no pending or, to Seller’s best knowledge, threatened action or proceeding affecting Seller or any of its properties before any Governmental Authority or arbitrator.

 

(f)           No proceeds of any purchase or reinvestment will be used to acquire any equity security of a class that is registered pursuant to Section 12 of the Securities Exchange Act of 1934.

 

 

 

III-1        STRATEGIC ENNERGY - RPA

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(g)           The Seller is the legal and beneficial owner of, and has good and marketable title to, the Pool Receivables, the Lock-Box Accounts (and related lock-boxes) and Related Security, free and clear of any Adverse Claim (other than Permitted Liens solely with respect to the Pool Receivables and Related Security).  Upon each purchase or reinvestment, the Administrator or the Purchasers shall acquire valid and enforceable perfected security interests, to the extent of each Purchaser’s percentage interest of the Purchased Interest, in each Pool Receivable then existing or thereafter arising and in the Related Security, Collections and other proceeds with respect thereto, free and clear of any Adverse Claim.  The Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in favor of the Administrator in the Pool Assets and the Lock-Box Accounts (and related lock-boxes), which security interest is prior to all Adverse Claims, and is enforceable as such against creditors of and purchases from the Seller.  The Pool Assets constitute “accounts”, “general intangibles” or “tangible chattel paper” within the meaning of the applicable UCC.  Each Lock-Box Account constitutes a “deposit account” within the meaning of the applicable UCC.  The Seller has caused or will have caused, within ten (10) days, the filing of all appropriate UCC financing statements in the proper filing offices in the appropriate jurisdictions under applicable laws in order to perfect the security interest in the Pool Assets and the Lock-Box Accounts (and related lock-boxes) granted to the Administrator hereunder.  Other than the security interest granted to the Administrator pursuant to this Agreement, Seller has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Pool Assets or the Lock-Box Accounts (and related lock-boxes).  Seller has not authorized the filing of and is not aware of any UCC financing statements against Seller that include a description of collateral covering the Pool Assets, other than any UCC financing statement relating to the security interest granted to the Administrator hereunder or that has been terminated.  Seller is not aware of any judgment, ERISA or tax lien filings against the Seller.  With respect to any Pool Receivable that constitutes “tangible chattel paper”, the Servicer is in possession of the original copies of the tangible chattel paper that constitutes or evidences such Pool Receivables, and the Seller has filed or has caused to be filed within ten (10) days after the date hereof the financing statements described in this section above, each of which will contain a statement that “A purchase of or a grant of a security interest in any property described in this financing statement will violate the rights of the Purchasers.” The Pool Receivables to the extent they are evidenced by “tangible chattel paper” do not have any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Seller or the Administrator, for the benefit of the Purchasers.

 

(h)           Each Information Package (if prepared by the Seller or one of its Affiliates, or to the extent that information contained therein is supplied by the Seller or an Affiliate), exhibit, financial statement, document, book, record, report or other information furnished or to be furnished at any time by or on behalf of the Seller to the Administrator in connection with the Agreement or any other Transaction Document to which it is a party, taken as a whole, is or will be complete and accurate in all material respects as of its date or (except as otherwise disclosed to the Administrator at such time) as of the date so furnished; provided, however, that if such Information Package is incomplete or inaccurate solely due to its inclusion of an untrue representation or warranty with respect to any Pool Receivable as set forth in Section 1(g) or (n)  of Exhibit III, and such Pool Receivable has been repurchased in accordance with Section 1.4(e)(ii), such incompleteness or inaccuracy shall not effect the completeness and accuracy of such Information Package.

 

 III-2        STRATEGIC ENERGY - RPA

(i)           The Seller’s principal place of business, chief executive office and state of formation (as such terms are used in the UCC) and the office where it keeps its records concerning the Receivables are located at the address referred to in Sections l(b) and 2(b) of Exhibit IV to the Agreement.

 

(j)           The names and addresses of all the Lock-Box Banks, together with the account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified in Schedule II to the Agreement (or at such other Lock-Box Banks and/or with such other Lock-Box Accounts as have been notified to the Administrator in accordance with the Agreement) and all Lock-Box Accounts are subject to Lock-Box Agreements.  With respect to all Lock-Box Accounts (and related lock-boxes), the Seller has delivered to the Administrator a fully executed Lock-Box Agreement pursuant to which the applicable Lock-Box Bank has agreed, following the occurrence and continuation of a Termination Event, to comply with all instructions given by the Administrator with respect to all funds on deposit in such Lock-Box Account (and all funds sent to the respective lock-box), without further consent by the Seller or the Servicer.  None of the Lock-Box Accounts (and the related lock-boxes) are in the name of any Person other than the Seller or the Administrator (on behalf of the Purchasers).  The Seller has not consented to any Lock-Box Bank’s complying with instructions of any person other than the Administrator.

 

(k)           The Seller is not in violation of any order of any court, arbitrator or Governmental Authority.

 

(l)           Neither the Seller nor any of its Affiliates has any direct or indirect ownership or other financial interest in any Conduit Purchaser.

 

(m)           The Seller is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U and X, as issued by the Federal Reserve Board), and no proceeds of any purchase or reinvestment hereunder will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

 

(n)           Each Pool Receivable included as an Eligible Receivable in the calculation of the Net Receivables Pool Balance is an Eligible Receivable.

 

(o)           No event has occurred and is continuing, or would result from a purchase in respect of, or reinvestment in respect of, the Purchased Interest or from the application of the proceeds therefrom, that constitutes a Termination Event or an Unmatured Termination Event.

 

(p)           The Seller has accounted for each sale of undivided variable percentage ownership interests in Receivables in its books and financial statements as sales, consistent with generally accepted accounting principles.

 

(q)           The Seller has complied in all material respects with the Credit and Collection Policy of the Originators with regard to each Receivable originated by the Originators.

 

(r)           The Seller has complied in all material respects with all of the terms, covenants and agreements contained in the Agreement and the other Transaction Documents that are applicable to it.

 

 III-3        STRATEGY ENERGY - RPA

(s)           The Seller’s complete organizational name is set forth in the preamble to the Agreement, and it does not use and has not during the last six years used any other organizational name, trade name, doing-business name or fictitious name, except as set forth on Schedule II to the Agreement and except for names first used after the date of the Agreement and set forth in a notice delivered to the Administrator pursuant to Section 1(1)(iv) of Exhibit IV to the Agreement.

 

(t)           The Seller is not an “investment company,” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

(u)           Each remittance of Collections by or on behalf of the Seller or pursuant to the Transaction Documents and any related accounts of amounts owing hereunder in respect of the Funded Purchases will have been (i) in payment of a debt incurred by Seller in the ordinary course of business or financial affairs of the Seller and (ii) made in the ordinary course of business or financial affairs of the Seller.

 

(v)           Since the date of formation of the Seller as set forth in its certificate of formation, no event has occurred that has had a Material Adverse Effect with respect to the Seller.

 

2.           Representations and Warranties of Strategic Energy, as the Servicer.  Strategic Energy, as the Servicer, represents and warrants jointly and severally as follows:

 

(a)           Strategic Energy is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to do business and is in good standing as a foreign corporation in every jurisdiction where the nature of its business requires it to be so qualified, except where the failure to be so qualified would not have a Material Adverse Effect.

 

(b)           The execution, delivery and performance by Strategic Energy of its obligations under the Agreement and the other Transaction Documents to which it is a party, including the Servicer’s use for the benefit of the Seller of the proceeds of purchases and reinvestments:  (i) are within its organizational powers; (ii) have been duly authorized by all necessary organizational action; (iii) do not contravene or result in a default under or conflict with:  (A) its certificate of incorporation, formation, limited liability company agreement, by-laws or any other organizational document of Strategic Energy, (B) any law, rule or regulation applicable to it, (C) any indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument to which it is a party or by which it is bound, or (D) any order, writ, judgment, award, injunction or decree binding on or affecting it or any of its property; and (iv) do not result in or require the creation of any Adverse Claim upon or with respect to any of its properties.  The Agreement and the other Transaction Documents to which Strategic Energy is a party have been duly executed and delivered by Strategic Energy.

 

(c)           No authorization, approval or other action by, and no notice to or filing with any Governmental Authority or other Person, is required for the due execution, delivery and performance by Strategic Energy of the Agreement or any other Transaction Document to which it is a party.

 

 III-4        STRATEGIC ENERGY - RPA

(d)           Each of the Agreement and the other Transaction Documents to which Strategic Energy is a party constitutes the legal, valid and binding obligation of Strategic Energy enforceable against Strategic Energy in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws from time to time in effect 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)           The balance sheets of Strategic Energy and its consolidated Subsidiaries as at December 31, 2006, and the related statements of income and retained earnings for the fiscal year then ended, copies of which have been furnished to the Administrator, fairly present the financial condition of Strategic Energy and its consolidated Subsidiaries as at such date and the results of the operations of Strategic Energy and its Subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles, consistently applied, and since June 30, 2007, there has been no event or circumstances which have had a Material Adverse Effect.

 

(f)           There is no pending or, to its best knowledge, threatened action or proceeding affecting it or any of its Subsidiaries before any Governmental Authority or arbitrator that could be expected to have a Material Adverse Effect.

 

(g)           No proceeds of any purchase or reinvestment will be used to acquire any equity security of a class that is registered pursuant to Section 12 of the Securities Exchange Act of 1934.  No proceeds of any purchase or reinvestment will be used for any purpose that violates any applicable law, rule or regulation, including Regulations T, U or X of the Federal Reserve Board.

 

(h)           Each Information Package (if prepared by Strategic Energy or one of its Affiliates, or to the extent that information contained therein is supplied by Strategic Energy or an Affiliate), exhibit, financial statement, document, book, record, report or other information furnished or to be furnished at any time by or on behalf of Strategic Energy to the Administrator in connection with the Agreement, taken as a whole, is or will be complete and accurate in all material respects as of its date or (except as otherwise disclosed to the Administrator at such time) as of the date so furnished; provided, however, that if such Information Package is incomplete or inaccurate solely due to its inclusion of an untrue representation or warranty with respect to any Pool Receivable as set forth in Section 1(g) or (n)  of Exhibit III, and such Pool Receivable has been repurchased in accordance with Section 1.4(e)(ii), such incompleteness or inaccuracy shall not effect the completeness and accuracy of such Information Package.

 

(i)           The principal place of business, chief executive office and state of formation (as such terms are used in the UCC) of Strategic Energy and the office where it keeps its records concerning the Receivables are located at the address referred to in Section 2(b) of Exhibit IV to the Agreement.

 

(j)           Strategic Energy is not in violation of any order of any court, arbitrator or Governmental Authority, which is reasonably likely to have a Material Adverse Effect.

 

 III-5        STRATEGIC ENERGY - RPA

(k)           Neither Strategic Energy nor any of its Affiliates has any direct or indirect ownership or other financial interest in any Conduit Purchaser.

 

(l)           Strategic Energy has complied in all material respects with the Credit and Collection Policy of the Originators with regard to each Receivable originated by the Originators.

 

(m)           Strategic Energy has complied in all material respects with all of the terms, covenants and agreements contained in the Agreement and the other Transaction Documents that are applicable to it.

 

(n)           Strategic Energy is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, as amended.

 

 

 III-6        STRATEGIC ENERGY - RPA

 

1.           Covenants of the Seller.  Until the latest of (i) the Facility Termination Date, (ii) the date on which no Capital of or Discount in respect of the Purchased Interest shall be outstanding, (iii) the date on which an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account and all Letters of Credit have expired and (iv) the date all other amounts owed by the Seller under the Agreement to the Purchasers, the Purchaser Agents, the Administrator and any other Indemnified Party or Affected Person shall be paid in full:

 

(a)           Compliance with Laws, Etc.  The Seller shall comply with all applicable laws, rules, regulations and orders, and preserve and maintain its organizational existence in good standing, and its rights, franchises, qualifications and privileges, except to the extent that the failure so to comply with such laws, rules, regulations and orders or the failure so to preserve and maintain such rights, franchises, qualifications and privileges would not have a Material Adverse Effect.

 

(b)           Offices, Records and Books of Account, Etc.  The Seller:  (i) shall keep its principal place of business, chief executive office and state of formation (as such terms or similar terms are used in the UCC) and the office where it keeps its records concerning the Receivables at the address of the Seller set forth on Schedule IV or, pursuant to clause (1)(iv) below, at any other locations in jurisdictions where all actions reasonably requested by the Administrator to protect and perfect the interest of the Administrator in the Receivables and related items (including the Pool Assets) have been taken and completed and (ii) shall provide the Administrator with at least 30 days’ written notice before making any change in the Seller’s name or making any other change in the Seller’s identity or organizational structure (including a Change in Control) that could render any UCC financing statement filed in connection with this Agreement “seriously misleading” as such term (or similar term) is used in the UCC; each notice to the Administrator pursuant to this sentence shall set forth the applicable change and the effective date thereof.  The Seller also will maintain and implement (or cause the Servicer to maintain and implement) administrative and operating procedures (including an ability to recreate records evidencing Receivables and related Contracts in the event of the destruction of the originals thereof), and keep and maintain (or cause the Servicer to keep and maintain) all documents, books, records, computer tapes and disks and other information reasonably necessary or advisable for the collection of all Receivables (including records adequate to permit the daily identification of each Receivable and all Collections of and adjustments to each existing Receivable).

 

(c)           Performance and Compliance with Contracts and Credit and Collection Policy.  The Seller shall (and shall cause the Servicer to), at its expense, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and timely and fully comply in all material respects with the applicable Credit and Collection Policy with regard to each Receivable and the related Contract.

 

 

IV-1        STRATEGIC ENERGY - RPA

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(d)           Ownership Interest, Etc.  The Seller shall (and shall cause the Servicer to), at its expense, take all action (i) necessary and (ii) desirable to the Administrator (as reasonably requested by the Administrator) to establish and maintain a valid and enforceable undivided variable percentage ownership or security interest, to the extent of the Purchased Interest, in the Pool Receivables, the Related Security and Collections with respect thereto, and a first priority perfected security interest in the Pool Assets, in each case free and clear of any Adverse Claim, in favor of the Administrator (on behalf of each Purchaser), including taking such action to perfect, protect or more fully evidence the interest of each Purchaser as a Purchaser, through the Administrator, may reasonably request.  The Seller shall from time to time and within the time limits established by law prepare and present to the Administrator for the Administrator’s authorization and approval all financing statements, amendments, continuations or initial financing statements in lieu of a continuation statement, or other filings necessary to continue, maintain and perfect the Administrator’s (on behalf of the Purchasers) security interest in the Pool Assets as a first-priority interest.  The Administrator’s approval of such filings shall authorize the Seller to file such financing statements under the UCC without the signature of the Seller or the Administrator or any Purchaser where allowed by applicable law.  Notwithstanding anything else in the Transaction Documents to the contrary, until the date following the Facility Termination Date on which all amounts and other obligations owed pursuant to the Transaction Documents shall have been paid in full, neither the Seller, the Servicer nor any other Person shall have any authority to file a termination, partial termination, release or partial release or any amendment that deletes the name of a debtor or excludes collateral of any such financing statements without the prior written consent of the Administrator.

 

(e)           Sales, Liens, Etc.  The Seller shall not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse Claim (other than Permitted Liens) upon or with respect to, any or all of its right, title or interest in, to or under any Pool Assets (including the Seller’s undivided interest in any Receivable, Related Security or Collections, or upon or with respect to any account to which any Collections of any Receivables are sent), or assign any right to receive income in respect of any items contemplated by this paragraph.

 

(f)           Extension or Amendment of Receivables.  Except as provided in the Credit and Collection Policy, the Seller shall not, and shall not permit the Servicer to, extend the maturity or adjust the Outstanding Balance or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, any term or condition of any related Contract (which term or condition relates to payments under, or the enforcement of, such Contract).

 

(g)           Change in Business or Credit and Collection Policy.  The Seller shall not without the prior written consent of the Administrator and each Purchaser Agent make (or permit any Originator to make) any material change in the character of its business or in any Credit and Collection Policy, or any change in any Credit and Collection Policy that could have a Material Adverse Effect with respect to the Receivables.  The Seller shall not make (or permit the any Originator to make) any other change to any Credit and Collection Policy without giving 30 days’ prior written notice thereof to the Administrator and the Purchaser Agents.

 

 IV-2        STRATEGIC ENERGY - RPA

(h)           Audits.  The Seller shall (and shall cause the Originators to), from time to time during regular business hours as reasonably requested in advance at least 2 days prior to each such audit (unless a Termination Event or Unmatured Termination Event exists) by the Administrator, permit the Administrator, or its agents or representatives:  (i) to examine and make copies of and abstracts from all books, records and documents (including computer tapes and disks) in the possession or under the control of the Seller (or the Originators) relating to Receivables and the Related Security, including the related Contracts, (ii) to visit the offices and properties of the Seller and each Originator for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to Receivables and the Related Security or the Seller’s, Strategic Energy’s or any Originator’s performance under the Transaction Documents or under the Contracts with any of the officers, employees, agents or contractors of the Seller, Strategic Energy or any Originator having knowledge of such matters and (iii) without limiting the clauses (i) and (ii) above, to engage certified public accountants or other auditors acceptable to the Seller and the Administrator to conduct, at the Seller’s expense, a review of the Seller’s books and records with respect to such Receivables, provided, that at any time when no Termination Event exists and is continuing, the Seller shall be required to reimburse the Administrator for only two (2) such audits per year.

 

(i)           Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions to  Obligors.  The Seller shall not, and shall not permit the Servicer or any Originator to, add or terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account from those listed in Schedule II to the Agreement, or make any change in its instructions to Obligors regarding payments to be made to the Seller, any Originator, the Servicer or any Lock-Box Account (or related post office box), unless the Administrator shall have consented thereto in writing prior to such termination or instruction and the Administrator shall have received copies of all agreements and documents (including Lock-Box Agreements) that it may request in connection therewith.

 

(j)           Deposits to Lock-Box Accounts.  The Seller shall (or shall cause the Servicer to):   (i) instruct all Obligors to make payments of all Receivables to one or more Lock-Box Accounts or to post office boxes to which only Lock-Box Banks have access (and shall instruct the Lock-Box Banks to cause all items and amounts relating to such Receivables received in such post office boxes to be removed and deposited into a Lock-Box Account on a daily basis), and (ii) deposit, or cause to be deposited, any Collections received by it, the Servicer or any Originator into Lock-Box Accounts not later than one (1) Business Day after receipt thereof.  Each Lock-Box Account shall at all times be subject to a Lock-Box Agreement.  The Seller will not (and will not permit the Servicer to) 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; provided, that, in the event that any cash or cash proceeds related to any Excluded Receivable is deposited or credited to any Lock-Box Account, the Servicer shall cause all such amounts to be redirected to the Person entitled thereto within one (1) Business Day after the crediting or depositing of such amount into such Lock-Box Account.

 

(k)           Marking of Records.  At its expense, the Seller shall:  (i) identify (or cause the Servicer to mark) its master data processing records relating to Pool Receivables and related Contracts, including with a legend evidencing that the undivided percentage ownership interests with regard to the Purchased Interest related to such Receivables and related Contracts have been

 

 IV-3        STRATEGIC ENERGY - RPA

sold in accordance with the Agreement, and (ii) cause each Originator so to mark its master data processing records pursuant to the Sale Agreement.

 

(l)           Reporting Requirements.  The Seller will provide to the Administrator and each Purchaser Agent (in multiple copies, if requested by the Administrator or the Purchaser Agent, as applicable) the following:

 

(i)           as soon as available and in any event within 90 days after the end of each fiscal year of the Seller, a copy of the annual report for such year for the Seller, containing unaudited financial statements for such year certified as to accuracy by the chief financial officer or treasurer of the Seller;

 

(ii)           as soon as possible and in any event within three days after the occurrence of each Termination Event or Unmatured Termination Event, a statement of the chief financial officer or treasurer of the Seller setting forth details of such Termination Event or Unmatured Termination Event and the action that the Seller has taken and proposes to take with respect thereto;

 

(iii)           promptly after the filing or receiving thereof, copies of all reports and notices that the Seller, any Affiliate or any ERISA Affiliate files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U. S.  Department of Labor or that the Seller or any Affiliate receives from any of the foregoing or from any multiemployer plan (within the meaning of Section 400l(a)(3) of ERISA) to which the Seller or any of its Affiliates is or was, within the preceding five years, a contributing employer, in each case in respect of the assessment of withdrawal liability or an event or condition that could, in the aggregate, reasonably be expected to result in the imposition of liability on the Seller and/or any such Affiliate;

 

(iv)           at least thirty days before any change in the Seller’s name or any other change requiring the amendment of UCC financing statements, a notice setting forth such changes and the effective date thereof;

 

(v)           promptly after any Responsible Officer of the Seller obtains knowledge thereof, notice of any:  (A) material litigation, investigation or proceeding that may exist at any time between the Seller and any Person or (B) material litigation or proceeding relating to any Transaction Document;

 

(vi)           promptly after the occurrence thereof, notice of a material adverse change in the business, operations, property or financial or other condition of the Seller, the Servicer or any Originator;

 

(vii)           promptly after any Responsible Officer of the Seller obtains knowledge thereof, notice of the failure of any representation or warranty to be true (when made or at any time thereafter) with respect to the Receivables included in the Receivables Pool;

 

(viii)                      notice that (A) any Person shall obtain an Adverse Claim upon the Pool Receivables or Collections with respect thereto, (B) any Person other than the Seller, the Servicer or the Administrator shall obtain any rights or direct any action with respect to

 

 IV-4        STRATEGIC ENERGY - RPA

any Lock-Box Account (or related lock-box or post office box) or (C) any Obligor shall receive any change in payment instructions with respect to Pool Receivable(s) from a Person other than the Servicer or the Administrator; and

 

(ix)           such other information (including non-financial information) respecting the Receivables or the condition or operations, financial or otherwise, of the Seller or any of its Affiliates as the Administrator or any Purchaser Agent may from time to time reasonably request.

 

(m)           Certain Agreements.  Without the prior written consent of the Administrator, the Seller will not (and will not permit the Originators to) amend, modify, waive, revoke or terminate any Transaction Document to which it is a party or any provision of Seller’s certificate of formation, limited liability company agreement or other organizational document of the Seller.

 

(n)           Restricted Payments.

 

(i)           Except pursuant to clause (ii) below, the Seller will not:  (A) purchase or redeem any shares of its capital stock, (B) declare or pay any dividend or set aside any funds for any such purpose, (C) prepay, purchase or redeem any Debt, (D) lend or advance any funds or (E) repay any loans or advances to, for or from any of its Affiliates (the amounts described in clauses (A) through (E) being referred to as “Restricted Payments”).

 

(ii)           Subject to the limitations set forth in clause (iii) below, the Seller may make Restricted Payments so long as such Restricted Payments are made only in one or more of the following ways:  (A) the Seller may make cash payments (including prepayments) on the Company Notes in accordance with their terms, and (B) if no amounts are then outstanding under the Company Notes, the Seller may declare and pay distributions.

 

(iii)           The Seller may make Restricted Payments only out of the funds it receives pursuant to Sections 1.4(b)(ii) and (iv) and Section 1.4(d) of the Agreement.  Furthermore, the Seller shall not pay, make or declare:  (A) any distributions if, after giving effect thereto, the Seller’s tangible net worth (as determined in accordance with generally accepted accounting principles, consistently applied) would be less than $10,000,000, or (B) any Restricted Payment (including any dividend) if, after giving effect thereto, any Termination Event or Unmatured Termination Event shall have occurred and be continuing.

 

(o)           Other Business.  The Seller will not:  (i) engage in any business other than the transactions contemplated by the Transaction Documents; (ii) create, incur or permit to exist any Debt of any kind (or cause or permit to be issued for its account any letters of credit or bankers’ acceptances) other than pursuant to this Agreement or any Company Note; or (iii) form any Subsidiary or make any investments in any other Person; provided, however, that the Seller shall be permitted to incur minimal obligations to the extent necessary for the day-to-day operations of the Seller (such as expenses for stationery, audits, maintenance of legal status, etc.).

 

 IV-5        STRATEGIC ENERGY - RPA

(p)           Use of Seller’s Share of Collections.  The Seller shall apply the Seller’s Share of Collections to make payments in the following order of priority:  (i) the payment of its expenses (including all obligations payable to the Conduit Purchasers and the Administrator under the Agreement and under the Fee Letters); (ii) the payment of accrued and unpaid interest on the Company Notes; and (iii) other legal and valid organizational purposes.

 

(q)           Tangible Net Worth.  The Seller will not permit its tangible net worth (as determined in accordance with generally accepted accounting principles, consistently applied), at any time, to be less than $10,000,000.

 

(r)           Fundamental Changes. The Seller shall not, without the prior written consent of the Administrator and the Majority Purchaser Agents, permit itself (i) to merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person or (ii) to be owned directly or indirectly by any Person other than Strategic Energy or an Affiliate thereof and thereby cause Strategic Energy’s percentage of ownership or control of the Seller to be reduced.

 

2.           Covenants of Strategic Energy as the Servicer.  Until the latest of (i) the Facility Termination Date, (ii) the date on which no Capital of or Discount in respect of the Purchased Interest shall be outstanding, (iii) the date on which an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account and all Letters of Credit have expired and (iv) the date all other amounts owed by the Seller under the Agreement to the Purchasers, the Administrator and any other Indemnified Party or Affected Person shall be paid in full:

 

(a)           Compliance with Laws, Etc.  The Servicer shall comply (and shall cause the Originators to comply) in all material respects with all applicable laws, rules, regulations and orders, and preserve and maintain its organizational existence in good standing, and its rights, franchises, qualifications and privileges, except to the extent that the failure so to comply with such laws, rules, regulations or orders or the failure so to preserve and maintain such existence, rights, franchises, qualifications and privileges would not have a Material Adverse Effect.

 

(b)           Offices, Records and Books of Account, Etc.  The Servicer shall keep (and shall cause the Originators to keep) its principal place of business, chief executive office and state of formation (as such terms or similar terms are used in the applicable UCC) and the office where it keeps its records concerning the Receivables at the address(es) set forth on Schedule IV or, upon at least 30 days’ prior written notice of a proposed change to the Administrator, at any other locations in jurisdictions where all actions reasonably requested by the Administrator to protect and perfect the interest of the Administrator and the Purchasers in the Receivables and related items (including the Pool Assets) have been taken and completed.  The Servicer also will (and will cause the Originators to) maintain and implement administrative and operating procedures (including an ability to recreate records evidencing Receivables and related Contracts in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records, computer tapes and disks and other information reasonably necessary or advisable for the collection of all Receivables (including records adequate to permit the daily identification of each Receivable and all Collections of and adjustments to each existing Receivable).

 

 IV-6        STRATEGIC ENERGY - RPA

(c)           Performance and Compliance with Contracts and Credit and Collection Policy.  The Servicer shall (and shall cause the Originators to), at its expense, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and timely and fully comply in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract.

 

(d)           Extension or Amendment of Receivables.  Except as provided in the Credit and Collection Policy, the Servicer and, to the extent that it ceases to be the Servicer, Strategic Energy, shall not extend (and shall not permit the Originators to extend), the maturity or adjust the Outstanding Balance or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, any term or condition of any related Contract (which term or condition relates to payments under, or the enforcement of, such Contract).

 

(e)           Change in Business or Credit and Collection Policy.  The Servicer shall not make (and shall not permit the Originators to make) (i) without the prior written consent of the Administrator and each Purchaser Agent, any material change in the character of its business or in any Credit and Collection Policy, or (ii) any change in any Credit and Collection Policy that could have a Material Adverse Effect.  The Servicer shall not make (and shall not permit the Originators to make) any other change in any Credit and Collection Policy without giving prior written notice thereof to the Administrator and each Purchaser Agent.

 

(f)           Audits.  The Servicer shall (and shall cause the Originators to), from time to time during regular business hours as reasonably requested in advance (unless a Termination Event or Unmatured Termination Event exists) by the Administrator, permit the Administrator, or its agents or representatives:  (i) to examine and make copies of and abstracts from all books, records and documents (including computer tapes and disks) in its possession or under its control relating to Receivables and the Related Security, including the related Contracts; (ii) to visit its offices and properties for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to Receivables and the Related Security or its performance hereunder or under the Contracts with any of its officers, employees, agents or contractors having knowledge of such matters and (iii), without limiting the clauses (i) and (ii) above, to engage certified public accountants or other auditors acceptable to the Servicer and the Administrator to conduct, at the Servicer’s expense (such review shall not be at the Servicer’s expense if the Administrator has previously conducted a review within the current fiscal year unless a Termination Event has occurred and is continuing (in which case such review shall be at the Seller’s expense)), a review of the Servicer’s books and records with respect to such Receivables.

 

(g)           Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions to  Obligors.  The Servicer shall not (and shall not permit any Originators to) add or terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account from those listed in Schedule II to the Agreement, or make any change in its instructions to Obligors regarding payments to be made to the Servicer or any Lock-Box Account (or related post office box), unless the Administrator shall have consented thereto in writing and the Administrator shall have prior to

 

 IV-7        STRATEGIC ENERGY - RPA

such termination and instruction received copies of all agreements and documents (including Lock-Box Agreements) that it may request in connection therewith.

 

(h)           Deposits to Lock-Box Accounts.  The Servicer shall:  (i) instruct all Obligors to make payments of all Receivables to one or more Lock-Box Accounts or to post office boxes to which only Lock-Box Banks have access (and shall instruct the Lock-Box Banks to cause all items and amounts relating to such Receivables received in such post office boxes to be removed and deposited into a Lock-Box Account on a daily basis); and (ii) deposit, or cause to be deposited, any Collections received by it into Lock-Box Accounts not later than one Business Day after receipt thereof.  Each Lock-Box Account shall at all times be subject to a Lock-Box Agreement.

 

(i)           Preservation of Security Interest.  The Servicer shall (and shall cause the Seller to) take any and all action as the Administrator may require to preserve and maintain the perfection and priority of the security interest of the Administrator in the Pool Assets pursuant to this Agreement.

 

(j)           Marking of Records.  At its expense, the Servicer shall mark its master data processing records relating to Pool Receivables and related Contracts with a legend evidencing that the undivided percentage ownership interests with regard to the Purchased Interest related to such Receivables and related Contracts have been sold in accordance with the Agreement.

 

(k)           Excluded Receivable Amounts.  In the event that any cash or cash proceeds related to any Excluded Receivable is deposited or credited to any Lock-Box Account, the Servicer, at its expense, shall cause all such amounts to be redirected to the Person entitled thereto within one (1) Business Day after the crediting or depositing of such amount into such Lock-Box Account.

 

(l)           Reporting Requirements.  Strategic Energy shall provide to the Administrator and each Purchaser Agent (in multiple copies, if requested by the Administrator or the Purchaser Agents, as applicable) the following:

 

(i)           as soon as available and in any event within 60 days after the end of the first three quarters of each fiscal year of Strategic Energy, balance sheets of Strategic Energy and the consolidated Subsidiaries of Strategic Energy as of the end of such quarter and statements of income, retained earnings and cash flow of Strategic Energy and consolidated Subsidiaries of Strategic Energy for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, certified by the chief financial officer or treasurer of such Person;

 

(ii)           as soon as available and in any event within 90 days after the end of each fiscal year of Strategic Energy, a copy of the annual report for such year for Strategic Energy and its consolidated Subsidiaries, containing financial statements for such year audited by independent certified public accountants of nationally recognized standing;

 

(iii)           together with the financial statements required in (i) and (ii) above, a compliance certificate in substantially the form of Annex D signed by the senior financial

 

 IV-8        STRATEGIC ENERGY - RPA

officer or treasurer of the Seller or Strategic Energy, or such other Person as may be acceptable to the Administrator;

 

(iv)           as to the Servicer only, as soon as available and in any event not later than two (2) Business Days prior to the Monthly Settlement Date, an Information Package as of the most recently completed calendar month or, if in the opinion of the Administrator reasonable grounds for insecurity exist with respect to the collectibility of the Pool Receivables or with respect to the Seller or Servicer’s performance or ability to perform its obligations under the Agreement, within six (6) Business Days of a request by the Administrator, supplemental interim information relating to the Receivables to the extent that such information is reasonably obtainable for such periods as is specified by the Administrator (but in no event more frequently than weekly);

 

(v)           as soon as possible and in any event within three days after occurrence of each Termination Event or Unmatured Termination Event, a statement of the chief financial officer of Strategic Energy setting forth details of such Termination Event or Unmatured Termination Event and the action that such Person has taken and proposes to take with respect thereto;

 

(vi)           promptly after the sending or filing thereof, copies of all reports that Strategic Energy sends to any of its security holders, and copies of all reports and registration statements that Strategic Energy or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange; provided, that any filings with the Securities and Exchange Commission that have been granted “confidential” treatment shall be provided promptly after such filings have become publicly available;

 

(vii)           promptly after the filing or receiving thereof notice of and, upon the request of the Administrator, copies of all reports and notices that Strategic Energy or any Affiliate or ERISA Affiliate of Strategic Energy files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U. S.  Department of Labor or that such Person or any of its Affiliates receives from any of the foregoing or from any multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA) to which such Person or any Affiliate of Strategic Energy is or was, within the preceding five years, a contributing employer, in each case in respect of the assessment of withdrawal liability or an event or condition that would reasonably be expected, in the aggregate, to result in the imposition of material liability on Strategic Energy and/or any such Affiliate;

 

(viii)                      at least thirty days before any change in Strategic Energy’s or any Originator’s name or any other change requiring the amendment of UCC financing statements, a notice setting forth such changes and the effective date thereof;

 

(ix)           promptly after a Responsible Officer of Strategic Energy obtains knowledge thereof, notice of any:  (A) litigation, investigation or proceeding that may exist at any time between Strategic Energy or any of its Subsidiaries and any Governmental Authority that, if not cured or if adversely determined, as the case may be, would have a Material Adverse Effect; (B) litigation or proceeding adversely affecting

 

 IV-9        STRATEGIC ENERGY - RPA

such Person or any of its Subsidiaries in which the amount involved is $5,000,000 or more or in which injunctive or similar relief is sought; or (C) litigation or proceeding relating to any Transaction Document;

 

(x)           promptly after the occurrence thereof, notice of a material adverse change in the business, operations, property or financial or other condition of Strategic Energy or any of its Subsidiaries or any individual Originator;

 

(xi)           the occurrence of a default or any event of default under any other financing arrangement evidencing $7,500,000 or more of indebtedness pursuant to which Strategic Energy or any Originator is a debtor or an obligor;

 

(xii)           promptly after any Responsible Officer of Strategic Energy obtains knowledge thereof, notice of the failure of any representation or warranty to be true (when made or at any time thereafter) with respect to the Receivables included in the Receivables Pool;

 

(xiii)                      notice that (A) any Person shall obtain an Adverse Claim upon the Pool Receivables or Collections with respect thereto, (B) any Person other than the Seller, the Servicer or the Administrator shall obtain any rights or direct any action with respect to any Lock-Box Account (or related lock-box or post office box) or (C) any Obligor shall receive any change in payment instructions with respect to Pool Receivable(s) from a Person other than the Servicer or the Administrator;

 

(xiv)  on or prior to March 31, June 30, September 30 and December 31 of each calendar year, beginning on December 31, 2007, an updated version of Schedule VI hereto; and

 

(xv) such other information respecting the Receivables or the condition or operations, financial or otherwise, of Strategic Energy or any of its Affiliates as the Administrator may from time to time reasonably request.

 

3.           Separate Existence.  Each of the Seller and Strategic Energy hereby acknowledges that the Purchasers, the Conduit Purchasers and the Administrator are entering into the transactions contemplated by this Agreement and the other Transaction Documents in reliance upon the Seller’s identity as a legal entity separate from Strategic Energy and its Affiliates.  Therefore, from and after the date hereof, each of the Seller and Strategic Energy shall take all steps specifically required by the Agreement or reasonably requested by the Administrator (with reasonable notice to the Seller) to continue the Seller’s identity as a separate legal entity and to make it apparent to third Persons that the Seller is an entity with assets and liabilities distinct from those of Strategic Energy and any other Person, and is not a division of Strategic Energy, its Affiliates 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 the Seller and Strategic Energy shall take such actions as shall be required in order that:

 

(a)           The Seller will be a limited purpose limited liability company whose activities are restricted in its limited liability company agreement to:  (i) purchasing or otherwise acquiring from the Originators (or their Affiliates), owning, holding, granting security interests or selling

 

 IV-10        STRATEGIC ENERGY - RPA

interests in Pool Assets (or other receivables originated by the Originators or their Affiliates, and certain related assets), (ii) entering into agreements for the selling and servicing of the Receivables Pool (or other receivables pools originated by the Originators or their Affiliates), and (iii) conducting such other activities as are necessary or appropriate to carry out such activities;

 

(b)           The Seller shall not engage in any business or activity except as set forth in this Agreement and the other Transaction Documents nor incur any indebtedness or liability, other than as expressly permitted by the Transaction Documents;

 

(c)           Not less than one member of the Seller’s Directors (the “Independent Director”) shall be an individual who is not and has not been, within the preceding five (5) years, a direct, indirect or beneficial stockholder, officer, director, employee, affiliate, associate, customer, creditor, consultant or supplier of Strategic Energy or any of its Affiliates.  The Seller’s limited liability agreement shall provide that:  (i) the Seller’s Board of Directors shall not approve, or take any other action to cause the filing of, or join in any filing of, a voluntary bankruptcy or insolvency petition, dissolution, liquidation, consolidation, merger, sale of all or substantially all of its assets, assignment for the benefit of creditors, admit in writing its inability to pay its debts generally as they become due, or to engage in any other business or activity with respect to the Seller unless the Independent Director shall approve the taking of such action in writing before 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 the Seller, Strategic Energy or any Affiliate thereof;

 

(e)           Any employee, consultant or agent of the Seller will be compensated from the Seller’s funds for services provided to the Seller.  The Seller will not engage any agents other than its attorneys, auditors and other professionals, and a servicer and any other agent contemplated by the Transaction Documents for the Receivables Pool, which servicer will be fully compensated for its services by payment of the Servicing Fee, and a manager, which manager will be fully compensated from the Seller’s funds;

 

(f)           The Seller will contract with the Servicer to perform for the Seller all operations required on a daily basis to service the Receivables Pool.  The Seller will pay the Servicer the Servicing Fee pursuant hereto.  The Seller will not incur any material indirect or overhead expenses for items shared with Strategic Energy (or any other Affiliate thereof) that are not reflected in the Servicing Fee.  To the extent, if any, that the Seller (or any Affiliate thereof) shares items of expenses not reflected in the Servicing 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 Strategic Energy shall pay all expenses relating to the preparation, negotiation, execution and delivery of the Transaction Documents, including legal, agency and other fees;

 

(g)           The Seller’s operating expenses will not be paid by Strategic Energy or any other Affiliate thereof;

 

 IV-11        STRATEGIC ENERGY - RPA

(h)           All of the Seller’s business correspondence and other communications shall be conducted in the Seller’s own name and on its own separate stationery;

 

(i)           The Seller’s books and records will be maintained separately from those of Strategic Energy and any other Affiliate thereof and any other Person;

 

(j)           All financial statements of Strategic Energy or any Affiliate thereof that are consolidated to include Seller will contain detailed notes clearly stating that:  (i) a special purpose entity exists as a Subsidiary of Strategic Energy, and (ii) the Originators have sold receivables and other related assets to such special purpose Subsidiary that, in turn, has sold undivided interests therein to certain financial institutions and other entities;

 

(k)           The Seller’s assets will be maintained in a manner that facilitates their identification and segregation from those of Strategic Energy or any Affiliate thereof and any other Person;

 

(l)           The Seller will strictly observe organizational formalities in its dealings with Strategic Energy or any Affiliate thereof, and funds or other assets of the Seller will not be commingled with those of Strategic Energy or any Affiliate thereof except as permitted by the Agreement in connection with servicing the Pool Receivables.  The Seller shall not maintain joint bank accounts or other depository accounts to which Strategic Energy or any Affiliate thereof or any other Person has independent access (other than the Servicer in such capacity) and the Seller shall use separate invoices and checks from any other Person.  The Seller is not named, and has not entered into any agreement to be named, directly or indirectly, as a direct or contingent beneficiary or loss payee on any insurance policy with respect to any loss relating to the property of Strategic Energy or any Subsidiary or other Affiliate of Strategic Energy.  The Seller will pay to the appropriate Affiliate the marginal increase or, in the absence of such increase, the market amount of its portion of the premium payable with respect to any insurance policy that covers the Seller and such Affiliate;

 

(m)           The Seller will maintain arm’s-length relationships with Strategic Energy (and any Affiliate thereof).  Any Person that renders or otherwise furnishes services to the Seller will be compensated by the Seller at market rates for such services it renders or otherwise furnishes to the Seller.  Neither the Seller nor Strategic Energy 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.  The Seller and Strategic Energy 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;

 

(n)           Strategic Energy shall not pay the salaries of Seller’s employees, if any;

 

(o)           The Seller does not and will not hold itself responsible for the obligations of any other Person, and shall not guarantee or become liable for the debts of any other Person;

 

(p)           The Seller will conduct its business in its own name and shall hold itself out as a separate entity from any other Person;

 

 IV-12        STRATEGIC ENERGY - RPA

(q)           The Seller shall maintain (i) a sufficient number of employees and/or arrange for appropriate contracts with service providers to provide necessary services to the Seller and (ii) adequate capital in light of its contemplated business activities;

 

(r)           The Seller shall not acquire the obligations or securities of any of its shareholders; and

 

(s)           The Seller shall not pledge its assets for the benefit of any other Person or make any loans or advances to any other Person, except pursuant to the Transaction Documents.

 

 

 IV-13        STRATEGIC ENERGY - RPA

 

 

Each of the following shall be a “Termination Event”:

 

(a)           (i) the Seller, any Originator or the Servicer (if Strategic Energy or any of its Affiliates) shall fail to perform or observe any term, covenant or agreement under the Agreement or any other Transaction Document and, except as otherwise provided herein, such failure shall continue for 10 Business Days after knowledge or notice thereof, (ii) the Seller or the Servicer shall fail to make when due any payment or deposit to be made by it under the Agreement or any other Transaction Document and such failure shall continue unremedied for 2 days or (iii) Strategic Energy shall resign as Servicer, and no successor Servicer reasonably satisfactory, to the Administrator shall have been appointed;

 

(b)           Strategic Energy (or any Affiliate thereof) shall fail to transfer to any successor Servicer when required any rights pursuant to the Agreement that Strategic Energy (or such Affiliate) then has as Servicer;

 

(c)           any representation or warranty made or deemed made by the Seller, the Servicer or any Originator (or any of their respective officers) under or in connection with the Agreement or any other Transaction Document, or any information or report delivered by the Seller, Strategic Energy or Originator or the Servicer pursuant to the Agreement or any other Transaction Document, shall prove to have been incorrect or untrue in any material respect when made or deemed made or delivered and shall remain incorrect or untrue for ten days after knowledge or notice thereof (if the warranty is of a type that is capable of being cured);

 

(d)           the Seller or the Servicer shall fail to deliver the Information Package pursuant to the Agreement, and such failure shall remain unremedied for two Business Days;

 

(e)           the Agreement (and each Lock-Box Agreement, as applicable) or any purchase or reinvestment pursuant to the Agreement shall for any reason other than as a result of an willful or grossly negligent action by the Administrator or any member of a Purchaser Group:  (i) cease to create, or the Purchased Interest shall for any reason cease to be, a valid and enforceable perfected undivided variable percentage ownership or security interest to the extent of the Purchased Interest in each Pool Receivable, the Related Security and Collections with respect thereto, free and clear of any Adverse Claim (other than Permitted Liens), or (ii) cease to create with respect to the Pool Assets, or the interest of the Administrator with respect to such Pool Assets shall cease to be, a valid and enforceable first priority perfected security interest, free and clear of any Adverse Claim (other than Permitted Liens);

 

(f)           the Seller or any Originator shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Seller or any Originator seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or

 

 

V-1        STRATEGIC ENERGY - RPA

---

other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Seller or any Originator shall take any corporate or organizational action to authorize any of the actions set forth above in this paragraph;

 

(g)           (i) the (A) Default Ratio shall exceed 2.5% or (B) the Delinquency Ratio shall exceed 6.0%, (ii) the average for three consecutive calendar months of:  (A) the Default Ratio shall exceed 1.75%, (B) the Delinquency Ratio shall exceed 5.5% or (C) the Dilution Ratio shall exceed 2.5% or (iii) at any time the Day’s Sales Outstanding shall exceed 60 days;

 

(h)           [reserved];

 

(i)           a Change in Control shall occur;

 

(j)           at any time (i) the sum of (A) the Capital, plus the LC Participation Amount, plus (B) the Total Reserves, exceeds (ii) the sum of (A) the Net Receivables Pool Balance at such time plus (B) the Purchasers’ Share of the amount of Collections then on deposit in the Lock-Box Accounts (other than amounts set aside therein representing Discount and fees), and such circumstance shall not have been cured within two Business Days after knowledge thereof by the Seller, Strategic Energy, the Servicer or any Originator; provided that each month upon the due date for the Information Package, such parties shall be deemed to have knowledge thereof (regardless of whether or not such parties had such knowledge or whether or not the Information Package due to be delivered on such date was delivered to the Administrator);

 

(k)           (i) the Servicer or any Originator shall fail to pay any principal of or premium or interest on any of its Debt that is outstanding in a principal amount of at least $7,500,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement, mortgage, indenture or instrument relating to such Debt (and shall have not been waived); or (ii) any other event shall occur or condition shall exist under any agreement, mortgage, indenture or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement, mortgage, indenture or instrument (and shall have not been waived), if, in either case:  (a) the effect of such non-payment, event or condition is to give the applicable debtholders the right (whether acted upon or not) to accelerate the maturity of such Debt, or (b) any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to repay, redeem, purchase or defease such Debt shall be required to be made, in each case before the stated maturity thereof;

 

(l)           either:  (i) a contribution failure shall occur with respect to any Benefit Plan sufficient to give rise to a lien on any of the assets of the Seller, any Originator, the Servicer or any ERISA Affiliate under Section 302(f) of ERISA, (ii) the Internal Revenue Service shall file a notice of lien asserting a claim or claims pursuant to the Internal Revenue Code with regard to

 

V-2        STRATEGIC ENERGY - RPA 

any of the assets of (a) the Seller or (b) any Originator, the Servicer or any ERISA Affiliate, and such lien shall have been filed and not released within 10 days, or (iii) the Pension Benefit Guaranty Corporation shall, or shall indicate its intention in writing to the Seller, any Originator, Strategic Energy or any ERISA Affiliate to, either file a notice of lien asserting a claim pursuant to ERISA with regard to any assets of the Seller, any Originator, Strategic Energy or any ERISA Affiliate in an amount in excess of $1,000,000 or terminate any Benefit Plan that has unfunded benefit liabilities, or any steps shall have been taken to terminate any Benefit Plan subject to Title IV of ERISA so as to result in any liability and such lien shall have been filed and not released within 10 days;

 

(m)           if any Transaction Document shall for any reason cease to be effective and valid, binding and enforceable in accordance with its terms or the Seller, any Originator, Strategic Energy, the Servicer or any other party (other than the Administrator or any member of a Purchaser Group) shall, directly or indirectly, contest in any manner such effectiveness, validity, binding nature or enforceability of any Transaction Document; and

 

(n)           the breach or default by any party (other than the Administrator) of its obligations under the Intercreditor Agreement.

 

V-3        STRATEGIC ENERGY - RPA 

 

 

 

 

 

 

 

Schedule I-1        STRATEGIC ENERGY - RPA

---

 

 

Lock-Box Bank	Lock-Boxes		Accounts
PNC Bank, National Association	676863 643249		1019809357
	676863 643249		1019809349

 

 

 

 

 

 

Schedule II-1        STRATEGIC ENERGY - RPA

 

 

Organizational Name                                                                                     Trade Names / Fictitious Names

 

Strategic Energy, L.L.C.	SEL
	Strategic Energy
	Strategic Energy LTD
	Expert Energy

 

 

 

 

 

Schedule III-1        STRATEGIC ENERGY - RPA

 

 

The Principal Place of Business, Chief Executive Office and State of Formation of the Seller is:

 

Strategic Receivables, LLC

 

Two Gateway Center

Pittsburgh, PA ###-###-####

 

Delaware limited liability company

 

 

The Seller maintains its master books and records relating to Receivables at:

 

Strategic Receivables, LLC

 

Two Gateway Center

Pittsburgh, PA ###-###-####

 

 

The Principal Place of Business, Chief Executive Office and State of Formation of the Servicer:

 

Strategic Energy, L.L.C.

 

Two Gateway Center

Pittsburgh, PA ###-###-####

 

Delaware limited liability company

 

 

The Servicer maintains its master books and records relating to the Receivables at:

 

Two Gateway Center

Pittsburgh, PA ###-###-####

 

 

 

Schedule IV-1        STRATEGIC ENERGY - RPA

 

 

 

 

 

 

 

Schedule V-1        STRATEGIC ENERGY - RPA

 

 

 

 

 

 

Schedule VI-1        STRATEGIC ENERGY - RPA

 

Non-Lock-Box Bank	Remittance Addresses	Accounts
JPMorgan Chase Bank, N.A.	PO Box 910152 Dallas, TX ###-###-####	77 ###-###-####
	PO Box 911945 Dallas, TX ###-###-####	77 ###-###-####
	PO Box 88066 Chicago, IL 60695-8066	53-095-7515
	PO Box 915039 Dallas, TX ###-###-####	32 ###-###-####
	PO Box 915028 Dallas, TX ###-###-####	32 ###-###-####
	PO Box 88166 Chicago, IL 60695-8166	32 ###-###-####
	PO Box 915017 Dallas, TX ###-###-####	32 ###-###-####
	PO Box 27511 New York, NY 10087-7511	30 ###-###-####
	PO Box 88996 Chicago, IL 60695-8996	30 ###-###-####
	PO Box 27643 New York, NY 10087-7643	30 ###-###-####
LaSalle Bank N.A.	135 S. LaSalle St.     Schedule VII-1      Department 6413 Chicago, IL 60674-6413	580-033-6066
	135 S. LaSalle St. Department 2308 Chicago, IL 60674-2038	580-033-6090

 

 

 Schedule VII-2 

 

 

(attached)

 

 

 

 

 

 

Annex A-1        STRATEGIC ENERGY - RPA

 

 

 

 

 

 

PNC Bank, National Association, as Administrator and a Purchaser Agent

One PNC Plaza, 26^th Floor

249 Fifth Avenue

Pittsburgh, PA ###-###-####

Fifth Third Bank, as a Purchaser Agent

38 Fountain Square Plaza, MD109047

Cincinnati, Ohio 45263

Ladies and Gentlemen:

Reference is hereby made to the Receivables Purchase Agreement, dated as of October 3, 2007 (as heretofore amended, restated, supplemented or otherwise modified, the “Receivables Purchase Agreement”), among Strategic Receivables, LLC, as Seller, Strategic Energy, L.L.C., as Servicer, the Conduit Purchasers from time to time party thereto, the Purchaser Agents from time to time party thereto, PNC Bank, National Association, as Administrator and as LC Bank and the LC Participants from time to time party thereto. Capitalized terms used in this Purchase Notice and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement.

 

[This letter constitutes a Purchase Notice pursuant to Section 1.2(a) of the Receivables Purchase Agreement. Seller desires to sell an undivided variable percentage interest in a pool of receivables on ____________, [200_], for a purchase price of $______________ ($______________ of which represents the Capital funded by the Purchaser Group for which Market Street is a member and $______________ of which represents the Capital funded by the Purchaser Group for which [____________] is a member). Subsequent to this purchase, the aggregate outstanding Capital will be $______________. Each Purchaser Group’s Share of such purchase and resulting aggregate Capital and LC Participation Amount is set forth on a schedule attached hereto.]¹

 

[This letter constitutes a notice pursuant to Section 1.12(a) of the Receivables Purchase Agreement.  The Seller desires that LC Bank issue a Letter of Credit with a face amount of $__________.  Subsequent to this purchase, the LC Amount will be $_________ and the aggregate outstanding Capital will be $__________.]²

 

---

 

 

 

 

Annex B-1        STRATEGIC ENERGY - RPA

 

 

 

Seller hereby represents and warrants as of the date hereof, and as of the date of purchase, as follows:

 

(i)           the representations and warranties contained in Exhibit III of the Receivables Purchase Agreement are correct in all material respects on and as of such dates as though made on and as of such dates and shall be deemed to have been made on such dates, except for representations and warranties which apply as to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date);

 

(ii)           no Termination Event or Unmatured Termination Event has occurred and is continuing, or would result from such purchase;

 

(iii)           after giving effect to the purchase proposed hereby, the Purchased Interest will not exceed 100% and the Capital plus the LC Participation Amount will not exceed the Purchase Limit; and

 

(iv)           the Facility Termination Date shall not have occurred.

 

 

 

 

Annex B-2        STRATEGIC ENERGY - RPA

 

 

 

IN WITNESS WHEREOF, the undersigned has caused this Purchase Notice to be executed by its duly authorized officer as of the date first above written.

 

 

	STRATEGIC RECEIVABLES, LLC
	By:_________________________________
	Name:______________________________
	Title:_______________________________

 

 

Annex B-3        STRATEGIC ENERGY - RPA

 

 

 

_____________, _____

 

PNC Bank, National Association, as Administrator and a Purchaser Agent

One PNC Plaza, 26^th Floor

249 Fifth Avenue

Pittsburgh, PA ###-###-####

Fifth Third Bank, as a Purchaser Agent

38 Fountain Square Plaza, MD109047

Cincinnati, Ohio 45263

Ladies and Gentlemen:

Reference is hereby made to the Receivables Purchase Agreement, dated as of October 3, 2007 (as heretofore amended, restated, supplemented or otherwise modified, the “Receivables Purchase Agreement”), among Strategic Receivables, LLC, as Seller, Strategic Energy, L.L.C., as Servicer, the Conduit Purchasers from time to time party thereto, the Purchaser Agents from time to time party thereto, PNC Bank, National Association, as Administrator and as LC Bank and the LC Participants from time to time party thereto. Capitalized terms used in this paydown notice and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement.

 

This letter constitutes a paydown notice pursuant to Section 1.4(f)(i) of the Receivables Purchase Agreement. The Seller desires to reduce the Capital on _____________, _____³ by the application of $_______________ ($_______________ of which shall be applied to the Capital funded by the Purchaser Group for which Market Street is a member and $_______________ of which shall be applied to the Capital funded by the Purchaser Group for which [_________________] is a member) in cash to pay Capital and Discount to accrue (until such cash can be used to pay commercial paper notes) with respect to such Capital, together with all costs related to such reduction of Capital. Subsequent to this paydown, the aggregate Capital will be $_______________. Each Purchaser Group’s Share of such reduction and resulting aggregate Capital is set forth on a schedule attached hereto.

 

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Annex C-1        STRATEGIC ENERGY - RPA

 

 

IN WITNESS WHEREOF, the undersigned has caused this paydown notice to be executed by its duly authorized officer as of the date first above written

 

	STRATEGIC RECEIVABLES, LLC
	By:_________________________________
	Name:______________________________
	Title:_______________________________

 

 

 

 

Annex C-2        STRATEGIC ENERGY - RPA

 

 

 

 

To:  PNC Bank, National Association, as Administrator

 

This Compliance Certificate is furnished pursuant to that certain Receivables Purchase Agreement, dated as of October 3, 2007 among Strategic Receivables, LLC, as seller (the “Seller”), Strategic Energy, L.L.C., as servicer (the “Servicer”), the Conduit Purchasers from time to time party thereto, the Purchaser Agents from time to time party thereto, PNC Bank, National Association, as administrator (in such capacity, the “Administrator”) and as LC Bank and the LC Participants from time to time party thereto (as amended, restated, supplemented or otherwise modified (the “Agreement”).  Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

1.           I am the duly elected _______________________ of the Servicer.

 

2.           I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and condition of Seller during the accounting period covered by the attached financial statements.

 

3.           The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Termination Event or an Unmatured Termination Event, as each such term is defined under the Agreement, during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth in paragraph 5 below.

 

4.           Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which Seller has taken, is taking, or proposes to take with respect to each such condition or event:

 

 

 

Annex D-1        STRATEGIC ENERGY - RPA

 

The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this ____ day of ________________________, 20___.

 

STRATEGIC RECEIVABLES, LLC

 

By:                                                      

Name:                                                                

Title:                                                                

 

 

 

 

Annex D-2        STRATEGIC ENERGY - RPA

 

 

PNC Bank, National Association, as Administrator and a Purchaser Agent

One PNC Plaza, 26^th Floor

249 Fifth Avenue

Pittsburgh, PA ###-###-####

Fifth Third Bank, as a Purchaser Agent

38 Fountain Square Plaza, MD109047

Cincinnati, Ohio 45263

Ladies and Gentlemen:

Reference is hereby made to the Receivables Purchase Agreement, dated as of October 3, 2007 (as heretofore amended, restated, supplemented or otherwise modified, the “Receivables Purchase Agreement”), among Strategic Receivables, LLC, as Seller, Strategic Energy, L.L.C., as Servicer, the Conduit Purchasers from time to time party thereto, the Purchaser Agents from time to time party thereto, PNC Bank, National Association, as Administrator and as LC Bank and the LC Participants from time to time party thereto. Capitalized terms used in this Purchase Notice and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement.

 

This letter constitutes a notice pursuant to Section 1.12(a) of the Receivables Purchase Agreement. Seller desires that LC Bank issue a Letter of Credit on ________, [20__], with a face amount of $__________. Subsequent to this purchase, the LC Participation Amount will be $________ and the aggregate outstanding Capital will be $__________. Each Purchaser Group’s Share of such purchase and resulting aggregate Capital and LC Participation Amount is set forth on a schedule attached hereto.

 

Seller hereby represents and warrants as of the date hereof, and as of the date of purchase, as follows:

(i) the representations and warranties contained in Exhibit III of the Receivables Purchase Agreement are correct in all material respects on and as of such dates as though made on and as of such dates and shall be deemed to have been made on such dates, except for representations and warranties which apply as to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date);

 

Annex E-1        STRATEGIC ENERGY - RPA

 

 

(ii) no Termination Event or Unmatured Termination Event has occurred and is continuing, or would result from such purchase;

 

 

(iii) after giving effect to the purchase proposed hereby, the Purchased Interest will not exceed 100% and the Capital plus the LC Participation Amount will not exceed the Purchase Limit; and

 

(iv) the Facility Termination Date shall not have occurred.

 

 

 

 

Annex E-2        STRATEGIC ENERGY - RPA

 

IN WITNESS WHEREOF, the undersigned has caused this Letter of Credit Application to be executed by its duly authorized officer as of the date first above written.

 

	STRATEGIC RECEIVABLES, LLC
	By:_________________________________
	Name:______________________________
	Title:_______________________________

 

 

 

 

Annex E-3        STRATEGIC ENERGY - RPA